WARNING SIGN

The debate lately is whether or not gold still has one more leg up. For the many reasons I went over in last night’s report I think it has become too dangerous to continue to play the long side in the precious metals so I don’t really care anymore whether gold is going up. The risk is now high that one gets caught in an intermediate decline or worse a possible D-wave.

Here is one more reason. The miners have broken below a prior daily cycle low. 

This isn’t a perfect signal. Of course nothing in this business works 100% of the time but this particular signal works about 80-90% of the time and those are the kind of odds it usually just isn’t worth bucking.

You can see in the above chart that every intermediate decline in gold was preceded by the miners falling below a prior cycle low. That condition is now active in the current market.

As a case in point a violation of a daily cycle low in gold is the main confirmation we look for to confirm that gold has entered an intermediate degree decline.

I’ve marked the expected timing band for when the next intermediate low should bottom in late June to mid July. You can see that the summer low came last year in late July. The yearly cycle tends to run about 12 months on average so I wouldn’t expect this to be over for at least another month to a month and a half. As it stands today gold topped on week 14. That gives it a lot of time to grind lower. As a matter of fact every intermediate decline since this phase of the bull began has dragged gold considerably below the 50 day moving average and fairly close to the 200 DMA. That would suggest gold would at least move back to $1400 if this is just a normal intermediate degree correction.

If this turns into a D-wave then we can expect at least a 38% retracement of the prior C-wave advance. This C-wave began in April of 09 at $860. A 38% retracement of that rally would drag gold back to roughly $1300.

Folks this is what you are risking getting caught in by trying to squeeze the last few pennies out of this sector. Now if gold was doing what I think it should be doing I would be happy to hang on to positions. But it’s not! The weak dollar yesterday and today for that matter should be sending gold rocketing higher. So far it’s not happening.

Combine this with the warning sign from the miners and I simply don’t want to play the game anymore. It’s easier to just wait for the intermediate correction or D-wave to run it’s course and then get in as close to the bottom as we can for a much safer trade and one we will be able to hold onto for 12 to 15 weeks with little fear of significant draw downs.

297 thoughts on “WARNING SIGN

  1. T.J. Rand

    The past intermediate corrections pierced the 50SMA and got close to the 200SMA on Daily Charts.

    On weekly charts, all recent Intermediate corrections since 2009 have been caught rather neatly by the 30SMA.

  2. Bruce

    Gary, … not that it matters, but I agree

    however, why I will try to squeeze a few pennies more: if there is a big rally in the S&P & Nasdaq, as you are betting on; I doubt gold/silver & miners will be commencing the D-wave just yet.

    Sure, it trying to pick up nickels in front of a bulldozer, but someones got to do it.

    Wish me luck!

    fingers X’d;)

  3. Poly

    Gary,

    A IT cycle low is a given, for sure and it should start with the next daily. But, do you find it odd that we’re dollars away from record high’s, sentiment reset, COT reports fairly neutral and miners near last iT cycle lows? I mean, thats just not D wave material no matter how you slice and dice it.

    To me, this is signalling an IT cycle low of the plain vanilla varity, a normal tag towards the 200dma, or whatever the previous IT lows tagged.

    It’s also signalling to me that the dollar may still have another IT cycle lower to go before printing a 3yr low. The 3 yr low was anything but a dollar collapse or panic.

  4. Poly

    I wouldnt touch puts now, BUT if we tag or make new Gold high’s, buying some GLD Aug puts should work out fine. I wouldn’t touch SLV as we just don’t know how it will react, best to make the money on GLD where the expected decline has higher probability.

  5. Gary

    Bruce,
    Actually in this business no one has to “do it”.

    In this business we all have the luxury of sitting as long as we want while we wait for the high percentage trade.

    Trading just for tradings sake with no edge is gambling and if you just want to gamble the action will be much quicker down at the local casino.

  6. Gary

    Poly,
    Unless gold can make a new high the IT cycle decline began with this daily cycle. So far gold is showing no ability to regain those highs even with a falling dollar and a falling dollar that is quickly moving into the timing band for a bottom.

  7. Visitor

    A little off the current topic (I don’t care about short term moves of a month or month and a half relative to a true Old Turkey, many years). I think your call to avoid silver and the probability of it getting back into the 20’s is just wrong. I wouldn’t (and am not) be so one sided to think gold will out perform silver on the next leg up. See this brief interview.
    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/24_Embry_-_Silver_Market_Extraordinarily_Tight,_Look_for_$125.html

  8. Poly

    Gary, the dollar had the biggest rally since Nov 2010 during this gold cycle! Gold is up almost $70 from the cycle low with this rally.
    It may not make new high’s, but don’t discredit Gold’s strength!

    My point wasn’t when the move to a IT cycle low began, I agree we’re heading down to one. What are your thoughts on this d wave and 3rd lows? Something is just not kosher there.

  9. Gary

    Poly,
    I’m kind of up in the air as to whether this will be just a normal intermediate decline or a D-wave. It depends on if the dollar still has another drop down into a final three year cycle low later this fall.

  10. Bob loves Hawaii

    Just like the Fukushima earthquake offset the cycle timings, I can’t help but wonder if the silver “non manipulated” margin hike crash offset golds cycle this time.

    We are now doing what Gary thought it would do a month ago. 80% up days on small daily gains. 6 of 7 up days so far, dollar weakening, a two week seasonal strong period, etc.

    Keeping an open mind, and adding sold call hedges to book profits.

  11. Gary

    Vistor,
    Do you really think silver will hold up if gold trades back down to $1400?

    Or maybe you think that gold will not enter an intermediate decline ever again, even though it has done so like clockwork for the last 40 years.

  12. Aaron

    I cant see gold dropping below 1300, D wave or not. So anything close to that and Id be adding heavy.
    Also, there is no reason why gold couldnt make new highs next week, and then drop into the IT low, and it would appear absolutely normal…not say that it would, Im just saying that it could and it would be within the norms of the IT cycle duration.
    Bias long PMs

  13. Gary

    Arron,
    Could you see silver dropping to $32 from $50 in 5 days?

    One can never “see” a D-wave coming but they do come. The question isn’t whether we will have another one. We almost certainly will. They are necessary to keep the public off the bull as long as possible.

    The question is will the current dip turn into a D-wave or will it just be a normal intermediate cycle decline?

  14. Gary

    I can also assure you that if gold gets even vaguely close to $1300 almost no one will be adding anything much less adding heavy.

    The fear in the metals market would be so great that it would be next to impossible to add at that level. Everyone would be convinced gold is heading to sub $1000 at that point.

  15. 77

    TGIF traders!! $30 bil in pomo was given the dealers this week, so outlook is for SPX to be able to stay green friday, plus managers could think about their monthly results and do some window dressing

    http://www.etfdigest.com/

  16. Silverhound

    trond

    Looking at your chart of the 1979 Gold spike in the last post. Looks to me like an a,b,c,d,e triangle pattern wave 4 correction leading into the wave 5 blow off in 1980.

    Strikingly similar to what appears to be unfolding in wave 4 of the current chart. Albeit on a smaller scale. I’m guessing that is why you posted your charts. Thanks.

    gold wave 4

    JH are you hanging in there….. I found the above chart strapped to the ankle of a messenger pigeon from Alf. I’m keeping the pigeon in case wave 5 fails, that way I at least get to fire up the barbie as a consolation! The pigeon is getting nervous.

  17. Gary

    Arron,
    Of course $1300 would seem like the low now while gold is going up but at $1300 it’s not going to seem like a bottom. Did $46 seem like a bottom in silver a month ago? How about $42? $40?

    In theory any one of those levels should have halted silvers decline but it didn’t stop till it reached $32.

    So anyone who bought at $46, $42 or $40 is still underwater.

