INTC beat earnings yesterday and this morning the market is loving it. Cramer is wildly bullish. BUY, BUY, BUY!

Unfortunately INTC has a history of marking turning points. Let’s just say that buying the gap up on earnings hasn’t been kind in the short term. Buying when INTC has closed at new 52 week highs the day they report has led to losing trades three days later every time.

The trend is clearly up and I doubt that we are at a final top for this cyclical bull but is the reward really worth the risk of taking Cramers advice?

As of yesterday the market had moved higher 71% of the days out of the February bottom. Folks that is verging on parabolic. Those never end well.

I liken the current market to playing musical chairs with 10 people but only one chair. Certainly you might catch more upside but almost certainly we are, at some point, going to go back down and test the breakout at 1150.

When it happens it’s going to happen quickly. These kind of extreme momentum moves have a tendency to erase several weeks or even months of gains in just a handful of days. So one has to consider is the minimal upside really worth the risk of getting caught in a vicious correction?
At this point one is better off stepping to the side until the correction occurs and then buying back in.
Keep in mind I’m certainly not advocating going short. Because who knows how much longer this could go on. But the potential reward just isn’t worth the risk of pressing the long side anymore.

34 thoughts on “MUSICAL CHAIRS

  1. Anonymous

    You think the big boys are gonna pin SPY at 120 Friday and then take this biatch down next week?

  2. Anonymous

    If Gary could tell the future and tell us precisely when, hed be the richest man in the world (:

  3. Anonymous


    What is an ideal mix in a portfolio of precious metals and miners? I’m thinking of constructing a portfolio using the following:
    What % should I allocate to each?


  4. Gary

    Well I think you will make bigger percentage gains in miners and silver than in gold. So if that is what you want to buy I would just split GDX, GDXJ and SLV evenly.

  5. Anonymous

    Adding to current PM position is fine until the B wave starts. In my book, ‘B’ stands for ‘be careful’. Gold is moving another 2% (minimum), then it can begin a move down. The reversal should be very clear. At that point (A-wave peak), buy the leveraged inverse ETFs that track PMs. ! Also Increasing stop loss for SPY.


  6. Anonymous

    It’s tempting to think about all the hay you could make on the short side with inverse leverage in one of these vicious selloffs in miners like we saw in Feb, but in practice it would be really tough.

    For Gary: what happened to all the “regulars” around here? Did they all follow you over to GoldScents? Oldster? Jayhawk? Jake? Bueller?? I can’t stand all the quiet!

  7. Gary

    It’s a lot funnier beating on someone when they are suffering a drawdown. I’m sure as soon as the next draw happens they will all be back.

  8. Anonymous

    Not all of those guys were haters, in fairness.

    Old Yeller Junk must be loving the opportunity to short gold at this level.

  9. Blake

    I wonder how Xtrends is holding up through this, being massively short and calling for the ned of the world every day

  10. Gary

    It is already outside the normal timing band for a daily cycle. This makes two cycles in a row that have stretched very long.

    Pretty amazing.

  11. Jayhawk91


    I’m still here, reading from time to time. This is killing me to be in a 25% mining position, watching everything run like crazy. I never beat you up Gary, except a dig here or there. Were all big boys and girls and make our own decision on investments. That being said, I did decide back in December to trust Gary’s calls this year to a larger extent. Needless to say, it’s been a tough year to be a follow of the G-Man. Curve ball after curve ball have made trying to figure out these cycles challenging work. I wish I would have held onto a bigger position, but reality is I’m stuck waiting for a pullback that appears to not be presenting itself. After chasing in Jan, I’m EXTREMELY gun shy.

  12. Gary

    The solution to your problem is not to worry about a pullback.

    This is a secular bull after all and any pullback will be recovered. So if you are nervous about missing anymore then just add some. But only enough to where you won’t freak and sell when the correction comes.

    That’s what I did on Monday and again today. I still have plenty of powder when the correction comes but in the meantime I’m adding knowing that ultimately gold is going to go way above $1200. Wwhether or not it’s this spring is irrelevant in the long run.

