ABOUT TO HIT THE WALL

For the duration of the dollar’s secular bear market the 200 week moving average has acted as pretty solid support and resistance.

The recent two week rally has now relieved the oversold conditions and in the process the dollar is about to hit the brick wall of a declining 200 week moving average. It’s already hit the intermediate down trend line.

The dollar is now short term overbought, in a strong down trend, is pushing up against solid resistance, in a secular bear market, is caught in the grip of a left translated 3 year cycle decline, and in the early stages of a dollar crisis.

I don’t like the dollars chances of pushing significantly above 80.

As soon as the dollar resumes its collapse into the 3 year cycle low I expect we will see stocks and commodities resume their upward advance.

By the way, my good friend Doc, who most of you are familiar with either from his blog or from the insightful comments he posts in the SMT comments area, has offered a discounted rate for his newsletter to SMT readers. You can go here to take advantage of his offer thru Thanksgiving weekend. He might even buy me a chicken burrito or two if you sign up πŸ˜‰


http://www.thedocument.com/members/smt.cfm

249 thoughts on “ABOUT TO HIT THE WALL

  1. DG

    Poly (from the last string): I did not find it so easy. I had lost on a few short setups prior. My sense is that the fed’s pumping is overwhelming some of my most reliable short term indicators. I am having a good year, but my short terms shorts as a class have not been successful, which is unusual for me. This last one worked—finally—but we’ll see about the future. Glad it worked easily and well for you. Let me know in real time what you short next. I usually post mine here (OIH, AMZN, and SPY this time)

  2. Gary

    Poly,
    Quite the contrary. Like I said in last night’s report I would like to see a narrow range day and a slightly lower low.

    Markets don’t usually just reverse and balst off after a hard sell. The downside momentum has to be broken and the emotion of fear has to subside before traders are willing to wade back in.

    That usually requires some back and forth action before the trend can resume.

  3. Onlooker

    Well so far your call to buy back SLW is working out quite well Gary. I’m glad I followed you in that trade.

    Now we get to see who’s right, you or Doc. Of course it’ll take a while to be sure, as we could still get head-faked a few times in the short run.

  4. DG

    By the way, for anyone who is interested, I spoke to Jason at sentimentrader about stocks going to options”maximum pain” near expiration, that is making the maximum number of options expire worthless. He said that he studied it and the theory was not born out by actual price movements, He’s about the best analyst there is, so I myself have stopped looking at it. There are probably lots of ways to look at this so maybe there’s some wrinkle he didn’t analyze, but FWIW, he said it has no value.

  5. Jayhawk91

    Added some this morning, still a bit tentative, but those falling wedges someone pointed out on silver & miners like EXK, HL broke out so I’m in for now.

    Bought SIL, HL, EXK, GBG. Heavy on the silvers. Doc is pretty convincing and so is Gary. We’ve got burritos on the line here between those too but I don’t want no stinking intermediate decline to pummel me.

  6. Shalom Bernanke

    I also ignore the idea that prices are held close to a certain strike for “max pain”. Sure, it could be the case absent any other factors like momentum or fundamentals, but it seems to be much less important, especially with indices.

    It’s possible that individual names might be more easily manipulated, but options are really only a tiny part of overall liquidity. Options market makers would be the ones that most desire to fix a strike price. If one believes that prices do get pegged into expiration, that is yet one more reason to stay away from options, IMO.

  7. Razvan

    guys I jumped on silver yesterday at 25.05. If that was the bottom then i deserve trade of the year award πŸ™‚ and props to Gary for his amazing insight.

  8. Gary

    Jay,
    We do have a pretty good plan B strategy in place to tell us if gold is headed down into an intermediate decline and get us out if that is the case.

  9. Gary

    Soros comments were taken out of context by the media as usual.

    Soros said that gold would be a bubble, which I completely agree with. But it’s certainly not a bubble yet. Heck it isn’t even back to the old highs in inflation adjusted terms.

    How can something be a bubble when it isn’t even at new highs?

  10. Poly

    Hi DG,

    I don’t short too often anymore, it’s typically cash or invested, but when I do it’s primarily S&P puts where the pool is deep. I thought this one was easy but that’s because I only caught the tail-end 2.5% decline, I typically wait until the trend is confirmed before getting short and if it does not confirm I jump off quickly. The puts guarantee a great return on a 2.5% decline and there is good liquidity to jump off on tight stops.
    I’ve wanted to short AMZN for a decade, LOL. It’s the one stock I love to hate, grossly over-valued that always comes through for the bulls.

    P.S. I wish Silver would take a breath, always in a rush.

  11. thedocument

    I think Gary will agree with me that the key to success in trading is not being correct about market expectations so much as trading correctly. It is therefore system and discipline that equates to success. So regardless of who wins the burrito, we could both end up doing just fine with our trading.

  12. aviat72

    Nice action in silver so far. 25 was retested again and it held so we know have a tradable double bottom.

    Sentiment data is a red flag for any equity rally.
    ————————–
    SB: TK runs a short focussed hedge fund. People pay him for his short bets.

    Alex/Brian: If some one is paid to run a short fund, the investors expect him to do great when the market falls, and maintain reasonable losses when the market rises. That is the WHOLE point of being in a short fund. He calls himself a bear. For Gods sake his site is called the “Slope of Hope” as in “Bear markets slide down the slope of hope while Bull Markets climb up the Wall of Worry”. How much clearer does he have to be?

    And SB: Unless you have an army of researchers like Einhorn or Chanos making long term bets, a chart based short-term, bear oriented fund *SHOULD* have many positions. I gave you the reason why eight is too small a number. Of course you can chose to ignore.

  13. David

    Technically the downtrend line is drawn incorrect. It should be be drawn through the high on 8/24.It hit that line initially on 11/12 and did provide resistance, then obviously broke though it shortly.

  14. Shalom Bernanke

    Aviat,

    I do not agree that it’s necessary to have more positions when trading the short side. What’s shorting have to do with it?

    Since I believe everybody is entitled to speak their opinion, I hope you appreciate that I’m not calling for you to keep quiet like you did to others yesterday. Share your opinions and others will do the same.

  15. Tim Knight

    Well hello there, Smart Money Trackers.

    Tim Knight here. One of my Slopers brought to my attention the Tim-bashing taking place in these parts, and I see in particular that Shalom Bernanke (who lives in Israel, no less) and Jerred are getting their rocks off to this kind of thing.

    Gary asked me to take a moment to respond, so although I’m usually not inclined to debate with people hiding behind the cloak of anonymity, here goes:

    + “TK’s position overload was the first sign to me that he was not profitable” – this has no logical basis at all. I track a lot of positions because I like to be very broadly diversified.

    + “the second was he was typically a buyer of options” – Huh? I make literally about 3,000 stock trades for every 1 option trade. I hardly ever touch them. So you clearly have no idea what you’re talking about.

    + As for the idea that someone would blow out their account by following me – – look, I have good times and bad times. Some years are triple-digit-amazing. Some years stink. But I don’t enjoy the lifestyle that I do because I’m a walking disaster. I’ve done all right.

    Oh, and by the way – I’m short GDX.

    XOXOXOXOXO

    – Tim

  16. Jerred

    TK,

    No anonymity here!! That is my real name and I dont need to hide on a blog.

    I dont visit/post on your blog because slope of hope is a waste of time.

    You can go back now and post some videos about how great you are at trading.

    Best of wishes!!

    I am long GDX and loving it!!!

  17. Shalom Bernanke

    Thanks for popping in TK. Where can I send you some capital? πŸ™‚

    My comment on TK’s options purchases were from the last I visited his site a couple years ago. It was all options talk at the time, but I guess that has changed.

    I still don’t believe that just b/c a fund trades the short side it needs 200 positions. If that works, why not 300? And if one trades hundreds of positions, why monitor them all individually when a basket would be more effective?

    Suggesting one can scrutinize 200 positions to get an edge is ridiculous.

  18. Nick

    Guys, I don’t think it is healthy to bash another person.

    Each person has his or her own unique style and time frames and he / she is the best judge of what works.

    After all, aren’t there over 6 B people in the world with 6 B different personalities? (Not counting split personalities! πŸ™‚ )

  19. Gary

    I draw my trend lines exactly like Victor Sperndeo describes in his book “Trader Vic”.

    He’s one of the best in the business so I think I will stick with what I have.

  20. Tim Knight

    Shalom, I’ve “toned down” the quantity of positions (to a mere 100!) since, after a while, it doesn’t make much of a difference. I agree there are disadvantages to so many, but I still prefer broad diversification.

    Jerred, your statement that you think slope is a waste of time and your apparent knowledge of the videos I post is self-contradictory. Since you think it’s a waste of time, that’s fine, but tens of thousands of daily visitors disagree.

