I’ve temporarily unlocked this weekend’s update. I’m also going to run the special 15 month subscription until Christmas.

Click here to read the weekend report.

If you want to take advantage of the Christmas special (a perfect Christmas present for that hard to buy for investor) follow this link and click on the yearly subscription. I will add three free months to the normal 12 month subscription.

Sorry this offer is only for new subscribers and or current subscribers converting a monthly subscription.

483 thoughts on “15 MONTH CHRISTMAS SPECIAL

  1. DG

    To Nikeboy:Nope—no vacation here. We are still building a top. I have made some short forays and lost very small. I will post when I start shorting in earnest for the coming drop. I have pretty high confidence that the NDX (Q’s) will get hammered in January. The great thing about trading is you can wait and wait for a good setup, and I just haven’t seen one yet. I hope they wait for January before tanking.

  2. Gary

    So what? I’m not planning on selling and locking in a loss.

    I will sell at the top of the C-wave when they are many percentage points higher than they are now.

    This is just my core position in case I’m wrong or the bull surprises on the upside. It’s my insurance against the bull running away from me.

  3. DG

    Jim: I have been trading for 35 years, and have read a zillion analysts/newsletter writers from time to time. Gary is in the middle of an incredible run of calls. Whatever you are expecting, if it has not been met by what Gary has been doing this past year, you are asking for the impossible.

  4. David


    You must be new here.

    Gary has nailed it all year. And not perma-bullish, stopped-clock, vague stuff. He has made highly specific calls and every one has been correct.

    Let’s go over his year, shall we?

    Last year around this time he called for an intermediate correction. It unfolded exactly as he predicted, although he got back in a little soon. And by “a little” I mean days. Based on his call, I waited to buy PM stocks until the correction had run its course and got a much better entry than otherwise.

    Then, most importantly, this August he started pounding the table for PM stocks, particularly silver. I was personally getting weary of the underperformance in PM stocks, which had not kept pace with the gains in the metal for years. Gary insisted that we were on the verge of a monster C-wave rally, and that silver and PM stocks were going to outperform huge this fall. He was right.

    This fall, as the rally went further than anyone expected, he urged people NOT to take gains. I probably would have, but I stayed all-in and made a fortune.

    Finally, this winter, he told us to take leverage off and go back to a core position. I thought he was a little early (he was — he got spooked by the North Korea business) but this is a minor quibble.

    Anyone who has followed Gary this year should be up 100% for the year. I am. If Gary never gets another call right, I won’t care.

  5. Gary

    You are giving a very specific example of a directional trade in the middle of one of the worst stock market crashes in history.

    Hell I just bought some puts on drillers during that time and made the same or better returns and I didn’t have to go through all the complicated rigama role you went through.

    Instead of giving us one instance that worked out why don’t you tell us about all the lost capital for the many many times where the market just continued higher and your “insurance” just cost you money and crippled your long positions.

    Folks I can assure you if it sounds to good to be true it is. You can dream about risk free trades all you want but unfortunately the real world just doesn’t work that way.

  6. Brian

    I can say for sure I lost my butt on options until I learned some cycle, and bull market knowledge from Gary. I am still very cautious, but the best piece of advice is small doses, and only in bull market instruments at intermediate bottoms. I could see buying some puts if the market turned into a bear, but not on individual stocks. Perhaps some SPY puts 6 months out after a 50/200 cross and a confirmed Dow Theory. Even then, just a maybe. Maria may do well, but most will lose their clothing, food, housing………

  7. Gary

    I’m assuming you are talking about the stock market.

    In order for a runaway move to get traction we would need to see the dollar collapse. The dollar is rallying out of a yearly cycle low and as I pointed out in the weekend report it looks like it has just put in a cycle bottom on the last Fed meeting.

    Dollar rallies haven’t been kind to stocks for the most part. At best stocks might trade sideways during a dollar rally but we certainly aren’t going to see a runaway move in stocks at the same time as a dollar rally.

  8. Scott

    Gary, what are your thoughts about a second bubble forming in the same sector within 10 years?

    what I mean is another tech bubble with Facebook valued at 40 bill, Groupon at 6 bill, Yoku IPO’s doubling ect ect

    Is it different this time because of 4g? is this time for real? could tech be the catalyst you are looking for to start the new bull?

    your thoughts are appreciated

  9. Gary

    The Nasdaq is still half what it was in 2000. How can that be a bubble?

    The tech bubble burst 10 years ago. It’s not coming back anytime soon. Just like the housing market isn’t coming back any time soon.

    The bond bubble is in the process of deflating right now.

    The only bubble I see at the moment is in government debt.

  10. Razvan

    Gary is a money machine. As far as i am concerned he should be kept in a glass bottle locked away in a vault. If you cant make money with him then you should give up investing and do something else.

  11. thedocument

    Most folks who make comments like Jim are lashing out for their own inadequacies as traders. You’d think he’d at least be smart enough to pick a target who didn’t have a record as solid as Gary’s.

  12. M-

    I also would like to chime in on Gary’s track record. While his calls are not perfect (his crystal ball broke a long time ago…) His cycles work has been consistently profitable.

  13. DG

    For you folks interested in playing the coming drop, heres’ an interesting chart of FXI (China). With the SPX making new highs China is already weak. Looks like it built a huge top over the past year, then made a weak push to new highs that failed. Breaking this trendline ought top yield a juicy drop. FXP is the double inverse ETF.


  14. Robert

    Planned Economy Or Planned Destruction?

    Satire published in the Chicago Times in 1934. Speaks more fluently about today’s times than most anything I’ve read in a while. Sign.

    Trotsky’s quote was also fitting to this image, “You may not be interested in strategy, but strategy is interested in you.”

  15. Robert

    It will be interesting to see the outcome of South Korea’s artillery drill that is scheduled to occur any moment now (12:00 PM – 1 PM Korean time).

    I think Korea has for a long time been an objective of the Western powers to eventually disband. They currently stand firm with 1 million+ in their military with another 8 million on standby though. They actually have the 4th largest military in the world! I honestly think that in the next few years there will be full blown war between the Korea’s, it is more a question of who else gets involved?

    It will also be very interesting to see what gold does during this conflict. Maybe the dollar strengthening is too much for gold to avoid an intermediate decline even amongst Korean conflict?

    War games are of the most interesting when you’re not involved.

  16. Robert

    If you look deeper you’ll find that North Korea’s current military/industrail levels have been reached through indirect Western financing.

    The same of course holds true for the previous USSR.

    It seems to be that what the final objective here is a unified Korea, with the further goal being a more unified Asia, with China being the supreme powerhouse.

    If you are naive about the US funding the USSR’s military advancements I suggest you read, ‘None Dare Call It Treason’, by John Stormer.

  17. David

    In all likelihood, North Korea will simply collapse, just as the Soviet Union did.

    This is actually South Korea’s greatest fear. (They know war is not in Kim’s interest. Even with his standing army, he would be routed very quickly by American air power, and he knows it.)

    If North Korea collapses, there will be a flood of refugees into the South and a massive humanitarian crisis. South Korea’s economy will have a hard time absorbing a huge pool of utterly uneducated, brainwashed, starving people. They will literally be overrun by zombies.

    At the moment, Kim’s regime is what’s keeping that eventuality bottled up, and he knows it. His periodic tantrums are intended to extract money from the west to keep the game going. But at some point he will die, his idiot son will take over, and there will be some sort of coup d’etat. At that point, anything can happen.

  18. Robert


    I don’t like answering for Gary, but repeatedly, over and over again, he emphasizes NEVER to short a bull market! Silver is the little brother of gold and so they are both part of an ongoing bull.

    Surprises in bull markets come to the upside, and even if this Korean incident blows out of proportion gold and silver could quickly rise catching most off guard. That is why it is smart, almost essential, to hold a core position in this bull market.

    It is still best right now though to wait for an intermediate low to get back into gold and silver if you’re currently not holding a position. There should be some very good buys come January/February.

  19. Gary

    Not in a million years. In bull markets the surprises come on the upside.

    You may get lucky every once in a while but over the long run all you will accomplish by trying to short bull markets is to whittle away at the gains you made during the rallies.

    First off you will almost never time the entry right. So you will lose some there. Next the intraday rallies will usually be volatile enough to kick you out for losses. More whittling.

    Then there is almost always one powerful counter trend move even during an intermediate decline. That will get you for a few more percentage points.

    So by the time the correction is over you will probably have managed to whittle away 2-5% of the gains you made on the upside even though you were positioned correctly.

    In hindsight it seems like a good idea. But in real time its just a great way to throw away money.

  20. Robert

    Gotta love Bloomberg, always:

    “Gold’s rise resembles moves reached before the three big crashes of the last decade: the Nasdaq tech-stock bubble of 2000, the U.S. housing market bubble of 2005-2006, and the crude oil- price spike of 2008, according to data compiled by Bloomberg.”


    “History shows that when the price of an asset takes a parabolic climb like gold’s has, it’s eventually bound to crash, according to Mark Williams, an executive-in-residence and master lecturer at Boston University’s finance and economics department. And when it does it’s almost always the smaller, individual investors that get out too late, he said.”


  21. Gary

    These are probably the same people who couldn’t see the housing or tech bubble coming. Now they think gold is a bubble when there isn’t even anyone buying gold yet.

    Gold hasn’t even made an inflation adjusted all time high yet. How can you have a bubble when the asset isn’t even at new highs.

    When we see lines out front of the local coin dealer then it will be a bubble.

    When the Dow:gold ratio is at 1:1 or lower then it will be a bubble.

    Classic Moe Ronn!

  22. Robert

    Yeah I have a lot of friends with wealthy families, my friends are all getting into finance, and none even know about gold/silver. What they’d just think if you brought it up to them would be “expensive, of no use.”

    Ironically one of the wealthiest families I know is into gold/silver and have been since around 2000 right when it started! Next thing I know this guy just bought a farm a few weeks ago. He obviously thinks agriculture is going to take off. And for all you people who think it is paranoid to prepare for certain types of events, this guy just built a monster house 20-25 minutes from downtown (kind of remotely located), with HUGE water reserve tanks built under the house. His son told me his dad said there is a 10% chance of food shortages in the US in the future. His dad also had private arraignments with a private jetliner to pick his son, my good friend, up from college in case of emergency. This is of course just common sense but these elite do cover their asses in all situations!

    He also did say that HAARP is a mind-control affiliated project. He also has flown all his gold out of the country to South America. I’m not trying to scare any of you but this is all true, everything.

    10% is good news, eh? 🙂

  23. Robert

    His dad would never conceal any of this to anyone. His son has of course told me all of this. His son only tells me this stuff of all our friends because he realizes I’m the only one that can comprehend any of it, or more or less, is interested. His son is not fearful whatsoever, the exact opposite, very comfortable always- he knows their family is of the highest preparedness. We almost never talk about these things, but over the course of the last 2 years, those are the facts that have popped out of him that I have noted. I wouldn’t scare into getting rid of all stocks and into physical, the stock market will be around for as long as humans are around. It might close for a day or two (when it opened gold would explode, right 🙂 ?).

    Just wanted to share with you guys some facts that have alarmed me. Cheers.

  24. David

    You had me right up until the part about mind control.

    Rich people can be as crazy as anyone else, if not crazier. See under: Howard Hughes.

    By the way, why would you fly your gold to South America? South American countries have a history of corruption and expropriation. It’s less safe there than somewhere like Switzerland or Luxembourg. And presumably when the sh-t hits the fan, you’re going to want your gold near you, where you can actually exchange it for food, etc.

  25. Robert

    He has a fully staffed, militia-backed, compound there.

    I shouldn’t have brought HAARP up to be honest. I’m not saying right or wrong on the mind control. I haven’t used the HAARP facilities, none of us have (expect maybe TZ, :),), and so I guess no one of can with 100% certainty answer on that.

    It would be interesting to study the natural state brain/nervous system frequencies. Also study what changes occur if these frequencies are altered. That last thing I doubt though is the ability, technologically, to create some type or propagator that would do this. Most likley though as many speculate its primary purpose is weather engineering, and its secondary purpose would be mood altering. I highly doubt it is currently used for anything other than experiments. I guess what I said before suggested that it is being used. I don’t think that is true on a large scale. But that does not leave out of the question that it is planned in the future to do so.

    Listen to everyone, read everything, believe nothing unless
    you can prove it in your own research.

    Remember I’m not trying to bring up crazy “conspiracy” theories. I got into HAARP as I was reciting what my most elite-related friend has brought up to me over the years that has alarmed me. The reason I brought him up in this first place was due to his dad’s interest in gold and silver which this blog is dedicated to. I probably will all add investments to agriculture in the future, as of now I haven’t decided which exact means.

  26. Robert

    His dad is nothing like obsessive-compulsive Howard Hughes. This guy taught graduate school finance, and has major institutional buildings named after him. I obviously don’t know where he’s “plugged” in, but I do know that he is.

    And it’s not Hulk Hogan.

  27. Robert

    IT decline catalyst: Korea artillery drill? Gary did hypothesis that weeks ago. Every news site I visit now basically mentions this as or near their main headline. MarketWatch is also providing this reasoning for the dollar rise. Still though we could go nowhere to January. It would be something if for the first time in a while though we got hit with a major decline prior to xmas eve. In both gold and the markets people would be confused.

  28. David

    Not knocking the guy. I don’t know him. I was using Howard Hughes as an example of the fact that the rich can be eccentric.

    A lot of people have end-of-the-world fantasies. Rich people can indulge them to an extent the rest of us can’t.

  29. maria

    Gary Your blog limits the number of words but here is some info. I do between 50 to 60 trades a year. This year I have been in Cisco, CECO, MSFT, KFT, XOM, KFT, ABX, RIMM, Visa. The lack of understanding on how options are applied is indicative of why so many traders get hurt in any market – bull or bear. Options are actually very good in a bull market particularly for sellers of options. Those of us who understand options do not just buy an option and wait. I started in the 1970’s, when options was a small market with limited number of optionable stocks. When you learn how to use options you learn how to buy the option and how to then cover that cost. Here is another example, from this year and again let me use VISA as it has been stellar. At the end of Jan 2010 with the stock at $87 I bought 30 put contracts Jan 2011 80 for 4.40. You can see that I always buy the leap put, bcause this affords me time to cover my cost of purchase and for the stock to have wide moves. Time is on my side with leaps. Again to defray the cost I then sold 30 contracts Mar 80 put for 1.58. At the end of Feb I bought back the March 80 put for .25 cents and sold 3 April 85 for $1.75. It expired worthless. The first week of May I sold the May 75 for .68. I had made 3.76 against the cost of my puts of 4.40. On May 20 one day before Friday options expiry, the stock opened at 72, rose to 75.42 and closed at 72.82. I bought back my May 75 puts for 3.35. – Now my cost was 4.40 for the original Jan 80 put, less 3.76 I had made, plus 3.35 to close early – so my loss was 3.99 – The same day, May 20 I sold my Jan 80 puts for 9.35 – My gain was $5.36 on 30 contracts. My cost 3.99 X 30 – $11.970.00 – My gain $28,050.00 for a net credit of 16,080.00 or 74%. Gary I am in my late 60’s and I have been doing this for a very long time. You learn through paper trading how to buy options, cover those costs and reduce your risk. The same with stocks and putting in place a collar, which is a common method for options. In my last posts I mentioned a variety of books that are well worth reading. Those who believe options are for losing money do not know how to use them. I would also recommend the forum I belong to. Post questions as there are hundreds of users and they are more than happy to share ideas. The moderator is a woman who has been trading a long time. Her website is fullyinformed.com and while she does not do my style of options, she belives in options and stocks and is consistently successful and quite conservative. She posts all her trades and unlike many sites she does not charge. I stumbled on her site last year. She appears very interested in trading ideas. I subscribe to her site. As a sidenote you might want to check out the one lone gold stock – YRI that the moderator holds and trades. She is up 22% this year on it and was up 14% last year on a very conservative option strategy. Just my opinion and I hope it helps some people. I also enjoy your site very much.

