One of the hardest things to do in this business is to let your winners run. For whatever reason we are programmed to expect reversals. It’s why so many people try to trade against the trend. I’ve seen it in full display over the last 5 weeks as trader after trader has tried to pick the top of the run in metals. Many even trying to short the sector.
I made that mistake many times myself in my early career. Folks a sustained trend doesn’t come around all that often, when you get one you have to ride it for all it’s worth. That’s how the big money is made. And I’ll say this again. Never, never, never short a baby bull. They are unpredictable and extremely aggressive. They almost always go much further than anyone expects. Why? Because everyone has become conditioned for failure by the bear market that preceded it. This is the fuel for a much more sustained move than most people anticipate. Invariably there is a steady stream of top pickers all the way up. They either sell way too early, or they try to short the rally over and over as a revenge trade for missing the move.
Let me show you how far the baby bull went as we came out of the last 8 year cycle low.
The current baby bull is showing all the signs of delivering something similar, yet I continue to see traders shorting gold, or shorting miners. Aren’t there enough trampled bodies in the wake of this bull already? Why do people keep repeating this mistake over and over? I guess this is why so few people make money in this business. The can’t, or won’t break their destructive trading habits.
Now we have a breakout from the pennant pattern.
These are almost always a continuation pattern. When an asset rallies strongly and gets stretched far above the mean, it either needs to correct, or it needs to consolidate before the move can continue.
For whatever reason many traders assumed that the golden beach ball would be pushed back underwater. That clearly wasn’t going to happen. Like I’ve been saying, I don’t see any reason for the cartel to continue attacking gold. The Fed needs inflation at this point. They need gold to lead the commodity sector higher, especially oil. So I just don’t see the motivation to continue attacking the gold market. It’s time to start playing by different rules.
So at this point one of two things is going to happen.
One: The euro will rally for 5-8 days and then roll over into an intermediate degree decline. In this scenario gold will rally enough to test the 2015 high ($1308), or maybe marginally break it, and then start down into an ICL over the next 5-8 weeks.
The other scenario, and the one no one is expecting, is for the euro to deliver another leg up in its intermediate cycle, and the dollar another leg down into a final ICL. In this scenario the pennant is a midpoint consolidation in a T1 pattern and gold is going much much higher than anyone currently anticipates. The T1 target zone is around $1400.
So it’s important to me to see how the euro rallies over the next 5-10 days. If it rallies hard and the oscillators take their time about getting overbought, the odds are good that we are moving into the second scenario. That would mean we want to hang on to our long positions until the dollar forms a bloodbath phase sometime around 25-30 days into its daily cycle. It’s only on day 13 right now.
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Its official . Gold now in bull market.
Its up over 21% off its low in dec 2015 .
Its all over the financial papers .
Outperforming everything .
run till next FOMC meeting
Well, it’s basically kicked @ss since the last fed hike….
Don’t look now, but GDXJ, GLDX are at 52 week highs.
Buy and hold
Bravo Gary bravo ?!
Gary …. Amen to your comments!
Regarding your generous subscription offer. IT’S A STEAL. Saved myself a bundle by not caving on the 17th and adding as we went up. No trading. One of the few times I had the fortune of buying the bottoms (hopefully): materials, gold and emerging markets. Subscription is worth every penny. You deserve to be supported and thanked for providing all this great advice on your free site. Here’s the deal though… I DON’T WANT TO JINX IT. You’ll get a kick out of this:
Other then reading Barron’s for decades the only other subscription I ever had was to JOE GRANVILLE MARKET LETTER (famous flamboyant old time TA guy) in 82. He was a character. Heard him talk once where he entered the room in a coffin with pall bearers and the whole deal … saying the DOW was dead and darkness would prevail till the end of time. So I’m hooked and send in my 35 dollars. Joe is convinced it’s a secular bear. Short short short. He’s wrong. It’s a secular bull, the start of one of the greatest bull runs in history. So the day I sign up Joe makes the worst call of his career (he had a lot of good ones) is run out of TA land on a rail never to be heard from again. Been doing my own thing ever since.
Conflicted you deserve to be supported but …. I JUST DON’T WANT TO JINX YOU.
