216 thoughts on “Last Day

  1. Poly

    It’s always so amusing watching mainstream business news wires in action. How quickly their tunes change in an attempt to “try to fit” the news around the markets actions, as if this news is really preceding the markets actions.

    “Stocks lower on China rate hike fear” Because GDP ran higher than expected. LOL, last month that would have read. “Stocks higher on China GDP beat”.

    “Gold prices slammed on Brazil rate hike” ?? Really, LOL.

  2. DG

    Pima: It can also be useful to watch each specific 1/2 hour’s volume in the OEX options. Only as an adjunct, though. for example, if you are expecting a reversal to the upside and notice that they have suddenly bought 5-1 calls to puts in just the past 1/2 hour, it’s the time to buy. They often catch reversals this way and it’s real time data, which is an advantage. Just now they bought 1400 puts and only 450 calls from the 12:00 to 12:30 posting, so about 3-1. over 5-1 catches my attention for any given 1/2 hour. To be fair, they have been flipping around and wrong more than I have ever seen them on this run up, however.

  3. LowTax

    Poly – excellent point about the media trying to fit the news to the market. This is what I meant a couple of weeks ago when I said that the market doesn’t need to the dollar to move up first in order to correct – the market will CAUSE the dollar to move up simply by moving lower itself. Contra Gary, we don’t really need a Korean or European event to trigger our correction – only the switch in market psychology. The news can sometimes be irrelevant, and the rest of the time it’s simply an excuse for a sell-off.

  4. LowTax

    There was a discussion a couple of weeks ago regarding margin rates. I don’t remember who it was (Gary, Poly, DG, SB, ???) but the idea of contacting your broker and asking them lower your rates was proposed.

    I did a bit of research and found that both Scottrade and ETrade both had lower rates than TDAmeritrade. I was overpaying by about 3/4%. I contacted TDAmeritrade with this info and they lowered my rates below those of their competitors. It’ll save me a few bucks when Gary gives the all clear signal again.

    Give it a try!

  5. Patrik

    Hi all!

    I just want to give cred to Gary because of the focus and mental strength he showed in his last analysis..A lot of people here actually questioning him a lot..

    A lot of times a lot of people didnt trust him..Thats good of course..You must ask about stuff you dont trust but i think some people went further than that..

    Its not that easy to have a lot of people hanging on his shoulder..But he he didnt change his mind! Not even close!

    This was just awsome! And yes Gary i did short the market..Both gold and the OMX in sweden..The OMX is down 4 % in 2 days..:-)

    Yeah i know i shouldnt have done it..But I did anyway..:-)

    From know i will follow you advide but the call you did this time was fenomenal!!

    Take Care all!

    Many of you guys learned me a lot not just Gary..Credit to you!

    Take Care!

  6. greg

    Margin rates? I pay 1.17% from Interactive Brokers – I love them. I pay a flat rate of .5 cents per share commissions ($1.00 minimum)

  7. Steven

    LowTax,

    Yes, the balance in the account was more than the average as was my margin balance. But I was at similar numbers and getting a rate of 3.5% and then I called them and said I would move my account if they didn’t lower it to 1.25% (which was the lowest rate I could find elsewhere). They also lowered my commissions to $2.99 per trade from $6.99 but the real savings was in the margin reduction.

  8. Steven

    LowTax,

    I contacted my rep over there (they had me in a special group but I’m sure you could contact the regular group and ask for a manager) and told them the places that were offering 1.25%. It really wasn’t much more complicated than that. Give them examples of places you can get the lower rate (do a Google search and you will find them…and Interactive Brokers as was mentioned here today was one of the examples).

  9. DG

    If the Dow closes at a new high (+12.87 or more) I will get a sell signal. As I have stated, though, the sells are not ads good as the buys. I take virtually every buy, but the sells are merely another good data point for me.

  10. TZ(5288)

    My ES trade yesterday would have been a loser had I kept it. I didn’t re-enter on reflection cause I was being to aggressive with the system I was using. I’ll be buying for bounces…but lower.

    In other stuff…

    Large volume of contracts blown out on the gold and silver drops this morning. 20,000 gold contracts in 10 min alone.

    We have a down wedge type formation on the gold chart (daily). The blowout volume was when we spiked below that bottom line. If we reverse back up above the top line, then the low might be in.

    Yes, I have been one continually examining areas where the low ‘might be here’ and was also saying ‘what if we don’t drop’.

    Those were all valid as a prudent trader. Please note to ALWAYS follow the MONEY when somebody talks cause it tells you where their true bet lies. Except for one failed trade on gold last week, I have continued to be out and watching despite those comments.

    At one point soon enough one of those lows WILL be legit and by continually keeping alert to possibilities I hope to catch it.

  11. TZ(5288)

    Hoye
    http://www.321gold.com/editorials/hoye/hoye012011.html

    “…Our last few publications have been reviewing our Momentum Peak Forecaster.

    When speculation in any, or now, in all games becomes intense the Forecaster goes straight up and when it ends it provides the warning. It got to 1.28 and has stopped going up. Anything above 1.21 is in dangerous territory. Typically, the buying mania completes within one or two months. In so many words the frenzy continues until it exhausts.

    The last such signal was 1.21 in May 2006 and the high in housing was recorded in that fateful June.

    Now we wait….”

  12. TZ(5288)

    Recall I earlier said that it appeared gold would trade to approx 1330 tomorrow based on my read of GLD options. We are getting close and can see how that prediction works out tomorrow.

