Everytime I hear a politician or economist call for more stimulus to create jobs I just shake my head and wonder, do these people really not understand what is happening in the jobs market? Do they really not understand that government can’t legislate prosperity? All governments can do is steal from…errr I mean tax it’s citizens and then throw it away on nonproductive make work jobs.
Seriously how does it help the country to tax a productive citizen and then use that money to pay another citizen to dig a hole. And if you think that is ridiculous the government will then pay someone else to fill the hole in.
How in the world is this a rational use of capital?
Let me lay out the series of events that led to the mess we are now in.
From 1982 to 2000 we had two completely new industries created. The personal computer and Internet. These two technologies drove an incredible productive phase in history. They created millions and millions of jobs.
But as always happens when a new technology hits the market there is over expansion. By 2000 there were too many tech companies. Many of them had no earnings and never had any realistic chance of ever earning a dime. As always happens when expansion reaches over saturation the market will act to clean out the unhealthy companies. That cleansing process was the bear market from 2000 to 20002. Millions of jobs were lost as the tech sector contracted.
That was unacceptable to politicians and the Fed, so Greenspan slashed interest rates and printed billions in a vain attempt to side step the natural economic forces. The end result the Fed created the conditions that led to the real estate and credit bubbles.
Those twin bubbles temporarily created millions of jobs in the construction and finance industries to replace the jobs lost when the tech bubble collapsed. Unfortunately as we now know this was a phony economy built on a massive credit expansion and not a sustainable economic expansion.
As expected the bubble imploded. When it did we again lost all those jobs that were created in the bubble sectors. We also lost a lot of marginal businesses that were only surviving because of the false economic expansion.
So instead of halting the bear market in 2002 Greenspan just created a much bigger mess.
Now politicians are trying to create jobs by taxing and spending. That’s not going to fix the problem. In order to fix the unemployment problem we need the next “new” industry to come online. The computer and Internet drove the economic expansion in the 80’s & 90’s. Electronics and plastics drove the expansion from 45 to 66. The automobile and mass production drove the bull from 1920 to 29.
We are never going to get out of this mess by taking money from productive members of society and giving it to unproductive members to dig holes. We need the next “new thing” to come online. My best guess is that it will come out of the biotech sector.
If politicians really want to create jobs they should direct funds into research and development in the biotech industry and speed up the process of finding and bringing online the next new industry.
Very True Gary–
I suppose the process is driven by those politicians (almost–if not–all) who are driven by receiving the next vote from their constituents instead of what is right for the country.
Thanks for the NEW POST gary. Very useful.
-TZ
All government needs are votes.
I’m looking for next bubble (besides gold) like dotcom and put all my fund into it. Gary,Which sector do you think is possible to be?
Doing the ‘right thing’ usually means telling people NO, not handing out money, and forcing responsibility on others.
Politicians almost NEVER desire to do the ‘right thing’.
They desire to stay in office, get paid, and retain their power over little people.
This will occurr and remain the same up until the point that the electorate wakes up and decides they don’t want it to occur anymore (NOTICE: that this means the electorate willingly choses to STOP hearing the word YES, STOP receiving money, and STOP being able to blame others for their problems. Yeah…that happens a lot, right?.)
As obvious as it appears, there is NO REASON to believe that simply because they are politicians leading this country they have any desire or motivation to actually HELP and not DESTROY things. That is a fairy tale for children, not grown adults.
–TZ
Oh…and the leaders of the FED and Treasury only have the goal of protecting and profiting from the fiat currency system. At that goal they have been most effective and continue to be. Nothing in their goals includes helping NOT take money from the masses. The only possible goal they have in regard to the masses is to keep them as clueless and uninformed as possible so they can’t identify how they are getting to be so poor and helpless.
–TZ
TZ,
I am curious why you don’t consider the $19.50 level a major breakout for silver. On the weekly chart that level seems more significant to me than the all time high of just over $21.
TIA
I am waiting for a redefinition of unemployment .
Examples
Broader terms for discouraged worker.
Labor force=citizen for more than x years.
Labor force=adults only, and under 55
Instead of unemployment insurance, Joe and Sally have to dig a hole for the same money. Politically sounds productive, but all it does is remove unemployment and decreases unemployment % as a calculation
Base the labor force on a family…if one parent is working, then the family is working.
Etc
There is a whole bunch of pure American Politics that can be played here. This is easier then investing in research for the next big thing.
People don’t change until they are forced to. The reset in the US is almost certain in my mind.
If you turn the article title around to:
“Why can’t the **PEOPLE** understand what is really happening with unemployment”
you clearly see the nature of the problem and the reasons:
1)they are stupid
2)they don’t want to learn
3)they are trustworthy of the wrong people and organizations
4)most parties have an interest in continuing to deceive them (because they steal their money or rely on their support to stay in power)
The public will only seek to learn and correct this problem after they have suffered much much longer. They can’t be bothered even years into this thing. Quite fascinating really.
–TZ
Jesse,
Good question.
Except for *maybe* LATELY (and we do *not* have any confirmation this is true yet on a sustained basis), silver -> FOLLOWS -> gold.
But, it follows it roughly 2x in BOTH directions.
I key my trading off of GOLD. This includes silver and the miners. If gold goes up, so will they. If it goes down, so will they.
(here is your point now…)
If gold has NOT broken out yet and is in danger of a correction, then silver is ALSO considered by me indanger of a correction due to it’s nature of FOLLOWING and not leading (this is now in question, but it is always dangerous to assume long standing principles have changed. The worlds money *IS* gold…it is NOT silver.)
Note as well that the break at 19.50 was a new high of RECENT, it was not a break of the all time high. Gold broke the all time high and not silver yet. It is actually arguable that silver is still TRAILING gold.
Thus…if (as I believed last week) gold had hit resistance as 1260 and would bounce DOWN for a multi week correction, then silver would have gone down too (with no real support until 18 – since it was in midair since having shot up from 18). And silver would have dropped 2x of gold if such a correction had occurred.
I will be getting slw and silver in future on the next pullback, but I will continue to key off gold.
-TZ
AngloGold issuing stock to buy back their hedge book. Gary, I am a complete believer in your long term thesis on metals but things like this worry me in the near term on the price of gold. Typically when these public companies release their hedges, its usually at the wrong time.
Nice post Gary. Falls right in line with what we all expect – The next “new” sector will really “bail” the US and the world @ large, out of which the next “true” bull market in equities will be born. That may happen when DOW/Gold = 1:1 as you expect. When is anybody’s guess. Maybe it is biotech, maybe it is clean, green energy or maybe it is desalination of water. Currently we fight wars over oil…who knows, if nothing is done, maybe @ some point in future, we may fight over clean water?
USD resuming weakness, apparently even the yen cant help it rally…sad.
Aaron.
Thanks TZ,
Certainly reasonable logic. I was keying off of Gary’s theory that silver leads in the latter part of the C wave. Silver breaking above 19.50 before the gold and HUI breakout indicated to me silver was leading as Gary proposed so I added leverage then in silver and selling more GDX leap puts. I also like the second level waiting around 21 for silver, I think it makes a nice setup for a layering trade.
I also made an earlier point last week that it is arguable that you can buy (or leverage) MORE gold and match or equal the performance of silver – possibly with less risk.
My actual opinion on all these, however, is that we really do want silver and SLW cause they will, IN TOTAL, outperform gold as this bull progresses to the very end. But it will occur with MUCH more volatility – hence the reason buying in ‘midair’ is dangerous.
Since I’ve been chasing, the safer entry for me now (after *SIX WEEKS* of gains) is to go with gold and pick up silver stuff on the next (possibly violent but likely short) pullback.
–TZ
Trying to time gold moves based on lifting of hedges by one company is going to be a waste of time. Timing gold moves is the purpose of using cycle theory. Right now gold is still very early in the intermeidate cycle but I think there is a good chance of a daily cycle correction after gold hits $1300.
The caveat though is a runaway move can overpower cycles and sentiment.
Gary is 100% right that silver spikes and outperforms gold at the tail of a C wave: That is actually one way to determine the top of a C wave visually.
–TZ
Carl Paladino
Christine O’Donnell
Ken Buck
Rand Paul
Sharron Angle
Mike Lee
Marco Rubio
I believe each of these candidates have won primaries on a platform of smaller, less intrusive government and greater personal responsibility. The majorities who voted for them clearly favored that platform and mindset in their elected representatives.
As I recall, ABX also spent a mint to buy back their hedges last fall.
Here’s the hit. They are trying to reverse the spike up from yesterday.
–TZ
Or big money is trying to scare nervous longs into coughing up their shares at lower prices so they can get in for the run up to $1300.
I really doubt this daily cycle will top before gold tags $1300.
The only reason Gold go up is UUP go down..so how low can uup go??
Last Nov. the gold moves came in spurts… I think the entire thing could be broken down to 7 days (days like yesterday), the rest of the time, gold either traded sideways or just a little down. Its beginning to looks like that again…
Aaron.
You might want to check the price of gold and the dollar from Feb. to mid June.
It kind of blows a hole in your theory that only a falling dollar is driving gold.
The problem is not that the politicians are stupid. It;s that they are not trying to solve the problem—they are trying to get re-elected. Even most of the guys who run on a “small gov’t” platform want to get re-elected once they get in and so take “bribes” (sorry, contributions) so they can run again. The politicians know exactly what they are doing. They are doling the perfect thing to meet their desire for power; it’s just that their interest and ours conflict. We want a gov’t that works and they want to get re-elected.
