The S&P has now formed a swing high and we finally have a little follow through on the dollar rally. We are late enough in the daily cycle that this should signal the beginning of the decline into the daily cycle low for stocks and gold.
For the many reasons I’ve discussed in the nightly reports this correction shouldn’t last very long but it could be sharp. If, and this is a big if, the dollar can tag the historically significant 80 level which also happens to be where the declining 200 week moving average comes in that would be the point where one could take a shot at picking the exact bottom of the cycle.
I really doubt we are going to see the dollar regain this major resistance level for the duration of this 3 year cycle and there is a strong possibility that we may never see 80 again until the secular bear market for the dollar ends.
A tag of 80 would be the spot where one would want to add to precious metal positions for the continuation of the current C-wave.
Make no mistake this still has a long way to run yet.
The swing high was negated that very same day as the market formed an outside day.
Gary,
While I completely agree with your Big Picture Fundamental views, sometimes your being so sure, scares me!! Really need to be old turkey here!
I’m definitely gonna git some more gold into this dip. Only we at the Fed know the extent of what we’ve done to the dollar!
Pretty neat how we convinced the population that we’re a government institution just by putting the word “Federal” in our bank name, eh?
http://www.cnbc.com/id/39626164
Google plans an INFLATION INDEX!
http://quotes.ino.com/chart/intraday.gif?s=NYBOT_DX&t=f&w=15&a=2&v=w
Also the dollar, to me, looks like a perfectly angled buy program is ramping it up. They are chipping away at this thing and after a 2 month gold rally I *think* they can crack it to the downside in another day or two at most.
Until the dip buyers fail a couple of times, they are going to keep buying the stock market down moves. This happens whenever the stock market is at a near term high, and is just normal.
Nick,
Hey when something happens like clock work for 40 years in a row and the Fed is doing everything it can to destroy the dollar one just has to go with the odds.
Nick: I used to have the same concern about Gary, but he does waffle when appropriate (“The dollar may hit 80” “”We may be in a runaway move”, etc.) His biggest conviction is that gold is in a bull market, and that seems pretty obvious. I’ll be interested to see how he handles a reasonably significant bad call (but I haven’t seen one yet. 🙂
DG,
I missed last July. I thought the market would continue down after testing the declining 200 DMA. Instead the Fed aborted a failed and left translated 4 year cycle with it’s printing press. It took me a few weeks to realize what I was witnessing since it had never happened in history but once the 50 crossed above the 200 and the 200 turned up it became apparent that the bear market had been halted.
I was also too early in Jan when gold formed a weekly swing but still dropped down one more leg into a very stretched intermediate cycle.
Dollar looking really pathetic.
GARY,
I know the losses/damage are already in the system. I know these trends will continue. You ignored my comment that if 90% of the people expect the fed to do X in Nov and the fed starts indicating they wont then it will have market implications – even if short term.
You don’t agree with that?
Yes the market is aware that QE2 is coming so there isn’t much urge to buy dollars even into severely oversold conditions. This may be one of those times where fundamentals trumps everything else.
Although we will certainly see some kind of bounce it may just be very short.
I’m not advocating the selling of ANY positions or shorting (based on this fed talk, etc.). I’m again just hoping (bad word in finance) that there is a break in the momentum long and sharp enough to flush some weak hands and give a good adding point.
Possible sell signal! If the Dow can close up today I will get a sell. Not sure how much rally would abort the signal (That is, if we close up over 100 I probably won’t get it). I will post late in the trading day. The sells are not as accurate as the buys, but given everything else this one ought to work, which would mean an immediate drop of at least 1%.
Hmmpf, Can’t make heads or tails out of this action. Dollar up, gold not down much. Dollar /dx goes red and gold is still down -6/oz.
Im wondering is there is something in the FOMC that has been leaked, leading to this bizarre action today…
GDXJ leaps!
This must be a very recent addition, you could never buy leaps for GDXJ. Unfortunately the ’12 and ’13 Calls don’t offer any deep in the money.
Gary, when did you say we might expect a final blow off top? Don’t want to pay for more time premium than necessarily 🙂
very strange movement in gold indeed. Don’t have a clue what to make of it
Poly,
The best time to buy calls is at the bottom of intermediate cycle lows. That won’t be for a couple more months yet.
An even better time is at D-wave bottoms. That won’t come until next summer.
Blake,
Quit trying to figure the bull out, it will never happen. Remeber me saying the bull will do everything possible to throw people off?
Gold is due for a cycle low. And if this isn’t a run away move then that correction will happen no matter what the dollar does. Heck gold as been disconnected from the dollar for some time now.
Gary, it looks like the $ could get a swing high here if tomorrow it moves below today’s low. Correct?
Thanks Gary, I hear you.
To play the current C-Wave, would you play the Feb or May 2011 calls? basically are the Feb calls enough time to capture the whole wave?
I’m playing them fairly deep in the money and will likely hold to near expiration. Just want to capture the most of the wave with a fair amount of cushion. Cheers.
You would have to go out to June and you are going to burn up a lot of time value during Dec and Jan as gold consolidates while the dollar bounces out of the yearly cycle low.
Today certainly isn’t the day to be buying calls of any sort because gold may be moving into a daily cycle low.
