525 thoughts on “portfolio change

  1. DG

    I just covered my SPY short and sold 1/2 my DUG, then went here only to find you covered as well. Everyone is looking at 1250, so maybe we don’t get there so easily. Still short euro, EEM, USO, some DUG, and SLV so if we crack big I’ll be all smiles. Tricky weekend coming up with the EU meeting, tag of the 200 DMA, and loots of bears.

  2. DG

    mdsn. Just my opinion, but you are playing with fire going long here. The proverbial picking up nickels in front of a steamroller. You may win a little but the risk is to get flattened.

  3. Greggy_M

    Gary,

    I know we are very oversold in the stock market but if the dollar is set to rally for another week or two can stocks fight a strong dollar?

  4. I've Eaten Silver

    Gary, what do you think of this gold:xau ratio? Think it will exceed the previous 2008 high of around 11?

    I can’t easily see historical data for it, what was the ratio’s highest ever since the bull began, anyone know?

    Gold/XAU

    (go to weekly view, it’s better and in candlestick form)

  5. Gary

    Blogger Gary said…

    Greg,

    The dollar has rallied very strongly the last couple of days. It wouldn’t be unusual to see a minor bear flag form before a final push to the 200 day moving average.

    That would allow the market to rally briefly. I do think we will probably marginally break 1250 before the real countertrend rally begins, I’m just not willing to hold short positions on that assumption. It’s safer to cover now and then wait until the countertrend rally materializes.

  6. mdsn

    Gary and DG,
    Of course you are right…then again it was a pretty low risk 5 point scalp in my opinion.
    I am now out and flat

  7. samppa_nyman

    interested to hear about the dollar and PM’s in this stock bounce, what should happen to them?
    could it be dollar up, stocks up, PM’s up at the same time, or finally the start of faster decline for PM’s if their safe haven appeal fades?
    Long dollar, short silver here…

  8. I've Eaten Silver

    Stocks and gold can do anything in relationship with the dollar, as you should know there is no perfect science, otherwise we’d all be billionaires. Easily we could see a counter trend rally with the dollar going sideways or even up. It is not historically likely, but never put anything out of the question.

    Look at gold, the dollar has shot up what 5-6% since its 72.xx low and gold’s still only a little over 2% off it’s highs, and there’s much better examples than this I assure you.

  9. Gary

    I’ve eaten silver,

    I doubt the gold XAU ratio will exceed the 08 high this time.

    More likely gold will start to drop aggressively into its intermediate cycle low and the ratio will either stabilize or actually start to drop marginally as gold starts to catch up to the miners.

  10. 77

    VIX more than 10% above it’s 10dma is one buy the market signal in the market timing system developed by Larry Connors.. known as Connors Vix Reversals.
    …always would like a gap down off these and buy the morning low

  11. Gary

    I suspect that the current strength in gold was due to an erroneous assumption that gold was a safe haven protection from the current European banking crisis.

    Once the stock market starts to enter its countertrend move traders are going to assume the European situation has been corrected and the gold safe haven trade should come off, leading to gold moving down aggressively into its intermediate cycle low.

    In the 7+ years that I have watched gold I have yet to see it not move down into an intermediate cycle low respectively of whether the dollar was rallying or declining. I expect this time will be no different.

    The market will always find a reason to follow the cycles.

  12. DG

    Sold 1/4 of my EUO at 17.60 (felt like throwing a child out of the house). I will get that back and more next week almost regardless of what happens.

  13. samppa_nyman

    The Greece situation might really make a mess of this intermediate gold cycle.
    But reading from all your thoughts being long dollar and short silver isn’t the worst idea since shorting stocks for now is a high risk…
    And I’m in the Euro area so I need a hedge against euro depreciation.

  14. ckpc

    Brilliant call, Gary. My gut was telling me to cover and your announcement confirmed it. Sold my SDS, TZA and EUO before the market turned, all for a very nice profit. Plus, what a relief to go into the weekend with no worries. Strong call, and perfect timing. Bravo!

    Many thanks for the new charts and summary also. It’s like a treasure map.

  15. Ollie

    DG, I really liked your posts on shorting and how to add on weak bounces etc…as I’m a terrible short I still am just sitting in cash though

    As I was thinking about why I wasn’t able to pull the trigger in June 2nd I realized it was due to position sizing

    Greed was telling me to go all in but fear of a drawdown on a 100% position kept me out

    May I ask what % of trading capital do you use when you initiate a position like your EUO trade?

    And what % allocation do you add at the next opportunity?

    Many thanks

  16. Felix

    Indecision candles GLD, SLV ? – lovely proportions, perfect suspension, delicate – yet hardly yielding to either suitor…

    SPX looks the same, actually, all in suspended animation today

  17. DG

    Ollie: My situation is odd so my %ages wont help you. I am 55, have no debt, no kids, own my own business, rent, and all my assets are in cash. My % should have no bearing on yours unless you match all those conditions. If you fight both greed and fear and pick a middle ground you will come out fine. Never do 100% on the first order. Do some and see if the mkt goes your way. Then add small pieces until you get excited at how smart you are or how much money you have made. Then sell 1/2.

  18. Ollie

    Thanks DG, will work on incorporating position sizing into my trading strategy. BTW 3 out of the 6 conditions are the same 🙂 No debt, renting, 100% of my assets are in cash

    That’s actually the main reason why I badly need to think about position sizing as it’s quite scary for me to trade with most of my life savings…

    But I just can’t let it lose most of its purchasing power due to Fed policies

  19. CMT

    Ollie, I’m in the same boat. To help me with position sizing (and I’m not suggesting anyone follow my lead – wtf do I know?), over the last few years, I converted 3 years of expenses into physical AU, saved up enough cash to handle 2 years of emergency expenses, then split that between cash I keep in a safe deposit box and cash that’s in a “high yield” savings account.

    I put the rest of the money (about 2/3rds) into my brokerage account, but rarely have more than 65% of that invested in anything (and rarely have more than 25% on any pone trade. So, even if I blow up my trading account and have to sell my PMs, I should have a few years to get back on my feet and return to the plantation.

    just my approach to positioning for the future.

  20. dallascfp

    As we cannot short stocks/ETF in our 401k, does anyone have any suggestion on what they are doing with their plan?

    I am 100% cash now.

    Any advice will be greatly appreciated.

    Thanks

  21. Poly

    Apology if already stated, been out all day, but did you notice that we have a confirmed failed IT NASDAQ cycle in play!

  22. Ben

    re: 401k. I’m mostly cash and waiting for late summer/early fall. It truly sucks… I wish there was a way to transfer it to an IRA, but they entrap you for your own good. Ah, right…

  23. fubsy_cooter

    Ollie,
    If I may jump in here.
    If you are able to honestly understand how much of a loss you can tolerate with a trade..meaning all trades that line up in the same trend (if you are short S&P and QQQ, these are essentially the same position so you would take a half position in each to keep your risk within parameters described below), then position size is a matter of simple math.

    The number of shares should allow the loss if stopped out to be within your comfortable limit.

    For example, when I initiate a position I typically will risk between 1% and 5% depending on the market status. At an intermediate cycle low in a bull trend I will risk more.

    So, say I’m willing to risk 1% and my account is worth 100k. I can lose 1000.00 on a trade and it will be acceptable to my risk tolerance. So, if if my stop is
    .50 away, I can buy 2000 shares of an equity. 2000 times .5 equals 1000.00. I usually go a little light in case my stop is gapped over.

    In a trend, there is always time to add to positions and make gains substantial, but in this way, your tactic limits your risk to a manageable level.

    Obvbiously, if you’re willing to risk 5% of account value you can buy 5 times as many shares.

    Hope that helps. Simple, but very few traders utilize this type of tactic as many think about how much they can gain rather than how much they can lose.

    fubsy

  24. Edwin

    aww man. gary we’re on the same team now going long.

    i’ve been buying the dip for the past 3 weeks now

    I would really love to see the market rocket to 1340 or so

    let see what happens over the course of a week.

  25. Edwin

    i have to tend to agree about the comment of the gold silver trade as being a safe haven.

    though i’d would have love to see a 1600 number for gold for this intermediate cycle.

  26. Aaron

    Good trade for those who took it, you cant go broke by booking a profit. Im sitting tight with my trade, there was no capitulation, and a bounce here would only be used for me to add to my position.

  27. Poly

    Yesterday was a 92% down day, the third such day for the month!

    If today’s bounce is all that she can show after a brutal 92% down day, then I want my full exposure to the trap door option.

    I see no point in covering for 20-30 points and miss a possible 200, these markets are rattled and anything is possible. Sure it’s a major outlier, but you get some type of flash crash while leveraged short and you’re talking serious, serious gains.

  28. Dan

    CME lowered margins on PMs, not that I think it matters as I can’t imagine there’s too many people out there on heavy margin.