  30. Shalom Bernanke

    As far as agriculture, I’ll never be a commercial size farmer but we’ve been raising our own animals for 2 years and growing enough food for a few families (for practice, although we give much of it away for now).

    Since I’m not a die-hard farmer, I have been buying up property with 50+ yr old timber on it, just for something tangible. Good thing about these “farms” is that they are low maintenance.

    I still have majority of assets focused on gold/silver although I’m looking for a window to re-enter those.

  31. alex

    regarding ‘JIM’ s comment (late to the blog party, i know 🙂

    I am imagining that Jim must have started reading this blog late Oct – early Nov, and heard that Gary was calling for the IT top and stripped down his position.

    Maybe Jim got out of gold, and has since seen SOME P.M. / MINING STOCKS still go up % wise since mid-Nov?? ( see ticker NAK =$9-$14 / PZG =doubled in price– even AXU went from $6 to $9 in Nov 17 to Dec 3)

    So Jim , in your defense, maybe you missed the ‘meat’ of Garys call to load up early July, lighten up November..and are now seeing further possible gains…feeling he was wrong..

    BUT , in Garys defense, he has a solid track record for solid gains/low risk…and KEEPING GAINS.

    trading NOW is HIGH RISK…I do it with a small side fund & my own methods…(dont risk more than you re willing to lose)

    You can trade as you wish,have at it…

    but Garys report calling for a major decline will materialize…please write us here in end of Jan…and let us know how you’re doing 🙂

  32. Elaine


    A month or so ago you posted a list of PMs and miners that you trade. I have searched through the archive but can’t find the original post. Would you consider posting it again?

    One of my resolutions for the new year is to keep a trading journal.

    Thank you.

  33. basil

    Hi Gary and everybody,
    you all, with the exception of Gary, put down this Jim guy who posted here, not quite for the right reasons. Gary, in fact, has not been as right as everybody is suggesting here. I do think that it is virtually impossible to be right all the time, and it is healthy for a blog if some one points that out. Perhaps he did it in a way that was not entirely polite, but he wasn’t outright rude. What I always like about Gary’s responses, he is fair, polite, and never aggressive. I think that is good for a blog.
    To be fair, the last time I have written on this blog was when Gary’s forecast was wrong. If I remember correctly, in March Gary was not trusting a market that was melting up from the February lows while I got invested against his advice on this site. In late April then the market started to act very erratic. Gary suggested that the melt up would continue and suggested to invest here, while I sold my positions and suggested on this blog that the market seems to be building a top. What happened then was a steep correction. This is my recollection. If anyone remembers differently, please feel free to educate me; but to change the history of the past twelve months by saying he was always right makes no sense. For as long as I follow this blog, Gary has been a good investment advisor with a gentleman style with some very good calls and some not so good calls.
    Btw, I am not that convinced that the market will be correcting now. What I see in all markets (and I know chart patterns are some times questionable, and I know that some data suggests a correction) is a cup with handle pattern that suggests further upside. I participated in the uptrend since summer with AGQ, SIL, some Uranium stocks and DAG. I sold recently and I am out of positions now. I am only holding physical silver at this point; you could call that my core position. I am out even though I wouldn’t be surprised to see the market continue to go higher into January; the reason is simply that there was a good run and I rather miss out on another (smaller) leg up, than risking to dramatically decrease my profits. So I am actually with Gary on this one, while I am not sure that the call is right this time. In fact, even though I am out, I got the feeling there is still some money to be made here if you’re in the market.

  34. alex


    I post with caution that these are mostly juniors (explorers and producers) so some fundamentally better than others. Can be volatile on any bad news, so be careful.

    good solid ones fundamentally are SLW NG EXK AXU PAAS HL UXG

    I have invested in PZG NAK EGI ANO MGN PAL GBG and a few others, but I use a chart analysis that is trade specific, and I have been able to catch some great % pops (like PZG, EGI ,NAK , etc) …but please be cautious. I do not advice many to do what I do in this area…maybe after the it bottom arrives, these smaller ones will form nice uptrends

    but you gotta love AGQ and SLW at that point too

    please be careful this late in the cycle…these may be a nice watch list??

  35. Gary

    Actually I had been warning early last year to expect a 10-15% correction in the stock market off the second leg up in the cyclical bull. The Feb. correction came in a little lite at about 8%.

    I was a little early getting back into gold and knew that possibility existed because the stock market hadn’t corrected yet. But I wasn’t willing to let gold get away from me just in case it ignored the stock market correction so I re-entered anyway figuring the greater risk was in missing the run than in worring about a correction that the bull would “fix” anyway.

    Starting in late March and early April I began warning that the potential was there for some kind of mini crash similar to February 07 because protective hedging had completely dried up.

    We all know what happened in May.

    We are in a similar situation right now in that speculation in call options is off the chart and no one is buying puts. The market has lost it’s safety net so to speak.

    This should lead to a severe correction by the end of January.

    When it will start is anyone’s guess. But it’s way too late to press the long side, unless you have a hair trigger on the sell button.

    I will say this. I almost always sell to soon. So investors would probably do better if they wait a week after I sell.

    I can usually get pretty close at bottoms because cycles are pretty good at timing bottoms but mostly worthless at timing tops. Hence my habit of getting out early. I dopn’t want to get “caught” at a top.

    When one has the kind of gains we’ve made over the last several months it just doesn’t make any sense to risk getting caught in the down draft just to catch the last couple of percentage points.

  36. Chicken Burrito


    Gary also told us to go all in last January and we got swept into the yearly decline in the miners (stock market floated up through Dec & Jan and refused to put in it’s intermediate correction and by the time it did, lights out for the miners). He was also very reluctant to get out during that correction and finally made the call to get out and sell the SLW calls which would have had time to bounce with the June exp.

    Other than that, he had a very good year overall. Not complaining, just showing he was not perfect as nobody is. At least we are not following Tim Knight’s calls.

  37. basil

    Of course, there is a reason for me to follow this blog. I am just getting cautious when the tone on a blog turns into guru-admiration as that would usually be a first warning that it might be better to not consider this blog for further advice. That is the reason why I put up the previous post. I wouldn’t care reading Gary’s posts if I wouldn’t care for his opinion.

  38. alex


    good, now that I know you re not jumping in…check out a 6 month chart of AUMN and GORO juniors

    maybe at the bottom of the coming correction , we’ll catch one of these 🙂

    J/K…..play it safe

  39. TZ (7006)

    Blogger only SEEMS to limit the size of posts here. I have found it doesn’t really (at least with firefox and potentially other browsers.)

    -Create a comment, as long as you want.
    -Push submit.
    -You get “Comment…” or “URI..” “too long” error.
    -IGNORE. Hit F5 refresh one or two times. (You will get same error).
    -Then push the BACK button on your browser. The browser will ask “OK to resend…” (yes/no) (or something like that). Say Yes.
    -You’ll be back to the original comment page and your long comment WILL be there.

    (NOTE: if you want to write something longish, it is always smart to copy it first to another program on your computer just in case this process doesn’t work and you lose it.)

    Let the long diatriabes commence.

  40. TZ (7006)

    OH…and stuff like this long comment solution. And the earlier (AGAIN) reply by gary about why he doesn’t short, are the types of things that should be in a FAQ, I suggest.

  41. alex


    never noticed the rock climbing pic by your name (the pics dont seem to show up on my explorer , but on laptop i use firfox and just saw it)

    I know its your hobby, but is that you in the pic?

  42. alex

    and to think I thought you were low risk!!

    Its clear enough to see chalk on your fingers, but I dont see the safety harness 🙂

  43. DG

    Hey! The OEXers are buying a lot more puts than calls finally. It is too early in the day to count for much as the numbers are still small and will therefore be volatile, but if it holds up till the end of the day I may put out a short or two. I am getting nervous about waiting until January as they may just break before since everyone “knows” they can’t go down in late December.

  44. TZ (7006)

    >This is what I like to do for fun.

    The market appears to be like climbing rocks. The uptrend is a slow grind over time. The downtrend comes unexpectedly, is much much faster with significant fear.

  45. alex


    nice link…THAT actually looks like a great time ( and yes, I saw the harness that time…especially the last 10 seconds)…

    Markets are slow 2day/this wk …good time to work on those skills . I may take an early leave here shortly.

  46. TZ (7006)

    PS: Let me ask a technical question. If a person is climbing and has that safety rope, the rope is always anchored as you go UP….so it’s always anchored at OR BELOW where you are, right?

    So when you slip, you freefall down the rock face, slamming into any outcropping, possibly spinning around. Then you get jerked as the line holds and you slam into the face at that point?

    How often do people slip?
    Is that the process when they do?
    What is the damage level from a drop down until the rope holds?
    How many times does the FIRST hold point NOT hold and you pop lower to another one?

  47. Gary

    Your belayer holds the other end of the rope. When you fall, if he’s a good belayer, he will try to jump right as the rope tightens so the fall is cushioned and you don’t slam into the rock.

  48. Brian

    Elaine, What I have noticed is that towards the end of an uptrend in the miners, some of the least attractive get noticed as laggards and they get bid up. Now PZG had a major discovery, so it may continue, but the other late bloomers Alex mentions seem to always be in this last to the party group. You could include KBX and BAA into his list of late bloomers.

    The operative thing here is that they show up at the end of the uptrend, and always give back most of their gains.

  49. alex


    I tend to agree (however we arent at the very end of this c-wave, so after the pullback , these can still become rockets…CAUTION NEEDED THO).

    and the theory…and old saying(s) with regard to your observation is that when the bull mkts run, the big caps lead and then as it catches on, the junior producers and explorers can catch the bid…the sayings are

    “When the wind blows hard enough, even turkeys fly.”


    “Rising tides carry all ships”

  50. Brian

    Alex, I probably should have clarified “end of an uptrend” to say the “end of an intermediate cycle” to put it in SMT parlance!

    My main point is these are the most dangerous, as they have no fundamental reason for catching a bid other than the rising tide theory. I play them too, but you have to be a careful chart watcher.

  51. Jayhawk91

    Here’s a link to Eric Sprott’s fund and it’s mining holdings. I noticed he just added a stock that was recommended to me by a guy who runs a pm hedge fund. (BRD).


    He also increased ABX, AXU, CGC, JAG, KGC, MFN.

    I have AXU, BRD & MFN on my watch list.

  52. alex

    thx Jayhawk

    Brd is new to me , and I love that volume on a 1 yr weekly. Strong buying and the news showed it to be a recently profitable producer…on a pullback I will be watching this one.

    again…new to me , thanks

  53. Jayhawk91


    Glad to help, I appreciate the sharing of different ideas in regards to juniors. I want to hold a bunch for a longer term play–but also catch some good ones that could be ripe to move next year.

    Longer term speculative ones I’m checking out-Impact Silver, Arian Silver, Sandstorm Resources and a few others.

    I like many of the ones you posted as well.

    Article on BRD-


  54. Brian

    Last year BRD was named Apollo Gold symbol AGT. They declared bankruptcy and changed their name. It has been getting good press lately.

  55. Gary

    In the last twenty years no intermediate corrections have been sideways consolidations. You can’t work off sentiment extremes by going sideways.

    Markets just take a while to top. That way emotional retail traders get suckered into the top of the rally while the smart money gets out of the way of the correction.

    We’ve already had several large SoS days. Big money is already out the door. Now you just have to decide if you are going to let yourself be suckered or not.

  56. alex


    I remember Apollo Gold…I was wondering what happened to it…I lost track in one of the corrections.

    I was in it at .35ish?? it shot up to .70+ ish ..and dropped again…and I spit it out around .55ish if I remember correctly.
    Rough ride 🙂

  57. Brian

    Today’s wonder stock is XPL. Somebody knows a secret because there is no news that I could find that would cause a 46% rise this month……

  58. Nike Boy2008

    Hey DG…follow up on your OEX post

    If i’m reading this correctly, EOD data: calls 7,821; puts 19,689

    put to call ratio of 2.5…which I believe is quiet high..the number of puts really increased in the last hour..wonder if we tank tomorrow?

  59. DG

    Nike: Been out and just got back…Yes,you are reading it correctly and yes, that is very, very high. I am going to short some SPY in the aftermarket based on it. These guys are not always right but have been virtually perfect for the last month or so, and I believe in going with the indicator(s) that are working. Good catch. Let’s see what happens tomorrow.

  60. rkp


    When I look at the volumes for December expiry (12/22), I see almost 12000 puts traded today and the open interest is now down to less than 3000.


    Look at strikes 510, 520 and 525.
    It sounds like most of these were puts that were bought back and not puts sold.


  61. DG

    rkp: I usually look at the raw data for the OEX traders, but your point is a good one close to an expiry…but I thought options expired this past Friday? I am not an options trader (obviously) and just look at several stats for sentiment. Why are these options expiring 12/22?

  62. Wes

    The OEX options traders are usually the smart money, but I certainly don’t see their latest bout of put buying reflected as profits for them in the major averages.

    Their last bout of put buying commenced on 11/17 (2.12 p/c), and got exceptionally heavy on 11/22 and 11/24 (3.15, 3.29), and ended on 11/26 (1.62).

    While they certainly may have profited on individual names, those profits were not reflected in the averages.

    I think they actually got it wrong in November.

  63. rkp


    OEX has weekly options. December week4 options actually expire on 12/23 which is Thursday (24th is probably a market holiday).

    The other problem with Put/Call ratio is you don’t know if someone is buying or selling Puts/Calls. Lot of people sell Puts for the premiums if they think market is going up (or if they hold longer term options, then they could be selling short term options).

    Not sure how you gain an edge by looking at the number without knowing the ratio of buys and sells inside that number.


  64. DG

    Wes: I look at them primarily for next day action because they flop back and forth so much. I am more enthused now because I think we are going to tank for many reasons. On the dates you showed heavy OEX put buying:

    11/22–Dow was down 142 the next day
    11/24–Dow was down 95 the next day
    11/26–Dow was down 46 the next day
    11/17–they blew this one

    As I only use them as evidence for the next day, 3 out of 4 is pretty good for a bull market that refuses to break. I use the 10 or 21 day MA for longer term bets. I am more bothered by what rkp said.

  65. contulmmiv

    @ basil Kudos for your post. Crowds form everywhere, it is good to keep in check the impulse for those in which it is too irrepressible 😉 Do you have a webpage where one could read out your views? Thank you.

    Equally, kudos to Garry for his reply. Not giving in to sycophancy is proof of character.

    @ TZ (7006): Thanks for the tip re. long postings 🙂 It would have been useful on occasion in the past, the occasion will certainly arise again in the future.

  66. David

    What you call “sycophancy” can also simply be called “appreciation” from people that Gary has helped.

    You will generally find that Gary is challenged and questioned much more than he is lauded around here.

    Jim’s post elicited the responses it did not because it questioned Gary as a guru, but because it made an assertion that was plainly false — that no one should subscribe because Gary’s been “wrong repeatedly recently”. The record is easy to check. If you’d followed Gary’s calls, you wouldn’t have hit every turn perfectly, as some seem to demand, but you’d have done exceptionally well overall.

  67. Onlooker

    Ditto that David. It was the typical hit and run, unsubstantiated, and provocative nature of JIM’s comment that irked me. I have no problem with a reasoned and thoughtful challenge, backed up with some evidence, etc.

