THE CORRECTION HAS BEGUN

Yesterday the market broke the trend line off the August bottom.
The dollar also followed through on it’s snapback rally.
The odds are now high that we have the cycle top in place for stocks and the cycle low in the dollar. We should now see the market drift lower possibly till the third quarter GDP report next week.
However let me stress again this isn’t over. This is just a profit taking event and once it’s run it’s course the dollar will resume what I fully expect to be a complete train wreck (especially if Bernanke is stupid enough to run QE2) as it continues to crash down into the yearly and three year cycle low.
Initially this will push stocks higher, until surging inflation next year destroys the fragile economy. At that point the stock market will begin the next leg down in the secular bear market and the economy will roll over into the next depression.

174 thoughts on “THE CORRECTION HAS BEGUN

  1. Hyekyung

    Good morning Gary,

    Great post/market timing! btw, looks like the SP wants to revisit the trendline before going down further. I like your projection though.

    Gary, can you show us your chart analysis on BAC? Very curious. Thanks!

  2. Gary

    Skogie,
    Actually I’m counting on the mortgage mess escalating. That is what will drive the next leg down in the dollar because it will drive Bernanke to make the ultimate blunder and run QE2.

    We were already going to have a currency crisis either way because of QE1 but if he is stupid enough to do it again right as the dollar is collapsing into the 3 year cycle low who knows how big this mess will get.

    H,
    I don’t waste time trying to analyze individual stocks. Company specific news can drive these things all over the place. It’s why I typically only buy ETF’s.

    People who post charts on individual stocks under the assumption that they can get an edge with technicals are just kidding themselves. For the most part it’s a waste of time, in my opinion.

  3. daniele

    Hi gary, your last post was at 1:57 AM this at 5:30!!!Just 3 hours sleep are very little.I beg you to sleep more.I wish you could be awake and ready to face this hard market.have a nice day!! πŸ™‚

  4. Marc

    Gary,
    you say if the mortgage mess escalates than that would further validate the theory of the dollar collapsing further but wouldn’t that put downward pressure on the market given all the financials would drive the market down thats contrary to your view that the market should move higher into next year.

  5. Gary

    Marc,
    Don’t make the mistake of thinking this market is rising because of improving fundamentals.

    It’s rising because of liquidity. Any increase in liquidity will improve the fundamental driver of this rally.

    Until inflation rises high enough to crush the economy this flood of liqudity will continue to force the market higher.

  6. Gary

    D,
    I usually wake up briefly in the middle of the night but I do go back to sleep. Plus I go to bed around 9:00pm.

    Geez how pitiful is that? I can’t even make it to 10:00 anymore πŸ™‚

  7. TommyD

    Good morning All,
    Gary ?,
    If this correction takes the miners back 50% or more from the July/Aug run, could this not be considered a ‘D’ wave? Or is the ‘D’ wave like jumping off Niagara Falls in a whiskey barrel on ones honeymoon?
    Tom

  8. Gary

    You will know a D-wave when it happens. They don’t start with miners only 18% above the 200 DMA.

    D-waves start with the sector incredibly stretched both technically and sentiment wise. Often with the HUI 40-60% above the 200 DMA.

    D-waves send gold crashing down to or below the 200 DMA. They last 4-8 weeks ands correct an entire C-wave. Often retracing 50% of the entire C-wave.

    This is just a run of the mill daily cycle correction in an ongoing C-wave (the largest of the bull so far I might add).

  9. Gary

    Just be patient. Nothing goes straight up. The dollar had a huge rally yesterday and the market suffered a panice selling day. Give back on both sides is completely normal.

  10. Onlooker

    Well, just as predicted by Gary we’ve got a spunky little bounce in the markets today (and drop in the $, of course). I’m sure this is making many a sold out/chasing bull quite anxious, wondering if that’s it and we’re off to the races again.

    But keeping you powder dry is the higher odds, smarter play at this time. I’ll be looking to add leverage per Gary’s (and Doc’s) advice of watching the $.

    The psychology is endlessly fascinating, eh?

  11. DG

    I shorted more SPY and XLF—nervously (probably a good sign). They need to stop about here IMO though at SPX 1178 +/- a few points.