    In any case, I’ll end my participation on this thread at this point. I simply wanted to state that I’ve never made a stink about how I’m a perfect trader or never have bad times. I take the good with the bad, I’m quite public about it, but like I said, I’ve done all right over the years.

  21. Gary

    I have to agree with Nick. It’s a waste of time and energy to bash another person especially if you don’t have access to their account. There really is no way to know if that person is profitable or not.

    In Tim’s case we’ve been friends a long time and I can say I’ve never know Tim to lie about his positions. When he’s wrong he admits it. When he’s right he gloats…just like the rest of us.

    Human nature never changes πŸ™‚

  22. aviat72

    SB:

    There is a difference between being critical of a person and being critical of a trade. Doc and Gary have different view points but they express that in a civil manner.

    If you want to criticize TK’s pick, then be specific on why you think it is wrong. That would be a great discussion.

    But it adds absolutely no value to SMT users to be critical of TK as a permanent bias. Last night TK came into discussion because he went long SLV. Why should he bashed because his view is aligned with the majority here? What value does it add to the user-base here? This is not about free-speech; it is about respecting the time of others.

    And for the last time, a short portfolio with eight positions, is exposing you to immense tail risk of a buyout which can literally wipe-out your fund overnight. Two buyouts at 100% premium and you are down 25%.

  23. Gary

    There is a definition of swings in the terminology document.

    But to answer your question, the only way to get a swing today would be for gold to trade above $1364.50.

  24. Shalom Bernanke

    I didn’t criticize TK’s specific picks, I don’t even know or care what names he’s in. I was talking about his overall approach (too many positions, short only, etc)

    And I never made a personal attack on him. He’s an entertainer and was quite funny if I recall correctly, but I would not give him funds, or follow him into trades. The fact remains he’s been a tremendous fade. It’s nothing at all to do with his personality.

    Even Gary might agree that shorting the only bull market left on the planet was not the best idea,but follow him if you like.

  25. Shalom Bernanke

    LOL! I just read this part:

    “Two buyouts at 100% premium and you are down 25%.”

    First, you’re suggesting that 25% percent of the companies in an account get bought out in one evening. Second, that the premium is double the current price.

    Go back and show me any day where this happened. Use the entire market if you like.

    Here’s a simple solution to that problem, trade an index if company specific risk is your concern.

  26. David

    I have read some of his work as well, I thought he said draw from swing high to the next recent(obvious) swing high.On my chart that is on 8/24. Could be wrong though.

  27. Gary

    Kathleen,
    Make sure you are putting the user name and password in the correct prompts and that the letters that are supposed to be capitalized are.

  28. Jayhawk91

    Tim-

    You could have been on the precious metals bandwagon and still maintained your bearish slant…I think that’s the beauty of betting on these metals vs. trying to short 2 years straight. A lot of deflation bears are betting on the PM trade as well.

    Or, you could have just handed the keys to your account over to your good buddy Gary and let him double or triple your money since March of 2009. πŸ˜‰

    Also, one can easily link their account to something like Profit.ly if you want the world to really see your performance. That would shut up your critics.

    http://chart.ly/

  29. tfortrader

    You all can be as diplomatic as you like about TK but I’m not holding any punches. I just don’t like the guy. Everywhere he shows up it’s just drama drama drama. I mean if you’re gonna post opinions online, be prepared for feedback, including criticism. If he could respond maturely and professionally like Gary, folks would return the respect but every time he gets criticized he turns into a f&@king teenager. I’m with shalom on this one. I mean what does TK mean when he says, “Who lives in Israel, no less”? What the &@& difference does geography makes. For @&@ sake, go get your GED, Tim, and leave high school behind.

  30. Gold Era

    “There is a definition of swings in the terminology document.

    But to answer your question, the only way to get a swing today would be for gold to trade above $1364.50.”

    Got it. Ty Gary.

  31. RainmanInVegas

    David,
    Per Vic, the trend line is drawn through higher high preceding the lower low without cracking price from the top to identify the change. The chart gary has put up follows it.

  32. Poly

    off topic, but who else here is going to try pick up a piece of GM?

    Got to think they run that baby up to 50 before this cycle tops πŸ™‚

  33. Bruce

    Regarding the ‘bashing’ of others. In the words of some famous misquoted dude; his words hijacked and falsified, in order gain power for the falsifiers, and to submit to subservience the believers of said falsifications.

    I. “Judge not falsely, lest you be falsely judged.
    2. “For with whatever judgment you judge, you will be judged, and with whatever measure you measure, you will be measured.
    3. “Judge according to the logic of the laws of nature, which are from Creation, because only they
    possess its truth and correctness.
    4. “Why do you see the splinter in your brother’s eye and are not aware of the beam in your own eye?
    5. “Or, how dare you say to your brother: ‘Wait, I will take the splinter out of your eye!’ And behold, there is a beam in your own eye.
    6. “You hypocrite, first take the beam out of your own eye, then see how you can take the splinter
    out of your brother’s eye.
    7. “Learn first the laws of nature and of Creation, their logic, before you judge and condemn
    and wish to see the faults of your neighbor.
    8. “Through the laws of nature and of Creation learn first how to recognize your own faults, so that you can then correct the faults of your neighbors.

  34. thedocument

    Be careful with GM. If it starts to tank, I wouldn’t put it past the SEC/Fed cabal to ban short selling on it. That political trick has never done anything but make the end result worse, but who wants to get caught in the wake? If they pulled a stunt like that, I’d be more than willing to buy puts or sell calls into the pop, though.

  35. Poly

    I agree on F, I’ve been long that since the dark days. I’m thinking GM wont be allowed to fail until the government is out, that wont be for a while. They need to average their sale at over $50 a share to break even. Too many boys have a vested interest in this one to be a quick pump and dump.

  36. Steven

    Gary or anyone else,

    They certainly are doing a great job of pinning SLV @ $25. Do you think options expiration for equities this week and futures next week will hold things back for a bit?

    Steven

  37. TZ (7006)

    I am of the belief that the intermediate gold/silver peak was last week. I’m reasonably comfortable with that view and not currently betting on the gary scenario. Take it as a contrary indicator if you want. It’s ok, I can live with it.

    My view would change if we saw some good strength in the next day or two (and obviously if we didn’t break 1315). By ‘good strength’ I mean something that quickly erases many of the last few days of losses. (Obviously I wouldn’t benefit from that quick strength.)

    Without that move, however, I’m out leverage, in core only, and currently planning buy points at lower levels.

  38. TZ (7006)

    My comments are not based on “you’ll always find it difficult to buy a low” scenario. (Yesterday I actually was buying into the drop.)

    Gold (which is what I key off of) has actual blown through all my ‘mental stop’ levels which are higher than gary’s. So, at this point I have already switched into the ‘this is now heading down’ mode that gary isn’t in yet (and maybe correctly so.)

    What is frustrating is that many of the reasons I’ve now switched to the ‘heading down’ side (barring a rapid rally back up as I previously mentioned) were obvious and present *last* tues (week ago) and I carelously missed them. Something I promised myself I wouldnt do, but there you have it. I got complacent early last week and zoned out. Now I review the same stuff I should have then and they were flashing alerts. Shame.

  39. TZ (7006)

    If we shoot up in a day or so I’ll look to re-enter, chasing style, for a final gary-scenario blowoff cycle. It’s not the best solution, but it fits in with a combination of my style and gary’s.

    I don’t want to buy this area here without evidence a final cycle upward is still in the cards. Maybe I SHOULD be buying here. I know that. But yesterday’s attempt was the one that I made and the continuation lower today doesn’t work for me. I wait.

  40. aviat72

    SI formed a double bottom and reached its measured move target; came down to test the top of the W with a H&S look, only to bounce again into equity close. The relative strength in silver is encouraging but gold had very anemic action, with low volume.

    ————————-
    SB:

    A quick web-search reveals:

    http://247wallst.com/2009/01/12/100-buyout-prem/
    144%+ buyout premium on a $1.5B deal in January 2009

    http://247wallst.com/2007/05/18/aquantive_massi/

    A 90% premium on a $6B deal.

    Smaller size deals often have 100%+ premiums, especially a stock is depressed for some reason but is a strategic fit for a bigger buyer.

    Anyway, point is let us discuss the trades, not the trader.

  41. Keys

    I wouldn’t want to be out of silver right now. Something strange is a work….I am dreaming, but I am only wondering if silver is set to gain a new plateau. I don’t even want to think about SLW.

    It feels like the elastic on silver has been too stretched, I am just wondering if we are in store for a violent re-pricing.

  42. TZ (7006)

    I agree that silver is strong.

    Ironically, silver has NOT yet broken below my “mental stop” as gary calls it (unlike gold as per my previous post). Silver still looks green, (but not if it moves lower.)

    The problem for the whole 10yr bull, except MAYBE(!) now, is that keying off silver to trade metals is a losing game. Gold leads and working off silver will just chop you to death due to the volatility.