D,
Yes it could but I don’t thinkl the dollar rally has topped just yet. We could get a test of 80 in the next two weeks. That’s where one would want to try and pick a bottom. Wait for that or wait for the stock market to put in it’s daily cycle low before doing anything.
http://www.zerohedge.com/article/goldman-tells-clients-buy-comex-gold-13642-raises-12-month-gold-forecast-1365-1650-silver-27
Upping gold rather publicly is not a good sign. They tend to do this (in my opinion) when they want to unload something or near a peak.
Gary: a big BoW number just popped up (we’ll see if it hold until the post-close posting). I believe you have said these things are often early, but if this holds it adds evidence to your (and my) opinion that the correction will be sharp and short, eh?
http://www.zerohedge.com/article/goldman-tells-clients-buy-comex-gold-13642-raises-12-month-gold-forecast-1365-1650-silver-27
Upping gold rather publicly is not a good sign. They tend to do this (in my opinion) when they want to unload something or near a peak.
I can’t remember the last time I did a day trade. Used to do trade all the time, but markets have been absolutely dead midday.
TZ, that Goldman calling for $1650 is old news- about 1 month old. People were saying the same thing you are now when they released that, and at that time Gold was trading at $1250.
Clear out the noise…
Close ’em! They are up and I’d get the sell signal
Robert,
All the news on goldman’s upping gold is today. I don’t see any evidence it was a month ago or that it is ‘noise’.If you have a link that would help.
Regardless, the fed minutes just out “..Fed Officials Were Prepared to Ease `Before Long,’ Minutes Say…” isn’t helping the pullback scenario. Perfect storm.
Grease up those printing presses– Call the paper suppliers and tell them to get mass quantities ready for shipment.
Gary, the S & P just met your criteria for an outside day, do you believe we can still undergo our swing high in the coming days?
I have a strong feeling we still correct over the coming 5 or so trading days.
The market has to pause sometime, if anything this is a classic case of “sell the news”.
This whole tape release thing is over the top IMO. Who needs to hear the Fed say they will stimulate via audio when we’ve gotten the message in the markets now since Q1 2009?
TZ,
I remeber the GS call a month ago too. Actually it might have been more like two months ago.
Robert,
An outside day just negates the swiong high is all. It doesn’t mean ther will be no move down into a cycle low.
Now’s the time to short the market, albeit for less than two weeks most likely.
Robert,
I raise the issue about goldman not as ‘noise’ but because I have actually done research on their past announcements and the results.
There is a correleation between them making a big public (bullish) announcment on a security and that security peaking. I’m not going to go into the specific results cause I put the work in and it has value, but suffice to say a warning when they do this is warranted.
GARY,
>I remeber the GS call a month ago too. Actually it might have been more like two months ago.
All annoucements are not the same. It depends on whether the annoucement is wildly bullish or just sorta following the market up. It also depends on how widespread the announcement is pushed.
If the announcement is sorta a low buzz leak of a mostly private report it isn’t the same as a public proclamation with lots of news behind it.
I can’t find a record of whatever they did a month or two ago (which in and of itself indicates something.) If someone can provide one or the price they recommended I can look to compare it to now. THanks.
I know that no matter what GS does or says I’m not going to be exiting this C-wave until the dollar reaches the 3 year cycle low and we see “normal” C-wave topping signs. (HUI stretched 40-60% above the 200 DMA)
Gary, I agree. NONE of what I say is reason to sell. I am NOT trying to scare people out of holding turkey. It is a discussion for possibly education purpose only, and in the future (closer to significant tops) it might be more beneficial. For now, again, I’m only hoping for a pullback to leverage more. Such that everybody else seems to be doing the same it still seems doubtful.
TZ: I suspect there’s a way for you to write more clearly so that you do not have to always say later, “I am NOT encouraging people to sell.” Maybe if you used the qualifiers in your short-term analysis there would be fewer misunderstandings. There have been so many future caveats that one has to wonder whether cleaning up after the fact isn’t inferior to being clear with the initial posting. Just a thought…
TZ,
Here’s zerohedge’s August 11th article calling for a gold top then because Goldman came out with a 9 page report calling for gold to go to $1300 in six months.
http://www.zerohedge.com/article/goldman-goes-goo-goo-gold-gold-market-poised-rally-us-real-rates-head-lower
I would have to agree with this statement which was in the forum for that August 11th article:
“It looks like The Powers That Be are getting quite worried about Gold considering they’ve started the overt psychological games again, only this time with GS headlining. TPTB don’t usually bring out the big guns unless they feel they’re needed.”
Remember this is the semi-rate, ever-powerful C-wave, usually this is when the bull bucks hardest but for the longest.
Stay tight, even through this possible minor and mild correction.
… Gold was around $1240 when Goldman released this article, exactly two months from then gold has gone up 9% (that is a very nice 2 month gain!)
I have always found it fascinating that contrarianism has become so well known that everyone tries to do the opposite of what everyone else is doing. Ken Fisher wrote a great piece once called “Le Crowd C’est Moi” encouraging people to do the opposite of what their own emotions are telling them to do, and not to worry about everyone else so much. If I allow myself to feel it I almost always get a feeling in the pit of my stomach at bottoms and a feeling of elation at tops. I bet against those with regularity. GS be damned!
TZ how much you want to bet we’re in a C-wave?
Simple as that isn’t it?