  12. Onlooker

    No, I’m not going to go short here. Not good enough risk/reward for me. I’ll wait for the yearly cycle low on the dollar, then I’ll take a shot at the short side.

    Right now I’m just biding my time to scale into more PM positions on leverage as we bottom in this cycle.

    The dollar sure is looking weak again though, eh? Threatening to give back all of yesterday’s gain. It’s gonna be close. Still a ways up off the cycle low though.

  13. Gary

    Everyone is missing the point by watching the dollar. The stock market has to move down hard enough to scare the market. As that happens the dollar will rally. Once that process gets underway THEN watch the dollar for a topping sign (like a tag of 80).

  14. Onlooker

    If you’re talking about me Gary, I fully understand and am biding my time waiting for just that.

    Of course we have to also realize that sometimes the market will fool us all, right? It’s (the dollar) not likely to top out so quickly here, but who knows.

    If so then equities are likely to make a new high in an even more stretched and perilous condition, kind of like April. Then we’d be set up for a nasty spill from an intermediate high.

    It’s possible, though certainly not something I’m betting on. But I also don’t want to bet against by going short here. I’m quite content with a full boat of PMs, waiting to add some leverage.

  15. Gary

    I wasn’t aiming at anyone in particular but yes if the market just continues higher then we would be setting up for a stretched cycle and another crash type event into the intermediate cycle low.

  16. Gary

    We obviously have the daily cycle low in place for the dollar so a move below the recent low will signal another failed and extremely left translated cycle. At that point it would be time to re-enter long PM trades heavily.

  17. Gary

    E,
    I wouldn’t advise you to lose your position. Just hold on and look to add. If the dollar continues to collapse then you will be sorry you lost your position.

  18. Onlooker

    Yeah, it seems like at this point it’s a sure way to get whiplashed and be in a position to have to chase yet again. Of course a corollary to Murphy’s law says that if you do that, the dollar keeps dropping, and if you don’t, we continue as predicted by Gary. πŸ™‚

    So the best course would seem to be looking at the intermediate/long term, instead of the short term which could go against you.

  19. Leonard

    Gary,

    While we are waiting for the $$ the DOW and the Transports are withing 1.5% of the 52-wk high. One good day and we are going to get a Dow theory buy signal. Is that something you are considering, and if yes, what are the ramifications for the PMs?

  20. DG

    SB: I’m with you. I just covered my add-on shorts as well (I assume you did too) . If we tank tomorrow after POMO, well, that’s trading for you. Small losses is the key.

  21. Shalom Bernanke

    Frank, I must’ve printed too much, they won’t come in!

    Yeah DG, stopped out of extra for small loss, but still have original size which could even possibly be held overnight, but we’ll have to see.

  22. Gary

    I’d like to see how the day ends. If it ends strong then perhaps we are going to test the 200 week moving average before this rolls over. We do have another swing low which really shouldn’t happen if the cycle has topped. Amazing!

  23. Gary

    Yes I am. The odds are in favor of the daily cycle top being in but I would never bet heavily on a counter trend move. I rarely ever even take a counter trend move. Why because more often than not the trend surprises you and even if you win it’s usually small.

    The few small winners rarely make enough to offset the many losers you take trying to catch the counter move.

    How many times have we seen gold bears get run over trying to call the top of the rally?

  24. Shalom Bernanke

    I should’ve known everything would be OK, and that stocks would ramp.

    Sure was more enjoyable watching gold gain 1-2% everyday the last few months, rather than having shorts stuck betwixt me cheeks.

  25. Jayhawk91

    Bought some SIL and GDXJ at the open taking Gary’s Bollinger Band crash trade. Decided I hate PHYS and cut it today so I can go with something else. I’m still very leery and think this is just a response to being over sold yesterday. I’m just bragging and there’s no way to confirm this and nobody cares, but everyone else seems to share their views.

  26. DG

    Jayhawk: People will stop calling you out if you post the trade when you take it rather than four hours after, when it has already worked. Why not post “I just bought XYZ at 35.5.”? Also, you may have taken 5 trades that lost and posted your one winner. Why not do it in real time? Then all the bashing will stop.

