The “PLAN”

I’ve posted a trading “plan” for the precious metals sector in tonight’s report for subscribers.

374 thoughts on “The “PLAN”

  1. alysomji

    I agree with John V.

    Seems to me to be a little early to be saying that the weekly cycle low is in on gold. And, yes, you seem to be saying that by going fully long and with margin!

    We’ve had a one-day bounce off $1320. $1315, which was a previous daily cycle low, hasn’t even been tested.

    You just wrote this today, Gary:
    [So far this correction is still very mild. Gold should at least dip down to $1290-$1300 if it’s just going to be a “normal” correction.]

    Clearly you’ve changed your opinion. The question is, why? Is it the high Blees rating? Or something else?

    Also, you were saying before that you wouldn’t want to get fully long until in miners until stocks completed their weekly cycle low. Well, stocks haven’t even begun heading into their weekly cycle low yet.

    I’m not complaining. Just wondering why the change in opinion. What is driving it, exactly?

  2. alysomji

    I thought the whole purpose of the “core” is to protect against both scenarios. So, why go 130% long when there are pretty good reasons to think the weekly cycle low isn’t in.

    Yes, you have a stop in, but if gold drops below $1320, you will take a loss of at least 5% from here on each of GDXJ/SIL/SLW.

    So, again, I ask: what is driving you to take this risk? The Blees rating?

  3. catbird

    Things are getting interesting.

    I’m thinking tomorrow A.M. I’ll re-enter a full position just with good old PSLV. If PMs pick up momentum to the upside I will flip over to AGQ and SIL.

    I can’t shake the feeling that this is merely the daily cycle low and the intermediate is yet to come…but I’m gonna be dispassionate and re-enter tomorrow with you. Gary, you hit the nail on the head last year with your description of the gold bull. It ends up making loyal riders money but man oh man, it somehow drives you up the wall along the way.

  4. Avann

    Well for those of us who have a core of zero … this plan works. I’ll just go in for 35% for now and wait for confirmation.

  5. Onlooker

    Boy it’s never easy is it? Mixed signals at this juncture, but I’m sure in hindsight it will be obvious (whichever way it ends up).

    The reaction off of 500 and the 200DMA by the $HUI sure makes it look good here. Tough call

  6. james r

    I think this year this time the mining sector is showing more strength than last year.

    Why?

    Because the HUI has broken above resistance 500 level and now has retested successfully. Last year this this was not the case.

    I also think the mining sector (along with commodities) are leading the charge and you’ll see money being rotated from the general market, bonds and the dollar into the mining sector.

    When the general market does correct I would expect the mining sector to go “higher” not lower with the market. Because investors will be buying PM and metals not the dollar. (This is the opposite of what happened last year)

    So we’ll see. Interesting times indeed!

  7. Fergie

    Alas, our marching orders. I was going to take up meditation or something to help practice patience. Let’s hope this isn’t yet another head fake.

  8. Poly

    The decision to 130% is completely against weeks of thoughts and strategies that you have presented, you must or should be able to acklowedge that much.

    Now you have clearly presented the trade, no argument there.

    But you don’t want to miss the start of a big run by buying now, while in exchange you want to risk another 5-10% drawdown (depending how high it goes before dropping and the leverage) if your weeks of analysis/comments are correct.

    I don’t know Gary, you’re the captain here :).

    But let me ask you, do you feel very scared about buying tomorrow?

  9. Steven

    Poly,

    FWIW I feel very scared about buying tomorrow and I usually don’t feel scared. Of course it only really matters what Gary feels at this point.

  10. Gary

    Poly,
    I look at it this way. Even if I’m wrong and the stop is hit. I will lose maybe 4-5% at most. That will easily be recovered by just entering at the next daily cycle low which would also be the final intermediate low.

    So I don’t really care if I get stopped out it just means I will get an even better entry and make even more money.

  11. Poly

    I hear your logic, I don’t feel comfortable, but I too am riding your show. πŸ™‚

    You’re incorrect on the drawdown though, AGQ and the others with 130% can or will easily burn through 10% before the stops hit. Just saying.

    BTW, is your coming intermiadate decline for equities still as previously stated?

    Cheers.

  12. John V

    Being early is one thing. Getting whipsawed twice in one month stings a little! I’ll still be going in. If we are stopped out, I’ll be able to use the losses to help offset some of our future capital gains.

  13. Gary

    I think most people are worried about a drawdown. The stop limits the drawdown and if it is hit it just means one will make even more money.

    Too many people are looking at this with trader eyes and worrying about hitting the stop.

    Hitting the stop would be a wonderful thing not a bad thing.

    BTW I think the odds are a little better than 50% that we got the intermediate low yesterday.

  14. catbird

    Poly,

    Look at it this way: this fear about buying PMs tomorrow could be an omen that buying now is the right thing. If you’re afraid at this point, surely you aren’t alone. Just sayin..

  15. Wes

    As for the stock market, sentiment may be over the top, but everything else is about as perfect as it gets for stock appreciation.

    I’m going to hold my modest long position until I get stopped or until the market gets overbought or seasonal factors turn negative.

    I’ve about abandoned my original plan to buy a put lottery ticket. The odds on the downside don’t look good to me.

    If I had to play, I’d chose the downside, but I don’t and I won’t.

  16. DG

    Anyone know where I can find the “blees rating” online? I can barely even find a reference to the word in Google! The only thing I found was an article by Toby Connor mentioning it πŸ˜‰

  17. Gary

    DG,
    I used to have the web address for the Blees ratings. But one of my mathematician subs figured out the formula so it’s programmed into the COT spreadsheets.

  18. LowTax

    We have to keep the big picture in mind guys. Gary is trying to keep us from riding through a draw-down like last year. But several times now, I have REGRETTED not buying back in after a decent discount as gold/miners just took off and I had to chase. Even if we buy now, the stop will limit losses. And even if you go through a draw-down, we have been given a serious discount as of today’s closing prices – in a month or two, all of this will seem trivial as we set new highs, having bought back in at lower prices (with or without the stop).

  19. DG

    One other thought for those of us less gutsy than Gary: There will be an other daily cycle low in 25 days or so. Gold is not going to rocket straight to $1600 (yet). Taking on a chunk here will give us a nice profit by mid-February which will enable us to add leverage with a nice cushion/head start to be there in full if/when the mania stage starts.

  20. Gary

    DG,
    Good point.

    Most people just aren’t capable of seeing a draw down as a positive. If the stop gets hit they will lose sight of the big picture (this is a bull market). They will then be gun shy at the next cycle bottom and won’t be able to buy.

    The simple truth is that if the stop is hit one will make a lot more money. But that is dependent on being able to take another swing when the time is right.

    If you know that another loss will mess with your head and then you won’t be able to re-enter at lower prices then follow DG’s plan.

  21. Dan

    Gary,
    You have probably answered this before but I can not find it in the archives;
    Why do you not use futures, either silver or gold?

  22. T.J. Rand

    I share the indecision of others…but at the end of the day, intuition is a difficult thing to explain. At some point, the switch flips and it’s time…it flipped some time ago for me (probably all of us) on PM fundies, and I look at Gary’s cycle intuition as a powerful indicator that it may be time to move forward. I’ll up my core tomorrow to 50-60% and wait for weekly confirmation before going all in.

  23. Robert

    FYI, this could end up being meaningless, or vital, but according to a source, the end of February should see Ireland’s debt problems in the headlines. You can extrapolate with many things on this potential event.

  24. Thomas

    Gary,
    why do you suddenly change your plan and your whole thought process on the intermediate low?

    for about a month you’ve been saying the correction in stocks will drag miners down at the selling climax, and it’s not safe to get in until then. moreover, you said you thought the int cycle wont bottom until feburary at the earlier. why suddenly change your mind into thinking the low is in?

  25. Robert

    What I am implying, and yes I believe it is a long shot, but, we could see the end of February mark the top of the dollar cycle (prior to the move down into the 3 year cycle low), the yearly cycle low in stocks, and the bottom prior to the C-wave advance in gold/silver.

    I still fully agree with Gary, and his plan is really bullet-proof as he has tried over and over again to explain. My hunch is though you may not go anywhere for the month of February, maybe a few percent net gain in PMs (you may not even get stopped out if we don’t move much), but then you’ll be well positioned for the months of April-May.

  26. Robert

    Calm before the storm.

    I think we’ll see less direction over the next month and this tends to wear more people than you think out.

    Time will tell. I actually think February will be very volatile, but the net movement will not be much for the dollar and gold/silver.

  27. Gary

    Let me say this again.

    I’m not saying the intermediate low is in. What I’m doing is entering at a daily cycle low in case it has bottomed. The stop protects me if I’m wrong. And if the stop gets hit it just means I will make even more money.

    So I don’t know if the intermediate cycle has bottomed or not. I don’t need to know if it has because the plan will handle both scenarios.

  28. Pseudopersona

    I am leery. The last time you changed your tune on a dime like this was the last days of december. If you had stuck to your guns there, we wouldn’t have got smacked down the first week of Jan…

  29. Gary

    P,
    I have to ask. So what? Hitting that stop just guaranteed you would get in at a lower price, which by the way is what you will do in the morning.

    If this stop is hit it will again just guarantee you will get in at a lower price.

    You are losing sight of the big picture. This is a bull market.

    As long as you continue to think like a trader you sabotage yourself. You need to think like an investor and understand that hitting a stop in an intermediate decline just means more money in the end.

  30. Brian

    With likely 6 weeks left in the dollar int cycle, everybody convinced that the rounded top was the death of gold, along with that 1330 break and power move up, I’m not convinced at all those stops will be hit.

    TK’s Golden Shower statue should have been a tip to go all in.

  31. Thomas

    Gary,
    you are protecting vs both scenarios. but what leads you to think that there’s a greater than 50/50 chance the intermediate cycle has bottomed? you didnt think that it would happen this early before.

  32. pimaCanyon

    I bought a little today, thinking that we’re due for a bounce. My plan–if indeed the bounce continues–was to take profit on what I bought today by attempting to time the top of the bounce or just use a trailing stop.

    Now, though, I don’t know… I will likely buy more tomorrow, but whether to take profit in a few days or let it ride will depend on whether we get confirmation that the IT low is in.

    Gary, that confirmation would be a swing low on the weekly chart?? Is that the only thing we’ll use for confirmation, or are there other criteria as well?

