SHORT TERM TOP?

The market is now 16 days into the current daily cycle. We typically see a minor half cycle correction around day 15-20. I’m guessing the Fed is going to give the market exactly what it wants to hear today. I also think the market has already discounted that.

I expect the “news” will be used to take profits after the strong rally of the last three weeks (the pullback into the half cycle low). I also expect bears will mistakenly see this as the market finally coming to its senses and heading back down.

Unfortunately I’m afraid they will be wrong again. This should only be a brief profit taking event to dampen sentiment before the next push higher. Possibly to test the April highs. 

111 thoughts on “SHORT TERM TOP?

  1. Gary

    It’s certainly possible, but I suspect the bull may have one more trick up it’s sleeve. Don’t be surprised if we see a sudden spurt up to $1300 for the correction begins.

  2. Anonymous

    Thanks, i totally agree about the retrace (if we get one), it should be concidered as a buy opportunity.

    What do you mean by “market has already discounted that”?

    Thanks

  3. Gary

    The powerful rally over the last three weeks was the market discounting that the Fed would give them what they want. When it finally arrives this afternoon the only logical response should be to sell the news since the market has already priced it in.

  4. Anonymous

    They are trying to crack gold and silver. So far it is still tough going and the dollar isn’t helping.

    For what it is worth, my target for a decline, should it get going, is 1230.

    –TZ

  5. RA

    Hi TZ,

    If it reaches your target then well and good :-0)

    But what if it does not?

    But if you already have a solid core position, I guess its ok.

  6. Sound Money

    There was me thinking we’d made up, and I get new posted!! Lol, only joking.

    Here is what I just posted…

    Hello.

    Well, a tricky few days to navigate, and maybe a few more left to go, but it is becoming more and more obvious to me, and others, that this last little bit of ‘irrational exuberance’ from the POMO juiced markets will end in tears, and pretty soon.

    I see maybe, another 1-2% upside, then we start down again. I have added a few more puts and discovered VXX, which looks a steal at current levels.

    I posted a comparison yesterday between late 1930 and today, have a look here if you are interested…
    http://wealthadviseruk.blogspot.com/2010/09/2010-or-1930.html

    Complacency (by market participants, and those who think they are in control of events) is the chink in the armour that will bring things crashing back to earth in the next 4 to 5 weeks. I still think 25 to 30% from here.

    Every market tops out on good news, so I am hoping Bernanke is a little upbeat today maybe?

    I am pleased to see Gold doing well. Not for myself as I want to join the fun after the crash, so some sort of correction would be nice.

    Interesting time ahead though.
    Will China & Japan sort out there little spat? Will the Eurozone completely freeze over? Will China raise rates?

    Why does the world never learn?
    ____________

    In addition, and responding to Gary’s new post…what does the market want now? Does it want a huge ‘blank bullet’ i.e. QE2?, meaning things are really bad?
    Or does it want to hear that things are looking better?
    I think this is far from black & white.
    At the end of the day, the Fed are impotent now, and it will be a tiny little straw, a downgrade, a profits warning, a failed equity issue, a failed bond issue, something seemingly insignificant that will crush the bulls.
    In my opinion of course!!

  7. Gary

    S,
    That’s not how intermediate rallies top. One company missing earnings isn’t going to turn the market.

    You are setting yourself up to lose a lot of money because you can’t control your impatience. Just wait for the signs. Your portfolio will be much happier you did.

  8. RA

    For the benefit of others, would it be possible to delete redundant copies of the quituplet post 🙂

    No offense to Sound 🙂

  9. RA

    Gary if you do go climbing, try not to fall of the cliff will you 🙂

    How will we subscribers ever get our money back then 🙂

  10. Anonymous

    I am wondering if gold is building up steam stalling here, so that it can punch through 1300 and not look back.

  11. Commoditiesbull

    Gary, on your mention on energy going to cause the recession again. I am on the camp that energy and commodities will rise and remain high this time, different from the last time in 2008. As long as the financial system is supported, there will not be a meltdown like in 2008.

  12. Keys

    CB,

    When prices get too high when people can’t pay them anymore, the environment becomes unsustainable. Unless the demand in China is so great to compensate for increased prices, any surge in oil will most likely cause another crash in the oil market. 100$ seems iffy. During our last crash in oil, OPEC and most nations decided that it be best if oil stays between $70-$100. I believe $75 was a good price as per their discussions. I wouldn’t be surprised if some market management will or is going on to keep prices in that tag zone. Oil above $100 increasing increases the chance of a fall back into a sharp decline. Translation the demand picture is crap, and China won’t absorb oil at stupidly higher prices.

  13. Anonymous

    wrong way TK is doing another mental masturbation, “analog to 1037-1942” I started to feel sorry for him. Just a week ago, he said he adopted new indicator and now back to analog game.