  13. DG

    I put some more shorts out when we were up 20. I figured either I get the sell, or we fade and I don’t get it. Either way…Still only at 25% of my account or so. Now I need a little room to before I add to positions (or a perfect looking set-up).

  14. Poly

    DG, aren’t you over complicating it?

    I;m not arguing with the prudence, but I mean we’re only looking for that waterfall intermediate decline now. So late in the game, is it worth trying to time it? Especially when you don’t play leveraged, you could easily place a stop at say 1,300-1,303 area on the S&P and be out a max of 1.5%, but in the game to catch every cent of a potentially massive drop.

  15. DG

    Poly: Just not how I do it. A stop at 1305 is just begging to be triggered. Remember how Gary talks about how they go through an obvious level to get the stops hit, (like gold below 1300)? My rarely- being-in-the-hole-for-the-year style means I can take a good heavy shot when convinced the top is in. I am actually not trying to maximize returns, but instead prefer have stable gains year in and year out, and an occasional great year (I was up 30% two years in a row when the stock bull began in 2003 and 2004). There are lots of ways to do risk management and position sizing, IMO. Even more wrong ways, too, unfortunately. If we drop I’ll be well ahead for the year even before gold bottoms. That’d be great because I’m going to buy a boatload of PM’s and would appreciate the lack of pressure.

  16. DG

    Poly: One other thought. You lose 1.5 % of your account getting stopped out at 1305, and then what? Try again? If you do this 3-5 times you have last a real piece. This is why Gary is against shorting. His picture is you try a bunch of times and are down 7% or so before you get it right. Then you don;t get the bottom exactly and wind up netting 3% or something. Not worth it. I am never down 5% during a year doing it my way, and that’s my preference. I’ll make plenty if/when we crack once I get some room (what Gary calls, “strong hands.”)

  17. TZ(5288)

    ALERT!

    COMEX RAISING Gold and silver margins approx 10% effective tomorrow.

    Wow. And they are declining and lower.

    The attack continues.

  18. DG

    Qualitystocks: Actually the investment surveys, Rydex exposure, options activity, etc. all show that people are expecting a continued bull run. Other than anecdotal stories and “I saw this blog” type of stuff, what statistical evidence is there that a particular investment group is calling for a decline? I’d love to know!

  19. thedocument

    Quality, there are indeed many calls for a correction, but almost no one is calling for a longer-term top. I think the surprise here will not be the lack of a correction, but just how severe it turns out to be.

  20. notGreedIsGood

    Gary

    you mentioned earlier that you expect miners to drop at most another 10%. What is your reason for this given that the correction in the stock market has just started, and it’s not even scary yet?

    not

  21. Poly

    Market “looked” like it came back strong…but the Russell still got creamed and closed near the lows. The Transports were similar and so too were the tech’s. All the leaders barely recovered in the afternoon.

  22. Quality Stocks

    Quality, there are indeed many calls for a correction, but almost no one is calling for a longer-term top. I think the surprise here will not be the lack of a correction, but just how severe it turns out to be.

    It is possible….

  23. Nike Boy2008

    i’m already seeing a lot of blogs and websites calling for the top in gold and that the bubble has burst and we head down for a few years…

    this has to be good news for gold bugs

  24. Steven

    From a technical analyst at one of the large banks.

    SILVER

    The surge higher in Silver from July last year (80%) looks way overdone and very stretched to the
    weekly moving averages.

    2 weeks ago it posted a bearish weekly reversal at the highs, with momentum divergence and has
    now started to fall again.

    We would not be surprised to see a sharp capitulation in this trade that could take us back to trendline and 55 week moving average support in the $20.75-$21.25 area.

    If so we expect this move will
    be very quick-possibly a matter of weeks.

    GOLD

    Posted a bearish weekly reversal 2 weeks ago and still looks set to head lower.

    Good support is met in the $1,235-$1,270 range and we would not be surprised to see a move towards that area.

    In addition, a close this month below $1,385 would constitute a bearish engulfing month, further supporting the case for deeper loses in the weeks ahead.

  25. Shalom Bernanke

    That’s a pretty bold prediction, Steven. That large bank wouldn’t be JPM would it? πŸ™‚

    I’d be surprised if silver even manages to get to $24. Sounds like we’re closer to a bottom to me, even if it takes a few weeks to base.

  26. Steven

    No, it’s a Citi analyst. And he is actually a gold bull. He thinks the top of the bull market will see gold at $6000 and thinks there is a chance of $2000 within the next year or so. This is just his short-term forecast and I’m not sure how much he differs on silver versus gold on the long-term picture.

  27. Steven

    Also, FWIW, he is pretty much issuing a warning on almost all markets near-term.

    Here is the summary

     Chart of the Week: A bit of a “shiver” in the Equity and Commoditymarkets

    • Price action in a number of equity and commodity markets in recent sessions suggests some caution is warranted.

    • The overall picture suggests that a quick, sharp and painful corrective phase may be around
    the corner.

    • The charts below give a good snapshot of the concerning developments in these markets.

     Commodities

    • There are a number of commodities that are now looking quite shaky in the near term. While
    we remain medium term bullish in general we feel that a quick and sharp pullback could be
    seen across the board.

     Foreign Exchange

    • The correction up in EURUSD is approaching an end and we expect a turn back down over the weeks ahead

    • The setup on GBPUSD also argues for a move lower at least towards the 1.5350 area. The bearish monthly reversal from November is still valid.

     Fixed Income

    • Few developments this week. We still expect lower yields in the short term (days / weeks)
    before the more dominant trend of higher yields takes over again later.