  33. Nike Boy2008

    Gary,

    You’re very wise at spotting bottoms and would like to learn to think like you…

    Last year , gold formed a similar bottom followed by a huge up day (just like today)…and then 4 days later broke down again and then finally formed the final intermediate low.

    The action this year has been really similar…it’s actually scary to see how similar/identical it’s been…

    Today, gold bounced of a support in a big way just like last year…but then last year this was a fake low and gold had a panic selling day a few days later…

    you were thinking along the same lines again that gold will have a fake low and then drop again.

    Until today, when you seemed to have seen something different. what did u notice today that was not there last year?

    Thank you for answering

  34. Gary

    A couple of things. The volume on today’s move. The Blees rating on gold. And I happened to look at the public sentiment poll this evening.

    Usually I check it Tuesday night when it comes out but for some reason I missed it last night. Probably got side tracked watch Stana Katic.

  35. Gary

    PC,
    A weekly swing is only one confirmation. We had a weekly swing last year and gold threw a curve ball right after that.

    The biggest confirmation will be that the stop never gets hit.

  36. ALEX

    In Garys defense

    I posted yesterday that I bought EXK and AXU and HL around 10 a.m. IT WAS NOT EASY , but I got my signal.

    All day yesterday I wondered about it turning and selling off-things looked weak (WHEW, it didnt come)

    Today I added NG , at 10 a.m. and was 100% invested again…but it was still scary!!

    IT DIDNT LOOK GREAT, I was waiting all day for the FED to speak on interest rates and see what happened AFTER THAT…sell-off or buy??

    LARGE volume buying came in after that, at days end…THEN felt a lot better!

    http://www.screencast.com/t/utYu7bnoCc

    http://www.screencast.com/t/NBHgiTK6W

    So in Gary’s defense , he didnt think it looked good yesterday..and it DID look like a possible weak bounce ( I was ready to bail when these tested their 20sma)… but with late day high volume today, its starting to feel like it could be REAL BUYING…a bottom.

    So maybe what Gary saw (weakness yesterday)changed as the day went by today?? add that with other signals.

    Excuse me for speaking for you Gary, but I kept reading “WHY did you change..” and “You must admit you changed..” ” Your opinion has changed…” ..so I know todays late day volume did seem to ‘change things’ (I’ll sleep better πŸ™‚

  37. wmp

    Gary,

    To repeat Poly’s question>

    “BTW, is your coming intermiadate decline for equities still as previously stated?”

  38. ALEX

    Gary-

    you posted that ‘volume’ reply while I was writing my post.

    I knew ‘something(s)” must have changed for you..and everyone was asking ..’what’

    sorry I spoke for you πŸ˜‰

  39. Steven

    Gary,

    Will your plan change if gold or silver is up or down tomorrow in terms of when you will buy or will you buy at the open regardless of what gold or silver are doing at that time?

  40. Gary

    WMP,
    It should be but even if it does the selling shouldn’t effect miners until we get to the end at the selling climax.

    And like I’ve said for the 10th or 11th time now. Hitting the stop just means we will make more money.

    I could care less if the stop gets hit. And I certainly have no desire to trade the stock market, long or short. I’ve been trying for months now to convince everyone that was a waste of time and money.

  41. james r

    The way i see it. if this is just a short covering rally then we should be able to spot it way before the stops get tiggered.

    Look for the blow off top and the next day confirming close (usually accompanied with high selling volume).

  42. Gary

    I would prefer a flat or down open. A big gap up will be tough, so let’s cross our fingers and hope that doesn’t happen.

  43. alysomji

    Gary, I think you’re jumping the gun.

    If you’re wrong and your stop gets hit, it will be a 7-13% loss on capital I estimate, including margin – sort of like in December. Back-to-back, that can be a lot for people to take.

    Keep in mind that many of your subs haven’t been with you long enough to accumulate the type of profits you have.

    I can give a list of reasons why you may be early:

    -$BPGDM hasn’t made a convincing turn yet (maybe tomorrow, if we see follow-through today)

    -Gold hasn’t even retraced 50% of its previous weekly cycle leg up

    -Gold hasn’t touched either the 150-day or 200-day moving average (unlike the past several weekly cycle lows)

    -Silver hasn’t even tested $25

    -No weekly swing low yet

    -There are a ton of retail stops sitting under $1315, which was also a previous daily cycle low (that level is just asking to be broken)

    -The dollar should be making its daily cycle low very shortly, which will probably result in gold’s daily cycle topping

    Anyway, maybe you will be right. Maybe you will be wrong. I just think it’s too early to be going 130% long. An increase in your core from say 35% to 50 or 60% sounds a lot more reasonable, unless we get follow-through tomorrow (at which point you could up it to say 80-100% long, and then wait for a weekly cycle low to add margin).

    Just my humble opinion.

  44. james r

    Everyone be on the alert for those nasty bear flags. You guys save my A couple of weeks ago. A poster had mentioned about a bear flag forming on gold and this was after I bought shares that day. Lucky for me I knew what a bear flag was (believe me I do) and sold my shares that very same day. The next day gold tank.

    Whew!

    Thank you

  45. thedocument

    You can now see why trading PMs via futures is the superior way to go. Apart from the tax advantages, you don’t have to fret a morning gap. If your evening analysis says buy, you can buy right now, in the middle of the night. If I could convince Gary to use futures while he convinced me not to tangle with the stock market, we’d both be much better off. πŸ˜‰

  46. Gary

    Aly,
    You are missing the point. I would welcome the stop getting hit. It means I would make even more money.

    If GLD touches 128.90 I will exit and try again. So what if it results in a loss. The first loss a month ago has resulted in a much lower entry. So yes it was a loss and everyone freaked out about it but the end result was a much better entry and much bigger profits in the long run.

  47. Jayhawk91

    That was a huge move today in the miners.

    Looking at the longer term charts on the HUI–I’m starting to think that was it and Gary may be right here.

    First off, HUI tagged the 61.8 retracement just about perfectly. (I shaved off the peak wick and that seemed to fit the levels perfectly)

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/1be35d24-b5b0-4ace-9eda-0cda3b19e87f

    Last Feb we went under that level for a few days, but that zone was the bottom. Last summer’s intermediate bottom only hit the 50% level.

    Look at the weekly chart and compare the final sell off last Feb and this year. We had three pretty strong weeks down followed up by a nice reversal/hammer type candle. Also, the WEEKLY RSI 7 levels have only hit this level of over sold 2 times in the last 2 years. Last Feb and now. Both hit under the 30 level and curled up fairly fast.

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/1fcdf22e-9d3a-472d-9727-aacdfefa6380

    This year, we have the three year cycle low on the dollar directly in front of us. I’m wondering if this thing might just take off really hard right now.

  48. Gurvir

    It just occurred to me that a lot of people are questioning why Gary is going in long now including myself. Perhaps this will really make him not want to push the trigger tomorrow morning but isn’t that when you are supposed to be buying? When it’s really hard to hit that buy button?

  49. catbird

    Gary,

    Here’s what has me SCARED…a stone tablet shaped like a chicken burrito hasn’t fallen from the heavens with the word “buy tomorrow” scribbled across it in picante sauce. Until you take a photo of that bad boy and post it in a nightly report I ain’t following you into the breach. The fact that investing is about playing the odds and the fact that your calls usually work out mean nothing, see.

    I mean, I know this is the only secular bull in the world right now and I know you gave us a very clear stop to protect ourselves and I know if the stop gets hit it will ultimately just result in even larger profits…but, but…come on man, you’re WORRYING ME! ; )

  50. Jayhawk91

    I know you have to wait for the week to end on these candles…but so many beautiful hammers on these miners (SSRI, PAAS, SLW, SVM, etc) forming on the weekly charts.

    Catbird-

    You own PSLV in a taxable account and are you a US citizen? Those funds (CEF, etc) are a pain in the rear from what I’ve read.

  51. Greg

    All these comments here are amazing to me. I am definitely the longest term trader here. I never thought Gary should have gotten out of the mining stocks to begin with. If i had of been out I would have been scaling back in the last couple days. But for all of you that did get out Gary is absolutely correct in getting back in tomorrow. One thing is for sure, Gary knows a bottom when he sees one.

  52. ALEX

    Jayhawks

    I agree very much with that chart (at least for now, right??). If its a bounce and gets retested , fine..but I drew a similar chart for GDX a couple weeks ago showing where I WOULD buy if I got a proper signal(set ups).

    http://www.screencast.com/t/ujaPdaLFx9t1

    Its GDX , but you could actually draw the same trendlines on your chart. The oversold areas are RARE on the stochastics. I feel its time, BUT time will tell.

  53. catbird

    Jayhawk,

    Although collectibles are taxed at 28% even if held for over a year, my understanding is that if you sell them inside of a year for a short term gain the gain is taxed at your income bracket–not 28%. Am I wrong?

  54. Jayhawk91

    Cat-

    Got to the CEF message board on Yahoo Finance and search the board for PFIC–It’s my understanding that PSLV is also considered a PFIC.
    —–

    “CEF is a PFIC (Passive Foreign Income Company). It is a closed-end mutual fund traded on stock exchanges. It does not trade futures. It owns gold and silver bullion stored in a bank in Canada. CEF shares are not considered as a “collectible” for US income tax purposes. Gains on shares held over one year may, but do not automatically, qualify for the preferential rate on LT capital gains. CEF is eligible for treatment under the PFIC rules as a “qualifying electing fund” which means if you file the right forms at the right time you can pay tax at the long term capital gains rate on gains for shares held longer than 1 year. If you don’t file Form 8621 it means you accept the default PFIC tax treatment, which means gains for positions held over multiple tax years will be allocated to each year, and subject to tax at the HIGHEST rate in existence for each year and interest is charged on the tax allocated to prior years.

    You have to file Form 8621 and indicate that you want to be taxed by the “QEF” method. You will probably have to get this form from the IRS web site, as it is not supported by most tax software, and most tax return preparers don’t know and don’t want to know about it, and if you do anything with a PFIC in the future that affects the rest of your tax return, you will have to figure out on your own how to do that. Read the “Instructions for Form 8621” at http://WWW.IRS.gov and you will get an idea of what is involved. If you don’t do your own tax returns, before you buy CEF in a taxable account, discuss with your return preparer whether he is qualified and willing to do PFIC returns, and what the extra charge might be.”

    The more I read about all this crap, I decided to drop PSLV like a hot potato last fall. I just found it all overwhelming…Now in an IRA, I think it’s fine.