  68. DG

    I just looked at the numbers and dates you posted which you said were the big ones. More puts than calls is not relevant unless it’s approximately 1.4 or more to 1 (it changes based on where the BB are). Did you post random dates or the extreme dates? They couldn’t have been higher than 1.4 to one from 11/17 thru 11/26.
    And even if they were (very doubtful) it is a mistake to rely on only one indicator. GIven all the other background conditions I am interested in a very heavy number. I didn’t realize that the have an expiry every week, though, and for that I’m grateful to Ravi. I’ll have to check that from now on.

  69. TZ (7006)

    Silver symmetrical triangle. Gold in down wedge (and intraday reverse H&S pattern). Both look ready to break higher.

    Doc suspects any break higher (if so) won’t last long. (DOC: if i’m giving too much away from your comments let me know).

    I’m not so sure how fast we might roll over. A break higher could see a tradable move I think and I’m pondering it. Not only might it be tradable, but it might get back in to a continuing uptrend.

    Yes, I know the risk and I only consider this with VERY tight stops.

  70. TZ (7006)

    Money never sleeps, but it looks like everybody else here does.

    I’m risking 0.3% of net worth on the long gold trade. High leverage. Looking very good at this moment for a break higher.

  71. Gary

    Just my opinion but I think you are just setting yourself up to take losses with these trades. Tight stops in a sector as volatile as metals is just asking to get knocked out for a loss.

  72. T.J. Rand

    The weekly dollar futures look like they are topping and in the early stages of rolling over…a process that could take 4-5 weeks, although maybe not. Shorter time frames(daily, 4 hours)are a bit more positive but still a bit toppy. The weekly looks like it is supporting a long term dollar decline/risk asset rise beginning sometime between now and late Jan. Right now, it doesn’t look like a short term dollar spike.

  73. MLMT

    I cant figure why one would go long gold at 1386 when 1388-1390 has proven to be a HUGE resistance. Have you seen how stock market has gone up, but gold has been held hostage under 1390 area.

    I suspect market will get big whack before Christmas and will get gold down to 1350-1360 region, where it is a better buy than right now.

  74. David Kafrick


    Why do you use cycle analysis on the Dollar Index, when it is a very thin market? The volume on the Dollar futures is ridiculously small when compared to EURUSD, for example, or any other major dollar cross. I believe that the sentiment and cycle of the Dollar Index is mostly dependent on the sentiment and cylce of the major crosses, specially USDJPY and EURUSD. So why not analyse these 2 crosses instead of analysing the Dollar Index, which very few people trade?


  75. alex


    you were giving kudos to everyone else, but I wanted to give kudos to you for using the word sycophancy in the blog 🙂 I’ve used cacophony , but had to look sycophancy up 🙂

    while I’m at it..kudos to Gary ,WES & DG and Jayhawks etc for staying on top of their research game ( usually to our benefit)
    Kudos to Gary for this blog and his time & energy!

    yes, just had my second cup of coffee …WIRED 😉

  76. Gary

    If you read the latest weekend report you would see that every intermediate cycle in the last 20 years has dipped back down to test the 200 DMA and many drop below the 200. Obviously we weren’t even vaguely close to anything like that in Nov.

    An intermediate cycle decline has to be strong enough to completely correct overbullish sentiment. Right now sentiment is at multi decade highs. That will be corrected at some point.

    Positive seasonality may hold the market up till next year but it will just mean the correction when it comes will be all that more severe.

    The Flash crash in May was a diret result of the Fed’s efforts to artifically inflate asset prices. The market rose too far for too long and everyone lost all fear of a correction. When it came no one was prepared for it and everyone tried to get out the door at the same time.

    The Fed is now manufacturing the same risk again.

  77. Gary

    I mostly use cycles analysis on the dollar because I have decades worth of history to draw from and historically it has followed these timing bands.

    I would add that the dollar is the worlds reserve currency. There are more dollars circulating around the world than anything. It is probably the largest market in the world.

    I’m not concerned with just the size of the futures market anymore than I’m concerned with the size of the futures market in the S&P or gold. All I care about is what the actual asset does. And the dollar has very clear cycles that it moves through.

  78. alex

    CRAP MAN!! TZ was in at 1386 with a very tight stop…gold went to 1384ish and bolted to 1392. I was hoping he’d get a little extra cash from a tri angle break 🙁

  79. Gary

    What about the dollar “looks” toppy. What does toppy look like BTW? Seems like without a crystal ball toppy looking is kind of a meaningless term.

    None of the momentum indicators are diverging and MACD is on the verge of crossing back over. We don’t even have a swing high, not that it would have any significance this early in a daily cycle.

  80. alex


    just wondering what you did for work in your 20’s and 30’s etc..or your educational background.

    I ask only because it doesnt matter what question is asked or what angle it’s coming from…you have a well thought out , fact based answer that even if one were to dis agree, they would have to admit that it is reasonable. It never sounds like bull or smoke and mirrors.

    But I almost feel that you didnt get a business degree, or they may have clouded your thinking into ‘seeing’ things differently (like cnbc). (NO Offense to those with a business degree that CAN see through the smoke and mirrors)!!!

  81. sophia

    Dear Gary,

    Poor you! I don’t undertsnd those guys who ask you for advice and then keep telling you that you might be wrong!, you must feel like the captain of a ship in the middle of the storm!! As you said before, let’t all have a trading break and re- assess when the crash comes….

  82. Gary

    Purely self taught. I learned the hard way by making mistakes and learning from them.

    Luckily I usually only have to make a mistake once or at most twice before the lesson sinks in 🙂

  83. alex


    Thats my background too.Many hours reading and many more learning from my mistakes…
    I ve often said that doctors pay quite a bit for their education,Lawyers for theirs , so anything worthwhile will cost you time and money. Its about not giving up or discouraged from losses to me…its an education.

    We have paid our tuition to this market for our education. Well worth it, and I’m happy to witness another example of success from that ‘self taught’ arena in you.

    thanks for sharing.

  84. Onlooker

    So much for that gold/silver breakout, for now at least. This action is just another reminder to people of just how volatile (and randomly weird in the short term) these markets can be. Don’t try to rationalize these kinds of spasms.

    The rally from the July bottom has generally lulled many into a sense of complacency. But when you look at their history you can clearly see that much more volatility is the norm.

  85. T.J. Rand

    Hey Gary-

    On Weekly March dollar Futures, I’ve got the StochRSI %K high and starting to flatten, the MACD speed line still in uptrend but starting to flatten, and a directional indicator with a downward bias at present (although flat for this week). Plus, the price is nudging admittedly weak resistance…all of which I take as the dollar feeling to be in the beginning the topping orocess …although obviously anything could happen and the rolling over process could take time.

  86. Poly

    Don’t lose sight of QE2 primary function, which is to buy treasury notes and bonds, $600B worth to be exact. But in light of this action, look at how far bonds have dropped in the past 4 weeks.

    If bonds can collapse under this level of direct buying support, there is absolutely no credence to the argument that QE2 can or will forever support a rising equities market.

  87. Wes

    Checking the 3 days before and 3 days after Christmas in the stock market when the trailing quarter, month and week have been positive, there have been 126 such days since 1950.

    Exactly one has been a 1% or greater down day.

  88. Wes


    That’s a good point, but I would say that QE2 has not offset a rise in interest rates due to improving business conditions.

    I’m not as sure what the corresponding statement would be about the stock market.

  89. Poly

    We’ve had “improving business conditions” for 18 months and recent news was no better. Plus the drop in bonds was sudden and severe.

    I guess the lesson is don’t be blinded in thinking the fed will “always” raise all ships.

  90. DG

    Seems to me that QE is creating lots of money. That would naturally depress bond prices as inflation and credit risks are involved. Oftentimes, though, “to much money” means higher stock prices as the money needs to go somewhere, and it may fuel further market gains (after a big correction) until/unless people get really scared about things coming unglued. Makes sense to me for bonds to drop and stock to rally, until rates get high enough to choke of growth.

  91. DG

    That’s a great stat about Christmas, Wes 12/22, 12/23, and 12/31 are the three strongest year-end dates for this year, so if we are not down today, it’s probably game over for a much dip until January.

  92. Gary

    I’ve been saying all along the bond bull expired in Dec. 08.

    Secular turning points in bonds tend to be very long drawn out affairs but I think the bond makret has recognized that the US is now on an unsustainable debt binge.

    If anyone happened to read Vic Sperandeo’s article in this weeks Barrons you know how these things end. Either the government admits defeat and defaults on it’s debt or they eventually hyperinflate the currency.

    The bond market is starting to price in political stupidity.

  93. Gary

    I would point out that stock markets rarely stay ahead of inflation. If they did the 70’s would have been a great time to buy stocks.

    When a government goes on a debasing binge the only safe place is in commodities.

    Liquidity will continue to leak out of stocks and into the commodity markets until inflation rises high enough to destroy the economy.

    We saw this very thing happen in 08. It didn’t matter how much money the Fed printed it all just flowed into the energy markets and stocks continued to fall.

  94. Wes

    I’m always confused about how to interpret the OEX options data on a day like yesterday.

    The p/c ratio of options traded was 2.52, clearly bearish (for people usually right), but yesterday’s open interest p/c was only 0.66, well below the long term average and clearly bullish.

    If the open interest is what they take home at the end of the day, are the rest day trades with limited predictive value ?

    I admit confusion here.

  95. GGuy

    thanks for the answer. What i am concerned about is that EUR is starting (if not already done so) a new intermediate.

    Here’s my oscillator (cycles are blue, the indicator to look is the cycle speed (the black line) when it cross zero):


    It is hard to imagine a sellof with dollar dropping.

    There’s another possibility: a failed intermediate cycle on EUR. But that would mean HUGE drop for about 6 weeks both on equities and preciouses.

    The point to look at is 1.2963. A new 16days cycle is about to start on EUR. If it drops under that point, we can short the whole farm on it^^

  96. Gary

    I’m not sure what that chart is but I can tell you the dollar cycle runs 20-28 days most of the time. The Euro will run opposite the dollar.

    The dollar just bottomed 4 days ago and there is no sign of a left translated cycle at this point.

    Sentiment on stocks is at multi decade highs. I realize that our emotions will fool us into thinking this is going up forever but I can assure you it won’t.

    When sentiment is this extreme we are at risk of running out of buyers at any time. Eventually we will and when that happens the market will drop like a rock. Then you will be wondering how in the world you could have ever thought the market would never go down.

    And before it’s over you will be convinced the bear has returned. Then of course that’s when we will run out of sellers and the process will reverse.

    The Fed is exacerbating the moves with it’s free money. So the rallies go higher and last longer than they normally would. Then when the correction comes it ends up being more severe than it would have been…which causes the Fed to freak out and print more.


  97. Gary

    The S&P is currently stretched 9.7% above the 200 DMA. That’s about as far as it ever stretches barring the intial rise off a bear market bottom.

    The market is in very dangerous waters here.

  98. Robert

    I had to giggle at this one, but thought I’d put it up here,

    “‘We’re smack in the middle of a ‘Puetz window’. Researcher Stephen Puetz studied eight epic market meltdowns dating back to Holland’s 1636-37 Tulip Mania. He found every one of them took place within a few days of a lunar eclipse… and each time, that lunar eclipse took place within six weeks of a solar eclipse. Heh… The next solar eclipse is Jan. 4.’”

  99. Onlooker

    Bonds may be rolling over again with a failed daily cycle manifesting. I got out of my TLT long with about a 1% gain. Should have gotten out sooner of course, but we know how that goes. I thought there might be a bit more in it. And there may yet be.

    But it’s looking ugly as we are holding perilously at yesterday’s low. Maybe a renewed plunge in bonds will help break stocks down. If anything ever can again! LOL

  100. Gary

    The NDX is stretched 13.7% above the mean and only 7 points from the 07 high. I doubt it will be able to get through that resistance level on it’s first try.

    If the Q’s can tag $55 speculators might consider trying a short.

  101. Gary

    The key is the coming three year cycle low in the dollar. The rally out of that low should intiate the next leg down in the secular bear market just like it did when the dollar rallied out of the 08 three year cycle low (the stock market actually discounted it by several months and started heading down in Oct. 07 instead of March 08.

  102. alex

    Watching TZA on daily, monthly,weekly…even 10 day hrly and 5 day /15 minute and it looks like a bottom on a decending wedge pattern.

    Could be due for a bounce or maybe more, but when the markets finally let go…this should be a great ride up.

  103. alex

    posted a buy of NG last Friday @ 13.50…out at $14.50.

    posted a buy of ANO @ 1.22 last Friday ( still holding on , since volume looks o.k. , but hairs are up on the back of my neck 🙂

  104. Beanie

    This market is still very undervalued. Maybe fairly valued at SPX 1500. Maybe.

    For anecdotal evidence how the economy is improving dramatically, look no further than frequent visits to Starbucks and Apple stores. Breathtaking!

    Vegas is also coming back. MGM great buy.

    Housing? Getting better. USG, a Buffett stock, looks great.

    Keep buying.

    Precious metals look like they’re headed down to sideways most of 2011.

  105. alex

    Volatility is a traders market and not long term. I woulkdn t recommend buying here–unless its an amt you can lose.

    (although I did by intraday break out of REE on the pullback @ 9.70. this will be a quick trade and possibly my last for the year).

    these markets are drifting up lightly like most Christmas rallies.( See WES post on the history) Can run through new years – OR NOT -and will break down.

    oh, will by TZA soon 🙂

  106. Gary

    Still too early for the three year cycle low. I went over the series of events that should drive the dollar down into that low next year in the weekend report.

    Namely a severe intermediate correction early next year that causes Ben to freak out and print like crazy. That should tank the dollar into the three year cycle low and in the process spike inflation to the point where it collapses the global economy again.

    You are probably wasting your time trying to chart your way through this mess. Tops are never going to look like tops and bottoms are never going to look like bottoms on a chart.

    In order to catch the turning points you need to learn cycles and follow sentiment. Then to top it off watch the money flows so you know what the smart money is doing.

    Right now the charts are saying up forever but all three of the reliable tools are saying extreme caution is warranted.

  107. alex


    Exact tops are impossible for me to call really. I see them coming , but stay in later than most I think…anyways

    Yeah, like Gary said…extreme sentiment levels (giddiness), but also the SPY and Nasdaq and DJIA are continueing up on less & less volume ( like Gary said…buyers running out) – Higher highs without MACD confirming…distribution…etc and when Mkts get that extended , they waterfall sell-off when the time comes. I am long a couple stocks, so TZA can act as a hedge until I can close positions if need be.

    Also though, on the TZA there s a descending wedge forming , so a break of that downtrend line is a good entry. I may go sooner to hedge my REE in case of a sell-off

  108. TZ (7006)


    >Just my opinion but I think you are just setting yourself up to take losses with these trades. Tight stops in a sector as volatile as metals is just asking to get knocked out for a loss.

    This trading is my technique, not yours. I know. Stopped out for 0.2% loss last night. However I made the same trade on the wed and thurs morning bounces and am well ahead considering all three.

    I will continue to buy bounces in the decline to INT low. At the one or two bounces which I believe to be *THE* low, I will hold instead of trade out of them for smallish profits.

  109. TZ (7006)


    >I cant figure why one would go long gold at 1386…

    May I suggest that trades which are met by most people as being crazy or completely boneheaded are often the ones that work out. It’s like buying on panic selloffs – it’s VERY difficult to do, but it usually is profitable because it’s so hard and because so many people are doing the opposite thing that you get good prices.

    Still…I did lose on last night’s trade. But I’m well ahead overall with my strategy.

  110. TZ (7006)

    I didn’t post the wed/thurs trades and I don’t really want to get into “it’s the internet and you are making things up” situation. You either trust me or not. History shows that posting small side trades isn’t really the meat of this blog so I didn’t.