  29. Aaron

    Anyone notice Agriculture getting murdered? If this dollar rally continues (I believe it will), the deflationary wave can be brutal.

  30. I've Eaten Silver

    Poly,

    Do you have puts on a inverse leveraged ETF, or are you short a call on a leveraged ETF?

    … need some option exposure in the coming weeks to the downside. 🙂 It’s so much more comforting…

    oh, whatever, I’m out in the middle of the ocean having the time of my life, if I come back to shore and the world has gone to hell b/c of the markets collapsing, I still be as happy as out at sea having had some nice puts 🙂

  31. I've Eaten Silver

    I’m just curious b/c I don’t necessarily want to spend the time looking at all the leveraged ETFs for their option volumes to make sure one is acceptable. It sounded like you may already have done the hmwk, but I maybe do recall that you just had a SPY put?

    You confused me when you said you were leveraged short, are you talking over 100% short or shorting something leveraged, or just using puts (leveraged intrinsically)?

  32. Poly

    I don’t buy options on leveraged ETF’s, just tracking ETF’s, I control the leverage via the option.

    Not sure how i feel about adding new exposure at this point, certainly not with options, unless you’re talking way OTM type puts for crash exposure, with say a max 1% risk, at most.

  33. I've Eaten Silver

    Yeah, that’s what i thought you meant, but you never know with you considering you said you paid for multiple family trips with options before on the way up with silver (not too hard to do, lol, with that tear silver had).

    That’s exactly what I want OTM calls. But I’d dabble with a few levels if we see a nice bounce here soon, right now obviously is bad timing.

  34. Poly

    “but I maybe do recall that you just had a SPY put? “

    I use multiple strategies depending on the IT cycle, but I only trade options in the big pools, primarily SPY, love that. I’ve been short SPY, SLV and USO for a while now. I will at times hedge by selling weekly puts against them, but that is not often.

  35. David Kafrick

    If tomorrow we trade above today´s high, I am taking a long position on ES. I think the odds are high that this won´t be just a 1 day rally, so I will be able to begin the trade with instant gratification, plus, I think there is a good chance that we have one more leg up on the ES, probably to 1450 or so.

  36. Ben

    010,

    a) not much of a secret if we all know about it;

    b) not until the printing presses are ripped from the dead hands of the Fed

    Politicians will not give up the stealth tax of monetary inflation unless the gov’t itself is shocked, by being overthrown or by some other incredible calamity.

    Maybe in 2015 or 2016…

    Life/economy/jobs will truly suck if the Feds feel that a return to the gold standard is their best option.

  37. $$$

    DG,

    I don’t get to post during the day, but I do try to follow the blog.

    you must have mentioned this before, “when you get excited at how smart you are or how much money you have made. Then sell “.

    That’s how I felt yesterday with my UUP and DUG calls.

    then it occurred to me reading something like this on the blog — so I sold and had my most profitable day ever trading

    thank you

  38. 86d4life

    Eamonn,
    We only have blacks here. On very rare occaison, a grizz might wander through the western part of the state, but that`s the exception. Never been chased by one but numerous encounters. Put it this way, if they`re coming for you there`s no chase at all, it`s just over. They beat a quarter horse in a sprint. The best way I can think to describe it is shooting a Volkswagon out of a cannon. How about where your at, bears, wolves, any of that?

  39. Éamonn

    86d4life, interesting what you said about bears. Probably best to carry a gun then while in bear country?
    We have nothing scary like bears here. Only thing I have to watch for are deer running in front of the car at night. They are not very smart when it comes to cars.

  40. Moneyman

    Hmm Maybe we will get a stronger rally then we think? Or not?

    The sentiment is really bearish and the euro might bounce a bit..

    Will probably sell some positions tomorrow morning..Not all but some..

    But also I think the mess in Europa just started and soon Portugal and Spain will be the next target..

  41. 86d4life

    Eamonn,
    No worries on the bears. They`re just trying to make a living like the rest of us and prefer to avoid conflict. And the deer aren`t very smart at much of anything! 🙂

  42. 86d4life

    Poly,
    In an earlier post you mentioned yesterday was a 92% down day. I have seen this reference before. Could you please explain what this number is refering too. Also, did you find this number on Barcharts? Thanks a bunch.

  43. Last Shadow Rider

    I see an ABCD S&P Fib upside target with D terminating at between 1277.2 (127.2) and 1280.8 (161.8). If you average the 2 it comes out to 1279. So Im thinking the best place to get short is about 1279. Does anyone else see this?

  44. Éamonn

    86d4life, yes deer seem to be harmless timid sort of animals. They don’t seem to react well to cars though. Sometimes they just come from nowhere and it seems like they are really trying to make an effort to get under the wheels of the car.

  45. Last Shadow Rider

    My dad just hit one a few days ago. It was feeding on the side of the road in a gully. It jumped up on to the road, and took out the driver side window and the windshield on the driver side. Why didnt it just keep eating? Like Eamonn said, It had to try to get under the tires 😉

  46. I've Eaten Silver

    86d4life,

    How far north are you in MN?

    Isn’t there a small sized wildfire that just broke out in the boundary waters? Probably some dumb kid… Also there was a 23yo that went there alone and was just reported missing the other day… don’t know if you’re close to those necks of the woods but curious…

    I occasionally fish near Bemidji.

  47. Poly

    86,

    It’s a measure of the downside volume on the board. 90% up or down days are extremes, euphoria and panic.

    Barchart.com shows you the up and down volume, a simple division will give u the %. Although 90% days always make the press.

  48. Éamonn

    Last Shadow Rider, that’s just what I’m talking about. Seems they jump at the car trying to get in through the windscreen or something. Heard it many times

  49. Éamonn

    I’ve Eaten Silver, you’re not insinuating that 86d4life is starting fires and abducting 23 year olds are you? *joke*

  50. Alex in Montana

    Miners or Gold ???

    Many subs have been asking Gary whether miners or gold will be better. He will have his own opinion based on the miners relative valuation vs. gold itself. The lower the valuation the better.

    Fore fundamentals on miners you must read Standard Chartered 68page report on the miners. It is found on http://www.zerohedge.com – date is June 14th.

    Bottom line – big miners – read GDX will be underperformers vs. gold and large juniors about to actually por gold from new mines.

    Keep an open mind when you read the report. I know I am.

  51. Haggerty

    Gary good luck at the tournament.

    All,
    If you look at GLD from the 4/29 high and the 5/5 low, it’s kind of forming a triangle consolidation pattern which I hope breaks to the downside.
    The same spot also looks like a cup and handle formation

  52. William

    Haggerty,

    We closed today below that lower trendline of the triangle, didnt it we?

    That lower trendline will now be resistance tomorrow.

  53. William

    Haggerty,

    BTW im looking at a gold chart, not the GLD.

    That lower trendline is sitting right on the 20sma, which is now coming to a point with the 10sma both will hopefully act as resistance tomorrow.

  54. William

    Gold is sitting right on first support now of a longer term lower trendline from 1/28 at 1528.90, we need a break below the 50sma now to start free falling.

  55. William

    Gary!

    Take a look at a weekly chart of GDM, it dropped from 1296.01 to 117.09 and then went back up to 1243.61 the next week like nothing happened???? Do you see that, or are my charts screwed up.

  56. William

    Anyone notice what happened last intermediate cycle at weeks 21 and 22?

    Gold bounced off the 10sma (where its sitting on now at week 20) and rallied $50 before dipping below it into the intermediate decline.

  57. William

    Charles,

    If you draw a lower trendline we are 3/4 of the way down a falling wedge, which tends to break to the upside through the upper trendline.

    Thanks for posting that chart.

  58. MrMiyagi

    US Markets futures show slightly lower at this hour with Asian markets trading lower.
    Mr & Mrs Miyagi are enjoying a little trip to Vancouver Island but Mr Miyagi still keeping an eye on things and you kids (shame on the rioting Vancouver hooligans).
    If QQQ goes a bit lower tomorrow I will sell my puts and buy again after a bounce.

  59. Ollie

    CMT, very interesting approach, honestly i haven’t thought of planning ahead in such a way

    fubsy, thanks for your comments, the max % risk method is what i’m going to put in place

    this is a great blog with lots of great traders/investors, i wish i had found it few years earlier!

  60. Ollie

    CMT, very interesting approach, honestly i haven’t thought of planning ahead in such a way

    fubsy, thanks for your comments, the max % risk method is what i’m going to put in place

    this is a great blog with lots of great traders/investors, i wish i had found it few years earlier!

  61. Sasa

    Does anyone have an opinion on shorting Palladium?

    Palladium Futures

    It went from $160 after 2008 crash to $860 in 2011 (530% gain), it’s even way above 2008 highs. It’s showing weakness since February ’11 high.