Then again leverage never makes anything simple 🙂
still on track for a sell if we close up, but it looks like up about 50 or more may abort it. Will write again right before the bell.
Intel announces earnings after the close today. Since mid 2009, the market has sold off after the Intel announcement, even though the earnings have been quite good.
FWIW
The S&P has pushed right up into the 1175 resistance level. I would be surprised if it could get through that with any confiction before the daily cycle low startts to drag the market down.
Gary,
Are you aware of similarities/differences between your cycle analysis and Martin Armstrong from Princeton Economics cycle analysis? He may be more of a philosopher than an economist but he does present very detailed cycle theory.
I would like to compare both of your theories (and yes I know your cycle theory is from someone else) and see where they agree and disagree. If you have advance knowledge of this it would save me the time (not like I don’t enjoy though anyways). 🙂
Regarding buying calls to take advantage of the C wave that is in progress:
IMO it’s very difficult to make money buying options. The market can continue to go up, but your call options may not go up due to loss of time value. The way to make money in options is by selling them, or perhaps with spreads.
Why not just buy directly into the gold and silver market? Lots of ways to do this now with the ETF’s that are out there: GLD, GDX, GDXJ, SLV, SIL, to name a few.
I do have his website marked but I never read it and I’ve haven’t tried to compare the two systems.
I also combine sentiment, money flows and a bit of TA to the mix to refine my signals.
Right now we are missing the money flow part of the equation and sentiment isn’t terribly extreme so it could be that the dollar will make one more push down to 86.50 before a final cycle low. Possibly at that point sentiment would reach more extreme bullish levels and we would see a large SoS day that would signal the short term top.
Or this could just be one of those daily cycle corrections that doesn’t have a SOS day prior to the top.
Armstrong uses cycles, but those are very very long term. He’s got those crazy channels on gold & the SPX that go back to the turn of the century. It’s hard to make out where the support and resistance levels are on that prison type writer faxed copy with scribbled notes report he puts out! 🙂 I do know if we break above his channel on gold then all bets are off! To me, we should easily do so this year.
ANV getting spanked pretty had today. Any takers?
Gary—I thought it was the intermediate tops that were accompanied by SoS days. Are you saying the daily cycle tops are as well? If so, what percentage approximately(80% of them? 60%?)
Sell signal imminent. I am not planning to do much as this market has me baffled. Too much reliable stuff is not working.
DG,
Yes virtually every intermediate top is accompanied by a SOS day or two. It’s not unusual to see a mild SoS day prior to a daily cycle top either. Not always but often enough that I tend to look for them.
Dollar’s sure looking like it wants to probe lower before making a daily cycle bottom. Just can’t get any spunk in it for more than a couple of hours.
Jayhawk – I’ve been noticing ANV’s weakness today (and of late) too. I’d probably be interested if I was buying individual stocks, but I’m not. I don’t see any news out there on it, so who knows.
Regarding buying options, I think just about everybody should stay away. Probably more Joe Retail money is sucked away in options than anywhere else. The allure of scoring big with that huge leverage is a siren song (especially the OTM, for course).
Selling ’em can work out quite nicely, with less risk. Though even that can catch you off sides and bring pain.
I have to agree about the options. Our best opportunity was last Jan. but the C-wave decided it would take a year to consolidate instead of finishing the move so that one didn’t work out so well.
The next best opportunity will be at the D-wave bottom.
As they say, it’s hard enough to get the direction of price movement right (unless, of course you correctly identify a secular bull mkt), but to get the timing right is very tough.
I also don’t buy the B.S. about how you can limit your losses to a predetermined, known amount with options and therefore they’re somehow “safer.” That’s just crap. I’m simply amazed when I hear that one. It’s a sales pitch line.
I mean it only makes sense if you assume that you have to make an irrevocable decision that can’t be monitored along the way. You can obviously limit your downside risk with stocks/ETFs with stop limits. And do so without the killer that is (can be) massive leverage.
Onlooker,
If used properly options can be a great tool for controlling risk. The thing is to not use them for leverage and only buy deep in the money. Just substitute options for shares. So if you would only buy 100 shares if you were trading the stock then you would only buy one option contract. In that case you won’t lose anymore than you would trading the actual stock.
And if you bought DITM you will actually lose less if the postion goes against you for a while as time value will increase as intrinsic value decreases.
I don’t necessarily disagree with that Gary. But then most don’t do it that way, and there’s also the question of why not just own the shares then? Even if done with some leverage. Then you don’t have to get the timing just right and complicate things much more.
I realize that there are also people who understand all aspects of option trading and can make money doing it. And for big money they can be a great way to hedge a portfolio, and other sophisticated strategies made necessary when you’re so big that you can’t operate nimbly in the markets.
But when Joe Retail gets into it, it’s all too often a train wreck.
Well the reason to buy options instead of shares is a much larger return on capital of course. But like I said one has to use options correctly or they will destroy one’s account.
I am planning to purchase out of the money options on the QQQQ at the stock market intermediate low due in November (if Gary can identify it properly :). There are three big considerations that I factor in when buying options.
1. Identify a significantly strong stock market period. In this case it’s the period between November and May starting in the second year of a presidential cycle.
2. Identify a significant market low at which to buy. In this case the intermediate cycle low.
3. This is the most important consideration. Always use someone else’s money to buy the position. By this I mean to use about 10% of this year’s YTD profits for the purchase.