Peter Schiff has written an excellent book called, “How an Economy Grows and Why it Crashes.” It’s available from Amazon and comes in Kindle version too!
While the story has some cartoons in it, and uses a rather funny analogy of an island economy based on fish, some very important lessons are driven home. I wish every politician in America would read this.
The last bull market in stocks began in the 1980s with consumer stocks like coca-cola, not tech. This us because they were beneficiaries of falling commodity prices.
Tech underperformed in the 80s, then took off in the 90s.
As a general rule, value tends to outperform in the early stages of a secular bull market, and growth outperforms during the latter half.
Biotech may represent a baby bull in the new bull market, but I doubt it will be the leader.
Coca cola was certainly under priced at the end of the last bear market but it didn’t create the massive job creation that drove the economic expansion from 82 to 2000.
A secular bull market is always driven by a new technology that changes the world.
In the early 1800’s it was canals. In the mid 1800’s it was trains. The early 1900’s was invention of the automobile and mass production. After WWII it was electronics and plastics.
Gary, next bull market will be auto industry -:) — think how many cars China need?
DeMark, for what it’s worth:
S&P started today a Daily Perfected Sell Setup which is a 1-4 day reaction, so after Monday, stocks should be ready to attack and exceed that line of 1130. One trader I subscribe to says a close of 1135 and above is the all clear to buy.
Gold still in its 12-day sell period, which didn’t work yesterday 🙂
Silver strong in its weekly qualification.
Interestingly, Japanese stocks are on month 1 of a 12 month buy signal – monthly is very strong! Yen also getting close to a monthly buy. Silver weekly, Japanese monthly – Japan outperforms silver in one year??? pishaw! 🙂
Peter Schiff is brilliant. If you look at the old CNBC vids on utube, he is calling a crash of epic proportions and they all laughed at him. He thinks the next crash will be a currency crash, time will tell.
Not sure if you have seen his recent videos on the USD and the upcoming elections, but certainly worth a peek. go to the Schiff channel on youtube.
Peter
Hi Gary:
I know you prefer Silver over Gold right now but what about Platinum? Do you think it’s over-exposed to the auto market element or have you just avoided covering it since the only liquid way of gaining exposure is either futures or physical?
Thanks.
gold can hardly pull back. acts like it wants to go higher near term.
The auto industry is a very mature industry not to mention it is becoming increasingly automated.
China will certainly create lots of demand in the years to come but the auto industry isn’t going to fill in the gap for all the millions and millions of jobs that were lost when the tech and then real estate bubbles popped.
We will have to create an entirely new industry just like every other bull market in history.
Platinum has too much exposure to the auto industry. The fundamentals will be slightly impaired similar to energy for the foreseeable future.
The only two metals that are pure monetary plays are gold and silver. Even though silver does have industrial applications they are usually so small that silver is price insensitive.
It really will not affect the final price of a cell phone or computer if silver is $5 or $50. The amounts used are too small to matter.
New inventions in alternative energy could fuel the next secular bull market.
Gary, etal, the anti-government rant is getting a little old. Services provided by the government sector are not all wasted monies thrown into a hole and all monies generated by business, or lost by business, are not necessarily good for everyone. Of course, private business generates the driving force of economics, but the prosperity generated is well-spent on services that the public wants, but maybe forgets that it wants, like schools, roads, parks, social security, etc. While they may be much valid debate about how well the money is spent, what the priorities are, etc., blanketly vilifying government, just like blanketly vilify big business, really serves no purpose or moves us forward. Perhaps we need a new type of economy, one that isn’t driven so much by the manufacture of goods. In the meantime, while I don’t think the government should be spending beyonds its means, I don’t have any problem with the government harvesting the wealth generated by this country to provide jobs which will also lead to reigniting business activity. A point of view you seem to completely discount. We can still leave the rich fat and happy for all of you who think taxes will sap their motivation . . . as if we are all dependent on the rich to lead us and create jobs for us . . . what a ridiculous and shameless argument that is demeaning to all the hard-working and capable people out there.
The new big thing is coming, and it’s the electrification of vehicles.
The govt is merely trying to stop the bleeding before the next big thing takes hold. Without government spending and bailing out the dumb, there would not be the next big thing, not anytime soon anyway.
Best to watch how the Nissan Leaf sells when it gets in the marketplace later this year.
I think it will get swallowed up like hotcakes.
boom boom boom
A secular bull market is the result of undervaluation, not technology.
Technology has been developing rapidly over the past ten years, but the market has gone nowhere. Why? Because all that innovation had already been priced into the market when stocks were selling at 30 p/e.
Even if there is a biotech boom, that won’t impact the earnings of most compaies in the s&p. How will new drugs create an explosion in coke’s earnings, or alcoa’s, or intel’s? It won’t have any impact at all. What will impact them is falling commodity prices and absurdly low valuations, and the herd slowly coming back to stocks. When stocks are selling at 6 p/e, a new bull market will be born.
A secular bull market is the result of undervaluation, not technology.
Technology has been developing rapidly over the past ten years, but the market has gone nowhere. Why? Because all that innovation had already been priced into the market when stocks were selling at 30 p/e.
Even if there is a biotech boom, that won’t impact the earnings of most compaies in the s&p. How will new drugs create an explosion in coke’s earnings, or alcoa’s, or intel’s? It won’t have any impact at all. What will impact them is falling commodity prices and absurdly low valuations, and the herd slowly coming back to stocks. When stocks are selling at 6 p/e, a new bull market will be born.
To put it another way: are you really trying to suggest that the bear market of the past ten years was caused by a failure to develop new technologies? Or that if some new technology had been developed, the Dow would be at 40,000?
Technological innovation and value creation is a constant. It happens in both bull and bear markets. How that innovation is reflected in stock prices is what changes.
We are quite possibily in a classic, and repeated collapse phase of the US economy/currency. The leadership of the country, as in every collapse, are in reaction not proaction mode. If they face reality they lose popularity. Obama actually had a chance to pull it off as he was elected by an infuriated populace who appeared willig to take some pain in order to be treated to trasparency/truth, and a cleanse. Unfortunately for the future of our country’s economic and social health, he blew it; choosing instead to play politics, and appoint the same idiots who caused the crisis to drive the ship out of it. What a clusterfuck. Pardon my French.
This is why, as gold rides higher, and we all count our profits, I can’t really enjoy it. I know that gold’s rise is a symptom of the breakdown.
Mitch
Gary,
I am convinced that last Friday marked a daily low for gold rather than August 24th. Several characteristics of gold cycles strongly support this notion:
The first daily cycle within a bullish (right-translated) intermediate cycle typically runs long… often past the 30-day mark… and Friday was Day 31. The trend line off the July low was also broken during last week’s action, and a trend line break is characteristic of a cycle declines.
Furthermore, intermediate cycles that host parabolic moves tend to accelerate during the second and third daily cycles within them, so Monday’s surge is much more conducive to the commencement of the second cycle than the middle of it. Gold also ran into overhead resistance… the all-time high… just as the cycle peaked.
That first daily cycle tacked on about $100. Although there are now no overhead pivots to speak of, several consolidation patterns project a gold price of $1370-1400. Given that this second daily cycle should continue to see price acceleration, anticipating a $130-160 move off Friday’s cycle low during the current cycle would be reasonable.
Personally, I think the evidence toward this interpretation is overwhelming. However, if gold reaches $1370-1400 in the next 3-5 weeks, the view won’t even be debatable.
thedoc: you really think gold can go to $1400 by the end of next month? That seems like a bit of a bold prediction. Most money pros are calling for $1400 by the middle of next year.
Anon 1:04,
You are confusing a secular bear market bottom with economic expansion that drives a secular bull market.
Certainly this bear market won’t end until valuations become too cheap but just reaching bear market bottom valuations doesn’t supply the fundamental driving force to power a 20 year bull market. That requires a technology to come online. One that will ultimately impact almost everyones life like the personal computer and internet did.
Doc,
I’ll make you a friendly bet that we see an obvious daily cycle correction begin soon after gold tags $1300 🙂
The one caveat is if a runaway move is now in force.
Even if it is I suspect we will still see this next cycle correction arrive right on time. It will probably be the next cycles that will be distorted.
Perry,
Gold just added $100 in 6 weeks. Why should it require 9 months to cover the next $130? Yes, I think gold could hit the $1370-1400 range by the end of October. We are in the phase of the gold cycle that typically sees price acceleration.
I also believe we are on the doorstep of gold’s biggest parabolic run of the bull to date… a move that will probably only be exceeded by the terminal move of the bubble phase down the road. $1400 will look cheap by the end of this run.
Just checking in, and I see GaryUK and 950 boy got smacked again.
Can they ever do anything right? They should be banned just for crapping themselves every time they show up.
Gary,
Standard bet size? ($1)
If gold hits $1300 and then pulls back to the $1265 breakout level, you win. If it only pauses there and then moves on to tag $1370 before the end of October, I win.
What’s up with Justin? How convenient he disappears. Don’t worry, he assumes he’s made big gains. LMAO!
The bet is on, but let’s up the stakes. You lose you buy dinner the next time you hit Vegas, I lose and dinner is on me.