     Emerging markets

    • USDINR is testing the double bottom neckline and is still likely to rally over the weeks ahead.

    • Equity Indices in India, Mexico, Brazil and Turkey look to move lower.

  28. james r

    Hi Gary,

    Since we are on day 23 of the gold cycle and the duration is about 20-30 days, then should we not expect the bottom of our intermediate decline sometime in the next two weeks instead of the next three weeks?

    (Are you thinking we will have a stretched gold cycle?)

    James R.

  29. Gary

    Since the stock market should have at least three weeks before it bottoms the odds are probably high that gold still has another daily cycle down after this one before a final bottom.

    I do expect the bounce out of the coming cycle low to be very convincing though. Probably enough to sucker quite a few gold bugs back into the sector prematurely.

    The key will be the pattern of lower lows and lower highs. If the bounce isn’t strong enough to break that pattern in gold AND the miners then its a fake out.

    And if gold doesn’t at least dip below $1315 then it isn’t a final bottom.

  30. Chicken Burrito

    I’m getting a big kick out of this gal posting on JPM’s Yahoo page.

    http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_(A_to_Z)/Stocks_J/threadview?bn=10073&tid=383860&mid=383860

    Blythe,

    Your former traders know that you are scouring the whole world for physical silver. Last week, SLV lost over 6 million ounces of silver and today it is reported that SLV lost another 4.45 million ounces of silver more. We also suspect that you are raiding the US Mint as well as other silver ETF based in Switzerland.

    There is only one explanation. Blythe must have heard that your former traders have secured the necessary financing to stand for delivery come March 1. Unlike December, they are ready to stand for massive amount of contracts for delivery.

    But since Blythe is so desperate and raiding physical SLV from the ETF, do you know what your former traders are doing?

    Yup, they are re-doubling their efforts to get even more hedge funds and big investors to help them stand for delivery March 1.

    You see, Blythe has convinced the CFTC to impose position limits on the longs but not on themselves which means that the next delivery month of May might not be available to be raided.

    But rest assured Blythe, we are coming after you in March. And we are confident that we can raise money a lot faster than you can find physical silver.

    How high will you push the price of silver in February? Anthing under $40 and we might be able to bust Comex ourselves.

    Either way

    You’re going home in a body bag,do-da, do-da…..

  31. David Kafrick

    DG,

    Sorry for taking this long to answer your comment on the previous post, yesterday was a holiday here in my hometown so I was away the whole day.

    I´m still in the Euro trade. I will let you know if/when I get out.

  32. Gary

    Gold hasn’t formed a swing low so there’s no indication the current cycle has bottomed yet but when it does silver will follow.

  33. pimaCanyon

    DG,

    Did you end up heavily short at the of the day yesterday?

    If so, do you have a stop? And/or will you add to your shorts if we trade higher today?

    Thanks!

  34. DG

    Pima: I am about 25% short. I will not add on strength. A big test is coming up. We got quite oversold and have always snapped back hard from that condition since the summer lows. If we cannot do so now, that would show a change in character so best to wait and see how weak or strong this bounce is before adding. I will add on a rally failure. Not sure where my stop is yet, but I am not too heavy.

  35. pimaCanyon

    Looks to me like the move up in stocks is something that would be normal and as of right now does not invalidate the idea that the recent high was a top of some kind.

    So far spx has retraced between 62 and 78 percent of the move down.

    If it goes above 78 percent, odds are it will make a new high.

  36. Gary

    The miners have been discounting the impending correction. Once gold starts to near the bottom I expect the miners to resist the downside even if the metals themselves continue down.

    Well unless we see a massive selling climax in the stock market.

    Of course that would just give us an even better buying opportunity…for those that can still pull the trigger.

  37. DG

    Pima: I tend to cover bits at a time on the way up if I feel I am too heavy. Nothing done yet, but I will cover some if we make a new daily high after 7:30. New highs after the first hour greatly reduce the chance of a reversal later in the day.

  38. Gary

    Yes normally we would see a couple of rallies that smart money sells into near the top.

    It’s getting very late in the daily cycle though so unless this is going to stretch past 60 days the topping process should be rather quick.

  39. Shalom Bernanke

    Some miners hit levels yesterday and today that I wouldn’t mind buying, although I expect some muddle through before they head higher. I much prefer to get the direction higher again before loading up.

    SVM was a special case that I was looking to buy in the low $10’s so added yesterday, but still looking to triple the size of my current position. I hope miners close down or flat today, booking another weak close for the week.

  40. Poly

    The cat is already out of the bag, never understood why people want to over complicate it. We’re tagging the 50dma no matter what here and that along is a great trade.

    Beyond that is anybody’s guess.

  41. DG

    Avann: It’s hard to explain how I trade. I am not an all-or-nothing trader. I short when it seems right and cover on the way up, re-shorting when it seems right again. I don’t know what it would take for me to abandon the idea given the sentiment readings. I guess i’d have to believe that the Fed has totally changed the game somehow (Hyper inflation causing stocks to rise forever?). I can;t remember ever having been wrong about something like this though. We will go down, so it’s a question of risk management and tap-dancing, making sure the damage is small and then adding back at the right time to catch the bulk of the move. i have lost in these situations when the gains that eventually come are smaller than the small losses that have piled up. Even that is rare if you are careful and not stubborn. (This also is an answer to Poly’s question yesterday about “Why not just short a bunch now with a stop at 1300?) I am light and will stay so until we get better price confirmation. if we are going to drop 10% i am fine missing a piece of it so long as i am heavy for the heart of it.

