4 DAY RULE

If the market can end the day with a gain we will get a 4 day rule possible trend change signal.

The four day rule says; After a long intermediate rally look for the first down day to signal an intermediate trend change after the market rallies 4 or more days in a row.

The four day rule is a sign of extreme sentiment. I would caution that it only works after a long intermediate rally lasting multiple months. We have those conditions right now. We have also reached extreme bullish sentiment levels. The kind of levels where we are in jeopardy of running out of buyers.

Add to that the fact that the intermediate cycle is now going on it’s 23rd week and we got a large selling on strength day a couple of weeks ago (a sign institutional smart money is exiting in front of a large correction.) and we can probably expect any further gains to be given back and then some when the market moves down into the intermediate degree correction.

Now is not the time to press the long side in either stocks or gold.

That doesn’t mean one should short. Shorting bull markets is a tough trade. You have to time the exit perfectly and survive the violent fakeout rallies to make money. Not to mention you will invariably miss time the entry several times. All in all you will probably be better off just going on vacation for the next 5-6 weeks.

336 thoughts on “4 DAY RULE

  1. sophia

    I have been following Gary’s view for quite some time ( 8 months) and his track record is fantastic…To be fair, being so right is amazing, Gary must be multimillionnaire and I don’t get why he doesn’t spend the rest of his life in Maui!!! πŸ™‚

  2. alex

    No rock climbing in Maui??

    what about the other Islands where you see those towering waterfalls!
    Don’t they have volcano s you can climb?? Maybe no burritos , but they must have something you can climb πŸ™‚

  3. Wes

    Gary,

    The stock market is up less than 2% since the start of QE2. Gold is actually down.

    This is what I meant when I said that the effects were priced into the market before the event.

  4. alex

    92000

    beautiful tree , but was that Hawaii πŸ™‚

    So PZG is breaking out with volume on daily and weekly charts.

    NAK also

    just thought I’d throw some good news out on a boring day/week/..and prob month

  5. Gary

    Wes,
    The market is just in the timing band for an intermediate correction and sentiment has reached bullish levels where we are running out of buyers.

    I’m confident though that QE2 is going to lead to at least a minor currency crisis this spring. It’s not possible to discount QE. It’s new money hitting the market. That liquidity has to land somewhere.

    At the moment it’s staying in cash because the market is due for a correction but once the correction has run it’s course we will see a flood of liquidity rush into asset markets.

  6. MLMT

    I know all of you will say that I am wrong.. But I am going to pose a question to you all.. and what will you do if faced with the following possibility:

    “We have already seen a long-term bottom in USD and a long-term top in PMs?”

  7. Gary

    I would say I have to go with the odds. It’s still too early for the three year cycle low in the dollar. And nothing we’ve seen yet is indicative of a final C-wave top in gold.

  8. MLMT

    Gary,

    I don’t question the odds. I am just posing the worst case question and what is the plan of action in the event worst case materializes.

  9. alex

    Gary

    that reminded me…I do not think we saw the c wave top , but is it really too early for the 3 yr bottom, ( because I thought in your definitions section you said 3 yr give or take a month or two.)

    last low was March 14 2008 , 2 yrs and 10 months later is now , and if it took a month or 2 to bottom ,its there. No??

  10. Natanarchist

    @MLMT…I would start by saying, we are not “going back to normal” and are going through a paradigm shift of epic proportions. Therefore, the old models are not useful. #2. CB’s, particularly Asia and non western CB’s have no desire to continue the ponzi scheme of US dollar reserve. Their populations don’t either. These countries and people are creating real wealth while we create “debt” wealth. #3 1388 is the inflation adjusted high from 1980. Why do you think the battle is in this area. We have only just begun.

  11. Gary

    M,
    There is a very clear signal we will look for to let us know if we are wrong. I will go over it once we get close to the intermediate bottom.

  12. Gary

    Eric,
    You could use the 4 day rule on most indexes although I attach the most importance to the S&P.

    Remember just like every strategy its not 100%. However, it does often spot the exact top.

  13. David

    MLMT,

    As someone who caught the proverbial knife in 2008, I bought pm stocks at 50% off their highs only to see my positions lose another 80%. For instance I bought SLW around 10 only to watch it go to 2.50. I bought NG at $3.00 only to watch it go to $.50ish. I watched my portfolio shrivel away to unimaginable levels. I never sold a share (except for NG, which looked like it was ready to go BK), but kept on buying, picking up more SLW for $4.50 a share and riding it back to $40.

    So the answer to your question is: I will NEVER do that again. The line in the sand for me is the 200dma. If gold crosses under the 200dma (now around $1200) I will blow out the whole portfolio and wait for it to trade above that level before buying back in.

    So your point is a good one: when I read people saying “hey, AGQ can’t go below $128”, I want to tell them that it can go to single digits. These are not widows and orphans stocks. When the D-wave hits, people will find out how unforgiving these stocks can be.

    In the meantime, it’s a bull market, my good man.

  14. alex

    Elaine

    yes , i have been doing it for 10 yrs and got burned a few times i, but i learned from it too ( guess that was called paying my tuition πŸ™‚

    you can make good money in some of those small companies , but pick ‘producers’ with good results ..AFTER A PULLBACK , and good volume on the way up.
    and only when Gold/Silver /etc is in a confirmed uptrend ( or now when Gary shows where we are in the cycle timing).

    Its not for everyone , but I do my research , buy and SELL when the time comes. πŸ™‚

  15. Goldzilla

    Robert,

    Yep. Professional photographer, PR team, they are all posed.

    Question is, did she do that herself naturally, unnaturally, or was she asked to do that.

    Bigger question is, who cares?

    Photographers generally try a number of ideas and go from there.

  16. LowTax

    Sophia – I’ve been following Gary for a couple of years now and his track record is, as you say, fantastic. He’s very modest about it and will deny this to the bitter end, but I’ve yet to meet a better market timer! I wish I had listened to him back then as much as I do now – it took me a while to come around to his methods and I am the poorer for it. But better late than never, eh?

  17. DG

    Alex: I never trade such things. Let me know your perspective on the following thoughts…Making 50% is great but I’d never put more than a little into one of those tiny miners. I’d rather make 30% on $200k than 200% on $5k. Do you really put a lot of your net worth into such things? I can load up on GDXJ or SIL, but would be terrified to put that kind of money into $1.50 miner, or even into a basket of ten of them. What am I missing here?

  18. Bede

    Robert,

    When I was a boy in Japan, we had a japanese maid who could do remarkable things with her fingers. Looks quite natural to me.

  19. Robert

    Bede,

    You’re probably right. I simply tried it on my own hand and to have that much gap between fingers took extra effort.

    I’m sure it is plausible that Japanese have more nimble fingers. It still looks weird in the picture though, her fingers so far apart almost look like spider legs.

    Goldzilla,

    I’m intrigued by minute details. Who cares what I care about? Everything you said is common sense and not worth saying at all.

  20. alex

    DG ,

    i dont think you re missing anything here…we just do things differently.

    I don’t short bull markets ever, but I’ve heard that you do. Its easier to lose money shorting a bull with the constant upside surprises ,even with stops it chips away at your funds ( unless as you say , you just put a small % on it) but you keep trying. Its your style..it suits your desire to be an active trader.

    SLW was under $5 –2 yrs ago , over $40 recently. It was a small cap miner. NG recently doubled , EXK recently doubled ( both in 6 months). Its all about what you are comfortable.

    $2000.00 on SLW 2 yrs ago is $20,000 today. Its all good πŸ™‚

  21. alex

    DG

    so since we are now stripped down waiting for the correction , it doesnt hurt to throw $3000 on a small cap IF the chart looks good ( I base trades mostly on volume breakouts//big volume right before a break above consolidation.

    now go look at NAK and PGZ today- I kept these in my core for the volume rising toward a break area in a 2 month consolidation…volume was always up on the way up, light on the way down…if they fail , cut losses quick , but..now they will be sold. πŸ™‚

  22. Poly

    5,000 TZA’s @ 16.16. 2% Stop, no tolerance down, looking for a drop next week. $RUI is very extended, up 32% in 12 weeks and will likely drop most on the other indexes. Looking for 15-20% on TZA over 2 weeks (3x ETF)

  23. Robert

    Damn Poly, very nice buy today. That is the bargain of the century, almost. I got 5k+ but not that cheap! The RUT is OMG extended- up to 2006 levels! It should drop real hard. You’ll get 40% in the next month is my guess.

  24. alex

    Poly

    I agree ,that looks like a good trade!

    These mkts look weak , vix is bottoming…and these markets are up on LIGHT volume=buyers drying up, lack of support to the upside.TZA is continuing down on lighter volume.

    Also , I think that China makes a major decision on interest rates tonight. Could cause shockwaves.

  25. Wes

    I’m sitting with two very small put trades.

    If we get the usual gap up on Monday, I’ll probably add a third.

    But, I’m still not a fan of shorts in a bull market.

  26. bamster

    Poly,

    i’m with you. bought 10 jan 17 calls $1.14. i’ve been out waiting for this correction. its been hard not buying anything on the long side. hope it starts soon so i can load again on my PM stocks.

  27. alex

    Anyone…

    ISnt there a major drawback to the 3x directional shares (owning them for a prolonged period of time) because they re- allocate constantly?? Do they charge a daily fee for that??

    Is it because there is a fee passed on to holder of the trade for that??

    thanks

  28. Frankie

    All
    -the gov wants the stock market up
    -newly created $100B/month goes to primary dealers who can do whatever they want with it including levering it up 10, 20, 30 times(I don’t know the real number anymore)
    -this is open ended, no upper limit, no approval from congress — nothing (until someone stops the madness, and I have no idea how that will happen).
    – the gov knows they will devalue the $ so they need to get the rich more $ so they will retain their status.

    Why does everyone keep applying old rules to the stock market that has these conditions? This is the biggest ponzi scheme ever invented. Like so many are saying about gold, it has a long way to go.

    We have never seen anything remotely like this.

  29. alex

    No offense meant (really) but

    I don’t believe everything I read on blogs without a link to see if it s a reliable source

    wheres the link to where you got your rumor?

  30. GGuy

    Well, i couldn’t resist and shorted a very little gold with a not leveraged etf when @1.420, just where i sold.

    Now i just have watch, with my stop at the break-even, and have fun until 2011 πŸ™‚

  31. blammo

    Re: primary dealers ‘rumour’ (if that is what you are referring to), here’s a link with the schedule and a note:

    “…this current schedule adds up to another $117B in brand new, fresh greenback for the PDs to play with over the course of the next four weeks. My advice to you is simple: Be long or be out. Do not attempt to be “Mr. Smartypants Topcaller” and try to short anything. “

    http://tfmetalsreport.blogspot.com/2010/12/son-of-chartdaddy.html

  32. alex

    Blammo

    thanks for the link, it made for a nice Saturday morning read since all is quiet on the blog πŸ™‚

    Is tough, because Gary is calling for the int top and a rather healthy leg down, but according to that article…He thinks the fed will stretch things quite a bit…

    (quote from article)..I think you get the point. As long as we’re creating from thin air over $100B in new cash every freaking month, *(delete)* ain’t going down. Period.