  14. Wes

    I’ve gotten a stock market sell signal which I’m ignoring because of “strong market” conditions.

    I’m hoping Gary’s correct about selling on the Fed report as I’m prepared to get more long.

  15. Anonymous

    Gary, what is your price for gold and silver before this c waves top? About the time you deleverage your AGQ. Thanks!

  16. Anonymous

    Gary, congrats on more excellent calls. Took your advice and lightened up on leverage over the past couple of days.

    Once again, great job, great calls, and great service.

    peter

  17. Anonymous

    Just what WrongWay TK needed, another indicator. That must be why he’s gotten blown out, not enough confusion.

    🙂

  18. Anonymous

    TK is a victim of his perma bear bias. He goes to all the trouble to find an indicator to tell him when the trend has reversed and then immediately proceeds to ignore it.

    Just amazing. Sometimes one has to wonder if we really are an intelligent species.

  19. Anonymous

    Gary:

    I’ve already got a sizable position in miners and am looking to top up my account on this dip. I’m tempted to pick up some GDXJ given the nice 3%+ drop today but it would be a bit early given your expectation for a low early next week. Do you think there is enough downside left that it’s worth waiting and seeing, or is it possible the drop is more or less fully priced in to today’s drop?

  20. Gary

    Do you really think a daily cycle low is going to be put in in only one day and with gold only dropping $5.00 (less than a half percent)?

    I don’t 🙂

  21. Anonymous

    The metals market here is like that scene from Star Trek II where there is a missile whizzing around outside, searching….and Kahn watches from the monitor saying “To be…or not to be”

    🙂

    Somebody’s gonna get blown up here. We just don’t know who yet.

    –TZ

  22. Anonymous

    Gary

    You say the daily cycle for gold lasts about 20-25 days… does this mean that the low can occur somewhere between day 20 to day 25, and that the low can take a few days of declines to form?

    fyi

  23. Anonymous

    Resistance comes in around the 1150-60 area. Would like to see one more push higher….but 1143-4 may be close enough.

  24. Gary

    Looks like the Fed has marked the dollar for a trip down to 80 before we see a bounce. And probably $1300 before a correction on gold.

  25. JD

    Anybody:

    Why did announcement of no QEII lead to dollar sell off and stock gain? Shouldn’t it have been one or the other?

  26. Gary

    I do expect a reversal either into the close or in the next day or two. The market knew this was coming. Hey Ben isn’t doing anything he hasn’t already been doing for the last 5 years.

  27. JD

    Gary–HUH?? Announcement was NO QEII. QE II should have sent mkts much higher, so why does no QEII send mkts much higher?

    Also, no QEII seems to defend dollar, yet dollar plunges.

    No QEII should have led to sell off in PM’s, but they shoot higher.

    What am Imissing here?

  28. Anonymous

    The economy is perhaps best helped in the long term by no QEII, but since when has the stock mkt been responding to what’s good for the economy??

  29. Gary

    They said they would continue to re-invest payments and that they stand ready to do whatever is needed. They also said the economy is slowing.

    The obvious conclusion is that they will run QEII as soon as they feel the economy is at risk.

  30. JD

    I guess the mkt thinks QEII was necessary to prop up Am. economy/mkt, and so they sold off the dollar thinking now our economy is too risky.

    It’s too effing twisty and complicated and neurotic. Nobody knows up from down anymore.

    Makes me glad of my CHF and PM’s.

  31. JD

    Gary–so stealth QEII I guess. Makes sense given the Fed and the elections and the desire to say nothing.

    Not sure how this should have affected the various mkts. Maybe ur right and in a day or two, others might not be so sure what to make of it and we might see a reversal of some of the big moves that just happened.

  32. Anonymous

    Yup,oil up them printing presses;headline from CNBC website:

    “Fed Signals It May Take Further Steps to Boost Economy”

  33. Anonymous

    It’s tempting to take profits now as the metals have reversed momentarily.

    Old turkey or safety, that’s the tug on my emotions…

  34. Wes

    So far, it’s easy to see why it’s not wise to take sell signals on stocks under “strong market” conditions.

  35. JD

    Anon @11;41

    fwiw, I bought SIL earlier today at 17.75. Regretted doing so almost immediately. Just sold for nice profit on dumb luck of Fed announcement, but am holding my core positions, and will buy back when it makes a larger pullback.

  36. JD

    Hey Gary:
    It’s taken me a 1/2 hr, but I think I get it, and you are right. They did announce QEII, if and when necessary, and it will be.

    Mkts. responded appropriately imo to the truth of the announcement.

    tks.

  37. Sound Money

    Hi Gary.

    Which one is right do you think? Gold or oil?