  55. Jayhawk91

    Cat-

    Go to the CEF message board on Yahoo Finance and search the board for PFIC–It’s my understanding that PSLV is also considered a PFIC. There’s special forms you have to file with the IRS
    —–

    I tried posting the details over and over, but this blog kept deleting me.

    The more I read about all this crap, I decided to drop PSLV like a hot potato last fall. I just found it all overwhelming…Now in an IRA, I think it’s fine.

  56. Gary

    Bob,
    The view on the dollar has never changed. It’s heading down into a three year cycle low.

    My view on the stock market hasn’t changed. It’s still due for an intermediate decline. I could care less though as I never had any intention of getting tangled up in the stock market. The gains trying to short stocks are minuscule compared to the gains possible by riding a bull.

  57. Bob loves Hawaii

    One thing to bear in mind regarding if Gary’s timing or support level is perfect or early. The open interest on the March contracts are rising, anmd the vaults are emptying. In March long investors can take delivery, so we will have a metal squeeze going into that expiration, for sure.

    I am scaling in over the next two weeks at any rate, and I never went as low as Gary did so today was a spectacular day for me and I am well positioned. Relax and enjoy the ride.

  58. jabalong

    “A couple of things. The volume on today’s move. The Blees rating on gold. And I happened to look at the public sentiment poll this evening.”

    Hi Gary, what’s the sentiment poll you’re referring to and is there somewhere we can follow it?

    Also if anyone has a link to data where we can follow the Blees rating changes that would be appreciated too.

    Thanks!

  59. Gary

    I track the Blees rating on the COT spreadsheets every week.

    In order to track sentiment data you would need a subscription to sentimentrader.com

  60. David Kafrick

    People are freaking out because Gary wants to get back in??? lol…

    This is why you should NEVER piggy-back on someone else´s trades. Everyone should do his own homework.

  61. vuvvy

    My mechanical trading system for gold futures is always in the market long or short, and has a track record of 65% winning trades going back to 2001 when GC Globex started trading. It is not based on the pit session.It is still short from1381 and will flip to a long at 1354 with that # coming down every day. It will be 2 straight trades that are winners so the odds say if this does go long it may not be a great trade, but anyone following Gary’s advice will have a very nice reasonable stop.Gary, I also can’t understand why you don’t trade futures. IB makes it so easy being able to trade virtually everything from 1 account.

  62. vuvvy

    Also, I believe today is the last trading day for the near month and may cause a little volatility but hopefully the swing low will hold.

  63. Keys

    You guys pick my thoughts perfectly to why I keep a 100% core in this gold bull. Both entry and exit can drive you nuts! Pretty impressed with some on this blog in beating the pure old turkey strategy so far, but agg I don’t have the heart for it. πŸ™‚

  64. alysomji

    While true, David, the truth is that Gary is a better trader than most of us (at least right now, and probably for the foreseeable future in the case of most of us).

    Add to the fact that most subs work full-time and you can see why they defer to Gary’s judgement quite often. This game isn’t easy, especially for the working joe, and if you don’t have time to analyze it properly – you will really suffer and get hurt. People like Gary are thus a big help to those still interested in playing the game.

    So, it is perfectly natural for many if not most subs to defer to Gary, despite how incredible you might find it. Maybe it’s not ideal but we don’t live in a perfect world.

    Personally, although I’m pretty busy with work, I try to do the analysis myself and use Gary as a consultant of sorts. I trade micro gold futures and have gone to 3 contracts long from 2 (my “core”) – with a stop at $1321.35 on 1 – and will move to 4 if I see some follow-through before the end of the week (need to see $BPGDM make a more convincing turn higher). I will then wait for a weekly swing low before adding more. I typically go to a max of 5 or 6 contracts.

    My analysis right now suggests that there’s a reasonable chance the weekly cycle low is in but it’s far from certain, especially considering how mild the decline has been in the metal (although the decline in miners has been more than adequate). Hence why I’m not going fully long like Gary (not yet, at least).

  65. Strellsy

    Hmmm… We had a pretty sound plan in place, and suddenly it changes. I don’t like these kind of surprises.

    This new plan sounds uncomfortably like the last one that went awry.

    I’m not sure this trading approach fits in so well with your other advice regarding ol’ turkey. One of the mantras you keep repeating Gary, is that you only lose money in bull markets by selling at a loss. And here you are using tight stops and accepting 5% draw downs.

    I understand that the draw down means lower prices, but the new plan seems rushed and reactive. As opposed to most of your advice which focuses on patience and planning.

    Still, I don’t pay you a subscription to then ignore your advice, so I have taken my core back up to 60%. If we get confirmation of the bottom, I will go all in; if we go lower, I will sit it out with my core intact and use the cash to average down at next cycle bottom.

  66. alysomji

    “Gary, I also can’t understand why you don’t trade futures. IB makes it so easy being able to trade virtually everything from 1 account.”

    I agree. Don’t be silly, Gary. You control the leverage with futures – so, the only reason you shouldn’t trade them is if you don’t trust yourself with the buying power you will have.

    I trade micro gold futures (can’t afford the mini or the big as I’m too young with too little capital as yet) and take far less leverage than you, even though you use ETFs. The reason for that is that although very little cash is needed to acquire a relatively large position with futures, I still nevertheless keep plenty of cash on hand and never use anywhere near my full buying power.

    Futures have no slippage and can be traded almost 24/7, and are more efficient than bullion ETFs almost anyway you look at it. Of course, if you want to buy mining companies instead of bullion, you will need to use ETFs (or “build your own ETF,” so to speak).

  67. alysomji

    “Hmmm… We had a pretty sound plan in place, and suddenly it changes. I don’t like these kind of surprises.

    This new plan sounds uncomfortably like the last one that went awry.”

    As someone who’s been with Gary for a while, I can tell you that when most of his subs complain, he usually ends up being right.

    That said, I agree with you about Gary making a 180. You can see my recent blog posts above are indicative of that.

    But, that’s just how it is. At the end of the day, he’s got to publish in his newsletter how he feels and what he thinks is best. If that means he has to change his opinion on a dime, then so be it. We all have to do that sometimes to ultimately end up doing what we think is right. Being flexible in your opinion (sometimes very flexible) is the life of a newsletter writer who wants to be successful, and subs can gripe about it but at the end of the day shouldn’t complain too much because he’s just doing his job.

  68. vuvvy

    Futures do have slippage, so to speak. Any time you’re rolling from the near month to the next you pay a premium of a couple dollars which dwindles to the next expiration. This premium is used for insurance and storage at Comex vaults.

  69. David Kafrick

    alysomji,

    If someone doesn´t have the time or inclination to learn about the markets, then they shouldn´t be involved in it. All I am saying is that piggy-backing other people is not a good way to approach the markets. Not because Gary isn´t a great trader, but because unless you give your money to Gary for him to manage it personally, you will screw it up. At some point people will screw it up, if they are depending on other people´s decisions to make their trades.

    I´m a proud subscriber because I use Gary´s material as a way to learn about cycle analysis, which is something I knew nothing about. And I expect to use it to improve my results. But I would never ever try to follow someone else´s trades, because I know the chances are very high I will screw it up badly at some point. It´s simply impossible to follow someone else´s trades perfectly, simply because we are all different.

  70. basil

    Gary,

    this all seems like a waste of time. In out in out. How is that old turkey? This just turns into the proverbial noise. I guess that is what a blog is all about, something needs to happen and be talked about. How boring would it be for a blog to just sit on a position until there is proof that a D wave is beginning? I don’t see how this in and out makes you any money. For the second time in 24 hours I am referring to Jim Rogers, and the same is probably true for all old school investors. You don’t sell anything of what you believe is in a bull market, and when it dips you just buy more if you are liquid enough. Isn’t that the better plan?

  71. David Kafrick

    basil,

    You are quite wrong. Gary already made more money than an investor in the past few months, simply by exiting his positions when gold was trading above 1400 and reentering today wit gold trading at 1330.

  72. Gary

    Basil,
    There are very clear reasons to get out…and to get in.

    The reason to exit last month was because a daily cycle low was broken. That almost always means an intermediate decline has begun. If that is the case then getting out is appropriate because the odds are high one can re-enter lower. That is the only reason to stop out is if one has high odds of a lower entry.

    So what has happened since hitting the stop? That’s right an intermediate decline unfolded and now we are entering at much lower levels than we exited.

    If the next stop is hit it will mean the same thing that we should get an even better entry.

    Those lower entries mean that in the long run we will recover all those minor losses and end up making a lot more money.

    That’s why I keep trying to explain that hitting a stop below a cycle pivot isn’t a bad thing it’s a good thing because it means we are going to make a lot more money.

    The problem is that people are conditioned to view a draw down or loss as a bad thing, when in reality, in this case, in a secular bull market, it’s actually a very good thing.

    We are proving it with today’s entry that is much lower than where we got stopped out at a few weeks ago.

  73. vuvvy

    WTF is everyone complaining about? It looks like a stretched daily cycle that bottomed yesterday with an extremely tight stop (in gold standards), and a potential intermediate low,bottoming potentially on option expiration shenanigans.Just buy,put your stops in and don’t overthink.

  74. basil

    perhaps you are right, I don’t know. Seems it works on some trades and on others it doesn’t. Only because one’s timing is right one time doesn’t mean it is the previous or the next time. So with the exception of a D wave draw down, wouldn’t it at the very least be the same result if you just sit out the rest of it?

  75. David Kafrick

    basil,

    It all comes down to the question: Do you have an edge?

    If Gary believes he has some kind of edge, than he is absolutely right to try and time some tops and bottoms. Given that he has an edge, it will perform better than simply buying and holding.

  76. alysomji

    David, I disagree with you completely. If a sub gets anywhere close to Gary’s performance as far as trading is concerned, he/she should consider himself/herself pretty happy about that – especially if he/she works full time. You seem to live in a world of ideals where if something can’t be done perfectly it shouldn’t be done at all.

    As I explained earlier, it is perfectly natural for many if not most subs to defer to Gary, despite how incredible you might find it. Maybe it’s not ideal but we don’t live in a perfect world.

  77. basil

    Gary,

    Well, my reply to David actually works as a reply to your comment, to.

    I appreciate your explanation and give you the benefit of the doubt, meaning that I suppose you know what you are doing when you trade the PM market.