    So, anybody keying off silver *now* has to ask themselves if they feel lucky. I don’t. I’m not going to bet on a change of history just yet. (But if gold can regain a few days losses very fast then I could be convinced that both metals are still in play (Gary scenario) and gold was simply having indigestion.)

    Very critical next day or two in my book.

  43. TZ (7006)

    Maybe silver really is having some once-in-a-decade or two delivery crunch and the contract rollover in about 2 weeks will show a massive amount of people standing for delivery. Maybe it goes sky high and gold just wanders and detaches somewhat (it will still go up if that happens, but prob not a delivery meltdown).

    So….Maybe…or maybe not.
    You know the game.

  44. GGuy

    To “Andy”, if you are around.
    You asked me about this one:

    http://img717.imageshack.us/img717/3108/eurocycles.jpg

    Sorry for the delay of this answer.
    First, this is the updated one:

    http://img716.imageshack.us/img716/6122/bplaneuro.jpg

    This image is the “battleplan” for the yearly cycle. The red arrow mark the point i think we are in now, and so what i expect.

    It combine 3 cycles: one 1-year cycle, 4 intermediates and eight shortest cycles (Gary calls them “daily cycle”)

    It is obtained using the SIN() function. Math for the single cycle is
    K1*sin(x) year
    K2*sin(4x) intermediate
    K3* sin(8x) daily

    K1, K2 and K3 are the strenghts. As you can notice year cycle end higher then the point it started. That means there are a even bigger cycle (3year) pushing up (or down if you have dollar as point of view)

    Please note: this is not a QUANTITATIVE graphs.
    Turning point and cycle are monitored using oscillators. As by the name, it is just a “battleplan”. You can use it to verify if your strategy si going well, or if you need a new one.

    Here are the EUR/USD oscillators i use. The blue area is the cycle, the black thin line is the speed (first derivative, cross zero when you are at a max or at a min)

    INTERMEDIATE with target price and time:
    http://img686.imageshack.us/img686/8643/intermediate.jpg

    Daily:
    http://img709.imageshack.us/img709/6338/dailys.jpg

    Next there is a smallest cycle, 6to8 days. Not too much useful for trading, but i still miss ONE of them to close daily and intermediate. So, my vision now is long for 2-3 days, short for onother 3-5, then a little bounce for accumulation and then up rocket style for the yearly max.

    I do NOT trade a cycle until in the same direction of the upper one. So i won’t be longing Euro now, but wait for a decent point to short sell, maybe 100-200 pips up from now.

    I alwais welcome critics and discussions to my view, obviously ^^

  45. Shalom Bernanke

    Aviat, you said ” a chart based short-term, bear oriented fund *SHOULD* have many positions.”

    The dates on the events you posted are two years apart, hardly qualifying it as a short term blowup.

    Second, we were discussing the trades, not the trader but a name always goes with a trade, as in “TK is shorting GDX”.

    Last, say you short 200 mining companies (if that many exist). Your diversifying to avoid company specific risk still doesn’t mean it’s not a poor bet.

    I’ll leave it at this. Already several people have agreed or appreciated the open discussion. It is only you that demands others keep quiet b/c you don’t find the info useful. Well, if music videos and and images of Star Trek help your trading, TK’s your man. I still wouldn’t tell you or him to quit entertaining. I’ll point out strengths, weaknesses, and other observations anytime I please.

  46. Razvan

    TZ, silver is being held up by big money , not little guys like us who get excited about stuff and buy. I dont know when the down side will stop but the demand for it remains strong.

  47. TZ (7006)

    RAZVAN,

    >TZ, silver is being held up by big money

    And there isn’t big money in gold too? And comments about big money in both securities at various times hasn’t been thrown around for years? Maybe now it is true, of course.

    My ponderings were simply to throw out a few views on the current situation regarding gold vs silver performance. That’s all. I really don’t have the answer but examining things from a few angles doesn’t hurt. I *should* have done that last tuesday instead of going for a long lunch counting all the profit I had made so far.
    πŸ™‚

  48. Uatatoka

    Bank of America just increased their SLV holdings by purchasing an additional 4.6 million shares, becoming the largest shareholder at 12.3 million shares. Looks like someone got some POMO action this week, which by the way, is supposed to total around $35 billion this week alone…eventually this should drive the USD back down and assets back up however artificial it may be.

  49. Razvan

    i dont see why you are so discouraged since yesterday. If i am not mistaken you were long at 1355 with a tight stop. The previous low was 1350 so it should have not been much risk. Why didnt you jump on the ball when Gary sent the alert?

  50. Robert

    Geez,

    You guys are acting as if, freaking out as if, you day-trade silver. What kinda loony would even think about thinking like a silver day trader?

    The messages are so unfocused, that it’s like “what are you asking”… it seems that ultimately everyone is asking what is silver going to do tomorrow, Nov. 18th, and Friday, Nov. 19th, and then next week. Hate to break it to you, probably only GS knows that considering they had 100 trading days in a row this year that were winners. Same with Merrill.

    All you can revert to to answer your quasi-questions are fundamentals. That is obviously, now preaching to the choir, dollar devaluation, global currency wars, and smart money flights to safety. I think the fundamentals will answer your questions, if not show up and Lloyd’s house.

  51. Robert

    TZ have you made money at all in this run-up? I swear you’re only on the bull like 1 day a week or every other week.

    Remember this is a bull, why don’t you just get on and hang on instead of convincing everyone else that’s on that the bull that it’s about to have a stroke?

    Remember, Gold adjusted for government stated inflation would have to reach around $2500 or so to tie its 1980 high. According to guys like Bob Chapman, Jim Sinclair, and John Williams, to outreach “real” inflation gold would actually have to jump up to $7000 to match the 1980 high.

  52. Robert

    BTW I like the Turk call the other day, “$400 silver by 2013”.

    Sit tight ladies and gentlemen.

    Oh yeah and to whomever doesn’t own FRMSF, buy it! That is a hidden gem. 1.8 million ounces produced in Q3, and they’re valued at less than a billion! Funny thing is their still a pink sheet. The volume is only 155,000/day or thereabouts. This thing will go to the moon in a c-wave! They should go to the AMEX in Q1 2011 and that should blast them as well.

    Disclaimer: I am receiving 200 shares from FRMSF for this post. jk.

  53. Robert

    Fukc yeah it is, 26.01.

    It’s funny to think about 2008 when I started investing heavily into PMs. To think silver is only at $26 after all this time is amazing! To think the dollar is still in the high 70s is also amazing!

    I think its still damn cheap right now. If we get a blow off C-wave in the next few months we could see high 30s and we’ll look back and say why didn’t I load up again at $32? lol.

    I look at Kitco and see silver grouped with Platinum $16xx, Palladium $63x, Gold $134x, and then SILVER $25. That shit is way cheap! BUY IT!

  54. Robert

    Jayhawk,

    You asked me awhile back if I was the guy on the Kitco message boards- no. But I have some questions for you:

    What are your opinions of the likes:

    1) Mines Management?
    2) Great Panther?
    3) Revitt Minerals?
    4) USSIF

    I know you’ve looked into these longer than I have so I honor your thoughts…

  55. Robert

    IMO,

    MGN is Chinese and just recently hot grouped with the big hitters in Google silver miners. This will bring heavy attention, and they’re down 25% from their highs 2 weeks ago. BUY.

    USSIF is being pumped by inflation.us, they have HUGE following and their track record on stock suggestions is phenomenal. BUY BIG TIME!

    Great Panther. For those of you that don’t know GPRLF was the secret stock suggestion for inflation.us members that donated $1000 for this recommendation a few weeks ago. It since has moved from $1.2 to $1.7. This will attract more interest than any other micro silver most likely during the duration of this bull. BUY.

    Revitt. American. Producing. Lots of interest. Really unsure about this one, but heavily pumped.

    Note I only have 3% of my portfolio in each of these.

    Not I could care less about gold, silver is where the real money will be made IMO.

  56. Robert

    Bamster,

    I hope you’re not right!

    The miners have to catch up soon, and according to Gary and others the miners will start to really steam vs. the Ag price increase.

    AGQ is a very very good and safe bet. I will do fine if I don’t own it (I did choose some damn good miners, and yes some will outperform, others, underperform AGQ), but actually, ironically, yesterday and today the only thing I have thought I’ve been missing has been AGQ. If there’s any more drop at all I’ll add it, a few hundred shares, nothing crazy, but if silver just goes to the moon I’ll have a huge silver core nonetheless.

    Thanks for the tip though…

  57. Razvan

    Gary what is going on? have we made the bottom yet? the metals have made new high during the asian session… that has to be a good sign!

  58. Gary

    Only a move above $1365 will form the swing. Of course one could take a position at any time, just keep your mental stop at $1315 in place.