@ Robert and/or Gary:
Robert said “I know your cycle theory is from someone else”.
Could you please give an indication as to whose is this cycle theory that Gary uses?
A link, a reference would be much appreciated.
Thanks.
I follow basically the same cycle analysis as Tim Woods at cyclesman.com although I don’t bother with all the technical indicators he uses.
This comment has been removed by the author.
Wes, I like your approach to buying options, but never do so myself. Here’s why (and please tell me why this reasoning does not appeal to you.): I always have a good chunk of cash lying around; that is I am virtually never 100% invested. You never know when a great something or other will show up. GIven that, I don’t need the leverage of options. Just buy more QLD. One of the great troubles people get into is too-large position sizing. If someone is stretching to get that little extra kick by buying calls, they are probably too heavy. Lots of QLD AND Q calls. Then if they market moves against them they really have a decision to make. Markets can stay irrational longer than you can stay solvent—and especially if you are hocked. Thoughts?
Just came across a book on Amazon:
Shoptimism: Why the American Consumer Will Keep on Buying No Matter What
I have not read the book below, it has 4/5 stars on Amazon based on 9 reviews – The Title is amply suggestive of all the mess we are in with the officials (elected or otherwise) doing nothing to bring about “change”
G-Train,
In your opinion, will this affect gold favorably over time, or might it be too deflationary?
http://www.zerohedge.com/article/citigroup-call-implications-foreclosure-crisis-just-tip-iceberg#comment-644743
Then again, I’m Shalom! I’m already invested in hard assets so can afford to print as much as it takes to keep asset prices stable.
I can tell you that nothing short of the Fed jacking interest rates up to 15% and deflating their balance sheet by a couple of trillion dollars will have any effect on the bull at all.
Bull markets rise until the fundamentals change and even then there will be a bubble period where price will continue to rise based on nothing more than public greed. This one will be no different than any other secular bull and I expect it to be the greatest bull market any of us will ever see.
DG,
I am talking lottery ticket when I buy out of money options on the QQQQ. I usually buy the strike price that yields a $1.00 per share ask. And I try to buy in size about 6 months out.
In order to win on a bet with odds that long, you have virtually got to be right on everything. If you are, you will make multiples of your money, not percents.
I know of no reasonable approach where you could expect to even double your money buying QQQQ or QLD.
We’re talking serious lottery ticket odds here.
Hope this helps.
Yeah, makes some sense, but if I were to buy a lottery ticket I’d buy maybe $50 worth, so tripling it doesn’t do me much good. For me, I’d rather make 20% on $200k than triple $5k, but I get what you are saying. Thanks.
@ Gary:
Thank you Gary. Unfortunately, there isn’t much by way of educational content on Tim Wood’s website. Would it be too much to ask you to indicate some of the sources you yourself used?
C,
I do have a farily indepth explanation of how I use cycles in the terminology document on the premium website.
DG,
I use the out of the money option with enough money so that if you’re right, you can buy at least one car.
That’s why it’s important not to use your own money.
Good videos I found linked from Max Keiser’s site the other day. Thought some of you may like this Harvard business grad telling you how the world really works:
“The Rise Of Financial Empire- Revisiting American History”
http://www.youtube.com/user/councilonsper#p/u/0/l37RhdFGVsM
Also check out his other videos, the topic Money As Debt is highly highly highly important IMO.
I hope your kids are different…
Ninja Generation: No Income, No Jobs, No Assets
Wes, That makes sense. I like the idea of playing with the house’s money and shooting to make a good year into and great one. I remember when I was in the business buying 100 Homestake Mining puts at $2 (when that bubble popped in the 80’s) and selling them ten days later for $6. Those were the days! Haven’t done anything remotely like that since (sigh). If it works for you next time you try it, make it a nice car and give me a lift somewhere. Let’s hope we both catch the next decent bottom! I could use a dip now to cover my stock shorts and get longer the PM’s. It’s starting to feel like they will NEVER go down…which usually means they are about to…
I did very well with the call options coming out of the last intermediate low, but all the stars lined up perfectly. The stock mkt and gold were hitting that low at exactly the same time. It really couldn’t have been a better scenario. Gary is right. That is the only time to try what I did. Needless to say the % profits were large.
The thing I don’t get, is I keep reading TZ’s action here, but why did he not see the same line up of those stars? Intermediate bottom in the stock mkt AND gold at the same time. How does it get any better than that?
Gold correction at $1300, no now gold correction at $1350, wait, wait a second, sorry, gold correction at $1400. God I love this bull market.
Gary,
The dxy is currently at 77.17, gold at $1354 as I write this.
You speculate that the dxy might move down and test 76.50 (about only a 1% decline from its current levels).
You also speculate that Gold may move up to 1400 when the dxy does this 1% test. Do you really see Gold moving up by a little over 4% with only a 1% dxy move?
Also do you have any data on the average percentage move-up in Gold versus average percentage move-down in the Dollar?
I know this is really easily to calculate but I’m also wondering how you go about calculating it (would you just use previous c-wave percentage ratios?)
I know it may sound stupid trying to make unpredictable emotions into a simple science, but I still want to see what you think about this ratio discrepancy.