    Or maybe both, as Gold is actually a good deflation hedge I believe.
    http://www.fool.com/investing/international/2009/02/27/why-gold-is-an-excellent-deflationary-hedge.aspx

    Anyway, here is USO chart, with equities about to catch up and then some ..(USO is down 25% since April 10).
    How far down will it go now, down 2% or so today? Oil and the dollar falling? Odd eh?

    http://www.screencast.com/users/Gary_UK/folders/Jing/media/396e45bc-8573-4940-b44a-10b779f0194e

    And Bernanke’s language, wow, how doom laden, exactly as I have been predicting. So now th market has to stew for 5 weeks. It’ll be a fun time!!

  38. Anonymous

    It was pretty obvious that this was coming, the action in gold was very telling this morning, as it was being stuffed and squeezed all day in an unnatural manner.

    The dollar though… I wonder if it will stop at 80.00
    What are the chances of it falling through that level Gary?

    Aaron.

  39. marc

    Gary how many days should it take for the daily half cycle to bottom and what price range are u looking at for the SPX to bottom?

  40. Gary

    Aaron,
    It might briefly trade below but I expect some kind of bounce as the market moves down into the half cycle low and gold corrects into its daily cycle bottom.

  41. Wes

    I’m hoping we can get a whack in the stock market, but I expect the dip buyers to be aggressive. I’ve learned that in runaway markets, you usually buy shallow dips or you’ll have to chase to add exposure.

    We’ll see tomorrow.

  42. Vijay

    Who would’ve guessed Shalom Bernanke and his tribe will continue to sacrifice the USD to keep the house of cards standing?

  43. fubsy_cooter

    I have to say, QE 1 never stopped. The Fed purchases treasuries to this day. They also ptint money which they lend to banks at 0%, which the banks are able to lend out at 2.5 to 4%. Is this not QE? They are buying US debt. They are giving free profits to the banks. Why all the talk of QE @/ QE 1.5 or 1b, maybe. Its laughable.

    Also, I got news for you all. We can’t have a double dip recession. Why? Because we’ve never left the first recession. Sure GDP shows 1.5% growth, but the growth is based on trillions in increased debt. So, do we have gains in productivity? No. Productivity continues to decline. We are in the beginning stages of a long drawn out depressive period in the US.
    I’m sick of the media. And politics.

  44. GK

    Well said Fubsy – QE1/2/3 – the printing presses will run. Per Gary’s post from a couple of days back, the next new industry will be the savior not Bernanke and the Fed nor our politicians on either side of the aisle.

  45. Elaine

    Fusby,

    Agreed. In the AZ morning paper they reported that two banks have missed their second TARP payments and both banks missed their quarterly payment on preferred stock in May.

    “Dan Govinsky, president and CEO at Gold Canyon Bank, said the bank’s main regulator, the Federal Reserve Bank, told it to discontinue paying the dividends to bolster its financial position.”

    The headline on the front page “ARIZONA RECESSION OVER” meanwhile, unemployment is up.

  46. Anonymous

    Today was the first day gold finally rose up and closed above the huge wedge formation.
    http://img525.imageshack.us/f/goldpic.gif/
    (it isn’t drawn perfect there, but you get the idea)

    Popping higher to 1300, nailing some buy stops…then reversing back *into* the wedge would count as an exhaustion and false breakout in my book – likely giving us whatever pullback is now due into early next week.

    I’ll be the first to say, however, that this thing is amazingly powerful. I sold my leveraged position fri and just have core. That’s life with a bull.

    –TZ

  47. Anonymous

    Let me further explain my comment: there is a special feature of people buying a breakout and then coming to their senses (or realizing they got emotional and/or overleveraged) and exiting or getting taken out the next day. Sleeping on it overnight tends to have that effect.

    The break to another high and rise above wedge was 20-30k comex gold contracts. Large. (You can look at GLD volume on the same move instead if you don’t a futures feed.) That’s a lot of people who might realize buying on new highs can be risky.

    So…that’s what i’m looking for. Obviously ‘old turkey’ buy and hold stuff still in play. These comments are maybe helpful if somebody does some leverage or has continued income from a job and thus is applying more funds over time. If you can get a better entry by holding your paycheck a week or two it could be valuable. Again I say it hasn’t worked much last month though.

    -TZ

  48. Anonymous

    If gold rises higher tomorrow, stays above wedge and keeps going – especially into futures options expiration monday – then all bets are off. Probably buy in with your lunch money 🙂

    -TZ

  49. Anonymous

    A large chunk of that volume after 1285 fell was from the idiots shorting gold with buy stops right above that fake resistance. It was vicious!

    Aaron.

  50. Anonymous

    Gary
    noticed the dollar has broken down shouldn’t that put upward pressure on the market in the near term?