    The same thing will happen at a D-wave bottom. You won’t time the entry perfectly and have to suffer through a scary draw down. Most people freak and bail. It only takes one or two of those to ruin one mentally to the point where they can’t pull the trigger again.

    I think when we do finally get into a D-wave you will find out just how mentally tough you really are. Right now with the tiger inside the cage it’s easy to be brave. But once you are inside the cage with him it’s a whole different story.

  18. 77

    silver bulls remind one now of crude oil bulls acted after price hit 147 in 2008

    crude oil then went from 147 to 33 because it was a ‘blow off move’

    silver in history every time after the kind of up move it had again here in 2011….it always retraced 70%

  19. Edwin

    position accordingly and have your stops in place. we are later in the timing band for sure.

    the time of entry on this move was critical and if one wasn’t in at 1471 last week, well you missed some of the move.

    week is coming to an end and a close above 1515 is fine with me. It’s inline with expectations.

    sure i’d like ballistic moves of $20 per day, but a slow steady grind is alright. sentiment is still kind of low people had gotten
    massively burned on that silver smash.

    I will sell on a weekly tag/or stops currently just a tad below 1515.

    good luck everyone

  20. Aaron

    I was actually in gold in April of 09 and was early, and was being margin called (no fun). I have no fear of losing money.
    The key is leverage for me. I add 1 or 2x to begin and add on strength.
    Trust me Gary, I have the scars and the stories from untold losses, yet it has made me the investor I am today, further aided by your cyle work(for which I am very thankful).
    I will still add at 1300, be it a bottom or not, unless ofcourse some drastic fundamental issue comes to play.

  21. TenYear

    Gary, just stopping by to say ‘hi.’ Looks like you are tracking the cycles as accurate as ever. Are you still holding core positions? Or are you out completely waiting for the D Wave end?
    Just curious.
    tia

  22. basil

    Gary,

    was the trade i.e. the circumstances for the trade (GLD, GDXJ, GDX) any better when you entered it vs. when you exited it. I think not, but if so what circumstances changed yesterday?
    Heart to heart, should one minimal down day make the difference? Volatility is inherent to PMs, you said so many times yourself.

  23. basil

    PS: I did read yesterday’s report. Still I wonder whether yesterday’s market action provided any sufficient reason, other than a change of intuition, to change your view so drastically?

  24. Dan

    Everything moving up nicely today includinging gold and PM stocks outperforming metals. Looks healthy to me.

  25. Poly

    “I still would rather buy into day 2 of a daily cycle than day 16.”

    Yes that’s a very good point, but it’s very far from irrelevant to my trade, it’s everything as the trade is centered around it.
    If you recall, I posed the exact same question to you about Gold being on day 33 and how dangerous it was to hold AGQ, you said it wasn’t a cycle trade. This time, gold is on day 18, so there is room.
    We’re discussing a VERY light trade using call options, as we know the approximate top in days left in the cycle, that gives us a huge advantage with very little risk.

  26. ALEX

    FWIW

    I am in agreement with Poly in the first two posts posted by him.
    some of us have room to play with though, having bough in last week.NOT SURE if I would be buying here, unless I could watch closely.

    I also agree with Gary that There is NO REASON to stay invested in anything that you are unsure of…so best to stay in cash for those unsure. In fact there have been so many ‘wiggles’ in all of the markets lately that instead of jumping in and out daily…why not go to cash…relax…and wait for the I.T. low and jump onto a solid trade, one that confidence is very strong? Nothing wrong with Cash until the fog clears.

    Most of my metals holding sold off lightly yesterday and turned back up, closing green , buyers reversed the sell off I.M.O. , closed above 20sma.

    For confidence, I reread Garys Wednesday strong bold report, and deleted Thursdays from my mind πŸ™‚

    I have seen Gold go up $30+ per day if buyers come in ( and yes, down too)It could be there in 3 days I.M.H.O.

    ( for metals) Holding EXK, AG, HMY, RIC since last week…and bought NAK yesterday

  27. Poly

    Alex, it’s probably just a matter of understanding each specific trade. If you view my argument from the standpoint of having 25% or a large sum invested in that setup, then what I am saying would be crazy. I’m talking small risk with BIG payout trade only.

  28. trond56

    Silverhound, nice you liked the charts. Yes, the present triangle consolidation might resemble the one of October that year, a wave 4. The bullmarket in the 1970’s started in 1971, the present one in 2001, so same age. + The spike in 2006 could correspond to the 1974 spike, and the 2008 bottom to the temporary lull the years after 1974. Also very important, during the quadrupling of the goldprice 1979-80 the dollar rose together with gold, all the time week after week. (As has also happened many times later).

    But such a triangle consolidation can also break to the downside, the average odds are 30% to the downside and 70% to the upside.

    What is important is the real rate of interest, when negative, people flee to gold in order to preserve wealth, and it was negative then. Interestingly, negative today also, albeit not to that degree. (However in China and India – comparable).

    http://bullnotbull.com/archive/gold1979.html

    http://bullnotbull.com/archive/gold1980.html

  29. ALEX

    POLY

    I understand what you are saying.

    In addition to that , I also dont think you are personally isking anything big here, because of your trading style, but also I have read your posts all along,You’ve been bullish and adding gains along the way.

  30. Visitor

    Vistor,
    Do you really think silver will hold up if gold trades back down to $1400?

    Yes, I don’t believe silver will break below $30 before new all time highs

    Arron,
    Could you see silver dropping to $32 from $50 in 5 days?

    Gary, I think part of your thinking that silver is in no way “manipulated” is why you believe that drop was justified. I’d say 5 margin hikes in a short time span is manipulation and added to the steep, quick drop.

    With all due respect I just think you are getting whipsawed in and out and trying to justify your moves. I think your philosophy a few years back (a true Old Turkey and a combination of metals index/ETF combined with a variety of smaller individual names was and would be a better strategy.
    But, that was before your blog took off, so maybe you are making more with subs and need to feed them information to keep them on edge.????

  31. Sleeper

    The current gold daily cycle is officially right translated now, so a test of high is very reasonable. The drop into the low should be of a waterfall variety, the $64 question to me is just “when”. I will hold my smallish DGP until next week, with tight trailing stops to protect gains. I still have July SLV puts and August GLD puts as my core summer holdings.

  32. MrMiyagi

    On Wednsday, SLV gapped up. Yesterday, the decline filled the gap.
    This morning, SLV gapped up again so there’s this to be filled but more than that, there’s Tuesday’s gap up that is sub 35$.

    I know, it doesn’t get filled right away but eventually it seems they all do.

  33. Gary

    Wes,
    I’m not sure what you mean by uninspiring. It’s only day 2 of a potentially new daily cycle. The market doesn’t have to recover all the losses from a daily cycle low in 2 days. I tend to think most losses will be recovered by the time the half cycle tops.

    I also think that the stock market may be able to resist a rising dollar for a while mostly because it is very early in the daily cycle, whereas gold is very late in the cycle and any strength in the dollar should force gold to roll over into the next cycle low.

    It’s just not worth the risk at this point when all I have to do is be patient for a month or two and I will get another great setup with much larger profit potential.

  34. Poly

    I’m on the SPY train too, thanks Gary. In with July $130’s.

    It’s amazing how equities just manage to slice through any negative news, so no reason to change, for now. The cycles seem to have very good predictability around them lately.

  35. Sleeper

    visitor,
    I’m not getting whipsawed. Both GDX and GDXJ were nicely profitable.

    That would be a 3% gain for us in the “conservative” model portfolio. I’m sure your gains Gary may have been more profitable in the mysterious “aggressive” portfolio if you had leverage.

  36. oa92000

    If you bought NG (@$1) 2 yeras ago. Don’t you want to take profit like Soros did? Now the key is to find next NG..