    (delete was mine)

    thx for the link

  33. alex

    P.Bateman

    Hi- hope you dont mind my two cents here..I looked at what you were pointing out ,because I was interested in what you were seeing.
    It seems that Garys observation was that previously It 1st PLACED the 3 yr low, then broke up through the ema200…and it NEVER had broken up through the ema200 after placing other lows…it was rejected.

    BUT he wrote that in Jan 2010 , and if you look at the dollar chart , what he observed actually changed in Late Jan 2010 – that very month that he stated that,after placing a minor low.

    It was only on yr 2 it actually went up and DID break above the 200ema…going as far up a the 88 area.
    BUT… at that point it wouldnt be a dollar 3yr low , because it was only 2 yr after the 2008 3 yr low.

    It seems that his statement (observation at that time)that a bounce in the dollar wasnt going to break above the ema200 , because it was not coming off of a major 3 yr low… was quickly undone the following month.

    I would still like to hear what Gary has to say too..just wanted to add that in here at the time-hope you dont mind.

  34. Gary

    I recently thought 80 would provide enough resistance to turn the dollar back down. But the dollar sliced right through that like a hot knife through butter.

    I think the forces at work in the currency markets are so large that any technical analysis at this point is probably hopeless as different countries try to weaken their currency against their neighbor.

    I don’t think we’ve seen the three year cycle low though. Last month was too early as the average has been about 3 years and 3 months.

    I also don’t think we’ve seen the top of the bounce out of the yearly cycle low yet because the stock market still hasn’t dropped down into an intermediate cycle low of any significance.

    My best guess is we will see the European and Korea issues come back into the spot light soon and the market will enter a sizeable correction bottoming in Jan. or maybe even as late as Feb. like it did last year.

    At this point I think we can probably bank on another stretched cycle due to the Fed’s meddling and positive seasonality.

    So I would give the four day rule about a 50-50 chance of working.

  35. Strat81

    Gary,

    Wonderig if you have any book reccomendatons on learning about some of the market cycle theory you talk about and timing rules such as your “4 day rule”?

  36. Steven

    Gary,

    You mention a likely bounce from the daily low in gold. Where do you think this bounce will take us? Is it likely that it will challenge or make marginal new highs? Also what would the normal timing for this to occur? Lastly, is there any reason to think silver will act differently?

    Most importantly is how high do you think it can go on the bounce?

    Thanks…

  37. Gary

    Cycles are pretty much worthless for spotting tops, especially left translated tops.

    I went over the safest strategy for the next daily cycle in the last two reports.

  38. trond56

    The stockmarket broke up friday like I mentioned the copper development could indicate. The 1220-1230 level was strong resistance, in fact ‘the mother of all resistance’ since the Lehman crash occured from there. Now this level once penetrated may subsequently turn to support. But the market is overbought for sure, for instance on the Arms-ratio (Trin).
    Btw, here the charts for gold and silver 1979-80. The developmens after the end of november is somewhat special..

    http://futures.tradingcharts.com/historical/GD/1980/2/linewchart.html

    http://futures.tradingcharts.com/historical/SV/1980/1/linewchart.html

  39. Phil

    Gary
    I’m a holder of GLD , core and only position ,1 k shares, since May of ’09 . I’m sorry if you had this question already but whats your target of selling out my core position approximatively in say price range .
    I know you don’t agree with it but I hold much more in DBO .Any idea were oil will top out too Gary ? You dont go into oil much on your reports .
    thank you sir , Jake

  40. Phil

    Gary
    I also tried to buy SLW , under your recommendation but did not get filled . However on a pull back with your say so in a future newsletter I’d like to get long that stock as well .
    Jake

  41. Gary

    I don’t do much with oil anymore because it’s no longer in a secular bull market.

    One of the mistakes investors invariably make is to go back to the leaders of the last bull market because they were treated very well by those stocks or commodities before. So they expect it to happen again.

    Just look at tech stocks. How many people kept buying the Nasdaq during the 02-07 bull? The Nasdaq never even got close to the all time highs and still isn’t.

    The same thing is and will happen with energy.

    Regarding GLD; You should continue to hold a core position. I’m just reducing at this time so I will have some dry powder to put to work when the intermediate cycle bottom comes, but I still have a core position.

  42. mamaloshen

    Hi Gary,

    I enjoy it when you project the charts out a year or so, thus was interested to see your calling for an $SPX top next April, then a sharp decline into late 2012. But my question is: if this plays out, wouldn’t gold and certainly the $HUI decline, too, or do you see the pm’s completely decoupling from the stock market?

    They have been pretty much moving in lockstep all this year, so I don’t see how gold/silver stocks could hold up in the face of a market smash in 2011/12.

    Interested in your views on this and thanks for a great market letter.

    Albert

  43. Gary

    Albert,
    Go look at the metals and miners during the day of the flash crash and then tell me if you think the metals and miners have to follow the market.

    You could also look at the metals and miners during the 02 bear market and during the period from Nov. 08 to Mar. 09.

  44. mamaloshen

    Absolutely right, Gary. Just spent half an hour on Stockcharts comparing the S&P and HUI and the exercise confirms what you said (also found that from April 07 to March 08 the HUI was up 70% while the S&P was down in that timeframe.

    I guess recent history has conditioned most to think that pm stocks are always going to parallel what the stock market’s doing. Just ain’t so as you point out.

    Best,
    Albert

  45. Slumdog

    MLMT:’…what will you do if faced with the following possibility:

    “We have already seen a long-term bottom in USD and a long-term top in PMs?”‘

    Go short with 20% of your trading capital after there’s an extension of 10 more points, beyond the 1365 target? So the odds are high then that the extension will continue, and stay with it until the next target number, below, bottom of the uptrend channel, and then shorten the stop range so you’ll get dropped after a profit, and if it collapses, you’re on board.

    Expect a trading risk of say 10 points above the low. Watch to see the way the market bounces off of 1365 and if it’s too fast, then leave the trade after 5 points. Or if it looks like it’s a slow domed arch, let it go to see if it creates a right shoulder down?

    As to the balance of one’s capital, diversification in AU, CA bond funds to offset the USD, say 25%, and the rest exposed to US gov bonds, short or medium term, and a call option on the USD for the gamble, say 2% with the goal of 5 times the cost?

  46. Razvan

    the failure to pass the tax extension package early next week might be the catalyst we are looking for to bring some serious profit taking. It looks like they might vote against it and wait for the rep to take over in jan to implement a new policy.

  47. TZ (7006)

    GARY/ALL,

    I have some interesting discussion I’d like to kick off. It concerns cycles and whether they become significantly less useful as a bull progresses (towards mania top).

    We have two recent past bubble/mania examples – real estate and tech stocks.
    Real estate doesn’t really have chart data you can use for the sort of cycles we follow, so stick to tech stocks and approximate with the $NDX index. See this chart:

    http://img256.imageshack.us/f/ndxrunaway.gif/

    This is the naz for the last 5 yrs or so of the tech bubble. I’ve made a number of notations.

    Clearly, up until about mid 1998 the naz had daily and intermediate (RED CIRCLE) cycles. It shows a rather continuous progression higher (ORANGE line).

    Then, lateish 1998 the market accellerated (2nd ORANGE line). Note this chart is LOG so that the slope shows the percent compounding. From last 1998 onward the market took off into it’s final (and most profitable) run.

    What I want to highlight and discuss is that when the market changed in phase (and “character”) at the 2nd orange line, not only did it move up much quicker, but it ALSO STOPPED having much in the way of intermediate cycles. They disappeared, or became *significantly* reduced.

    In fact, it is pretty clear that:
    a) playing intermediate cycles was seemingly useful and profitable before late 1998, but
    b) it pretty much left you behind afterward. Eating dust.

    My concern with this example (applying to gold/silver) is:

    1) I think the nature of precious metals market has changed in the last year or so. I think there is a different amount of money and we are in a different “phase” (phase 2 by many definitions – obviously we aren’t in the ‘mania’ phase yet.

    2) With the change in nature of the metals (now) and with a certain change in nature in the future (mania), this example would seem to indicate that cycles might not work out as we expect. That there might be a time, if not possibly **already started**, where the cycles disappear or become not very useful.

    Any thoughts? Do we risk being left behind now or in the future by selling to core for an expected ‘intermediate’ pullback that might not come? Can we identify this ‘runaway’ phase when it happens and stop trading? Is there something about the $NDX/tech that makes that example unique? Are there other examples that might show if this is unique or not?

    As a challenge (no slight intended), let us assume Gary and Doc and others came to use and learn cycles only for THIS current phase of the metals. Maybe they haven’t/didn’t use them for previous manias. Maybe they stop working at some point? Maybe they don’t know or realize this cause it hasn’t happened yeat in their lifetime trading experience? Maybe we have a few more successful cycles before we need to simply hold? Maybe the runaway phase is already here?

    Would love to hear thoughts.

  48. TZ (7006)

    I know the default response can be “we hold a core cause we never know”, but I’m interested in a more detailed discussion as best possible.

  49. Gary

    Actually if you would expand your chart just a little way into 2000 you would see that the NDX dropped into a cycle low in Jan. Just about perfect intermediate timing.

    I prefer to follow the S&P though because that is what the pros measure themselves against. The S&P clearly went through all the intermediate cycles.

    I do think at the start of the bubble phase the ABCD pattern will break down. I expect gold will come out of a final D-wave and the A-wave will turn into a final bubble parabolic rally.

    But for now it’s way too early in the bull to expect the normal progression to fall apart. That will only happen as the public starts to panic into gold and that’s still several years down the road.

  50. David

    TZ,

    At one point I asked Gary how many more A-B-C-D cycles we could look forward to after this one, he said two, “followed by a blowoff/parabolic top” a la the 1999/2000 Nasdaq.

    In other words, he stated that a final blowoff top is a different animal from a typical A-B-C-D cycle.

    In a way, (and I don’t want to put words in his mouth), it seems what he’s saying is that a secular bull market is one big supercycle, and the final blowoff is that supercycle’s C-wave.

    Either way, he seems to have anticipated a change in character when we reach the terminal blowoff phase of the bull market.

    Presumably when we get to that stage we will just go Old Turkey and watch for our exit point.

  51. TZ (7006)

    A side link of interest, HOYE:
    http://www.321gold.com/editorials/hoye/hoye121110.pdf

    he has some kind of all encompassing “Momentum Peak Forecaster” (credit market based as he mentioned this fri on howestreet.com) which calls major tops in markets.

    He is now warning of a major top in the “ALL ONE MARKET”. Essentially saying much of the continued gains in almost everything are now about to come to an end (if I read him right).

    Check it out at that link.
    He mentions a bit of it on the 10th here:
    http://www.howestreet.com/audiovideo/

  52. TZ (7006)

    Hoye quote from link:

    “..What this indicator does is more important than what it is. When backdated to 1970, it has
    anticipated some of the most significant speculative reversals of our times…”

    He’s making a grand call of the end of almost *everything* within about 1-3 months, it seems.