Thanks,
Robert
I’m just guessing at $1400. Gold is trading in a vacuum. So the only resistance levels are psychological at this point. The next possible resistance level would be $1400 if gold can get through $1350.
things are getting pretty outlandishly bullish.
guaranteed we are very very close to a short term top.
not chasing here…
Jason at sentimentrader points out that the SPX has gapped to a new high on INTC earnings 8 times in the last 15 years. Seven of those times it was an average of 2% lower two weeks later. The one time it was up, that two-week later higher day marked the closing high before a 12% drop in the Q’s. Buyers beware here!
Gold will still test $1300 in the next three weeks.
Anyone want to bet?
I’m saying it will touch in the $1311.xx’s.
“I’m saying it will touch in the $1311.xx’s.”
I believe you meant to say, “I’m praying it will touch in the $1311.xx’s”
Up, up, and away, I can print us to prosperity, each and every day!
Poly, you are correct, but my prayers always come to fruition.
I think we can ignore Jason’s data. The fundamentals are entirely different than any other time in history.
In order for the market to correct we have to see the daily dollar cycle bottom. The continued weakness suggests that last Thursday may have been a fake out and there could be one more push down before the dollar rallies.
We will get a correction though. Of that I have no doubt. Daily cycles sometimes stretch but they never just disappear. One more push up to the 200 week moving average should push sentiment to extreme levels too.
I’m not sure I would “ignore” the data, but I agree that historical correlations like that imply that things have not fundamentally changed. The dollar collapse is clearly calling the tune for now. Nonetheless, “This time it’s different” is an often dangerous idea (“This time INTC doesn’t matter”) which is why I suggest not ignoring it. Given the dollar situation, though, I shorted only lightly as a hedge against my PM longs. We’ll see what the next week looks like. Interesting that INTC is down on the day now.
I believe the market will just roll over the INTC tendency as long as the dollar is dropping.
Good thing you didn’t take that trade DG, and short stocks. This is ridicalus. 🙂
Yes, I agree, but these things tend to be synchronous, no? Why can’t the dollar stop dropping right now? It doesn’t have to hit 76.5 any more than gold had to stop at $1300. 76.50 is just a line on a chart. Makes sense to tag that level, but it certainly doesn’t have to. Agreed, “As long as the dollar is dropping” but that statement is coincident and not predictive.
True but I’ve also found that quite often markets will manage to tag a resistance or support level before the cycle tops or bottoms.
I’m starting to wonder if the dollar hasn’t decided it’s not going to bottom until it hits that support level.
DG,
I think I am understanding Gary’s line of thought here:
“
If
Swing Low in $$$ before 76.5,
Then
Cycle has bottomed and $$$ rally.
However,
IF:
$$$ violates prior swing low,
THEN:
Since next level of support is 76.5, more than likely it will go there, unless it forms another swing low.
The 76.5 level would also make sense…Drop the $$$ a little below it, draw in $$$ bears and then reverse it hard up towards 79-80.
Thanks, Gary, that was a good debate and exchange (It’s great having the trolls gone. Maybe let them post again next time we need the troll meter!).
BTW, A touch of SoS is showing up—let’s see if it expands or goes away.
Picking winners with blindfolds and dartboards is not what I do.
I’ll be playing golf today.
Nick: Yes, I understand. I am just saying that 76.50, while likely, is not written in stone. Nothing works all the time (or everyone would be rich!) I look at many data points and when the weight of the evidence is heavily on one side, I act. Too, the dollar could go down and the markets fade anyway. After all we are only talking about another small move on the dollar to tag 76.50. Or it could tag 76.50 overnight and rally by the NYSE opening, or… I never marry an idea, because then you miss setups. My motto is “Take your best shot and play with stops.”
And I will be climbing rocks 🙂
top-callers are being pounded…
Looks like $ just tested the low … = double bottom
Well…so much for the extreme RSI discussion. I lose that one too. Kudos to HIPTWIST. New highs on a day when I said we’d be seeing correction lows.
ROBERT: I *agree* with you this is a C wave. Have never made the argument it is not.
BRIAN: Regarding the intermediate low 1156 on gold and why I didn’t “see the stars line up” or missed it – I was new to Gary’s site. I expected mediocre resuls like any other site where the person is right/wrong about as much as I or anybody else is. Have never used cycles. Didn’t have any confidence in them. Had more confidence in my own tools which worked on all previous C waves. I actually had bought the 1156 low with gold futures, but sold it about 24hrs later thinking we had one more leg down. If you recall we paused flat for about 2 days then rallied never to return. I only have core position right now, no leverage yet like on previous C waves. It’s ok. This is how markets work. I still eat fine.
I concur with DG that fairly certain things that used to work are not. This is even option ex week after a two month rally and we are still going up. Wow.
TZ: Yeah it’s really something, but as you know just when you think, “I guess all the old rules are out the window” they top out. It’s annoying to have a flat day with gold up so much, but I am having a great year, so I’ll live. My entire net worth is in cash and available to trade (we even rent—glad not to own a house right now), so a 15% “trading year” is 15% on my NW. Of course, I wish I had dumped half of it into gold at $1156, but I had just discovered Gary myself the month before, bought a small chunk then, and he has been very helpful ever since. (Thanks Gary.) No one stays hot forever though. Are you old enough to remember Joe Granville? Even Don Hays was super hot for years until he got mangled in 2008. Babson in the 20’s. May Gary stay on track forever! (But don’t bet the farm on it.)