  78. alysomji

    No, basil and David, what it comes down to is whether you’re able to buy back in at a lower price than you’re selling at. If the answer is no, then in a secular (or even cyclical) bull market you should just keep holding until the fundamentals change and a permanent top can be confidently said to be in.

  79. Gary

    A big bonus this morning is that gold is down substantially. Our risk at this point is about $12.00.

    One can’t ask for much better than that.

  80. alysomji

    And, for what it’s worth David, I agree with you on one thing: if a sub falls on his face after “following Gary’s trades”, he/she should take responsibility for that and not Gary.

    But, fact of the matter is, Gary will continue to have an overall positive expectancy on his trades for the foreseeable future, barring a significant decline in the quality of his analysis due to some as yet unforeseen circumstance(s).

    So, if a sub decides based on his/her own judgement that it’s wiser to listen to Gary for one reason or another, there’s nothing wrong with it – so long as he/she also accepts responsibility for any losses that may come with this decision.

  81. basil

    David,

    I don’t get the word ‘edge’ in this context. If edge is based on a gut feeling I think it’s just gambler’s luck. If it is based on waves, and cycles, and other forms of analysis – I can show you other traders with an analytical ‘edge’ who will tell you that gold is headed lower. Edge is if you have some information that others don’t. With all due respect, I don’t think Gary has that information. He is definitely more experienced and knowledgeable than me, but so are all of the people on CNBC.

  82. alysomji

    “When the fundamentals change you will be holding the bag alone.”

    Quite the contrary, David. Secular bull markets almost always top after the fundamentals have changed. Gold will top well after it becomes relatively expensive and stocks become relatively cheap.

  83. David Kafrick

    If you don´t believe such a thing as an edge exists, than whatever you buy (gold, stocks, oil, grains) you should never in your lifetime sell it. Because the moment you sell something, it´s because you believe you have an edge.

  84. David Kafrick

    The cemetery is full of fundamentalists. People who understand and know much more about fundamentals than any of us. If only making money was this easy… simply follow the fundamentals.

  85. alysomji

    For what it’s worth, David, I’m not a fundamental trader. However, I’m not so naive as to believe that fundamentals don’t ultimately determine the long-term direction of the market. They absolutely do and I challenge you to prove otherwise.

    In other words, the gold secular bull market started well after paper assets (stocks) became very expensive relative to hard assets (commodities, and gold in particular). Likewise, it will end well after the opposite occurs (paper assets, mainly stocks, become relatively inexpensive to hard assets).

    The first thing that changes before a long-term trend begins or ends is the fundamentals. That’s because the long-term trend cannot even get into place without the right fundamentals being there well before hand. This has been the case throughout history.

    A quick look at the most successful investors bares out the importance of fundamentals in determining long-term trends (Soros, Jim Rogers, John Paulson, Warren Buffett, etc.). These gentlemen base their views on fundamentals and will only consider technicals for timing entries and exits (if at all), and for no other reason. To me, that is what technical analysis is for – timing entries and exits. Every long-term trend starts well after it has well grounded fundamental roots in place. Likewise, every long-term trend ends after its fundamental roots have disappeared.

  86. Keys

    The most important part is the fundamental story. If I happen to get stuck in a drawdown, fundamentals change, and I get a permanent loss, so be it….An old turkey strategy is based upon conviction at the beginning.

    That being said, I for one am always testing the fundie story, as it is the Achilles heal to the old turkey….Everything in my view is strengthening for the gold bull, which allows me to keep the path. Price btw has to be meaningless for a buy and hold in a bull, except to add perhaps.

    Also the risk of Gary’s trading practices, from a turkey’s perspective, is the opposite of a traders. Being out of the market is more risky than being in it. The other risk is if the strategy is thrown a curve ball, and either an entry or an exit cause a severe amount of pain because the person is thinking like a trader, and after hurting never touches this bull ever again. Humanity is a very important part of old turkey as well. Many old turkeys, I would imagine, have been burnt severely on the trading side. I know I have.

    Just like TA, fundie analysis takes great skill…also it can’t be based upon any single item, but a series of information…fundies kept me out of the market in 2001, and I made money riding the bond yields instead, fundies kept me out of the market in 2007/2008, and fundies got me back in to a selective group of sectors in march 09(out after the bounce). Like anything in life, if it ain’t your thing, try something else.

    Whatever works is always the best way.:)

  87. Gary

    Just to make the point. The oil trade in 08 continued despite the fact that the world was awash in oil. Tankers were sitting in the gulf with no place to drop their load.The world had already fallen into a recession, demand was already collapsing.

    What drove oil higher was human emotions.

    But the secular trend began in 2001 not because of emotion, but because of the fundamental driver of too much demand and too little supply.

  88. Shalom Bernanke

    Good points, basil, except for the CNBC comment. From your questions and observations, you’ve already proven you know more than most of the clowns on that channel.

    I started making big money when I dumped the propaganda box. Anybody that thinks CNBC (or Bloomberg) is giving them an edge is mistaken. More information is better, but only if it’s legitimate and useful. The rest is noise at best, lies at worst.

  89. David Kafrick

    alysomji,

    The fluctuations around the fundamentals are so huge, that knowing about the fundamentals is irrelevant to making decisions about entries and exits. At most, the fundamentals might give you a bias around which you will trade.

    By reading your last post, I see that we actually agree on some points. Where I disagree with you, is that you think that timing techniques should only be used to time the ultimate top, while I believe that timing techniques should be used to time lots of tops and bottoms, given that one has some kind of edge at timing these tops and bottoms.

  90. Jennifer

    Gary, could you possibly post to twitter when/if the stops are hit for those of us who don’t have trade triggers through our brokerage, and can’t be in front of a gold chart all day?

  91. Gary

    Jen,
    Virtually all online trading platforms have the trade trigger option.

    You could always call your broker and ask them how to place a trade trigger.

  92. Shalom Bernanke

    Although we could see higher prices this morning, I’m sticking with my core and not buying into strength.

    I will add into a late morning pullback, should it occur.

  93. thedocument

    Listen folks, the ability to change one’s mind on a dime is a vital characteristic of a successful trader. Stubbornness gets you nowhere in this business. How many bloggers do you know will stick to a view for the sake of consistency or worse, ego, when the conditions have changed and merit a different view?

    Now, if anyone wants to debate Gary’s decision on a technical point, we’re all ears. That’s what these discussions are for. But when I see someone criticizing Gary simply for doing something he wasn’t planning the day before, it just tells me the commentator is not an experienced trader.

  94. Slumdog

    On the 60 min gold chart, the reversal is in. It’s not a slam dunk, but it’s an outside bar and that means there’s a direction change. It’s not the most powerful 2 bar chart pattern, but it’s just now occurred, 6:30 am pdst. I’ve gone long but only on a mini. The target is 1340-45 on the hourly chart.

    For a reason I don’t understand, the 1334-43 gap is not an area where the market is comfortable trading. It runs through it, but is not delighting in slicing and dicing it, at least not yet. I think this time, it’s gonna make mincemeat out of anyone who can’t trade in the moment and even for us, it’s gonna be vicious.

    Silver’s at a recovery high and gold is still unwilling to jump into the gap.

  95. DG

    One thing that has not been mentioned here is the fact that this is a daily cycle low regardless of whether it is the IT bottom or not. That means we ought to rally for a few days at least. If that is so, we will have a profit and can decide based on the quality of the rally whether it looks like the real thing or not and do what seems appropriate. Gary: am I missing something here?

  96. Gary

    DG,
    My thinking exactly. I think if the cycle starts to show signs of weakening I will probably be able to spot it and exit maybe even with a small profit before the stops are ever hit.

  97. Slumdog

    IMO, today, the market will chop and end up within a few points of where it is now, unchanged. The movement here imo is exhaustion; as I posted in my kitco thread hours ago, this is a directionless market, imo, because of the NY Market gap which has some impact I’m not familiar with over the market behavior. So, the chop is as all can see turning out this morning to be vicious, and thus every direction-trader has been burned, and will soon step aside.

    Nice day for running errands.

  98. DG

    David K: I am just about to get a buy signal on the dollar and have just gotten a sell on FXE. These signals are trading signals but quite accurate, though sometimes early. I will be re-entering my EUO trade should the dollar drop even a little from here.

  99. Onlooker

    Wise words doc. The investing world is littered with the bodies of those who’ve stubbornly stuck to their viewpoint/forecast, as their investing accounts were shredded. Most of them are really in the business of taking others’ money in exchange for their “brilliant” views. Marketers, not smart investors.

    It’s one thing to hop back and forth sporadically, reacting to the wiggles in the market, etc. That would be cause for concern. It’s quite another to change based on a reasoned rationale and not being stuck in a viewpoint. And with a specific plan if it goes awry.

    I, for one, thank Gary for being so independent minded as to take this step. It would have been easy to just stay his the previous viewpoint, but he laid it on the line with us. Everyone is free to take their own course.

    That said, it’s fair to ask questions for clarification, though you should take the time to review what Gary has said before just firing off the cuff. Understanding his methodology is key. Those who just follow the trades without understanding that are bound to be lost, and unable to prosper from it.

  100. basil

    Doc,

    changing one’s mind is not a problem necessarily, depending on the frequency. Ultimately whether a trader is right by changing his mind is determined by the result, not just by the fact that he’s changing his mind.

    And in general, why are some people getting so wound up here about Gary getting attacked. He’s not getting attacked, and he doesn’t need protection. Not every one shares every single of Gary’s opinion, and nor should they, if you ask me. But it seems some here can’t take a bit of controversy. I never understood that about fan following. Can’t we appreciate Gary’s blog without being slaves to his trades?

  101. DG

    Gary: You mentioned one of the items that had yo u think this may have been the IT bottom was volume. The ETF’s didn’t have all that much. What were you looking at?

  102. pimaCanyon

    DG,

    You said you have a sell signal on FXE. So why are you waiting for the dollar to drop a little more instead of just taking the signal and buying EUO now?

  103. Jayhawk91

    Gary-

    For the ultimate safe call, when would the new intermediate low be confirmed? (Weekly swing low one would assume-What price would that be on POG)

    I’m putting my in laws in some positions so I want to be very conservative.

  104. David Kafrick

    jayhawk,

    In my opinion, buying here is much more conservative than buying up there. By the time a trade is preceived as conservative, it is probably near the end.

  105. DG

    Pima: Just being conservative and waiting for extra confirmation. I pull in my horns when I have been wrong a bunch—which I have been this past six months. But it triggered after that last post, so I am now back in EUO.