I don’t know what to say 🙂
Jacob, I talk to witch and reading your post she said you’re not going to jinx Gary, so you can safely sign up…
Thanks Gary
Congratulations and thank you Gary… may your understanding prevail.
tulip
Gary may be VERY right here, on this gold puppy running. The gold market is so small, and right now it’s the only market that’s been really going up measurably, and once again it’s up $9 something tonight at $1273. Think about it with not only the miners, but all the paper instruments, not just GLD, but even NUGT. The momentum players are few and far between, so it won’t take too many more days for people to figure given all the signals in the market, and information out there, that gold has signaled a bull market. You got Ray Dalio saying get gold as 5% to 10% of your portfolio, you got Louis Yamada saying gold just entered a bull market, and you even got more mainstream folks who have been spot on regarding treasuries, the stock market topping since last spring, also now saying gold is the place to be. (HedgeEye). Now while Gary has been calling gold far more preciously, well ahead of most skeptics, it’s the overall message that could make this sucker run a lot longer and lot higher right now due to today’s overall macro market conditions, that I would not be too hair trigger quick to sell anything gold related. Let your winners run, ( gold winners that is) could make you more money right now than any other play this entire year.
Very well done…thank you!
Hi Gary! Would you please elaborate what reports (sample) /services that subscribers enjoy besides your publicly available blog updates.
Rgds
Alok
India
I cover the stock market, energy, precious metals and the dollar/euro. The reports come out nightly. Here is a video sample of a weekend report.
With gold breaking above its parabolic level, bulls have won. Time for silver to catch up? Today could be it.
Kudos to Gary for calling it…. stocks, gold, oil, everything…even toilet bowl also move together! The way Asia behaved, commodity stocks big rally, index rally, PMs rally, sure imply tonight NFP gonna seal this trend. But I really wonder, what kind of number will seal this trend? A good number, or a so so number? Hmm…
Gary, you previously said to sell NUGT when GDX = 21. We are nearly there now, and it could happen in 1-2 trading days at this rate. Is this still a valid rule?
Once the HUI tests 185/190 it wouldn’t be a bad idea to convert back to an unleveraged ETF like GDX or GDXJ.
I’ve tracked Gary for years. When gold is in a bull market there isn’t anybody better in the world. A $150 yearly subscription is hands down the best bargain in the industry. He should be charging over $1000.
Gary please don’t raise your price though 🙂
Expect a wild ride after the NFP number is released. If it’s a good number gold will probably drop to retest the pennant trend line. Once the market calms down traders will remember that the last rate hike sent gold over 200 points higher.
The euro rally isn’t going to end after only 1 day. The earliest would maybe be on the ECB meeting next Thursday.
Gary, you have been right on since this run started, BUT your lead chart of HUI shows several very trade-able corrections in that path to 100% gain. We haven’t even seen a 38.2% correction in Gold yet. Could it be the pennant formation breakout is a trap to lure in longs, then we get a 50% correction?
How would we now that ahead of time?
Gary, as I commented 2 days ago, whatever scenario plays depends on today’s jobs report while, what you call the scenario that “no one expects” targeting 1400 for gold, is actually THE MOST LIKELY FOR 2 reasons:
– USX is entrenched in yearly cycle decline and now that we have confirmation that it left an ICL behind IT HAS PLENTY OF TIME TO MOVE DOWN INTO THE PRINCIPAL TREND OF THE YC DECLINE;
– classical TA says that a coil or pennant, as continuation patterns, produce another leg (up or down) of the same absolute value since the last major low starting from the lower part of triangle’s pole.
An from the prior DCL we have an advance of 200, as you mention, and the low of the pole is 1200, so, here you have the 1400 😉
So, this is not a scenario that no one expects but rather the SCENARIO WITH A VERY, VERY HIGH PROBABILITY 🙂
Watch the pennant trend line after the jobs report. If gold drops back below it then take profits on metal positions just in case gold has formed an intermediate top.
Bye Bye Gold!
Have nice weekend folks 🙂
Good point Gary. Yes, this gold could correct if fail. So it shouldnt drop back into range if it is really bullish. Personally, i think its about time for silver to do some work already.
Key battle for gold for the last day of this week is 1258. If can close above will be even better.
yes, Gary.
Actually I’ve preferred to take my 1-day profit already CLOSING ALL my GLD position premarket just now.
As I commented 2 days ago, the level of 250k jobs today was key for me and we got pretty much there, on lower earnings is true, but….fundamentally, being in metals (either long or short) is too risky from my point of view:
– the rising wedge in miners is still there
– fundamentally hawkish prospects for FED.
I am holding the long stocks and short treasuries position with 77% of funds.
This a bear rally, told ya !