  42. pimaCanyon

    Jim,

    thanks for the link to Peak Theories. Just took a quick look at gold and the “twin peaks” page. She has a long term forecast for the SPX to hit the 400’s within the next 3 years! Yikes!

  43. pimaCanyon

    Poly,

    Sounds like you’re giving high odds to SPX tagging the 50 SMA on the daily. That’s running at 1239 today, so that will be a nice drop.

  44. Poly

    I am giving it extremely high odds!

    Even without a hint of an intermediate decline, the market is going to need a 50dma pullback to find it’s next legs.

  45. Jesse

    “The Flaw”

    Title of a documentary film coming to Sundance film festival this year. Below is a description of the interview with the film maker that aired last night on local public radio.

    Thursday, we’re talking about the roots of the financial crisis and why it is that the world’s greatest economy is so slow to recover. Doug sits down with returning Sundance filmmaker David Sington. Sington’s documentary The Flaw sets out to find answers to the economic questions that are still plaguing America and to ask what should be done if there’s a “next time.”

    Here is a link to listen to the interview, about an hour and quite interesting. If the link doesn’t work just search on “KUER radio west” and look for the flaw.

    http://www.publicbroadcasting.net/kuer/news.newsmain/article/0/184/1751559/RadioWest.(M-F..11AM..and..7PM)/12011.The.Flaw

  46. DG

    David K: Part of my reasoning (clearly wrong today!) is that to have a stiff correction in the SPX we’d need the dollar to rally, and thus the euro to fall. Do you agree with this, or are you expecting the correlation to cease (or stocks to just not go down)?

  47. sophia

    the price action of the stock market is amazingly weak today…I left for one hour and all were rallying, come back to see it much lower! any news? exhaustion ??

  48. thedocument

    JC, the dollar lost a fairly important pivot at DX 79 earlier this week. I seriously doubt that level will be regained during this intermediate cycle, especially with a failed daily cycle now in hand.

    Perhaps DX 79 gets back-tested after the current daily cycle finds a low, but I wouldn’t count on that, either. I think we’re at the stage where the dollar crisis accelerates and drags stocks down with it in crisis. Likewise, I believe gold and silver will find a low sooner than most people expect. We just need one more good panic, probably below the $1325 pivot on gold to blow out stops.

  49. DG

    Poly, Pima, Avann: I added some shorts on the weak rally to up 60. Failing to hold the rally today might be fatal.

  50. Shalom Bernanke

    Jay,

    No love-fest, just like how it trades and have made lots with SVM in the past. Maybe it’s because I have a very low average cost so feel comfortable getting aggressive again should it dip further.

    My current position has a $2.20 stop from right here. Like you, I’m hoping it gets hit hard again but I only give that 50/50 odds. I’ll be happy even if it even just gets below $10 again, as long as miners get through with this intermediate correction first.

    I have several others I like as well, so it’s not the only game in town even if it should be on everybody’s list.

  51. Shalom Bernanke

    Quality,

    I don’t have much opinion on the USD for a trade. Oversold short term, but long term going lower, so I’ll leave it alone. And as it relates to metals/miners, it doesn’t seem to offer an edge, simply because the typical inverse relationship has not been reliable. I’m not trading the dollar, and will judge the metals/miners on their own.

  52. coolkevs

    Using Feb Gold futures, Kevin Depew on minyanville.com Buzz and Banter showed a qualified break of a DAILY DeMark level at 1350. This means a full 13 countdown to a Buy point should occur. Currently, on bar 5 of 13, so at least 8 more trading days before the Buy Signal records (bars do not have to be continuous). A .382 retracement down level shows 1292, but Depew thinks it could go lower. That 1350 level should now be resistance.
    SP futures now have active DAILY TD Sequential and TD Combo sells confirmed by a bearish price flip. Short-term 1270.40 is a resistance level – any trades below this level can be bought. If the 1270.40 level is qualified (Up Close, followed by Down Close below that level, followed by Down Open – DeMark qualification rules, crazy I know), then prepare for trend change downside in SP.

  53. DG

    coolkevs: Have you tracked this guy Depew and Demark analysis for a long time? Has anyone else here done so? Is it/he any good? There are millions of opinions out there and I like to know who has a good track record.

  54. Shalom Bernanke

    I also agree that gold will bottom out at higher prices than most believe, primarily because real assets should experience a flight to quality at some point.

    The only potential flaw in this stance that I can see, is that seasonality will not be in our favor much longer.

  55. pimaCanyon

    coolkevs,

    I’m confused by what you wrote:

    “SP futures now have active DAILY TD Sequential and TD Combo sells confirmed by a bearish price flip. Short-term 1270.40 is a resistance level – any trades below this level can be bought. If the 1270.40 level is qualified (Up Close, followed by Down Close below that level, followed by Down Open – DeMark qualification rules, crazy I know), then prepare for trend change downside in SP.”

    Do you mean 1270.40 is support?

    And if SPX trades below that level, SPX is a buy?? or a sell?

  56. Jayhawk91

    Gary-

    At what gold price did this C wave officially launch?

    Also, I would like to know the prior cycle (start of the C to peak)…If Gary is off to KC, would anyone else know this?

  57. Avann

    DG … thanks for the response and the update.
    The reason I asked when I did was because I was heading out for the day … just got back now … and I was debating on whether to put a partial stop in before I left.
    I put in a stop for 50% at 1300 but obviously it never even got close.