    Since its primarily industrial metal with heavy use linked to auto industry i assume it might get hit rather heavily.

    It seems to have 190DMA as support since 2008.

  62. dking74

    Say, I’ve just subscribed, so I saw “A portfolio change has been posted to the website” and I looked around and couldn’t find where this was posted. I found a “Model Portfolio” link, but the page just says “New subscribers should consider…” but nothing looks “posted” there. Is there a place where portfolio changes, and stops and trade triggers, get posted?

  63. 86d4life

    Dking,
    Gary covered shorts yesterdsay on the model portfolio, so now the portfolio is back to cash. One of the best things you ever did was show up here. Good Luck!

  64. 77

    TGIF traders!! a trend day (ID/NR7) setup again in CL GC SI, insdie days with narrowest range in 7 sessions…. options can play a role with GLD SLV USO…since crude is starting weak, feb gap fill at 87 gets mentioned…crude oil down takes a tax off the economy, ES unfilled gap begins above 1282

    Today’s Equity 10 Day PutCall Ratio (0.859) exceeded yesterdays (0.816) both readings were the highest since February of 2009. options market makers supporting the gap up

  65. flaunt

    Last night things weren’t looking so good for a rally today but look at that gap up in ES! Wow this should be a monster rally. Glad to see it even though I’m flat.

  66. Silverhound

    jh

    I’m loving your input!
    It’s great to see you are staunch on your gold position. The dollar pulled up as you suggested. Here is the chart I posted yesterday showing the resistance that is stopping things so far.

    USD chart

    And here is a bigger picture to see where the lines are coming from. I’ve added a little twist on this one just for you. I think you’ll like it 😉

    USD big picture

    We’ll it’s friday night here and my week is done. Have a great weekend all!

  67. Haggerty

    Sold my DUG too. GLD puts taking a blow. Looks like GLD is trading over the 10 dma. I guess it has to close over that to be worried?

  68. Gary

    Aaron,
    After today’s action I think I am going to rephrase the last cycle low to the 13th.

    Gold is still forming a nice bear flag and crawling along the 50 day moving average, so I suspect by sometime next week Gold will begin the move down into the intermediate cycle low.

    Haggerty,

    Ben has already made it clear that he will not initiate QD3 at this time. I think we have to take him at his word.

  69. Gary

    William,

    There is no way to know whether a top is been put in until after the fact. Cycles are mostly worthless for spotting tops.

  70. 86d4life

    It kind of makes sense something like that would cause a blip on the screen to the upside and that`s about what happened. Then it`s back to business as usual.

  71. 86d4life

    William, true.
    But look at that nice juicy bear flag on GLD as a result. And there`s nothing like Bear cheeseburgers on the grill. I`m going to go split some mesquite now!

  72. MrMiyagi

    Sold my QQQ puts earlier for a decent profit, SPY looks almost ready to re-enter already..
    AAPL, GOOG not taking part in today’s small rally.

  73. Gary

    William,

    Yes we have a swing low, but that is to be expected if we have just put in a daily cycle bottom.

    Since gold is 20 weeks into its intermediate cycle this daily cycle should be left translated and move below the recent pivot at 1510.

  74. Frank

    Anyone opening any short positions today? I was eyeballing XLF if it could hit 15. It’s a bit tricky now and depends on a lot on what happens on Sunday in Greece.

    I play this with puts (on SPY so far) and have been batting 1.000 so far with stair-step decline in the S&P. About 30-50% profits per quick sale.

    I don’t like having less than 50% miners in my accounts so do this to hedge.

    I picked up GSS and NGD yesterday for trades. Although I might save some GSS for the future.

  75. MrMiyagi

    Frank,
    I looked ad FAS as a put (or FAZ as a call) but it has had multi day decline here and might go up a few before turning. Also not too keen on weekend holdings….

  76. Michael

    William said…
    “Anyone notice what happened last intermediate cycle at weeks 21 and 22? “

    “Gold bounced off the 10sma (where its sitting on now at week 20) and rallied $50 before dipping below it into the intermediate decline.”

    Great point William.. to avoid the drawdown in SLV and GLD puts, went long GLD and SLV this morning to be Delta neutral until this breaks one way or the other…take the angst out of watching the tape… So, if we get the $50 bounce, will sell into that and hopefully ride the puts down…BTW was based on advice by Doc…

    Cheers,

  77. I've Eaten Silver

    Rosa, you haven’t been paying attention than to much of the previous OPEX expiration dates with SoS/BoW.

    Today is an outlier, completely, with the amount of SoS. It is extremely high on a historic basis, and I’ve never seen numbers like these when the market wants to keep going up.

  78. Rosabarba

    Today is a triple witching OPEX. Compare the SoS/BoW table for today with those for the past March and December 3rd Fridays. Doesn’t look like an outlier to me.

  79. I've Eaten Silver

    I think it’s way to late Mitchell for a continuation of the C-wave, plus the dollar in all likelihood bottomed. Gary thinks we’re near the top right now for PMs, I agree.

  80. Poly

    July 13th seemed like it would be the cycle low when it occurred. I like the 13th, it provides much more clarity. Good chance gold could test $1,550 where recent (past cycle) resistance was found, but it would be very unlikely it beats the last cycle high.
    If we get $1,550 over the next some days, that would be a juicy spot to go extra short Silver, even gold for the very brave.

  81. I've Eaten Silver

    Crazy how nobody can get out of miners safely if they hold them, and many do…

    Crazy too if you’ve held GDX, GG, or AEM, you’ve made nothing in the last 4 years!

  82. Aaron

    I like the rephasing of the cycle, Gary.
    SnP looking lethargic despite the drop in the USD.
    Next week should be interesting!

  83. William

    Michael,

    Gold banged its head off the 1550 level a few times so rallying $50 off the 10dma this intermediate cycle is unlikely, but who knows, not me!

  84. Gary

    Aaron,

    Yes I suspect we will test 1249 next week and I would think we would see more determined buyers coming at that level.

  85. DG

    My thoughts: We have built up enormous pessimism. The emotional tendency is to want to short a bounce too early because it “feels” like we are going back down right away. That feeling is because we have gotten smashed in the recent past. I try to feel my emotions as a clue as to what NOT to do. I “feel” like we are going to crash soon, so probably we are going up. If I feel that way, so does everyone else, so they have all sold already. No one would stay long expecting a crash. I covered some shorts yesterday and bought some SPY this morning to hedge more. I like to clear my mind of my trading knowledge and just feel what new traders must be feeling. Just another way to look at trading…

  86. William

    DG,

    BTW I thought we were going higher on the s&p so I didnt short on gary’s call at the 10dma. Then I thought the opposite when he covered the shorts.

  87. I've Eaten Silver

    I think the snap back rally will have it’s beginnings next week.

    I think we’ll go down some more and the shorts will end up pressing their bets due to emotions.

    I’m playing this short term, and have no problem covering into strength.

    There will be a violent bounce soon, that is guaranteed.

  88. Gary

    Granted I’m not a very good short-term trader, but I doubt this market is going to gain any traction until we get to a level where more determined buyers are willing to step in.

    I think the market at this point is waking up to the fact that the economy is rolling over into recession again. So I really doubt big smart money players are going to be buying.

    True, sentiment has reached extremes, and if we do get down to 1249 I would expect some kind of short covering rally, but the fundamental fact remains that the economy is entering the next recession. Unless that changes I don’t expect rallies will gain much traction.

  89. DG

    Eaten: I am a trader and have no problem shorting lower, buying higher after I sell, or whatever. I just trade when I believe there’s a positive expectancy at any moment in time. The only thing I won’t do is go into the hole significantly for the year (which ain’t gonna happen this year as I am nicely ahead). Tracking my year’s net is the only time I look at the past, so strong hand status is not something I pay much attention to, though I think it does help most people whether the storms of volatility. My only other “looking at the past” trading rule is not to let a profitable position go into the red, as another risk-management thing.

    That all said, I am still net short, just not as heavy. Good point, though.

  90. William

    The dollar hit resistance yesterday at its long term upper trendline, but it is 3/4 way down a falling wedge pattern, which tends to break to the upside at this point. We’ll see.

  91. jhnewman

    From Ashraf Laidi, currency expert (first part of Intraday Market Thoughts, http://www.ashraflaidi.com):

    **********

    Intraday Market Thoughts

    Merkel/Sarkozy Help Spark a Risk-Off Rally

    June 17, 2011 08:46 ET : Market sentiment sees a complete turnaround. USD sold across the board on the back of Merkel and Sarkozy meeting in Berlin. UoM Consumer Sentiment is next. See in our Thursday Premium piece how and why we called for longs in EURUSD, S&P500 but intermediate shorts in gold & silver. [Newman edit: he’s gonna be wrong about shorting gold & silver.]