    I commented last night cause it was a slow night. If people would like to hear about my buying bounces on the way down (one of my strategies; like DG has his own too) then I can post a bit more on them in real time.

  111. Gary

    My point wasn’t so much as to whether or not the trade had good or bad odds of being directionally right.

    I was suggesting that a very tight stop almost guarantees a loss even if you got the direction right. Case in point you did get the direction right and you would have a profit this afternoon but your tight stop didn’t allow the trade to work.

    The metals are volatile. A tight stop almost guarantees you will lose even if you are right.

  112. alex


    that sounded like a ‘general’post so I’ll add my 2 cents.

    I like this blog, I read what everyone says . I trust what you’ve said in the past (its fairly anonymous anyways, no one knows us personally , so why would you lie). And I like your posts as well as others. (Some are overly critical, but I just read them and say to myself..

    “what? You never lost $$ in the market??” we have ALL lost enough to not be OVERLY critical.This isnt an EXACT science, its human nature.

    I say keep posting as you like…I enjoy reading every ones thoughts, I learn from their winning trades and ideas , and I learn from ones that dont work and the ideas behind them.

    also when Gary gets a rude post..he must use it as a sentiment reading, because he barely bats an eye -good patience lol

  113. Jayhawk91


    Can you post a chart on what you see on TZA? I don’t see it–looks like a death channel at this point!

    I got burned last year shorting around this time frame when every kept calling tops but the market drifted higher for ever it seemed.

  114. alex


    I’ll try in a minute. TZA isnt quite ready yet , but I was thinking of using it as a hedge ( a waste of money) 🙂 – in case the sell off was to gap down tomorrow.

    I used the TZA in different time frames but 3 months has one a POSSIBLE formation …(maybe its a stretch, haha)…but i took lows of oct , low of Nov , Low of Dec for bottom and high of 11/16 , 11/23 , 11/29 , and 12 /16 as a contraction of that channel.

    It looks like $15 would pay off well if the markets start failing.

  115. Gary

    What do you mean? The dollar has rallied for 6 weeks and in that time gold is down about $40.

    But more to the point I expect gold will drop into an intermediate low no matter what happens to the dollar.

    It corrected into an intermediate low this summer even though the dollar was weak.

    These intermediate corrections are like clock work in the gold market. I doubt the clock has broken.

  116. DG

    I have come to see over time that Gary is also a trader, he just uses different words. Anyone who goes from 130% long to 50% long in the middle of a bull market is a trader. Buffett held his items for decades. Cycles and sentiment are timing tools and would be of no use if one didn’t trade off them.

    So it come down to the trade’s holding period. Gary calls “short-term traders” traders. He calls guys looking out a month or three…whatever he calls himself, because that’s what he does.

    As for myself, I do both, depending on what my macro view is and what the sentiment is on the item. I bought the Q”s and the bottom in 2003 and held for two years. Shorted the euro and China earlier this year and held each for months. He’s right that I make more money that way, but the market has to let me hold that long (the ETF acts right, sentiment doesn’t get wild, I don’t get in the hole much) I do it this way because I can never get badly hurt and damage my financial health. I made a nice chunk in the PM’s and was never in the hole. Taking quick profits simply because they are there is a waste. If I get into the black I set a break-even stop and otherwise hang in there (if I bought for more than a bounce, until it gets overdone on the upside vis-a-vis oscillators or sentiment.

    Anyway, a little trading philosophy while the slow markets play out the crazy time of year.

  117. Jayhawk91

    I’m showing a break out of that channel/wedge around 15.60 would be a positive sign for TZA. I’m in a bit, but will cut it loose soon. I know others are in. Who was the dude who got 5-6K shares last week?

  118. Gary

    You are right. When I say trading I’m talking about these quick little trades that we often see posted on the blog.

    Short term and day traders must use strict position sizing and risk control or you run the risk of losing more than you can recover from.

    So when I say a trader can’t even come close to an investor that is what I’m talking about. Some one with a limited position size trying to make hundreds or thousands of trades a year.

    Unless you have a mechanical system and have the discipline to follow it just trading off gut feel with the restictions of proper risk control you will be lucky to win 55-60% of the time.

    It is going to be virtually impossible to keep up with an Old Turkey investor with that kind of handicap.

    Obviously I do trade the intermediate scale to some extent. When I think an intermediate cycle has bottomed I step on the gas. When it’s late in the cycle I coast.

    And when I think it’s time for a C-wave to top I’m going to exit everything.

  119. Gary

    Instead of guaranteeing a loss if you don’t time the trade perfectly. Why don’t you take timing out of the equation.

    We know an intermediate correction is coming. We know all markets are stretched too far above the mean.

    We know all markets regress to the mean, with no exceptions.

    If you take a small enough position you will be able to hold the trade until it works.

    If you demand that you time the trade perfectly you will almost certainly incur a loss even though you probably have a winning trade.

  120. DG

    Man if I could win on 55-60% of my trades I’d be incredibly rich by now! My gains are far larger than my losses so 35-40% is great average of winners to losers for me. My favorite trading style is yours (months or so), but I make money and love the game of doing the short-term stuff as well. Believe me, if we catch the bottom on the PM’s I expect to make a pile and will not be “trading” in and out of them (except maybe to go from super-heavy back to heavy). I will have about 50% of my net worth in them when the time comes if the tape, sentiment, and cycles (not the charts) all look right. I also plan to buy some ag, and perhaps a little uranium.

  121. alex


    and if you do a 6month chart , go from the Bottom of july (July 27) across all the same bottoms , then use 8/25 and11/03 and 12/16. the stochastics looks done to the downside soon too ( but the fed is pumping things up, so its a tough call).

    Also, this seems to be clearer on a Non-log scale.

    I also found out this only works on

  122. alex


    I agree , I think we have similar trading preferences, and I too love the long trade with cycle timing 3 to 6 months of riding it.

    But at other times…like now… I think for me , I just see other small opportunities and ‘cant sit still’ until it’s definitley over 🙂

  123. Poly


    I’ve won 42% of my trades this year and “if I only” held onto these 42% a little longer 🙂

    Still be a great year.

    Jawhawk, I had the 5k + TZA last week.

  124. Wes

    Longer trades are the most successful and that’s how I handle most of my money. But those trades make for lousy conversation.

    There has not been a single day in 2010 that I have not been in the market.

    I mark to market every Friday, and my account peaked on 12/3. Since then I am down 1.5%.

  125. Onlooker

    Well the long bond reversed right off that support/resistance level I was eying (the low of yesterday). Of course I got shaken out in classic fashion, but with a profit.

    I should have waited to be sure it wasn’t going to hold there, I suppose – jumped the gun a bit – but I had a tight stop on it as I don’t have conviction longer term.

  126. Poly

    No, I got in at $16.16 but got stopped out fairly quickly. Itching to get back it in, but had three stops on it already.

    Yes Gary we know 🙂

  127. DG

    There’s a chapter in Market Wizards about a trader (name escapes me) who said, “The WSJ always has these reports that I caught the exact low on this item or that item. What they don’t report is that while I did enter right near the bottom, I had six false starts first!” For me, I don’t care how many times I get stopped out so long as when the big move comes I am there in size for 80% of it. I add on counter moves once it’s working, and stay until there’s a reason to get out (there’s always a clue). I have had three or four false starts already on the coming dip, but expect to make that back with interest in January/February (I hope!…and if i do it right.)

  128. alex

    TZA has gone (through Dec) down to a trendline , then more sideways , then down to meet that trendline again , then sideways , then down again. I am thinking it could go to $15 , but Its a guess more than anything.

    I think it will be a GREAT opportunity when the selling picks up…I mean it looks like it could bounce 30% ($15-$20) easily. (just my opinion)

  129. DG

    rkp: Can you explain to me how they show a total of 4234 OEX puts traded at the 2:30 posting, but the Yahoo site you shared shows 6633 of just the 510,520,and 525,’s alone? It’s not yesterday’s data on Yahoo as it is now different than what the 12/20 close showed.


  130. Gary

    Jan. is probably way too short. Time decay will eat you alive and if this turns out to be a stretched cycle you will just flat lose.

    I would try the March or April just to be safe and so you will still have plenty of time value when you wnat to sell.

  131. alex

    Liked the volume on the few longs I still hold ,

    so stayed long on ANO , REE , and yes(I think it was DG..if you remember our conversation last week) …I am STILL long GMO (ha ha)…my stop was 10% and it went near there , but I am almost break even now , thank you uncle Fed 🙂

  132. Wes

    I think a number of us are in general agreement that when the drop does come, it will need to be somewhat substantial to erase the current excessive bullishness.

    Seems to me that a put lottery ticket might pay off under these circumstances.

    I don’t have anything specific in mind right now, but someone might want to bring up a candidate.

  133. alex

    AND..if this was near a bottom of an IT low, I would see that ANO chart and be screaming from my rooftop to buy it , that is a sweet chart.

    But ( due to cycle timing) it is not really a buy here and now in time…I got in earlier.

    Almost Dinner time on the East coast…G-nite guys!

  134. DG

    I think the Feb puts would work on the Q’s. The NDX has a horrible track record of getting crushed in January and the Feb puts means you get the whole decline if it happens late in the month. I may or may not buy them as I am not an options guy, but even I am tempted with those. Feb limits your ultimate risk, but as Gary says, March/April has less time decay working against you. Who the hell knows. I’m probably just gonna short Q’s.

  135. Poly

    March/April also has a hefty premium though. You might not get it all with Jan, I agree Feb is probably the right mix while the premium is reasonable on the SPY that i follow.

  136. fubsy_cooter

    Anyone here have experience buying junk silver? I’m curious if there is anything I should know prior to purchasing. Helpful tips, reliable brokers etc…I’ve decided to buy one bag at each intermediate correction. This should provide some insurance against a possible currency collapse in the coming years.

    Thanks in advance.

  137. Gary

    The premium is mostly just a factor of how much time one has left. I rarely trade options but the biggest mistake I usually made was not giving the option enough time to work.

    Generally speaking I found that if I gave the option an extra 2 to 3 months more than I thought I needed I would usually be OK.

    If you cut it too close the time decay will eat away at your option and often cause you to make an emotional decision that’s not warranted by the underlying asset.

  138. Gary

    I’ve heard it’s hard to sell once you want to get rid of it. The dealer won’t give you a good price for it. You will be better off buying Englehard bars.

  139. Poly

    You’re right, the time decay in the last 3 months is most severe, so unless you’re going way out beyond May here, I think it would be pointless to pay the premium of March/April, only to lose all that time value selling in late Feb, because the intention is to time this trade with your intermediate decline.
    It’s best to trust you in this case 🙂 and trust the decline will come, even if that means we’re sweating #%$^ in Jan waiting for that decline.

  140. Wes

    I’m thinking about a low premium ($.25 or lower) out of money junk put that you don’t necessarily think will ever really get to be in the money.

    These have a way of doubling or tripling quickly when the slide comes.

    Maybe March/April would be better. Remember, once the correction starts in earnest, it will look like we’re going to zero, and the puts will jump beyond what you think is reasonable.

  141. fubsy_cooter

    Thanks for that info. My projection is that if I ever want to get rid of it, I would likely be able to sell it to anyone of the myriad fanatics looking to cash in on the silver rush of 2014-2019. There is also a growing interest in junk silver on EBAY. Imagine how hot that will be when the bull really takes off and has the public riding. I suspect I will get high premiums for junk. My understanding is that in the days leading to Y2K junk silver traded at a 50% premium to spot.

    Anway, my reason for buying it is to have a spendable currency in the case of a fiat collapse. I don’t know if I would be able to use silver bars to purchase items like seeds, grains, or fuel.


  142. Wes

    Another way of thinking about this is that it will probably take a VXO of about 45 to stop this next downtrend. The VXO closed at 15.1 today.

  143. Robert

    Another 100 million coming out of SPY in SoS today. It’s hard to imagine the market can keep going higher with smart money dumping. If I remember correctly we’ve now seen around 1.4 billion dollars in SoS in SPY starting in late October. The sell ranges are now from 118.xx-125.xx. They were bought mostly around 109.xx in the summer.

  144. Robert

    Gary was right that tops can possibly avoid SoS in the SPY for 2 months! This is assuming we top here soon! The stock market is one buggy creature.

  145. Poly

    45! You’re looking for an April like correction?

    I’m thinking this is more like Jan 2010, VXO spiked to 27, S&P dropped about 10% and found support between the 50 and 200.

  146. Poly

    But how do we know the guys in your article were not the ones doing the buying during the SOS 🙂

    I’m being a little cynical of course, hard not to these days.

  147. Robert

    Poly, you’re beating a dead horse. We’re in the timing band for a top here. Are you long or something? If so do you want compliments for being long right now on how wise of an investor you are? 🙂

    Romeo, you’re correct, and that is a good point.

  148. Robert

    If you’re short Poly and are displaying a little nerve right now, I think that may be a good sign right now for today/tomorrow being a top.

    I’m short too and today was one of those days that I was like “whoa, holy cow, were going to the stratosphere and never coming back.” I’ve had this exact same feeling many many times before at major tops. I’m confident we’ll be down in short order. Down big.

  149. driver1

    I just checked the SoS numbers and see that IVV and SPY shares are at the top of the list. Why would big money(?) use IVVs when they have far less volume than SPYs? Maybe someone in the iShares org selling?

  150. Robert

    IVV, is still a big index. Bigger than QQQQs and IWM with market cap. Maybe they wanted to split up their SP500 sales today, who really knows?

    Maybe they knew Poly would exit his long positions if they showed over 100 mil in SPY. lol.

  151. Natanarchist


    The “junk” silver is really just US Government money when it contained silver. It can always be sold for its melt value, which you could have done anytime and made into your own bars if needed. Although you’re not supposed to melt government coins. I have a couple bags myself. insurance..if not needed just give to your kids. I didn’t buy it to make a profit.

  152. DG

    Fubsy Cooter: o.k. after all this time I have to ask. What the hell is a “Fubsy?” Here’s what my Google search showed:
    Urban Dictionary: fubsy
    This teacher at my school was simply known as “Fubsy” because he was a bastard. And fat. And ugly.
    I hope that’s not why you’ve chosen that handle (points for humility, though, if it is.)

  153. Steven

    Fusby, I’ve bought many of the silver 90% bags (I think these are what you’re talking about). They are easy to buy from many sources. I actually bought mine from my futures broker who also buys & sells physical. There is a small premium when you buy them but the bigger hit is that when you sell them most people will give you about 97.5% of the melt content. For investment purposes in physcial I prefer 100oz bars but I have a bunch of these for the same reasons you mention. Let me know if you need more info or contacts. Happy to provide.

  154. Redwine


    You can buy below spot on BullionDirect.com in their Nucleo Exchange. Nucleo is an exchange where individuals can trade bullion. BD charges 1% and shipping is very reasonable. I have bought 100 oz, monster boxes, and junk silver below spot on several occasions. You can even leave it in their vault no charge until you decide to sell or take delivery.

  155. Steven


    Do you find any correlation between PM stocks going up while the metals are not? For example, today the silver stocks were doing quite well. One could attribute this to the equity market doing well but that’s a hard argument since gold was doing even better than silver yet the gold miners were down. I’ve heard so many times that the miners lead the metal but that assumes the equity investors are smarter than the metal investors. What do you think?

  156. EricH

    I added a tad more Russell 2000 futures short today (Feb TF).
    Slowly building a nice position.

    It’s current at 16.3% above the 200 DMA. Another 3-6% move higher over the next week would be perfect.