  59. Walter

    TZ,
    >Very critical next day or two in my book.

    I think that’s clearly too short. Imo the big decision days are next Tuesday Nov23 and Wednesday Nov24, with Options and Futures expiry, respectively. Currently there are 8430, 6236 and 10785 call options open at $1350, $1325 and $1300 respectively. Were they all to end up in-the-money, of course not all of them would stand for delivery/physical, but even if only 10% would then the bullion banks would have to come up with real gold for an +extra+ approx 2500 contracts. That is: 2500 on top of what they’ll already have to bring in to fill the deliveries for all the in-the-money options below, say, $1250, a level they probably won’t be able to bring gold down to.

    Those options below $1250 add up to (very rough count) 50,000. Again, if only 10% of those would stand for delivery, that’s approx 5000 contracts.

    Conclusion: if the bullion banks could drive gold down to 1300 (in a spike down ONLY on Tuesday!), that would save them 50% less gold they’d have to come up with to fill the deliveries. (And even at a 5% or 15% delivery rate, that 50% less rate still remains intact.)

    With such huge stakes it is simply imperative for the bullion banks to make another desperate attempt to drive gold below 1350-1300 on Tuesday. It’s not a matter of IF they will try but of HOW FAR they will be able to drive gold down. There WILL be a raid on Tuesday (but: it could fail completely, see below).

    Now imagine yourself being big money trying to buy gold in quantities as cheaply as possible. Then the point for you is: how deep should you let the banks drive gold down on Tuesday before you step in to buy big time – that is: before some OTHER smart money party steps in and snatches those options right from under your nose? That’s one game of chicken for you… – the outcome of which will decide how deep the raid will be allowed to go.

    Regardless, to stand any chance of running gold sufficiently down, until Tuesday the bullion banks simply HAVE to cap gold below, say, $1350 (a $50 down day is likely the max they can hope to achieve, considering their previous ‘successes’ on expiry days). That is why gold currently gets slammed at every single breakout attempt. (So far, at least – it just broke upward of 1345 as I write this.)

    However, this whole Waiting-For-Tuesday game works equally powerful in upward direction. If the banks can’t keep gold capped until Tuesday or if their raid on Tuesday doesn’t get them anywhere and would stall again at, say, $1330 – boy, then the chances are we’re going to see a short squeeze the likes of which we haven’t seen for quite a while. Consider that there are another 25000 call options expiring merely between $1350-1400; and the higher the bullion banks would have to let gold slip up (i.e. more options in-the-money, i.e. more deliveries), the bigger the short squeeze.

    So, the question on where gold will go won’t be resolved until Tuesday. (Or if the banks fail on Tuesday, they’ll try another raid on Wednesday.) As of Thursday, we’ll have a new and more normal situation – if such a thing exists in gold & silver.

    Here’s the current Comex options & futures Open Interest report (select Metals and hit Create Report):

    http://www.cmegroup.com/tools-information/build-a-report.html?report=dailybulletin

  60. Jayhawk91

    Robert-

    I like all of those on your list-I have 9 or so junior silvers on my watch list…Mostly through triangulation of various blogs, traders, analysis I’ve seen.

    My speculative ones-I’m not in these but will be buying shortly.

    Revett Minerals
    Genco Resources
    Great Panter
    ECU Silver

    Smaller amounts of-
    US Silver
    Silver Dragon
    Minco
    Bear Creak
    MGN

    Larger Potential blue chip silver
    First Majestic

    Of the more established I like
    HL, EXK, SVM

    I really hate SSRI, but one day this sucker may run…I’ll pass

    I’ve posted this thread on Kitco before, but check out a miners analysis discussion there. Here’s his final list based on various fundamentals. On the silvers, his top ones are Revett, MGN, Genco,

    List

    Thread

    thread

    Also other thread in that section of Kitco.

    Guy on Seeking Alpha who goes by MarcoG or something has multiple article on US Silver, Genco, GBG

    Bob who posts here sometimes also like Genco, First Majestic and a few others.

  61. Robert

    FYI, after Gary stated there must be something going on in the physical market for silver, I was around my local PM store (the biggest in MPLS, and one that I have previously bought thousands of ounces of silver from and many ounces of gold) and I stopped in thinking they had what they used to: a ton of PMs.

    The case was somehow the exact opposite! I asked how many monster boxes they had for sale, they said “none”. I said well can I buy a few thousand or hundred ASEs? They said right now they only had “60-80 ASEs”! They knew I would be startled b/c I was a big buyer before. I then said, well you still have a few hundred AGEs right (Patrick the manager told me in the summer he could sell me 500 AGEs that day)? They said “NO”. They had ZERO AGEs!

    He then proceeded to say, “We’ve gotten totally wiped out.”

    This is crazy to be honest. They used to have millions of PMs now they’re all cash. Almost no PMs and if they want to get back into all PMs the premiums are hefty.

    Shows you that the bull market surprises do come to the upside, traders get slaughtered, and there are fundamental supply inadequacies. This is opinions for the micro gold/silver realm, but one that definitely counts.

  62. Robert

    Jayhawk,

    Thanks for the quick reply.

    Genco is getting some attention, they are on my christmas list, lol.

    I totally agree with you on EXK, HL, and SVM, I own them all. I also own SSRI and today it was my only equity in the red but I have major faith in them. I actually ran into a buddy of mine the other day who’s dad is very well connected in the elite business world and has had my buddy buying silver for the last 8 years or so. He just had my buddy buy a bunch of SSRI so, of course, this is a very random pointer to you, but to me this is provocative!

    I divided up SVM, SLW, HL, PAAS, SSRI, and AXU into my core, with EXK and FRMSF a little heavier than the above with the three micros on the side. Should make for a good feast for the next few years!

    When did you graduate KU? I had some buddies that went there. You familiar with Edina, MN?

  63. William

    Gary, nice TL on the $USD daily chart.

    I’m a beginner, and have some q’s please – any/all feel free to answer as I’m eager to learn.

    Q1: regarding the swing high of $GOLD at $1365, is that calc’d as price reversing above yesterday’s candle high (1364.5)?

    Q2: on $GOLD still, why not a floor at just under $1330 instead of $1315? Just curious.

    Q3: what did you see in SLW that caused you to issue a buy signal? On the daily chart it looks bullish, but the 60 min chart still looks like a downtrend to me.

    Q4: I see you use cycles – I listen to Tim Wood each Fri – but, these seems more like a guideline to me than a hard buy/sell signal – reason is there is too much variation (for me) to use this as a hard buy signal. So, this means I don’t get cycles yet?

    Thanks much.

  64. Steven

    Gary,

    I’m wondering about your portfolio mix. I currently hold mostly AGQ with some GDXJ that I bought on the opening day and have held since then. I’m wondering why you (or I) even hold GDXJ if we are really playing the silver side of things (with gold as a lead, of course). So, why not put the GDXJ money into SLW or AGQ?

    Thanks,

    Steven

  65. Poly

    Well boys, it’s early of course, but tomorrow is already shaping up to a big day and possibly even a swing!

    Gold/silver up strong and SP futures up 7.

    Don’t forget its big GM IPO day, like it or not, it will get pumped up for at least one big day. Throw in a ECB bailout of Ireland announcement on Friday and we’re off.

  66. Jayhawk91

    Robert-

    I think I heard you say you are 24? Man, I don’t know what I was doing at that age, but I can assure you I was not studying economics & stocks! Contgrats, you are WAY ahead of your peers my friend.

    I graduated in 1991 (my user name may have clued you in to this!).

    SSRI is also on that list I linked-They are in the top 5. Bob Chapman-LOOOONG time metals guy likes SSRI a lot. I bought some early in the year and went down 28% on it at one point. Kind of a bitter taste about that one, but the bull corrected SSRI like Gary points out over and over and over.

    Best advice I can give you? Listen to Gary, he’s on the money and will be right a majority of time. He’s got the correct mental approach too, which is so key.

    Best wishes.

    I do recall KU having a good amount of student from the MN area. I grew up in the Chicago area and we had a ton of kids go to KU.

  67. Gary

    William,
    There is an explanation of swings in the terminology document on the premium website.

    $1330 is a meaningless number. The only level that has any meaning at all is $1315 because that was the bottom of the last daily cycle low. As long as the pattern of higher highs and higher lows holds the intermediate degree rally is intact.

    Gold bounced off the 50 DMA. That was the first logical level where we could expect value investors to step in front of the decline. I am one of said value investors.

    Forget about intra day charts they are a waste of your time unless you plan on day trading. Something I suggest you don’t do, especially with the volatile metals sector.

    Cycles aren’t a perfect timing tool, other than the occasional swing sometimes marking a cycle bottom. They are more of a guideline for when to step on the gas and when to coast.