    Risk off sentiment continued in Asia which pushed EURUSD back towards 4130 level. Once the London session started, there was a 180 degrees change. USD is weaker across the board on the back of chancellor Merkel and president Sarkozy meeting in Berlin.

    Both leaders agreed that they have the same position on Greece and that “private sector involvement in Greece must be voluntary. The German government wants private bondholders to share a part of the losses but it faced a strong opposition. While they both agree that a solution on the Greek issue is necessary and that there is a need to preserve the stability of the euro, not many concrete details have been revealed. Exactly how private entities will be made to voluntarily roll over their bond positions remains to be seen.

    Chinese foreign minister also helped to improve the sentiment when he was quoted saying that China has been helping by buying Euro debt and that Europe overcoming its debt crisis is vitally important to China.

    The FX market focused on Merkel/Sarkozy meeting and ignored the widening of Eurozone deficit that reached 2.9B in April worse than 2.2B in March………

    **********

    I believe yesterday marked a MASSIVE intermarket pivot. The dollar is going down from here, and the Euro up — into late July/August, at least. This is signaling or triggering the start of Risk-On again: Euro, stocks, commodities and gold going up into late July/August, at least.

    Very high probability for Euro, commodities and gold doing this, IMO. I’m less sure about stocks, since I haven’t been following the general market that closely, but I’m going to go with a pure “intermarket analysis” and say stocks are going to do this too (because the dollar is going to go down into the high 60s) — therefore a summer rally in stocks.

    Gotta run to my real job. Good luck, all!

  92. Gary

    J,

    I think you’re kidding yourself if you think the dollar is going down with the economy rolling into recession and Bernanke clearly stating he is going to stop QE.

    We are now in an extreme deflationary environment is only being held at bay by massive money creation. Anytime the presses are turned off the forces of deflation will slam back down.

    We saw this in action last year as QE1 came to an end. The dollar surged higher as the forces of deflation started to leak into the markets.

  93. Adam

    Gary,

    Why rephase the gold cycle low to 6/13 with the CRB index making no such indication of a daily cycle bottom (I’m using DBC an admittedly imperfect proxy)?

  94. Adam

    As deflation hits international investors move into safety (Treasuries) en masse. That will create a demand for dollars & drive the price up. At the end of the day, we’re still the only game in town when it comes to return of capital – for now.

  95. jhnewman

    I just wanted to mention that I don’t mean to be rude not responding to posts directed to me. I just don’t have any time to read through posts. I’m putting in 17 – 20 hour days trading the PMs in order to fund the feature documentary (= for movie theaters) that I’m making. Both are going very well.

    So please forgive me if I don’t see posts addressed to me.

    This is a great blog, with great people — and I wish all of you good luck in your trading, and especially in life.

    Gotta run! Have a good weekend all.

  96. Unknown

    i know what im doing and thats covering.Im also not taking risks with my feelings. im just doing what gary is telling us to do because that why i susbscribe to his Premium site.

    thanks gary

  97. Adam

    I won’t deny the fundis of gold are different and, therefore, so is the phasing. I just feel that the commodity index as well as silver & GDX are tipping their hand.

  98. Felix

    DG,

    Do you mean that you will bail out of a once-profitable position as it declines to break-even, rather than ride a draw-down?

  99. I've Eaten Silver

    OT:

    Anybody hear eat/like/try PRO bars? Just came out a few months ago, been looking for something like this forever! SOOOOOO good, but $4/bar, and you can only find them at high class grocery stores, no gas stations or major chain stores I know of.

    http://theprobar.com/products/

    They’re guaranteed to improve your trading by 20% or your money back!

  100. Poly

    Sandy,

    Yes I am holding SLV puts, although covered a 1/3 recently on expected gold cycle low. I’m waiting for gold to retest $1,550 and waiting for the Aug expiration to roll to.

  101. Dan

    Commodities are definitely breaking down, just take a look at RJI however, I continue to be concerned with how the PMs will react if we finally get a low in the markets next week. The last thing we want is to be holding PM shorts while the market rally drags the PM price right up with it. Just take a look at todays action, everything, including PMs, are green together.

  102. DG

    Felix: Yes, exactly. It’s a good risk management rule-of-thumb though nothing exists that works all the time. You have to be prepared to make “errors” and move on. It’s even more complicated in that selling something and then having it skyrocket may not have been an error at all, so you have to figure out by analysis what the errors even are! If I offer you an even money bet that I only win if I flip three heads in a row, you of course take it. If you lose, taking the bet was not an “error” even though you lost. It just happened not to work out.

  103. I've Eaten Silver

    Jeez, I was just trying to help you a-holes out with some nice tips on food, who doesn’t like food?, and you spit it back in my face…

    last time I share anymore of my secrets here 🙂

  104. I've Eaten Silver

    Been drinking Kombucha the last few days, staying off meat for a little, that Kombucha rocks your system! Also starting to leverage up on the herbs, also doing a dmsa chelation upcoming, should be good times 🙂

  105. William

    Eaten Silver,

    I have a crazy vitamin regimen. I take over 15,000mg Vitamin C daily…I never get sick, and when I do the symptoms are very weak and dont last.

  106. I've Eaten Silver

    I called in and shorted SSO earlier today, you can’t short that without going short 1100 or more shares, or that what the minimum was earlier… covered most of it, don’t like this action right now…

    gotta preserve that cash for the IT PM bottom!

  107. Adam

    Eaten Silver,

    It was a quote from “Old School”. I just made fun of your protein bars by changing a couple of words. haha Not hatin!

  108. I've Eaten Silver

    lol, get it now, but never saw that movie, and ps, they’re not protein bars, who needs protein bars anyways the body can only process a minimum amount of protein anyways, most all of us consume way more than we can use, those are nutritional bars not protein, but good day y’all I’m out…

  109. William

    Eaten Silver,

    I know I am one of the few…I had a heart attack at the age of 34, came off all drugs they tried to jack me up on for the rest of my life, and been all natural for years. Got all my numbers (blood pressure, cholesterol, etc. lower than they were with medication) I work out like crazy too.

  110. Gary

    William,

    At my current age of 51 my best snatch is 102 kg (242 pounds).

    Best clean and jerk is 121 kg (262 pounds).

    When I was in my 20’s my best lifts were 137.5 snatch (303 pounds).

    Clean and jerk 180 kg (396 pounds).

  111. Poly

    I’m going to hold my short lines through the weekend, no sense in losing a strong-hand in a fast market.
    A mass rally is planed for Athens this Sunday and they need both the domestic house of confidence vote to pass and those EU cronies to all agree on a bailout the market will swallow! Right.
    No positive resolution on Sunday will be a big problem for the European bourses on Monday.

    Markets are oversold, yes for sure, but they’re also rattled and trigger ready, so I’m expecting surprises too the downside.

    If they come to a positive resolution (temporary of course) Sunday and the markets rally, then giving back a small portion of the gains will just have to be the price.

    Have a good weekend all.

  112. William

    Gary,

    Thats awesome Gary, im 35 now…in my 20’s I was much stronger also, was benching 400lbs, Squatting 600lbs. At age 51 your still moving alot of weight.

  113. Dan

    Gary,

    My question is short-term based as my belief is gold is being viewed as a safe haven during these uncertain times in europe.

  114. Gary

    William,

    I was never a power lifter but in my 20s I benched 360 pounds at a body weight 175 and squatted 550 for a double.

  115. Gary

    Dan,

    I doubt gold is being viewed as a safe haven it’s just following its normal cyclical path. It was due to put in a cycle low and those are always followed by some kind of bounce.

  116. Michael

    Gary, you are to be commended for the dedication and discipline that it takes to maintain your strength and excel at your age and weight class. Perhaps it is also why you are a successful trader.

  117. Hack

    Cramer just said something interesting. Because the ethanol subsidies were removed by congress yesterday, commodities as a whole are going to puke. Essentially speculators have seen the hand writing on the wall and will move their money into another sector. He said oil in particular is a bad investment right now…take it for what it’s worth but he may be right.

  118. Dan

    Hack,

    Perhaps but news like that is already well priced into the markets. Legislation always takes a long time to pass and many people have a strong idea how whether the legislation will pass or not well beforehand.

  119. Felix

    DG – Thanks, I will consider that system once my trades don’t start losing within seconds of purchase. Essentially it sounds like “never lose money” and there’s sense to it for the long haul.

  120. William

    I can remember before I was a trader and just a spectator that when everyone starts saying “we are to pessimistic” is when people are just starting to realize that its time to get out of the market.

    Is that true?

  121. Dan

    Well thats it, lets see what next week brings. Still looks like we have bear flags on both GLD and SLV. SLV continues with lowest volume since March.