  53. Gary

    The reason you can’t determine the cycles is because you are using a log scale and the final move was so large that the early moves get washed out.

    There was an intermediate low in March 99 that dipped 14%. Another in Aug 99 the dropped 14%. And then the final parabolic run that extended all the cycles.

  54. David

    TZ,

    I saw that Bob Hoye thing. On closer inspection, it predicts very little.

    It seemed to have missed the 2000 tech bubble collapse entirely. And yet it predicted something or other in 2004 — “housing rate of change” — meaning what? That the housing market was really taking off, but that the bubble wouldn’t burst for another two years? It predicted “narrowing spreads in Euroland” in February 1998, but LTCM didn’t happen for another six months. This is very loose correlation, not causation.

    In short, Hoye’s “system” gives a signal, and then he finds something after the fact to explain what it was signaling. This is a pretty easy trick, because there’s always some crisis going on in the global economy.

    And you can bet that there’s going to be a crisis in the next six months, given that we’re already in several of them (Ireland, the bond market reversal) and any of these crises are more significant than “Housing Rate of Change”. Hoye will have no problem proclaiming the rightness of his system when Spain gets into trouble or the bond market backs up.

    In short, this is the kind of pseudoscience that newsletter writers like Elliot Wave use to bilk people — predicting disaster is always good for sucking people in.

  55. TZ (7006)

    GARY,

    >The reason you can’t determine the cycles is because you are using a log scale. There ws an intermediate low in March 09 that dipped 14%. Another in Aug 99 the dropped 14%. And then the final parabolic run that extended all the cycles.

    The log chart would show the same size movement (in %) throughout. So there is still a clear deviation between the early and late portions.

    Nevertheless, I wasn’t proclaiming to be cycles proficient. I turn to you for that. If you believe that situation was playable either with closer examination, extended cycles, or use of SPX instead, then I believe you. I just wanted your take on it and whether it was highlighting a dangerous area for us in the future.

  56. alex

    TZ

    i was wondering the exact same thing and tried to use the oil ramp up that happened through 2008 when it shot to $140.00 and you can use $WTIC.

    I even looked at individual stocks like MEE , CHK, & PQ and so on..but it was inconclusive to me, Great charts of blow off run ups tho

  57. Steven

    Gary,

    Do you think the move in gold/silver is the bounce out of the daily cycle low (seems early for that), daily wiggles, or something else?

    Thx

  58. Onlooker

    Gary

    What do you think about the dollar breaking down this morning? Not to analyze the squiggles, but going below that little support level at about 80.07 or so is disconcerting to me. If we go below the daily cycle low do you get back into PMs, assuming that the dollar is toast and resuming it’s drop into the 3 yr low?

    This is exactly what the “risk” is right now in being out of position in PMs – and short the stock mkt for those who are, though I think stocks can definitely fall into an interm low no matter what the dollar is doing, given the bullish sentiment, etc.

  59. Onlooker

    Hopefully I just bottom ticked a short term move on the dollar with that comment. LOL

    Stocks didn’t react much to that little free fall, but PMs sure are, and it’s making us core only bulls uncomfortable. πŸ™‚ But this would be a normal and classic mid-interm cycle decline bounce and so I’m certainly not chasing here.

  60. trond56

    Well, I tried to give you some warnings. I’ve been loading up the last days, especially TGB which is a wery well run producer of both gold and copper. (Up 6% just now)

  61. aaronpalang

    This stock market is ridiculous. POMO has ended, and yet no sign of relief. With seasonality on the side of the bulls, and sentiment extreme, I wonder how this plays out…should be interesting to say the least.

  62. Onlooker

    Well it’s not over yet trond. It’s still quite risky to be long here. We’re very vulnerable to a nasty and abrupt fall at any time. Calls are being bought hand over fist again this morning (see ISEE). Yes, it may be a good short term bounce, but we’ll see how it plays out over the next couple weeks or so.

  63. Gary

    Trond,
    If gold can put in a swing low then we may have the bounce out of the daily cycle bottom, but 20 weeks into an intermediate rally is way too late to be chasing.

    At this point just let your core position catch what ever rally unfolds because the odds are high it will be given back when gold moves down into the intermediate low.

    The goal isn’t to catch the last few percentage points of this intermediate cycle. The goal is to have some dry powder to put to work at the intermediate bottom when it comes.

  64. Onlooker

    Friggen’ dollar is melting down this morning. But given it’s nasty spill, it’s still a pretty muted response, relatively speaking, in the PMs, and especially the stock mkt. The pull of the interm cycle vs. the decline of the dollar.

  65. Onlooker

    And I was speaking specifically about the response since about 5 a.m. when the dollar started falling out bed. I realize that silver is up quite large today.

  66. Gary

    It could. I tend to think once the stock market begins to dip down into the intermediate cycle low it will have a bigger impact on the dollar.

  67. DG

    There are so many indications of hysterical bullishness, this is not going to end well. Amazing. Yet the Fed is pumping in another 7-9 billion today. I just keep waiting for a clue it’s over…and waiting… Have lost tiny bits on the way up on the short side. I have found that usually, for me, if I probe more than a few times, when then move finally comes it’s a whopper. NDX tends to crack big in January for some reason, so maybe then…?

  68. Onlooker

    The other thing that seems notable here is the bearish sentiment evident in bonds lately. I don’t have any empirical data at hand, but the “bond bull is dead”, etc. type stories have reached a very high level of late.

    Regardless of what the longer term holds, it seems like we ought to be near a significant bounce (even if it’s a dead cat type, like the dollar has had), and that would go well with an equity correction.

    Today’s spike up in bond prices just may be the start of that bounce.

  69. oa92000

    ” alex said…
    Is it significant if the dollar breaks and closes below Dec 6 low? Failed daily cycle?”

    looks like 50 dma is support..

  70. Onlooker

    Excellent DG. Thanks for that. It has certainly fallen quite rapidly.

    It obviously validates my anecdotal feel of bond sentiment. I was wondering what SentimentTrader was showing for that. But I no longer subscribe and I’m reticent to solicit that info from subscribers.

  71. DG

    Jason’s a friend and I think posting a chart like that with attribution is a good add for his service, so I didn’t t think he’d mind—I hope πŸ™‚

  72. Onlooker

    Yeah, I understand and agree. I just don’t like to go around soliciting that stuff from others as it makes me feel a bit cheap and, well, just wrong. If I really want it I should just subscribe. I used to subscribe there but dropped it a while back. I’m debating getting it again.

  73. Elk2Go

    Gary,

    This week the CFTC is holding open talks about position sizes, and thats one of the things everyone’s been bitching about.. JPM is short 18% of the entire worlds production of silver. it’s all naked too, they don’t have the silver laying around as a hedge. That’s how they’ve been manipulating it.

    Question, if for once the CFTC grows a set balls and sticks to the legal limits, Would it cause silver to pop? I believe the meeting is Thursday.

    Thanks.

  74. Avann

    Can anyone answer this?

    The plan to get back in is clear enough on the downside … but let’s face it even Gary and cycle analysis can be wrong this time so IF that happens and the PM’s continue higher … when do we decide that it’s time to get fully in again?

  75. Onlooker

    New lows on the NYSE have ticked up significantly over the last couple of days and are shooting up quite a bit today. Showing that breadth is breaking down at these higher highs. It’s interesting because we didn’t even see this at the Apr or Jan tops.

    That said, it’s not reflecting in the NASDAQ figures, and so I thought that it could just be the interest sensitive issues (i.e. bond ETFs, preferreds, and all the other things that tend to “pollute” the NYSE breadth data).

    But bond yields are down across the board today so it doesn’t really make sense. Hard to say but it’s something to watch.

  76. fubsy_cooter

    I was expecting to see a lot more seeling into strength today, but the numbers on the SPY are not what I’ve seen mark intermediate tops. Looks like we may have a little further to go. I’m thinking I’ll take a small short position on the S&P if we get a good SoS day. Just to spice things up a bit. Waiting bores me. Anyway, it seems like a pretty good bet if it materializes.

  77. Robert

    Fusby, what was the volume on the SPY today? What have you seen for SoS on previous intermediate tops? When is the last time you have seen a high SoS?

  78. DG

    Robert: There was a huge (-$400 million?) SoS day 2-3 weeks ago. Gary has pointed out that it is a poor short-term timing tool, but that it does show the big money heading for the exits. According to the studies he has done, another is not needed. The fact that we have been rallying since it hit is a pretty good indication of its non-short-term predictive value, I guess.

  79. Robert

    DG, what I was trying to tell Fusby, is that SoS without volume considered can be misleading. I look at the -73 million in SPY today as significant with SPY volume only 70% of its average. Also it seemed as if he, Fusby, was saying that this is the first SoS in awhile. More like this will be the last SoS in awhile (likely) if the market begins to drop.

  80. TZ (7006)

    GARY,

    Regarding moving the email and using an “SMT” header type trick, we all know and LIKE that you are friendly and corresponding and answering questions. This won’t substantially change that. The issue is that the #1 thing that stands out on the front page of your blog is a big email address. It is only natural a large mass of people will STOP doing anything else at that very point, CLICK IT, and write to you. By the design of your page, that is what you are encouraging – to your detriment.

    Move the email so they have to read and learn before contacting you. Either way you construct it, the people will follow. Construct so they answer their questions first and many fewer contacts should result.

    And there is nothing wrong with encouraging the posting of question on the BLOG instead of emailing you. You can put that in the FAQ: “Please consider posting your questions to the blog INSTEAD of emailing me. There are probably others with the same questions and you will likely get a quicker response assuming I can get to your email at all. I prioritize incoming emails for subscriber specific issues and cannot provide personal investment advice.”

    etc.etc..
    It doesn’t have to sound mean, but if you are being burdened, then bone up a bit and level with people on what you are willing to accept or not.

  81. Steven Haggerty

    Hey Gary,

    I was thinking of taking a small positions in spxu, for the next 4 to 6 weeks, just to add to my dry powder. Then get back in the silver miners (heavy) when the time is right. Crazy?

  82. fubsy_cooter

    At the last intermediate top in mid July..ish I saw several days with more than 100 million SoS in the SPYs and >100 million SoS on several other issues. With sentiment as frothy as it is, I suspect there will be a day with high volume in which institutions hand over positions to retail traders and that will give us high SoS numbers. On such a day, if it occurs, I will initiate a small position short (appx 10% of portfolio). I will likely add to the position by a couple % with each successive SoS day.

    If no SoS day occurs prior to drop, I’ll wait and see what kind of set up develops. Perhaps I won’t get short due to lack of a high odds trade. We’ll see.

  83. TZ (7006)

    ALSO,

    switch to using an email at the domain you own. USE:

    [email protected]

    THEN…go to the registrar where you have that domain and FORWARD IT to wherever you want ([email protected]).

    Keeping and using cox keeps you locked into that provider should you ever move or want to switch.

    It also prevents you from easily accessing and using when traveling since it’s probably POP only with a crappy web interface (if any at all).