Jesse has been posting this chart since the spring! His chart has said $1,375, a retrace and then off to $1,455.
http://2.bp.blogspot.com/_H2DePAZe2gA/TLTGoxlSBOI/AAAAAAAAO2g/zGm1b0_HJD8/s1600/golddaily16.PNG
$1,375 is the high today.
I’ve got an observation here. I’ll use SLW:
http://finance.yahoo.com/q/op?s=SLW+Options
Unlike in the past, you will notice a large number of puts immediately at or right below the current high prices of the stock. This is not normal.
In normal times, people buy puts lower down and the calls are higher up or above the market. Then when you get to option ex week, it is profitable for the stock to drop taking out the calls and stopping just before it starts putting a lump of puts in the money.
What you can see here on SLW (and undoubtedly many other metal securities) is that the market players have now come to fear or expect that action. They are looking at SLW just like I and others are and saying “Boy, that thing is a monster, just wait till it corrects and CHOPS OFF some heads” (Like in the past).
So everybody is now buying loads of puts very close to stock price. Hell…the LARGEST lump of puts is the CLOSEST to current price – at 27! In fact SLW only even closed above 27 ONE TIME so far and that was by 4 cents a few days ago. Yet people scrambled and loaded up on the 27’s. So people are actually buying puts HIGHER than the trading price of SLW for this month. Crazy and completely out of character.
A further conclusion if this option pattern is on other stocks is that due if a large number of puts is protecting stocks from dropping, then they WILL NOT DROP into it. Markets don’t usually move to give people easy money. Options usually expire worthless.
It would then further follow that the least amount of resistance to such a drop (*if* it will happen) would be the week immediately AFTER options expiration and well BEFORE the NEXT option expiration – when those puts are not protecting.
IN FACT…
http://finance.yahoo.com/q/op?s=SLW&m=2010-11
Looking at the Nov options for SLW we see the more *familiar* pattern of puts substantially grouped lower than the stock and not pressed right up against it. NEXT month’s options (so far) then allow the normal pattern of a drop reducing the value of calls, but not dropping enough to really hand money over to puts. As said earlier, that situation does not exist this month/week.
Using next month’s options seen there we could suggest 26 or 24 as levels where SLW could drop to to neutralize a majority of options.
Maybe wrong or right, just something to consider.
“Well…so much for the extreme RSI discussion. I lose that one too.”
TZ, it’s not about beeing right – it’s about making money. I try to have no ego in this game. I hope you hadn’t invested too much to play another day.
Here’s something completely different: A nice introduction to junior miners:
http://www.caseyresearch.com/editorial/3751?ppref=ZHB189ED1010A
CORRECTION on SLW puts. The highest number for this fri is actually at 25 and not 27, but only by a small amount. Same argument though. How often do you see such large put volumes immediately up against the current trading price of a stock? I actually can’t recall a previous time
HIPTWIST,
I’m fine. The actual issue (like others) is not having enough invested long. When miners go up you want more. When they go down you swear you have too much 🙂
None of my RSI discussion or other stuff is me betting on shorts or a decline (unless you consider a ‘bet’ to be waiting to buy more. On that I have lost so far as I mentioned).
We MIGHT be halfway through this C wave end run so I’m not worried about coming out with nice profits.
TZ: Interesting tutorial on options. Thanks. Makes me think I may have to study that stuff someday (but not yet…)
HIPTWIST,
I post what I do cause they are honest opinions and observations that I think have merit (to ‘make money’ as you say). They usually don’t fail me repeatedly in the past and I’m not intending to hurt or mislead the conversations on the board.
I’m certainly not going to post jabs and predictions and whatnot like others and then disappear or not own up to it when they don’t pan out. I’m here to try to learn and make things better.
That RSI thing, for example, was a valid view and I gave my reasons for saying it. Now that it didn’t work out and I am wrong I’m gonna admit it and move on wiser. The goal is to make money from this and get as many burritos from gary as possible.
DG,
I’m not an ‘options guy’. In fact my statements to people are, generally, that “Options are a great way to lose money.”
I came to learn some of what I described above during the sharp drop in May 2010 when gold and slw plunged during option expiration week. It’s fresh enough that most should remember.
There were loads of calls in the money and few puts to stop a decline. The big guys trashed the sector hard, wiped the floor with the options (and me too) and the stocks and gold were back up near previous levels a week or three later.
I don’t like losing and I don’t like repeating the same mistake. Since that week I now ALWAYS review options to see where the weak zones lie and this week it is not lower.
Note that I didn’t have options during the May example. What I had were large gold and slw positions and I wasn’t expecting a drop.
Had I looked with my knowledge now, I would have clearly seen weakness and a target zone based on the options that was substantially lower. The drop caused me to panic, lose money, and sell positions. Live and learn.
The option distribution for that May week (just like ME and other players) was clearly showing that a pullback was not expected and not protected against. Thus it happened. Weak hands.
The options THIS week show everybody is scared like hell of a drop and loaded with puts. So it isn’t happening.
I’m a put writer this week but my gains would have been 8-10x greater if I would have just bought at 34+. Habits are hard to break. My intellect is willing but my emotions are weak :*(
Gary,
when are we going to short the gold market??
i kid, i kid
I got bucked!