  58. DG

    David K: Sold 1/2 my EUO. Looks like dollar is breaking down and has decoupled from the other asset classes. I don;t see how the euro can rally given the scene in Europe, but no point arguing with the markets, which, as the man said, “can stay irrational longer than you can remain solvent.”

  59. Gary

    Avann,
    As long as your position size is reasonable you could put a stop at roughly 1320 and let thetrade ride figuring if 1320 is hti then Ben is probably going to accomplish the impossible.

  60. Jayhawk91

    Interesting…Was looking at the last yearly cycle on gold/HUI from the Nov lows in 2008 to the highs the next Dec. The HUI retraced 38.2% of the move and found it’s bottom there last Feb.

    Starting from last Feb’s low to Dec..We are sitting right at the same level of support.

  61. Gary

    Probably better if you put your fib’s on individaul intermediate cycles. This one began in July.

    I would be leary about buying before the stock market bottoms. Intermediate cycle lows almost always are severe enought for selling pressure to leak into all sectors.

  62. Poly

    My only regret to date was not loading up on the QQQQ puts instead of SPY, considering the strength QQQQ had shown in this rally.

    Nasdaq really struggling again today.

  63. Gary

    E,
    Well I do have an hour layover on Sunday evening. But I don’t think you can get into the terminal without a ticket.

    If you ever make it up to Vegas I’ll be happy to take you up on that offer πŸ˜‰

  64. Avann

    Thanks Gary … yes, position is only 10% … I’ll reduce half at 1300, the rest at 1320, give Ben the finger if that happens and hopefully recover it in PM’s. I rarely short … but I can afford to play a little with the profits from last year and I’m bored so this gives me something to entertain myself with.

  65. Gary

    I would give your first level room to at least 1305. I was expecting a tag of 1300 anyway. If you stop out at 1300 you run the risk of covering right at the top.

  66. DG

    Poly: The NDX has a remarkable track record at getting trashed in January. Lots of regular occurrences are not happening, but I’d focus on the Q’s for shorting.

  67. David Kafrick

    DG,

    I´m definitely expecting stocks to go down in the next week or so. Common sense says therefore dollar sould go up. But I feel very strong towards the buy set up that we have on the EURUSD. So I expect stocks and dollar to go down together. At some point the negative correlation between dollar and stocks sould break.

    By the way, I agree that on the long, long term there are severe problems with the Euro.

  68. Gary

    At some point a dollar crisis will be a big negative for stocks. I wasn’t expecting it until inflation got out of control though.

    Perhaps the marekt already sees it coming and is discounting it.

  69. Gary

    Time to board. I don’t see anything special happening today so I think I will spend the weekend with friends I haven’t seen in years.

    No weekend report this weekend. I’ll be back on Monday.

  70. DG

    David K. Thanks for your thoughts. In the long, long term I’ll be dead though, and usually don’t have that kind of patience. πŸ™‚

    Am focusing on XHB and QQQQ, but thought EUO would work. Oh well.

    Have a good weekend.

  71. Elaine

    Gary,

    Yes, you are correct, but the better restaurants are in the main concourse. Anyway, Vegas is probably a more exciting place to eat a burrito.

    e

  72. fubsy_cooter

    I’m short 12 percent via SH. Not feeling the need for a stop. With the overwhelming odds that a yearly low will eventually occur, and agreeing that further fed intervention will cause a steeper drop, i figure the odds are overwhelmingly on the side of patience for winning trade…and if the market goes up 20 percent from here, I would be down 2.4 percent. Not much risk. Like Gaery said, it just adds a level of interest in the game. I will ptramid into a larger position as clarification of a correction ensues.

    Have a great weekend Gary and all.

  73. Jayhawk91

    Seems like a reasonable strategy Fubsy.

    I was looking at a small short position, but want to avoid the ultra leveraged funds.

    Anyone else have any ideas?

  74. pimaCanyon

    jayhawk,

    SH is not leveraged, it’s just the inverse of the SPY. SDS is double inverse. I like SDS (have a small position as we speak). Even though it’s leveraged, I haven’t noticed severe decay problems like you see with the triples.

    Another thing you could do is buy deep in the money SPY or QQQQ or IWM puts. March or April expiration. Check out prices first, but usually deep in the money options have very little time value, so the option moves almost one for one with the underlying.

    Or just short SPY, QQQQ, or IWM… lots of possibilities

    Good luck!

    πŸ™‚

  75. Robert

    Gary,

    So are we not in the most left-translated 4-year cycle in history because you moved the beginning of this cycle up to Spring 2009?

    Thanks, And Enjoy KC.

  76. Robert

    Lastly, in 2008, did you successfully exit the C-wave in the March area, and then what did you do for getting back in for the A-wave? Did you get in near May or did you miraculously wait until around October? Did the Blees ratings help you successfully enter there if you were able to?

    Thanks again Gary, really interesting stuff.

  77. trond56

    The dollar is breaking down from the megaphone pattern just as my prognisis said it would. No sign of a start of any rally here. Likewise my prognosis from beginning of December that the target for the SP500 breakout from the cup and handle formed since April is ~1430 will be probably realized.

    Not the least because the pre-election years springs are traditionally strong, as seen on this chart, the so called ‘Election Cycle’:
    http://www.chartoftheday.com/20101231.htm?T

  78. ike

    I was looking the the spx chart since 12/01.

    I see 4 corrections of 14 points, 14 points, 16 points and 25 points.