  157. DG

    rkp/Ravi: [This is a repost because I’d really love an answer to this question]
    Can you explain to me how they show a total of 4234 OEX puts traded at the 2:30 p.m. posting, but the Yahoo site you shared shows 6633 of just the 510,520,and 525,’s alone? [the numbers have changed by now but you get the idea. The final OEX put volume was about 7600, and the Yahoo site shows almost 100% of that was the 5 cent puts? Doesn’t make sense]


  158. Po


    In your opinion, is there a specific number that constitutes a valid SoS day or does it simply need to be at the top of the list on the WSJ market data?

  159. Gary

    several years ago we would often see one or two days with -300 to -700 million at or very close to the top.

    Now it often is spread out over several weeks or even a month out. But we still usually see at least one day with -300 or better.

    We’ve had two over 500 so far.

  160. Robert

    That was just an experiment I’ve wanted to do for a while. Guess I picked the wrong board.


    Those are just the most mainstream internet conspiracy theories, and I was trying to see what were the best intelligent responses from people trained in technical analysis.

    I’m a little impatient for some responses so you don’t have to respond, I’ll just move them over to a different more active board.

    Good trading Y’all.

  161. Gary

    In the initial move out of a bear market bottom the indexes will stretch much farther than they will after the move becomes mature.

    Part of the reason is because of the lag time it takes for the 200 to turn up and then to catch up to the index.

  162. rkp


    It looks like Yahoo volumes are not very accurate. When I see these strikes on Optionsxpress, 510 had no volume today and yesterday. 520 traded 3233 contracts yesterday but 0 today. 525 traded 6367 contracts yesterday and 1000 today.

    You can see today’s volumes on CBOE also – http://www.cboe.com/DelayedQuote/QuoteTable.aspx?ticker=oex

    But it doesn’t show historical data.
    Not sure where else you can see historical quotes for options.


  163. hiptwist


    in your nightly report you wrote

    As you can see after the initial rally out of a bear market bottom it’s pretty rare for the S&P to stretch much beyond 7-8% above the 200 DMA.

    Some additional remarks on this:
    You always marked the stretch above the MA at the end of a run, but the maximal stretch was usually earlier.
    Best example was the time August 2009 until January 2010 (the initial rally): The stretch was never below 12-13%, Maximum was >20% in October 2009. You posted 12.4% as maximum in April 2010. This is valid too for the other given peaks.

    Resumee: Regression to the mean works, but you don’t know when. With currently 9% above the MA, a pullback is definitely possible. But the percentage points given on your chart in the nightly report underestimate the maximal excursion in an uptrend.

    Thanks for your thought provoking posts.

  164. Gary

    NIck just asked this same question earlier and here was my response.

    In the initial move out of a bear market bottom the indexes will stretch much farther than they will after the move becomes mature.

    Part of the reason is because of the lag time it takes for the 200 to turn up and then to catch up to the index.

  165. trond56

    I never stop marvelling about how the bears and permabears hate prosperity and progress. If someone dare to be optimistic they get morally insulted. I’ve had to listen to their whining and complaining and self-pitying for 2+ years now. Hoping that they can earn money on the economy and society going down, better they get completely crushed in a strong Christmas squeeze-rally 🙂

  166. alex


    Thought I just heard…3 to 6 inches of rain due in Las Vegas??!!

    My grandparents used to live there, not sure the ground can absorb that very well ( its like living in a bowl with those mountains surrounding you).

    Better dig that gold up out of the ground before it gets washed away 🙂

  167. Gary

    Even if you sold short at the bottom of the last daily cycle, which I don’t think anyone here would do, you are only down 6.4%. Even if you sold short your entire portfolio that’s hardly getting killed.

    More likley one would have started selling around 1200-1220 when the SoS numbers started to show up. In that case one would only be down 3-4%.
    That’s not too bad.

    This is the drawback of trying to short a bull market. It’s very tough to time the top. You either have to be willing to take multiple losses or you have to have the conviction to take the trade and weather the drawdown until it turns in your direction.

  168. alex


    I looked up the ticker SNP and thought you were drinking a little early..haha

    I see now you mean s&p 🙂

    it is quite a spectacle, but volume is getting so light , it really does look like buyers are drying up.

  169. Poly

    S&P dropped a considerable amount the last 3 trading days of last year, so the holidays do not guarantee it’s straight up.

  170. alex

    Right ,

    And then January volatility/volumes will probably take the bottom out of this thing.

    Gary, I have a serious concern and since its a slow day, I’d like to ask you-it pertains to previous cycles with the dollar and gold.

    it’ll take me a minute to write it up, but I was noticing something and would like your feedback. thx

  171. Gary

    I still expect we will see the correction start today or tomorrow based on a “normal” duration daily cycle.

    A down day today will trigger another 4 day corrollary.

  172. alex


    I am having a problem. Looking at past cycles running roughly 6 months? So I went back on GLD or GOLD and I see the Lows of (roughly)July 2010…then low of Feb 2020…etc, etc,etc

    but now go back to summer 2007-2008, when the lAST 3 YR DOLLAR LOW WAS GOING TO ARRIVE…

    Gold ran from July 2007 to Nov 2007…(like 2010) and then did a sideways flag pattern to DEC 24 , and after Christmas…TOOK OFF UPSIDE and continued Through March.
    Dec 24 proved to be the 1/2 way point of that run…and dollar sinks to 3 yr low.

    The GOLD low was where?? And now in 2010 , Gold looks like it could be forming what is called a ‘running correction’ here …which is quite bullish ,because it shakes out weak hands, then shoots straight up.

    The chart of Aug 2007 to March 2008 runs and only dips to the 50dma (at that Flag correction)—Our run from Aug to now is at the 50dma too…and

    similar?? It was also a 3yr dollar low expected.


  173. Gary

    What you are looking at in `07 was a T1 pattern that formed on the Gold chart.

    This C-wave isn’t forming a 2 wave T1 pattern. This one is forming what I think will be a three wave pattern. At the moment we are waiting for the correction that will seperate the second wave from the third wave.

    Strategy wise it’s irrelevant. Just hold your core position as protection against an upside surprise and if the correction materializes like I think it will, (probably aggravated by the stock market moving down into a yearly cycle low) then we will have dry powder to put to work.

  174. aaronpalang

    Gary, when I said ‘killing me’ I didnt mean my portfolio, it was mostly geared towards my patience, and ego, more than value 🙂
    I agree with you though, and am holding my short into the end of January.
    Im not a tarder by nature, more of an investor. Trading in my early 20s was fun, Im just too old for that now 🙂

  175. Gary

    The next cycle should run quicker and more parabolic to the top because it needs time for the D-wave to run its course.

    Probably three dailies up and two down.

  176. Onlooker


    Yes, I’ve had similar thoughts about that analogous time frame. I’ve debated upping my core position a bit, but haven’t taken that step yet.

    Of course it could go either way from here as we’re right at a critical price point, but it sure seems bullish that we haven’t taken a real tumble yet. But we also know that cycle picture and the real possibility of stocks taking a nasty drop and dragging PMs with them; thus the dilemma. Aaaagh! 🙂

  177. Gary

    If the daily cycle low came last week instead of the week before then today is only the 4th day of the new cycle and so far it is forming a bear flag.

  178. alex

    Thx Gary,

    I’m with you so far , and really it seems like next week or really Januarys’ first week will show the mkts hand…so we’ll be ready.

    I was just looking at that run 2007-2008 like it was so familiar to now , even the aug to Nov to March part.


  179. ddn3f

    Three daily cycles up and 2 daily cycles down. At 20-30 days a cycle…that’s a really long 100-150 trading days. I think I am not calculating this correctly.

  180. alex


    My thoughts exactly. I thought that my core near 50% would be better served at 60%…thn if we break lower, cut it again.

    That 2007 to 2008 run didnt go below the 50dma , but all the other IT lows went to the 150 dma-

    so I thought “up the core” , and if a serious breakdown comes in the nxt wks…take the slap , cut the core by even more…like down to 70% cash , and get back in when gold forms its swing.

    this next wave up will fix it 🙂

  181. alex

    onlooker…here is the real kicker.

    I DEEPLY feel that the spx is done soon, and will correct pretty good…BUT

    Look at 2007-2008 run again

    the HUI followed Gold and ran aug to nov..sideways..then UP through March , the regular market tanked!

    so this was weighing on my thoughts too..if you understand what I was thinking here.

    there seem to be a lot of BIG BOYS buying the dips 😉

    like you said ARRRGH

  182. Gary

    Going to drive yourselfs crazy with whatif’s. Just pick a core position you can hang on to if gold drops to $1265 and if it breaks higher you can add.

    If it breaks higher we will be at the beginning of the run and there will be plenty of time to add.

  183. alex


    that is SOO true-

    I think for some of us, though , we like to drive ourselves crazy ( hopefully we dont drive you crazy with speculation in the mean time 🙂

    Its not so much the $$ for me..like did I miss the moves beginning…its kind of a challenge imposed on myself to stay sharp and focused..and continue to learn.

    That could be costly if too greedy or taken too far , but I’m kind of playing with ‘ideas’ more than much ‘money’

    You are correct in that reply though..we would be at the start and still make great gains. I think its like a chess game with the market at this point (or Russian roulette??) haha

    thx for your patience

  184. DG

    David K: Why 1260? Chart?, oscillator?, cycle of some sort? measured move? I am dying tom short as well and am looking for a good excuse. I am super lightly short right now and just holding, but if I add I’ll use stops so want to pick a spot well with an intelligently chosen stop point.

  185. DG

    Fubsy: I’ll try once more in case you just didn’t see this post earlier:

    Fubsy Cooter: o.k. after all this time I have to ask. What the hell is a “Fubsy?” Here’s what my Google search showed:
    Urban Dictionary: Fubsy
    This teacher at my school was simply known as “Fubsy” because he was a bastard. And fat. And ugly.
    I hope that’s not why you’ve chosen that handle (points for humility, though, if it is.)

  186. Poly

    Last nights Investor’s Intelligence survey now at 58.8% bullish, way past the April high and the highest level of the Mar09-Current bull market.

    It’s not far from the Oct-2007.

  187. viking

    i’d like to offer a different perspective than trying to time all these cycles.

    get in and stay in.

    #1 killer of profits in a bull is trading too much

    long holding periods bring cap gains down to 15%

    the only thing i try to time is the D wave, which is okay, because they usually come in periods of year plus




  188. DG

    Gary: A better trap than touching the high would be to run it a bit past the high on light pre-holiday volume so they can print “NASDAQ Beats 2007 High. Bull Market Alive and Well.” That would suck in a few more chasers. It would also stop out some shorts. The mkt doesn’t like to go down with too many shorts as company

  189. Gary

    Yes that would be the logical scenario but how are you going to time the exact top above $55?

    At $55 you should be close enough and you could put a stop at $55.50 and have a reasonable chance of the trade having enough wiggle room to work.

  190. thedocument


    If that’s what works for you, have at it. But cycles are quite a powerful tool, and I’ve managed to make much more money using cycles to time when to put on leverage than just sitting around with an unleveraged book. And making more money helps me sleep better.

  191. alex


    additional thought,

    ever ridden a d-wave correction?

    OUCH…you lose 50% of your gains..not worth the 15% longterm capitol gains tax benefit-especially if you bought late into the run.

  192. Romeo Bravo

    If the market ever goes down 🙂 I have a feeling the Captain Obvious play is early in 2011. However, we still have next week. I have a hunch, not ready to act on it yet, that it may start right after Christmas and before New Years. The New Years holiday then breaks things up and people think it’s only a small correction. Then, blam, a bigger drop as 2011 kicks off.

  193. DG

    For me, timing a top has to do with either an oscillator extreme (which we are not near yet), or a tape reading event (reversal, churn at a high, broad A/D weakness right after a new high, my Buy/Sell system getting a signal, etc.) To me, picking an obvious spot (like 55) is not the best unless it comes with a clue from the tape. I did just buy some Feb 52 puts at 64¢, so if the keep running my exposure is small, but I am hoping they are in the money by mid February.

    The other point is that I don;t mind shorting on the way down once we get some tape clues that a decline has started (shorting into a bounce after a high volume break, for example.)

  194. David Kafrick


    My 1260 is based on a confluence of resistances. FIrst of all, 1256 and 1270 were the double bottom lows of January and March 2008, so there is a lot of resistance in this level. 1260 is the 162% fib retracement of the last correction we had (November 9 to November 16). 1260 is also the top of a Pitchfork.

    Here is a picture of my chart:


  195. pimaCanyon


    Why are you buying out of the money puts (which makes the entire price = time premium) when you could instead buy 59 puts for 4.30 and that is almost all intrinsic value (4.13) so only 17 cents of that 4.30 is time premium?

  196. DG

    Pima. Because I am concerned that the mkt is going to keep rallying due to the Fed pumping. I want little risk. If I’m going to risk 4.30 per option I’d just short the stock, as I’ll never lose 4.30 on a $50 short. I’d rather risk very little and just hold it without no stop on it. This is not something I normally do, but this market has been more than a little odd.

  197. alex


    Oh Yes!–thats what I was looking at. Funny, i was also micro-managing it and just looking at it on a 10 day 15 minute chart too, because it has a consistent downtrend line on that level too.

    Your chart looks like its so squeezed , its gonna bust out . Really thinking its going to be a good % move , even if you time it wrong , with the expected cycle low coming in 🙂

  198. pimaCanyon

    that makes sense, DG. Except that if I were buying out of the money (OOM) puts, I would not let them expire worthless. I’d put in a stop loss based on either the underlying or on the price of the option itself.

    You could do this on the OOM puts and you could also do this on the deep in the money puts.

    Seems like there’s less risk on the deep in the money puts because if the market goes sideways for two or three weeks, there’s very little time premium in those puts to get eaten up by that sideways action, whereas the OOM puts will get hammered in that situation.

  199. DG

    Pima: Out of a trading pattern like this I think the chance of the market going sideways for 2 months is about zero. If i were to play with a stop I’d just short the Q’s, so that I’d lose no time premium at all if we go sideways. I always have lots of cash around and don’t need to maximize it. Whether I put up$450 to buy a put or $2750 to short Q’s doesn’t matter to me. It would be incredibly unusual for me to be so excited and confident of a trade that I’d have no extra cash left.

  200. pimaCanyon

    So, DG, is getting a larger return if the market moves down the main reason for the OOM puts?

    Here’s an example:

    Say you bought 5 puts at .64. Your cost $320. You are not going to use stops on them, so your potential loss is the entire $320.

    Now instead of buying the puts, say you shorted 100 shrs QQQQ. If you want to risk the same amount as the puts, your stop would be around QQQQ of $58.

    Now let’s say the market moves down $3 on the QQQQ’s. You would make $300 on your QQQQ short.

    Based on today’s put prices, your puts could be worth $150 each, giving you a profit of $86 on each, or a total profit of $430.

    So for the same risk, your potential profit on the puts is higher– $430 versus $300.

    However, this assumes a move down soon so that the option prices do not lose much in time value.

    Another thing that could work in your favor is that if the move down happens quickly, the time value of the options could actually go UP, even though time has elapsed, so your potential gain could be even higher than the $430.

    Does that pretty much sum up why you’re going the OOM options route instead of just shorting the Q’s?

  201. DG

    Another advantage of the puts is if the market rallies first, I get stopped out of Q’s but not of the puts. A sharp rally followed by a collapse puts me in the black in the puts and the red in the Q’s. That seems realistic to me (big rally the first two days of 2011 or so, then a big drop). I also would have a much tighter stop than 3 points on the Q’s. So given your example I’d short 300 Q’s with a 1 point stop. I am still risking $300, but the profit is now $900 on a $3 drop and much less in the puts. I did the puts out of concern for a sharp rally stopping me out before the decline. If I get a tape clue (see previous post) it’s Q’s ho! I usually don’t do options.