    Idealy, you take [email protected]…net
    and forward it to a yahoo.com or gmail.com email.

    Then you can work and use all the features there (gmail.com allows THREADING like i mentioned before). You can access remote. have unlimited storage. Never worry about backups, breakdowns, etc.

    And, again, you can simply redirect [email protected] to another place if and when you get tired of what you use.

    cox.net and outlook (personal on your computer with pop) doesn’t make you very mobile or flexible.

  84. TZ (7006)

    When I say use:
    [email protected]
    and forward,

    you can simply forward it now to [email protected]

    and continue life as you have it setup with no issues. So you can keep working as you are. But LATER a simply redirect again from the registrar can send everything to gmail, or hotmail, or hong kong or canada, or wherever. Flexible.

  85. Robert

    From 10/28/10-12/13/10 we’ve had a total negative outflow (SoS) in the SPY of 1,160 ($1,160,000,000 USD). Since 10/28/10-12/13/10 we’ve had a total positive inflow (BoW) in the SPY of 35 ($35,000,000 USD). The net is then an outflow (SoS) of $1,125,000,000 USD from today since 10/28/10. I disregarded anything under 20 million (although upon first glance at each date from 10/28-today I didn’t see any).

    IMO -1,125 money-flow in the SPY constitutes enough SoS for an intermediate top in the short-term.

    It is also important to note that SPY on 10/28 (the lowest share price on SPY throughout the dates covered) was close to 118.5. This entails that an intermediate correction should drop significantly lower than 118.5 (or 1185 S & P 500 or thereabouts). 5% under 1185 is 1125, so I would not be surprised if the correction brought us to that area. That is almost a 10% drop in the SP500 from today’s closing price which is not uncharacteristic of an intermediate low.

  86. Robert

    The largest SoS days from today to 10/28/10 were 10/28 (-151), 11/29 (-582), and 12/1 (-123).

    *Correction on previous post. There were some small SoS (under 50 million each) that came up on 10/22 and 10/26. If those are disregarded the total net of SoS and BoW for SPY from 10/28/10-12/13/10 is approximately -1,055 million.

  87. Wes

    Robert,

    Unfortunately, that is not the total negative money flow. WSJ only shows negative money flow on days the SPY is positive, and calls it SoS.

    But, negative money flow can also occur on days the SPY is down. In that case, we don’t see it from that source.

  88. Gary

    Avann,
    This late in an intermediate cycle I would never go back to a full position. Just let yur core catch any upside that may be left.

    Steve,
    I never short a bull market. It’s too hard to time the top and tough to time the bottom. On top of that the percentage gains are tiny so a couple of misses on the entry and a miss on the exit and all you’ve accomplished is to whittle away at your cash.

    This is just one of those trades that is better left for someone else.

    We’ve made a killing over the last few months. Be happy with your gains, take some time off and take the family on a nice vacation.

  89. Robert

    Wes, you are correct. I did realize that throughout gathering the numbers for that post. I didn’t mention it because I know that it has thoroughly been discussed already here on this board, but should have anyways as a reminder.

    That said, the same holds true for all previous SoS and BoW numbers we have taken off the WSJ site and discussed, and patterned to IT tops and bottoms. I calculated, some time ago, the April SoS and it too was over and close to the 1 Billion mark on they SPY.

  90. Gary

    The fact that we don’t see signs of selling on down days doesn’t mean it’s not happening just that we have no way to track it so it’s inconsequential as a timing tool.

    The fact that virtually every intermediate top has been preceded by one or more SoS numbers is a tool we can use to give us a strong warning signal.

    We got that warning several weeks ago. It’s now dangerous to press the long side any further.

  91. Robert

    Gary,

    In the last report, the weekend report, you mentioned that on the next daily cycle we might exceed this intermediate tops’ high (on the major equity indexes), but then that would be it for the stock market. I see you have marked March of 2009 as the beginning of this 4-year stock cycle. Are you then assuming we’d decline from sometime around the middle of 2011 into Spring of 2013?

    With gold having its last 8-year cycle beginning in 2008, we’d be looking for gold to gain into 2016-2017. Do you think stocks will then put in another 4-year cycle decline from 2013 into 2017, which would coincide with gold’s top?

  92. Gary

    Robert,
    Gold and stocks run on different cycles so I wouldn’t expect too much in the way of similarities.

    Since the 02-09 stock market cycle stretched so long (it really was aborted by Bernanke’s printing press) I expect we will see the next four year cycle contract drastically. I’m looking for a bottom in 2012. Either in March or in the fall.

    We should have anotehr deflationary scare as the dollar bounces out of the three year cycle low next year. That could last a year to a year and a half.

  93. fubsy_cooter

    Silver is knocking on 30 again. looks like the JPM confessional has motivated speculators to push a bit. It will be interesting to see how this turns out…whether JPM really has overleveraged short of silver, or if the story is just retail nonsense.

    I would think they could easily hedge a large solver short by buying other commodities….of course, not much has outperformed silver.

  94. Steven

    Gary,

    I think we have a swing low in gold now, correct? How does this affect things in the short-term? Could we look for a more meaningful short-term bounce and, if so, any idea where that could end up before rolling over?

    Thanks

  95. jabalong

    Still relatively new at following this blog, but impressed by the discussion.

    Just read an interesting Bob Hoye update (http://www.321gold.com/editorials/hoye/hoye121110.pdf) that I thought might be of interest here.

    He’s got a Proprietary Momentum Peak Forecaster that has generated just its seventh peak signal in 40 years (!). Previous signals have been followed 1-3 months later by key peaks (commodities 1973, gold 1979, DJIA 1987, LTCM 1998, housing 2006).

    This latest signal just triggered is for what he calls the “All-One-Market (AOM)”. Not exactly clear what markets this includes exactly (if anyone can shed any light on it), but gather it’s at least the stock market.

    Correct me if I’m wrong, but this would seem to jive with talk on this blog about a top coming soon in the stock market. Hoye’s rarely triggered signals would seem to point to a big correction I’m guessing, not sure how this compares to what people here are expecting.

    If anyone’s got any thoughts on this, would be much appreciated. Thanks!

  96. Gary

    Jablong,
    This was discussed ealier today. If you go through the ealier comments you will find it.

    Steven,
    I’m not sure a swing here will mark the cycle bottom. But one could always put a stop below the recent low at $1377 under the assumption that it did and be somewhat protected from getting caught in the intermediate decline when it comes.

  97. alex

    I also saw that the swing was put in on gold when it went to $1405 tonight…I was thinking maybe just a run up to retest the high , then a $40 plunge to set the tone later this week ( total guess , but I do use other indicators like slow stochastics and macd and r.s.i.—they look a bit oversold on gold. )

    Its the perfect scenario to suck rally lovers and POMO pushers back into the MKTS –and slam them into the I.T. low. We’ll see ,maybe it doesn’t make it to the $1425+ area

  98. TZ (7006)

    Boy, being down to core only feels pretty bad right now. I’m hoping that’s a sign of imminent selloff and not just the last couple of months continuing to punish anybody who tries to pick a top.

  99. TZ (7006)

    ONLOOKER,

    Funny. You posted almost the exact comment as me at DOCS tonight. I guess the vibe is going around. Probably a sign of close turnaround.

  100. Steven

    Fusby,

    There was an article on Zero Hedge that claimed JPM purchased 1/2 the copper in London and the speculation was that they did it specifically to hedge their silver short position. I personally think their silver short position is a combination of hedges for producers and outright naked shorts. They have made billions over the years. It will certainly be interesting to see what happens at the CFTC hearing re: position limits this Thursday.

  101. Gary

    Check your spam filters. I sent the passwords to you yesterday. If you still don’t have it send me an email to [email protected] and I will repoly back to your email with the codes. Usually that will make it past the spam filters.

  102. Robert

    Insider trading is still rampant and, obviously (I’m probably preaching to the choir here) is going no where.

    Last night I was researching “unusually high put volumes”. What I found (this has been an extreme bull market lately so there weren’t too many stocks that this alert came up for) was Best Buy. Sure enough I wake up this morning, check Bloomberg, and Best Buy will miss profit estimates by 4.4%. Now they just opened down 15.5%.

    Those insiders just made millions with their options. It pisses me off…

    Here as of yesterday, Best Buy had a 3-month high put volume:

    http://www.marketintellisearch.com/articles/1087247.html

  103. DG

    TZ: How do you access Doc’s blog? Is it not public like Gary’s? All I could find was stuff from 12/7, yet you said you posted last night, and just two comments even back then at that. Can you post a link or something? Thanks.

  104. Robert

    9/11 put options are a whole new story, and IMO really open up the picture into the corruptiveness of Wall Street. It is estimated that $15 billion was profited off puts pertaining to companies affected by 9/11 that were placed days/weeks prior to the attacks.

    Dylan Ratigan said that 9/11 amounted to “the worst case of insider trading ever.”

    http://www.globalresearch.ca/articles/HEN204B.html

    This is very sad IMO. Think of if the families of the victims in the towers, as well as the families of the soldiers that have died knew about this?

  105. Onlooker

    DG

    Members can post comments on the daily newsletter posts, so if you’re not a member you can’t see them. That’s where I commented and so it would appear that TZ has a membership too.

  106. Gary

    I always thought that was pretty strange that a plane crashing into the top floors would bring down the entire buiding.

    I don’t htink there has ever been any other time in history where a building collapsed because of a fire in the top floors.

  107. Leo

    Gary, aren’t you sick of the fact that anyone in the media who so much as hints that skyscrapers do not collapse like THAT is immediately branded a loon and a truther?

    I do not have a pet theory on the subject but as an engineer I am absolutely convinced that 3 tall modern steel-reinforced buildings would never just neatly fold in their footprint leaving surprisingly little debris.

    And someone WAS buying TONS of puts on AA and UA just a few days before the event. What a coincidence…

  108. Jennifer

    The towers collapsed because of a structural phenomenon known as “pancaking”.

    The jet fuel fire melted the steel that was at the point of impact. Steel melts at relatively low temperatures. Buildings are designed so that if one structural support fails, a redundancy of systems allows the building or story to survive long enough to be successfully evacuated. Unfortunately the scope of the fire was such that all redundant structures were breached at the impact level, failing in a quick cascade. Once the structural integrity totally failed at the level of impact, the higher floors collapsed into the lower floors over-stressing different points of support in the floor below, in turn bringing those floors down on floors below them differentially stressing those supports in those floors to failure and on and on, like a vertical line of dominos. This is not the first time a building has collapsed this way. It is only the most well known.

  109. aaronpalang

    Jennifer, you are confusing temperature with heat, rendering your whole argument regarding the melting of steel, moot.
    There is ample proof on the internet that shows how this was infact misunderstood and falsely dispayed.

  110. Jennifer

    I am an architect, and we studied these types of small footprint collapse scenarios quite thoroughly in school years before the towers.

    I find it strange that gary refuses to believe in a gold price-fixing conspiracy but is all over WTC conspiracy theories. πŸ™‚

  111. Onlooker

    Oh come on Poly, you didn’t want a long, involved 9/11 conspiracy theory discussion here? LOL!