  37. Gary

    The key now is to wait until everything gets put on sale again. That’s what Soro’s is doing.

    I’m sure he’s smart enough to spot a true bubble. And gold is nowhere near that level yet.

    Soro’s just got out of the way of an intermediate degree correction or D-wave. He’ll be back.

  38. ALEX

    PowerCorrupts

    years ago I used to trade NXG (2006) and did ok, but have stayed away from it lately.
    I held it for a while and while exk and AG doubled and tripled, NXG was sideways…so I havent looked at it, but if it goes above $3.50 in the future…I would imagine it could finally break loose.

    For now, I think there are better % gainers.

  39. basil

    How will we be able to distinct between what will either be an IT low before a fall rally or a temporary low in a continuous D wave decline?

  40. ALEX

    GANN360

    THX for the chart. Are you long or out?

    Just curious, no right or wrong answer here πŸ™‚

    If you are out ,
    And lets say next week GLD breaks above your (roughly)$150+ resistance, would you re enter for the double top, possible new high? Quick trade for a week? Or just wait for the I.T.low

    Thanks again.

    I am still long, may close a few positions for the 3 day holiday. Sometimes cash is king.

  41. Poly

    Isn’t a D-Wave just a severe IT cycle low?
    Can’t have a D-Wave without an IT cycle low. The severity of the IT cycle low should be inversely related to how far the IT cycle stretch above the mean.

    C-Wave tops blow off, causing a D-Wave reaction. Hard to argue that was the case here. but it really does not matter, does it? We’re still getting an IT cycle low over the summer, like it or not. That will be a monster profit maker.

  42. basil

    I wonder whether we could see a double top in gold and an attempted and probably failed double top in silver (in the mid forties or so)?

  43. basil

    Gary,

    if you think Soros is making a smart and well timed move out of gold, why not taking the other side of his trade, which is into agriculture for a summer trade?
    His biggest new purchase were shares of AGRO.
    Seasonality favors the agriculture trade over PMs now, and then one could comfortably rotate into PMs at the next IT or D-wave low.

  44. Edwin

    i would suggest looking into fixed income investments ie. bonds/credit

    if you’re looking for opportunities.

  45. Cory

    Dollar down big, gold up big, my SLV puts are even from two days ago…if this is the dollar’s cycle low silver could get ugly soon…max pain is 38 area but lots of nervous longs up above

  46. Cory

    UUP just tested its pivot at 21.4, that was its last support level before a double bottom or new 3 Year low.

  47. Keys

    I don’t think we break to new highs in gold…I mean sustained new highs. Tag the high or slightly higher, and then the races are off to the downside. This trade really seems tired…people are on board for new highs, but what’s after that? Without a clear target to hold for I don’t see why the market will keep going up.

    Of course I have been doing almost nothing for the last month.

    My monoply play bet…we slightly tag a new high in gold, and then correct 5%. Then a whole bunch of people will jump in on the one day gold moves up sharply, and then we continue to tank. We will find some support at 150…but will it hold? The entire climate seems different, so unlike last time, I am not as certain about the 150 holding this time.

    Silver is interesting; it has gotten alot of support at current levels, I wonder what would happen if we got another push to the downside. Would the current buyers buy more, or bail and make the problems worse…

    Alright back to sleep..ZZZ Bored but catching up on my naps.

  48. ALEX

    a heads up..

    SILVER JUST BASICALLY CRASHED..

    Gold still up $16, and SO FAR, my AG and EXK not reacting to the downside.

    BUT keeping an eye on things

  49. Gary

    at ease,
    I’ve just been busy this morning i will get it posted. but if you want to follow the model portfolio you should go ahead and buy.

  50. Hot Rod

    Cory,

    What strikes did you go up to with your SLV puts? 45? 50? I think I remember you saying you were a fan of the DITM puts far out in strike.

    How do you determine when you add more (on way up and/or down).

    Thanks.

  51. ALEX

    BASIL

    Thats funny that you said AGS , BOB LOVES HAWII was buying and bullish on them a week or two ago, so I bought CF and an unknown DARa wk ago, and sold them both today…

    I will be looking to re enter CF and DAR and maybe even (POT, MON, AGU)in the future if I like the set ups.

    AGRO is a new one to me, I will have to look at it.

    And THX to BOBLH for the AG call 2 wks ago.

    BASIL , Others may appreciate your reminder today for future summer trades

  52. Gary

    Basil,
    I don’t trade Ag because I don’t know how to develop a cycle count on it. Too many factors like rain and such that influence the sector.

  53. CMT

    ALEX, that SLV move was odd. Not even that much volume if you’re looking back a few days on 1 minute charts. Did all the buyers go for a smoke break at the same time?

  54. CMT

    Miyagi, I hope so. I grabbed some when it crapped and hope to scalp a few bucks in the next few minutes.

    I liked the fall thru last spring so much better. I forgot how much work trading is.

  55. MrMiyagi

    CMT,
    PMs have gotten unpredictable and at this time I just keep an eye on them but not much else.
    I have a handful of July 32 puts and that’s it.
    There are a lot of other stocks out there to trade for a buck or two.

  56. ALEX

    CMT

    Yeah, smoke break…OR , Selling for the 3 day wkend? But the Silver dropped (still nicely green) and Gold went higher.

    crazy stuff πŸ™‚

  57. Gary

    Yes the rally in SLV has been on very poor volume. When gold decides it’s time to move down into its intermediate decline silver is going to get taken to the woodshed.

    It’s entirely possibly that silver just consolidates for several years and doesn’t take off again until the final bubble phase.

  58. CMT

    ALEX, gold stayed nice. Even got a lot of my June GLD 138 calls filled at 12! I’m slowly exiting almost everything. Over the past 2 days, sold all my DGP, EXK, NUGT, and the rest. Am left with a handful of GLD calls, which I may sell today.

    Just not seeing the way out here.

  59. ALEX

    GARY

    Pretty good point on unpredictability on AG due to weather. We just saw over 300 tornadoes in one day a few weeks ago, and the flooding now in mid-west and so on.HUGE droughts right now in the south ,usually lead to fire.CRAZY.

    This can actually be very bullish for grains , prices go up do to scarcity.

    When I trade AGS, its short term , they do usually move well if you can catch a low. And I trade fertilizer stocks ( CF is a specialty agricultural chemical producer)mostly, because if weather harms crops early in the season, maybe they re-plant…ordering more fertilizer.

    But cycles would be tough for the weather alone reasons, as you mentioned.

  60. CMT

    Miyagi, out of that SLV now. A lot of work for only enough profit to fill up the truck with gas. I think I need to go on vacation.

  61. MrMiyagi

    CMT,
    A profit is a profit.
    Most times I’ll take a day or overnight trade for a 150-400$ profit. That’s good for me, as long as I average 300-400$ a day I’m happy because it is 75-100K a year and for a couple with no kids, no mortgage, no car payments, in essence only living expenses (food, phone, heat, property tax, travel..) that is good. Even 50K is ok but I like to build up reserves.
    The best part is I do this in my jammies and no arsehole employer to annoy me (not a people person).

  62. CMT

    Miyagi, I understand completely. When I “retired” from my law practice this spring at 39, I thought that if I could just make 1000/month to supplement my savings, I would be fine forever.

    Then, in April, when I started making 5-10k/day, it totally warped my perspective. Then, the market reminded me that things move both ways.

    I’m kind of glad I’m mostly cash now; while working in your jammies is nice, going to the gym or range is even better. I think I’m wearing a butt groove in the chair in front of my computer over the past few months.

  63. Gary

    Seems pretty normal for a low volume pre holiday rally, especially one that’s fighting mildly overbought short term conditions.