  202. DG

    Pima: To simplify/clarify my previous post: I make more in the Q’s but risk getting stopped out. My lack of confidence that this is just the right spot to short has me more worried about getting stopped out than usual, so I chose the puts that I will hold till either a big drop or expiration.

  203. alex


    Could be a bit early and 3x bear isnt something I’d like to hold onto too long if I’m wrong, 🙂
    -but volume down was so light today and it looks close to the bottom of that trend line ( plus market cycle timing for a top soon)…it looked fairly good.

    Anyone has an opinion on 3x etfs or any input…bad experiences? anything?? I welcome anything info.

  204. DG

    Interesting stat from sentimentrader: In the past six years the SPY has put in back-to-back NR7 days (narrowest range in past seven days) 3 times while at 52-week highs. Each time the SPY was down at least 4% over the next 30 days. Narrow range trading near highs is how tops are formed.

  205. Jayhawk91


    Hard to see too much more downside, but I think I got burned buying IWN puts around this time last year.

    We could keep on drifting higher and higher. Who knows.

    Miners started to bleed there at the EOD. I see many sitting on a key fib level and starting to break down. Silver has not even testing it’s rising trendline off the summer. Seems so dang strong to me.

  206. alex


    feels the same here- could keep drifting higher, but really looks weak.

    (when tza hit $16 last wk it looked good, but went sideways and hit $15 this wk 🙂 time will tell

    Miners…I was looking at EXK , I think I would buy that right there (sitting on its 20dma like it did all through the run)if not for the cycle timing 🙁
    I hope it goes to the 50dma at $6 it looks so much nicer.

    Best wishes–out for a few hours.

  207. TZ (7006)


    Why on earth would you trade a 3x Bear ETF instead of just shorting futures? Do you understand the differences and cons to your approach? (I bring this up cause you asked for comments)

    If it was small sums of money I guess it might not matter. But if it’s small sums of money that don’t matter, then why bother in the first place?

  208. Onlooker

    It trades ex-div starting tomorrow though. Anybody holding today gets the div so it would be discounted in the market starting tomorrow (standing orders are adjusted by brokers after trading today). Somebody check me on this if I’m wrong.

    Also, just think about it. If today’s large drop was attributable to the div, the real change in value would have been about 3.6% UP (it dropped $1.43 and so if you added in the div you’d get the real change).

    That certainly doesn’t make sense on a day when the PMs were negative and stocks in general weren’t leaping. That’s what made me look up the div and the ex-div info as it didn’t make sense.

    We should see it drop by about that div amount at the open tomorrow. So don’t be shocked then!

  209. alex


    you said…”Why on earth would you trade a 3x Bear ETF instead of just shorting futures? “

    Well- I have seen people shorting this market 10 to 20 different times since Nov , and closing the short , or getting stopped out.

    Honestly , I dont short the markets in up trends ,

    (so far my risk is minimal actually, the trade is green thus far 🙂

    but it just looked like a good time to use TZA as a trade in the event we get a large market correction , which I do think is near.

    But I did ask for comments, so if you want to discuss the pro’s/con’s…( I do know some of the risks associated with this etf) that’d be great. I am out for the night, but I will read any posts tomorrow.


  210. Steven

    Best Time to Buy Stocks in Decades: Black Monday Seer
    Posted By: Gennine Kelly | Web Producer, CNBC
    | 22 Dec 2010 | 01:54 PM ET
    The woman who predicted the 1987 stock market crash says now is the best time to buy stocks that she has seen in decades.

    “My thirteen stock market indicators are at a bullish level—they are at 71 percent. Anything above 65 percent is bullish, 30 percent would be a sell signal or a major bear market—before the crash of ’87 the indicators got down to 9 percent,” Elaine Garzarelli, president of Garzarelli Capital, told CNBC’s “The Strategy Session” on Thursday.

    Garzarelli cites what happened with Japan’s Nikkei 225 Index as one reason to be so bullish right now on the equity market here in the United States.

    “In Japan, after they implemented QE1 [quantitative easing], and they did it with aggression, the stock market [Nikkei] went up 50 percent. The second time they did it with aggression, like we’re [U.S.] doing it, the stock market went up 80 percent. When they stopped QE, the stock market went down 50 percent,” she said.

    “QE does help the stock market, doesn’t always help the economy,” she said.

    “If this is not working, we’ll be able to see it pretty easily in the statistics that come out and that would change our mind,” Garzarelli said, adding, “So if QE2 does not work and we go into a recession with earnings down 30 percent, my indicators would drop to 20 percent and I’d change my mind.”

    “At this point things look pretty good. And the statistics that are coming out in the last two weeks have been very favorable, right down the line,” she said.
    Heading in 2011, Garzarelli is recommending four ETFs (exchange-traded funds):
    • Consumer Discret Select Sector SPDR
    • Industrial Select Sector SPDR
    • Materials Select Sector SPDR
    • Technology Select Sector SPDR

  211. David

    It’s not a dividend. It’s a distribution.

    Dividends = good. Dividends are income.

    Distributions = bad. It’s a taxable event that doesn’t increase the value of your investment.

    Presumably there are other etfs with similar year end distributions coming. GDX, SIL. I won’t be selling mine because I have substantial profits and don’t want to take the tax hit, but if you just got into these in the last 2 weeks, you may want to consider selling them, because you could get a tax distribution on someone else’s profits.

  212. Steven

    PART I

    Market Slaughter Ahead? Herd Indicator Hits 3-Yr. High

    Jesse Livermore, legendary trader of the early Twentieth century, had a rule: The stock market is designed to fool most of the people, most of the time. We may be in fool territory.
    According to the most widely followed sentiment measure on Wall Street, the number of stock market bulls out there is eerily approaching the highest level since October 2007, the month the stock market hit an all-time high and the worst financial credit crisis since The Great Depression ensued. The number of bulls rose to 58.8 percent this week, the highest since the 62 percent reading three years ago, according to the long running survey of financial newsletter writers conducted by research firm Investors Intelligence. The velocity of the conversion from bull to bear is impressive, notes Investor Intelligence, as bulls numbered just 29 percent at the end of August. “I know of not one bear for 2011,” said Peter Boockvar, chief equity strategist for Miller Tabak. “With the European problems still very much alive, a mini earthquake in the U.S. bond market over the past few weeks, and the likelihood of higher interest rates in Asia and Latin America too, the bulls better be a bit more careful here.”
    Those that have turned bullish since August have been rewarded. The S&P 500 is up 23 percent from its 2010 low posted in July as a second round of quantitative easing by the Federal Reserve, improving employment figures, and a tax compromise in Washington fueled further gains. But now, with so many bulls out there, which bears are left to convert into buyers and take the market even higher, contrarian investors said.

  213. Steven


    The “USA Today” ran an interview this week with five Wall Street strategists, including Blackrock’s Bob Doll, Goldman Sach’s Abby Joseph Cohen and Bank of America Merrill Lynch’s David Bianco. The headline screamed — Experts Agree: Get Over Your Fear and Get Back Into Stocks. “I have to admit that as a contrarian, I love articles like this,” wrote David Rosenberg, chief economist & strategist for Canada’s Gluskin Sheff, in a note this week. “The article concludes that ‘each panelist predicted double-digit gains in 2011.’ Now that is what I would refer to as groupthink!” Rosenberg made a name for himself for his bearishness ahead of the credit crisis despite the fact that he was employed by a firm at the very heart of the problem, Merrill Lynch. This year at Gluskin Sheff, he’s come under fire for remaining bearish during this second half rally in stocks, saying that we’ve yet to pay the price for the housing market collapse and the subsequent bailouts. That brings us to the one problem with going against the herd to soon. The herd can be right for a long time, traders said. “This is where it gets slightly complicated because I always wanted to trade along the line of least resistance, so I was generally moving along with the crowd, the herd, most of the time,” said Livermore, according to a 2001 biography entitled, ‘Jesse Livermore, World’s Greatest Stock Trader’. “It was when the change in trend started to appear, the change in market direction, that was the most difficult change to catch and act upon. So I was always ready to separate myself from the popular thinking, the group thinking.” For the majority of bulls out there, should you?

  214. fubsy_cooter

    Fubsy: Short and fat
    Cooter: A turtle

    These worda came up in a game of balderdash and I’ve been using em for all projects ever since. Music, writing, trading etc…

    Fubsy_cooter is my alter ego. Neither short, fat or a turtle, he’s more of an old toothless, porch sitting, banjo picking codger with a snoozing, fartin’ hound dawg. Picture a corn cob pipe laced with Humboldt County’s finest & a jug of corn whiskey by the side of his old rocking chair, and you’ve got fubsy in his element. Playing good ole fiddle tunes and staring at the view from his cabin in the hills. Fubsy can rock an old telecaster, pick a gourd banjo, and chill with the best of em. That’s the gist of it.

  215. Onlooker

    Dividend or distribution, what I said still applies, so no matter (and yes, I know the difference).

    The point was that today’s weakness was genuine, and tomorrow the market should discount that distribution from the opening.

  216. David


    No offense intended. I wasnt implying that you didnt know the difference — my tone was the result of my annoyance at catching an unforeseen capital gain.

  217. Gary

    Garzarelli is recommending everything except the one secular bull market. The only market in the world trading at new all time highs.

    How smart can she be?

  218. n1tro

    what I like to know is….did her system predict the other crashes that followed 1987? if not, who gives a shit that she predicted 1987. its 2010…23 fricking years later.

  219. Gary

    Marc Faber also predicted the 87 crash and he thinks hyperinflation is inevitable at this point.

    Sperandeo predicted the 90 mini crash and he also thinks hyperinflation is virtually unavoidable.

  220. David

    Garzarelli called the 87 crash but told her followers to stay out of the market afterward, claiming a depression was going to follow. The market took off and never looked back.

    Ultimately anyone who followed her calls would have done worse than someone who just stayed in the market, old turkey style.

    She faded into obscurity afterward.

  221. alex


    Does anyone on here use TURBOTAX?

    I was thinking of using it this year and wasnt sure how good/useful it was with reporting Capitol Gains regarding stocks.

  222. alex



    I had heard that it could download the 1099 form ,which saves a ton of time…but my broker doesnt (YET) keep track of cost basis (which lot purchased matches which lot was sold) , so I’ll still have some data entry I guess.

    I also have a friend that said if you are audited , the turbotax has a guarentee that they will take care of things, kind of like insurance from them.

    That all sounds good…if anyone has had any trouble with it, please let me know too. thanks

  223. Elaine


    TurboTax does have an audit feature, but it is an extra charge. I think it could be $49, but I don’t remember. I have been using TT for the last three years. I switched after doing a trial run with TT and coming up with the same result as my cpa to within the dollar. My cpa charged about $675 to do our taxes, both my husband and I are self employed.

    I had to provide everything to the cpa in a spread sheet which was completely organized and itemized by categories, once I had all that information put together it was easy to use TT.

    Plus TT stores your past filings, so you don’t have to enter any refunds from the previous year or anything like that.


  224. DG

    Shorted a little mote SPY at the close yesterday and bought some of the Q Feb puts I posted about. I am really torn. I want to be short but am not seeing something that makes me say “this is the spot” so I may have to wait for price weakness as a clue. I generally hate shorting into declines though. If I see a tape clue that say “now!” I’ll post it.

  225. alex


    Thank you- looks like it’s worth a try and it really sounds extremely cost effective ( what’d you save…$600.00 from the CPA??)..that certainly makes for a few nice evenings out or even a wkend get-away with your husband 🙂

    Thanks everyone-I’m more confident with your good reports.

  226. DG

    Now we’re talkin’ If the Dow can close up slightly today (under 20?), like we are right now, I will get a System sell signal. Remember the sells are not as good as the buys (I take every buy signal as they are 80%+ accurate) but given background conditions now I’d love to see it. (But it’s a long way to the close, so I’ll just have to wait.)

  227. DG

    I’m (emotionally) expecting it to bounce as well, but at some point they will have to run out of money since the trading world is now universally bullish. Usually when I start feeling the market cannot possibly go down it starts to. Yet with the super-light holiday volume it might only take $50 to keep the SPX afloat so…?

  228. Gary

    Because I find it hard to believe we will see two stretched daily cycles in a row and a stretched dollar cycle, my money is for a small down day today that triggers the 4 day corollary and then the decline starts in earnest next week even though everyone knows the market doesn’t drop in Dec.

  229. DG

    Gary: I think there’s a good chance of that simply because everyone is saying it can’t happen. We have been going up for the past week because people are buying knowing they will have a sure profit by 12/31. Even the bears are waiting until after the Xmas rally to express themselves.

  230. Onlooker

    Selling? We’re down like 2 pts!

    Not that I don’t agree that we could see some more volatility with a couple of false starts down being bought, before the drop really starts.

    Very early of course, but SPY is atop the BOW list. Good grief.

  231. Poly

    Don’t forget last year the tape was painted the entire month of Dec, but the last 3 trading days of 2009 were big down days, selling can start anytime.

  232. Poly

    OK you’re right, “big down days” was an exaggeration, sorry. Down 1.3% was correct, but the point still stands, somewhat 😉

  233. pimaCanyon

    Gary, just saw your comment re hyperinflation. The big question, of course, is when will it hit? Hyperinflation is pretty serious, with likely very serious consequences, social unrest and political upheaval being two of them. This country may become a very undesirable–and unsafe–place to live.

    Do Faber and/or Sperandeo put a time frame on their hyperinflation expectations?

    How about you, when do you see it taking off?

    And will you continue living in the Vegas area, or take off to some place more exotic (and safe)?

  234. Poly

    70’s style inflation a possibility much further down the path, but hyper inflation will never hit the US, don’t kid yourselves. All US debt is dollar denominated and the US is never spending/debt constrained.

  235. TommyD

    How hard is it to get citizenship in Australia, Gary? Level of education requirements?
    I was told recently that Canada financial system may be the model for the world….

  236. Gary

    Well we are on the path that leads to hyperinflation right now. The question is will our elected officials at some point come to their senses and stop the madness.

    As Sperandeo points out in Barrons, governments and central banks are the only ones that can cause hyperinflation. If the debt spiral becomes so great that we have to monetize to pay the interest payments, then hyperinflation is the inevitable outcome unless the country chooses to default.

    According to Sperandeo the tipping point comes when debt reaches a level of 40% of expenditures for several years. Historically that has been kind of the point of no return.

    We are now at roughly 44%.

    I’ve been contemplating Austrailia.

  237. Gary

    No idea about Austrialia. Right now it’s just an escape plan but no where near being acted upon.

    I’m hoping someone with a litle bit of commonsense will come to power and do what’s neccessary.

    Hey maybe in 2012 Chris Christie will run for President.

  238. pimaCanyon

    Thanks, Gary and Poly. You have point, Poly, regarding US debt being denominated in dollars. The other countries where hyperinflation hit–Germany after WW I, Argentina, Zimbabwe–was their debt denominated in a currency other than their own?

    Gary, I too have considered Australia and New Zealand. I have heard that it’s tough to get into NZ, don’t know about Australia. Canada is an obvious choice too, except I lived in the Washington State for too long. The winters are dark, wet, and dreary–and they go on far too long.

  239. TommyD

    Chris Christie would be a great one, imho.

    Pima, I am up here in northeast pa. near Scranton(The office) and Binghamton, NY. I would be thinking of eastern Canada. Toronto area. Good living can still be had I believe.

  240. Gary

    It really doesn’t matter if the debt is denominated in dollars. That just means we can print dollars to pay the debt…which is the cause of hyperinflation anyway.