    OK, back to the deflation/inflation debate people. Or maybe silver manipulation. πŸ™‚

  112. pimaCanyon

    Jennifer,

    If you look at videos of the Tower’s collapse, you’ll see little puffs coming out of the corners of the building many floors below where the collapsing is occurring higher up.

    Also, how do you explain the very obvious demolition of building 7, across the plaza from the Towers? That had to be done by demolition.

    Demolition is something that takes weeks to prepare, so whoever rigged building 7 for demo knew something a long time in advance of the planes flying into the Towers.

    Moreover, the strike on the Pentagon is even weirder. NO EVIDENCE OF JET PLANE WRECKAGE ON THE GROUND? That’s never happened before, there is always some wreckage lying around, tail fins, wing parts, fuselage parts… But at the Pentagon, nothing! And the plane would have had to have done this amazing 270 degree turn at high speed to hit where it did, flown by a person who had never flown commercial jets.

    Finally, how is that none of our fighter jets made it into the air to intercept any of the planes after the first? We have the most sophisticated air force in the world and we couldn’t get any fighter jets into the air to defend New York or the nation’s capitol?? WTF!!

  113. Jennifer

    Well we need something to argue about to pass the time while we sit on our hands for a few weeks waiting for gold to do something. And your structural engineer title does not scare me. I have to review your drawings remember, and you don’t always get it right! But I guess we should agree to disagree and get back to the money.

  114. Leo

    Jennifer, could you please tell me as an architect how tall should the pile of rubble be when a 110-story structure collapses?

    And if there are any police officers out there, could you please tell me how it is possible that a crime scene where 3000 people died would be immediately dismantled and recycled before any criminal investigation could take place?

  115. Jennifer

    @ pimacanyon. I really was just poking around for fun and didn’t want to get drug into a full scale discussion on this because neither side is going to be able to change the other sides mind for sure.

    But those little “puffs” coming out of the corner of the building are most likely caused by the air that is being compressed by the collapses is creating higher air pressure inside the building and being forced out of the building at weak points or ventilation openings.

  116. aaronpalang

    I have to agree, we all have already made up our minds about what really happened. No amount of facts or data will deter us the other way. This is a sensitive issue, and should be left alone.
    Much like the belief in manipulation πŸ™‚

  117. Daniel

    Jennifer is right on the money on this one. (and I am one prone to giving conspiracy theories a fair shake before making up my mind)

  118. n1tro

    I believe the reason why the airforce didnt automatically intervene is because the rules of engagement was transferred over from the military to president a few months prior 9/11.

  119. Bede

    I think there’s a conspiracy to clog up this blog with off topic and pointless debate. This is a blog about investing. Please stick to the topic.

  120. alex

    the only thing I wanted to add to that conversation was when Leo said…

    And someone WAS buying TONS of puts on AA and UA just a few days before the event. What a coincidence…

    If I remember correctly, that is true , but those trades were traced to taliban and the money was traced and confiscated. Now I’m not saying I do or do not believe this or that, just that I remember hearing at that time that airlines were HEAVILY shorted and a ton of money was made in the capitulation…but it was traced to those accused of the crime.

    you gotta admit, Jennifer can hold her own in a debate πŸ™‚

  121. Gary

    Not that I believe one way or the other. But how did building one come down when it wasn’t hit by anything?

    As far as I remember it also collasped. Now if it was crushed under the debris of the other buildings that would be another story. But I don’t think that was the case, was it?

  122. thedocument

    Actually, structures do come down due to fire, which is why structural steel is fireproofed in just about every building in the U.S. The fireproofing is usually one or two-hour rated, depending on the size of the building… to give people time to get out before the building comes down. In fact my father, who is a structural engineer, was saying on the morning of 9/11 that the firefighters shouldn’t be allowed in the towers because there was a danger the buildings would come down on them.

    That said, there is still a plethora of fishy circumstances surrounding that morning.

  123. Jayhawk91

    Gary-

    You meant building 7 and I agree it was odd. Some pretty important govt agencies and some critical paperwork resided in 7.

    So still no swing low on gold, and this rally looks to be running out of gas. ZSL looks good here-I’m in for a small portion

  124. pimaCanyon

    Jennifer,

    Okay, the puffs have an explanation. (You are the first person I have heard or read that states that jet fuel burns at a high enough temp to melt steel, but since you are an architect, I will take you at your word.)

    But how do you explain building 7 coming down at 5 o-lock in the afternoon, hours after the Towers collapsed?

    And what about the Pentagon, where’s the wreckage from the commercial jet?

    And how is it that our air defense system could have such a colossal failure?

    Maybe some of these have perfectly reasonable explanations. But ALL of them?

  125. JenniferD

    Gary, do you mean building 7?

    Building 7 was hit by debris and caught fire early in the morning. From what I have heard, the sprinkler system was a dry pipe type system and needed to be pressurized manually, and it was not. There were a few attempts to put out small fires in the building but the building was evacuated successfully and attention was needed elsewhere. The building burned from early morning and finally collapsed around 5 that evening. If that building was demo’d by terrorists, they were really bad at what they were doing.

  126. aaronpalang

    Patience πŸ™‚
    It took us 41 years to realize that we were all lied to about the Gulf of Tonkin, it will probably take us that long if not more to find out the truth on 9/11.

  127. JenniferD

    Pima – I don’t know anything about the Pentagon building. Large scale structural failure is much more interesting to me then mysterious holes. I have nothing to add to that discussion one way or the other.

  128. Shalom Bernanke

    Merry Christmas everybody! I haven’t been doing any trading, instead enjoying this time off (with very juicy profits already booked for the year).

    Regarding 9/11, my thought it was an inside job. I’ve never seen buildings collapse straight down (and get demolished to dust) except in demolitions. Some say Israel used 9/11 as a false flag attack to get us into wars in the Middle East. After all, Mossad’s motto is “through deception we wage war”. Perhaps we’ll know for sure one day soon.

    Good luck to those trading!

  129. Onlooker

    As a retired Air Force pilot I can tell you that it doesn’t all happen like in the movies. πŸ™‚

    You wouldn’t believe the amount of bureaucracy involved, and it’s really not hard to believe that REAL people would not instantaneously decide to intercept and shoot down a domestic airliner. It’s not as clear cut as you might think. And the “fog of war” is quite disorienting.

    No mattter how sophisticated the communications technology, when you have something like this develop, when nobody was on guard for it, and so many agencies, with a long chain of command, etc., it ends up taking quite a bit of time to take real action. Again, it’s not like in the movies.

    All that said, I’ve never spent huge amounts of time studying this whole thing to become an expert. So that’s all I’ve got to say about it.

  130. pimaCanyon

    Thanks for the reminder about the Gulf of Tonkin. It would be hilarious if it wasn’t so tragic, that lying to start a war seems to keep playing itself over and over and over again.

    Meet the new boss, same as the old boss… get on my knees and pray, we won’t get fooled again!

  131. DG

    I was waiting for Shalom to chime in. (Seriously, I knew he’d post) The Jews did it! What took you so long to blame them?

  132. TZ (7006)

    10yr rates keep ticking higher and higher. Straight up since QE2. The bluff is starting to be called!!

    Meanwhile stocks blatently ignore this situation as they have done many times in decades past…until they don’t. A powder keg is building up here.

    Finally, mortgage rates appear to have definitively bottomed and turned this time as the world no longer has an appetite for US govt debt (it’s now up to the FED to buy). As rates rise, it marginally lowers the ability of debt to finance or carry debt on such overpriced real estate (remember my rent times 100 metric = sale price). Thus, the sharply increasing mortgage rates are now slowly squeezing out and starving real estate. The next wave down is coming.

    Good mortgage rate link to bookmark:
    http://www.bankrate.com/funnel/graph/

  133. DG

    Oh, my mistake. You had said it’s the “Jewish Mafia” who caused the economic problems we now face. If we just got rid of Israel and the Jews the world would be so much better off…Oh wait that’s been tried. Maybe stop blaming others for the anger and frustration in your life.

    (last post—feel free to fire back unchallenged.)

    Paranoid Pie Hole

  134. Avann

    Yup, and Kennedy was shot by a magic bullet, there are UFO’s, X-Files was based on REAL cases and BIG BROTHER is indeed watching us.
    As a matter of fact … this blog is now on their high alert radar.

  135. DG

    Don’t worry Mr Mom. This’ll pass quickly. Most people here are pretty market savvy and stick to the point of the blog.

  136. aaronpalang

    Im just eager to see what this FOMC brings…Im kind of getting tired of seeing the SnP move higher day after day… Best Buy should have done it, but nope…up we move again!

  137. pimaCanyon

    Well, I am not a Jew hater, but I do have to wonder why the US gives the equivalent of over $2000 to every Israeli citizen to Israel every year in the form of “foreign aid” when we give next to nothing to surrounding Arab states. How does this enhance our national security??

    (I forget the name of the guy in the US State Department who some years ago said “We can’t kill terrorists as fast as the State Department is creating them.”)

    Okay, last political post of the day… Trading is a little boring today, everyone waiting on FOMC–as if anything Uncle Ben says could possibly come as a surprise!

  138. Shalom Bernanke

    DG,

    That’s right Mishpucka, but that was a different conversation. I see we’ve read our Hasbara manual!

    Readers should search “Hasbara” to read up on what we’re talking about.

    Israel is a terrorist state and anybody that wants can see videos all over the internet. Our “ally” doesn’t give anything to the US, while we just gave them $3 billion worth of fighter jets JUST to get them to stop building illegal settlements for only 60 days. The relationship is abusive to Americans and most are still unaware of just how bad it is.

    That’s changing though. Until 2 years ago, I believed the BS myself.

  139. DG

    TZ: Yeah, the rise in rates is alarming. At the same time, though, the “death of the bond market” is now consensus based on the sentiment polls. So do we just bounce to relieve that bearishness, or start a new leg higher in bonds? People have been calling for big headline inflation for long time and that day of reckoning just keeps getting put off. I can’t see why we can’t do another leg higher in bonds to at least challenge their price highs…?

  140. Razvan

    i like it that we are able to discuss other topics besides investing especially when there isnt much action in the market. It gives the blog a more homey feeling. If you are looking for a stiff blog that always stays on topic why dont you go read the wall street journal.

  141. Leo

    Pima, check your facts. The US gives about the same to Israel and Egypt as a result of the 1979 Camp David agreement (another misguided US attempt to buy peace).

    Who do you think funds the Palestinian authority? $500 mil a year of the American taxpayer money.

    And so you really think it was the “surge” in Iraq that reduced the violence? It was the payments to the Sunni “Awakening councils” that convinced the bastards to stop causing mischief.

    You just add up all the money the US sprinkles around the Arab world (and add into that our “aid” to Pakistan) and you will sing a different tune…

  142. Leo

    Well, Shalom, Israel might me a terrorist state (depending on how you define “terrorist”) but so is the US of A. With the slight difference that Israel has to deal with genuine existential threats while the US bombs the hell out of people it does not like just to make itself feel better…

  143. Gary

    Interesting. The melting point of steel is about 2500 degrees F.