  27. Mr.Mom

    @Jay LOL. There are some nitwits out here in anonymous internet land. If someone thinks sharing info/opinions is bragging why would they even bother reading posts? The whole idea of anonymously bragging is feeble-minded since no one really knows who we are anyway. Let alone anonymously bragging about something they didn’t actually do! Just to feel better about themselves??? Human psyche is quite bizarre…
    Good buy @ the open! GDXJ 33 was good support, but once again I didn’t have the balls to buy fearing a gap down. Considering I am trying to setup a core position I c,s,woulda bought the close yesterday.

  28. Jayhawk91

    Sure, I could start doing that but who freaking cares? I said in the prior post that I suck at trading and have been a chicken vs turkey trading in and out of SLW/GDXJ for peanuts vs the big gains you all have. I actually sold out of my GDXJ and SLW back in the spring and took a loss on them! My trading record has been pretty lame this year. I really want to be a Turkey before November hits. πŸ™‚

  29. Jayhawk91

    Mr Mom-

    I was in an risky option position at the close yesterday on BAC calls-this was a day trade. It was sitting on some support and I had a bad feeling it would gap down on me, which it did. So I took a good sized loss on that one.

    I have a core of pms around 25% of my portfolio, but right now I’ve been waiting for a pullback to get my 75% to work. I do agree with Gary’s longer term call and think Old Turkey is the key, but nobody has a crystal ball and anything can happen.

    I still think we go down a bit more, but maybe the bulk of the correction is over and the dollar pop (if we get it) towards 79.5/80 will only cause the miners to briefly touch yesterday’s lows. (Sideways consolidation on the 50 DMA on the HUI-500 level support zone.) Anyway, I think the time of being cute should be over for me on this trading nonsense.

  30. Mr.Mom

    Indeed, Some reason it gives a sense of security, but in the end for most it ends with small gains or losses. Trying to get out of that mind set myself. Although a good entry is always useful!

    “…trading in and out of SLW/GDXJ for peanuts vs the big gains…”

  31. TZ (7006)

    The rebounds in stuff today are normal. The miners should drop by close and roughly end where they opened.

    Today is the day that makes it LOOK like we get another single day rebound. But this time the market has a surprise in store.

    The resumption down tomorrow/fri will be the one that wakes people up and starts causing selling from weak hands who decided to hang on yesterday.

  32. DG

    On trading vs. holding: I try to do BOTH. I am a trader when it comes to taking quick losses and an investor for the major moves that are working. I own SIL at 14.75 from 8/25 and do not plan to sell it. But if it had gone against me, out it would have gone…and I’d have bought it back at a slightly higher price later if need be. I simply refuse to take a large loss because I thought we were in a major move and turned lout to be wrong. Cut your losses short and let your winners run is the rule for me. Cutting losses makes me a “trader” and letting winners run makes me an “investor” I guess. The goal is to make money and emotion is what is used to pry money out off your account. A good risk management and entry-point system takes the emotional decisions out of your hands. Anyway, that’s how it looks to me.

    I am taking some losses today on my shorts. If they market winds up at 1130 I’m sure I’ll get a major cut of that decline. If it goes straight up from here, I won’t get nicked too badly. It’s the big hits that hurt an account. Losing 30% means you need to make 50% to just get back to even. Avoid the big losses and you may survive this game. Only way to do that is to cut losses (or never be wrong on a major move…good luck with that!) Gary says too much leverage will eventually blow you out. I say being sure you are right when the market moves against you will…because some day you will have it all wrong, no matter how compelling your “evidence” is. My approach to this, at least.

  33. Natanarchist

    @jayhawk…dude you have been a sub long enough to know to get that core and hold it. I know it seems hard sometimes.
    I was leveraged pretty good on silver and started scaling out first week of October. I removed all the leverage and then a bit more by last week. I probably could have waited and made an extra dollar or two per ounce, but I was hoping the seasonal October pull back would allow me to reload. But that Shalom B just keeps printing..haha. ( why don’t you take a week or two off Shalom so we can all reload…LOL) Anyway, I am in strong hands and hope G mans cycle analysis plays out by the end of the month so I can get ready for round two of this C wave. Lots of dry powder. Good luck to all.

    Gary, in the past has there been times where you get a swing high and then a swing low within a day or two?

  34. DG

    TZ: I have the same read on this as you do, but I am still surprised to get this much strength. If we do make new highs this week it will really show that there is so much money being pushed into the system that most of the stuff I have always used has become worthless. I guess that’d be my equivalent of a runaway move which negates the usefulness of Gary’s cycles and timing.