  64. MrMiyagi

    CMT,
    I hear the buttgroove part!
    I like cycling, probably the only sport I truly enjoy as I can do it solo and not be annoyed with someone else’s pace. The weather here just turned acceptably warm so I’ll start soon.
    Other than that, I am finishing an entire basement (1500 sq feet) by myself, deadline end of August.
    My wife works but she sat out the past 4 years so she got bored while I don’t.

  65. Bob loves Hawaii

    OK,time to watch COMEX close, traders now need to roll or stand and fully fund their trades for gold.

    If no sell off before 10:30, but a sell off after closes is more problematic for a Tuesday pump and dump.

  66. Michael

    Anybody use Market Profile? Old dog discovering new tricks. Any really great resources worth delving into beyond Steidlmayer, Dalton and the software?

  67. KAL

    Mr. Miyagi,

    How much did you set aside for trading before you left the rat race? How much do you keep in reserve at a minimum that is non-traded? If you don’t mind sharing… I’m not asking you to share your net worth; I don’t want to upset anyone! Just wondering what you feel you needed to have in place to walk away from the corporate world and manage your money for a living. You seem to have a cool head about you re: risk and return. Thanks!

  68. Peter

    excellent chart GANN .. 32.07 will be the number to look out for. I am protecting whatever I have left on my PM positions with some SLV puts , July.

  69. Haggerty

    Guys I’m heading upstate NY right now for the holiday weekend and will be dreaming about the A wave to come. See you guys on the flip side.

  70. MrMiyagi

    KAL,
    When I split from my shitty employer I got a 200K settlement from which I paid off our house and set aside 75K to trade. Also I had my pension portion that came back which I use for longer term holdings as they are locked in LIRA and RRSP.
    Aside from that, we had put aside 25K to finish the house.
    As you can see, we are not rich but we have no debt and NO CHILDREN.
    I don’t mind sharing some details like this because, seriously, you’re not going to find me under Miyagi in the phone book, also it might give incentive to anyone with even 30K to learn trading.
    I think that if someone is here on this blog and following Gary’s writings, they are on the right path.

    Most important: pay off your debts and quit buying useless shit to impress others. Who cares if you drive a 15 year old car?

  71. ALEX

    cant argue with that Mr.M

    Pay off debt and dont buy to impress others. You sleep better that way too. πŸ™‚

    I was just looking at UUP (can anyone post a chart of the dollar WITH VOLUME? I cant get volume).
    Looking at UUP..it has broken below the 20sma today and its below the 10sma. If it closes below the 20sma…bearish.

    The MACD is near the zero line and crossing down.

    The stochastics has turned down below 80, which indicates further downside.

    LARGE wide open gap at the bottom where the dollar broke out and that HUGE volume needs to be retested/ Gap filled I.M.H.O.

    This is dollar bearish , /Metals bullish ( to me)

    AND NO ONE BELIEVES IT…EVEN BETTER!

  72. CMT

    re: MrM saying “Most important: pay off your debts and quit buying useless shit to impress others. Who cares if you drive a 15 year old car? “

    If I can get preachy; I also have no kids, so I can really live on less. But, my law partners all lived in $1M-2M houses, drove $90k cars, etc. When I made partner, I went home (the one I paid $250k for) and told my wife that we could never spend more than I made the last year as an associate. Not because I was planning to retire, just because I thought their behavior was ridiculous.

    5 years later, I had saved right at a million dollars. I resigned my partnership in February. Next month, we’re moving to Florida and I’m going to spend my days sailing and fishing.

    The only reason I can do that is that I lived on far less (sometimes as little as 20%) of what I made. Now granted, I made good money, so it was easier, but the concept is the same.

    My 2003 truck has a dent in the door and doesn’t look as cool as all of my partner’s porsches. But they’re at work today.

  73. Gary

    Bruce,
    Unless you think gold is never going to enter another intermediate correction I don’t see how it gets negated. The Hui has already dropped below a prior daily cycle low. The sector is already in trouble. Gold may resist for a bit but everyone needs to be prepared for the sector to get hit hard this summer.

  74. ...at ease

    Mr. Myagi, I am with you, let’s take this baby down.
    The market never does what I want it to, so I bought an AUG 153C. That should do it. I think that has started the turn down now. πŸ™‚

  75. jhnewman

    CMT:

    The end of your post says it all:

    “My 2003 truck has a dent in the door and doesn’t look as cool as all of my partner’s porsches. But they’re at work today.”

    Why people make themselves slaves to things is beyond me.

  76. Eamonn

    My car is a year 2000 model diesel with 200k miles on the clock. I don’t give a toss what people think of it. I’m still in love with it

  77. CMT

    jhnewman:

    If you really want to see the value of your “stuff”, move. Planning for this move makes me want to take all the crap I bought (i.e., traded my time for money for stuff) to the dump so I don’t have to move it.

    Kinda puts it all in perspective.

  78. Moneyman

    Alex

    Nice one..:-)

    I think that we will get a very nice setup for shorting this market later on.

    For know I hope that gold will test the high.

  79. ...at ease

    CMT,
    So true, I spent a lifetime moving and I really don’t want to have to do it again as we have been here 15years and I cannot fathom the thought of having to move it all now. You are right, when you move around a lot, you tend to travel light. Since I am only home for a few weeks at a time, I call up good will and request a pick up. I go around the house and pick up all the stuff we don’t use or need at that time and pile it up. take a picture and make the list and off she goes with a receipt stuck in my door. At the end of the year, I take the photos out and list it all on “It’s deductible”.
    I use Turbo Tax, so it imports right in. Hardest part is putting it in boxes and not thinking twice about taking it back out. You never miss it. We have a large family so a lot gets dragged into this house, my job is to pry it loose from everyone.

  80. MrMiyagi

    at ease…
    You’ll probably make a few bucks off that, I think there’s enough momentum here. Keep a close eye Tuesday morning.

  81. KAL

    Thanks Mr. Miyagi and CMT! I appreciate your candor. I actually don’t have kids, the ones in my picture are props for pyramid scheme purposes. Seriously…

    I drive a 1990 Honda Civic Wagon. Paid $400 for it from a friend a few weeks ago. I have become a shade tree mechanic… New plugs and wires, new air filter, new fuel filter, cleaned throttle body, next up pvc valve and maybe more interesting projects. Maybe. Anyway, I am a cheapskate but I heard that’s how you make your first million! Don’t worry, my wife has a nicer car for herself and the kids. I drive 4 miles to work right now, so no big deal.

    I’ve always lived on less than I’ve made… Right now it’s tough but at least my wife gets to stay home with the young ‘uns. In a few years she can go back to work and things will have a little more breathing room for the future.

  82. ...at ease

    Mr Myagi, I am betting on 153.50. So figured may as well take a chance, since I have PUTs in place, but wanted to push it over the top to roll over. πŸ˜‰

  83. MrMiyagi

    By the way, I don’t mean to harp on anyone here with kids, I just don’t like the idea of parenthood (or kids..) and I tend to speak my thoughts as I have no filter.
    I love dogs though, they are the sweetest souls.

  84. MrMiyagi

    KAL,
    Make sure you pull the fuel pump fuse out and run the car till it dies otherwise you’ll have a line full of pressurized fuel spraying all over you.

  85. KAL

    Senor Miyagi, are you talking about the fuel filter? I took off the gas cap and opened the little pressue release screw on the bolt for the filter and we were golden. That released all the fuel line pressure… A little jumped out but nothing an old t-shirt wouldn’t hold.

  86. DG

    Kal: I drive a 1990 Honda Civic wagon!! I love that car and may never ditch it. They only made that model for two years.

    My wife and I (35 years) have no debt, no kids, no house (I love renting—no headaches) and live on about 50% of what we make. One guy I read referred to “stuff” as “future landfill.” I thought that was well put.