    Could this potentially be a runaway move in stocks with measured corrections ranging from 14 – 25 points?

    Here is an annotated chart illustrating my point.

    http://i56.tinypic.com/inswgy.png

    I know that Gary is not around so I would appreciate the any comments

  79. ALEX

    TROND 56

    FWIW

    Interesting that you say that…

    I wasnt going to share this chart here…(except maybe with Jayhawks :)… but your post caused me to reconsider-since I have been trading Equities through Dec and Jan with this charts ‘POSSIBILITY” in the back of my mind).

    A correction retesting the breakout at the handle is not out of the question(1231 area) and fits an equity pullback that Gary calls for now, just not Armageddon yet…

    Dollar does look due to bounce (uup to gap at 23 which is also 50dma)

    I drew it in Dec,but as volume dried up on Holiday weeks, I felt it was weakening… but updated it in Jan when upward volume returned.

    http://www.screencast.com/t/9IkeUpghPY1

    No Recommendation implied to anyone πŸ™‚

  80. ALEX

    After that last post, I should state that I do…DO EXPECT a slam down in the SPX soon.

    I just wonder about the GDX being dragged down MUCH with it???

    Since Thanksgiving…the spx djia and Nasdaq have gone straight up while the hui/gdx etc have pulled back already.

    looking back at Oct 2008 slamdown to MKTS …to March 2009

    GDX bottomed and went from 16 to 37 (double + )

    OCT 2008 HUI went from 150 to 340 (double + )

    OCT 2008 SPX went from 984 to 666
    (severely cut)

  81. Jayhawk91

    I’m up late reading that book Alex (Trade Like An O’Neil Disciple)

    The guys are going through their biggest mistakes…Chris talks about the Solars setting up perfectly in 07. He was positioned perfectly and told himself to hang tight even if the market corrected. However, the bearish talk from other traders, the warnings, the claims of the market being similar to 87 messed with his mind. He ended up dumping his huge position in FSLR after it broke out of a C&H when the market weakened one day in Oct. FLSR reversed that day and proceeded to rocket higher while the NAS sold off that fall. So his point is to “Watch your STOCKS not the indexes!”

    We could easily see the miners diverge from the overall market–they did so in the early 2000’s

    Also, these guys are big on picking the big, leading stocks. Makes me want to rethink my strategy and weigh stocks like SLW much higher.

    Fun times…it’s good to read these experienced traders mistakes and realize I’m not alone. Last year I feel like I blew it to some degree, but I’m over it and really focused on 2011.

  82. ALEX

    Jayhawks wrote

    ‘We could easily see the miners diverge from the overall market–they did so in the early 2000’s ‘

    I am feeling the same thing…I have seen the gdx and HUI pulling back to that support and sma 242 the feb low and July low bottomed on..

    http://www.screencast.com/t/1aHxUCS8

    As I just posted…in the crash of 2008 , the gdx and hui doubled from OCT to March by the time spx bottomed in march.

    Will they be crying on cnbc…”flight to safety has resumed-buy Gold’ as SPX goes down??

    so as you said Jayhawks…I am watching my stocks and even that sector gdx/hui…(not listening to too much else until the chart tells me what IT is going to do)…pass or fail. The former resistance level,which is now support…will ‘pass’ or ‘fail’ —–Time will tell.

    take care

  83. Rod

    Gary/All,

    Next Wednesday as I understand is expiration option on gold and silver. How will this play a role in pricing of the metals? Could we see a further dip in the metals first part of the week? Then after the bounce start?

  84. Jayhawk91

    This was linked via Jesse’s blog.

    http://www.economicpolicyjournal.com/2011/01/hot-fed-hides-major-accounting-change.html

    Accounting Tweak Could Save Fed From Losses

    http://www.cnbc.com/id/41198789

    “Any future losses the Fed may incur will now show up as a negative liability as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible,” said Brian Smedley, a rates strategist at Bank of America-Merrill Lynch and a former New York Fed staffer.

  85. ALEX

    Ike / Rod

    Ike

    I was wondering the same , BUT…DJIA and SPX and NASDAQ have been running up above their 10 and 20sma. Nasdaq broke down and closed below BOTH this week. That is risky…I.M.H.O.

    Rod

    I pay close attention to SMART money. The C.O.T. Shows SMART money closing short positions drastically on this pullback. All time lows for this year… less than July Low and Feb low

    http://snalaska.net/cot/current/charts/GC.png

    Not a precise timing tool, BUT very meaningful. THIS is only with regards to the METAL prices though, not mining stocks- which may get dragged down with the markets.

  86. Jayhawk91

    Did some math on the intermediate cycle-assuming a 200K portfolio. I wanted to see performance of a GDXJ/SIL blend vs. hand picked top silver miners & gold juniors. For my preference, I went with 75/25 silver miners to gold miners ratio. (or 150K of SIL, 50K of GDXJ)

    For the hand picked portfolio-(dollar amts)

    60K of SLW
    20K of HL
    20K of SVM
    20K of NG
    10K of NAK
    10K of UXG
    20K of SSRI
    20K of PAAS
    10K of RBY
    10K of AXU (by far the best performer)

    The SIL/GDJX returned 193K

    The hand picked on returned 231K

    A portfolio of just SLW returned 266K

    If you just went with AGQ-350K return.

    Of course, may of these individual miners can lag the next leg up and other may lead…But I’m trying to get a read on the clear leaders coming out of the summer.

    Looks like SLW, SVM, HL, AXU…SSRI did pretty well too.