  122. Cory

    Final Score:

    GLD 150 / SLV 35

    (Options makers high-fiving in background)

    USD (UUP) on track for a perfect 1-2-3 Reversal with a nice backtest of the 20 & 50 DMA today. Just needs to get above ~21.90 level on UUP (for us Stockcharts sufferers) to complete it.

    Still waiting to invest long junior miners. Currently still holding DITM SLV puts from June 25 up 11%.

    I’m an Old Turkey PM bull, but I still think GLD/SLV goes into an intermediate low before we go into the A Wave, with miners being the best play. This market is wearing people out and burning up options time on the retail side. Gary has us on track. Stay patient.

  123. Robert

    From Dan Norcini today on gold
    “Incidentally, Gold, priced in terms of the British Pound, scored a new all time today. This is one of the reasons that in spite of the “risk off” trades that are currently in vogue, the bears are having trouble breaking it down in terms of the US Dollar at the Comex. Gold is trading as a CURRENCY and not so much as a commodity. When gold bears look at the strength in the metal when priced in terms of the other various majors, they lose conviction, even in the midst of large amounts of risk off trades while the gold bulls take heart and step up to buy.

    Markets making new all time highs (even if priced in terms of another currency) are not in bearish phases – period! US centric traders do not seem to be able to understand this. For gold to enter a bearish phase, we would need to see it break down across the board, whether priced in Dollars, Euros, British Pounds, etc. The reason for this is that the surge into new highs or near all time highs reflects FEAR about currency stability in the various countries where the gold market is performing so well. That generates buying of gold as a safe haven and reveals strong demand for the metal from those quarters of the globe.

  124. Sang

    I’ve been in the game long enough to know that comments like the one Dan Norcini makes about Gold trading as a currency hence why it will rise in spite of a rising dollar and risk-off trade to be a losing trade.

    Eventually, Gold will succumb until THE APOCALYPSE happens and Gold truly is understood as a currency.

    THE APOCALYPSE is not happening now. I tend to agree with Martin Armstrong and Gary here that it will happen some years down the line… not right now. That is when Gold will go to $5K or some crazy number.

    Until then, we will have corrections and cycles that will be adhered to like it has for decades.

  125. jeff

    Gary or anyone

    would you adress bonds. I dont want to trade them. I would like to understand what a riseing dollar should do to them and their trading nature. if anyone is up to it =)

  126. Ben

    Hack, it’s laughable that ethanol, or corn I suppose by inference, would lead the entire commodities sector. I think Cramer is an idiot and a shill, although like a blind squirrel, he’s bound to get a nut every now and then.

    If that’s true that subsidies are off, that’s great, because ethanol production has caused us to import more oil than without it. Just another crime against rational thinking.

  127. Keys

    Jeff,

    Simple stay away from them bonds…. In theory, its not about the dollar, its about interest rates. If you believe interest rates should rise, then short bonds. If you believe interest rates will fall then go long…Problem is that during shocks people tend to run to the US bond or what have you…not a fundie run, just a fear jerk reaction run…Problem is that even during deflation a 0-4% yield is not justified. Interest rates want to go up, and should, however the FED is always poised to do what it can to delay this reality..

    Conclusion, just stay away, short or long, unless someone sees an advantage for a trade. IMO

  128. jeff

    Le Fou
    that artical made it crystal clear. without a doubt and absolutly i know for sure i know nothing about them +)

    the artical did help

  129. Ben

    Hack, I reread your comment — I agree that oil is going to fall, part of the deflationary wave. I would not be surprised to see oil in the upper 70s again this summer.

  130. ejoys

    Gary,

    CME announced they are lowering trading margins on comex gold. Would this make you change current take on gold? Thanks always!

  131. Gary

    ejoys,
    By change my opinion, do you mean that I think lowering margins will prevent an intermediate decline?

    I really doubt it. Intermediate declines have been coming like clockwork for 40 years regardless of margin limits.

  132. Driver

    Gary,

    Check this comment out from within this zerohedge article:

    http://www.zerohedge.com/article/guest-post-what-writing-book-taught-me-about-obama-and-those-who-followed-him

    ……………………………

    New Metals Trading RestrictionsPosted by Lew Rockwell on June 17, 2011 04:36 PM

    Writes Jason:

    Just got a notice in the mail from my Forex broker. Apparently it is illegal to trade currencies against precious metals now. What a good way to show how safe the dollar is.

    From Forex.com:

    We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

    In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

  133. 86d4life

    Driver,
    So what is this, like shutting down PMs futures trading?

    I`m along with Cool. Does anybody have any beef with TOS? I`ve been using Fidelity and I`m ready for a change. Any reccos on brokers? Thanks.

  134. Charles

    Cycle theory question. I understand one daily cycle LOW cannot go below the daily cycle LOW of the previous, but does the same apply for the daily cycle HIGH. In other words, in the chart below of the USD, the previous daily cycle HIGH was 76.366 made on 5/23. The current daily cycle high so far is only 76.01 but isn’t complete. Do we need to make a higher high above 76.366 in order to be a proper cycle? Thanks guys!

    http://screencast.com/t/bJmJUSIWKS7

  135. 86d4life

    Driver,
    it`s gotten to be numerous things. I see what some the people are posting for charts from TOS and it looks really nice. I call Fido trying to learn something new and don`t get too far. Granted, if I have a question, usually they answer but never volunteer. Understood, they are not supposed to give investment advice, but when something is new and a person doesn`t know what questions to ask. I pay them for solutions, not keeping me in the dark. Blah blah blah! lol. So rather than getting some cheese to go with my whine, maybe somebody else will help me out. Maybe this is as good as it gets. But I will find out.

    Jeff,
    Would you post what you find out? thanks.

  136. Bob G

    Just an observation but there seems to be some speculative money flowing into certain junior miners (GSS, AZK) steering clear of this personally but probably bears watching

  137. ALEX

    Bob G

    Yes, I saw that volume surge too (and have a look at GBG , PZG ).

    As you said, not acting on these, since we are expecting new lows in gold-
    Good to jot down in a notebook ,maybe- ‘things to look up later after a gold bottom’.

  138. ejoys

    Gary,

    Thanks so much for your answer! Margin increases on silver were a disaster on the metal, so I thought lowered margins would be positive.

    GLD seems ready to break its upper descending trend line, I don’t know, but maybe the chart is telling you a different story?

  139. Ben

    ejoys, margin increases can *force* some players to sell, but margin decreases compel nothing.

    In a rapidly rising market, some might jump at the chance, but otherwise, no. Just like getting offers int the mail for credit cards at this point, in my book.

    As Yogi Berra said: If people don’t want to come to the ballpark how are you going to stop them?

  140. Bruce

    I can definitely see the case for a bear flag on silver but NOT on gold.

    To anyone; How is GLD in a bear flag when volume has been increasing on the way up, and the up days volume is larger than the down days volume?

  141. ALEX

    86d4life

    Sorry, I was away.

    I have used Etrade and Scottrade, nothing special. I’m hearing good things about TOS, especially if you use options.

    Alex

  142. Dan

    Bruce,

    Has it really? The only increase in volume I see is on friday, that had huge volume. The decline on thursday was on lower volume however it was down just 0.10%…I think its fair to call that day flat.

    Bottom line is I think the PM stocks are really warning us of something, take look at $xau:$gold. The ratio hasnt been this high nor has it spiked in such a manner since 2008. My only real short-term concern is how gold and silver will react when the markets finds a bottom and bounces back.

  143. ejoys

    Ben,

    Thanks! I just learned a thing about margins! Hopefully CME won’t do any consecutive margin increases on gold.

  144. Haggerty

    Le fou
    I like Faber, I like when he mentioned that he could make the case that Gold is cheaper now then it was in 99 because of all the money printing in recent years.

  145. Gary

    Hack,
    It’s probably more likely that gold will decline since everyone is expecting it to rise when the margins are decreased.

  146. Gary

    Ejoys,
    You need to back your charts out a little bit and look at the big picture. The current daily cycle for gold has failed to make a new high. That is a huge warning sign.

    The silver parabola has broken down. Another huge warning sign.

    Mining stocks are leading and accelerating to the downside. A gigantic warning sign.

    Gold is 20 weeks into an intermediate cycle. Another huge warning sign.

    One can try to talk themselves into seeing something bullish or you can face reality.

  147. Gary

    Charles,
    The definition of an uptrend is higher highs and higher lows, so yes the dollar should make a higher high during the current daily cycle.

  148. Gary

    yes I did just get home from the competition. The shoulder held up pretty good. I didn’t make any new personal records, but then I wasn’t really expecting to since I haven’t really trained in the last month.

    Even so I was only about 15 kg off of my best total.

  149. Gary

    This was an open competition. I can’t beat the young guys anymore, only guys my own age, so no I did not win 🙂

  150. I've Eaten Silver

    If you would have lifted close to your best would you have placed? Even top 10?