  106. Gary

    David,
    Correct, buying now has much less risk as the stop is very close.

    Jay,
    How will we know the intermediate cycle has bottomed? The stop will never get hit.

  107. DG

    David K. No. When I get one of these short term buys it gets me a very good entry point, and there is usually a sharp move soon after. Then I place a break even stop. I get out via tape reading or TA (a light volume new high, high-volume reversal, severe overbought, etc.) I very rarely have targets.

  108. Gary

    FWIW I doubt the dollar will be able to rise back above the downward sloping 50 DMA plus there is a resistance level around 79. Even if the dollar cycle bottoms here I doubt it’s going to get very far before rolling over into another left translated cycle just like the last one.

    The last one only rallied for 6 days BTW. I expect the next one to be the same or shorter.

    There’s little doubt at this point that the final push down into the three year cycle low has begun.

  109. Gary

    It’s not possible to have a weekly swing this week. However if gold can move above the intra week high of $1353 next week then we will have a weekly swing.

  110. pimaCanyon

    I’ll take a stab at the weekly swing low question. Two possibilities.

    1) If this week’s bar were to make a weekly swing low, then it would have to print a price above last week’s high, which was 1378.90 on the March futures.
    2) If this week’s prices do not go above 1378.90 on the futures, then next week would have to trade above this week’s high, whatever that turns out to be. Also, I believe next week’s low could not trade below this week’s low.

  111. notGreedIsGood

    anyone have any idea why gold has given up all of the gains since the fed announcement, but silver is still holding up well? it also looks like SLW and other miners aren’t doing too well

  112. Gary

    Actually if gold traded above last weeks high it would form an outside week. That’s not a swing low. The earliest a weekly swing can form is next week.

  113. sophia

    Gary, Doc,

    You were both pretty bearish on stocks last few weeks. Now that Gary thinks that Gold has turned the corner, what is your view for the stock market in general? Thanks for your input

  114. Onlooker

    Jayhawk

    Well first of all we have to wait until next week to confirm a weekly swing low, and that assumes, of course that this week’s low holds.

    If so then it’s this week’s high at 1353, and that assumes that that stays the same; i.e. is not exceeded this week.

  115. Gary

    Sophia,
    My view is that it is due for an intermediate correction. The fact that it has made it almost all the way through January is a sign something unusual is happening. The market should have begun moving down several weeks ago. It being supported by the dollar’s move down into the 3 year cycle low.

    So the possibility is there for an extremely stretched cycle that may continue to grind higher until the dollar puts in the three year cycle low.

    Now you see why I had no desire to short the market.

    The time to short will be when the three year cycle low bottoms. The rally out of that major bottom should correspond to the next brief deflationary period, just like it did in 08.

  116. Poly

    Just like last April, all of the (equity) bears got tired and broke waiting for that decline, even though it was so obvious the market need a correction. Weeks went by while the market just crawled higher and higher and eventually all gave up, afraid of being wrong so many times. Of course, it’s precisely then that the market rolled over and caught everybody by surprise.
    In my book (as worthless as it is πŸ™‚ this market is about to finally roll and at least initially take all ships with it.

  117. LowTax

    Gary, thanks for continuing to follow the SPX – I have at least one account where I am restricted to trading stocks (no commodity exposure is available).

    DavidK – I have to strongly disagree about following Gary. I have been doing so for a couple of years now with great success and I am NOT a trader. I have a day job and can’t follow the markets. But I am fully aware of our macro situation and agree with Gary’s long term call. I am able to do exactly what he does with no errors. It’s not terribly hard.

    To NOT be involved in the markets at this juncture simply because one is not a trader is ridiculous – the risk due to currency collapse is far too great to sit on one’s hands in a bank account.

  118. Gary

    Yes trade triggers should have activated. Now we will jut wait patiently for the next opportunity. Perhaps it will come at 41290 maybe at $1265.

  119. Slumdog

    .9x, x being 60 pts, was just reached. IMO, this is close to the bottom if not the bottom. I’m long at this point. And it’s doing the bounce.

  120. Poly

    Couldn’t have asked for a better way to have been stopped. Barely in and then out is better than in and out for -10% πŸ™‚

  121. Natanarchist

    shoot..I miss the nightly email. I sometimes forget to check the blog, but I always check the email…Anyway.. I see we have plan change..hmm..I still have my core so I am staying put. I am going with the “Gary is always early call”..haha. I prefer not to trade in and out of positions or get stopped out. Since I don’t trade a lot, I almost never use stops. I would rather just commit the cash and let the market correct my timing. I am speaking only of Gold/Silver. I am going to wait. At least a week. I agree with Jay or nikeboy or whomever it was that said, ‘this feels eerily like last year.’ I don’t mind missing a few percentage points to the upside..because that is what my core is designed to capture.

    BTW, I can type, twiddle my thumbs and chew gum at the same time. Its all about practicing.

  122. Yash

    my 2c .. gld ma144 gdx ma252 ..again and again I think …

    gld its 127.80 todays low 128.47

    gdx its 51.77 last low was 52.46

    if both hit above then huge positive divergance rsi(5)

    keeping it simple

  123. Daniel

    Gary–
    Even though it was worth the shot I still think this was a good strategy!! Fundamentals haven’t changed and we will get buys at lower prices. Small risk for high reward. Thank you for your analysis!!

  124. DG

    That was painless. The advantage of tight stops. I posted a month ago that I will trade almost anything if the stops it tight enough. I lost $680 all told in the PM trade. Irrelevant. (I bought SIL and GDXJ at the bottom on the 25th, which helped. I got a buy on SIL that I didn’t post. I will next time.)

    David K: UUP seems to have bottomed on cue, for now at least. No idea how far it will go.

  125. Onlooker

    Of course the dilemma here is that we don’t know that yesterday marked the cycle low, and this may just be a nasty stop run that sets a marginal new low for the daily cycle low. Could be ugly.

    I’m staying with what I bought today, for better or worse (I’m not leveraged here). I’ll let the bull cure my timing and forgo any possible gains I may have made by getting in even lower to ensure that I don’t lose money on a stop run whipsaw. I can add leverage if we go lower.

    Brutal day

  126. Avann

    Onlooker … I’m with you … since I don’t hold a core usually I’ll just keep what I bought as a core position … seems like a good price.

  127. ALEX

    That was a shake-out

    miners have light volume pullback./.my indicators are majorly oversold (on light volume)

    I think this will be bought

    I.M.H.O.

    if that was hard to buy??

  128. Jayhawk91

    I’m with your for now Onlooker. I added a smaller position as my plan was to scale in. But that small position got rocked pretty dang hard. I’ve gotten killed now three times (I bought in front of that panic sell back in Nov when they change margin limits) Trading these guys has taken 10 years off my life, which is good because at this rate I won’t have any $ left to retire on! πŸ˜‰

    The move did seem like a blast the stops thing. Hmmmm.

    Bear flag nailed the target perfectly too.

  129. DG

    Gary had written a while ago that we ought to have a bounce that looked good enough to suck some money in before the final low. Well, there it was. Gary: I am really starting to wrap my head around your point that declines, even after getting stopped out, are good because you get in cheaper. Losing some now and making several times that loss in extra gains later is worth it, if it plays out that way. For me, buying the next bottom will be easier because the sentiment will be even worse.

  130. LowTax

    3% loss – bought in way too early this morning. But as with the previous trade, we’re more than likely to make up for it with lower prices. Cest la vie.

  131. TommyD

    Gary,
    Thanks. I worked with my broker, this morning, to establish triggers. While I was away it worked perfectly for me, placing me back to core. A 3.3% drop that I can live with instead of my emotions losing more for me…

    Tom

  132. Gary

    Let’s keep our fingers crossed and maybe the stock market will correct and send gold down to $1265.

    Now that would be a buying opportunity.

  133. Gary

    The miners are starting to resist the decline in gold. Gold has made a new low but the Hui is holding almost 3% above yesterday’s intraday low.

    If we see this continue and gold can push below $1300 that would be a good sign.

  134. Josh

    Cherry popped today. My first big loss in the markets. Down 4% in about an hour per the plan.

    Had that Charge of the Light Brigade feeling the whole time I was placing the order too.

  135. David Kafrick

    Gary,

    At what point, for you, do lower prices in Gold stop being a buying opportunity to become a warning that something else is happening.

    This is not a criticism, it’s a genuine question. Just wanted to know if there is any level beyond which a red light would light up in your brain.

  136. Gary

    David,
    I would have to be convinced the bull market is over and the fundamentals have changed.

    I will take another stab at the next Fib retracement which comes in around $1290.

    Now I’m off to climb some rocks.

  137. aviat72

    That 1265-1270 zone is also the 23% retracement of the move from the 680 low in Oct 2008.

    The topping pattern in Gold this time was much longer than the past. In the past we would typically have a spike which would be followed by a quick fall. This time we spent almost two months forming the top. That suggests that a lot of distribution took place above 1400. Perhaps it will also take LONGER not only to find a bottom, but also to find a base.

    It is also possible that money is moving out of PMs and into equities. Certainly the strength in equities suggest that a major reallocation out of other assets has taken place.

    In some way we might be heading towards more normal markets where negative correlations between multiple asset classes return rather than the asset up-asset down trades for the last two years. I am quite surprised at the way the market has brushed aside the Japan rating downgrade. Japan is the world’s second largest economy and biggest debtor nation. Though most of their debt is domestic owned, it is still a significant event.

  138. Jayhawk91

    “SLV looks like it wants to close that gap on the daily chart around $25.50”

    Also appears to be in a bear flag (15 minute chart) that measures to that area.

  139. Onlooker

    Therein lies the problem at this point Gary. If the miners (and maybe silver) diverge positively while gold makes a new marginal low, you may end up taking a loss on this stop out unless you get the timing juuussst right. Who knows, but it’s possible. Of course it could go quite lower which makes your move the right one.

    I do think it’s possible we make that lower low, I just don’t want to trade my way to losses at this point.

    Everybody has to make their own decisions here and own them. Those who may want to start throwing tomatoes at Gary for this whiplash need to just STFU.

  140. David Kafrick

    aviat72,

    That´s a very good point about the enormous trading range that formed the top in gold. If that happened in the stock market, I would definitely say that we were in for a long decline. But since I am relatively new to trading gold, I can´t say the same applies to this market. But looking at past few corrections, they all started with tail tops. So there is definitely something different this time.