The only caveat is that we have to have Mexican. I’m addicted to that stuff 🙂
There is no question that in order to have a secular bull market commodities must be in a secular down cycle. But the fact remains that in order to produce the kind of economic expansion that will drive huge job creation a bull market needs a new technology to come online.
The computer was actually invented during the second world war but it didn’t reach the public until the early to mid eighties. It was that new industry that drove massive job creation and economic expansion and was the underlying fundamental driver of the secular stock bull.
BTW a big chunk of the gains in a secular bull come from P/E expansion.
You finally get tired of Applebee’s? Sure, Mexican sounds good. I wonder if we’ll have to use silver coins to pay by the time I get to Vegas again 😉
nice .. a little “action” on the site !! Should be interesting to see how this unfolds .. the tag and retreat or the touch and go ! Maybe you should get GaryUK to take the other side of the bet, we pull back from here … he can buy for the both of ya !
Either way, when this unfolds, you’ll have to post a pic of this dinner, and the loser should wear a tshirt that says LOST …
Peter
LOL I still hit Applebee’s but I always order mexican.
Gary & Doc,
Great stuff. How about another guess/bet on direction & price target of silver for the next 1-2 months.
Doc,
You sure you want to take that bet? The G-train has been unbeatable lately 😉
I’ve gone against my method by making a 500 share sale of QLD into the after market.
The QQQQ is extremely overbought here, and the Nasdaq has been up 8 of the last 10 days. This is actually more like a “throwing the maiden into the volcano” trade.
Common sense can be a dangerous thing in the stock market.
Gary, you don’t know how many times I’ve lectured this to my girlfriend. Spot on.
-Greg
Anon: I’ve been kinda hot lately, too, so, yes. The bet is on 😉
So much for the idea that the PPT is a black helicopter kind of theory:
Written in 2006:
hedge funds with $1.3trillion at their disposal.
The PPT was once the stuff of dark legends, its existence long denied. But ex-White House strategist George Stephanopoulos admits openly that it was used to support the markets in the Russia/LTCM crisis under Bill Clinton, and almost certainly again after the 9/11 terrorist attacks.
“They have an informal agreement among major banks to come in and start to buy stock if there appears to be a problem,” he said.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/2949861/Monday-view-Paulson-re-activates-secretive-support-team-to-prevent-markets-meltdown.html
Let the games begin.
I got two silver Eagles on the train 🙂
Welcome to POMO.
Fed prints money and buys treasuries from the Prime Dealers, who now have cash from selling the debt, to go and buy stocks at huge leverage.
No wonder the market still pops boners during POMO times.
You are right Gary, they should spend more time figuring out jobs so there is end demand and the rally will be sustainable, rather than buying stocks indirectly.
19th straight week of equity fund outflows, and the market goes higher. Money even coming out of ETF’s.
But no – this is all legit right?
HA
The markets are simply way too big for anyone to manipulate for anything other than the very short term.
The PPT is just a fairy tale used to scare perma bears in the deep dark night.
Look what happend when the SEC banned short sales on financials. It produced a violent rally for a couple of days then the banks turned and moved even lower than they would have anyway because there were no shorts to cover and put in a bottom.
not when its controlled in the futures markets where there is leverage.
think about it. $3 billion today made it into the PD’s hands. If they buy ES with that at 10-1 leverage, there is $30 billion of new money flooding in to stem the tide of retail money fleeing the market.
Thats about the equivalent of buying General mills every few days.
Plus the presidents own mouthpiece confirmed sch.
Then again – you are Gary, and you know more than most.
Gary deleted my post regarding the causes of the 80’s-90’s bull market for some reason.
I guess you’ll have to figure it out on your own.
It wasn’t Gary…It was the PPT
I actually didn’t delete it. I thought you did because I couldn’t find it when I looked at the blog. Let me see if I still ahve it in email if so I’ll copy and psste it back in for you.
Told you it was the ppt!
A secular bull market is the result of undervaluation, not technology.
Technology has been developing rapidly over the past ten years, but the market has gone nowhere. Why? Because all that innovation had already been priced into the market when stocks were selling at 30 p/e.
Even if there is a biotech boom, that won’t impact the earnings of most compaies in the s&p. How will new drugs create an explosion in coke’s earnings, or alcoa’s, or intel’s? It won’t have any impact at all. What will impact them is falling commodity prices and absurdly low valuations, and the herd slowly coming back to stocks. When stocks are selling at 6 p/e, a new bull market will be born.
To put it another way: are you really trying to suggest that the bear market of the past ten years was caused by a failure to develop new technologies? Or that if some new technology had been developed, the Dow would be at 40,000?
Technological innovation and value creation is a constant. It happens in both bull and bear markets. How that innovation is reflected in stock prices is what changes.
All I can say about the market is I had my wife’s meatloaf last night and look where it got us.
There has to be a better meal I can convince my wife to cook after a major move up for gold and silver.
Mexican may just do it….
GL,
Tom
G-Train keeps on chugging down the tracks.
I love getting paid, and almost no drawdown can take me out at this point!
Gary_UK, just off to bed.
Remember these words….
16/17th September 2010, the great crash of 2010 begins.
Plenty of technical reason why (nothing to do with coils though Gary).
The equity predictions Gary has made this week re S&P and Nasdaq will be proved to be quite laughable in a few days.
I also beleive silver will be hit hard. Maybe gold too.
I know you will mostly call me a permabull troll, but this is a warning, up to you if you heed it or not!
See you again when it begins!
PS…anyone feeling confident of a good jobs number tomorrow?
there hasnt been a good jobs number in 12 months … there doesnt need to be, havent you been paying attention?
Gary_UK
I take it you don’t go out too much with that big fat word IDIOT tattooed to your forehead.
Find another place to post your pathetic opinions.
i’m sorry, I have to post this. Our good friend, Gary_UK has gone into the blogging business. Here is the link to his site.
http://wealthadviseruk.blogspot.com/
I was reading his blog,and his background, and , believe it or not this is a smattering of his response to comments on this specific entry
http://wealthadviseruk.blogspot.com/2010/09/bollinger-band-is-pierceda-dagger.html
When asked why he felt the market would drop from its current levels to a 900S&P by November, his response
“As to catalysts for a 300 point fall? Well, what was the catalyst for the recent 100 point rise? Nothing significant I can recall!” – GaryUK
When he was challenged on such a ludicrous statement … this is his response
Very briefly though, if you don’t like my views, please don’t bother to visit, I wouldn’t miss you, you have a bitter and sarcastic tone
The irony of that comment.
Peter
GARY,
In regards to tonights report, comex futures OPTIONS expiration is monday the 27th. Not the fri before that.
http://www.cmegroup.com/trading/metals/precious/gold_contractSpecs_options.html#prodType=undefined
“…Expiration occurs on the fourth business day prior to the underlying futures delivery month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day….”
–TZ
Yeah I realized that right after I sent out the report. It wasn’t a big enough deal to send out a correction though.
If you are referring to FUTURES expiration only (and not options) the sept gc/si futures expire the 28th.
The OCT futures “first position day” is 29th; “first notice day” (of contracts exchanged) is 30th.
There is no option or future activity next week by my read.
–TZ
Having read through the comments, thought I would add to couple of thoughts.
1)Having been an elected official, I can tell you that some of the corruption crap is probably real, but the biggest problem, in my eyes, is that all the elected are mostly a bunch of do gooders. Some idiot comes to you with a problem, and instead of saying sorry not my mandate, you feel like you should solve it because you have power.
So the road to hell is paved with good intentions. As proof, look at how much is being spent on paving in the stimulus plan.
And this do gooding brings us to problem 2, which is helping the losers. I agree with Gary, all booms have been spawned by tech innovations which lead to productivity gains. This means, a lot of people get fired, and there is structural unemployment. Meanwhile the innovation leads to overcapacity and there is a bust. So then the do gooders get involved, and the problems really start.
Great site!
To anon 7:49 (the former elected official):
It really isn’t the case that most of the problems are caused by people paying more attention to getting elected than doing the right thing? It has always seemed to me that interest groups pull most of the strings. Witness the recent study showing that the vast majority of bills are actually written by the interest group backing the item. What level of official were you? (Mayor? County Council? State Legislator?)
By losers do you mean children? Old people? Minorities?
Or just people other than yourself?
anon 10:21pm,
Congrats, spoken like a true loser yourself. Do you really believe there are no losers in the game of life?
You better turn off your TV. It’s turned your brain to mush.
Wow need an Obama lover meter too? The PC crowd is coming out.
To be clear I think children are fat and lazy, and need to go to work on the farm.
Some minority groups are demanding, when the US is supposed to be a melting pot, not a nation of individuals. Which means minorities should conform to being American, not America conforming to minority differences. One nation and all…etc
The old people with kids clearly didn’t raise their kids right, allowing this PC bs to kill our society.
So I guess the answer is all of the above.
Well said anon@4:21!
In a squeaky little voice, “did you say ‘minority'”? LMAO!
Seriously, PC types are the only ones that vote for their own dispossession. Our media, controlled by a few, has quite possibly done more to destroy this country than even the banksters (inc. the Fed)
Well said anon@4:21!
In a squeaky little voice, “did you say ‘minority'”? LMAO!
Seriously, PC types are the only ones that vote for their own dispossession. Our media, controlled by a few, has quite possibly done more to destroy this country than even the banksters (inc. the Fed)
No, losers are the losers to the tech innovation. The buggy whip and slide rule manufacturers.