  87. MrMiyagi

    KAL,
    That works too I guess it was the filter in the engine compartment? Not sure if this car has a high pressure side filter as well, haven’t done mechanics in 15 years!

  88. MrMiyagi

    That’s it for me for today, got to get some stuff for the renovations.
    ave a good long week-end for most of you and a regular one for shlubs like us Canucks…

  89. Hot Rod

    You guys are a riot. My work car is an ’89 Buick LeSabre with 70K miles on it. Hand me down from my grandmother in law after she passed. Rides like a dream.

    Hey, regarding options, do you guys analyze option premiums on each side of the trade to see where potential smart and dumb money is?

    For example, SLV Oct calls have a higher premium than the puts.

  90. Eamonn

    Hot Rod, I was just looking there and SLV July Puts are going for peanuts.
    Btw, 70k is very low mileage for an 1989 car

  91. Hot Rod

    Eamonn,

    Yeah, my wife’s grandma barely ever drove it.

    It’s not always a good thing. Sometimes low miles cars have issues.

    My old Toyota ’93 camry was a workhorse. I picked it up with 155K miles in 2001 and traded it in for $1500 last year with 212K miles. It was leaking oil, axl was cracked, beat up….Couldn’t believe the dealer gave me that much for it.

  92. Casey

    “My 2003 truck has a dent in the door and doesn’t look as cool as all of my partner’s porsches. But they’re at work today.”

    Best quote I’ve seen in a while!

  93. KAL

    Hey, DG, I have already decided to be you one day when I grow up. Now that we drive the same car, I will go ahead and say it out loud!

    Next week I’ll be married 13 years (or maybe “more than 12” or “almost 14”, haven’t decided yet!). Anyway, I like the Wagovan. I prefer my old 84 CRX or the 88 CRX Si but this will do. Those 92 horses are kinda fun.

    Miyagi, I think you’re right about the high pressure filter. My dad changed mine on the 88 CRX once, and he asked if the 90 had one too. I don’t know but I’ll look into it. Definitely would have to take the fuel pump out of the equation on that one I’m sure.

    DG, we lost a hosue to a deed-in-lieu of foreclosure last year when our renters moved out. It’s a long story but that’s how it ended up. I like renting, since I don’t have to do anything to the house. I’ve rented one after owning two before and I’m satisfied this way. Glad to see I’m not out of the wisdom loop.

    That 89 Buick sounds classy. Good datemobile! So, since we are digressing, DG, I have steelies on the Wagovan. I also have some flat black paint. So, black steelies or stock steelies? What do you think? The car is that Carolina blue.

  94. ...at ease

    Aftershock authors advise selling any second homes and if you can sell your home and rent as the market is still dropping and no added value in owning one anymore, especially if they take away the mortgage deduction. So unless your house is paid off, you are better off just renting.

  95. Eamonn

    …at ease, you are full of wisdom RE millionaires not showing their wealth.
    My favourite car ever was a Volvo S40. So comfortable, so strong. Felt like I was driving in a tank or armoured personnel carrier.

  96. ...at ease

    Actually Ryan, I drive a white car. No red for me. I hate red! especially in my accounts. πŸ˜‰

    I am fond of the blues, any color blue.

  97. ...at ease

    My favorite car was my first one I bought in cash before I had a license to drive. 67′ MG Midget in British Racing Green. Loved that car, it was a lot of fun!

  98. KAL

    Cool website DG! Sadly the paint and interior of this car are kinda rough. I think the dude before my friend owned it (her friend) had kids AND dogs. What would Miyagi say to that? Haha

  99. ...at ease

    Sadly, I sold it to my Dad in 1978for more than I paid for it and that started him on buying and renovating about 6 more MG Midgets before he moved on to Metros.

  100. ...at ease

    Well I hope everyone has a great weekend, enjoy the family and household chores or visits, rest up for next weeks moves to see which way we are going.

  101. ...at ease

    I miss my Midget, it was like driving a little airplane on the road. I could fly around corners, shift those gears and feel like a race car driver, get out on the runway (old Army airfield in Mitchel Field NY) and skid around in the ice and snow. What a fun time it was! Now, I hate driving too much traffic.

  102. ...at ease

    We had a Fiat that was one of those cars you hated. Had so many electronic problems. You had to stand up to start the car, before you could sit back down to drive it. LOL

  103. ...at ease

    Yeah, now I have one of those electronic horrors from day one off the lot. We wanted a good reliable well built car for road trips. I swore it was a lemon day after I got it home and they just kept saying bring it back we will fix it. Hubby’s first trip from VA to OH, he dropped the transmission. Towed it back and they fixed it. Everytime it beeps, I just say, oh sh*t, what now?

  104. Romeo Bravo

    Have a great weekend all!

    Just wanted to also say let’s keep those who aren’t here in our minds this weekend. I lost two uncles in the past five years, both WW II vets. One was a Navy UDT/Seal at Normandy, the other a Marine in the Pacific at the battle of Guam, Okinawa, etc. I wish I knew all this when they were alive as I could have asked them all kinds of questions. To late now.

    To any of you who have served, thank you and my hats off to you!

  105. KAL

    Hear hear Romeo! To all of our fallen vets. Regardless of the conflict or how we felt about it, we should honor those who stepped up to serve our country.

  106. mamaloshen

    All this talk about cars (I don’t own one, use the no. 13 bus instead).

    Any automobile companies you like to play the rally in the S&P over the next week?

  107. KAL

    Mamaloshen, you must not live in an urban sprawl city, or maybe close to a bus stop? I think if I walk 2 miles, I can get to a bus stop. Wife won’t let me ride a bike, scared I won’t come home.

  108. oa92000

    ” DG said…

    …. no debt, no kids, no house (I love renting—no headaches) and live on about 50% of what we make. One guy I read referred to “stuff” as “future landfill.” I thought that was well put.”

    House? They will tax you once you own it..I sold my @ 2007. ALL I need is a big screen TV & HTIB.

  109. ckpc

    My first car was an Oldsmobile Delta 88…a powerful beast.

    My favorite (and coolest) car was a 1973 Alfa Romeo Spider. Red. Convertible.
    I live in Colorado and boy, that baby could really take the curves. And, btw, I’m a female.

    I’m leaving in the morning for Indianapolis for a week. My siblings still live there, and it is “INDY 500” weekend. Yah-hoo! πŸ˜‰

    Everyone have a safe holiday.

    p.s. I’m long SPY, GLD and GDX, but I bought some July silver puts just in case, as a hedge.

  110. ...at ease

    ckpc,
    Did your Dad buy you that 88 car? Dad’s like to buy tanks for their daughters. πŸ˜‰
    My Dad was pleasantly surprised, when I took him out to look at my first car to buy, as he borrowed it until I got my license… just to make sure it ran well.

  111. mamaloshen

    KAL, actually I do, but fairly central, 30 feet from the local bus stop. I don’t really need one as public transport is good here (London). Plus price of petrol, residential parking permits, auto registration fees, inspections etc. etc. make it uneconomic for me. Plus one more possession to worry about. It would be different if I lived in the country, though.

    Think I’ll pass on those OTM Fiat call options:-)

  112. eric

    CCI above 650, Gold 10 day moving avg now moving up, MACD now bullish, about to make a bullish upside crossover of the 20 dma. Many reasons to like Gold into next week.

  113. ckpc

    at ease;
    ha ha ha! Yes, my Dad DID take me out to buy that car, but I paid for it in cash from my summer job. Boy, those were the days!
    However, my Dad didn’t give me any instruction on how to take care of it…like the necessity of putting coolant in the radiator. I knew I should put water in it, and that just wasn’t enough for a 90 degree Summer day driving on the highway. Luckily the driver behind me had a fire extinguisher!!! Some things you learn the hard way….kind of like trading.