Out of all leverage, sold AGQ @ $99.75. Gary, thanks for the ride up from $55, it was FUN…and profitable 🙂
I just didn’t have the Cahoonas to ride it higher, even after your repeated warnings. The core still working hard.
So, in conclusion, the price of (paper) gold will plummet!
That’s right. At some point in the future, after the price of gold rockets upward, it will fall like a box of rocks!
But here’s the challenge. When the price of gold falls to $200 per ounce, try and get some physical. I’m sure that Kitco will sell you some from their pooled account. And GLD will be standing ready to sell you a share at $20. But just try to take delivery. I think you’ll find it will be impossible at that point.
And that’s why you’ve got to take delivery NOW, at the current “high” price of $1,300. Oh, yeah, the big dip is definitely coming. A **BIG** “correction.” But will there be any physical available? Perhaps at $1,200 if you’re really lucky. At $200? No way.
http://fofoa.blogspot.com/2010/09/shoeshine-boy.html
wow, amazing insight “knifecatcher”
at some point in the future gold will drop.
Just like we’ve never seen $150 gold after the last bear market we will never see $850 gold again even after this secular bull is finished.
Wow. Just wow. The dollar barely budged and gold soared. The statement by the Chinese saying they will expand their gold reserves is stunning and will add major buying pressure to gold. Gary, I think we’re out of luck as far as the cycle tool – this sucker doesn’t want to sand still for longer than a wink.
Just unloaded IAG and EGO.
They’ve been underperforming during this rip, so I will move funds into GDXJ and SIL.
I now have %15 of my funds off the table. Hoping to get fully invested again on the correction that, it seems, will never come.
The QQQQ hit a yearly high and the NDX100 closed at a yearly high today.
I’ll leave the predicting to Gary.
Gary says “Dont lose your core position”. Y’day I sell it to book profits, it breaks out next day. Still a nice ride from 1200. Thanks to the G-Train and be back to it..
Yey, Bull market surprises are to the upside!!
Unfortunately, the amount of skepticism on this blog shows that sentiment is nowhere near a top.
Oddly, I feel the same anxiety right now that I do during major declines — except in reverse.
Sentiment isn’t just a product of price it’s also a product of time. Not only does something have to go up in price but it has to do so for an extended period of time for sentiment to reach extremes.
For gold the intermediate cycle runs 20-25 weeks. That means during strong bull runs we can see price rise for 17-20 weeks before sentiment gets too bullish and the emotions become exhausted.
The $ just dropped a turd.
Gary tnx for the discounted sub. I should have heeded your calls to get a core position, instead of waiting for a bigger decline. Shallow pull backs were quickly bought, which showed me bull still had gas. Enough of the shoulda,woulda,couldas… Regroup and attack.
QQQQ yearly high, but QLD & TYH are not.
Gary,
When does the 1-month subscription end?
You’d said that at the end of the period there’d be a special subscription offer for those of us who took the bait 🙂
13,612,664,732,574.96 Says it all…
David,
End of the month. I will offer all trial subscriptions the 15 month special. 15 months for the price of 12.
My favorite song:
http://www.youtube.com/watch?v=ATmiX1tofBY&feature=related
Thanks Gary.
15 months should last us to the end of the bull market 🙂
It won’t get you to the end of the bull but it should get you to the end of the C-wave, D-wave and A-wave.
The $ looks like it might have found a bottom at 76.6. Maybe it’s the final one. We see tomorrow if it makes a charge out of this low.
lolz, this thing is going until november
dipping under 76.5
Gary,
Have you considered the possiblity of the 3 year ccyle low in $$$ = Yearly cycle low in 2010? i.e. No “double dip” in $$$ next year and Gold C Wave ending sometime late this year, at wahtever heck the price versus next year.
Yes I have and I will be lightening up on all positions as soon as I think this intermediate cycle has topped to hedge agaisnt that very thing happening.
However unless the dollar moves to new lows by that time I don’t think we will have seen the 3 year low.
This is still an extreme left translated cycle and as such should drop below the prior 3 year low.
We are going to have a dollar crisis because of QEI. I don’t think there is any way to avoid that. Ben can however make it much worse if he’s stupid enough to do it again.
Cool…thanks, so a drop to say 69 odd in late 2010 would consititute a 3 year low vs. a drop to 71 odd which would be a yearly low? I realize that sentiment @ daily cycles are imp in addition to the price on $$$, just wanted to get a feel for ballpark targets like the psychological targets for Gold having pullbacks.
And similar to Gold being in vacuum, below 71, the $$$ will be in a “reverse vacuum”, no?
It will.
Gary,
I think you can find a very big help chasing the daily cycle in USD if you look at the reversed pattern. Take an EUR/USD graph. Cycles are so obvious to see that you will almost not need a moving average.
There has been 4 cycles, lasting 6 days each one (130 to 150 hours of open forex market). Start from 9/13/2010
These are the “1-week cycle”. Usually there are 4 of them in a daily cycle.
Four of them has already been developed, with the last one that has formed a topping pattern ,double top with the last top lower than the first. This morning (I’m writing from Europe), the new 1-week cycle has already gone over the last one.
It can means only one thing:the upper level cycle is pushing up and it has started. And this must be the daily cycle.