    As an example right now gold is getting late in the daily cycle. We want to be looking for signs of a bottom. We definitely don’t want to be selling this late in a daily cycle.

  68. Robert

    Blogger Robert said…

    Steven,

    I bet Gary says its because it’s too risky. If that’s what you want, silver is more volatile (and both are very volatile), then go for it, but remember nothing is a sure bet- there are no guarantees in this business.

    Holding gold equity positions is just good money management, and a risk aversion decision.

    I’m 23 and am shooting high. If I was in my 40’s or up I’d hold gold most likely.

    JMHO

  69. Gary

    Actually I’m holding GDXJ because I think it will perform as good as the silver miners and I expect silver miners (SIL) to perform close to AGQ in the long run.

  70. Robert

    Jayhawk,

    I have an old soul, lol, or maybe it’s just a very young soul seeing the simple truths in life as easy as a child; That being the benefits of gold and silver in this current global debt market.

    I will try hard to listen to Gary as closely as possible but I am learning that is extremely difficult- more difficult than anyone would expect. But that is just the novice emotions of a 23 year old reacting to market swings.

    I do hold this SMT service to be a Pot Of Gold. I have searched the internet far and wide for different truths regarding economics and cycle theory is currently my Pot Of Gold. My only fear is that one day everyone figures them out. I for some reason KNOW this will not be the case, and if it does I KNOW it actually wouldn’t change anything- human nature is unchangeable. But it is still an interesting fear, and I think a common sense question to ask is, “how many will figure out real cycle theory, and in how long”?

  71. Andrew Jackson

    AGQ has out performed pretty much everything, but long term I’m not wild about those leveraged funds as a buy and hold vehicle. I like to own the miners directly.

    SIL has beaten GDXJ pretty handily since the summer, but I’m not wild about SIL vs hand picking the best of the best.

    Silver must have formed a swing low tonight,correct G-Burrito Boy?

  72. aviat72

    Silver is running up more than 2% while Gold is up about 1%. There is indeed something going on here.

    ————–
    SB:
    I rarely visit’s TK site; maybe once in 2 weeks. Though these days there are many other posters who seem to post interesting often bullish content.

    You asked for examples, of takeouts at a 100% premium: I gave you after doing a quick search on one web-site. And please understand and internalize the concept of tail risk.

    Again let us discuss his trades if they add value; no point discussing the trader.

  73. Robert

    To be honest JayHawk,

    I know nothing about the markets.

    But I do know that the people that I know do know plenty about them.

    One of my hockey coaches once said (he was a elite skater back in the day), “they don’t ask how”, they ask, “how many”, referring to goals, same holds true with money pretty much.

  74. Nick

    Gary:

    Sometimes I wonder if you have an overdose of confirmation bias….

    At times you say make decisions based off Gold since Silver market is too thin, and at times like tonight, you are looking for a swing high in Silver rather than Gold (that may very well come tomorrow).

    O well, guess you are human after all! πŸ™‚

  75. alex

    Gary

    Ifollow you (for 3 months now) but have followed a herd of other rather good mkt techs. almost all are calling for dollar rally/strength…gold top formed

    But i still see things your way due to this blog and your line of reasoning to doubts. IF the dollar rolls over and gold rallys again ( as I suspect they will) You really stand alone as THE ONE who stuck by your call…

    EVERYONE else is changing dollar view to bullish OR giving the wishy-washy view!

    I am talking about ‘jeb’ as one and charles cohen has sent out panic alerts for impending crash due to dollar strenght.

    http://www.safehaven.com/article/19006/trend-in-the-dollar-and-gold-under-pressure JEBS View

    you stand alone πŸ™‚ with us , that is.

  76. Gary

    When ever you see market “crash” alerts you can pretty much figure you are dealing with someone trying to shock and awe you into buying a subscription to a bear service.

    True market crashes are very rare animals. Usually it’s best to run the other way from the crash crowd. Case in point Elliot wave has been calling for a major crash since about 950.

  77. alex

    ahhh, CUDOs TO JOHN tOWNSEND TSI ALSO. His views match too, unwavering.

    I guess I meant Jeb , The Document , etc…could scare you out of your trades, but today I was buying EXK, HL , PAL with confidence from this blog/your reports , and other techniques

    so thank you Gary—I believe your cycle timing is on track

  78. Jayhawk91

    Robert-

    Hold off on Revett or DYODD…Someone posted this on Kitco tonight.

    “I did research on the Rock Creek situation and decided to sell my Revette shares. Last March the court anulled their permit issued by the Forest Service. This was the third strike. There is a powerful coalition against this project that includes two mighty national organizations: Sierra Club and Natural Resources Defense Council. They have impeccable record and some of the best lawyers in the country. Montana grizzlies are pussycats in comparison, they will eat Revette alive. It turns out that Revette is a renamed Sterling Mining Company of Montana that was run by some of the worst polluters and bancrupcy con men in the industry.

    http://www.earthworksaction.org/pubs…hoIsRevett.pdf

    They left Montana taxpayers with a $60-plus million bill to pay for the cleanup of the poisonous Zortman-Landusky mine.

    http://meic.org/mining/cyanide_minin…landusky_mines

    This is an area protected by the Wilderness Act. Only a thouroughly corrupt agency like Forest Service could issue a permit so obviously violating this law.

    Revette people most likely realize that it’s a lost battle but use the phantom of Rock Creek to pump their stock.”

  79. Frank

    MGN is Chinese, eh??

    It is a 230 million ounce silver and copper project at the Montanore mine in Montana. It was originally developed by Noranda (a major Canadian mining company) in the 1980s and then abandoned in 1994. It faces strong environmental resistance. The big question is in permitting the mine, so the market has very low valuation for the ounces of silver (and copper) in the ground.

    The stock has been battered over the years and it is the type of stock that could go hypeparabolic if silver and gold really pick up steam. But it is also subject to great risk since the project is a pure speculation. The company is a handful of geezers in Spokane who issue new stock to pay themselves fat salarird and allegedly try to get the permit and develop the mine. At that point they will require more dilution to finance the mine… so it’s a never ending cycle of dilution.

    Revett is on the other side of the same mountain, BTW.

    I sometimes think it is better to invest in a mine in Eritrea or Venezuela than dealing with American enviro-nuts.

  80. Frank

    Some other Canada listed silver miners include Sabina Gold and Silver (one of the highest fliers of 2010) and Fortuna.

    I think Fortuna offers much better valuation than First Majestic at this time.

  81. Shalom Bernanke

    I thought I was going to sleep like a baby last night, but it was more like a kid the day before Christmas!

    Unfortunately, I still have 20% of total capital not invested. Happy to have a good chunk working though.

  82. DG

    Hey Doc: You had mentioned that one thing that might convince you that we are not in an intermediate decline is an explosion off the bottom? Does 4.5% in silver count? (gold is only 1.5%) I’ll be interested in your thoughts as the day progresses, as i am writing pre-market.

  83. Gary

    Well it may have made the cycle low, we just don’t have any confirmation yet. The first level of confirmation that a daily cycle low is in would be a swing low.

  84. Carlos

    Ok Gary. I got your point πŸ™‚

    Silver still showing more strengh.

    Gary, if you don´t mind, and if this cycle low will be confirmed, it would be nice if you can “simulate” the next daily cycle about time frame and possible target, in your night post (daily or weekly post).

  85. Gary

    If gold moves into another daily cycle up I really have no clue how far it could go.

    My orginal hypothesis was three equal legs of $200 each. But if gold goes through $1500 on this leg it will shoot that theory down.

    At that point we will be in uncharted territory (we already are as the sector is trading in a vacuum) and we’ll just have to track the dollar and gold cycle and be on the lookout for an exhaustion move above a big round number.

  86. Bob loves Hawaii

    Jayhawk91, I also own South American silver. My view is the big boys are going to put all of their cashflow to work and buy out these juniors.

    Today is going to be interesting.

  87. v

    Hi Gary,

    As we follow gold for technical levels, should we wait for gold to make swing low as well before taking full positions in silver.

    V

  88. notGreedIsGood

    Gary or Shalom

    now that we’ve gapped up on gold/silver, what would be your strategy regarding undeployed capital? would you wait for confirmation of gold forming the swing low, before deploying any new capital, or would you start chasing at this time?

  89. Gary

    V,
    That would just be a personal decision. I reloaded my SLW position on the theory that gold was likley to bottom when it tagged the 50 DMA. Obviously there was no confirmation of a bottom at that time.

    Your options are; wait for at least one level of confirmation (swing low). The downside of course is that you give up some profit potential.

    Take a position at any point with the understanding that you still have a mental stop at $1315. Of course the further you let gold rise above that level the more drawdwon you will have to weather if the stop is triggered. And you may not get back to break even when you exit into the bounce.

    If it becomes onbvious that a cycle low has formed then we can move our stop up to the new cycle low. This early in the cycle it will become a hard stop the will cause us to exit immediately if triggered.