  114. mamaloshen

    At ease, I am in the Swiss Cottage/Belsize area. Maybe we could meet up, though Ruislip is closer to Heathrow. There’s a big US Air Force base near there (or was). RAF Northolt near there, too.

  115. Wes

    I also drive a 15 year old car, the last Cadillac Fleetwood Brougham made.

    It has 50,000 miles, is in A++ mint condition, and I get offers to sell it frequently.

  116. ...at ease

    cpkc,
    My Dad was a Submarine engineer (Career Mustanger), and one of his hobbies was fixing up cars, starting with model Ts. He was a big Ford man.
    I didn’t learn much on car fixing, matter of fact, I still refuse to pump gas, (they used to do that for you). My kids do it for me, now as I don’t drive much and they usually borrow the car.
    Times have changed, It used to cost me less than $7. to fill up my MG tank. Cost me $63 to fill up yesterday. Geesh!
    Miss my Dad, he had quite a spirit of adventure and a big can do anything attitude.

  117. ...at ease

    mamaloshen,
    Not sure where Swiss Cottage/Belsize area, however can look it up when I get over there. We can always meet halfway somewhere as the tube takes you anywhere in London.

  118. aklaunch

    New trader here….

    Question regarding volume?

    What is the advantage or disadvantage of having a low volume rally on the stock that you own compared to a high volume rally?

  119. Gary

    In theory strong volume suggests buying interest. Like everything else sometimes it works and sometimes it doesn’t.

    Generally speaking though it’s usually better to see strong volume off a bottom. Weak volume after an extended rally is often a sign of an impending correction.

  120. ALEX

    I use volumes almost 90% of the time, and what Gary said is what I look for.

    Also, I just dont like to buy low volume stocks (like they trade 60,000 avg a day, sometimes 20,000 for example) , because they trade oddly and if they sell off, the price on a quick attempt to market sell drops FAST. So if its at $16.50 and selling off fast , you’re mkt order sell may get out at $16.30 or worse.

    Rare, but also avoidable.

    Have a great long wkend Gary and the SMT gang. Be safe!

  121. mamaloshen

    At ease,

    Sounds good. I’m not far from Hampstead (if that means anything). Ruislip’s on the Metropolitan Line which runs not too far from me.

    I was too lazy to sell my GDXJ so am holding over the weekened. It was so oversold on the charts I took a shot a day after Gary went in. Think it could run a couple more points but I have my eye on the exit (bought some AUY, too).

  122. Poly

    Have a great long weekend all.

    Gary, even though some of us will, at times, passionately debate the calls, you still run and support one of the best blogs/sites, so congrats.

  123. ...at ease

    Yes, heard of Hampstead. We also can pick up the Picadilly line on the West Ruislip side. However, I am right on the Ruislip Tube stop. Right in front of Waitross, on Kings End.

  124. mamaloshen

    I could get up there. Actually, mid-late June may be best as I’m going to New York from late June to mid-July.

    Maybe we should exchange emails (though I don’t know how to do that here). Others on the blog may be getting bored reading about the underground stations and tube lines of fair old London:-)

  125. DG

    It’s been a tough month, but let me say that IMO Gary runs a great site and blog, is brilliant at cycle bottoms, and is an honest and straight up guy. Putting those three qualities in the financial world is nearly impossible, but he seems to have done it. I for one am quite grateful.

    Have a great weekend everybody.

  126. ...at ease

    Gary, Thank you for all your do and I hope your recovery is fast and you are ready for your Switzerland trip. I knew I couldn’t make this one to meet you, however hopefully a future one. God Bless you. Have a great weekend and relax if you can. Thank you.

  127. Felix Felicissimi

    Gary – don’t know if you’re still there but in the chart your posted above on this page, the miners’ breakdowns were all done while they were well above the 200 DMA. That’s just in the chart examples above, but I wondered whether the fact that the current break took place *below* the 200 has any bearing on the predictive value of the event?

  128. Gary

    Actually this break below the 200 is probably significant. It’s probably the first shot over the bow that miners are about to enter a bear market.

    I’m going to go over it in the weekend report.

  129. Ben

    I used the PM bounce the past two weeks to lighten up considerably (to about 8 to 10%), and have put some $ into the model portfolio. I think a breather in the PM drama of the past few months will be welcome.

  130. Felix Felicissimi

    Not me, I really miss AGQ. Our relationship was stormy but she took me to new heights and then took whatever wasn’t nailed down when she left, and I want her back!

    Long SPY with some SLV puts.

  131. Moneyman

    Felix

    True..The relationship with AGQ was nice..In the beginning..

    Then she betrayed us..

    She left us here..But She will come back later..I hope!

  132. $$$

    Gary,

    On the weekly chart, the dollar closed at 74.89 and just needs to go down 7 more cents next week to form a Weekly swing high.

    I don’t know if seasonality has anything to do with this, but last year the dollar peaked the first week of June and then sold off for the next 9 weeks.

  133. Gary

    Folks you need to resign yourself to the fact that we have not only a yearly cycle low coming in stocks, but also a 3 year cycle low in the CRB (actually about 2 1/2 years) And very probably a three year cycle low in the dollar.

    This combination is going to crush all markets in the next 2 to 3 months and that includes gold and certainly silver.

    Get prepared for this now. If you want to try and catch a few more pennies in the metals market or stock market that’s fine, but understand these are very short term trades. It’s not going to be long before all hell starts to break lose.

    This weekends report is going to be a very important report.

  134. ...at ease

    “First shot over the bow, that they are entering the Bear market” per Gary… Does that mean the miners are NOT going to produce for us along with the metals for the remaining cycles to come? Look forward to your weekend report. Thanks Gary. Have a good and hopefully relaxing weekend.

  135. Bill

    Hi – this is Bill in Japan. Some thoughts after reading the post and comments.

    It’s natural to try to predict the future, and if we could wouldn’t that be nice – or not – anyways, we can’t. Exceptions turn rules into guidelines, which is what I believe cycles are, guidelines. Probably good ones, but are still not rules.

    Same as for volume – see how SLV rose on low volume the last 8 mos – seems like volume is high on selling, is the only guideline I see.

    I like how you draw horiz lines to mark breakouts/downs, Gary. I do the same. Note though how $USD broke down today from last weeks pivot low. I don’t know how long it will last – long or short – but it’s currently on a sell sig in my book.

    $GOLD and $SILVER are now on buy signals, but again I don’t know for how long. Again, my tactic is to buy on breakouts and sell on breakdowns, w/out predicting where I think it will or should go (or I try to). It is hard – very hard – to drop judgement, but following is safer than predicting for me.

    Seasonality used to work, but now China demand outstrips India, so thats out the door now too.

    Lastly, w/all the debt and unemployment WW, I’m starting to think that a phys position in gold bars for 1/3 of our wealth is now prudent. I hope gold falls in a D wave as you predict, Gary, so I can buy bars this summer, but I’m slowly resolving myself to buy this summer, either way. The only solution for govm’ts is to print. Too bad.

  136. Gary

    Bill,
    The problem with buying breakouts or selling breakdowns is that that strategy almost never works anymore. That strategy worked back in the 80’s and 90’s but hasn’t worked very well for almost 10 years now.

    As many people have probably noticed almost every breakout fails to follow through now days and breakdowns more often than not lead to powerful rallies.

    Granted sometimes a long consolidation will lead to a break out with follow through similar to what happened with silver but those are few and far between.

    More often than not the market takes three steps up and two steps down or vice versa.

  137. Bill

    Hi Gary. Yup, it isn’t working 100% for me. It works better using just market close prices, but as you said it has a lot of fakeouts.