    Just because a country can print their own currency doesn’t mean they can repeal the laws of economics. As a matter of fact that is the very reason a hyperinflation happens, because a government tries to print it’s way out of a debt spiral.

    The currency crashes, the bond market in that country implodes, and the country becomes unable to borrow.

  241. Poly


    Australia is difficult and very selective getting into. They use a point system, so having higher education, skills, wealth etc play a big role.

    It’s a remarkable country, natural beauty, wonderful people with an advanced legal/business. I fortunately am a Citizen via birth and my US born children fortunately are dual citizen’s.

  242. Avann

    I live in Toronto … winter’s are typically mild (occasionally cold but only January and February). This year is colder than usual but still tolerable. Look at a map and check out how far south “southern Ontario” actually is. If you’re willing to go right to the southern tip you’d be on the same latitude as northern California.

  243. Shalom Bernanke

    I believe one must invest close to $2 million in a business to get residency in New Zealand.

    Also, the trend is that Americans are not nearly as welcome around the world as they once were. Add that to the fact won’t be able to own guns to defend yourself, and staying here starts to look a lot better. 🙂

  244. Redwine

    One indication of impending hyperinflation would be offers of cash discounts. When you see businesses start to offer discounts for payment in cash it should be a red flag.

    That’s supposedly when everyone starts wanting to be paid in physical cash and when the cash needs to be printed in vast quantities.

  245. Shalom Bernanke


    You’re so close to Canada that you could check it out on weekends (via Buffalo), but I’ve often heard Canada referred to as “America Junior”.

    If I’m not mistaken, they also have a 15% VAT to pay for that “free” healthcare.

  246. Onlooker

    Geez you’re right alex. Both gold and silver bounced off their respective trendlines. And the dollar is sure making it tough to remain confident in a further rise.

    You could also say that the dollar failed a test of the break of the trendline (best seen on an hourly chart) from the Dec 14 low. Not confidence-inspiring for a near term PM bearish stance, eh?

    I haven’t done a thing though. Hangin’ in there on the current cycle interpretation, mostly due to the stock market’s position.

  247. Onlooker

    Mr. Mom

    Maybe there’s just a bunch of suckers out there thinking they got a great deal on it today, unaware of the adjustment to NAV due to the distribution. Just a thought. 🙂

    It is quite strange though; yesterday’s extraordinary weakness followed by today’s extraordinary strength.

  248. Nick


    Regarding your view of an intermediate low in the SPX to be followed by another rally before marking the end of the cyclic bull:

    Why would the top of this cyclical bull not be marked right here? Why rally again out of this intermediate low instead of this intermediate low signalling the return of the secular bear?

    Merry X’Mas / Happy Holidays everyone!

  249. David Kafrick

    I live in a country (Brazil) that has had a long experience with hyperinflation in the past, and I think the odds of the same thing happening in the US is pretty small. In order to have hyperinflation the government needs to fuck up really bad on all levels. Even though the US government has been doing a bad job, it is nowhere near the fucked up level that I am talking about.

    I think that an undesirable level of inflation is certainly possible, but hyperinflation I´m not so sure.

  250. DG

    Things often bounce off trendlines as a self-fulfilling prophecy. But if it’s time to go down you get a weak bounce and then cut through it like a knife through butter. I never trade a trendline with any more than a day-trade time frame unless I also have the trend on my side. We may bounce for a day or so with GDXJ but if it’s time to go down, it’s time to go down and the trendline will mean nothing. On the other hand, breaking a trendline at the start of a decline can be juicy for a short. I can’t wait to buy FXP. (see url)


  251. DG

    I tend to agree with David K. Our creditors are not going to want to see the dollar crash to zero and thus bankrupt them as well. Wouldn’t they reschedule the debt by accepting smaller payments? What good would it do them to stick to the terms and lose everything rather than taking 1/2? 15% inflation cuts prices in half in five years, and that ought to be enough. In ten years of 15% inflation 75% of the debt will be gone. Not pretty, but not $200 for a loaf of bread either. We’ had inflation at this rate in the 70’s and survived. I don;t know what will happen, but this is realistic to me.

  252. alex


    Gold and silver did bounce off their uptrend lines…but I also was looking at Gold as having a trend line coming off the top of dec6 high, dec 14 high and dec 20 ( a triangle formed).

    It broke above that line 2days ago…and today went down to retest it.

    USUALLY this results in a retest of the highs of Dec 6 , but I wouldnt put any $$ on it this time around where we are in time. But thats what I was watching when gold sold off $12 this a.m.—a retest and bounce?? or a break back into that tri angle ?? ( that would be a failed break and I figured we’df finally start that downward fall.

    i must be bored 🙂

  253. alex


    I agree on trendlines…useful in early cycle time ( like moving averages…the 20 dma worked well on may equities..but its late in the game.

    and what a multi cultural blog we have here, huh?? Brazil, Europe, Canada,U.S. etc…nice.

  254. Onlooker


    Allow me to try my hand at that, and Gary can correct me if necessary.

    We (Gary) still expect another big drop in the dollar to a 3 yr cycle low. That would most likely accompany another push higher in the stock market. Not necessarily, of course, but likely, as we probably aren’t at levels of oil and other commods that will break that back of the economy, just yet.

    Also we haven’t seen the kind of breadth degradation that is most often seen at cyclical bull highs. A big interm cycle correction here followed by another push to new highs, accompanied by a break down in breadth measures like the AD line, high-low measures, etc., (as well as possibly some other negative divergences on a weekly chart) would be a classic sign of a major top.

    Those are two big reasons I see for expecting a push to at least a marginal new high; maybe a double top scenario. It doesn’t have to happen that way, but the odds favor it, based on historical evidence.

  255. Onlooker


    Yep, that’s what I was referring to also; the trendline from the top as you described. But I agree with DG here. You have to put it into the larger context.

  256. Redwine


    Volcker ended that inflation by raising interest rates above the rate of inflation (CPI). If that hadn’t been done a panic would have eventually led everyone to dump the dollar.

    This isn’t the seventies/eighties and raising rates now, stopping production of dollars, would create a deflationary depression unlike anything in history.

    The fed won’t be able to control true CPI anymore than they can control the weather. Human nature will rule and everyone in the world could panic out of the dollar. It’s more likely, IMHO, that creditors (dollar holders) won’t trust the fed to dial in a perfect discount through the use of inflation. The safest bet is to get out ASAP causing a rush for the exits and a hyperinflationary panic.

  257. Romeo Bravo

    I have lived in both Australia and New Zealand and travelled extensively through both. They both welcome American’s and are very easy countries to get around. I would think NZ would be a winner due to lower overall population, more conservative government and plenty of natural resources (though not as much gold as Australia.)

  258. David


    As inflation rises the interest rate on our debt will rise as well, so our debt will compound as fast as we can inflate it away. At some point that would become a spiral. It’s not that easy to inflate away one’s debt.

    Also, any “rescheduling” of our debt would be a de facto default.

  259. Nike Boy2008

    Hi DG..

    regarding shorting before Jan: I believe that we have 2 more POMO days next week (Tuesday and Wednesday)…maybe we go down monday and bounce tue&wed and then continue going down…still risky to short with 2 POMO days next week…

  260. David Kafrick

    It´s funny, people who live in developed nations that haven´t gone through hyperinflation seem to think that it is kind of like going through a black hole´s event horizon, that somehow all hell will break lose. Trust me guys, Brazil had problems with hyperinflation because the country was so fucked up politically, but as soon as a decent and somewhat competent man was elected president, he got rid of hyperinflation in less than six months. This is why I don´t believe the US will have hyperinflation, simply because I don´t see the level of stupidity and corruption needed to have that kind of problem. Maybe if Christine O´Donnell gets elected for president, than I would be worried.

  261. n1tro

    Toronto and Canada is a hole to live in. I know, I live here. You want to be bored, cold, and taxed up the ass? Come on over! What people should do is get landed immigrant status here (ie. a citizen without voting rights) to park their wealth and live abroad and declare world income which can’t really be audited 🙂

  262. pimaCanyon


    Won’t POMO continue beyond next week? If so, next week will be just like any other week for the past several months, and the week after that (first week of the new year) will be more of the same, as will the week after that… ad nauseum. My point is that POMO will not end next week, so what’s the point in waiting till after next week to short?

    I thought POMO days are the days that the Fed buys Treasuries according to the QE II plan. QE II continues into the middle of next year, right?

  263. pimaCanyon


    When I consider Canada as a possible country to move to, I would be looking at the West Coast, Vancouver, Vancouver Island, or possibly interior BC. Vancouver and Vancouver Island both have climates like western Washington State–mild summers (perfect weather IMHO) but dark gray wet winters. BC has some of the most spectacular scenery on the planet–when you can see it (i.e. when it’s not raining).

  264. n1tro


    True enough. West coast people are a lot more friendly than east coaster too. When BC housing prices implode, it’ll be good time to scoop up some nice property and settle in.

  265. Avann

    N1tro, at the risk of being considered one your cliched east coast unfriendlies (not that Toronto is actually on the east coast) … where are on earth to get such drivel? You sound like a very sad person … you hate where you live and think that the people who live around you are not friendly … I have a suggestion … move!

  266. n1tro

    my drivel comes from living in both L.A and Toronto for a period of time and seeing the difference. I’ve live in other places around the world so I can make my opinion. I guess I’m not like you who like paying high taxes, living in the cold, and enjoy doing nothing. To each his own I guess.

  267. Avann

    N1tro that’s cool, your opinion is just that an opinion but you devolve into geographical bigotry (that’s a new one I guess?) when you classify people as “friendlier” based on where they actually live.
    I guess the simple act of moving to the west coast should make me friendlier 🙂

    That’s a first for me.

  268. Gary

    I think you are mistaking a rally for a guaranteed move to new highs. That’s not what I’m saying.

    The rally out of the intermediate bottom can make new highs or it can fail to make new highs, there’s no way to tell at this point.

    The severity of the coming correction will tell us alot about where we are in this cyclical bull.

    If it’s strong enough to test the July low then the odds are high the bull is about to expire. We will have a a rally though.

    Even in confirmed bear markets the rally out of an intermediate cycle low is powerful. It has more to do with severe oversold conditions than fundamentals.

    The rally out of an intermediate low is what causes bears to lose money, even in bear markets.

    One just has to understand how markets go down. It’s different than how they go up.

  269. Natanarchist

    Toronto sucks…and so do the Leafs..haha..Course from being born down the road its easy to say. My hometown Montreal is an awesome place to visit/party but not so much fun to live there anymore. Alberta is where I would go if I go back. Idaho/Montana/Wyoming look nice too. maybe Uraguay or chile.

  270. Poly

    Getting really frothy when you read this on CNBC main story:

    “The weak dollar-strong stocks trade—a friend to the market but an enemy of the economy—has been unwinding for the past two months and is adding fuel to hopes that 2011 will be a profitable year on Wall Street.”

  271. n1tro

    I’ll break down to a specific example to highlight my definition of friendiness. As a young lad, I would hit the club scene a lot. Given I am the same person and my “game” is the same in both coasts, my sucess rate with the ladies were vastly improved in L.A. You may just say L.A. girls are sluttier but then I may just say they are friendlier. 🙂 But seriously, I think weather has a lot to do with people and “friendliness” I speak of. Can anyone who has lived in both NYC and LA care to confirm or deny?

  272. DG

    The past two 1/2 hour posts of OEX traders show the following trades:

    12:30 to 1:00—1058 puts bought; 68 calls
    1:00 to 1:30—1116 puts; 59 calls

    The OEXers are started buying a ton of puts relative to calls, and the market dropped on cue. I track these 1/2 hour changes to look for turning points. As always, nothing is perfect and this is no Holy Grail, but it’s nice to get a real time picture of smart-money traders. This is very short-term stuff though as they sometimes reverse several times a day, but i like getting the head start and I wait until what they are doing agrees with my overall analysis.


  273. Avann

    Natanarchist … totally agree with half of what you say … the Leafs … the saddest sports franchise in history and unless their pathetic fans wake up from their ’67 coma and stop contributing to their payrolls nothing will change.

    I still like the city … contrary to what some believe there’s a lot to do and if you can be bored living in Toronto well you can be bored living anywhere.

  274. Poly

    Well DG I can say that near term put’s just got much more expensive, with just that little .3% move down. VIX up 10%, hehehe.

  275. n1tro


    What do you consider “fun” things to do in Toronto? Toronto’s club scene consists of 2 streets downtown. Our sport teams suck. Guys who are paid millions to play games as a profession can’t stand it here.

  276. alex


    I’ve actually only been to Toronto when I was a kid, but…

    Toronto gave us RUSH , and I personally love that.

    and the REDSOX vs Bluejays is always a good game

    so I guess maybe some good things come out of Toronto 🙂

  277. TommyD

    OK, so Toronto is not the place…. How about Brazil? They have beautiful beaches and a good climate. Or, Croatia just across from Italy??? Hmmm

    Wind chill is about zero today. Best see if the wife will walk the dog..hehehe

  278. driver1


    That swing high on the S&P (and NDX) is good, but the SPY on the BoW page doesn’t give me that warm and fuzzy feeling. (Been short since late last week.)

  279. n1tro

    Don’t get me wrong, Toronto like most other places is a good place to live (depending on the area) if you are into the “work 9 to 5 and wait for the weekend to do something” lifesytle. I’m not into that.

    Still waiting for counter arguments to persuade a guy like Gary to bring his millions over if/when he decides to leave Vegas.

  280. DG

    Up close gets the sell signal. I will short Q’s, buy FXP, and buy TZA. Wish me luck! Hopefully I won’t have to tap dance covering and redoing until January. Take ’em straight down!

    And great Christmas everybody. This is a great analyst (Gary) and blog to have discovered.

  281. fubsy_cooter

    The shitty side of investing in miners…I’m sure everyone has seen the story on the Tanzanian locals living on pennies a day and allegedly being shot sifting through waste rock. I try not to think about it, but I know that with high prices in gold the companies we profit from are likely boosting profits through ugly human rights violations. Its part of the nature of humans and money/gold. Of course, i know little of the culture of Tanzanian mining towns, but my guess is that they are ruled by the haves with an iron fist over the have nots.

  282. Nike Boy2008

    DG said:

    “Now we’re talkin’ If the Dow can close up slightly today (under 20?), like we are right now, I will get a System sell signal. Remember the sells are not as good as the buys (I take every buy signal as they are 80%+ accurate) but given background conditions now I’d love to see it. (But it’s a long way to the close, so I’ll just have to wait.)”

  283. carlos

    Brazil? Croatia?
    Most of you people contemplating emigration would not last 6 months in such countries. They do not go by the book in countries outside the major developed economies. Corruption is rampant. Transparency close to nil. In comparison to America and Europe.
    People who run businesses in America would be amazed at how anybody could own and run a business in countries like Brazil, let alone Croatia.
    Americans for the most part are way too straight and honest to survive those kinds of legal and business environments. Just ask the British who got screwed over in the property market in the relatively sophisticated European country of Spain.
    On the other hand I would love to see how your average conservative gun-toting Tea Partying American would fare living in countries like Canada, Scandinavia, Aus, and New Zeland.
    I thought these nations were radically socialist compared to the US of A? Maybe I do not know but I know this much. The stench of idiocy or hypocrisy from some of the comments is quite strong.
    Some of you complaining so much about everything. Sound as if you people believe you are living in Gorbachev USSR hehe
    The politicians and corporations and bankers in the other countries are even worse than in America.
    You want to cast your lot in small countries like Canada and Australia? If was not for China they would be in the economic dust bin. How long can China continue like that?
    Please some of you get real and be realistic.
    All I want to know is what the markets will do midium term, not some “predicion” or “forecast” of what will happend in 2012 or 2020 and hyperinflacion and other fairy tales of gold bugs.