Of course they may be old, young or minorities, some may even be female visible minorities in which case we can really increase our stats by helping her!
“All governments can do is steal from…errr I mean tax it’s citizens and then throw it away on nonproductive make work jobs.”
— Like the government spend 10 millions $$ to hire more IRS to collect extra 10 million tax. Isn’t it smart??
How much longer can gold keep going straight up? This is AWESOME! 🙂
Gold is getting deep in it’s daily cycle. Start preparing for a corrective move soon.
Gary,
“Gold is getting deep in it’s daily cycle. Start preparing for a corrective move soon.”
do you have chart for this??
Anon 7:49
yes a lot gets written by special interest groups, probably laziness in a lot of cases, and partly out of technical expertise. Is this a good thing? No, but can you really find someone who is impartial and who has technical expertise?
The real fun is when you get a combo going, say building inspectors and plumbers working together to write a bill.
EMBEDDED!!!!
It was in last nights report.
What is enbedded? Gold or silver (or both)?
Hi Gary,
Should we wait for $1300 on gold and $21 on silver before lightening up leveraged positions or start booking from these levels.
10 dollars above an all time high, and we should consider it topping?
Hard to swallow…
Aaron.
Regarding Gary UK
We really should encourage Gary UK to post as it gives some of the people an option to take what he says apart
Personally I’m not going to do anything with my portfolio. I have better things to do than try to catch every little wiggle in the gold market.
If gold corrects a bit from $1300 it’s fine with me. We need to coll off sentiment a bit anyway.
Gary UK has the single worst record of any visitor here. Not only is he wrong, but immediately. Even Justin and Wrong Way TK can be correct for a few minutes sometimes. LOL!
have you been to his blog ? He is putting “whats left of his margin” on a 75 to 1 shot. what a wanker.
We’re not all like that here in the UK….
8)
Nahhh, I haven’t visited UK’s place. He’ll be back here again, like a parasite/host relationship.
Can you imagine how unbearable he could be if he actually made money? 🙂
If everyone is so upset at our politicians why not go donate to Senator Jim DeMints Senate Conservatives Fund, which supports Tea Party Candidates, instead of just bitchin’ all the time.
We made it though the 24hrs after the gold spike on tues and didn’t retrace or collapse down. The strength up now continues and I agree with gary that this thing seems at least headed to 1300 (and a buying spike at that round number) before we get any sort of possible correction. (All the call option writers are having to continue covering and hedging their positions – like a short squeeze).
PS: I liked the silver cup formation this morning that is breaking above just now so I got some silver futures for a short term trade (very small stop loss). This thing will likely keep ticking up until we spike through whatever level will bring a buying capitulation. Might be 21 or not, but I’ll let volume and action be my guide. So far it isn’t yet.
–TZ
indeed gary, 50% of your taxes goes to unproductive features called the military, causing a huge deficit, and absolutely not productive. A lot of the stimulus money goes to infrastructure, which is very needed in this country, as most repair works has been delayed for years under previous administrations. Repairing and building new infrastructure is productive. It is no solution for unemployment in the long term, i agree. Besides, we should go back to he tax structure at the end of the reagan years, Taxes were higher than now.
Possible sell signal. If the Dow closes up for the day (without a big rally–75 points or more?) I will get a sell signal which calls for an immediate 1%+ down move. The last six signals posted here have been good for 165 points or more each, but frankly the system isn’t that good–it’s a little better than 80% right—so maybe a miss is due? Or maybe it’s matching the market internals right now? Anyway, an up day will do it. There are lots of other things begging for a decline here, so I will trade it in some size.
Up to 1300 (and 21 silver) in the next few days then down for comex options 10 day from now would work about right I guess.
Buying silver at this level (in any sort of size) hanging up in the air is mostly stupid. My stop is almost nothing and this is only a small momentum play. A person I know who was out and watching things bought this morning. And of course I bought gold recently on Tues. There are a lot of chasing weak hands entering the mkt who will likely get punished soon. I may be one of them
–TZ
I agree with anon about the military. Not only unproductive, but destructive and making us enemies all over the world.
Troops home and on the border takes care of two problems, as well as keeping our military at home to defend, which is the original purpose. How can anybody justify we’re “defending” ourselves by killing brown people all over the Middle East. I swear, our gov’t is run by Israel-firsters, and the wars are for Israel’s benefit at our expense.
How come dual-citizens can hold gov’t positions in the US, that is, if the other country is Israel?
Hey anon at 8:27-
Let’s fuck up a really nice financial blog with politics. Plenty of people here like the projection of US power abroad, and are grateful and happy to have allies like Israel who act to help us regionally. Not everyone is a US apologist like our current CinC.
Hope we can get back to PM’s
First, this was a political post, so read it again.
Second, the US is in a one-way relationship that benefits Israel. We get absolutely nothing except a black eye, big expenses, and our troops in body bags.
“projecting US power abroad”? In case you haven’t noticed, we’re not looking too strong these days. We haven’t even left Afghanistan after 10 years and billions of dollars.
If you don’t want to talk politics, don’t comment on them and then tell others to get back to PM’s. Nice try.
I think that a move right through 1300 would leave a ton of people behind… too many traders are expecting a dip and a retest of the 1265 area… me thinks, it wont happen this time. Options expiration has become a joke, with everyone expecting declines, when too many people play one trade, it stops working as well as it should. I think it fails this month.
Aaron.
Btw, Israel’s economy is doing fine and we still give it roughly $10 million/day. It’s also the only country in the Middle East with nukes (lots of them).
anon@8:32 says
“Plenty of people here like the projection of US power abroad”
Nice of you to speak for others.
Hey anon at 8:37: ok
Go Israel.Go America.Go Conservatives. Go PM’s. Screw Obama. Screw Libs.
You’re getting better, but don’t forget screw neocons that support Israel too! 🙂
We can agree on the PM’s, however. GO PM’S!
Ooops! I think I made a wrong turn. I was looking for the blog to help me ride the gold bull. I think I lost my way…
Take the bull by the horns!
Aaron,
> me thinks, it [dip] wont happen this time.
🙂
NO comment necessary.
–TZ
Gary,
I came into a few extra bucks unexpectedly, and would like to add to my gold/silver. I’m a sub, and know what you’re expecting to happen, but would you just put it to work today and forget about it, or wait for the anticipated small pullback in the next week or two? I don’t usually like buying into up moves, but maybe I will try something different this time? It will amount to 15% of total holdings.
Thanks
It is interesting to see the lack of compassion in the comments on the unemployed.Many of you know friend who have lost their jobs through no fault of theirs. Technology change and their jobs went away, what is the Govt to do? allow them to resort to their basic animal nature where only the fittest survive? The govt have s responsibility to uphold law and order too and when a man cannot feed his family he will resort o any means necessary. Providing temporary jobs to repair road, schools etc may not be the best long term solution but certainly better than allowing civil disorder to prevail like post Katherina New Orleans.Unbridled capitalism is not the answer, the State has a role to play in the economy, the question is how much and when.Please don’t treat the unemployed as nameless stats.
Did Obama get a subscription and tell all his friends? Or is Ben drunk posting again?
Gary UK should take the rest of his money, send it to Gary in Las Vegas and he can go to the local casino and put it all on red 10 and maybe he will make 100-1.
To the Statists…just because people think the government and especially the Federal Government are the most incompetent humans residing in America, doesn’t mean people don’t have compassion for the unemployed. You are confusing two issues. The “government” is just humans like the rest of us, except they are thieves and liars that are well dressed and have nice haircuts. And please you Statists..do not be fooled thinking the government cares about the poorest in society because that is just not true. No one gets screwed more than the poor by the government…no one. Because if the government did care, then all the multi billion, trillions and quadrillions that have been confiscated from people over the last 100 years would have eliminated poverty…but it didn’t and never will. In fact, the government welfare programs are designed to pay people to stay poor.
Good one Nat. The naivete of people who support the state in this manner is just appaling. Blind as bats.
Sell looking good! Now if the Dow can just close up…
Mini crash is coming.
DG,
When the S&P is up between 3% and 7% since the last option expiration, and the S&P is up 1-2% on the first 3 days:
For all months since 1970, options expiration Friday is 13-8 up to down days.
Triple witching Friday is 4-4.
September options Friday is 2-1.
FWIW
Gary, SPX forming coil for past 4 days above 200 d MA? Can break either way @ this time I guess?
sellllllllllllllllllllllllllllllllllllllllllllllllllllllllll
Shorts getting squeeeeeezed!
AAPL running, taking the QQQQ with it.
AAPL is about 20% of the Q’s.
Yeah, Wes, I look at stuff like that too, but the signals usually trump everything else.
http://www.guardian.co.uk/world/2010/sep/16/four-million-americans-poverty-one-year
And still we fight 2 “wars”?
DG,
Did you get short yet, or is it to be done at the close? I might like to join you on this setup, at least for a day or so.
DG,
I don’t trade on it either. Just put it up for information.
Looks like my “strong market” indicator is no longer in effect.
Stocks go positive!
Gary,
Can you put a probability on a pullback on gold and silver in the next 1-3 days? Is it around 50-95% likely? Or can you even go deeper and give separate probabilities on different retracement levels?