    I keep going back and forth between using breakouts/down, and using EMA’s. My current method uses both, though that’s not perfect either.

    But it does work good for the *few* things that trend. Like silver. OIH is another. There are a few, but just a few.

  138. KAL

    Thanks Gary. Hope your shoulder heals nicely. For what it’s worth you’ve got me back in the weight room for the first time in like 5 years. Wow I’m a wuss now!

  139. Bill

    A bit more …

    I’m finding that using breakouts/downs works best for pure commodities, like GLD, SLV, JJC and DBA, and that EMA crossovers work best for stocks.

    But it’s definitely not perfect.

    For the life of me though Gary, I still can’t figure out why you use cycles, as they seem even less perfect. I read all your stuff and it works a lot, but several times from across the room I see zip. All the power to you though.

  140. Gary

    Bill,
    Cycles are never going to be a perfect timing tool, there is no such thing. But they are pretty good for telling us when to step on the gas and when to tap the brake.

    Right now it’s time to step on the gas in stocks but time to tap the brake in metals.

  141. Silverhound

    Hi trond

    I wasn’t suggesting that we are moving into a 1980 style blow off in the next few months. That wasn’t really the point of my post. I was only trying to show how common it is for a wave 4 correction to unfold in a triangle pattern. Rule of thumb for EW suggests wave 4 should be the opposite of wave 2, which in this case seems to be happening although the latest move in gold may negate that.

    As far as EW goes I take more of a hybrid approach and look more at the percentage of the correction size than the strict wave pattern. From that end gold completed wave 4 in the first push down to 1462. That is the 6.6% target I had marked on the chart in light blue and is a repeat of previous moves. This is the key for EW as far as I’m concerned.

    Thanks again for posting your charts. I for one don’t have a lot of historical data so I appreciate when others share the info they have.

    Cheers

  142. Bruce

    If silver busts thru 38.00 next week, it’s gonna be ‘game on’ to 43. I’m not currently in there, but I may play it in a ‘smallish’ way should it get through.

    And Gold should be testing & surpassing recent highs at 1577.

  143. Northern Marlin

    There are two characteristics about the current move by the miners on the HUI chart to break below the prior daily cycle low that are different from the other three examples shown on the chart in this post. Can anyone else see them?

  144. Moneyman

    Bruce

    Big risk in silver..But..If gold goes higher i also think that silver might go to 40-42 maybe.

    But the risk is massive..And the drop can be big..Gap down hard..

    But I might take a very small trade also..:-)

    For no Im only in gold and will focus to short this market later on..Then w8 for gold and silver to correct down..

  145. Gary

    Why would you want to do that? The dollar has probably just put in its three year cycle low. It’s now going to strengthen against other currencies.

  146. SkepticSquirrel

    The only problem with the pm’s prediction is that the Euro is causing flight to safety from the European population. Gold is more than just the dollar now.

  147. Eamonn

    Gary, yes, I’m kinda twisted on what to do RE expiry date. I haven’t bought them yet, I’m hoping for another silver rise before the unemployment report, and I’ll buy them just before then.
    Anyone here going of October instead of July?

  148. Russell

    Gary,
    The silver price drop that caused you to bail PMs was when silver hit 38.5 in the overseas markets. Is this level an area of price vulnerability for those us us foolish enough to be trying to find a top area before buying our Puts.
    I know you cant time tops, but what clues should be warning signs. In an ERT dollar cycle swing low are we to expect much more decline than 74.5? If I choose to short PMs waiting for a better entry improves the safety and profitability of the trade. Also(sorry to be so long) is it a good strategy to buy July PUTS and then transition to Oct after taking profits or just start off in Oct. SLV has no AUG or SEPT exp.
    I would love for you to comment.

  149. Gary

    In my experience timing tops is extremely tough to do. About the only way I’ve ever made money is to just pick a spot, take my position, and then sit still until it works.

    Stops will usually just cause one to get whipsawed so many times that they either don’t make any money or they can’t pull the trigger once the real decline begins.

    If you are going to play the downside my suggestion is to just take your best shot at some point and then sit still with it till it pays off.

    The problem with shorting is that it might never pay off and your loss will continue to grow and grow. This is why I like puts for the downside. The risk is known right up front.

  150. Eamonn

    …at ease, what are your strikes for July and October?
    Bob loves Hawaii, if you are there, what would you do? SLV Puts for July and October

  151. Russell

    Gary,
    Can you forecast the US$ price bottom? And what about the stategy of first July exp and then rolling into oct exp?

  152. ...at ease

    Gary, thanks for the great report! A lot to digest, hopefully we finally see this turn we have been expecting to align things up.
    Have a great weekend.

    To all Servicemen and Veterans, Thank you for your service.
    God Bless you All!

  153. Bob loves Hawaii

    If you are using options, it is my experience that greater than 60 days out you pay too much for time insurance.

    I like to buy options that expire after one daily cycle only. The reversals suck out your profit, I’d rather sell and buy again for the next daily cycle.

    So July or August. If you are ITM on your options you can buy July and roll to August if the decline is still in progress. However, my view is we will see a waterfall decline as Gary has posted before.

  154. Bruce

    Gary,

    According to your w/e report; if you think the downside is greater than the upside in Gold & in the S&P/Nasdaq, why did you decide to pick up pennies in front of the S&P/Nasdaq bulldozer but not the GLD bulldozer? Ain’t it the same thing?

  155. Peter

    Gary, just for clarification purposes, right after you talk about the 2000-2002 bear market you write ” the Fed’s actions will also force the dollar into an extreme RIGHT TRANSLATED three year cycle”. I will assume you meant LEFT ?

  156. TJ

    This guy agrees, calls Silver top.

    This guy has made some outstanding calls using time cycles and symmetrical patterns. He went short Silver on Friday, says it has topped and a sudden drop for Silver is coming under $30 by June 6. A week ago he did call a sudden drop for S&P Monday, and forecast a Silver top at this current level this week also.

    http://cyclicalmarketanalysis.blogspot.com/

  157. Gary

    Russell,
    All I can do is tell you when a cycle bottom timing band is due. There is no way that I know of to tell price ahead of time.

    Rolling into Oct. sounds like a workable idea to me.

  158. mamaloshen

    Gary,

    Nice weekend report. If nothing else, it makes me want to lighten up on long stock positions when I still can (I have too many for comfort if a sharp break is coming soon).

    My question, though, is about $BPGDM. I watch it pretty closely, and you used to mention it, too. Right now it’s at 50, coming off a bottom of 43.33. Usually, when it gets that low it bounces up to at least 70, which would suggest the gold rally has a way to run.

    Do you not find this a useful indicator anymore?

  159. Blake

    Open question to forum:
    I have been scouring the internet for decent articles on how to play out of the money puts for high volatility moves and have come up with unsatisfactory results. Can anyone here who has experience trading these type of options explain to me generally what one looks for when setting up this trade and the theory behind certain series OTM strikes and expiry dates. Thanks, all!

  160. Gary

    M,
    If the miners are still in a C-wave advance then yes I would expect a bounce back to 70ish. However if the CRB is ready to roll over into it’s three year cycle low then the miners should be about ready to enter a brief bear market. In that scenario the bounces may only rise to 50-60 before rolling over again.

    That’s kind of what happened during the 08 bear as the BPGDM worked it’s way down to 0.

  161. Blake

    @at ease,
    By way of instruction, why the 29 strike on slv? What is the general theory that underpins your determination of how far out of the money to go? Thanks!

  162. mamaloshen

    Thanks for pointing that out, Gary. I was only looking at a daily chart showing $BPGDM action for the last year. It does pay to look at precedents in previous cycles, not just the present one. Have a nice weekend.