  51. Anonymous

    I see where that buffoon Precther is still calling for a top. LOL

    Why anyone would listen to that idiot is beyond me.

  52. LowTax

    Fubsy, that’s not the half of it. When the Fed buys Treasuries from the banks, it pays them with cash THAT CAN THEN BE LEVERAGED BY ABOUT 12:1. So not only do they make 2-4%, but they do so AFTER they buy 12 times as much as that cash would normally allow. Yes, QE never stopped.

  53. Anonymous

    did you go to school for this stuff you banter about? you should be banned from the internet, its crooks like you , living off of other peoples money.

  54. Anonymous

    I’ve made over $100,000 from the G-train’s “banter”.

    Maybe you should listen to what he has to say so you could make money too.

  55. Anonymous

    Anon 5:47,
    You must be kidding right?

    In case you haven’t noticed Gary has been spot on with every one of his calls for almost a year straight.

  56. Shalom Bernanke

    anon is just jealous of the G-Train cuz he’s making everybody lots of money, that is if they’re smart enough to listen.

  57. Anonymous

    Yes I too have caught Gary on a couple oops!

    But then you have Anon1 and Justin too.

    Multiple personalities are part of investing in gold apparently. Of course I am the only one here, talking to myself, so it seems pointless to tell myself what I already know.

  58. Natanarchist

    Hey gary..you were ‘bantering” a while back about a sub SMT get together..are you still considering it? If so . let me throw out a time frame….some time shortly after the timing band for a D wave to start. All us subs of course will have lightened up to our core, and of course banked some nice profits. Now I understand from some reliable sources that the depression ended, however, we still might want to keep it somewhat frugal. Like the lower 48. I know Hawaii was a consideration, but Vegas might be more fun…(maybe not for you of course, cause you live there)and since the economy sucks lots of good deals. How about New Orleans?

    Mr. Anon 5:47 clearly you went to one of those “schools” where they fed you a bunch of BS, and you paid 100 k or more, and can’t understand that you were lied to. You might want to ask your school for a refund. Buy a subscription and invest the rest and you too will be able to have secure financial future. You understand that 90% of politicians and the FED only steal your wealth. Us little guys here are just taking the right steps to not let that happen to us. Let that wash around in your brain for a bit, so that next time, you will put your brain into gear before you let mouth take a walk.

  59. fubsy_cooter

    Does Bernanke believe he’s doing the right thing? Just curious how others read this guy. He looks to meek to be evil. I mean, he would have to be a better actor than Joaquin Phoenix to pull this off as bs. I think he may really believe he’s doing the right thing. Scary!

  60. Gary

    Nat,
    Still planning on Hawaii the first week of Dec. That appears to be the slow season. And gold should be moving down into an intermediate cycle low. I think if we can get maybe 15 to 20 people I can probably get a decent weekly rate out of one of the hotels.

    Once we get a little closer I’ll sart making further plans.

  61. Keys

    Mr. Anon 5:47 clearly you went to one of those “schools” where they fed you a bunch of BS, and you paid 100 k or more, and can’t understand that you were lied to.

    Oh my heart…I was one…not 100k, but yes a pretty penny for pure bull. Oh my heart, I could have spent $200 on smt and made a life, but so is life. To be clear 110% of school is 299% BS. If you understand the math, you understand why PMs are 100% of your portfolio.

  62. Anonymous

    Just noticed there was a little over $100 in SPY BoW today, which is surprising given how late we are in the cycle. Can we make anything of it, or is the figure too low? Between this and the dollar and the final push to $1300, it seems like we may get yet another day or two of gains (and short-covering) in the market before we start to finally dip. Brutal for them bears.

  63. Anonymous

    Shalom Bernanke knows exactly what he’s doing, just like the rest of the cabal. They are nothing more than thieves. Just like politicians, we shouldn’t expect them to admit any of their true interests.

    It’s not just the recent crises that has looted our currency. The dollar had already lost 95% of it’s value since 1913 when the Fed was ok’d to print this nations money.
    It’s the easiest and grandest way to steal from an entire nation’s tax base. Of course they still do it in other ways too, like bailouts that nobody wanted (extortion).

    They will rip you off until you hang them. Same as always.

  64. Shalom Bernanke

    When does Justin admit he’s wrong and stop the bleeding?

    He better not show his face around here unless he’s buying a subscription! I will debase the dollar to nothing, but hope to do it slowly enough that the masses don’t flip out.

  65. Anonymous

    Come on Justin. Be a man and just admit you blew it. You chose to stand in front of the train when you should have been riding it. 🙂

  66. bigTomato

    Gary –

    I like your troll meter for picking bottoms. Have you ever thought of a taunt-0-meter for picking tops? Sometimes the winners can be just as informative the losers, no?

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