Have an even nicer weekend 🙂
I don’t know whether it is a bear rally or not – I have no idea – I only follow the footprints Lady Market makes and leaves before me.
But I do know that probabilities are below my critical level to be either short or long in any metal, so that sidelines are the best place to be in this respect.
S,
Ooops spoke too soon 🙂
Yes it jumped up and bite me in the a$$ however both gaps in HUI and GDX is closed, sitting at 180 and 21. I must admit that I was surprised after the jobs report coming in strong.
Once you sold, you will probably hesitate a lot before you buy them again because the price will keep going up. This is how the pros catch up their lost opportunity. Good luck with your selling and kiss them good bye.
Remember, it’s still baby bull…
I don’t know what it is and I do not care.
I PARTICULARLY DONT WHAT TO GROW FOND OF THOUGHTS, PERSONAL IMPRESSIONS OR OF …A TICKER.
The only things that I care upon making an entry in whatever and then exiting are:
1) to have a low risk
2) to have the prospect of a reward minimum 2 times as much as my accepted risk.
Anything beyond these 2 things are dreams/fairy tales.
Lots of manipulation both up and down in this gold market .
ABSOLUTELY RIGHT. This time is being manipulated UP… Guess why?
If Ia m right, a quick deep plunge may be around the corner for gold.
Gold should be fu… with those job numbers . Gary you got some mainipution up to make up for the manipulation down you dealt with these past years
I’ve been saying for months that once gold broke the manipulation holding it artificially down that it would make up for lost time. This is what should be happening as gold breaks free from the bear market that was created by the paper shorts in the futures .
I call BS .
Looks like gold is out of the woods for now. It almost tested the pennant trend line and has bounced back into the green. The euro looks set to continue the rally out of its DCL.
Stocks on the other hand may be ready to drop into a half cycle low. This should push gold into it’s intermediate cycle top over the next 5-10 days.
S&p down w those killer job numbers ?!?!
With Index at this level, Fed will surely raise rates. And I wish they raise it. Better for economy, and better for them as they will have more tools. But its effect on PMs, I think it is ok. Its call sell the rumour, buy those facts. PMs rallied despite Fed first hike.
Everything going as predicted. The euro is now rallying powerfully confirming a daily cycle low. Now watching the stochastics to see how far it goes before becoming overbought.
Silver has broken its cycle down trend line confirming a DCL has been completed.
The earliest I would expect a top in the euro would be next Thursday on the ECB meeting, but maybe not till the 16th on the FOMC meeting.
Oh please . Look at that vertical decline just now in the dollar after those jobs numbers . Unbelievable
Anyway, who believes this this Bullshit Lying Statistics. They have been cooking this numbers ever since 2012. And this is election year. They know who they are owed their loyalty for keeping their cushy jobs. This is a crucial month with all the primaries. Nominations get lock up by end of this month with both political parties, and first Friday next month they will revise this number down. And the party goes on until November. And FED will not raise any interest rate to help the incumbents.
The bottom line is that CB’s are going to print to stop any bear market. So once the 7 YCL is finished (which I think it is) then we have a bubble phase ahead of us.
Loving these minute by minute comments. Golds down no up, no down!, “comedy gold”, pardon the pun.
Ed. The economies are on fire in the major cities of the USA . I live in NYC . Its crazy hot , same w San Fran, Boston , Seattle , boston , miami , etc .
This is not a recession . The unemplotment is number is not that far off . in backwater usa , thats a differert story . There’s little unemployment in the major cities in the USA .
Walt, agree with that, that is why I am not in the deflation camp. Yet. The move in oil is foreshadowing a deflationary environment in the future.
Cities are hot, same with east/west coast. Mid states, the economy stinks. This is the US divergence. The corporate media does not publish or focus on these dying mid-state towns.
woohoo, I think silver is now building the energy and enroute to make that elusive higher high.
That’s funny , look at GDX and gold
No mainipution today In precious metals
The bottom line is that CB’s are going to print to stop any bear market. So once the 7 YCL is finished (which I think it is) then we have a bubble phase ahead of us.
What do you guys think is going to happen at the ECB meeting?
Increase of QE from EUR 60 to 70 bln/month –> that should allow for a new DC in USX with DCL of the current DC to be set at any time.
What is with the hate Walt? I know as an older man, you are a stock bug because over the past 60+ years it has served you well, but the S&P has seriously underperformed medium-dated Treasuries over the past 20 years. Get over it. Like any other asset, now is not always the best time to buy stocks…they go through longish periods of overvaluation (like now) and undervaluation (like 1960s-1980s).