  90. Shalom Bernanke

    notGreedisGood,

    I have a tough time chasing things. I typically buy the sharp moves against a strong trend with bids away from the market. That said, it looks like metals have turned the corner and are headed higher.

    Since I don’t like buying runups, but I think we’ll at least see a drift higher if not explosive moves, I’ll only add another 5% today (if any), and just sit tight with what I already have.

  91. Andy

    @GGuy.Thanks so much for your answer. I will carefully study your charts and tactics.What is your target per euro towards the end of the year?

  92. Shalom Bernanke

    And if I wasn’t already pretty heavily invested in miners and metals, I would not go buy big today.

    As Gary points out, with $1315 being an exit signal, the further we get away from that number, the larger the potential downside should it get there. I’d adjust my position size lower to accommodate this fact.

  93. JD

    Gary, fwiw, my S&P sell indicator went off yesterday (been long since mid-April). If correct, usually dollar wouldn’t fall.

    But could dollar and PM’s rise simultaneously while mkt. falls if DXY is being so strongly influenced at moment by Euro fears?

  94. Wes

    I have sold 1000 QLD into the strength as the 11/16 opening gap is filled.

    I’m holding the other 1000 for now, although I think more stock market downside is ahead.

  95. Gary

    JD,
    Make no mistake the dollar is in the grip of the three year cycle decline. Nothing that happens in Europe is going to stop that.

    There’s a decent chance your sell signal triggered right at the bottom of the correction. That’s the problem with oscillators and why I use cycles & sentiment instead of technicals.

  96. DG

    Gary re JD: Huh? How could an oscillator give a sell at a bottom? As they are reversion-to-mean measures they can be early, but don’t give buys at tops or sells at bottoms, no? A chart can break down and give a false signal—maybe that’s what you meant. You seem to call charts “technicals” instead of “charts” and mix everything together a bit. Cycles are, after all. also technical analysis (they sure aren’t fundamental analysis and those are the two types that exist: FA or TA).

    Remarkable call at the bottom by the way!

  97. Shalom Bernanke

    It’ll be interesting to see how metals and miners act when they retrace 50% of the recent decline, which is 556+ on HUI, $26.5+ on SLV, and GLD is still away off at $134.50, assuming they get there on this push over the next few days.

  98. alex

    Gary,

    looking at the dollar (3 yr cycle decline) it seems 3 yrs ago it bottomed in the spring (thus we look for it to bottom this spring)..however 6 yrs ago it looks to have bottomed in December

    so maybe it stretched the following 3 yr cycle, BUT couldnt it decline faster this cycle (due to QE2 ) , and we head to a 3 yr bottom now…again landing in December, with a Gold cycle High/ c-wave top this yr??

    I ask you to look into that , just so we (old turkey accounts) dont ride a d-wave down into the spring.

    So could the dollar yrly low have been what we just saw…and 3 yr cycle low hit simultaneously this december or January…lining up with the 3 yr bottom (6 yrs ago). thanks

  99. oa92000

    Gary,
    “There is the swing low on the S&P. This should mark the bottom of the cycle”

    How long the cycle (swing low to swing low) last usually?

  100. Gary

    FWIW the risk is that the rally jsut takes off with immediate follow thru. This is how parabolic moves are started. If a sharp correction after a long rally gets recovered very quiickly traders immediately jump to the conclusion that everything is safe and they all start to pile in rapidly.

    Ben is enabling by contributing several bilion new dollars ever day.

    On top of the fact that we never saw a SoS day I knew this was a possibility and so far the rally is doing what it needs to do to initiate a powerful parabolic move.

  101. Shalom Bernanke

    “(never short a bull market)”- Marc

    That’s right, rule number 1!

    Since Nap Boy hasn’t made an appearance of late, I think I’ll assume his duties and turn in for a long sleep early this afternoon. There doesn’t appear to be any trades to make (for me) at this juncture,so I’d rather rest than try to explain to Aviat that 200 more GDX type shorts does not reduce his risk and remains a poor bet.

    Be careful Marc, Aviat takes it personal when you point out simple shortcomings in his hero. Personally, I’m sitting on what I have and will take advantage of sharp declines even though they don’t look probable.

  102. Gary

    Alex,
    I’m confident I will get out before getting caught in a D-wave. They usually take 6-8 weeks. If I can’t figure out gold is in a D-wave in 8 weeks then I deserve to lose burrito privledges for a year.

    The only time I would look for a 3 year cycle to shrink would be if the previous one stretched really far.

    Remember this cycle is extremely left translated. That means the odds are it will move to new lows at the next bottom.

  103. Gary

    DG,
    I was assuming he was looking at something like weekly RSI or MACD turning down.

    Personally I consider cycles more of an emotional tool than a technical one. The cycle durations just tell us when we can normally expect emotions to exchaust and reverse.

  104. Power Corrupts

    My view of cycles:

    Domestic financial assets and real assets alternate between carrying the secular bull market baton. When one class is in a secular bull, the other class is in a secular bear. Secular bull markets reward buy and hold strategies; secular bears are to be rented or avoided.

    I believe we’ve been in a secular bull market in real assets domestically since around 2000, which means we’ve been in a secular bear in financial assets for roughly the same period.

    I believe FRB and fiscal policy are distorting the markets dramatically.

    I have the same problem managing my emotions as everybody else. Gary has a disciplined approach which is helpful in making portfolio decisions which is why I bought a subscription.

    I own two open end mutual funds for my PM positions. I made my first purchase 8/2/2002, and have added 15 additional times since then, the most recent being 8/6/2010. I have not sold anything. I went down the elevator shaft in 2008! The elevator eventually went back up! Some of my buys were better timed than others, but every single one is currently in the black. I don’t intend to sell until the Dow/gold ratio approaches 1:1.

    My 401k does not have a PM option, so I’m stuck with financial asset choices. The four year stock market cycle seems like the best timing cycle for my disposition. The last trough in that cycle seems like it occurred in March 2009, so maybe the US stock market still has some room to run before the next 4 year cycle downturn arrives.

    I’m a raging long term bull on the PM’s and a cautious 4 year cycle bull on the S&P.

  105. Gary

    I think you can probably throw out all historical precedents. If the dollar is ready to roll back over and continue the move down into the yearly and 3 year cycle low all assets are going to head generally higher.

    This will override everything including sentiment to the extent that it will probably stretch to really amazing extremes.

  106. Carlos

    Gary, according to your last comment, it´s possible if Gold confirm his cycle low, that the next daily cycle may be streched has the one who begins in mid september ?

  107. Robert

    So G-Man 8% gains are going to come for the next consecutive 20-30 trading days?

    This is kinda cool.

    I outperform the S&P for a year in one day maybe two.

    Are you a superhero G-man?

  108. Poly

    Get a grip everybody. I don’t mind seeing huge daily gains on my calls too, LOL.
    But let’s not forget a bounce out of those 4 sharp down days (ECB bailout and Government Motors IPO) was bound to produce a significant bounce.
    The real test will be the follow through tomorrow and early next week.

  109. Frank

    Mozillo’s little brother on CNBC is too comical. He calls for gold to $1075 and he wants to invest in GBG at the same time. Good luck with that strategy, orange man.

  110. Wes

    JD,

    It was a good trade, but we do have an extremely strong calender period for the market over the next 10 days.

    I considered holding the last thousand, but decided I could reload at a lower level for a possible lunch money (200 share) trade.

    My indicators show more stock market weakness ahead.

  111. Poly

    Gary,

    What’s your take on seeing Silver jump 5%? Obviously it has strength, but is it a concern?Just panic short covering after the drop?

  112. Gary

    My position continues to be that something is going on in the silver market. My best guees is that severe shortages are developing.

  113. MD

    Hey Gary,

    Any chance you take some profits in your SLW position? 10-15% in 2 days is pretty nice.

    Thanks in advance!

  114. Uatatoka

    Gary on Nov 16:
    “Extreme panic tick readings that are starting to reverse. Oh what the heck I’m going to add back my SLW here with gold tagging the 50 DMA.”

    NICE call Gary. I took off 50% in a panic after the big Tues reversal last week figuring it was too big and warranted at least some follow through (yes, I know, I broke the rules but was right this time). Added back that capital on your Nov 16 call plus a little on margin in AGQ and SLW. Was extremely nervous at the time and of course giddy as a little school girl now πŸ˜‰ Let’s hope it holds and not just a dead cat bounce.

  115. DG

    Doc: You had said (if I remember correctly) that a launch off the daily cycle low might convince you that we have not started an intermediate decline. Does this count?

  116. Wes

    Gary,

    I follow about 20 stock market psychology indicators. When these indicators become overdone enough to indicate a correction is due, and the market begins to correct, usually the indicators will move into a buy range.