So, daily cycle in EUR/USD has bottomed and started again, with a 200 pips retracement and an extremely right translated top.
That means Euro is very strong on USD. Next top will be the intermediate cycle top, in 2-3 weeks. I expect Euro to be in 1.46 Area at that time.
Graphs:
http://www.investireoggi.it/forum/attachments/piazza-affari/85623d1286883700t-solointraday-borsa_638.gif
http://www.investireoggi.it/forum/attachments/piazza-affari/85750d1286918864t-solointraday-borsa_647.gif
futures just jumped. could be interesting tomorrow.
GGuy,
some questions and remarks:
– wouldn’t be the correct name for your graph USD/EUR instead of EUR/USD, as on your chart the relation currently is at 1.40 = 1.40 USD / 1 EUR ?
– You wrote “These are the “1-week cycle”. Usually there are 4 of them in a daily cycle.. Probably you meant “in a monthly cycle”?
– What tool/indicator generated these cycles on the charts?
Gary, your remarked in the nightly report, that markets go up differently than they go down. Therefore the USD can’t be in an runaway move DOWN.
We had this discussion before, but when watched from the other side of the trade (e.g. EUR) it is a runaway move UP (see e.g. GGuys previous post). So this should be possible by your definition. Does the US Dollar Index show a different behaviour as a currency-pair like USD/EUR or how do you explain this contradiction?
LowTax,
I think this is the most relevant song for this blog:
The whipsaw song from Ed Seykota, the one from the “Market Wizards”:
http://www.youtube.com/watch?v=LiE1VgWdcQM
@hiptwist
1)wouldn’t be the correct name for your graph USD/EUR instead of EUR/USD, as on your chart the relation currently is at 1.40 = 1.40 USD / 1 EUR ?
No, it’s EUR/USD.
1EUR/ 1USD = 1.40.
_____________
2) You wrote “These are the “1-week cycle”. Usually there are 4 of them in a daily cycle.. Probably you meant “in a monthly cycle”?
You are right. I have difficult translating cycles name from Italian to English. There are different naming systems too in the same language. In Italian when we call a cycle “daily” that not means you can see it in a daily chart, but that the cycle period is 1 day.
I usually refer to them calling “T” the weekly (cycle that last 1 week) cycle.
Then we have T+1 (Gary calls it “daily”), T+2 (Intermediate), T+4 (1 year) etc.
What i mean is that a T+1 cycle has just started on EUR/USD.
It is the 2nd T+1 in the 2nd T+2 of the yearly cycle.
__________________________
3)What tool/indicator generated these cycles on the charts?
They was made by a friend of mine, using scripting capability of visualtrader (someone use metastock).
They are not free software and the indicators do NOT come in bundle with the software itself. You have to learn to write code.
I do not have the software, i am “freeware”, i use Excel upgrading the data manually 🙁
Dollar 76.30 allready.
I don’t think the Euro is in a runaway move just a strong uptrend. It now looks like the dollar is going to trade through the pivot so the next support level will be the rising trendline from the 08 bottom. It comes in right about 76.
Sorry, obviously I wasn’t clear about my point of the runaway move discussion:
I’m not discussing the fact wether the EUR is in a runaway move or just a strong uptrend. It’s about the GENERAL possibility of a runaway move UP in the EUR compared to the USD in your methology. If this is a general possibility for you, it is logically a runaway move DOWN in the USD compared to the EUR.
A runaway move DOWN you negate for the US Dollar index. So the US Dollar Index has to behave differently to the EUR alone, or … ?!
Strong moves down unfold as waterfall declines. Actually the dollar is acting like it is in a waterfall decline. Today it has broken down out of the consolidation. Usually the final plunge lasts 3-5 days followed by a test of the consolidation zone.
hehehehe, but we at the Fed really do want a stronger dollar. We’re just victims!
I’ve been thinking about that article referred to by knifecatcher yesterday.
If the market’s value of paper gold and physical gold both dropped steeply after a huge climb, I think I know what would happen.
Even though it would be difficult to get hold of the physical by then, I think it is likely that the govt/CB/Fed will make it illegal to hold gold at that point.
Based on their track record it seems that the growth of people’s wealth is not in their interests.
Therefore, if they wanted to thwart the goldbug’s cunning plan to get rich, all they have to do it to force a sale when the price is in that short window.
Is that why you trade ETFs, Gary, and don’t advocate owning physical?
(Perhaps, though , it might be a better idea to own the gold in a different [safe?] country … eg Singapore [as, I think, Faber advised…)
I don’t think anyone needs to worry about the government confiscating gold. There was a reason why Roosevelt did that in the 30’s. The dollar was still backed by gold. In order to inflate the money supply the price of gold had to be reset.
Today the dollar isn’t guaranteed by anything. The governemtn can debase the currency at will. I can assure you the government could care less about the price of a shiny yellow metal.
All this conspiracy talk is just pure nonsense the gold bull is doing exactly what a bull market is supposed to do. It’s climnbing a wall of worry and that includes plenty of ridiculous calls for manipulation.
In case one hasn’t noticed there is always talking of manipulation. If the market is rallying strongly the bears blame it on the PPT. If its crashing it’s because the government is instigating a power grab.
The reason I don’t own gold is because the percentage gains will be far inferior to owning silver and miners.
new post