  141. DG

    Just a thought that may work for some people: I rarely enter a large position all at once. Gary has said things like “what’s the difference about catching the exact bottom if we go to $1600?” The same is true for position sizing. Unless it is a near-perfect set-up, put in a chunk and see how the market acts. You can still get fooled (there is no way to do this without some scenario or other hanging you), but by adding on the way up you have a profit cushion. I bought some one the 25th when my stuff flashed a buy, and added this morning. I’d never go 130% in one shot. Had they acted just right I’d have added more today. Losing 3-6% in a day is unacceptable to me unless it’s on a position that is in the black big time, and adding slowly is less of a gamble. Anyway, just a thought…

  142. David Kafrick

    By the way, the low end of the big trading range is 1317. In case Gold closes below this level and trades below there for 1-3 days and then reverses hard, that would set up for a huge head fake and gold would be ready to resume its uptrend.

  143. DG

    David K: Yeah, that makes sense, especially given the heartbreak all the guys who bought the bounce yesterday are feeling to day. Break $1317, stops and pukes trigger to about $1300, and that’s all she wrote for the decline. Seems like a great way to shake out the largest number of people before the rally resumes.

  144. Gary

    My best guess at this point is the dollar rally that is now due pushes gold down to the next fib level and stocks down into a daily cycle low. It’s getting too late in the current cycle to have enough time for an intermediate degree correction at this point.

    Then as the dollar rolls over into the next leg down gold finishes the intermediate bottom and the next leg in the C-wave gets underway.

  145. notGreedIsGood

    Gary

    are you suggesting that it’s likely we are going through the intermediate correction in gold that will stop at 1290, and that the stock market will correct to the daily (and yearly) cycle low?

    not

  146. Josh

    DG:
    I’m pretty new, and today didn’t work out well for me going in with full size all at once. However, I was buying on Tuesday at the lows, and if I’d gone in with size there I would have come up aces. Isn’t this question of scaling in mostly a hindsight issue?

    I don’t think today’s trade was bad per se — buying a swing low within a few percent of a good stop — it just didn’t go my way. I think if I took that same setup ten times I’d probably make money seven times and lose three.

  147. basil

    Onlooker,
    that’s what I would think of you when I read your comments. Don’t project on me, please. People who tell others to stfu are annoying, and should actually take their own advice to heart.

  148. DG

    Josh: Scaling in is not a hindsight issue. I am not suggesting scaling in after the fact, but as a consistent practice. You will make less some times and lose less other times, so it’s a question of risk management and trading style. If a big hit makes you gunshy at the next bottom, better to plan for that ahead of time. Most people on this blog have been stopped out twice now, and I was suggesting an alternative approach for the years to come so that people don’t buy too small at the future bottoms after a couple of major stop outs sows doubt and/or fear.

  149. Avann

    DG … I’m with you all the way … I always scale in and out … I know where my head is at and if I go all in or out I usually freak out too soon. Today’s was a perfect case … I’m just holding onto what I bought because it wasn’t too much πŸ™‚

  150. Uatatoka

    Ouch…rough January. I was all happy and content in December to sit tight for a couple months. These whipsaws in the PM’s are painful – not trivial by any means.

  151. Josh

    DG & A:
    So you guys use scaling almost as an emotions managment tool as well as risk management tool. That makes all kinds of sense to me. I was very nervous this morning, even before I took the position, and even tho I was pretty sure the selling pressure would lighten at some point today and give me a better exit I didn’t have the stomach to wait for it.

  152. pimaCanyon

    DG,

    Do you have a stop for your short Euro trade?

    And how do you reconcile going short the Euro with Gary’s forecast for a 3 year low coming up soon in the dollar? Is this short Euro trade a short term trade for you, a few days, maybe a week?

    Some analysts are seeing a large decline in the Euro ahead which, again, does not jibe with Gary’s 3 year dollar low. Is it possible the Euro AND the dollar could go down together? (Not likely since about half of the dollar index is inverse Euro, no?)

  153. ALEX

    Jayhawks

    Good observation on Bear flags, but I was on a 3 day chart and it also looks on many stocks that todays sell off simply went to the 50% retrace of the move off the bottom ( Tuesday to now).

    It felt like a light volume shake out…if sellers are gone, buyers may come back in at days end.

    I have seen HUI and GDX LEAD gold in the past often , and for a $26 gold sell-off , Hui down $11…Its (AT THIS POINT) a sign of strength.

  154. coolkevs

    oof – well, my tiny speculative play didn’t go my way in GDX. oh well, I guess 1350 did prove to be pretty tough resistance. Anyway, not much new to report in DeMark land. In SPX, there is an outside shot that it could reach 1333.58, double the 666.79 low. Something called D-Wave 5 up minimum target is 1342.88. Kevin Depew recommends start of scaling short into some positions for active traders.
    As a reminder, metals and miners could be seeing a relief 1-4 day reprieve from here, but the forces are pointing to lower prices – most likely in the mid 1200’s.

  155. pimaCanyon

    DavidK, right. The question was rhetorical, as in stating the obvious.

    Tough call here though, because the analysis that concludes the Euro is in for a big decline makes sense. Except for the fact that the dollar is coming into its timing band for a 3 year cycle low.

    It would suck, though, if the Euro did decline way down to 1.25 or lower. On that much of a dollar rally, PM’s would likely take a pretty sever hit.

  156. sophia

    Dear Gary,

    It has been quite a day and I admire your cool approach…
    Could you please explain something ?
    You said:
    “dollar rally that is now due pushes gold down to the next fib level and stocks down into a daily cycle low. It’s getting too late in the current cycle to have enough time for an intermediate degree correction at this point”.

    Do you mean that the stock market and the dollar cycles are so strechtched that it is going to be a blood bath considering that we have only 10 days to finish the cycle?

  157. pimaCanyon

    yeah, what is the deal here with the miners? gold hitting new lows on the day, now at 1316.7, but miners not tanking, more like going sideways…

  158. David Kafrick

    Well, in theory it is not impossible for EURUSD to go down and Dollar Index to go down as well, but for practical purposes it is. For example: If the Euro depreciated 5% in relation to the dollar, the dollar would have to depreciate way more than 25% in relation to the Yen.

  159. ALEX

    Also possible that miners could sell off at days end. Today could be setting up an intra day a-b-c down, …

    …BUT, if GDX and HUI retestd tuesdays bottom on lighter volume, It would be a BUY signal again, support would hold again πŸ™‚

    Heavy volume sell off would be capitulation , wash out…and even a better buy. But for now…IMHO…nothing has changed for me (YET)!

  160. TZ(5288)

    Didn’t buy anything last 24hrs on this latest plan. Too many things suggested it wasn’t a buy point. I said earlier that 1305 +/- $5 is my call and that’s where my orders are live. (I did trade a higher level a few days ago and got stopped out. I have about 3-4 buy levels where one should hold)

    Gold futures go into delivery starting fri evening as well. Being SO CLOSE to the previous low in gold of 1315.60 right next to delivery is too tempting for the guys in charge. We are likly to hit that and drop down within the next 24hrs and the run stops and reduce the # of contracts for delivery.

  161. Onlooker

    Oh basil, basil, basil

    I really don’t know why I bother, but…

    I didn’t address you, or anyone in particular, now did I? So why are you so touchy? Did it hit a little too close to home?

    I was merely saying that those who want to come here and torch Gary, blaming him for their own trades, should just keep it to themselves.

    As for you, well… STFU

  162. ALEX

    Wow Jayhawks

    47 on the GDX would actually be a retest of the last IT low on the same leg up! I dont think that has ever happened before ( but never say never).

  163. thedocument

    Alex,

    I agree. I was looking for stops to be run, and we got that today, so I bought some silver under $27. But since the dollar is due to bounce into a new daily cycle, I’m not sure we’ve seen the last of it. Still not using leverage, as I have not seen the ideal circumstances for doing so.

  164. basil

    Onlooker,
    took you an awful long time to come up with that reply. Must have cost you some hard thinking. Why don’t you just look on as your name suggests, which would make you less annoying and would also take up less of your time churning out these useless comments.

  165. EricH

    Gary,

    If GOLD goes straight down over the next few days to 1290, would you buy on it’s move down or wait for a swing low to re-enter your position?

  166. DG

    Pima: My exits are often by feel or tape reading. Entries are more mechanical because I can wait for just the right pitch (it’s an annoyingly asymmetrical game.) Sometime, if there is a level that “should” hold and doesn’t, it will get me out. So this is to say that I don’t have a stop-price for this trade, but it’s small because I have been quite cold this month. I like that old line: The first rule of holes is that when you find yourself in a hole stop digging! Applies to trading as well. Push your position sizes a little when hot and cut back when cold.

  167. thedocument

    Everyone needs to stop fretting seeing an equity correction drag gold down. Go back and look at the April-June period. Gold was rising while the S&P was tanking. In particular, gold was up $33 on the day of the flash crash! Maybe the tail end of a stock decline will drag gold into a daily cycle low or something, but just judge gold by its own cycle state.

  168. Nike Boy2008

    Basil and Onlooker are really funny…

    pure entertainment..on a bad day like this πŸ™‚

    reminds me of the time when my sister and I used to fight when we were young

    thank you guys..a lot of people got creamed today..can’t let our emotions get the better of us..Like Gary says, once the bull gets going we’ll make it up in a day or two

  169. DG

    Gary (or anyone) When were the last two dollar 3-year-cycle lows by your count? What is the range of dates for when the next one is due?

  170. pimaCanyon

    okay, now I’m getting scared, gold dropping like a rock.

    I had thougth 1313 might hold it, but it looks like 1305 is a lock. At least.

    Gary may get his 1290 TODAY!

  171. Ben

    Jennifer, it seems that every week since I’ve read this blog, there’s somebody new beating their chest. Macy blimp-sized egos usually flame out pretty quickly and vanish.

  172. sophia

    Daniele,

    What I meant was that Bonds corrected in October, Gold is correcting in January, so stocks should correct soon….unless everybody is waiting for it and it keeps going higher…

  173. ALEX

    PIMA

    volume profiles..not exactly sure what you mean, but as for volume itself on my charts…

    I would be BLIND without them.

    SIDEPOINT:

    Gold down $32 @ $1312

    HUI and GDX still holding up , not even at today’s lows yet. This is not scary guys , this may be a gift.

  174. Slumdog

    Gold hit 1312, 100% of the hi/lo of the high and following low, measured from the bottom of the that lo, and it has bounced insignificantly, but it bounced at that number, 1312.