-Robert
Robert,
We have the signs that a runaway move is in the making. One never wants to lose their position during a runaway move.
I will say that gold is going to move into the timing band for a daily cycle correction soon. So the next swing high should mark a short term top.
If you have some leverage you might take that down but one is taking a big chance if they lose their core position.
I often do it in the after-market to be sure I get the signal, which I did. I shorted SDPY’s and Q’s—about $200k, so not huge but enough to care! Signal should play out within five days maximum.
Out of silver futures. Up wedge on the charts, only 20 cents from $21 (where I think it will start pausing), and (as gary says) getting close to timing band for a pullback (which I thought would be sooner, but was wrong). Anyway, I’ll stick to holding the gold I bought morn of tues, but I don’t feel lucky enough here to play silver.
–TZ
I didn’t take the trade but think you’ll do well, DG. Good luck.
If the AH action holds up (boffo earnings from ORCL and RIMM), Gary_UK’s puts on SPX could very well expire worthless or close to it. Barring a total collapse before the weekend, that will be an expensive couple of days.
I point this out not to pile on his case (however much his comportment on this board might warrant it), but to highlight what can happen when total conviction meets supercharged leverage. If it could smoke pros like Livermore and Meriwether, it has no trouble doing the same we home-gamers whose enthusiasm outweighs our talent and experience.
I did try repeatedly to warn him that he was running the risk of making a catastrophic mistake by not waiting for the Dow Theory sell signal.
DG,
I’m going to hold my core long position in this market, having already sold 3250 QLD at lower prices. Surely you will get a down day sometime in the next 5, and hopefully from a good level.
You will be helped (maybe) by Cramer advising his followers to sell half their AAPL at the open tomorrow. Of course, many people favor fading Cramer.
I’m still thinking maybe we’re going to be in a runaway stock market to the upside, but you certainly have overly bullish sentiment on your side as well as overbought.
Good luck.
Whatever happen to the idiot who said silver never moves?
Missed that one by a mile! LMAO
I dont know why you guys feel bad for him (Gary_UK) … he came here, puffed out his chest like a peacock, and got his head handed to him like a chicken. at least if he was somewhat civil in expressing his views but he was a cocky little B****. Personally, I think you were all a little too gracious to him … to think that wanker has a blog and people will actually pay attention to him. Scary.
Peter
TLT/IEF had eye-popping volume today. TLT also closed below the 50dsma and traded entirely below the trendline covering the move from that major spring low.
Capitulation or an acceleration of a true change in trend/money flow? If the latter, retracements in equities might be that much briefer and shallower. Coupled with dollar weakness, it’s hard not to stay long the PMs, so I don’t expect to try for a while.
Jim Willie-Always a fascinating read!
The Ominous Silent Canary
SLW-
What a stock. In a beautiful rising channel that’s target appears to be infinity! 🙂
Notice the 13 Weekly EMA is great support and would be around the 22 zone, the 34 Weekly EMA is right at channel support and the break out above 2008 highs. We are breaking above the channel now, let see if it can hold for the week! If not, we could see a dip back to the 13. I’m not betting on the 34, but if it gets there, back up the truck time.
SLW
I’m about half expecting a corrective move once 26 is reached. SLW is getting a bit stretched above the 200 DMA. 4 points above the prior consolidation top was the extent of the last breakout also and would be this time too. 22+4=26.
You guys trying to slice hairs on SLW moves now? Just hold until we have an indication that gold’s intermediate cycle is peaking.
Exactly right 🙂
Jayhawk … i dont know what to make of SLW … maybe you can plot this on your chart and give me some thoughts. using the Fib ratios, End May low of 17$ (0%) and the end june 21.89$ is your 100% ratio … well, if you are looking for an upside target, you go to 161.8% which is equal to 24.96$. Well, we came pretty close, end Sept. 24.72$. Todays candle sits right on top of that 161.8% fib line.
I totally agree, we just broke above that channel going from the June 21st high 21.49$ extending to the mid sept high of 24.72$.
Definitely interesting if we pop again, and start a new rising channel. then we wont see 24$ again for a while, no ?
Well at least we know one of the buyers of gold in this runup. Anglogold is in the proces of eliminating 2.4 billion in gold hedges. You would have thought the Ashanti disaster was a good lesson to totally eliminate forward hedging.Ya gotta wonder if John Paulson is actually frontrunning his big position in Anglo by going long futures, and the investment banks who are aware of the position of Anglo’s toxic hedge book doing the same.
Frank
To the Statists ragging on Gary about digging holes and filling them in…read and weep…
“Audit of Federal Stimulus Funds in Los Angeles Shows $111 Million in ARRA Grants Has Only Created 55 Jobs”
http://www.huffingtonpost.com/wendy-greuel/audit-of-federal-stimulus_b_719817.html
Wow what a great return on that investment. If this is an indication of how Government will spend the wealth they confiscate from the people, we only need about 100 trillion to get the jobs back we lost in last few years. Might be easier to just send people checks.
Nat,
You definitely are making me think twice on taking profits on my SLW gains. I don’t want the jackasses in Washington taking my tax dollars and filling holes with them! Shit, I’d rather ride a D wave!
Justin,
Now that gold has clearly broken out and the dollar is stuck below the 200 DMA and bonds have sunk below the 50 DMA which is threatening to turn down and stocks are clearly making higher highs and higher lows, at what point do you admit that every investing strategy you’ve been operating under is wrong? 😉
Thanks for your good wishes, Wes. I’m nervous about the short I just put on…which is actually often a good sign. Even I can’t emotionally believe the market can go down at this point. Stepping back and analyzing, I do think we will take a hit, but I also use tight stops so I need it pretty soon. Futures are up a tad so far so we’ll see what happens overnight.
GARY,
What is a “half cycle low”?
Do you mean a DAILY cycle (assume a bull mkt) where the low is in the *middle* of a larger intermediate cycle?
-TZ
The stock market usually has a mini correction within the daily cycle that tends to occur around day 15 to 20. The half cycle low.
” My best guess is that it will come out of the biotech sector.” BINGO!! Great post sir.
Don’t look now but there goes the dollar. Below 81.
You sure you don’t have a cryatal ball G-train?
Goerge Soros recent comments on gold:
“Well this is a period of great uncertainty so nothing is very safe”
“Gold is the only actual bull market currently, just made a new high I think yesterday. In the present circumstances that may continue. Although, it will be very interesting to see whether there will be a decline in the next few weeks because practically everything that makes a new high almost immediately afterwords reverses and disappoints the bulls”
“But I called gold the ultimate bubble, which means that it may be going higher, but it certainly is not safe, and it’s not going to last forever”
George is also long gold and would like to scare retail traders into selling their shares to him at cheaper prices.
In inflation adjusted terms gold would need to trade above $2200 before it would even match the 1980 price.
It’s not possible to have a bubble when an asset isn’t even trading at new all time highs.
We have a long long way to go before gold is a bubble. Just ignore all the shennigans and nonsense put out by the media and keep your eyes on the goal.
George Soros (real name Schwartz) is a convicted felon. Best to fade anything he says, so higher prices to come!
New DX low on 90 min chart, on extremely light volume this AM and then a strong bounce, looks like it wants to keep hammering out a falling wedge that may still be in formation till next week unless it BO today.
Frank
Dollar bulls are regretting they ever read Mish. LOL!
Mish is always arguing that high unemployment, low wages and deleveraging is stopping consumer spending and therefore we will have deflation.
The thing I believe is that there are many ways to get inflation. with little or no consumer spending. All the govt needs to do is to print money to pay back debt (e.g. Zimbabwe) and you get inflation.
And rather than think in terms of inflation (which has various causses and can appear in various asset classes) as the fundamental case for the gold bull, I prefer to think in terms of Govt Debt and the choice between Debase or Default. I think in terms of currency crisis.
Mish has focused on the wrong thing IMHO.
Somebody drag Justin out from under that rock and make a comment.
Long live the G-Train!
Justin is too busy ignoring price action in the dollar.
Hi Anon 5:35,
Like you I am a very satisfied subscriber (I assume you are that is). I follow Gary’s advice and so far it has paid off handsomely. I am looking for more to come.
But shall we lay off Justin? The guy may have suffered enough. I do not know Justin any better than you but let’s give him a break shall we? 🙂
But that GaryUK guy, now that is another matter…
I’ll be happy to bash Gary-uk. Nothing is more satisfying than rubbing that idiots face in the dirt. LMAO
I agree GaryUK is the worst, but surely you think Justin would share his “professional” opinion rather than just run away never to be heard from again.
After all, he was talking like he was somehow already more profitable than everybody that subscribes to Gary, even though he never saw profitability. I don’t see why he didn’t continue, as nothing changed and he’s still losing.
Come on, short stocks the last month+ is just pathetic.
I have done my fair share of bashing on this blod but at least you can reason with Justin and he wants to have a dialog. And at least he acknowledges where he may have gaps in his understanding.
But GaryUK justs shoots of his mouth in a cocky manner so sure he is right. He does not engage in dialog. He does not acknowledge he is wrong. And he is disrespectful.
I hear you, but where is Justin to have the dialogue?
He didn’t offer any respect or kudos to Gary, and yet accuses Gary of being married to an idea, while that’s exactly what Justin was doing. At least Gary was married to the right trade. Since he was just here to impart his “knowledge”, but not learn, he was a detriment for those that want to stay focused. That’s my point.