Such a hot US labor market should raise soon the idea that the economy has stretched too far and motivate money managers to take some money out.
If today’s jobs report really casts a true light on the US economy, then WE ARE NOW CLEARLY IN A MERE DEAD CAT BOUNCE WHICH EMULATES A NEW MULTI-YEAR CYCLE SIMPLY BECAUSE IT IS AN INTERMEDIARY CYCLE ADVANCE.
But…as long as the music plays, let’s dance!
As I commented some 2 weeks ago, I will search for an exit of my stock positions when US treasuries seem due to cast their ICL.
I have been long the s&p for the past 3 weeks and will exit soon too .
I think its up and down 5-8% in the stock makers for the next year . Just going sideways . Then the bad bear market starts mid 2017 .
Tks Alex. Hope stocks corrects some so I could buy them back. And for silver, hope it behaves like the way it should when it wakes up. ie, crazy increases over 1-2 weeks. Then it could be in the range of $17-$19
Hi, Chris!
I don’t know anything about silver, so I’ll say nothing.
It is nice to look at Transports’ advance and treasuries’ decline.
I think Transports’ hitting their 200dma will coincide more or less with treasuries’ ICL.
http://stockcharts.com/h-sc/ui?s=OCANF&p=W&yr=5&mn=0&dy=0&id=p99725013185
Wise choice of topic today, Gary. Reminds me of a Livermore quote: “It was never my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!.. Men who can both be right and sit tight are uncommon.”
WIN!!!!!
https://www.tradingview.com/x/3A7MWxrd/
im suprised how strong gold is and yes completely underestimated the move up. either way im long gold anyways so doesnt hurt my physical holding, the 1273 is a hidden pivot and it would be such a beauty to see it close today below 1263 and produce a reversal hammer on the daily chart. Hopefully this will translate into a DCL for the next couple of days leading up to the next FOMC meeting then gold will make another dash towards 1400
Gary is insane. Toilet bowl, kitchen sink, bath tub etc all moving up together!!!
Wow!
“Government is born from wickedness since its primary directive is punishment.”
—Thomas Paine
FWIW we took profits on half of our miners today as the HUI is within spitting distance of that 185/190 resistance zone.
I want to see where the BPGDM is at tonight. If it’s hitting 80+ then I’m going to get ready to pull the trigger on the rest of our miner positions and wait for the next ICL before going long again.
The big potential now is in biotech (IBB) as they catch up to the rest of the market.
Gary, I will examine these charts more in depth later, but the miners have serious momentum. Support will be at 150 on HUI and resistance at 185. With the accumulation base that has formed, I would definitely not expect these to pull back to 150. And more, I would expect a breakout above 185 without looking back till 225 or so.
If you are selling half of your stock positions, what are you looking for on a pullback? 150 or lower?
Options are a different story and I did sell out about 33% long calls today. But my calls are also June and further, so I do have wiggle room.
This asset class has been under-owned for a long time and this among other reasons is why I am not even reducing shares in this area. I will go in and out with options. Institutions need to accumulate these.
I’m kind of freaking out about not selling today and I keep checking Gary’s last two posts for new comments, can you give me your thoughts? I’m all in on Gold and Silver Miners. Penny stocks are all I could afford.
What’s more is that platinum and silver are finally breaking out today, while issues like SWC and SLW have foreshadowed this over the past few weeks.
I think Jorgy got dusted with his DUST. Down 30% in a week. This is why you never short a baby bull 🙁
Gary, Jorgy(and me) may be vindicated if and when the big plunge in gold price I expect happens.
You just have to hold on with DUST and NUGT until you are rewarded for your patience. I’ve been there before, patience and strong nerves combination works. lol.
gary – congratulations you have made some really good calls lately and deserve success.
Absolutely.
Platinum & Palladium are have run up like wildfire today, into even more serious breakout territory than gold. In fact, gold is the worst performer in the PM sector, though silver is lagging most since the bottom.
THE HARDEST STRATEGY: LET YOUR WINNERS RUN – Does pulling down half the miners positon validate or invalidate the blog post.
Not really.. Gary has been very consistent in identifying this level as a potential area of resistance. The risk/reward is not as favourable at this point, hence why it makes sense to reduce exposure. The important thing is to have a plan and execute it. Let your winners run is not mutually exclusive to managing your position size.
The baby bull is dying, am only down -13% in DUST and I am not out until the gab at 10.5 is closed 🙂