    Roids aren’t tested obviously either so, and I’m sure you’re not on them, you probably have a huge disadvantage.

  151. jeff

    driver, 86d
    my broker said that it wont affect futures contracts so i am in the clear, but forex has been unregulated and they are comeing under regulations and haveing problems. We all can buy pm’s but forex cant trade them. i dont know what it all intails. Just remember that they are from the government and they are here to help us =! sorry i dont know how to finish that statement with a middle finger symbol, the stupid face is all i could come up with

  152. 86d4life

    Jeff,
    Thanks for that. It sounds like it probably won`t jam us up too bad, but I have to grin how it comes along pretty close to our timing for the cycle low on gold. I mean really, try to wrap your noodle around that one. But I`ve seen it too many times to argue with it. Utterly amazing.

    Gary, did you ever check into the MSM? The guy that turned me onto it had a hip replacement and when he went in for his 2 week checkup, the dr. told him he was at the 2 month stage of recovery. Granted, the guy was hyper loading(12-15,000 mg. 3x/day)but that`s a lot of healing power.

  153. Ivan

    Gary, I also compete in truck and field 400 metra running for veterans 38 year old.
    what is more interesting to me is that 3 year on a raw my results get better:)Maybe I am living my secong life

  154. SF Giants Fan

    Gary

    Great weekend report and thx for the vid’s.

    P.s you nailed the short trade on Thursday. I’m trading SMN an got out almost at the high of the day.

    Thx again

  155. Gary

    Jeff,
    I think the magnitude of the D-waves will moderate during the second phase of the bull market. But gold should enter a D wave decline in the next month or two.

  156. Driver

    Gary,

    Great performance with that shoulder. Can you tell if the MSM is doing a better job in speeding your healing?

    Jeff,

    Thanks for that info from your broker.

  157. hamvestor

    Great report Gary, but let me play the devil’s advocate for a minute. Looking at a chart of GLD, it sure looks like it wants to go higher. Positive divergences abound. The 14,3 stochastics have crossed up, the MACD is about to cross above zero, the RSI bounced off 50 and is heading up, etc., etc. I know you believe the cycles will trump the charts, but GLD seems to be forming an ascending triangle since the beginning of May, from which it will head higher. Perhaps at a minimum this just suggests any decline will be more muted than many may think. Just saying…

  158. Gary

    Looks like a bear flag to me. And with an intermediate cycle that’s going to be 21 weeks long next week I certainly wouldn’t want to bet on the long side now.

    We already got kicked in the teeth once by pushing too hard and too long. I don’t think I want to make that mistake twice.

  159. Keys

    I am wondering if parabolic moves will still occur, but not in gold for reasons outlined in the report. But in the children of gold…miners, silver, heck maybe platinum or palladium….basically logically it may make sense that as gold chugs higher, people following the trend may start to invest in gold’s offshoots to catch better returns. If money finds itself into the most undervalued assets first, miners might be the next best place….perhaps this will be the next boom and bust play in the goldfolio. The trigger might be falling oil prices, along with companies putting a proper hedge on gold prices…ie higher effective margins, might trigger things

  160. I've Eaten Silver

    Hedgies will be long gold and short miners until it doesn’t work anymore (that is short the weak miners). This has been an extremely profitable strategy and will persist until it doesn’t work anymore. This could be at this intermediate bottom but you never know.

    If and when this strategy is over miners will probably explode.

  161. I've Eaten Silver

    I think gold/silver and the market until late July will crash. This will put enough pressure on Congress to extend the debt ceiling.

    Nobody likes losing money and all citizens and congressman alike will be hurting badly at that time. Same thing happened prior to the bailout packages remember? Remember Bernanke saying to congress “if you don’t pass this the system will collapse.”

    Deficient spending is very important for higher market prices. Without it or even with the threat of without it things can get nasty in terms of deflation.

  162. Haggerty

    Gary,
    I have a friend on the east coast that does the tournaments here and is a good friend of Butch out on the west coast. I showed him your best numbers and he said those were his best numbers but his weight class was Super(much heavier than you)he said your numbers were among the best in the world for your weight class. Impressive Brother.

  163. Gary

    At 21 weeks into an intermediate cycle I certainly will not be going long. You need one to two months for the intermediate decline to run its course. It should bottom in August, but it apparently has already topped at the beginning of May.

  164. Gary

    E,
    The model portfolio is 100% cash. If you are going to deviate from that then you’re kind of on your own.

  165. wallofworry

    Just subscribed Gary, after a few months of reading your free site I just had to subscribe.
    Anyway, I’ve been ridding the gold/silver bull for over two years now and it’s been wild. It’s great to have your site to help put the ups & downs into perspective.

    Anyway, I’ve been recently building up a lot of cash a waiting for the next opportunity to load up on my favorite gold mining companies, the DGP, GDXJ and bullion. Right now I’ve got a hedge position on gold with DZZ and silver with ZSL. I’ve listened to your interview on Contrary Investors Cafe and I know you don’t advise shorting a bull market, but I think these two are good to use to profit from any upcoming dip in the metals. So far I’ve done quite well with ZSL, DZZ not so much.
    I’ve also picked up some January puts on the big banks (BAC, C, and WFC) because I’m thinking they will continue to get butchered as the final wave of shitty mortgage resets culminates next months (see link regarding this here: http://www.helpingdenvermove.com/Blog/Expect-A-Tsunami-of-Mortgage-Reset-Trouble-Over-The-Next-2-Years)

    Any advice you can offer?

    Congrats on the competition this weekend.

    Looking forward to reading your updates and will add my two cents whenever I feel I got something worth contributing.

  166. jeff

    wallof worry
    welcome to smt. im sure gary will help your trading.
    your link about the mortgages does not seem to work

  167. I've Eaten Silver

    wallofworry,

    your arguments for banks crashing with evidence from that chart semi contradict each other. The banks rose pretty good all of 2010 while according to that chart they should have been doing their worst respectively.

    I think what affects bank stocks more so is credit risk with the PIIG nations, as well just the dollar strength hurting asset/stock prices.

    The mortgage crisis is a major mess but accordingly the banks have two sets of books so investors never have seen much of the losses. This will probably be true for some time.

  168. wallofworry

    I’ve Eaten Silver,
    I understand your position, but like the old saying goes “the market can stay irrational longer than you can stay solvent”.
    My puts on the banks are up nicely and I expect they to do well be cause the banks are showing serious weakness. I believe this is not just do to the mortgage mess, of which BAC seems to have the most exposure, but also because of the debt crisis in Greece and other EU countries.
    I’ve felt for a long time that Bank of America will be the next “too big to fail” bailout waiting to happen just due to the toxic garbage they inherited from Countrywide, not to mention the CDS’s and other derivative garbage they are exposed to.
    I’ve also bought puts in LinkedIn. That turkey is going to get slaughtered, especially if there’s a downturn in the overall stock market. Barring that it’s simply a matter of time, and that time is running out for LinkedIn. The weakness of Pandora’s IPO sent a clear signal, IMO.
    Fusion IO, now that’s one tech IPO you need to keep your eye on. If it gets taken down in a overall market down draft I’d buy it with both fists. I could be another ArcSight (big fall after IPO followed by a run up of 5 or 6 fold and then bought out).
    BTW, I’ve been in tech in Silicon Valley for 15 years and feel like I’m pretty well in tune with what’s going on in the tech space.

  169. Gary

    Apparently Mr. Hubbart didn’t notice what happened to the dollar index last year when deflation started to creep back into the economy.

    Recessions are deflationary. In a deflation the value of currency rises. This is exactly what happened in 08 and 09.

    Unless I’m wrong about the economy rolling over into recession, which Mr. Hubbart appears to agree with, then the dollar should head higher. On top of that the FED has clearly stated that he will end quantitative easing. Without continual money printing the deflationary forces will send the value of currency higher.

  170. Gold Lion

    Gary,
    Do you REALLY think the printing is going to stop? We know what helicopter Ben’s view on deflation is. It seems to me the choice is inflate (print) out of this or default.

  171. Gary

    Of course I think it is going to stop. Ben has been very clear that QE2 will stop at the end of June.

    He has to stop QE2 in order to control commodity inflation.

    Last year the Fed had the luxury of much lower commodity prices. In that scenario QE2 was possible. The Fed no longer has that luxury. QE2 has to end.

  172. Gary

    I said it before, the gold bull will try to trap traders at intermediate tops and then kick them off at intermediate bottoms.

    At 20 weeks and counting gold is doing a very good job of trying to draw investors in at the top.

  173. ejoys

    Gary,

    Could you share your view on what would happen to ETFs like GLD and SLV if the Zeroedge piece (on OTC trading) is true? I don’t see any of big media reporting this.

    Thank you!

  174. Gary

    If I’m not mistaken that only applies to currency gold crosses.