GaryUK just pukes all over himself every time he opens his mouth, so at least we get entertainment value! 🙂
Well, the last time we had the dialog on this blog we clarified the USD 3 year cycle misunderstanding Justin had. Can’t remember when though. I pointed out that the high of the last 3yr USD cycle has not been exceeded.
And in his last post I think he acknowledged that he misunderstood that point. Essentially, I take that as an admission of his error. That is good enough for me 🙂
But when trolls are insulting, profane and cocky, I have no reservations in bashing them back (you can see my responses on previous posts).
Sprott’s PHYS gold fund down due to more shares being issued really frosts my balls.
According to Jason at Sentimentrader.com gap ups on expiration day have a very strong short-term negative bias through Monday’s close. Works for me!
So does this recent move qualify as being in a runaway move yet, or is it still to be determined?
Sure feels good.
Silver’s chart really is something to behold. I’m itching to buy into a 2-3 day pullback if it happens.
Another thing GaryUK does is delete comments on his blog from people who challenge him. Perhaps you should all pay his blog a visit ?
Peter
What is it again? I suppose I’ll give him a visit.
Wes, remember my signal is only good for a short sharp move. Doesn’t mean we can’t do more but after down 1% or more, you’re on your own in terms of your buying your QLD back. We’ve now had our gap up and fade…look out below! (I hope).
DG got a hold of this one.
🙂
I suspect Jason’s historical data will be worthless right now. If the dollar breaks through 81 the market is going to break through 1130.
That’s the one drawback to Jason’s historical comparisons. He doesn’t take market correlations and cycle theory into current setups.
DG,
The dip buyers have been quite active on this move up. Just when things look like a nice move down is shaping up, they show up again.
As the indexes move into positive territory for the year, this should intensify as performance anxiety will take over.
The S&P did make a slightly higher high this morning so officially the 1-2-3 reversal is confirmed.
Told you mini crashing coming.
Yes, I agree, which is why I really don’t know if I am going to hold my shorts or not. The only short I am enthused about is GE, which I just re-did (for the fifth time) this morning at 16.38. The rest—well—I don’t know. I see good reasons for being either long or short and will probably just go flatish (except for PM’s of course). Give me that one down 150 day first though!
LMAO Dude you’ve been calling for a crash for the last 2 months. How many times are you going to stick your foot in your mouth? You’re record is possibly worse than Gary-UK.
Isn’t “mini crashing” an oxymoron?
Anyhow thanks for the heads up, I heeded your advice and it saved me huge sums of $! What would I have done without you!
I get the feeling the dollar is headed to 80 by the Fed meeting. Then it bounces no matter what the Fed says. Ultimately though the yearly cycle low is going to drag the dollar back below 80.
DG,
Is your 1% move lower in the index from the highest point today, or from yesterday’s entry? Just curious if it means to take profits this morning into the swoon or if lower prices projected? Looking good at the moment.
The 1% is from the previous day’s close, which is when the signal is generated. On rare occasion’s one major index will make it and not another (I have seen times when the Q’s, for example, are down 1% during the day but the SPY’s never makes it and then we reverse higher. Annoying, but that’s the way it is. Again, this is a rare occurrence.) Hopefully this one will not be close or ambiguous.
One other comment on the system: The exit strategy is weak. Backtesting shows that 5 days is the optimal holding period. That is, if you hold exactly five days you maximize your gains, whether a buy or a sell. But that seems like data mining to me. There obviously has to be some optimal number of days—why five? That number may have absolutely no predictive value. I kind of made up 1% because the system is based on things getting out of whack and it seems to me a 1% drop addresses the out-of-whackness and allows things to ‘reset.” Give me an accurate prediction of a coming 1% move and I’ll figure out how to make money off it.
DG:
Part of the reason is the futures options expiration and the futures expiration. Today ES 09 closed and near the expiration there is a lot of noise and wild moves just prior to open. Typically the moves pre-market is in the direction of the current trend since that is where the people who are hedging their books have the path of least resistance.
Once the market opens and it tries to find its true value, which often below the level where it opened. And a gap-up followed by a move down will trap traders. As the day wears on, the op-ex hedging starts coming into play which does not let strong new trends to develop.
The DAX had an outside reversal day today.
I feel that any major move has to wait till the FOMC is out of the way. Last time the FOMC hinted at QE resulting in a bounce which was sold the next day. This time they may not hint at it strongly, resulting in a sell-off which will then reverse and then take out the resistance as the market follows its natural path (which seems to be up).
Gary:
Regarding Jason and gap-ups and cycles. I think you are mixing time-frames. Cycles are much longer time-frame than a two day pullback which Jason’s data is suggesting. They can mutually co-exist without one invalidating the other.
The Euro also is weak today. The expectations of QE2 may be deflating a bit going into the FOMC.
*** GOLD HEARING ***
Anyone know why Congressmen Weiner and Waxman Set Gold Hearing? I don’t trust the government on this as they’ve been hinting that peoples 401k and IRAs will have a chunk rolled into long-term treasuries.
Anyone concerned? Hearing is 9/21
Not really. I’m just observing that the dollar appears to be in a failed cycle. The next obvious support zone is at 80.
If 81 breaks it will be a storng signal that the BOJ had no effect on the dollar’s daily cycle. Premarket the dollar did break below 81 and the futures were up strong. I doubt that will change during market hours. If the dollar breaks back below 81 then I’ve got to think the market will break through 1130.
Most likely we would then see a weak bounce off 80 again. That should correspond to stocks moving down into the half cycle low before the dollar rolls over for good and the market heads back up..
I subscribed at the beginning of September but my investments haven’t doubled yet, am I doing something wrong? Just kidding, thank you Gary for all your hard work to help out clueless people like myself.
I’m looking at the latest buying on weakness figures and it looks like staggering amounts of $ are flowing into a diverse set of bellweathers: AAPL ($665), XOM ($408), MSFT ($295), JNJ ($239), CVX ($232), JPM ($231).
I don’t track these figures enough to know if this means anything, but my sense is that either this points to a broad-based market rally or flight to safety reallocation of some sort. Or perhaps it’s position taking ahead of earnings season in light of last night’s ORCL and RIMM performance.
This comment has been removed by the author.
Anon, this is most likely a quad witching phenomenon which is today. Dealers re-balancing their books. That being said any smart guy/gal know if these numbers are normal for quad witching?
Without the SPYDER’s I don’t think it’s significant. I saw this once before on the selling side but no Spyder’s and it turned out to be nothing.
Ah yes, quad witching day. Forgot about that. Been too focused on PMs and trying to keep my hands off the stock market!
But look at the selling on strength on the Qs.
I believe those major BoW/SoS numbers are not atypical for a major OPEX.
The Q’s have no predictive significance. Only the SPYDER’s are relevant and even then they are usually early.
QQQQ SoS is too low to make a difference. I saw similar figures all week long and late last week ($50-100 intraday). It disappeared by end of day, and the market continued to trek upwards obviously.
Regardless, I think Gary is right that SPYs are the only useful indicator of smart money flows into the broader market.
Though I do recall Gary mentioning, and I look back at the historical data to Feb 2007 just before the big swoon and their was lots of SoS on the big DOW type industrial names in the middle of a random week not related to Opex. I guess this action today is Opex related.
As an aside, someone mentioned to me yesterday that Union Pacific Railroad (UNP) was a good “tell” on the market as far as cycles go. You can do a comparison with the SPX/SPY and see it shows good support and even a bit of advanced warning on things affecting the general market.
Nothing is perfect however so I would not just use this alone!
Gary_Uk here, trying to help equity traders, or anyone that invests in equities.
Today was Quad Opex, the market was held up overnight to allow the big banks to sell out their holdings acquired over the past 2 weeks.
Today is the key reversal day, a throwover top, and gap exhaustion too. There are now no buyers left, just retail guys holding the bag, poor guys are about to get crushed to oblivion.
Gary and I agree on The Fed’s agenda..the Fed is out ot make profits for the banks, nothing more, it needs to engineer another QE2 ONLY to engineer more profits for banks, and eventually (but way way down the road) some high inflation to try to inflate away the debts. Gold will do great in the long run for sure.
But, despite me being in the UK, I think the Fed have 6 weeks to engineer/allow a collapse,as they have their 2 day meeting early in November.
Why then? Because they need to get it approved and in place before the mid-terms, when the new politics starts (finally thnkfully US citizens have started to wake up to the evil ways of the Fed.
SO, they have to act fast, we know they can take it down with ease, so just watch it happen.
Technically, the market is hovering below a key resistance line going back years, that is at 1130ish currently, and the 50% fib level (of the 2007/09 drop) just below.
Once it gets back below 1122ish, it’s away we go, and that shoud happen tonight or Monday.
Let’s see.
Weiner, a low-life congressman from Queens, is on a crusade against Glenn Beck. Apparently, a gold coin dealer called Goldline advertises on his show and charges a large mark-up for its coins. Unfortunately, some people are stupid and don’t shop around. So the good congressman is going to protect us. Of course, he also thinks that it is a terrible thing to buy and own gold.
It does not have any broader implication on gold ownership — yet. It’s bad enough that it is treated as a “collectible”.
Gary_UK,
Don’t take this wrong, but you’ve been sort of a windbag.
Gary-UK,
Sheez, just like a broken clock. You’ve been saying this same thing yor months now. At what point do you give up?