    The stretch can occur, but right now, imo, it’s attempting to retrace. I have no info on retrace percentages.

  175. pimaCanyon

    there’s a big channel line on the GLD chart, lower line starts at the Feb, 2010 low, and is now around 125.50. GLD may be headed there. I’ll try to post a chart later, headed to dentist now.

  176. ALEX

    SHALOM

    Everytime I read your posts , I SWEAR I hear them in my head with Bernanke’s VOICE!! I’m not kidding πŸ™‚

  177. Onlooker

    Looking at the gold futures, /GC, they just kissed the 144 DMA at the low (missed by .7 pts). Interesting when put together with the pos div on miners and silver.

  178. thedocument

    Alex, the miners are also diverging positively from the PMs and gold definitely saw a run on stops today. Even if today doesn’t mark the bottom, it’s probably not far off.

  179. oa92000

    “Shalom Bernanke said…
    Unless of course a stop is hit, then one should always exit. I’m up to 50% invested now, looking to add more.”

    I added 10% to slw & sil.But I still think SLW will go to 28..

  180. murmur.on.hudson

    I rarely make any comments here and don’t mean to offend anyone. But setting stop loss orders out in the open is like letting thieves see you sun-tan your cash in the backyard. According to my book, now is the time to accumulate gold positions on the way down. Don’t use margin and forget about your positions before the time to sell them. What are market-makers at HSBC, JPM or GS going to do? Nothing, just a matter of whether they are screwed by me sooner or later.

  181. Nike Boy2008

    fwiw..before the last two intermediate bottoms, we saw huge BoW on GLD…check out July 27 of last year…

    the intermediate low happened the next day..

    so far we’ve not seen any BoW for GLD (not huge amounts)…

    maybe this is insignificant, but worth a look

  182. ALEX

    DOC

    Same thoughts here. I am thinking that even if gold shoots down tomorrow , It may only drag the GDX back to tuesdays lows. Gold Down $33 today and GDX is only about 1/2 way there?? Pull up a 5 day / 30 minute chart of say SLW or NG. Sellers dried up (SO FAR)

    SO FAR , the REAL volume was buying late yesterday , selling this afternoon is VERY LIGHT. LOOKS LIKE most sellers are out.

    MAYBE tomorrow Gold sells off below 1300, MAYBE it drags GDX to Tuesdays lows, but it looks like weak hands are out at that point, then reversal to complete that chart that I posted πŸ™‚

  183. Marc

    Lots of folks trying to predict or even catch the bottom. Price is a function of demand and if there’s no demand then it doesn’t matter how cheap it looks.

    Best bet is to wait for a bottom that sticks even if you miss out on the initial pop. Of course, this strategy does nothing to satisfy the gambling urge in most of us πŸ˜‰

  184. Shalom Bernanke

    o0a9200,

    I agree, SLW led the way up, now lower, and is still weak. Although I will be a buyer at different levels bwlow here, I’m confident SLV will close that $25.5 or so gap, and maybe even $24.35

    Action like this typically precedes more of the same, so will be patient for now.

  185. ALEX

    OA92000

    If your in front of a computer tomorrow and GDX goes there , I just watch for a lighter volume retest…or even a STRONG volume break and reversal on stocks.

    Got back in REE when it went into that gap. Up on 24million , down on 6 million was a trigger. It now broke its downtrend line and I hope it retests that top. Volume slowly coming in off the bottom.

    Murmur

    I have heard that before…dont place your stops in obvious support , fibs , etc or they’ll buy your shares when they push it down

    …Could be , but if you are away at work all day , some may have to for security and pc of mind.

  186. David

    Bottoming is a process, not an event.

    It makes more sense to average in every day for a week than to suddenly go all in, given the poor odds of catching a precise bottom.

    This is where I take issue with Gary’s method of suddenly flipping from 35% to 130%. It would be easier just to ratchet things up gradually over a period of time (say 10% every day) as opposed to repeatedly trying to catch the bottom and getting stopped out. It takes timing out of the equation.

  187. Shalom Bernanke

    Close, but SLV missed closing the gap by .09

    I’m not concerned about buying into weakness around 25.5 but it could go lower. Price is not as important to me as direction, which is still lower in both gold and silver, even though I added some in the morning puke out. I prefer this week ends near the lows.

  188. murmur.on.hudson

    Alex: pardon me, but obviously you are in a trader’s not holder’s mindset. Imagine you purchased a gold bar or coin stuck in your drawer instead of a share or a position. Will you bother to sell it because gold price is down 50 bucks? Why do you care? Look, market-makers have a lot of advantages. But the only thing they lack is the initiative of when to open or close a position at what price, that is in your hands. As long as you pick your price low and hold reasonable amount of positions, then the game becomes a matter of who is more patient. Will they let gold priced in US dollar flat or keep going down forever? No, how could they. So you have the ultimate advantage and they are doomed to be screwed by someone with the virtue of patience. They know this for sure, that’s why they keep shaking gold price up and down to scare you off.

  189. David

    TK has been trumpeting his prescient “short GDX” call.

    He has not been trumpeting the other 12 money-losing “short GDX” calls that preceded it.

  190. ALEX

    Murmur

    no offense , I meant no harm…I was actually speaking from both sides. If ‘SOMEONE here’ worried about a major sell-off and cant be in front of the p.c.–THEY MAY place a stop for pc of mind.

    Your illustration about gold kept in a draw no matter what the price is…yes , if thats the buyers mentality , accumulate now regardless of drawdown.

    I only answered because I thought you werent speaking for yourself as the guy buying and holding it no matter what…I thought you addressed people on here (veteran traders and newbies)

    my apologies

  191. ALEX

    Blogger Jayhawk91 said…

    “Alex-

    That Tim Knight post was a contrarian indicator.”

    ahhh , got it! It cant be too far off.

  192. David Kafrick

    This decline is looking very impulsive. There is absolutely no buying pressure, except for yesterday which was a Fed day. Almost all corrections experience several bumps before finally reaching an end.

  193. Poly

    Too many people are trying to buy here, I guess the intermediate bottom is below us.

    FYI – Gold dropped 17% at the Feb 2010 bottom and 9.5% on the Aug 2010 bottom. We’re at 8.4% now.
    In both cases they tagged the 150dma, we have not yet. Tagging it would be $1,304 in this case.

    But, in both of those cases the drop into the equities intermediate bottom had already well and truly taken place. In the Aug example it already had occurred. Today we have had no such event, yet. Food for thought.

  194. Wes

    Interestingly, the stock market indicators are getting less extreme even as the market continues to rise.

    I wonder if there has ever been a case of the market’s rise making traders so fearful of a decline that the decline was put off by that reaction alone.

    Seems to be happening here, but only for this week, so far.

  195. ALEX

    GUYS

    Do this…put your chart on a 1 day 5 or 15 minute view

    look at slw , then ssri , then paas ,

    GOLD WAS DOWN -$34 , SILVER DOWN -70+

    what did the last orderS of the day look like? looks like-THE BIG BOYS TOOK POSITIONS?? Big orders BUYING

  196. tfortrader

    Doc, I don’t know if Gary would mind but you should open up last night;s writeup for everyone and put the link here. You nailed today’s call and others might appreciate your work.

  197. ALEX

    kEEPING IN MIND, OF COURSE , THAT SLW- IN THE LAST 1/2 HR HAD ABOUT 1 MILLIOM SHARES BOUGHT @ $30 AREA ( $30 M ILLION DOLLARS)…

    THAT COULD HAVE JUST BEEN DG STEPPING IN , I’M NOT SURE

  198. Slumdog

    How are you guys approaching the turn?

    SB is averaging in.
    Anyone looking for a swing low or some other indicator?

    I’ve been watching this 1312 number and have 3 times failed to catch the turn. I’ve stopped trying. The fakeouts are too expensive.

    I believe that 1312 is a pivot point and have said so at kitco repeatedly on the way down. I don’t follow my belief’s but that’s a therapy issue.

    The next step down, btw, I believe, can be extensions of the 60 pt drop. So, a drop from here of 120 pts is well within the cards. That will change if there’s a reversal I can see, or if it will turn on something you folks can see. I can’t see anything but what I know.

    Specific turning patterns or points? Timing for me is too uncertain. It’s a backdrop. I look for real, very, very high probability chart patterns.

    Do you know of any that act as reversals?

  199. David Kafrick

    That´s an ugly looking daily candle on Gold. Action like this one is either an exhaustion/capitulation day, or it is the beginning of a change in trend. Given where we are (almost 1 month of intense selling) I feel this is an exaustion day and shake out of weak hands. In order for this premise to be true, Gold needs to stall for the next couple of days and then quickly start to reverse this candle.

    If tomorrow or Monday we see more selling pressure, I would be really worried that something else is going on.

  200. Greg

    Alex, haha, yeah. Everytime I make a work of art out of a chart those lines don’t mean much anyway. Price never pays attention to my fib lines either. lol

  201. Patrik

    Hi all!

    I read something interesting that Poly wrote..

    “FYI – Gold dropped 17% at the Feb 2010 bottom and 9.5% on the Aug 2010 bottom. We’re at 8.4% now.
    In both cases they tagged the 150dma, we have not yet. Tagging it would be $1,304 in this case”

    But, in both of those cases the drop into the equities intermediate bottom had already well and truly taken place”

    There will be a correction soon and the equities will go down.
    Gary told us weeks ago that the market will go down..He also wrote that the selling pressure will sooner or later drag gold lower also..It seems to easy and to early for the dollar to go down now..There will be a bounce..!

    When Gary do his predictions or analysis and the market do something else he change the course sometimes..Like yesterday!

    A lot of people didnt like the call and I still looking for the first call he did and that was that gold will go down at least to 1292 or 1260.

    I think there will come a big move in the market very soon. And that move will force the dollar up and take gold further down the road together with the stock market..

    This was Garys first analysis and Im still think it will play out like that.

    Maybe he over analyze the market when it dit not do down. He told us 2 days ago that S&P will touch 1300..Maybe go to 1305 at most and then fall back hard..I think that will be the case now..

    Take Care!

  202. Poly

    IMO, tomorrow will be a 1% + down day for all major indexes and the start of the decline to the intermediate bottom.

    I’m also looking for the S&P to close below 1,280, tomorrow.

  203. Onlooker

    From your mouth to God’s ears Poly!

    Friggen market needs a correction badly. Of course I’m biased, having a small short position still.