  35. Gary

    N,
    It happens from time to time. The key is to watch the dollar.

    We have a cycle bottom. If it gets broken then the train wreck is coming sooner rather than later.

    This is why the FAZ trade is small and I didn’t touch my core position.

  36. coolkevs

    Blink and you would have missed this correction. I thought something was up last night when I saw the Euro blasting higher from below 137 – still not sure what that news was.
    Treasuries are in a world of their own right now. Yesterday’s selloff in the markets supposedly saw people looking for safety. Today, um, people are, um, looking for, um, – I’m really not sure. The Fed is going to be buying Treasuries? After QE1 in March 09, treasuries rallied briefly then sold off just as quick. Time to refinance that mortgage – I’m trying to. Shaving $50 K and a few years off my mortgage is much better than what I’ll get buying gold and silver in my small potatoes account…perhaps I should dream bigger πŸ™‚

  37. Nick

    Gary,
    Does today’s swing low mean we have started a new daily cycle extended of the current cycle being in an extended stage? If the $$$ can have an extremely left translated and failed bounce, why can’t the SPX possibly have an extremely right translated and short lived correction? (Not challenging you, just wanted some clarification)
    thanks,

  38. Gary

    Nick,
    We didn’t have a daily cycle correciton in the stock market but we could have a failed daily cycle in the dollar that would cause an extremely stretched cycle in stocks. I’m going to go over it in tonight’s report.

  39. Nick

    Thanks Gary:
    One last comment: Maybe yesterday was the fake out move lower, and today was a normal resumption in uptrend and not a fake out higher.

  40. Nick

    And one last comment, I promise: I agree with Gary, the higher we go, the harder we will fall…but just like Feb – April, we could keep going higher till Nov or end of year and then drop like in May when the put buyers / flash crash reoccurs, thereby giving the media / fear mongers another shot: “Heck, it happened twice!”

  41. QuantTrader

    Gold has been under-performing EUR (and therefore the $) in the last two days. Just wanted to point it out. Not sure what it means for the next week or two.

  42. David

    “we could have a failed daily cycle in the dollar”

    “we could keep going higher till Nov or end of year and then drop like in May when the put buyers / flash crash reoccurs, thereby giving the media / fear mongers another shot: “Heck, it happened twice!”

    “maybe yesterday was the fake out move lower, and today was a normal resumption in uptrend and not a fake out higher”

    There’s no point speculating about what could happen.

    The question is what is probable, not what is possible.

  43. Gary

    David,
    Correct the odds favor a correction here but we have a very clear line in the sand that will tell us that the improbable is happening.

    I’ll have tonights update out soon.

  44. NikeBoy

    Hi Gary,

    Some stock expert today was saying that despite today’s weakness in the dollar, gold did not react.

    And this could be because of the expectation that the dollar rally hasn’t finished yet.

  45. driver1

    Today’s low in the $ was very near that 77 level that I mentioned before (support/resistance line.) If that’s a significant line, I would expect the $ to rally from here.

  46. notGreedIsGood

    Gary

    you said that there is a possibility that the dollar tops out in just two days, and the dollar rallied because China raised rates… well isn’t it possible that Ben will put the printing press into overdrive, as it’s clear that the powers that be want a low dollar ?

  47. trond56

    Gary, you were on the few who called this dip on the spot. But maybe it will be shorter than normally expected. Possibly it was a ‘running the stops’, short cleanout before rally picks up.

    Seems that the last 2 days Usd candlestick is a ‘dark cloud covering’ bearish reversal?
    Maybe people are not buying up the dollar another 5% and selling stocks when they know 100% that a tsunami of liquidity is on its way..

  48. David

    Dollar bouncing now.

    It may be that the strange action in the dollar actually presages a stronger/longer dollar bounce than we were expecting.

  49. Trader H

    Hey Gary,

    I missed out on the last opportunity to subscribe at the preferred rate you had. Work and life had me away from my screens for a bit. Just wondering if you will be offering the deal again to sign subscribe to your reports? thanx

  50. John

    Could it be that the dollar is testing lateral support [as I believe often happens], and the S&P testing trendline resistance [which was trendline support]…?