    That should have virtually no effect on the sector. In case you haven’t noticed Zerohedge is kind of a conspiracy blog. As such they tend to find something nefarious anytime something out of the ordinary happens.

  175. ...at ease

    84,
    Puter fixed by Dell using LAN line to reach them. Apparently Trojans/virus can sneak in between upgrades. So have added Systems mechanics to catch anything missed as added protection while it continually works in the background.
    No permanent damage and off and running again. No new Puter needed as system scanned 3 times with different programs after Trojans removed and found all lurking cookie residue left in crevices.
    Also Dell now knows after I showed them that their internal wireless card gets overridden by embedded Carrier air card. They weren’t aware of this issue with the Computer that cards do not operate in sync. Typical CS, I would have to take that up with Carrier. As the Dell CS supervisor in India said; NMP. So back to Carrier to enlighten them and hopefully recapture those excessive roaming charges paid.

  176. Robert

    Gary,

    About the end of QE2 .Yes they have stated QE2 will end in a few weeks.I believe that will happen, but don’t expect it to last very long before they announce some form of Qe–they may not call it Qe but they can’t end it . US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has ,decided to not only not add to its US debt holdings, but to actively sell US Treasurys. The WSJ reports that “Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and and bolster a tepid economic recovery, Japan,China and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds .The Fed already is buying close to 80% at the bond auctions.So if they end QE2 who will buy are debt–the answer is no one–the fed has no choice but to print more money.There will be a QE3, it will just be called something else .

  177. Gary

    Robert,
    Yes, QE3 is coming but it’s not politically feasible until we have a severe market correction and significant decline in commodity prices.

  178. wallofworry

    Gary,
    Couldn’t agree more. They want and need more QE or another stimulus package that’ll be sold as a “job stimulus” package. Something, anything, in order get the masses to vote for Obama again. Whether or not the Republicans can throw a monkey wrench into their works, if they want to, remains to be seen.
    But they must give us the pain before they give us the relief from said pain. Produce the problem and provide the solution, it’s pretty much standard operating procedure.

  179. Éamonn

    I have a question. When QEII ends on June 30, what will happen? Is it likely everything will be already be priced into the markets, or could there be an irrational reaction? Thanks for outlining any possibilities…

  180. Gold Lion

    Driver,
    That was a great Schiff video. And, yeah I agree with him that the fed might not call if QE3 but they will be printing because politicians can’t stop spending. Targeted rates = QE…gives them the cover to print away.

  181. Gary

    Folks there’ll always be plenty of buyers for US debt. People seem to think that if the Fed doesn’t buy bonds that somehow the market will just dry up.

    That’s not the way markets work. Bond prices will fall and rates will rise until the market finds a level where buyers will enter the market.

    The Fed can stop monetizing debt anytime it wants, the risk is just that interest rates will rise. That risk decreases significantly during a recession.

  182. Gary

    I don’t think interest rates are going to 30% in the near future. But I do think the economy is rolling over into recession, and recessions are deflationary.

    In a deflationary environment the value of currency rises. There in lies the appeal of US bonds. Perceived safety in a recession, income, albeit small, and currency appreciation.

  183. Éamonn

    A lot of commentators are saying “things are going to pick up in the second half of the year”. Why? I’m not saying they are wrong, I’d just like to know what information they are relying on in making this statement. Anyone know?

  184. Éamonn

    Harry, its a bit strange to me. It is the same folks who forecast GDP. First, we had Q2 GDP at 3%. Then 2%. Then 1.5%. The heavy hitters like Faber, Rogers, and people I take reasonably seriously are saying a recession by year end.
    So I’d just like to know, why do many commentators speak of a pick-up or rebound in the second half of the year? I have heard this now several times on the TV by talking heads and on-line. For my own information, I’d just like to know why this would be the case so I can look into it myself and evaluate it it to form my own opinion.

  185. jeff

    robert
    i heard the other day that we ( the usa) are the largest holders of us debt. QE 1 was 1.3 trillion and QE 2 was 600 billion. china owns 1 trillion. I think its impairitive politicaly that they take a breather until they produce another problem.

  186. Dan

    We are probably already in recession right now except we wont find that out for a few more months. Data is always delayed.

  187. 86d4life

    At Ease,
    Of course I`m not the tech wienie, but I think I follow you on the trojan/virus thing. I have the latest version of Webroot spyware anti everything and that has shut everything down immediately when the virus has been introduced to the system. I`m sure other anti virus is capable of the same, just this is my experience. Strange though, I had to use Malwarbytes to actually remove the virus.

    That`s kind of bizarre that dell wasn`t aware of the carrier card issue.

    Oh, the trojan gets lodged in your registry which is why it`s so tough to get rid of. Glad you got the issues worked out.

  188. Harry

    Eamonn, note that many of the commentators on CNBC and the like ar fund managers and financial advisors. These people have a vested interest in selling you their services. If their advice was to buy gold ducats, cans of tuna, and ammunition, they’d be out of a job. It’s really as simple as that.

  189. Éamonn

    Harry, thanks for that. I am an ordinary person and I just assume people mean what they say. I guess I am a political innocent

  190. 86d4life

    Eamonn,
    good to see you back. Thought maybe you had a deer through the windscreen 🙁 Yeah, the issue is confusing. The third year of a presidential cycle is supposed to be a winner which goes along with gold having a good fall and early winter which also goes along with another big fat load of Porkulus. Did you watch the Schiff video? Bill Gross` idea of the next QEporkulus? Skies the limit than if it`s right. You know another thing; the talking heads don`t have to be right. It`s not their money on the line, it`s mine and yours and Harry and Gary, Bob, DG and everybody else who has their own money at risk. The talking heads can hit the crack pipe during commercial breaks and come back out and say it`s all Mai Tais and Yahtzee now folks! You wanna see some neat stuff, go to youtube and watch some of his interviews on cnbc and fox business from 2006, 2007, 2008. The talking heads tried to crucify him like J.C. but he wouldn`t back down. Well, who`s wearing the dress now??? Just a thought. 🙂

  191. William

    Gary,

    In tonight’s report on the gold chart you show a parabolic top in Dec 09, thats not a C-wave top just a top before an intermediate decline, correct?

  192. fubsy_cooter

    DG
    I’m continually amazed how similarly we think.

    My only long is EUO right now. For that exact reason I covered my SDS and DUG on Friday with SPY near 128. I plan to hold EUO (not cover) and build it during dollar corrections.

    With my bearish bias right now, I’m going to play this bounce by waiting for sentiment to clear, then short the swing reversal top. Stops set above the pivot. If sentiment doesn’t clear, I’ll be in my EUO, but noting else as the correction is getting dangerous on the short side for the very reasons you stated so eloquently.

    For the next leg, I’m going to keep it simple again with SDS, DUG and EUO.
    f

  193. fubsy_cooter

    Correction to last post. I still have my SLV OCT 32 puts. Didn’t even consider those as I’m only risking appx 1.5% and am holding them till the ICL.
    f

  194. ALEX

    GANN360

    Great chart , thanks!

    It matches my thoughts, but I have a question for you a tad longer term…

    I am still seeing a final drop (SPX) to the march lows, and then possibly a rather impressive rally to the 50sma…but then a cllapse.

    So using your 67 and 134 periods, do you also see a lower high ( 50sma) , and then a much lower low as a possibility?? Or are you saying off to new highs? ( or undetermined at this point for your analysis?)

    Thanks! Alex

  195. Dan242

    Fusby,

    Maybe a dumb question … but in your last post you mentioned holding your SLV puts until the ICL — can you please explain what ICL is? Intermediate Cycle Low? Thanks!

  196. Ivan

    We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress,a new regulation prohibiting US residents from trading over the counter precious metals,including gold and silver,will go into effect on Friday,July 15,2011.

    In conjunction with this new regulation,FOREX.com must discontinue metals trading for US residents on Friday,July 15,2011 at the close of trading at 5pm ET. As a result,all open metals positions must be closed by July 15,2011 at 5pm ET.

    We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule,as any open XAU or XAG positions that remain open prior to July 15,2011 at approximately 5:00 pm ET will be automatically liquidated.

    We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions,please feel free to contact our customer service team.

    Sincerely,
    The Team at FOREX.com

  197. Ivan

    If this is what they want,short term Silver and Gold are going down,because many US residents will have to close their possitions.Something really big is going to happen.

  198. trond56

    Luckily I’m an european and thus living in a free country. And can trade Xau/Xag normally onwards. & This US rule prohibiting daytrading if the account is less than 20k$. Other contries hasn’t this and is laughing of it. Whereas the big players do high frequency trading unimpeded. Also US residents can not buy contract for difference. If I’d to live in the Americas, Canada would be the only option, they’ve also got an ok universal health insurance system.