  163. Bob loves Hawaii

    Blake when buying OTM options, you must first have a thesis for the price target on the stock or ETF you wish to place your bet, and select a strike higher or lower than that target depending if they are calls or puts. Gamma is your friend, theta is your enemy

    Once that is established you must determine your size, and your loss appetite.

    You must time the expiry right as OTM options lose incredible value on daily cycle reversals, so you should not hold through one, take your profit, run, then reload at the same strike but later expiry if you believe your thesis is intact.

    Also buy a little over several days when you think you are entering your timing band for the trade.

    There is no magic bullet, and you cannot set and forget these. I know from profits lost experience, you cannot go out 90 days and simply walk away, you can be right and make little profit. Option market makers are not stupid, these instruments are rarely mis priced, and are designed for you to expire worthless/no profit.

    They must be managed. Finally, OTM trades are best made at Intermediate cycle changes.

    I hope that helps, and read Gary’s view on these as their is 80-90 percent chance you will lose money.

  164. jhnewman

    Back in 1974, 6 years before the ’70s Gold Bull peaked, Jim Sinclair sat down and estimated that the market would top at $900. Six years later, it topped at $850, and he sold all his futures contracts on the day it topped.

    Over on his site, Sinclair is now sharing “the formula” he used to come up with that target of $900.

    http://jsmineset.com/

    Sinclair’s father was Bert Seligman. Seligman was partners with the legendary trader Jesse Livermore. Sinclair says he (Sinclair) is sharing on his Web site, bit by bit, everything he learned from Livermore through his father, Seligman.

    Anyway, a few days ago, Sinclair threw out “the formula” he used to figure out that $900 target for the 1970s Gold Bull, and challenged his readers to come up with their estimate for the top of THIS Gold Bull we’re now in.

    The answer that came back that Sinclair said was the correct one: $13,664/oz.

    Sinclair says that is the price “where gold wants to go.”

    Now, given that the eventual high for the ’70s Gold Bull fell short of Sinclair’s target, and assuming that this Gold Bull may do the same, it’s still not unreasonable to believe that at the top of this Gold Bull, price may hit $10,000 oz.

    What that says for the dollar, as everybody here knows, is that it’s going to lose A LOT of its buying power and be devalued A LOT ( = a form of hyperinflation — not necessarily Weimar, but it’s going to be bad nevertheless).

    Because of the effect that’s going to have on the lives of ALL Americans, that’s pretty sickening to contemplate, but — forewarned is forearmed.

    This is going to happen. It’s baked into the cake at this point. PLEASE try to help others (family, friends, acquaintances, strangers) understand where this is going and how they can save themselves and others (by buying physical silver and gold, primarily).

    I know a lot of people refuse to listen, and that it can be very hard to “get through” to people, and that sometimes conflict can arise.

    But we have to try.

    Even if you can get people to put just SOME of their assets into The Ultimate Safe Haven, that will be a major victory — and they will thank you down the road, as the back-end of this financial hurricane starts to bludgeon all of us again.

  165. Bob loves Hawaii

    Blake, also I rarely just place a directional trade with options. Spreads, and also buying 60 days out and selling weeklies against them to reduce basis is a strategy I always use.

  166. Blake

    Thanks, Bob
    So, let’s take silver for example, using a price target of $30.00 by July 1. Would I then buy the July 16 30 Puts? All your guidance is much appreciated!

  167. Bob loves Hawaii

    Blake, if it were me, I would buy the 33 and sell the 30. If SLV closed below 35.80, remove the sold leg. If it closes above 38.40 get out as it will fly higher.

    But, I am not touching silver until gold finishes its move. Also, silver open interest on the July contract exceeds the remaining inventory in the COMEX, per their own reports. Silver is leaving the vaults at an alarming rate.

    I’d rather short oil, as Obama has told us it is too high, and those in power will not want to get the masses stirring over high oil. The first rumblings already have them very nervous. Today 10% of every paycheck for the average American goes for oil. Double last year, it is killing the economy.

  168. Blake

    Great, thanks for your considered remarks, Bob! Very helpful for less experienced traders, such as myself.

    Gary-
    Would you consider adding some language to your “How I use Options” section to include some general guidelines on OTM put strategies? It would surely help less experienced premium members to play the CRB intermediate cycle low without requiring you to disclose your actual put positions.

  169. Peter

    Gary , I just wanted to clarify something re. our Gold yearly cycle. Correct me if I am wrong on any points … last 2 yearly cycle lows came Oct 08 and Feb ’10 … I see we got an IntCyc low around Jan/feb 11 at around 1308$, are you considering this to be our yearly low ? If so, I assume then, you dont expect this upcoming Dwave in gold to go lower than that level. If you dont consider that 1308$ as the yearly low, would you consider June or July to be too late to put in that low ?

    thanks in advance.

  170. Gary

    I would point out that puts are sometimes mis-priced for the reason that markets go down much faster than they go up.

    There are only two times when I would ever consider an out of the money option. One would be as Bob says at an intermediate cycle low. However those can sometimes be hard to pick. Case in point in late 09 what I thought was the intermediate bottom turned out to have another leg down.

    The only other time I would consider buying an out of the money option would be if we are nearing an intermediate decline. At that point volatility will be muted as the market will be climbing so puts will be grossly mis-priced when the intermediate decline comes.

  171. Felix Felicissimi

    I was just looking at September SPY puts. There are groups of both calls and puts that have exactly the same (large) Open Interest, all up and down the strikes. That has to be a managed affair.

  172. Gary

    Peter,
    January should in theory be the yearly cycle low for gold. There may be contributing factors that could cause it to be violated though.

    Stocks and commodities both should be dropping into major cycle lows together. This could and probably will intensify selling pressure in everything and could drive gold below the January cycle low.

    When this kind of panic selling occurs fundamentals go out the window. We got a front row view to this during the 08 crash.

    Every last bit of physical gold was taken out of the market during the crash. One simply couldn’t buy physical gold because there was none to be had…anywhere. Yet the level of panic in the market was such that sellers continued to sell gold. Margin selling was so great that gold fell to $680 an oz. even though supply had effectively been reduced to 0.

    If one thinks that fundamentals are going to halt selling in the gold or silver market they might want to think again. When human emotions are out of control fundamentals become meaningless.

  173. Eamonn

    Gary, thank you for that information RE physical PMs.
    I am considering opening an account with http://www.goldmoney.com to buy physical precious metals. Apparently, you can have your metals stored at your choice of vault in London, Zurich, or Hong Kong, and, if required, take delivery of them at any time.
    If anyone has an account with these people I would appreciate your feedback on them. Thanks

  174. pimaCanyon

    hkc,

    A couple of weeks. (joking… sort of)

    However, I would be careful starting the second week of June. It’s possible the May high could have been the top. If so, this new daily cycle could end up being very left translated and may top out the end of next week or early in the week following.

  175. gilbert500

    Ok, lets all stand back and take a deep breath and take this info in.

    My only question is what are we going to do?

    Is there a light in your head where we can still make some money.

  176. Hot Rod

    Hkc,

    Grand supercycle has been calling a top in the market with his rising wedge for over a year and a half. It’s gotten old for me and I rarely follow him anymore. He posts his trades but I have not really followed. I’m sure at some point he’ll be right an he’ll surely pat himself on the back (again).

  177. Grand Supercycle

    Hot Rod

    Your assertion is incorrect.

    I have not been been ‘calling for a top for over a year and a half’

    I have been bearish since early 2011 as key indexes have been undergoing long term distribution, a topping process.

    stockmarket618.wordpress.com

  178. Mighty

    MrMiyagi,

    “Most times I’ll take a day or overnight trade for a 150-400$ profit.”
    I’ve been pondering this and was wondering how you developed your strategy for overnight trading?
    Thanks for sharing. Much appreciated.

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