  51. John

    But maybe this is all we’ll get this time as a correction – because the Fed has been so definitive about the next round of QE.

    The party has recessed so that the players can sleep off their hangovers and charge their glasses for the next round – since the lord of the manor has decreed that the fun is to continue.

    Such extraordinary circumstances – why should the stock market slump because of some silly business regarding mortgages …. or China upping its rates?

  52. Gary

    The mortgage mess should be the excuse the market uses to correct but if the dollar cycle fails then it will just roll righ over that.

  53. mamaloshen

    Hi Gary,

    Sorry to bother you but I’m confused by one thing. You say you are 100% invested with 5% on margin in AGQ, yet in the report’s last sentence you say, “We now need to be ready to add to core positions if the dollar cycle fails.”

    My question is, how can you add to core if you are already 100% invested? Do you maintain a cash position at all times to take advantage of dips (and could you tell us what percentage that might be)? Thanks in advance and sorry if you’ve already covered this elsewhere.

    Albert

  54. Gary

    I’m going to add with margin. But that’s just me. Everyone needs to decide for themselves how big of a positions they wnat to take. Most won’t opt for leverage and many probably don’t have more than 50% of their portfolio in PM.

    If you are going to add leverage with margin understand the risks involved. You will have larger gains but you will also incurr larger losses if you don’t time the entry correctly.

    If you max out on margin and the trade goes against you at all you will get a margin call. And that is how one can lose money in a bull market, even if they are on the right side of the trade.

  55. Poly

    Gary,

    You mention on your premium site the use of high delta call options as a way to trade options. Are you using any deep in the money calls or are you simply in the equity?

    Just seems like (not talking about buying right now, just generally) that deep in the money calls and a expiration out to say mid next year or even 2011 would be a great strategy, considering we’re in a “once in a lifetime gold bull market”.

  56. Gary

    Poly,
    Read the rest of the article. Options should only be substituted for shares. So if you would normally buy 200 shares you would buy two option contracts.

    If you ignore that and think you can get away with huge leverage in options you will destory your account…and you will do it even though you are on the right side of the trade.

    The reason being any small move against you will decimate your portfolio and you won’t be able to hold on to the positions. You will sell for a loss because the drawdown is unbearable.

  57. fubsy_cooter

    If the dollar breaks lower, this will be a scary point for me to add to miners. Phew, was looking forward to a correction here. I guess the bull is messing with us. Making it hard to ride with our full weight.

    My fear is that the dollar breaks below the daily cycle low, and it turns out to be a fake out. My mind says the market drivers in the dollar are too big for MMs to tag stops like that and a break would be more along th lines of Gary’s call…a train wreck for the dollar.

    Tough call on this one.

  58. DG

    Yeah, I have my stops in on each position, and am ready to pull the trigger. Will lose about 1.5% of my account on this one which is more than usual for me, but a lot of my stuff was calling for a decline here. Oh well.

    Miners have pulled back some. Just add a little. That’s what I do when I don’t like the price but like the idea. I just bought back my GDXJ at the same price where I sold it (got away with the sale, Gary, but just barely.)

  59. Shalom Bernanke

    I like the idea of adding some miners regardless of price, but since they’re relatively weak compared to the S&P’s I’m having trouble pulling the trigger. πŸ™‚

    Typically when I’m as wrong on a trade as I am being short stocks, I like to step back until I find my groove. Let’s see what happens.

  60. DG

    Yeah, I also tend to step back when I am wrong and trade smaller. But sometimes being wrong itself is telling us something. I think this dollar thing is in fact calling the tune right now, and if it breaks it’s like buying a breakout which is always at a high, and I buy those.

  61. John

    …. and on the euro:dollar hourly I see a fairly well defined rising wedge – which suggests strong return of the dollar bounce within the next few hours.

  62. Mr.Mom

    I can only imagine what pm’s would look like if the fed votes no to QE2. I am wondering if there isn’t much more downside until the meeting.

  63. DG

    Hey SB! My small purchase of GDXJ ended the rally (for now at least) You owe me! Boy did I get close to hitting my stops on a few items!

  64. DG

    Yeah. Buy AAPL. It’s a small undiscovered stock that has a ton of good news in its future. HOw about Salesforce? I always look for things with no downside.