  284. carlos

    Dear fubsy
    I dare you to make a list of potentially unethical publicly traded mining companies and invest accordingly.
    You should not be investing in roughly 95% of them.
    I am sure most readers here will shed some tears for the third world citizen villagers because of your Tanzania sob story.

  285. Avann

    Toronto … I’m not a big sports fan … don’t care about the blue jays, leafs or raptors.

    Toronto has great theater, great restaurants, comedy clubs, decent museums … unless you like outdoor winter sports that’s about it for the winter but it’s the spring, summer and fall that make this city a great place to be.
    There are music festivals pretty much every weekend, Jazz festivals, rock festivals, you name the genre and you’ll find it. Proximity to cottage country … I think I read a statistic that Ontario has more fresh water lakes then the rest of the world combined. If you like quiet, peaceful serenity overlooking a clean lake it’s not more then 60 minutes north of here. We even have a beach right in the city … OK it may not be swimmable most of the time but at my age I don’t go to the beach to swim.

    Hundreds and hundreds of miles of safe bicycle riding … you can actually ride your bicycle from Niagara Falls all the way to the Quebec border … I’ve done it 3 years in a row and it is absolutely stunning … most of the ride is alongside lake Ontario and the St. Lawrence river. It’s not all about Toronto it’s also about the proximity to the rest of southern Ontario … Muskoka, Haliburton, and all the other fantastic cottage country.
    To whine about winters in Toronto is absurd when you have the rest of the year to make up for it.

  286. David

    The “average conservative gun-toting Tea Partying American” is not a typical American.

    You’re utilizing a stereotype, just as many conservative gun-toting Tea Partying Americans stereotype people named Carlos.

  287. Redwine


    “You’re utilizing a stereotype, just as many conservative gun-toting Tea Partying Americans stereotype people named Carlos.”

    You managed to both stereotype and condemn stereotyping in the same paragraph. Well done.

  288. DG

    Onlooker is right, Alex. Dow needs to be up on the day for me to get a sell, or down on the day for me to get a buy. Got the sell today and so, if it works, it means we will drop 1% or more within the next five days before rallying 1%. Not a huge deal, but given background conditions it ought to start the coming decline. Too, for the way I trade, a 1% head start allows me to put in a break-even stop, so I either win big (if it caught the top of an intermediate decline) or break even.

  289. DG

    Interesting OEX stat: Last time OEX traders bought this many puts was 11/22 (we were down 140 the next day). They bought just about this many puts again on 11/24 (we were down 95 the next day). Good support for my short-term sell signal. The more lopsided the OEX action, the more likely they’ll be right. Today’s was truly extreme, though no indicator is better than about 80%, especially with the oddness of the markets these days.

  290. Steven

    Anyone know the link for the amount of options that expire on Tuesday for gold & silver futures? I’m trying to determine max pain. Thanks in advance.

  291. DG

    Steven: FWIW, Jason at sentimentrader did a study of Max Pain and said it had no statistically significant ability to predict market moves.

  292. Chicken Burrito

    Nice report Gary.

    So gold typically retraces to the 50% level during an intermediate correct? I was looking at the HUI charts during past intermediate declines and they seem to hit the 61.8% level—at least for a quick tag a the very end of the decline. This also seems to fit with a good level of support around the 40 Week MA. I expect the silver and juniors could get hammered pretty hard and test some key break outs. (7ish on HL for example)

    What say you?

  293. Gary

    I was specifically looking at the stock market retracements.

    Gold is anyones guess. If we are lucky it will dip back down to test the $1265 breakout.

  294. Gary

    Leaps on what?

    One certainly doesn’t need to go out that far if they are playing the intermediate correction.

    And gold is nowhere near an intermediate bottom here so there’s no call to buy any kind of option right now.

    Don’t let impatience cause you to do something you know you shouldn’t do.

  295. Slumdog

    So, if the equity and PM markets head down, where should the money go into?

    I just went long crude which today made a recovery high. I have a substantial stake in PM physicals and ask if it would be wise to nakedly short some futures contracts equal to my physical, or at least part of it, to avoid the same thing I did when it reached 1000 and dropped?

  296. Gary

    The odds are pretty small that we’ve seen the top of the C-wave. This should just be a brief 3-4 weeks correction followed by the final leg up in the C-wave.

    That’s where you want to sell at.

  297. My Blog

    @Gary, after this 3-4 week intermediate term correction down to 50% or 61.8% fib levels (or 75WMA) are you expecting another leg up which may go beyond current highs on the market ?

  298. Gary

    I did illustrate what I thought was probably going to happen in the weekend report, depending on where this impending correction takes the market.

  299. Prasad

    @ Gary –

    The US markets always showed actions in opposite to what is so obvious or what majority thought will happen.

    Like you said in your weekend report, “everybody is already on the same side of the boat” and this time we may sure have a correction.

    On the contrary side, What chances the FED can take to surprise many here (with sudden increase in PUTs) and take it further up with NO correction (>=3%) or leave it in a state where no one (bulls or bears) will win this! Like Jan 2004 – Oct 2004 where market was in a tight range from 1100-1150 before it took another leg up

    please advise?

  300. Gary

    These intermediate corrections happen like clockwork and have been for 100 years. Sometimes they stretch, like the current cycle is. I would dare to guess that stretched cycles are almost always driven by Fed meddling.

    The end result is always a more severe correction than what would have happened normally.

    Case in point the Fed went on a massive money printing campaign in 06 which prevented the normal 4 year cycle low from occurring. The end result was $147 oil, the implosion of the real estate and credit markets, the second worst bear market in history and the worst recession since the Great Depression.

    The Fed isn’t going to stop the intermediate correction from occurring. They have probably guaranteed it is now going to be worse than it would have been, maybe even so far as to have brought about the end of the cyclical bull market.

  301. Nick

    When things get bad, as they did in 2008, Govt’s and the Powers that be, blamed the speculators.

    Looks like Gary asks the Powers that be to point all fingers @ themsleves instead! Their incessant and needless meddling causes increased volatility, stretched cycles and pushes the proverbial cans down the road…

    Gary, given the fan base you have here, maybe a Chris Christie – Gary ticket in 2012? 😛

    Merry Christmas!

  302. Gary

    Yeah that would do wonders for my retirement plans. The newsletter has already put a severe dent in what I’d originally planned on.

  303. Prasad

    Gary –

    seeking your quick advise on Options.

    I read your thoughts on trading Options and liked the idea of buying deep in the money calls which expires in 2-3 months based on cycle periods.

    Do you advise the same theory for buying PUTs as well on an equity ? Buying deep in-the money puts with higher strike price (which expires in 2-3 months) than current market price with delta value (-0.80 or so) ?

  304. Gary

    Puts are a bit different. They are often underpriced at the top of an intermediate rally because volatility is very low at that point.

    The problem of course is it’s pretty hard to catch the exact top of an intermediate cycle. So you will often miss several times. If you are playing with options you can can easily be taking 50-75% losses on those options trying to time the top.

    With puts you could probably buy at the money, just give yourself plenty of time for them to work. You will probably just have to hold them and hope you got the top of the cycle. Trading will probably just be a losing startegy.

    So if you are going to buy and hold only spend as much as you are willing to lose. Because most of the time you will lose it all.

    Going all in on puts in a bull market is the single most efficient way to turn ones account into dust that I know of.

    I would very much suggest you just short a small position (10-20% of your total portfolio) in the QQQQ’s or SPYDER’s if you can’t resist the temptation to play the correction.

  305. Gary

    Well I don’t actually make 400K from the SMT. I only have 1300 subs and I make a lot more from my investments than I do writing the newsletter.

    Hawaii was the first vacation I’ve had in over a year. Originally I had planned on lots and lots of vacations.

    Oh well, I started this and I’ll finish it. I’ll at least get everyone through the duration of the bull market before I retire again…for good 🙂

  306. M-

    Just want to wish everyone a great Christmas or Holiday season. Hope you get what your all wanted. e.g retire early : )

  307. Otis

    Gary, thank you for sharing all insights on a daily basis. Like many of your subscribers, I really appreciate all that you do. Happy holidays to you and your loved ones.

  308. David


    You do realize there’s going to be another bull market after this one, don’t you?

    And by the time this bull market reaches it’s peak, the opportunities for you (books, seminars) will be hard to walk away from.

    You will also have a lot more subscribers.

  309. TZ (7006)


    >The newsletter has already put a severe dent in what I’d originally planned on.

    I continue to be concerned when you keep bring up statements like this. Can you voice your frustration level vs. whatever monetary or financial reward you get from the newsletter and this site?

    Are you just mildly annoyed sometimes, but otherwise like things? Or are you close to saying it isn’t worth the time and you’d just rather go off and climb?

    I’ve made comment before, of course, to suggesting modifications that might clear up issues. You never really replied or made changes, yet you also continue to make comments here and there seemingly unhappy.

    Just a bit concerned, that’s all.

  310. TZ (7006)


    >Hawaii was the first vacation I’ve had in over a year. Originally I had planned on lots and lots of vacations.

    Seems to me with 1300 subs you’ve got almost every city and country in the world covered to go have some possibly tax deductable financial consutations 🙂

    Any subscribers in Bangkok? Gary needs to come over there and discuss some head and shoulders patterns.

  311. TZ (7006)


    Besides the idea of pulling your email blatently from the front page and a FAQ, with 1300 subs you are clearly killing yourself by having people renew specifically at 6mo and 1yr boundaries.

    Almost any successful marketer knows you want to get people on a monthly payment plan and just let it ride. They usually keep it going much longer than having them alert to and decide on a $200 lump sum. And repeated subscriptions handled monthly cut you out of having to handle almost 100 renewals on average every month. That’s crazy bro.

    Paypal has a monthly sub option. Why not just turn it on and get people on that.

  312. TZ (7006)

    Well..I THINK paypal has a subscription option. If not check out whatever service other newsletter writers like Saville use. Should be able to find a monthly payment processor in a few minutes.

  313. Gary

    I’m really not unhappy with the way things are other than I’m tied to a nightly report.

    I can’t go sit down in the canyonlands and go climbing for 4 weeks because I can’t get the report out.

    Hawaii was a great time except I had to be back early in the evening and spend an hour or so trying to get the report out. Usually while fighting with a connectivity problem.

    I have to wonder if I could even get the report out while climbing in a remote corner of western Austrialia or New Zealand.

    Most of the time it’s no big deal because I’m usually here in Vegas and I enjoy analyzing the markets and would do it anyway because I have my own money invested. But the newsletter has definitely limited my vacation options.

  314. Steven

    What are people’s thoughts on the effect this will have on PMs on Monday? Was this already discounted or will they get hit (or go up)?

  315. Gary

    Gold is due to make a dip down into an intermediate cycle low. The odds are high it’s already started that move and it will finish it regardless of what China does or doesn’t do.

    This is a profit taking event and has nothing to do with fundamentals.

  316. alex


    Heres an idea…

    When the d-waves approach (and theres not much to do) just tell your subs that you will be taking a month off , and they will get an extra month at the end.

    It is then safe to go away , camping, climbing , and traveling…then its a bonus that you come back refreshed and ready.

    Sometimes I have to stop playing guitar for a week or two …JUST TO GET FRESH. Playing all the time is great, but you get stale…monotonous. Take your breaks.

    You will live this life ONE TIME…dont hit 80 yrs old wishing you had used your free time better 🙂

  317. DG

    Gary: There must be some way to share your expertise, help others, and still do what you want. How about a newsletter that is published, only when there is something to say? You don’t need a nightly report., You may lose some of the hand-holding quality and it may be less help for newbies, but the goal would not be to be everything to all people. How about starting with what works for you, and seeing if what results is a viable newsletter. If you don’t need the money (which, if you may quit altogether clearly you don’t), then if this plan drops you to 400 subscribers, so what? It’s 400 serious investors who are better off than if you closed down. Your can do the labeled charts, etc. when you feel like it. A ten sentence posting with key levels and your thinking would suffice and take ten minutes. If something odd happens that needs explanation, an alert can go out. Start with what feel right seems to me that to you and see what happens from there. You have a picture in your head of what a “newsletter” entails and are feeling pressured to match it. I, for one (of many I am sure) would be very sorry to see you close shop, but I am also not happy that it feels more like a constraint than a pleasure, If you love the markets like I do, you’ll also miss it over time. Last thought: Find a partner (current subscriber or someone else) you can blab to for ten minutes who can do all the legwork. If money is no big deal that ought to be easy (hell, I might be up for it myself) Anyway, just some thoughts…

  318. Gary

    Most of the time I don’t really mind writing the newsletter. I would do the analysis anyway because I have my own money invested.

    But one of my pleasures in life is rockclimbing. Unfortunately many of the climbing areas are out in the middle of nowhere with no phone service and certainly no way to connect to the internet.

    I like to from time to time go on a three or four week climbing trip but it’s virtually impossible for me to get out a nightly report from these areas. And even if I just go to a once a week report it still means I have to get to a town or area with decent cell reception. From many areas that means a drive of an hour or more or in somecases a multihour hike back out of the mountains.

    Another drawback is when I leave for a week the basic clerical work (filing new subscriptions and organizing renewals) gets backed up.

    I spent about 5 hours logging in all the new subs and renewals after returning from Hawaii. The thought of doing that after a three week climbing trip is to say the least daunting.

    I have contemplated hiring someone to type and publish the report for me. I’m a fairly slow typist and sitting in a chair for hours tends to make me really stiff and sore. (I’m starting to get some arthritis in my neck which flares up if I spend much time in front of my computer).

    The problem is I’m not sure I could dictate what I want to say to someone. For some reason I know what I want to say in my head and I can convert that into sentences on paper. But when I try to verbalize it it becomes a hopeless mess. I know weird huh?

    I actually went to a pain clinic on Thursday and got the first in a series of cortizone injections that hopefully will help my neck problem.

    For now I will just keep doing what I’m doing and if I can figure out a way to incorporate a climbing trip from time to time I will. It may entail going to a weekly report when I’m on vacation and hiring someone to automate the subscription process. Something I’m going to look into on Monday.

  319. Gary

    I have an aircard but a lot of the climbing areas I go to are miles from any kind of cell reception.

    Several years ago I took a trip to the Northwest Territories of Canada. We drove for three days straight and then took a helicopter for 100 miles to get to the climbing area.

    That’s the kind of places I go to to have fun 🙂

  320. Daniel

    Merry Christmas Gary,
    Hope you find a happy medium to do both. We all want you to be happy but the investing world would not be the same without you.

  321. TZ (7006)


    Did you delete my post from last night about me discussing you getting help from craigslist?

    Was going to repost, but not if you deleted cause it had something you didn’t like


  322. DG

    Thanks for the detailed answer, Gary. I bet the right person could “interview” you and get what was need rather than you having to dictate a finished newsletter from your head (a lot of people have trouble doing that, by the way.) YOu need someone who can type and edit…not a rare combination at all. As for the reports, you have a good sense of when you will be needed and when you won’t be (like now we are all just waiting for the decline). Trips could be planned for those times and if something odd happens AND you are without cell access AND don’t feel like making the trek to a reception area, then, in that 3rd order of probability, people will not get exactly timely advice. The goal shouldn’t be perfection but something that works for you. If people are dissatisfied the subscription base under the new plan will drop, and it’ll become obvious. Do what works for you and let the marketplace vote as to whether it has value. By compromising a little on your admirable standards, you can probably find a quite workable solution if you choose to. It would take some discipline (which you obviously have as an investor and weight lifter), but I bet you’d settle into a routine that you looked forward to without the feeling of being constrained and tied down.

    And now off to a Christmas banquet…have a great day!

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