    The open air burning temperture of jet fuel is roughly 500 degrees F.

    Unless there was something in the tower that burned a lot hotter than jet fuel it seems unlikely the building collapse was caused by fire from the planes.

  144. Leo

    Gary, the problem with steel is that although it melts at rather high temperatures, it softens at much lower temps. The official claim is that the structural steel was weakened by the fire, not melted. This would have been somewhat plausible if it weren’t for the sheer mass of steel in the frame of the building. The amount of fuel necessary to heat up thousands of tons of steel to the point of structural failure is enormous (and it never happened in all the fires heretofore).

    Besides, steel is an excellent conductor of heat which makes it near impossible to heat up 300ft of steel by a localized fire.

  145. Shalom Bernanke

    Teaching jews how to fight and influence opinion of Israel, regardless of the facts. They recommend that no matter the truth, “say it first, say it loud, and say it often”. As many as 60% of Americans will believe it even if it’s not true!

    Leo,

    It’s all in here, but better read it before it gets scrubbed from the internet:

    http://www.middle-east-info.org/take/wujshasbara.pdf

    The first several results of the google search are attempts to cover up it’s purpose, but the cat is out of the bag.

    P.S. I agree the US has become a terrorist state and I don’t like it. That does not remove the fact that Israelis have attacked their allies on more than one occasion when they thought it would be useful. Why try to justify it?

  146. Shalom Bernanke

    By the way, how did we get on the discussion of 9/11?

    Everybody is entitled to their opinion, but the “dancing Israelis” said they were there to document the event (they were stationed with cameras before the towers were hit, later arrested, then Bush let them free).

    Search “dancing Israelis”. Why would they be so happy that their ally was getting attacked?

  147. Leo

    SB, thanks for the link. I am going to read this.

    But no matter what the content of this document, you have to admit that Israel and the Arabs are engaged in a PR war and it is the dirtiest war imaginable on both sides.

    If you cannot think of any examples of the Arab duplicity just let me know, I will be happy to oblige.

  148. Daniel

    But jet fuel wasn’t the only thing burning, notes Forman Williams, a professor of engineering at the University of California, San Diego, and one of seven structural engineers and fire experts that PM consulted. He says that while the jet fuel was the catalyst for the WTC fires, the resulting inferno was intensified by the combustible material inside the buildings, including a large quantity of rugs, curtains, furniture and paper. NIST reports that pockets of fire hit 1832°F.

    “The jet fuel was the ignition source,” Williams tells PM. “It burned for maybe 10 minutes, and [the towers] were still standing in 10 minutes. It was the rest of the stuff burning afterward that was responsible for the heat transfer that eventually brought them down.”

  149. Ben

    Gary,

    If one is already at a core position, as you are, how do you profit if the swing low is in place and the gold market rises for a couple weeks prior to dropping into the intermediate low? If it’s too late to “add on” to one’s position, then at the cycle high in two weeks, one’s already cut one’s position to the bone, and therefore all gains between now and then are erased. Maybe it feels better go get some gains on the way back up, but they will certainly be lost if the intermediate low is coming soon, right?

    I guess the exception would be if the intermediate low is higher than the current cycle low a few days ago? Perhaps that’s where the wisdom lies when dealing with a bull market?

  150. Shalom Bernanke

    Leo,

    Good point, and I’ve thought it through, except Arabs do not control the media and especially in the US. Israel-firsters do, however, so Americans in particular never get anything but propaganda.

    I’ll keep an open mind and read whatever you post, as free speech and open discussion should be our top priority.

  151. Gary

    Ben,
    I’m no longer trying to catch anymore of the rally as you say. If it continues higher then I will just let my core position do it’s job. If it continues higher then reverses (which seems likely) I will ride the core through the correction.

    I have always intened to hold my core position simply because the risk is always there that a cycle could stretch long or we could see the dollar collapse. My core protects against that.

  152. DG

    Churchill was thrilled when Pearl Harbor was bombed. Why? Because it got the U.S. into the war. Churchill did not wish the U.S. ill, but he sure the hell was happy when we got dragged into it…and so was Israel, of course. Same reason. Those damn Brits! Some ally! Happy that PH got bombed!

    Gosh, and countries use misinformation and dirty tactics to defend themselves? Shocking! (And by the way, I do not like Israel or their policies, but some of the arguments posted here simply make no sense).

  153. David Kafrick

    Ben,

    Very good points. I’ve always wondered what is the reasoning behind leaving a “core” position on… unless you believe the odds are very high that the next intermediate low will be higher than where we are today, or you will sell all your position at the next high, maintaining a core position makes no sense. Maybe it is just a psychological thing.

  154. Gary

    The only reason I would reduce my core position further would be if gold and miners got extremely stretched above the 200 DMA.

    That would require a considerable rally from here to reach that level though. So for now I’ll just sit with what I have.

  155. pimaCanyon

    Anyone take a look at IAU, a gold etf? Yesterday’s volume on that etf is off the charts, about 7 times normal. GLD and SLV had normal or sub-normal volumes yesterday, so I wonder what was up with IAU??

  156. Gary

    David,
    The core is there to protect against an upside surprise.

    One could go to cash but they would have to be ready to get back in at a moments notice if conditions warrant and usually that entails a premarket gap up so you would have to chase.

  157. aviat72

    I find all this talk of demolition during 9/11 kind of funny since it misses a very basic question. Wouldn’t some one notice if a demolition team was putting charges and laying out wires? You have to drill holes in key areas; you need exact timing for detonation. And how could such an operation been kept secret?

    The trail to 9/11 starts much earlier and to anyone willing to dig in, the details are obvious. What I do cringe about is our inability to solve the root of the problem. But after a few generations of cold-warriors dominating US strategic policy, it will take one generation to turn the ship around.

  158. TommyD

    Shalom,
    Thank you for the handbook. There is a vote coming up Dec. 21 on the freedom of the internet with fcc regulations heading our way.
    History will call our limited freedom, in our sharing on the internet, as the Wild-Wild West days like the lawless outlaw days.

    Tom

  159. Shalom Bernanke

    “And by the way, I do not like Israel or their policies”, says DG

    Well then, we agree. If Israel did have a role in 9/11, it goes much deeper than “not liking their policies”. You’d agree with that, right?

    I DO hate criminals, and won’t look the other way just because he or she is jewish, but that does not mean I hate jews. Refrain from pulling the “anti-semitic” card every time someone says something you don’t like.

  160. Shalom Bernanke

    Anytime, TommyD. It’s an interesting read.

    I’m aware of the effort to clamp down the internet. Joe Lieberman is leading that charge.

    The truth is getting out, but it’s important that we all share information as much as possible, as quickly as possible.

  161. Jennifer

    Gary,

    Not to continue to beat a dead horse, but to address your comment… I think you are confusing the heat at which fuel will ignite (flash point) and the actual heat at which that the fire that was ignited by that fuel will burn. Jet fuel was the accelerant – it is really inconsequential that it was jet fuel, it could have been motor oil or gasoline or nail polish remover or burning wads of plastic. It was a burning substance that was in quantity large enough and burning hot enough (jet fuel will burn with a flame temp up to 1000º) to spread around and ignite all flammable material around it. This is where the real heat of a fire comes from. You can get your wood fireplace at home hot enough to melt steel.

    REGULAR OL’ STRUCTURAL FIRES ROUTINELY BRING DOWN STEEL BUILDINGS ALL THE TIME. This is why building codes REQUIRE that all exposed steel in a building be fireproofed.

  162. Gary

    Jen,
    Not without a blast furnace you can’t.

    In order to get the fire hot enough to weaken steel you would have to have lots of oxygen. Not sure the inside of a building would be the best place to stoke a fire to extreme tempertures.

    BTW what other skyscrapers have collapsed from a fire? I found several links on google for fires in skyscrapers but none of them collapsed.

  163. Ben

    David, I like Gary’s rationale that it is largely protection against the collapse of the dollar or some other outlier. Given considerable upside stretch, my “core” would be bigger than before, so some additional trimming would be warranted.

    The basic premise here is not to be caught out when the dollar starts it’s decline to the 3-yr low. I’d hate to be on the outside looking in when that happens.

  164. TommyD

    Gary,
    Simply put, building 7 was a planned take down. Knowing that, all 3 were taken down. That’s the easiest way to explain.

    all wtc buildings were shutdown for maintenance the weekend before, and under the direction of Bush’s little brother. That would have been the time to rig the buildings.
    Oh, building 7 had all the court material for the Enron case,, held at the fbi office…

  165. Gary

    Jen,
    With all due respect the link just proves it’s possible in theory but doesn’t show any examples of skyscrapers collapsing due to fire.

    I do however see many examples of skyscrapers suffering massive fire damage but no collapse.

    Do you have any examples of large high rise buildings collapsing due to fire damage? I’m just asking because I wasn’t able to find any with a quick google search.

    Boy we must be bored if this is all we can find to talk about πŸ™‚

  166. Shalom Bernanke

    Exactly, the fact they could “pull” building 7 (in Larry Silverstein’s words) means it was already wired and ready.

    Building 7 was not even mentioned in the fixed 9/11 commission.

  167. Nike Boy2008

    getting back to business hehe –

    18M SoS on gold so far…

    I believe that we had a SoS day of 24M a few weeks back and gold got trashed a few days after that…

  168. Shalom Bernanke

    “Could one of the most stupid and mentally challenged primate to ever walk on the face of the Earth pull out the greatest inside job ever?”

    Only with the help of Mossad.

  169. DG

    SB: C’mon. You can’t tell me you don’t have a predisposition against Jews. “Shalom” Bernanke? “Jewish Mafia?”” Israel caused 9/11?” Believe me, I do not play the ethnic card whenever someone says something I don’t like. In fact you are the first person in my life I have ever dialogued like this with. This is not a “thing” with me. The “thing” with me is that there is so much corruption, pain, and suffering in this world due to greed, hatred, and selfishness, that, well, I just got sick of seeing it. I find it impossible to believe that I have misread everything and that you are not a bigot, but if not, well, then I apologize (really!), but you would do well to stop picking out specific ethnic groups as nefariously running things (I forgot to list your claim that the Jews run the media as well).

  170. Shalom Bernanke

    Clam up, DG, nobody’s buying your Hasbara BS. You’re terrible at it.

    Jews do control the media, look it up. They control the Fed, JPM, Goldman, etc. And yes, Rabbis were busted in an organ trafficking ring (in NJ) this year. Myer Lansky was a jew, and so was Madoff.

    You’d do well to quit insinuating I hate jews because I point out some facts. Instead, you might start naming the criminals.

    I hate criminals. Hang them all, regardless of race or religion.

  171. David Kafrick

    What the US has done under the previous administration should be a much more important subject for you if your thing is just that you hate criminals regardless of ethnicity and religion.