  65. Shalom Bernanke

    I’ll say that stocks shouldn’t have pulled back that hard, and below the 200 MA (on the minute chart), if they were going to continue to rally later.

    We’ll see, but Gary’s scenario is still possible where stocks weaken for several days or more.

  66. DG

    I feel the same way, but have to admit that the strength really surprises me. I probably won;t put anything back on unless something happens to change my mind between now and the close. I have been out of sync with the damn thing and do pull back after a loss. (By the way, I already flipped out my GDXJ at 34.10 as it really was acting crappy today (Just don’t tell the market gods yet until we tank. You think they read Gary’s blog?)

  67. DG

    Yeah, nice call SB. As a lifetime trader i find this market fascinating. As a citizen, though, I need to constantly keep changing my pants and taking Advil! Your alter ego is making the trading world extremely interesting.

  68. Shalom Bernanke

    Made very small purchase of ANV at $22.45 to see if I can push stocks even lower. πŸ™‚

    That decline broke the bulls’ back, as long as we don’t rally too hard from here.

  69. pimaCanyon

    Shalom, your posts make me laugh out loud sometimes, especially the occasional “everything will be okay”. Keep up the good work and keep those presses rolling.

  70. Poly

    It’s frustrating to watch GDXJ under perform. But this drop, in very short order, pushed the RSI below 50 and clearly changed the sentiment. I would say those are at least some of the seeds we need for a sustained push to $HUI 800!

  71. TommyD

    Whipsaw anyone?
    Core position has me 65% in with 35% ready to jump back in with. I am looking at Fibonacci 38.2% at HUI and we are there at 495 area.

    Maybe I start adding back in?? but, I could sure use shot of courage.

  72. Shalom Bernanke

    And a very weak bounce so far off today’s lows. DG and me were a bit early but maybe I’ll get a short entry signal again.

    I’m glad to see the miners pull back even if it hurts some. I’m licking my chops to add.

  73. DG

    I just wrote to the NY Fed. If they can take a few minutes between bouts of printing money maybe they will tell me where the data is.

  74. NikeBoy

    Hi,

    Are we still looking at the $ tagging 80 before buying?

    I would like to open up positions in SIL, GDXJ and SLW…any opinions as to targers I should wait for? I remember TZ saying that SLW @ 24 might be a a good price..Does that still hold?

  75. GGuy

    Looks like EUR has topped the 4 days cycle. Good news, it is a left translated one.

    We should go under the yesterday’s low.

    I’ll go heavy short if it go under 1.3870 (last 1day’s cycle close) until 1.37

  76. pimaCanyon

    if gold continues to tank as the dollar goes up, at the current rate of decline versus the current rate of climb on the dollar, gold is in for a big drop here.

    Sub 1300 looks like a lock, sub 1200 might be a possibility.

    Dollar is up only 1.8 percent from its recent low, while gold is down a whopping 5 percent!

  77. Gary

    I wouldn’t make the mistake of thinking gold has to move a set % for every % move in the dollar. We’ve already seen that gold can move in lock step with the dollar.

    Just wait for a swing low and be prepared to buy when it’s toughest to do so.

  78. DG

    SB: Whew! We just made it. I managed to only cover my “extra” shorts yesterday, so today my PM’s are down a ton, but my account is unchanged. I am hoping this continues so it’ll help me have the guts to load up on PM’s at the bottom. My purchase and rapid sale of GDXJ did it! Am I a good contrary indicator or what?

  79. Elk2Go

    Gary,

    With POMO coming tomorrow and Monday, in the pass this has push the market up. If this pattern continues, would this also weaken the dollar again thereby pushing stock, gold/silver back up too? Wondering if one should look at buying miners at the end of today then?

  80. Shalom Bernanke

    Good trading, but I took my loss on that sharp turn lower late morning. Not concerned as it was well within my risk parameters. I’m cautious ahead of that POMO scam, but if I get a daytrade signal I’ll take it.

    Right now, I’m excited about the pullback in miners and doing all I can to be patient. πŸ™‚

  81. Shalom Bernanke

    I have been nibbling on ANV, but just to get my feet wet. Hoping we get a nice gap lower in the morning and I’ll scoop some of the favs. I also have buy orders in way below the mkt in case we get some fireworks.