Gary UK
Or if not today or Monday…
Tuesday or Wednesday?
Thursday or Friday?
Monday or Tuesday?
Any good lottery numbers for me to play while I wait for the crash? Maybe I can get rich that way?
Well, Gary_UK, you certainly sound convinced. You certainly sounded convinced yesterday that today would be the great woosh down, so much so that you bought puts with one day of time left on the clock.
So now you’re convinced it will be Monday, latest.
Markets go up and down, but to expect a 300-handle collapse based on a few resistance lines and a dorm-room theory of the way the Fed operates seems a thin basis for a real-money commitment.
You might be better served waiting for *actual* weakness beyond the usual backing and filling of a rangebound market before taking another leveraged flyer.
I look forward to your next lecture.
uh, hey everybody, UKGary here .. whatever I said last week, and the week before, and the month before .. um .. yea … ditto.
this time is really, really your final, absolute last warning.
I mean it.
SD
This one is the double secret warning 😉
TommyD,
There’s news out about our honorable men of the republic having a hearing regarding gold dealers on Sept. 23. I’ve seen nothing about a hearing on the 21st.
http://seekingalpha.com/article/225579-congressmen-weiner-and-waxman-set-gold-hearing
Anything these clowns do concerns me.
SLW puts expiring worthless. Out the gold futures I bought on Tues (made 3x the cost of the slw puts).
I’m gonna be a bit controversial here, but I see too many indications this week that it’s time for gold to pause and correct. No, I’m not selling my core – the gold futures were highly leveraged with only $20 gain. More comments later. (And yes…SLW still looks vulnerable for a drop to $22. I think gold could go 1230-1250.)
–TZ
Ok, so if gold drops to 1230 that’s a 3.5% decline. BFD. The whole point of Gary’s analysis and blog is to RIDE THE BULL. Just cause the damn thing stops to take a shit once in a while doesn’t mean we should hop off.
Your micro analysis of the expected wiggles is tiresome.
So TZ and Gary calling for a pullback next week. I say the exact opposite happens, and we go above 1300 before any pullback …significant ones anyway.
Anyone with me? 🙂
Aaron.
I think there’s little chance of gold rolling over into the daily cycle low before it tags $1300.
I really don’t expect a top before the dollar tests 80 again. That may be gold at $1300 or it may be $1325.
There’s no need to worry about a correction that will likley last only a few days anyway, and will be extremely difficult to time the bottom.
I shorted more Q’s at the close. I figure if they can’t get past 1130 they’ll take ’em down and try again, and Monday is post Opex Monday.
Fine!
TZ you are on your own 🙂
Aaron.
Any currency guys out there? The yen broke down below a long and well-established trendline. I’d like to short it on a bounce up towards that trendline. Any trading thoughts? (Not macro thoughts about Japan and their fiscal policy, but trading tactics and thoughts).
Anon,
Your “BFD” 3.5% is a significant amount to me. I’m not playing with pocket change. When I say large or leveraged futures you don’t seem to realize what that means.
As for my reasons to close the leveraged trading part:
-I finally bought this week after waiting a while (sign of buying capitulation?)
-Two other people I know who were waiting also bought.
-Even gary seemed susceptible after sending a latenight email saying “Runaway imminent!” this week.
-Lotta buying on that spike above 1260. 25,000 contracts just on that move. Ready to be retraced into.
-Fed next week.
-Comex options ex following monday (1250 on gold looks to be sweet spot)
-Gold exactly tagged top of wedge at 3am last night.
http://img525.imageshack.us/i/goldpic.gif/
(you have to angle the top line up a bit to touch the high sticking above it; the draw on this chart is lower)
-SLW massive momo exhaustion pattern still in effect (although it didn’t break early enough for me to profit from puts). Target about 22 or around 15% lower.
This is about probabilities. I think the probability of things well lower in the next 8 days or so is substantially greater than a moonshot at this point.
Have a good weekend all. The game will continue next week.
–TZ
Gary,
Wondering about your concern with regards to BOJ move. They are adding money to the system, they are not sterilizing it.
This should be inflationary. The currency cross should be secondary? No?
Thanks!
I was never under the impression that the BOJ move would have any lasting effect on the dollar just that the market might use the news to form a slightly stretched cycle and cancel the current phasing.
TZ,
The thrust of Gary’s advice is that a 3.5% correction is just that, a correction, and ought to be ignored because it will look like chump change compared to the gains to be made in this gold bull market. If you can’t tolerate seeing your account take a temporary dip, you’re in the wrong place. There are PLENTY of sites out there that trade every little wiggle, some profitably. This isn’t one of them.
Oh, and Gary has said many times, in no uncertain words, that he thinks it’s a bad idea to go full retard with the leverage. That’s not his schtick here.
Again, there’s lots of futures and options sites out there. Maybe you can find a home at one of them.
TZ and Gary might approach the market differently, anon, but I don’t think that’s a reason to try and drive him off. He’s been a valuable and interesting addition to the conversation, imho, and just because he trades more and employs leverage isn’t a reason to shut him out.
Euro isn’t weak.
Euro just closed a “8 day” cycle.
please look at this image:
http://img213.imageshack.us/img213/3108/eurocycles.jpg
There are four cycles, lasting from 38 to 42 hours, starting from 9/9/2009 9:30 (GMT+1).
Every time a cycle close, it cross the SMA of the cycle itself. It will sometimes slightly cross it, usually it bounce on it.
The 4 cycles start are marked by a blue arrow. You can draw a trendline between them.
Crossing of this trendline from above is the “close long”, and if you are brave enough to go against trend, the short signal. Bouncing or crossing the SMA of the closing cycle (red arrow) is COVER signal. Crossing again the faster SMA will be the LONG signal.
i usually DO NOT long on bounce, you can’t know, but only guess, that there is not a higher cycle closing.
That is the situation as i see it: if on Sunday night EUR/USD do not cross again the 320SMA on 15 min timeframe, Euro will start the second “8day” cycle, fist daily cycle, second intermediate cycle of a yearly cycle.
What does it mean? It means about (a little less) 4×40 hours of rising almost without retracements. Only a european nation’s bankrupt can stop this. The target i have for this intermediate is 1.39-1.40.
By the way: if you turn your screen 180°, you can almost see the USDindex graph 🙂 but i think EUR/USD is easyer to track and to work with.
Hmm.
There are numerous places where the Lower Bollinger band was touched. Mopst of them just signalled a continuation down.
You’ve also drawn your trend line incorrectly. It shoul be drawn from the Dec. low to the April dip. We now have a broken trend line and an ongoing 1-2-3 reversal. So far the bounce to test the highs has been very weak. A move below 80 will confirm the trend reversal and the dollar collapse will be on.
Gary has made available for free his “mission statement” from the June 28th newsletter. Here it is in case anybody needs to refocus or be reminded of his objectives at this site:
Let me say this again for any new subscribers and for those that may need reminding. My main goal with this newsletter for the next few years will be to keep investors focused on riding the secular gold bull.
Most of the time that is going to be boring as hell. There just isn’t going to be anything to do for long periods of time as we wait for a C-wave to run its course. I think most of us have learned our lesson by now that trying to trade the volatile PM sector is mostly a sure fire way to underperform if not actually lose money. I’ve been doing this for a long time and I can tell you unabashedly that I can’t do it. Every time I think gold should pull back it rockets higher. And just about the time I’m convinced it’s ready to soar we get a correction. Support levels get broken only to recover. Breakouts sometimes follow through and sometimes not. A precious metal bull will do everything in its power and violate every logical technical analysis to shake people off. Like I said, virtually untradeable unless you happen to be the luckiest person in the world. And even if you are that person you will never reap the full glory of the bull simply because trading strategies demand strict risk control and limited position size (even smaller than normal due to the PM sectors volatile nature). That unfortunately isn’t a recipe for huge gains.
What I do know is that if you can ignore the wiggles and forget about trying to time moves you will make a load of cash during this bull. So my main focus will be keeping as many people on board as possible during C-waves. If I think a C-wave is coming to a close I will do my best to exit. Subscribers can choose to follow me or not. It really makes no difference as you can buy the very top of a C-wave and still do just fine during this bull as it still has a long way to go.
Gary_UK back again.
Firstly, I acknowledge that my tone has been sometimes not a good one here, but I feel I was a little provoked.Sorry! No more. I will just present my contrary view to help debate, as that is what blogging is all about. A clean sheet, if you will all permit it.
Here is a dollar chart I just did…
http://www.screencast.com/users/Gary_UK/folders/Jing/media/c2104a74-99e5-4b42-a41e-06ba534bde76
I think Bollinger band stretch, a rising 200day MA, and trendline support cause a fair size bounce, starting on Monday actually. Can I recommend http://www.freestockcharts.com/
for doing charts, and it really is free.
Today was a bearish reversal day on the markets, a push to new highs (only out of hours though), and then closing near the lows, the same shape candle as on 21st June, just before we lost 11% in 9 days.
So, watch out next week, in my opinion.
Gary_UK, part 2 of post..
There is trouble brewing in Europe, spreads are stretching, it will provide ‘greasy oil’ to cause the crash to accelerate, but it will be driven by the same big banks who have driven it up in the past 9 days. (reasons on my blog).