  172. Jennifer

    Gary:

    You wont really find many modern examples of actual high rises brought down by fires, because of the effectiveness of fireproofing on steel members and the widespread use of sprinkler systems. The reason that was given for the failure of the fireproofing at WTC was that it was actually blown off the members by the explosion at the aircrafts impact so they were left unprotected. There are, however, early examples when iron skyscrapers first started springing up. I cant remember specific building names right now, but I will go back into my old Arch history books and find you some examples (I can email them to you so that the blog doesn’t have to be cluttered with this stuff). There were several.

    These days, fires that bring down steel in buildings are generally in low rise buildings that aren’t adequately protected. Usually roof beams, trusses and columns will weaken and fail in these cases.

    There are, however, several modern examples of pancake collapse (not necessarily caused by fire) in high rises, which cause buildings to fall into their own footprint. I will send you some of these also.

  173. DG

    Why point out that Madoff was Jewish? What does that have to do with anything? He also had white hair. He also bankrupted several Jewish organizations. If he had just bilked non-Jews you’d have said “Jews always stick together. They’re so clannish.” Instead you say “Jews even prey on their own kind. How disgusting!” There’s just no winning with people like you. Hate, blame, and hold a firm opinion first and justify later. I guess the Jews are running North Korea too. And the Sudan. Things are a mess everywhere. You find some Jews involved in a mess somewhere and say, “See!” In case you haven’t noticed greed, self-interest, corruption, lying, etc. is not restricted to one race. No need to point out the criminals’ ethnic group. That’s a big deal for you. When I see a criminal, I see a criminal. You see a race and then tar the whole group.

  174. Shalom Bernanke

    I hate Bush too, David, and especially that he was under Israel’s control like our current POTUS.

    Wake up Americans! Look at the map and see our military is being used as Israel’s shield. This is why our troops are never coming home, Israel needs us as a buffer (and aggressor). What better way to expand their empire than using another’s army?

    The controlled media uses the word “terrorist” 20x/hour to keep people supporting the wars, even though that support has shriveled by any measure. It’s all BS.

  175. Shalom Bernanke

    Again, DG, it’s not about jews, it’s about criminals.

    Many criminals are jewish. Do you deny that fact? You’re the one trying to make this an attack on jewry (as per Hasbara tactics).

    jew, white, black, asian doesn’t matter. Criminals get punished, and jews are not exempt.

  176. Shalom Bernanke

    P.S Madoff ripped off all kinds of people, not just jews. However, he did only fund jewish charities (that he later bilked).

    And Ruth Madoff blamed “the Goyim” for good ole Bernie’s downfall (after 50 years of scamming and never placing one legit trade).

    Look it up before you get back to me, but that criminal should hang.

  177. Poly

    As a non-partial observer to this “debate”, I would agree that “Shalom” is rather clearly an anti-Semite. I doubt your arguments to the contrary are winning anybody over.

    There are plenty of websites and forums where this discussion is welcomed, but as blog about gold and investing, I too would appreciate it if the subject was dropped.

  178. DG

    If criminals can be found in every ethnic group, why point out the ethnicity? Do you always point out that the Enron guys were Christian?

  179. Shalom Bernanke

    I’ll leave it at this, Israel is a terrorist state, even committing terrorism against it’s allies.

    That was the topic, but Hasbara teaches DG to get the discussion on anything but, like past presidents, for example. All the staunch supporters of Israel could join the IDF like Rahm Emmanuel did in 2006 (even though we had 2 active wars at the time). Traitors should hang, says this red-blooded American!

    Now, shall we get ready for the 2:15 announcement?

  180. DG

    Sorry, Poly. I am about done here. I just can’t stand not standing up to this kind of crap. There are enough people who just smile and turn away when someone spews this kind of vomit. I don’t want to get tedious about it, though. I think the situation is clear, and I’m done.

    Now let’s have gold break down so we can get back to basics!

  181. DG

    David K. I’ve been down this road with him. It really goes nowhere because you assume rationality. Unfortunately, the heart leads the intellect when the feelings are strong enough. We tend to see what we want to see under those circumstances (the psychology behind this phenomenon is actually what my 15 year long professional consulting business is based on.) It’s pretty fascinating stuff, but until someone is willing to see something a different way, they just won’t, and only see the things that support the view that they are already committed to. very dangerous for a trader, I might add!

  182. pimaCanyon

    SB,

    The problem with saying “Jews control the media” or “Jews do this” or “Jews do that” is that you are blaming an entire group of people for something. The group does not control the media. Several individuals control the media.

    We could say “Men control the media”, therefore all men are bad.

    The point is when you start labeling people by their ethic group or skin color or religion and then pointing out the misdeeds of those people, the implication becomes EVERYONE in that group is bad.

  183. Shalom Bernanke

    David,

    How does America (under control of Israel-firsters, btw) being a terrorist state make it ok that Israel is a terrorist state. They both have criminals in charge that should be punished.

    The only difference is Israel attacks the US (USS Liberty for example, and possibly 9/11), while we give them loads of taxpayer money all the time.

    Why do you defend Israel while trying to throw America under the bus? What do you gain? It makes you look like a traitor.

    Israel-firsters in our government must go as well. I know your reading comprehension is limited, but try not to ask the same question a third time.

  184. TommyD

    Zionism, Communism came from the same think tank. Any rabbi that uses the Talmud and ‘The Protocols of the Elder’s of Zion’ are preaching SATINS word and not GOD’S WORD. That is my belief and say all that you wish about me. I was Baptized and raised to believe in the Holy Mother and in Gods only Son, Jesus.
    There is evil and there is GOOD.

  185. Leo

    Is there some unusual solar activity today? Every jew-hating nut came out of the woodwork on the blog to spew their venom.

  186. DG

    Leo and Poly: It’s always been interesting to me that people who are into gold also tend to be into conspiracy theories, owning lots and lots of guns, anti-various ethnic groups, etc. I guess maybe it’s the “into” part. I am into gold now because I think we are potentially going to hell, so maybe the guys who have been into it for decades are more fringe? I am politically VERY conservative but am embarrassed by some of my “bedmates” (as in “politics makes strange bedfellows”) It really does seem that liberals are soft hearted and somewhat mushy brained and conservatives are generally more flint-hearted. A very interesting recent multi-year study actually showed that conservatives have much more of a sense of fear and sense of personal threat as they move through the world, which explains the big defense budgets, blaming others for their woes, etc. The human mind is quite the labyrinth. I find this stuff fascinating.

  187. Leo

    DG, the only reason I am in Silver (not much in gold anymore) is because as Gary says, this is the only real bull market out there.

    I am very skeptical about human nature and I think we are going to do ourselves in before too long, mostly as a result of rampant stupidity (effervescent samples of which were on display earlier today on these pages), but until then I am very much a “live and let live” kinda guy, which tends to manifest itself in somewhat leftward leanings. The only people I actively dislike are those who would impose their ideology (whatever it happens to be) on the rest of us.

  188. Leo

    oa, if flat to slightly down is not bad in your book, then yes, not bad. I haven’t made a cent in a week. Can’t you tell I am massively bored today?

  189. DG

    That’s interesting, Leo. I would say the live and let live philosophy is more conservative. I resent the gov’t telling me what to do and find their liberal policies the opposite of live and let live. Ordering me to wear a seat belt (just a trivial example). I’m an adult for cryin’ out loud and should be able to make that choice without gov’t mandates. I am in favor of extremely limited gov’t power, which is usually labeled right wing.

  190. David Kafrick

    I am very much for individual freedom, liberal economics, small government, separation of religion and state, against nationalism and patriotism, against religious tax exemptions.

    What should I label myself?

  191. Leo

    DG, if most people were brighter than average (ha-ha) I would agree with you, I am generally not in favor of the authorities telling me what to do (obviously, I am MUCH brighter than average). The trouble is that at least a half (actually, exactly a half) of the population has below average intelligence which interferes with their ability to make sensible choices. The vast majority of people do not have enough money to retire on when the time comes and most people lead unhealthy lives and obscenely decrepit by 60 which is why medicare is bankrupt. So what should the govt do? Let all those morons die in misery? Or should there be a safety net? and if there should be SOME safety net where do you draw the line?

  192. Daniel

    Human minds, behavior, rationalization, etc. is extremely fascinating stuff. While different than normal for the blog I am somewhat enjoying the fracas!!

  193. Leo

    Driver1, what a gentle soul you are! I would not be a bit surprised to find out that you are an exemplary Christian too!

  194. David Kafrick

    As much as I am for small government, I have to agree with Leo’s point about the government helping people make some decisions, simply because most people are not well educated or intelligent enough to make rational choices.

  195. Redwine

    Leo

    “I would not be a bit surprised to find out that you are an exemplary Christian too!”

    I see hypocrisy is alive and well.

    “The trouble is that at least a half (actually, exactly a half) of the population has below average intelligence”

    and irony as well. I think you meant below median intelligence. Sorry, couldn’t help myself.

  196. DG

    I think it’s a question of which set of bad conditions you prefer: Small gov’t which lets people harm themselves, and doesn’t help those in real need or too much gov’t which abuses power and obliterates personal freedom and consequences for one’s actions. My opinion is that there is no getting it “right” because as long as human nature is the way it is, whichever side you opt for will get abused and overdone. Once gov’t is given authority they only expand it until you get…well. what we have now, which I think is ridiculous. No gov’t agency has ever voted itself out of existence! I guess the set of problems that comes with small gov’t is preferable to me than the set that comes with expansive gov’t. I believe we are about to witness the collapse that follows decade of too much gov’t

  197. Poly

    DG,

    If only there was a true balance we could all agree on! Unfortunately, depending on your socioeconomic position, that level or balance is always going to be vastly different.

  198. Redwine

    The trouble with liberals is they think forcing other people to give money to the government is charity (safety net).

    It’s interesting that conservatives give far more to real charity than liberals.

  199. Leo

    Redwine,

    1. Yes, it was sloppy of me to say “average” although assuming normal distribution (I am not sure it is a valid assumption) there would be no difference between median and average.

    2. As far as charity is concerned, consider this. For a very long time education and healthcare were entirely a charitable enterprise shouldered by the church and what were the results? Today both are funded by taxes and in most civilized countries the outcome is much more convincing.

    We could (and should) argue about where do draw the line between to much government or taxes and not enough, but I suppose there is no argument that there should be a line somewhere between 0 and 100%.

  200. Redwine

    Leo

    All the arguments call for between 0 and 100 percent. But I do think the true contemporary definitions of right wing and left wing are represented in this 0 to 100 percent scale at the extremes. Right = no government and Left = total government.

  201. Poly

    “Right = no government and Left = total government.”

    Surely we’re not limiting the definition of left/right to the size of the government! Just one small aspect in my book.

  202. Redwine

    Leo

    “2. As far as charity is concerned, consider this. For a very long time education and healthcare were entirely a charitable enterprise shouldered by the church and what were the results? Today both are funded by taxes and in most civilized countries the outcome is much more convincing.”

    I have considered this and conclude that the free market provides far better quality in both areas. In all areas in fact.

  203. Natanarchist

    Indian Chief ‘Two Eagles’ was asked by a white government official, ‘You have observed the white man for 90 years. You’ve seen his wars and his technological advances. You’ve seen his progress, and the damage he’s done.’