    At this point I think we can rule out any more D-wave if that’s what it was. B-waves are usually mild and easily ridable.

    If this is a C-wave continuation then there is still huge upside ahead and missing a little of the beginning isn’t really that big of a deal.

  13. Anonymous


    actually I think Cramer said not to trade during earnings. I think his bullishness is longer term. And while he can be a bit much at times he doesn’t deserve to get beaten down for his recent predictions; in fact he’s been right with most of his calls since the bottom including the bottom call. I wish I would have kept my Freeport stocks when he recommended buy and hold in Nov 2008.
    Btw, the markets are apparently skipping this whole daily cycle low and instead go straight into parabolia. Once they will correct, which I believe will only happen in a few weeks time, it’s going to be more severe and take time to recover. So I think you are not only sitting out the run up for the past two months and the next few weeks, but then you’ll have to sit out another extended period for a correction to take place. That means you could be out of the market for most of 2010. Nevertheless, I agree that now is not an ideal moment to jump onto the bandwagon, but who knows…

  14. Gary

    I’m not out entirely. I still had a little over 1/4 position in miners that I didn’t take profits on. I added to those a little on Monday and a little more today.

    If the dollar breaks below 79.50 it will give a pretty strong signal that an intermediate decline has begun. In that case I will go back to full positions and sit till we either get a C-wave continuation or I’ll ride through the A-B consolidation and hold till the next C-wave runs its course.

  15. Jayhawk91


    I know, that’s why you told me back in January too…Right around the time the overall market was due to correct.

    Then you prematurely called the D wave and scared me out of my positions that were finally getting back to break even/green.

    I think we will get a smallish pullback soon…But I most likely will add more without waiting too much longer.

    Most of the miners retested the 10DMA the other day and quickly reversed. Some regained key levels of support, others looking like they may be ready to come back down. I guess one could always put a stop in place if they didn’t want to risk a big losing position this time around. I know you don’t use stops, so no need to give me that lecture. 🙂

  16. Natanarchist


    I am guessing the cycles you track are getting messed up, possibly with all the FED liquidity…anyway, IF, the C wave in Gold did not end in Dec and is continuing, do you think the C wave would top out in May/june time frame or is it possible it could continue through to the fall? Do C waves last that long? Is their an average time frame?

    yeah I know you don’t have a crystal ball, but just trying to get a sense of what we could expect time wise if this is C wave continuation. Your best guestimate. And I won’t crap on you if you don’t make the right prediction…lol..

  17. Gary

    If this is a C-wave continuation I think I would look at it as a large T1 pattern and plan accordingly. All in all though since this is the 10th week of the intermediate cycle we should top in the next 5-8 weeks.

  18. Anonymous

    Gary, I am new here. Would you mind to elaborate more in your cycle? What is T1 and C-wave refer to. Thanks.

  19. HunkofJunk

    The newsflow from Greece is deteriorating pretty quickly. The Greek Yield Premium to Bunds is above 400 basis points again this morning and there are concerns that the agreed package may not be available should the Greeks wish to tap it given individual countries have yet to ratify the package.
    So what?
    Euro will weaken. It may not be over for the dollar just yet……

  20. Anonymous

    I liken the current market to playing musical chairs with 10 people but only one chair.

    Brilliant! Bravo!

    [A command of metaphor] is the mark of genius, for to make good metaphors implies an eye for resemblances. – Aristotle

  21. Anonymous

    “I still had a little over 1/4 position in miners that I didn’t take profits on. I added to those a little on Monday and a little more today.”

    Since you mention keeping 1/4 position, please share what adding “a little” means. What is “a little”?
    10% more each add, 20%?

  22. Gary

    I never would have thought it would start on options expiration but who knows. It certainly looks like gold has begun the trip down into the cycle low though. So we should get our chance to buy sometime next week or the week after.

  23. Anonymous

    Everyone is selling the yeller stuff ahead of Paulson…he will sell to raise liquidity…they will be watching him like a hawk…even though I don’t believe he did anything illegal…sell then ask questions later…

Comments are closed.