  87. ALEX

    Jayhawks

    were you a good homework kid in school πŸ™‚

    Nice job (and as you said, thats just considering that they all run the same % next time. You forgot AG..one of my top performers, and recently more scary on the pullback).

    Nice little homework report , thanks for sharing

  88. Rod

    Jayhawks,

    This may be a dumb question, but why wouldn’t one just go with AGQ and be done with it (assuming one buys it on a good dip correction)?

  89. Jayhawk91

    Rod-

    The thought has crossed my mind. I may actually put my entire IRA into AGQ on this cycle bottom. (This is not a large amt)

    I’d hate to be long AGQ 100% and have the trade go against me. I’d have a hard time sleeping.

    FYI-the one year performance of just being in silver (SLV, SIVR) has a better track record than GDXJ (60 vs 40%). So being in a vehicle that is 2x the POS makes good sense.

    I know Doc and other just trade the futures. I’d love to know what a 200K portfolio invested in only silver futures would have done from July to Dec.

  90. David Kafrick

    C79.Guys, there is a thing called risk adjusted return. If simply buying the most volatile thing in the world was the way to get rich, everybody would be doing it and everybody would be rich

  91. Jayhawk91

    Yes, I realize that. Just thinking out loud on a strategy for the intermediate cycle low. I’m more likely to go with the leaders on the silver mining side…The bigger, more liquid plays with out a lot of resistance overhead.

  92. Mr.Mom

    Re: Silver futures,
    /SI=5000 oz. x 13= $65000/contract from $18 to $31. Current margin is $10462/contract but back in July it was ~$6000?

  93. basil

    DJIA and DJT look like they are headed for a Dow Theory Sell Signal. Dow continuing up while the leader, the DJT has broken an upward trend line to the down side. Anyone?

  94. catbird

    Gary is a baller. A report dispatched on his weekend off.

    I for one am not one of these people who will be too frazzled to pull the trigger if gold dips below $1300. I’m just getting friggin’ impatient for the plunge to happen. If by some miracle it gets down to $1260 I’m hitting up a pawn shop so I have more FRNs to convert to silver. : )

  95. Gary

    basil,
    For a Dow Theory sell signal to be given both the industrial s and transports would have to close below the July low.

  96. skogie

    Hey Gary, just out of curiosity, why would the transports need to break the July lows, and not say, the Feb lows? What makes July significant? Is it because that correlates with the DJIA most recent significant low?

  97. Gary

    Skogie,
    In order for a Dow Theory sell signal to be generated a secondary low point on both averages has to be penetrated on a closing basis.

    A secondary low is the same thing as an intermediate cycle low. The last one occurred in July.

  98. basil

    Gary, Skogie,

    if both indices need to break the July low to the downside to generate a Dow theory sell signal, what good is that sell signal? By that time one will have already lost an arm and a leg. Also, I thought there are various steps towards such a final Dow theory sell signal with the first step being a divergence between the two indices, which is what we seem to have here?

    Basil

    Basil

  99. Gary

    Well there are other signs that a bear market may have started to get one out. A DOW theory sell signal is a confirming sign not a timing tool.

    I took first place at the tournament.

  100. Steven

    Gary,

    You had an amazing 2010 but you were early in Feb. What gives you the confidence that you are not early again this year? Is it something in the cycle analysis, ABCD analysis, bigger picture, three year cycle low of the dollar, etc.?

    Congratulations on the tournament!

  101. fubsy_cooter

    Robert,
    I remember the D wave bottom in ’08 as that was the first time I had heard of Gary. Tim Knight posted on SoH that one of his most respected traders, and friend Gary Savage was pounding his fist to buy gold. Gold was at 700 at the time.

    I remember taking the trade and watching as Gold instantly went up 70 bucks the next day if my memory serves. Of course, I asked myself, Who is this Gary Savage guy, and was that just luck? Within a few months I was a subscriber. Anyway, Gary nailed the D Wave bottom. Pretty impressive!

  102. fubsy_cooter

    My fear now…A brief ramble.

    Will I miss the bottom by waiting for an intermediate low only to see Gold turn higher and leave these prices behind forever? Should I just begin buying incrementally from here to the bottom rather than wait?

    I haven’t acted based on this fear, but it keeps ringing in my ears. It would be lovely to hit the bottom within a few days or percent, but the thought of Gold turning higher and never looking back has me itching to pull the trigger. Countering that, the thought of watching mounting losses would create stress. With my current 28% position size I haven’t cared about losses. With 50% I would.

    Hmmm….Patience.

  103. pvm999

    We cannot not be near the intermediate low for gold yet. It seems that everybody is itching to get in.

    At the intermediate low, everybody should be so battered that emotionally they can’t pull the trigger.

    I think we will get one more good fake out rally — and draw many gold bugs in and — wham a big drop to shake them out

  104. Gary

    Steven,
    If you get a subscription you will see that I haven’t called a bottom yet. I don’t think this is over for gold yet and it’s only beginning for the stock market.

  105. Brian

    Fusby, It would seem to me we need to see some sort of capitulation move before a bottom, hence Gary’s talk important levels. After scanning through my charts, I see capitulation in a few stocks. ANV being the most notable, and could be setting up a cup base, but it needs more time to be sure. Most of the small caps I track are still in free fall mode.

  106. Jayhawk91

    Catbird-

    I have not subscribed to Zeal–I did read one of their junior miners reports and thought it was decent. I’ve just read his free reports from time to time and think he has some good stuff. I’ve only subscribed to Gary, Doc and the Aden sisters.