    The Chief nodded in agreement.

    The official continued, ‘Considering all these events, in your opinion, where did the white man go wrong?’

    The Chief stared at the government official for over a minute and then calmly replied. ‘When white man find land, Indians running it, no taxes, no debt, plenty buffalo, plenty beaver, clean water. Women did all the work, Medicine man free. Indian man spend all day hunting and fishing; all night having sex.’

    Then the chief leaned back and smiled. ‘Only white man dumb enough to think he could improve system like that.’

  204. Redwine

    Poly

    Since all areas of important left – right debate center around questions of legislation and to what extent government is involved, I would argue that it’s the only clear way to view the opposing sides.

  205. Poly

    Left/Right is a definition of ideology, the size of government just one aspect of such. Fascism is labeled right wing and at it’s core is a large central governing body!

  206. Leo

    Redwine,

    Then maybe you could enlighten me how in a free-market system most people would be able to afford education and healthcare?

    And BTW, should we privatize fire brigades, the police and FEMA? The idiots who insist on living in the potential natural disaster areas should know better. Fuck New Orleans!

  207. Redwine

    That’s my point. The definitions get twisted by conventional wisdom. Hitler is defined, by the left, as right wing even though he was a left wing politician (Socialist Workers Party). He nationalized private industry, etc.. The fascists were also left wing but have been ‘labeled’ right wing.

    I prefer not to believe in fairy tales.

  208. Poly

    “Lefty” LOL, Not that I care, but rather quiet the contrary!
    Plus I’ve stated no ideological opinion except to argue your definition of both Left and Right.

  209. Redwine

    Leo

    “And BTW, should we privatize fire brigades, the police and FEMA? The idiots who insist on living in the potential natural disaster areas should know better. Fuck New Orleans!”

    Yes we should. I like that you use FEMA as an example of how great big government is.

    With a free market health care and education would be so inexpensive that charity would fill the gaps left by the super prosperous economy. Ever since the feds got involved in education it’s been in a bear market. Same for healthcare.

  210. Gary

    Amazing we managed 300+ comments on religon, 9/11 and left and right wing government.

    Anyone have anything to say about the markets?

    That’s a hint it’s time to change the subject πŸ™‚

  211. Leo

    Redwine,

    “With a free market health care and education would be so inexpensive etc.”

    Go easy on that red wine, dude, you are on the verge of delirium here.

    In a free-market healthcare system there is no limit on what doctors and pharma would charge you and when you need them you are not in a position to argue about the price. And if you can figure out how to make open-heart surgery cheap you can win a Nobel prize. And I do not think insurance companies would bring the prices down, their only reason for being in business is to bring the profits up. It is a market after all!

    In a free-market education system the only education available to the poor will be reading the holy book (which would keep the poor permanently in their place).

    Be careful what you wish for…

  212. Leo

    It was a slow day after a slow week and my partner is studying for the exam and I am nursing a twisted ankle and am bored, so the most fun I can muster at the moment is to stir up trouble in cyberspace.

    My apologies to all the innocent bystanders…

  213. Nike Boy2008

    Hi Gary,

    On Oct 14, I believe that gold was at 1380-1390 and On Dec 14, we’re at 1395..

    it seems like gold is in a consolidation phase that has already lasted 2 months…and you are saying that this might go on until Feb 2011 because of the dollar?

    Do you think that the cycles are getting shortened due to the stimulus? and that gold will start it’s next move pretty soon (now that it has already consolidated for 2 months)

  214. Gary

    The trend has been to lengthen not shorten. So far we still haven’t seen anything that looks like an intermediate degree correction. It should happen with the current daily cycle.

  215. Redwine

    Leo

    “In a free-market healthcare system there is no limit on what doctors and pharma would charge you and when you need them you are not in a position to argue about the price. And if you can figure out how to make open-heart surgery cheap you can win a Nobel prize.”

    The limit on what can be charged is created by competition, not monopoly (government or otherwise).

    “And I do not think insurance companies would bring the prices down, their only reason for being in business is to bring the profits up. It is a market after all!”

    It’s not a free market unless you define free market as no or very little competition (which you might since it seems you received a government education). Insurance companies are severely limited on operating in multiple states and many states have only one insurance provider (government forced monopoly through regulation).

    “In a free-market education system the only education available to the poor will be reading the holy book (which would keep the poor permanently in their place).”

    No, what keeps the poor in their place is government/union/media indoctrination into collectivist ideology.

    “Be careful what you wish for…”

    It appears you’ve got your wish… and look where it’s brought us.

  216. driver1

    Leo, I would characterize myself as an agnostic. I don’t have any use for religion, as I think it’s a crutch and causes more harm than good. Perhaps when I get REALLY old I might change my thinking.

    Anyway, I think people are “wired” a certain way and their thinking can’t be changed through discussions. A major personal event is the only thing that will change someone.

    Now it’s time to do some downloading and see what the markets are up to.

  217. Gary

    It seems like there’s always talk of a short squeeze, usually at intermediate tops.

    I’ve often wondered if the smart money doesn’t leak these stories so they have plenty of gullible retail traders to unload their positions to.

  218. DG

    Gary: You suggested people take a vacation for 4-6 weeks. Maybe talking politics, etc. is what people do when the markets are on hold πŸ˜‰

  219. Nick

    Since Gary was clueless about Silver growing on plants, am assuming most others were clueless as well. This excess supply of Silver is going to be the catalyst for the intermediate low! πŸ™‚ (J/K)

    Great pics Gary!

  220. Steven

    Gary,

    What will be the tell in the next few days that the dollar is in a failed cycle? Will it be a move below 78.83 or something else? In other words what exactly are you looking for to determine if it is a failed cycle and the 3 year cycle has its grips on the dollar?

    Also, why do you think this may be a runaway move instead of a normal move into the final portion of the C wave?

    Thanks.

  221. David

    Redwine,

    You are confusing “conservatism” with “libertarianism”.

    There are plenty of conservatives who feel that this is a religious country and would have the government impose a specific set of religious beliefs and mores on the populace, i.e. creationism, abridgment of reproductive rights, and the legislation of morality, sexual and otherwise.

    There are also many conservatives who are quite selective about free speech laws — they believe in free speech for those who agree with them (In this sense, they are like some, but not most, liberals). It should also be remembered that the Bush administration attempted to roll back civil liberties in the wake of 9/11.

    You will also find that many conservatives believe in the death penalty. However you personally feel about the death penalty, giving the government the right to kill you is about as pro-big-government as it gets.

    The libertarian-statist axis intersects with the liberal-conservative axis. There are liberal libertarians as well as statist conservatives.

    The concepts should not be confused.

  222. Gary

    The 2b will be confirmed if the dollar breaks above 80.50.

    Whether or not the dollar is in a failed cycle will just have to be a judgement call as there is some leeway we have to allow for a stretched cycle.

    Hopefully I’ll know it when I see it.

  223. Bede

    Something Smells Fishy

    In short, a lot of the flashing lights technically that we observed last week are still very worrying for the risk-on theme.

    I start with precious metals which never invalidated the pattern of last Tuesday: Gold failed on the 61.8% retracement today, and posted a worrying hammer on the local high. We have a potential H&S in formation with the neckline support at 1,378 and the 50-dma right below. This set-up is quite concerning and if we go through those supports the move will be vicious. Again please understand that I am most sympathetic to the fundamental arguments to own Gold, but I am warning longs that a pull-back a relatively important magnitude could well be imminent if we don’t go bypass today’s highs in short order.

    http://www.zerohedge.com/article/something-smells-fishy

    with chart at:
    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/havenstein/Gold%2012.14.jpg

  224. Gary

    Bede,
    I think we are all looking for a pullback in gold by now and most people are probably back to their minimum core position.

    I don’t think you have to “warn” anyone at this point.

  225. Redwine

    David

    “You are confusing “conservatism” with “libertarianism”.”

    The only mention I made of conservative/liberal was in the context of charity based on a RealClearPolitics article about how conservatives give 30% more charity even though they are 6% less wealthy. I really don’t know what you’re referring to.

    “There are plenty of conservatives who feel that this is a religious country and would have the government impose a specific set of religious beliefs and mores on the populace, i.e. creationism, abridgment of reproductive rights, and the legislation of morality, sexual and otherwise.”

    Conservatives would fall far from zero government on my scale. Morality is already legislated (ie: murder is against the law), reproductive rights concern more than one life, unfortunately.

    “There are also many conservatives who are quite selective about free speech laws — they believe in free speech for those who agree with them (In this sense, they are like some, but not most, liberals). It should also be remembered that the Bush administration attempted to roll back civil liberties in the wake of 9/11.”

    George Bush isn’t what I’d call a conservative or even a neocon. Remember he pushed through that huge prescription drug benefit and started 2 wars. Traditional conservatives are anti war.

    ‘You will also find that many conservatives believe in the death penalty. However you personally feel about the death penalty, giving the government the right to kill you is about as pro-big-government as it gets.”

    Conservatives aren’t considered to be anarchists. The death penalty doesn’t require big government but I get your point.

    “The libertarian-statist axis intersects with the liberal-conservative axis. There are liberal libertarians as well as statist conservatives.”

    That’s why I tend to use a 0 – 100 percent scale for categorizing ideologies. The rest is all BS in my opinion. All that matters is how much government one wants, not what one believes. The more government they want, the more they want to push their beliefs onto others.

    “The concepts should not be confused.”

    This is not confusing at all.

    December 14, 2010 6:52

  226. Bede

    Gary,

    That was not a warning from me. It was posted tonight on Zero Hedge. It was merely confirmation of what we are expecting/hoping.

  227. David

    Redwine,

    Your original quote was:

    “I do think the true contemporary definitions of right wing and left wing are represented in this 0 to 100 percent scale at the extremes. Right = no government and Left = total government.”

    You are correct in that you didn’t use the words “liberal” or “conservative” but “left” and “right”, but my main point still stands.

    Politics is not a one-dimensional (i.e. linear) continuum. It’s at least two dimensional, if not more.

    Your feelings about the size of “government”, by which you seem to mean the welfare state, would constitute only one one axis. Foreign policy, for instance, would be another. Many people on the “Right” believe that the US should be isolationist and not involve itself militarily around the world. Many on the “Left” would agree.

    Similarly, belief in a social welfare state doesn’t make you totalitarian. It can be a component of a totalitarian state, as it was in Soviet Russia, but it’s not the defining feature. The defining feature of a totalitarian state is the abridgment of free speech and the total control of the police state. This is what makes Canada different from, say, North Korea.

    Most Americans, regardless of political party, support the social welfare state. They just prefer to call it by different names — “Social Security” and “Medicare”. These are extremely popular welfare programs, like it or not. In that sense the people on the “Right” and “Left” differ only in their rhetoric, not in substance.

    As for the charity statistics, my understanding is that people on the right give more to their churches, which are considered “charities” under the tax code. People on the left tend to be less religious overall. If you control for that factor, you might find the statistics are about even.

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