I admit I jumped in too early with shorts, but my puts are all long-dated, and I have enough margin (just) to cover large leveraged postions. My plan is to make a large enough sum to retire. I could lose 60% of my wealth, but that wouldn’t affect my lifestyle, I have a decent income from my business.
I will come back and admit I was wrong if I am, but for me, that was the top today, we only go down, maybe to a key fib level at 880 on S&P, by the end of October.
I do think Gold and silver will correct, as I read that there has been distribution on recent rallies, and generally sentiment is far too bullish, it needs a correection now, I think to 1060 for Gold, 16ish for silver.
So, who will be right then?
I look forward to reading any debate, have a good weekend, and apologies again.
Oh, I also bought a six-figure ££ of VXX today, it looks a screamig bargain.
Finally, some will doubt my assertions re my trading, I am happy for Gary or someone to view my trading screen live via webcam at the end of October.
If I am wrong I will be wiped out at any S&P price north of 1145, unless I trim heavily, which I don’t want to do with the crash so close.
Hope this all helps, have a good weekend!
Gary UK: What indicators tell you that the sentiment on gold is too bullish? Data not anecdotes, please.
DG,
I read a lot. I’m not being funny, or sarcastic, but I just googled ‘gold sentiment’, and found this…
http://www.marketwatch.com/story/contrarian-take-on-gold-market-2010-09-01?reflink=MW_news_stmp
But do the same, look for contrarian views and evidence, there are dozens of articles and sites you can find, if you want to look.
I’m off to bed now, past midnight here, but I’ll look in tomorrow, or feel free to post questions on my (frankly so far very poor effort at a ) blog!
Gary_UK,
A certainly appreciate the change, both in tone and in substance. I happen to disagree (or at least feel you are being recklessly premature), but the nature of your most recent post is a huge improvement over the ones that preceded it.
Couple things:
– There’s been trouble brewing in Europe all year. At times the market has cared, at others it has not. The problems in the European banking sector, as well as the fiscal disaster that is the PIIGS, are widely known.
– VXX is a terrible vehicle to hold, though you’ve picked a decent enough spot to take a trading flyer. I assume you’re aware of the contango issues it shares with USO, UNG, etc., which make it a guaranteed loser over time (esp. with a mean-reverting underlying like volatility). Overlay a year’s chart of VXX dailies with those of the $VIX. Caveat emptor.
– I don’t think verifying your trades through Gary is necessary. You’ve announced them in more or less real time, that’s good enough for those who care to follow them.
– I wonder if you spent much time on SOH or any of the other bear blogs after the initial bounce out of the March ’09 lows. The tone of your post is ominously reminiscent. It really is best to know you have a bear market before you trade it as such.
Thanks again for adopting a more civil and content-oriented approach to posting.
– RB
Gary,
The change in tone is much appreciated. As long as one remains civil I don’t think anyone here will object to anyone posting contrary opinions.
If one feels strongly about their position instead of becoming abusive just put money on the table. The standard bet size is $1 🙂
However if one ever plans on coming to Las Vegas I am prepared to up the stakes to dinner at the local Mexican cantina.
Gary, which “cantina” is your favorite. Need to know for my next trip. (We always stay Downtown at the Nugget.)
Gary, thanks and no hard feelings.
I am a big Hold’em fan, so will visit Vegas one day, soon if the next 6 weeks pans out for me..the World Series main event maybe?
So, we’ll call it a £ for now ( worth more than a pesky dollar!), but if I visit, dinner would be fine, I also love Mexican.
Apologies again, it has been a stressful 2 months, not like me at all to be snarky. No one is perfect, I realised today I was being an ass, and drew the line.
Now, I am off to bed, it is 1am!
Best wishes.
There’s a locals place not far from where I live Frank & Fina’s. It’s been here for like 30 years. I went last night as a matter of fact 🙂
Gary
What is your dumb money sentiment reading?
The swing in AAII is astounding.
http://www.zerohedge.com/article/aaii-confirms-completely-bipolar-market-records-biggest-monthly-bearish-bullish-swing-6-year
Investors Intelligence is the exact opposite. Too bearish. This is why one needs a lot more than 1 sentiment gauge.
Dumb money confidence is still in the neutral range.
I expect the AAII poll will time the move into the half cycle low but look for the II poll and dumb money confidence to time the top of the intermedate cycle.
GaryUK,
Welcome back! Here is the olive branch (figuratively speaking of course).
I echo the sentiments of some of those on this blog in that your change in tone and substance of content is much appreciated.
I welcome contrary views as it might make us aware of our blindside, and helps us become better investors.
The purpose here is to make money and not win arguments 🙂
And speaking of purpose of this blog, thanks to the poster who reposted Gary’s mission statement. I felt we were going off track with some of the posts that did not focus on riding the bull, got sidetracked with daily wiggles and and tried trading the stock market. I felt that if we can stick with the original intent of this blog, it would be much appreciated. Just my view anyway 🙂
Thanks RA, appreciate the branch (as long as I don’t have to stick it anywhere painful!!). I asked for the abuse, really so unlike me. Never again, I live and learn.
Still up, hyped over what I think next week brings. Just one guy I keep an eye on (so bright hard to believe)…It is bearish sorry 🙂
Please have a look though…
http://screenr.com/Y9n
GaryUK,
We all make mistakes – key is to learn from them 🙂
And I have learnt from mine – not to trade the gold bull market. I have learnt also not to confuse genuis with a bull market.
Thank goodness I am no genius and I can still make money!
I have elected to go Old Turkey. I do not have to fuss over day to day wiggles. I make more money that way than in past where I had to manage risk with position sizing.
Over the past decade, I have made substantial sum of money in real estate. I committed huge capital at the right time (during recessins), then wait for years, and at the right time (when govt get s nervous about rising home prices) exit with huge profits.
Then I had a epiphany with Gary’s help – why can’t I do the same with the PM market? Of course I can!
Gary UK…put it all on red 10…haha..just kidding.
I think folks will give you the benefit of the doubt as Americans are apt to do this. I don’t trade the stock market so I am not too worried about a crash. Even if it did, I am of the opinion that it wouldn’t hurt Gold/Silver anywhere near as much as the ’08 crash. You might want to take into account the large banks that have/will be closing their Gold/Silver trading. JPM for example. Plus with Anglo buying back its hedges and the fact that swap dealers are essentially neutral will keep a strong bid to Gold/Silver. I have learned to worry about the wiggles on the charts. Just my thoughts. But like many I am Old Turkey for the most part with the PM’s.
And Frank and Fina has some good Mexican food. Gary’s business alone guarantee’s they will be around for another 30 years..haha.
I meant ” I have learned NOT to worry about the wiggles on the charts.”
Yup, I am with Nat. A stock market crash will probably be followed by more stimulus and PMs will make even more record highs 🙂
Alternatively, crashes will lead to lower asset values, which then affects balance sheets, which may then lead to defaults. Same result for PMs. So I am not too worried.
Reflecting back on my, highly profitable buy and hold experience with real estate vs. trading in the stock market, I thought I could make more money faster doing the latter. I could use shorts if the market goes down – something I could not do with physical real estate. I can use stop loss orders and position sizing to manage risk that I could not do with real estate. The stock market was much more liquid and I could go in and out almost at will.
After several years, I realised that I vastly underperformed my real estate investment. Maybe it was down to my lack of skill because if you compare me to some of the guys on this blog – I look like a bumbling novice.
Then I also realised that even if I had reasonable skill, I will still not become as wealthy this way simply because of the inherent limitations of things like position sizing. The very things about trading that I thought were advantages are really limitations to making big money.
With Gary’s help, I began to remember that without committing larger sums of capital, the payoff is also less. I also remember Jim Rogers who claims that he is the world’s “worst market timer”. He says you make money buying things cheap and holding for years.
So the strategy is to buy and hold. But this only works in a secular bull. Stocks are no longer in a secular bull. How about gold?
The questions then are 1. Is gold in a bull market? 2. How do I know when to get off? This is where Gary’s blog comes in and this is why I am doing Old Turkey!
Oh and by the way, I am not American, but giving people the benefit of the doubt is an Ammerican quality I greatly admire!
Recent quote by George Sorros “Gold is the only actual bull market currently. It just made a new high yesterday. In the present circumstances that may continue,” he said at a Thomson Reuters Newsmaker event.
“I called gold the ultimate bubble, which means it may go higher. But it’s certainly not safe and it’s not going to last forever,” he said.
Actual article…
http://etfdailynews.com/blog/2010/09/15/george-soros-warns-gold-is-the-ultimate-bubble-gld-gdx-gdxj-sgol-ugl-dgl-dgp-iau-dzz-gll-ubg-dgz/
there will be no crash, short term. The reason … 3 words. Mid Term Elections.
Peter
A reader of Mish’s blog sent in this email to him…
“…this seems to mean that the government can sell vast quantities (1 -2 trillion per year) of debt directly to the FED and to other parties with few observable short or intermediate term consequences…If I am missing something, what is it?”
Mish went on to give his list of consequences. Mish also opined that (near and intermediate term) inflation was not one of those consequences.
And yet what is interesting to gold bulls on this blog is what Mish did *not* say. He missed one important consequence – currency debasement leading to the loss of confidence in the US dollar.
Even if the Fed actions do not inflate consumption or credit, currency debasement will drive gold higher.
Link to article here…
http://globaleconomicanalysis.blogspot.com/2010/09/one-sided-policies.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29