  107. Jayhawk91

    PVM-

    I think the average joe who is long PM stocks is just about at that point. I’ve got 2 buddies who are long SIL, one just getting in early in Jan. Needless to say, the guy is pretty down these days.

    The SMT subs are sitting nicely in cash waiting for our buy point, so we are a bit antsy here watching the dollar fall apart. However, no need to panic guys & gals. We may not catch the bottom, but we will be in the miners with plenty of time.

  108. james r

    any thoughts on tomorrow’s gold price? will N.york lay the smackdown to create a potential swing low or de we get a bounce or a sideways move?

    i would like to see N. york lay the smakcdown and bring gold down to 1320. here would be a short term buy.

    cheers!

  109. Bill

    I am thinking of buying physical gold, can somebody give me some idea for best website. first name that comes to my mind is kitco.com

    i am a long time reader of this blog, i am still short the equities. I dont see any good reason for this sell off to last longer then few days or week. Untill Ben stops giving this support market wont falter. there is no compelling reason for it to happen.

    Gary,

    you keep saying munis/bonds will fail but what happens if Fed is giving support to them. One possible outcome is after june there would be lot of pressure to stop the QE’s and then market falters.

  110. DG

    Way to go Gary! I see the dedication, determination, and hours spent learning how to trade asset classes has paid off in weightlifting as well. Very impressive to become highly skilled in two unrelated areas.

  111. Nike Boy2008

    Brian,

    SIL was in the 14’s from this rally started…hit 28 and is now in 21’s

    GDXJ was in the 26’s range when the rally started…hit 45 and now is in the 33s

  112. Brian

    That would be the difference. I show the July bottom at 23.29, and a top at 41.63 for GDXJ. It was a little tricky on the fibs since they both were making higher lows since February, but the general market did not. One of us is getting bad data on GDXJ. SIL data is closer.

  113. jc

    congrats on the win! What was the winning weight that you pressed? (if I may ask)

    Silver getting surge, $28 should be tough resistance. Was hoping for a nice drop monday.

  114. Gary

    Remember it’s usually better at bottoms to see gold open lower and then move higher. If the down trend is still intact then smart money will just use the higher open to sell into.

  115. Brian

    Mom, That is interesting. Stockcharts does adjust the price, so you don’t really have the true top. Fidelity shows it at 44.86, which would imply a dist/div of 3.22. Interesting part is the div didn’t pay till well after the top. 7th versus the 30th.

  116. trond56

    <<
    I’d love to know what a 200K portfolio invested in only silver futures would have done from July to Dec.
    <<

    Jayhawk, ‘spread-betting’ on silver give even less margin than futures, 4%!. That means buying the XAG/USD -Fx. + Advantage, that margins don’t increase either like on Comex, and you don’t have to roll over a contract to the next month. The usual brokers don’t offer it, but most fx-specialists that advertise on TV does.

    I didn’t invest 200k in july, rather only 20k in the end of August when silver was at 18.30$. And these were options aquired thru Saxo bank, on XAG (silver).

    With a high strikeprice of 21.30 it was possible to get 40k oz of silver for 20k $. The margin was therefore about 2,5%.. At the top 31$ this position increased 20x to 400k $!! but I didn’t sell at the top πŸ™ (the options were converted to long XAG in oct and dec)

    AGQ long term is not good, as mentioned before, it decays over time, the chart here illustrates it, comparing SLV and AGO, both starts out at 0% at beginning of 2010. In August when SLV is back to 0%, AGQ is not back to 0, but 12% lower..

    http://finance.yahoo.com/echarts?s=AGQ+Interactive#chart2:symbol=agq;range=20100107,20110121;compare=slv;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on

  117. trond56

    Another advantage with Fx gold or silver is that you can change to XAU/Euro, XAU(or xag)/Yen etc if for instance you think the dollar will rise vs these currencies while PM also rises.

  118. Gary

    AGQ should only be held while silver is in an intermediate uptrend.

    Under those conditions it will actually outperform it’s goal of 2X.

    From the July low silver increased 77%. AGQ rallied 190%.

  119. ALEX

    Gary

    Congratulations!Thats a rewarding trip after all the hard work that goes into competing!

    Quick question regarding that -Do you get all your supplements from shopping in Vegas, or do you have a website that you ca share to find either cheapest or best variety??

    I use http://www.Prosource.net mostly (for great variety and often best price)

    also http://www.vitaglo.com to shop by product ( EAS ,muscletech, etc)

    GNC seems to be 20% more or up to double the price on a lot of the same products!!

    Thanks

  120. Gary

    I don’t really take much in the way of supplements. I’ve tried a few over the years and found that none of them really made any noticeable difference in my lifting.

    I just try to eat healthy and train hard…but not so hard I get hurt πŸ™‚

    Luckily no injuries at this tournament.

  121. ALEX

    HMM, that says a lot about your d.n.a. πŸ™‚

    I have found at the very least that Creatine and certain whey protein powders (nitro whey) along with Branch chain amino acids was key to my work outs and endurance. you cant beat 1st place though!! Maybe when you re in you re 60’s you can try them πŸ™‚

  122. notGreedIsGood

    Gary

    do you see the daily cycle low, coinciding with the intermediate cycle low for gold as the Doc would suggest, or do you see the need for one more daily cycle before we see the intermediate cycle low?

    furthermore, earlier I think you mentioned that miners would likely only correct another 10%… given that the markets haven’t even started a nasty correction yet, what is your reasoning for this?

    not

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