    For example, the VXN, the volatility indicator I use will rise above 25 before the correction cycle is complete. So far it hasn’t.

    I could go on, but you should get the general idea.

    Currently we’re in a quite favorable calender period for the stock market. I have no clue if this will influence things or how much.

    But meanwhile, I’ll continue to dance with the indicators that got me this far.

  117. Brian

    Robert, I just love your youthful enthusiasm and great posts. I wonder how many of us look back and say “Yup, used to be just like that. Cant’t do it anymore, but I remember.” Fortunately you are on the bull. Most of us lost our azzez at one time or another.

  118. DG

    Wes: I do a similar thing with a basket of sentiment indicators (Do you get sentimentrader? You might like it if not). My experience is that there are times when they don’t work, like during the 2008/09 collapse. People were terrified—and we went lower anyway. I am wondering if a dollar collapse and thus asset spike up, will be similar on the upside to what we saw on the downside then. Anyway, just my thoughts on it.

  119. DG

    Wes: I do a similar thing with a basket of sentiment indicators (Do you get sentimentrader? You might like it if not). My experience is that there are times when they don’t work, like during the 2008/09 collapse. People were terrified—and we went lower anyway. I am wondering if a dollar collapse and thus asset spike up, will be similar on the upside to what we saw on the downside then. Anyway, just my thoughts on it.

  120. DG

    Wes: I do a similar thing with a basket of sentiment indicators (Do you get sentimentrader? You might like it if not). My experience is that there are times when they don’t work, like during the 2008/09 collapse. People were terrified—and we went lower anyway. I am wondering if a dollar collapse and thus asset spike up, will be similar on the upside to what we saw on the downside then. Anyway, just my thoughts on it.

  121. DG

    Robert: When I was 21 I started with about $30k, got a job as a broker, and turned the $30k into $650k in 5 years (this was around 1980, so $650k was worth something!). I then proceeded to lose $100k/months for 6 months. I had been both long and short during the five years, so it wasn’t one bull market play (I remember buying puts on Homestake Mining as we headed into the Hunt Crisis. Bought 100 puts for $2 and sold them at 6 a week later. That was fun!) Almost every great trader goes broke when he’s young.( Have you read Market Wizards?—Do if you haven’t). Going broke teaches humility and to respect the markets. I recommend it; just do it when you are young so you can make it all back. Good luck! It’s a fantastic and always-new game.

  122. Wes

    DG,

    I’m not familiar with Jason’s work.

    As for nothing working in 2008, I use the OEX option traders to tell me if we’re in a bull or bear market. As you’re aware, these are the “smart” options traders.

    When they say “bear market”, you can no longer use the psychology indicators in the traditional way.

    Incidentally, you most combine the
    daily data with the open interest for these guys to get the complete readings, as they sometimes day trade. So, it’s what they are taking home that counts.

    By the way, these guys were heavy put buyers yesterday.

  123. Gary

    I expect all the sentiment gauges are going to be worthless right now. If the dollar heads back down assets are probably going up.

    One might be better off trying to determine the dollars next move.

  124. DG

    Yeah, I track the OEX traders as well. Jason Goepfert (who runs sentimentrader) won Technician of the Year a few years ago and crunches all the numbers and makes the adjustment you mentioned. Frankly, at this point, I let him do the work! He also tracks small option buyers (ROBO–Retail Options, Buys Only) and several other indicators. Yes, I have noticed that the OEX guys are very bearish, but the weight of the evidence while too bullish, is not excessively so.

  125. Gary

    There were many times during the run out of the Aug. bottom that the OEX put/call ratio spiked. None of them signalled anything other than a very minor pullback. The daily data is actually quite volatile. Often cycling from bullish to bearish in a single day.

    I suspect one would do a lot better watching the SoS and BoW data.

  126. DG

    Yes, and the 10-day MA and 20-day MA are both neutral. The 5-day and single day shows OEX bearishness, but as Gary said, that’s way too short term (unless you’re a crazy trader like me.)

  127. Wes

    The OEX guys are solidly bullish. Yesterday’s exceptionally high P/C was the highest by far since April.

    I guess we’ll wait to see what it means.

  128. Wes

    92000,

    I think we’re in the process of putting in an intermediate cycle low in the stock market.

    Gary does not think so. You’d be best served to follow Gary on this.

  129. Keys

    Gary,

    Re-reading some your stuff on the site.
    Has backwardation ever factored into the ABCD wave analyis as a potential sign of anything? The idea of shortages in silver got me thinking about gold bugs potentially running in all at once demanding physical payments. Ie is there any correlation between a C-wave top and a backwardation event?

    Cheers

  130. thedocument

    DG,

    Sorry for the slow response. You’ll forgive me if I don’t spend all my time on Gary’s blog πŸ˜‰

    I did say I would consider being wrong if gold exploded out of a daily cycle low. So far, no explosion and no swing low. I don’t judge such things by silver’s action as it is too volatile and thin a market for cycle analysis. That said, contract volume under silver was pretty light today considering the move.

  131. GGuy

    @Andy: i don’t know at the moment.

    If the next intermediate on Euro will go above the last one, that means we have an uptrend year, so i can guess it will end higher than the poin it started. If the max is reached under that point, we are in a negative year, and i will short massively until at last the starting point.

    BTW, if you want to discuss more, my mail is
    [email protected]
    and we can do it without bothering gary and the other guests.

  132. Gary

    Hardly. when we get a strong 90% up day the market tends to concentrate on stocks. But as we found out in July and Oct. It doesn’t take long before the market remembers where the outperformance is. And what sector is trading in a vacuum at new all time highs.

    I wouldn’t make the mistake of trying to read too much into one days’s action.

  133. Robert

    Gary,

    How is GDXJ going to parallel the returns in SIL if we are expecting a regression to the mean of the historical gold/silver ratio?

  134. Gary

    You are assuming juniors will act like majors. They won’t. I expect the juniors to significantly outperform the majors. If GDX rises 1% I expect GDXJ to rise 1.5 to 2%. As we get into the final stages of the C-wave the difference may even expand considerably above that.

  135. Gary

    Because I have no desire to do hours of research. Fly all over the world inspecting mines and buy 20 positions when I can just buy one.

  136. Nick

    Gary, that was an amazingly awesome long term view going into 2012! πŸ™‚

    Thanks as always for the Big Picture Focus

    PS: I think the bigger threat going into 2012 is the Mayans being proved correct! (J/K)

  137. Elaine

    That was a really long view, kind of scary, although I think a lot of people have an inkling that it could happen. For all us working stiffs trying to string it together from one bust to the next, it’s really scary.

  138. Robert

    Yeah, DG i’m doing absolutely everything in my p0wer to go broke now, it sounds like so much fun and the potential for such a life long lesson. Do you want me to give you a loan or something and not even learn your name, is that what you’re getting into, easy pickings on the young here?

    No, I’ve gone broke before. Who said I just got into the market? In 08 I put in about 30-40k got it up to 100k then lost like 85% of it shorting the 09 QE1 run. Why was I shorting? Well I was just a sucker for the doom and gloom theories prevailing over the net. What’s BS is that I was in SLW huge when it was $6 a share and then I would make really really nice gains coming out of that 08′ supercorrection and I just thought it was overbought just as with the market. So I’d get out and throw those profits into shorting, and short more when we got more and more overbought- it wiped me out.

    I was so pissed at the markets I decided never to play them again, and I just started accumulating physical en masse outside the markets. Then in July I got the balls to sell all that physical (it’s really funny b/c that check the local PM shop cut me I brought into a local bank and ironically the teller that day was a good old buddy of mine- a few years older. He was like holy shit what did you just sell (I sold all my coins at a daily cycle top when silver hit $21 or thereabouts in mid-late July). I told him I just sold some “coins”. In reality it was all super pristine ASEs and AGEs (the equivalent of like 4000 oz silver). Then the other woman teller was thinking “that is so easy”, she said, “oh wow, I have some coins from my grandparents. I’m going to bring them in and get appraised tomorrow!” I was laughing very hard in my head as she was saying that πŸ™‚

    I got back in b/c Bob Chapman warned the “real money to be made is in the shares” not the physical. In the 80s gold/silver shares went up on average 40X the physical! That number astounded me, and so, I’m young, am a value gambler, and so I’m back in.

    Right when I got back in I started shorting huge when Gary thought there were daily cycle highs. I lost 30% pretty quick and I was steaming! Then I have made it all back + far more with leveraged moves and shorting this recent daily cycle immediately after selling all my PMs at the euphoric $29 silver top.

    With all these swings you’d expect/assume I’m on a one-way ticket to being broke again. NOT A CHANCE!

  139. Robert

    $650k at 23 in 80′- I like! :). If that were me right now, 2 mil liquid, I’d be over in Europe at the Aston Martin dealership with a real estate agent getting me the nicest place close to a good autobahn entry! Man that’d be sweet!