  204. Poly

    You want to see something interesting? Two charts, different periods. Compare.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=2010-04-01&en=2010-04-26&id=p28207486252

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=2011-01-04&en=%28today%29&id=p67634447456

    17 trading days from two different periods. Take a very close look at each trading day, especially the last 10 days, comparing each day to the other chart. Look at the RSI and MACD against each chart.

    No they are not duplicates! Sure history never repeats, but come on.

    The last chart is with an additional 60 trading days from the first chart. Opps.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=2010-04-01&en=2010-06-08&id=p63047789863

    http://stockcharts.com/h-sc/ui?s=$BPINDU&p=D&yr=1&mn=0&dy=0&id=p40339912218&a=222575144

  205. Shalom Bernanke

    “SB is averaging in”-slumdog

    That’s correct, and I’m hoping for lower prices to put the rest to work possibly even add margin, but for now I’m right around 50%.

    With my current position I can weather a drawdown, as I have some substantial unrealized gains, although my recent purchases have increased my average cost. I won’t have the best returns like the people that nail the exact bottom, nor the worst for those that go all-in too early, but I’ll be able to ride the bull whenever it resumes.

  206. Jayhawk91

    Onlooker-

    What % are you in the game now on the PM front? What are you holding for a short position?

    I’ve got my core of cores that is long term…25% position. I added a chunk today, but didn’t go too crazy thankfully.

  207. Onlooker

    Jayhawk

    I’ve got about a 6% position combined in SDS & TWM.

    My PM position is at about 75% right now.

    I probably should just top off my PMs over the next couple of days and then not look for a couple of weeks. But it’s hard not to watch, eh?

  208. Onlooker

    That chart comparison is uncanny SB. I knew it was shaping up very similarly, but I hadn’t looked that close, side by side. If we go down hard from here it’ll be very eerie.

    AMZN is getting whacked after hours. Down about 20 bucks at one point but already bounced 5 bucks. But it while it’s cheap! πŸ™‚

  209. discreet shopping

    Don’t know if anyone noticed but for the past 2 years every time gold has touched the 150 dma it has bounced off it! Thats only a few bucks down from here!Something to watch tomorrow.Lets hope!

  210. Nike Boy2008

    we have a ton on support below…hopefully, we’ll bounce of one of these…

    1305 is 150 SMA
    1300 is a psychological support
    1290 is 50% Fib
    1280 is 200 SMA
    1265 is the breakout

  211. Avann

    Didn’t MLMT call this yesterday …?

    “Expect GC to bounce to 1353-ish and GDX will be capped at 56.44 if it even manages to get there. Don’t fall in love with the bounce IMO.”

    Where are you today?

  212. pimaCanyon

    Nikeboy,

    You’re right about BoW on GLD at the last IT bottom in July.

    However, I don’t see any BoW of GLD prior to the Feb, 2010 bottom. Maybe I missed it, what do you have for BoW numbers on that IT low?

  213. pimaCanyon

    Here’s a chart with the channel I mentioned earlier today.

    http://screencast.com/t/t6DH0Mgw

    How about this for an intersection of time and price:

    What if GLD were to touch the lower channel line on Feb 4?

    That would be an exact 50 percent retrace of the move up from the July low AND the one year anniversary of the Feb 5 low (Feb 5 this year is on a Saturday) and a touch of the channel line.

    Let’s see whether this market can be that orderly.

  214. Rebecca

    “Buy Gold & Silver With Both Hands”
    By Graham Summers
    http://www.gold-eagle.com/editorials_08/summers012611.html

    This was posted previously in this blog. But I want to post it again because it is very relevant to what happened in the gold price action in the last two days. In Yesterday’s rally, Gold bounced off the lower trendline, which supported Gary’s call. Unfortunately we were handed another curve ball with the price broken below the lower trendline in today’s sell off. I did not jump into the market because I noticed the bear flag in GLD 15min chart in the morning and MACD was rolling over. So we could be looking at a target of ~$1250. The lower trendline will likely be backtested in the coming days.

  215. jc

    $usd found a bottom? Gdp out tomorrow, may get this dollar rally and stock correction cooking.

    Ya silver is getting blowtorched. sweet.

  216. Poly

    Gary,

    So you believe we can not have an intermiadate cycle low in equities because of the timing with the 3 yr dollar? But were already stretched in the timing band for an intermiadate and yearly cycle low, how can these be ignored? But the 3 yr dollar low is 3 months or so away, does or can the dollar break other cycles?

    In your garden variety daily low, what are you thinking? A tag back to the 50dma like Nov?

    Thanks as always.

  217. Gary

    Poly,
    I think it’s pretty obvious the market is buying stocks as protection against a falling dollar. Not to mention Ben is pumping in about 7-8 billion daily.

    But mostly it’s about how late it is in the daily cycle. We are simply running out of time for an intermediate cycle decline to develop. Intermediate degree corrections almost always last a minimum of 3-6 weeks. Tomorrow is going to be day 50. At most we have maybe another 10 days to reach a bottom.

    That’s just not enough time for an intermediate decline.

    Not to mention any dollar rally will almost surely be left translated. Which means it should only last 5-10 days max. Again not enough time for an intermediate degree correction to develop.

    Another strike against the intermediate correction. The dollar would almost certainly have to rally back above the 200 DMA in order to drive a major correction.

    At this point there is virtually zero chance of the dollar making any attempt at recovering the 200 DMA until after the 3 year cycle low is in.

    Add all that up and the odds are now pretty low for stocks moving down into a massive correction until after the dollar puts in the three year cycle low. And that is potentially as far away as March or April.

  218. Gary

    No ACL. I asked an orthopedic surgeon about replacing it last year but I had too much arthritis in the knee to make it practical.

  219. Bob loves Hawaii

    Congratulations Gary on being pain free.

    The margin compression we are seeing in all the company reports should start taking its toll on these companies. I am wondering if we have seen peak earnings for this bull cycle?

  220. thedocument

    Gary,

    Don’t you think that as the realization of the severity of the dollar crisis sinks in, equities will fall in commiseration? Equities usually get hit in times of crisis.

    Back in 2008, stocks also fell mildly during the final stage of the dollar’s swoon into its 3-year cycle low. However, this year will carry a much sharper sense of urgency, and I think we may actually get a more pronounced sell-off in equities.

    With no other safe haven available, we may also see a much larger precious metals rally than many anticipate.

  221. Gary

    Doc,
    Well I think the fall in equities despite the weak dollar in 08 was directly related to the price of oil going ballistic.

    That’s certainly not happening this time so I’m not sure the stock market is going to roll over before the dollar crisis becomes apparent.

    Once we start to see real panic in the currency markets then yes equities should start to trade down along with the dollar. But at the moment we are no where near the panic stage. Dollar sentiment is pretty much dead neutral right now.

    I do think liquidity will soon start to leak out of an overextended stock market and flow into the undervalued precious metals market.

    As they say liquidity will eventually find it’s way into undervalued assets.

  222. Beanie

    Chartwise, our next stop is SPX 1500, possibly by the end of this year.

    Anecdotally, do you folks see how busy the malls and Starbucks have been?

    Semiconductors are leading this awesome rally, and will continue to do so this year.

  223. Gary

    Actually one of my favorite restaurants (Ruby Tuesday’s) just went out of business.

    I’ll say it again. Just pumping billions of dollars into the markets can certainly produce a nice sugar high for a while, but never in history has it ever created a sustainable economy. It won’t this time either. Inflation is already starting to get out of control, especially in emerging markets.

    This will poison the recovery just like it has every time in history.

  224. Nike Boy2008

    Hi Gary,

    just had a thought and wanted your opinion on it…

    I mentioned this yesterday, but last year and this year’s intermediate cycle has so far been eerily similar..

    if we follow last year’s pattern, we should see a flat or a gap down in gold tomorrow…followed by further weakness (to maybe 1290-1300) and then rally hard into close…and close positive. This marked the intermediate bottom in gold last year..

    if that happened tomorrow or on Monday, will you get back into gold or still wait for the dollar cycle to run its course?

  225. JReality

    Beanie,

    I find it hard to believe 2008 was a non-event and that we can simply pretend it didn’t happen. I find it hard to believe we’ll all get rich by buying and holding stocks and ignoring 2008. I find it hard to believe that it is now safe to assume that everything has magically been fixed, and that the Fed will bubble-blow our way back to prosperity.

  226. Beanie

    Jreality,

    It’s just not wise to bet on multiple black swans (or death of world empires) in a relatively short period of time. Bears have been trying to do this since 1776, to no success.

    We got a jolt back in 2008-2009 and the problems have been rectified. True, there may have unforeseen consequences in the future due to the fed’s meddling. It isn’t that much different from the medical doctors always covering up the symptoms of their patients with a pill here and a pill there instead of finding and fixing the causes of those symptoms. But it gets the patients feeling better so they could get on with life, even though in the long run there are severe consequences for symptom treatments.

    And that’s how you need to see the Fed’s actions. They are the medical doctors of finance and banking. You don’t get rid of all medical doctors just because you feel they are idiots and will end up hurting their patients in the long run. Same idea with the Fed.

  227. JReality

    If a doctor prescribes MORE alcohol as a cure for alcoholism, then the doctor is a quack that needs to have his medical license revoked.

  228. Gary

    Nike,
    I doubt gold will behave exactly like it did last year so I’m not going to use that as a template to trade this year.

    Once the dollar rallies I will see where gold drops to and at some point I will re-enter. It wouldn’t hurt to see another big volume sell off. But then again we had plenty of those the last week so that isn’t a perfect timing tool either.

    Somewhere between the 50 and 61% retracement I will get in and stay in assuming I’m close enough.

  229. ike

    If you look on the GLD chart, GLD’s low yesterday was 127.80 and the 150 MA is 127.50 — tag.

    Since April of 09 the 150 MA was support.

    Gary the odds seem to side with that being the low.

  230. Gary

    Ike,
    You are assuming that just because the 150 acted as support before it’s going to do it this time also. I’m not ready to make that assumption.

    I want to see if the dollar rally will push gold down to the 50 or 61% retracement.

  231. David Kafrick

    If there is one thing that I´m almost sure of, is that the 150 DMA will be a bull trap. Where was all the talk about the 150 DMA the last time it acted as support?

    The funny thing is that the more a line acts as support, the greater the confidence that people have that it will continue to act as support, but in fact it is more likely to not act as support.

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