VIX

VIX

I see quite a few analysts and newsletter writers extrapolating a big selloff in stocks based on the low level in the VIX.

Look at the period from 05 to 07. The VIX spent long periods of time under 12, and even as low as 9. As usual the typical analysts are again making a mistake extrapolating what has happened in the recent past forward into the future.

vix

This is why they missed the 7 YCL, and thought we were in a bear market.

I can’t stress this enough, the tools that 90% of analysts and newsletter writers use are worthless for calling these turns. They will miss it every time, and apparently they will never learn from their mistakes, but just keep making them over and over. In order to succeed at a high level in this business, one has to adapt as quickly as possible to evolving markets.

You can’t stay stuck thinking that all markets follow perfect EW counts. They don’t.

You can’t stubbornly depend on chart patterns. They morph and evolve.

You can’t depend on indicators. This one is probably the most useless. Everyone has, and sees the same indicators. Do you really think you can get an edge watching the same thing as every other Tom, Dick, and Harry?

And yes cycles and sentiment also evolve. Cycles stretch or shrink depending on QE or market manipulation. Sentiment levels that would have turned the market last year often need to be more extreme this year.

This is why many cycles analysts miss the turns as well. They are stuck believing that we have free markets, so often they end up sitting on the sidelines waiting for a second leg down into the natural timing band for the cycle low … that never comes, and they miss the move.

You have to adapt in this businesses. Those that can do it quickest survive and prosper. Those that are stuck in the past go extinct.

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CHART OF THE DAY – NASDAQ PULLING THE MARKET HIGHER

NASDAQ PULLING THE MARKET HIGHER

The Nasdaq Nov/Dec high may act like a magnet to pull the S&P 500 price higher before generating a half cycle top.
nasdaq pulling market higher

Obviously it goes without saying that no one should be selling short right here. I’ve been on record as saying that no one needs to short anything for the next 3-5 years.

We are transitioning into the bubble phase. Yes, there will be corrections along the way. But I guarantee you will not be able to outsmart the bull market. The only people that will make any long term gains on the short side will have massive research departments finding sick companies that are going bankrupt. Retail traders with some charting software are not going to make money selling short.

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CHART OF THE DAY – TIME FOR A BOUNCE, BUT PROBABLY NOT A BOTTOM YET

GOLD – TIME FOR A BOUNCE, BUT PROBABLY NOT A BOTTOM YET

Sentiment got a little too bearish and price is bouncing off the 38% Fibonacci retracement. Ideally though I’d like to see one more lower low next week to break the cycle uptrend line before trying to call a bottom.

I’d like to see a bit more bearish sentiment and some panic selling. DCL’s should create fear and cause traders to think price is rolling over. That usually requires a trend line break to get technical traders on the wrong side of the market before price resumes the uptrend.

gold time bounce
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CHART OF THE DAY – GOLD DCL STILL SEVERAL DAYS AWAY

GOLD DCL STILL SEVERAL DAYS AWAY

Some analysts were expecting gold to form an early Daily Cycle Low. I’ve been warning that gold needs to break the cycle trend line before the DCL can bottom and to beware of a fake out. It turns out I was correct to be patient. I doubt gold will form the DCL until right before, or on the FOMC statement next week. More patience.

gold DCL
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CHART OF THE DAY – WAITING ON THE EURO TO BOTTOM

WAITING ON THE EURO TO BOTTOM

I’m just waiting for the euro to confirm a final intermediate cycle bottom. It’s now very late in the timing band at 33 weeks. So the bottom could occur at any time. My best guess is the euro will bottom and the dollar will top on, or the day before, the FOMC meeting next week.

The intermediate trend line has been broken. This needs to happen during cycle lows to get technical traders on the wrong side of the market. We are waiting for the trend line to break in gold.

waiting euro bottom
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CHART OF THE DAY – GOLD MOVING DOWN INTO ITS DCL

GOLD MOVING DOWN INTO ITS DAILY CYCLE LOW

Gold is now moving down into its daily cycle low. Be patient right now and ignore the technical analysts trying to call bottoms based on indicators or chart patterns. The most likely trigger event for gold to bottom on will be the FOMC meeting next week. I suspect gold will throw us at least one fake out before the true bottom as well.

gold moving
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CHART OF THE DAY – GET ON BOARD OFFER

GET ON BOARD OFFER

get on board offer

 

By this time I think everyone can see that I’ve been correct all along on stocks, gold and the commodity complex. I simply use better tools than the vast majority of analysts that try to rely on chart patterns, technical indicators, so called fundamentals, or Elliot wave.

I’ll say again: we haven’t had free markets since the SEC banned short selling in financials in the fall of 08. You simply can’t be successful in today’s modern markets until you accept that and adapt to it. You have to run far and fast in the other direction from the fools still in la la land that refuse to acknowledge and account for this.

None of these analysts ever spot these cycle bottoms. They are always bearish at bottoms, and bullish at tops. They fight uptrends all the way up, and buy too early during corrections. Most have been on the wrong side of all markets since the summer of last year. It’s a shame really as 2016 was, and still is set up to be an extraordinary year. A year similar to 2009 as everything emerges from a multi-year cycle low. I knew this was going to be the case and the SMT has been positioned to make money off this rare event, while almost all others have tried to fight it.

We still have half a year left. Decide now to quit making the same mistakes over and over. Jettison the worthless trading tools and so called gurus who have been costing you money all year long.

For the rest of the weekend I’ll offer a 15% discount on a yearly subscription to the SMT where you can learn how to use cycles and sentiment to actually make money, and more importantly keep it.

Just buy an annual subscription and I will refund $35 back.

Seriously, quit paying ridiculously high prices for subscriptions to services that don’t make money. Isn’t it obvious that all they are about is fleecing your pocket book? I’ve kept my subscription at the same price for 10 years. I challenge all of them to cut their price in half and provide a reasonably priced service rather than just fleecing gullible traders of their hard earned cash. My goal was never to get rich selling subscriptions (I have all the money I could ever need for this lifetime). My purpose in starting the SMT was to help traders ride the gold bull, and teach new investors how to make money in the markets.  More specifically how to use cycles and sentiment to make money in the markets. Isn’t it time to get on board and stop losing money?

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CHART OF THE DAY – ENERGY STOCKS BREAKOUT?

ENERGY STOCKS BREAKOUT?

The energy stocks are trying to break out of their two and a half month consolidation, and through a major resistance level. This could mean that the daily cycle decline in oil has been aborted early and the rest of the drop into the intermediate cycle low has been terminated.

If oil has finished its correction and energy stocks are ready to resume their rally, it will add even more momentum to the stock market.
Energy Stocks Breakout
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