    A drastic change I’ve made to my capital movements (trades) is that I wholeheartedly do want to stay in this “game”, the markets, for as long as I die. It is a fabulous game just as you’ve described, and brings great thrills and tests your intelligence to its maximum at times. I am a pretty good poker player- even cashed in my first world series event in 2008 (i won an event out of 810 people online and they sent me to vegas, paid my transportation, and gave us (other sponsored players from Sportsbook) vip into the Palms penthouse- that is another story!). The resemblances are uncanny with high level poker and the markets- with the highest attribute being patience.

    I’ll stay in this game because I’m not positioned to get booted out with a big down move in silver/gold, and won’t be positioned like that yet ever again. My risks have reduced as my net worth has grown. I won’t budge, I’m frickin glued, stapled, and cemented to this bull until we ride into the sunset. Except of course on its damn d-waves, but those do bring awesome re-buys!

  140. Robert

    DG,

    Intuition for lack of a better word is my new tool, you need a good one for this game.

    I feel the sentiment gauge on boards, the net, for silver/gold, and evaluate it. From my own intuition right now I’d say we’re only around 10% in positive bullish territory with to run maybe to MY 80 for this next daily cycle top.

    I just sit in the bushes and wait till people freak out and start buying with leverage when silver hits $31-$32 etc. Also Gary obviously keeps you in line with if what you FEEL is in tone with all his research. My 80 if Gary suggests could be bringing silver’s next daily cycle top to $30 or $38 I will adapt without any emotion. You have to become a robot- emotionless, indifferent.

    I guess what you have to become is what they call in the poker world- a shark. There are sharks, fish, and donkeys. Gary is an alpha-shark, retail Joe in the bull market who gets far to nervous is a fish (trading the bull frequently), and TK is donkey (anyone shorting the bull or markets medium to long term).

    This is how I’ve seen is the real way to become successful. Patience actually doesn’t even become a word- it is only and afterthought. Your whole livelihood has to become patience.

    I’m no pro at controlling emotions when it comes to money as you can see from my many giddy comments (Gary sorry about some of those. Don’t hit me πŸ˜‰ ). I just have finally learned from results. I lost heaps of money on emotion and made heaps on being a contrarian to emotion in the gold bull.

  141. n1tro

    Robert,

    Your youthful arrogance is more likely going to get you broke again unless I’m reading wrong. Seems you made some decent money in the markets and then shorted because you read stuff on the internet. Then you had a lot of physical silver and sold it to use it to leverage more in the markets?

  142. Robert

    DG you seem emotionless pretty much on trading, except you were pretty pissed the other day when gold/silver was at a daily cycle low. I think you had a mini-panic :). I actually took that as a very good bottoming sign- a very experienced trader’s nerves were even firing hardcore.

    I went in 130% that day. 65% on the open, 65% in the middle of the day (Nov. 16th after riding the bull to the 10th and then playing ERY from 29 and getting out at 32). You couldn’t catch a bottom better than that. Now with a 18% gain in a few days my leverage is obviously reduced relative to my non-margin. This is good. I’m in a good position.

    Now I just sit back and watch like a hawk the retail pour into silver at $35-$40 soon down the road and then escape like a bandit :). Wash, rinse, and repeat. Right?

    It is a zero sum game just as explained in Wall Street. It is about winning over and over and over and over again. It is not about the amounts, they are inconsequential if you are really a winner the amounts will pour in and you won’t think much about your worth just instead how you performed that last trade for the win.

    Have a good game y’all.

  143. Robert

    n1tro, I’ve recently had to completely change my tactics in order to be a long-term winner. I’ve realized its about playing your opponents, the market is just people. When you guys are freaking out buying and leveraging silver at $35-$40 as its stretched far above its means on a day where there is a mini-parabolic-spike is when I’ll selling. I’ve felt my emotions for 2 years in the markets and I’m finally able to get a grip on them.

    It’s hard not to get childish at times when you and all your buddies are in their low 20s partying constantly and chasing good MPLS tail, and you’re thriving harder than anyone of them by far. But that is reality for me and I get caught up in it. But I don’t pass up fun when it comes along, never, unless I need to get to the computer to exit on a freakout high day.

    The freakout high days come once in a blue moon, really. Silver hitting $20 and $19 in 08 and 09, those were freak out times when if you got in at $15 its then time to sell. The freakout days now are $30 (we just saw), and next who knows, but they’ll be higher than $30 most likely unless we go into an intermediate decline prior to that (odds not good for that).

    I’m just trying to have some fun from time to time on the blog, I mean you have to lighten things up sometimes when people are watching gold and silver round the clock 5.25 days a week. If i was a day-trader I wouldn’t have time for fun on the board as much, but I’m not and I like it that way.

    If I get outta line let me know, and I apologize in advance. Put yourself in my shoes at 23, no kids, no bills, all liquid when your friends are all experiencing the depression. Most of my friends went to ivys or good public institutions and they just got okay financial jobs that maybe pay $50k a year- its a joke. 10 years ago they’d make $50k the first 6 months and then be making 6 figures easy.

  144. n1tro

    RObert,

    Don’t make it about you versus the rest of us “freakouts”. I’m sure there are people on here that have portfolios that dwarfs a bunch of us combined. The people who read and follow the cycles properly don’t “freak” out when cycles fail, they take a small hit and go in again. We are all on the same ride, so enjoy. The stock market and individual stocks is about you vs. the other guy, I know, because I use to day trade but I think it is a little different.

  145. Robert

    n1tro,

    I’m on the same ship as you. It’s just that that ship is at its best when those on board, if even on the same team, still thrive to do their best (which means relative even to its crew members). And then learn from the members whoever performed the best in X activity how they did so and if it was based on luck or skill. If they repeatedly perform the best then I’d say its skill. Gary is obviously the leader here and why we’re all on his blog.

    I made one good trade lately, about $30k in a week, and got arrogant about it. I’ll use the same tactics next time and if it works again and again, I will continue to be arrogant. Maybe not on this board, but when I’m out partying πŸ™‚

  146. Keys

    Robert,

    I am 100% convinced you will lose it all at some point. Your all in at all times attitude will make you broke. Most of us have endured this, stupid, but all of us do it. Just try to no bet too much….but then again, who am I?
    You are going all in…leveraged, and ready to roar. I do believe you played hockey at one point….well your attitude is to pull your goalie at the first shift and go all offence….you won’t win…
    Do yourself a favor and keep your nut safe….
    Feel free to fight back…your track is still one of a loser…one that you should change, but I already know you won’t…

  147. Robert

    Assumption. I’m all in? I never said that. I’m all in with my Schwab equity plus 30% from them, that is only part, a fraction of my net worth.

    Assuming you’re on this board, and you’re 50+, I’m assuming you’re not 2 million + liquid, and so I could argue you’re a loser for being so old and not having that capital.

    Assuming someone betting $130% on silver at $25 is going to go broke is nothing short of moronic. You already have Alheizmer’s?

  148. Gary

    Probably the largest danger to a young investor is overconfidence or anyone for that matter.

    When any strategy works, especially if it works several times in a row, traders have a tendancy to assume that it will always work. Then they make the fatal mistake of leveraging massively.

    Invariably that’s about the time the market throws a curveball at you and if you are really heavily leveraged you are done.

    Just as an expample I had a new subscriber two weeks ago that bragged to me that he was up 400% in the last 6 weeks. Needless to say it was obvious he was way too leveraged. I immediately suggested to him that he should sell all his options and adopt sane trading strategies so he could keep his gains.

    He refused of course because he was confident the market would just continue to go stright up like it had for the last three months.

    I’m sure the recent correction wiped out most of his gains and he probably sold close to the bottom as he watched most of his net worth evaporate.

    Ironically he was on the right side of the trade but when you are that heavily leveraged and unable to see the future you have to sell to protect whatever you have left because you never know if the market will recover before your options expire.

    Robert,
    The best advise I can give you is to control your enthusiasmm and know that gold is going to throw us plenty of curves dring this bull. Your system that seems infalible right now will fail horrendously many times in the future. Always plan for the failure and only take positions that you can survive when a failure does arrive.

  149. Gary

    I would also warn you that trying to short daily cycle tops will be your downfall.

    Quit doing that right now. The only time to short is during bear markets. Or only with very small positions during an intermediate degree correction. We have no indication that an intermediate correction has begun so you have no business shorting anything.

  150. DG

    Robert: One idea that will save you a ton of money. Once I got this right I started winning consistently: Never focus on what you can make on a trade. Focus heavily on what you can lose. If you keep your capital and continue to place small-risk bets, you will win over time. You’ve gone broke once (fun, eh?) so I take you at your word that you won’t do it again. You will go broke over and over until you learn this lesson, IMO. Trading is all about risk control.

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