  82. Gary

    Elk,
    Usually if you have no trouble buying it’s too early. The correct time is when pulling the trigger feels like pulling teeth.

    Right now I would say your teeth are feeling just fine. Wait till it really hurts and then buy πŸ™‚

  83. DG

    Careful, though, as if your private currency (the $) does hit 80 the market, and thus miners, will probably tank further. But you ought to know that as you are the Puppet Master.

  84. Jayhawk91

    A lot of these charts look to be double bottoms on the other day’s low-GDX, GDXJ, HUI, etc. I’m showing a decent bullish divergence on the hourly charts, but the daily MACD’s appear to be plunging. 33 on GDXJ looks pretty solid, 31 after that. FWIW

  85. Gary

    Not sure if one can expect a support zone on the mining charts to work unless gold has stopped going down.

    One probably has a better chance of catching the bottom by watching gold for a swing low.

  86. TZ (7006)

    Recall yesterday the feeling of how few of us thought gold even had a CHANCE of dropping.

    That was the conditioned effect of spending 2 months with continuous gains and drops that recovered in 24hrs.

    Well..today we killed that as I believed we would and now we proceed lower for a bit to bum rush everybody who climed in on yesterday’s “it the bottom after ONE DAY!” rally. Now the pattern gets broken.

    SLW hit and bounced 25.50 today. As I’ve said, below this number the selling should increase. 22 would be gift, so I say 23-24 is buy point.

    Still thinking 1290-1300 will be gold’s bottom.

    I agree with gary that it is too early to buy. It’s time for some pain and to teach some lessons to the longs.

  87. TZ (7006)

    Confirming what gary said and my agreement, look at things this way…It was REAL REAL easy to want to buy yesterday. Real easy. Even I had a sinking feeling of “oh crap…here we go again”.

    That’s from the 2months of conditioning. But the market will condition people…then crush them. I think that is what we see in the next few days.

    The conditioned buyers yesterday (who are already slightly negative) will bail on a single down day from here. Them selling will assist in causing over leveraged longs and late ‘chasers’ of the last week in doing their own selling.

    We will move down until that lump of people is squeezed out, I think. Shouldn’t take too long (and yes…things are still bullish.)

  88. fubsy_cooter

    I’m going to add 10% positions in SIL and GDXJ. That will take me to 100% invested. I’ll add a little leverage if Gold breaks out to new highs. Probably another 10%…5% each in the same.
    f

  89. Nick

    My 2 cents in speculation: Till elections / Nov Fed meeting:

    Gold trades sideways to lower.

    Market grinds sideways to higher.

    Dollar grinds sideways to higher.

    Have no clue who will win elections. Fed will announce some sort of measure for QE2 – Market will interpret it as being insufficient and fall. Gold and $$$ will be a safe haven trade and both will rise simultaneous for a short while post announcement till the Market puts in its daily cycle low sometime mid Nov. Then ‘normalcy’ of past 2 months will resume: Gold / SPX higher, $$$ lower.

  90. TZ (7006)

    JAYHAWK,

    There is no real reason to trade anything other than gold, silver, or slw (maybe gdx,gdxj) in my opinion.

    Higher gains are possible with more leverage (and more risk, of course).

    Picking individual companies (reading reports, analyzing geography, management, whatever) is a completely separate game and is not one I have an interest in playing. People do it cause they think it will give them more gains…and it might. But it gives a lot more risk when wrong too. And a person WILL be wrong. So somebody picking companies (if they are smart) ends up picking a basket of them in which case they are sorta right back to gdx, gdxj, and sil only with more of a headache.

  91. TZ (7006)

    A bit of a continuation…

    so…if somebody is picking a basket of stocks they have to believe that THEIR basket will outperform gdx or gdxj or sil as a basket. And it might.

    But the question would then be could you just up your ownership of gdx/gdxj/sil from 1x to maybe 1.3x or 1.7x and get the same return for equal or lesser risk? (remember our earlier discussions on this topic.)

    And don’t forget that a privately formed basket would be harder to get in and out of quickly than the ETFs which would have higher volume and lower spreads. (Some also trade as Single Stock Futures.)

    So ultimately I see no reason to start trying to pick individual companies…except for SLW. But I think we all agree that it actually *IS* a different animal from the rest.

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