  199. Ivan

    I am European,but I trade with Oanda,which is registered in USA.I ask them are they going to cut GOLD and Silver and they say they will let me know before July 15 which is the deadline.Very funny,this people from administration think that 3 days inn advance to close Gold and Silver possition is enought.

  200. sophia

    But don’t you think that those big guys have entites in Europ and Asia and therefore can transfert their Gold/Silver positions between books?
    For me, it seems that once again, the little guys are going to be riped off…

  201. Ivan

    Sophia, As normal always the small trader is the one who get riped off:).
    It will be easy for me to me open account in Europe and trade there,but I believe Europe will follow USA with regulation.

  202. 86d4life

    Good Morning Everyone,
    Gary,
    If we`re looking for snp turn around 1250, would you expect PMs to show some strength there and get a little lift or maybe just ignore it keep dropping? Thanks.

  203. Gary

    I would look for each separate asset to follow its own particular cycle. The stock market is due for a bounce out of its half cycle low. Gold is due to rollover into left translated daily cycle.

  204. DG

    Fubsy, you might consider EDZ/EEM as well. The emerging market stuff will get crushed in a credit contraction.

  205. ALEX

    F.W.I.W.

    I have been in the camp that SPX –

    1. SPX tags the March lows or below- as the Dollar rises –

    2. Then the Mkts Rally ( maybe to the 50 sma?) and the dollar sideways or down for a bit

    3. Then the markets slam down ( one step at a time in case the fed steps in).

    So looking at the Dollar last Friday, I felt that Maybe it would have to rise to here ( see chart & click it to enlarge),as the markets retest that March low.

    http://www.screencast.com/t/l6HWqDGUZs

    Chart drawn June 14th SPX drop projection as dollar rises ( bounce may reach 50sma however)

    http://www.screencast.com/t/0cbIATxpqX7

  206. Gary

    It’s probably going to take another move up in the dollar before any markets really make any significant move.

  207. PST

    Does anyone remember the url or website that I think Mr. Miyagi posted last week which was a four part series on Options Delta? Much appreciated if anyone could steer me in the right direction.

  208. T

    Gary,
    This sideways silver stuff has lasted quite a while. Do you think there is still enough time left to see silver and gold take the drastic decline you are feeling will take place. The more time that goes by, the more drastic it will have to be to come out of it by August. Or do you think it is just delaying the entire process?

  209. Gary

    It doesn’t come out of it by August, it bottoms by August. The gold cycle should still have 4 to 7 weeks yet to run.

    Like I said, golds intermediate decline has come like clockwork for almost 40 years now, I doubt this will be any different, and as usual gold will do whatever it takes to draw people in at the top.

  210. Gary

    The simple fact is the mining sector should not be down 18% unless there is a serious decline in our future.

  211. Dan

    Maybe PMs will drop when the rebound comes. Would be a little odd as I assume the whole commodity index would also bounce but stranger things have happened.

  212. 77

    http://goldtrends.net/

    goldtrends does the july 28 buy from this link here:

    http://www.usagold.com/analysis/doldrums.html

    i usually don’t have time to make these links blue so they are clickable, but i notice in my latest firefox i can highlight the unblue links and right click and do the open in new window option

    you’all should not be running on internet explorer, as the russian or asian mafias can take your stuff, if not identity theft you

    trend micro titanium is reasonable for your internet security, the best i’ve found in last 15 years

    coop does a wheel of nine for AAPL

    http://image.minyanville.com/assets/buzzbanter/charts/original/062011/cooperwheelappl_1308577270.jpg

    many think AAPL is a buy at 50 week ema/sma zone with a 15 point stop around 297

    the big deal was made when NDX and AAPL lost their 200DMA….but then another major moving ave the 50 week will be next

  213. wmp

    If $dxy can break down through the 74.95 ish resistance we might get that SPX and gold bounce to short into..couldn’t do it Friday either…

  214. 77

    goldseek.com is a very nice site

    it has an afternoon precious metals report daily the ‘goldseeker report’ and does a nice representation of the cot reports late fridays, plus decent news on the smaller gold stocks

    for years the owner of goldseek kept doing article after article on this little $2 gold stock…

    ….anyway tons of congrats to the goldseeker for

    G O R O

    http://biz.yahoo.com/ic/ll/134pip.html

  215. wmp

    William,

    You are right…but as soon as the dollar bounced off 74.92 gold took a hit. There seems to be pretty good resistance at that level..but if it breaks let’s see if the gold bounce can be sustained.. hope so 🙂

  216. Rob L.

    DG,

    When shorting, as we are doing now, why sell prior to anticipated counter-trend rallies? Why not have the same mind-set as we had when we were long metals a couple of months ago – holding until an intermediate high?

  217. traderlady

    GARY, Can I assume that we shall short
    into the next SPY rally. I appreciate you and glad you did well in your lift last week-end 🙂

    SB, Where are you?

    ALEX, Are you still planning on Sarasota in July?

  218. William

    Gary,

    Nice to see you lifting well with the shoulder, its an honor to know you, for so many reasons. Your an inspiration in many ways, keep it up.

    PS I recently had double shoulder and scapular surgery (beat them up bad bodybuilding as a teen) I think you could have gone heavier from the looks of it, even with the shoulder. 😉

  219. DG

    Rob L: That is probably right for most people, but not everyone is an Old Turkey. I am a trader and can usually sidestep rallies (like this one). I am now slightly net long. We need to dissipate the bearish extremes. I also am not as convinced of the downside. We are still in a bull market for stocks. Buying PM’s was with the major trend; shorting stocks is against it.

  220. Poly

    Haggerty,

    I don’t short gold. I did have SLV, I’m out and waiting to get back into some Aug, but I’m holding here, I think we could see a few days of strength.

  221. Haggerty

    Ok do me a favor and let us know when you add. I had some july’s where I was getting beaten up and started to push them out to Aug.

  222. Poly

    William,

    At least a few more in gold, which will move SLV. I’m hoping for a test of $1,550 to mark the top of this daily cycle.
    Either way, I think we could burn a week here without going down, even if we do not test $1,550. Remember burning a week with sideways action is not too kind to the ATM/OTM put holder, very sensitive to time. Buying some puts towards the final spike is very rewarding, of course easily said…

  223. Dan

    Look through past reports, bear flag has been the consensus for he past week or so but it sure is dragging out…

  224. Michael

    Gary,

    Congratulations on your participation and performance in the tournament this weekend.

    In your weekend report you mention that you expect the dollar daily cycle to last 17-18 days, topping on or around the July employment report. My question is: If cycles are measured from trough to trough, should the dollar cycle then be bottoming instead of topping on or around the employment report?

    thx

  225. ALEX

    TRADERLADY

    Well, we have our tix, but my best friend and his wife have run into some problems that means they may cancel. 🙁

    The WHOLE REASON for us going in July was because its their wedding anniversary, she used to live there, and wants to look around and move back. We are trying to decide if we should change our tix to Sept…

    And as for my trading, I wanted to go LONG if we got a significant bounce, but I dont have a feeling (yet) that this is THE BOUNCE . I still think we retest the March low first.

    This wkend I had looked at CROX and NUS as stocks ( wkly chart 10sma) that didnt get hurt at all in our recent 6 wk correction. Strong, but I DID NOT buy either yet 🙁

    Going out for the day ,now. Happy trading to the rest.

  226. Michael

    Gary,

    you mentioned some time back that you expected this dollar rally to last about 9 months in total.. would that be two complete intermediate cycles?

    Thx

  227. I've Eaten Silver

    I was thinking last week if we were to get a bounce on the markets it would most likely be this week going into a bigger decline into August.

    I didn’t know what to expect with Gold/Silver :). Turn over by end of this week? I bet the shorts and put holders are starting to freak out 🙂

  228. William

    Gold Troll,

    In the last intermediate cycle gold didnt correct until week 22, we are in week 21, thats not to say it will definitely correct next week, Gary believes it will begin this week.

  229. Michael

    Michael,

    From the cylce count charts it looks as though the last intermediate cycle topped on Dec 7th which would be 18.5 weeks from low on July 28th. Then bottomed on Jan 27th, 25.4 weeks from previous intermediate low (July 28th).

  230. Poly

    William,

    You mean $1,448. Yes, that is certainly possible, hard to say on picking tops.
    I’m thinking of obtaining some exposure again here today and then some more on sustain spike. Falls into IT cycle lows tends to happen over shorter periods of time, waterfall like.
    Looking at the SLV Aug $35 ATM.

  231. I've Eaten Silver

    Silver miners up pretty nice today.

    Funny this morning I saw an article on MarketWatch saying to buy PM miners. I don’t think I’ve ever, maybe once, seen a MSM article to buy miners.

  232. I've Eaten Silver

    I would assume this would mean someone established a position and needs gains, then they’ll dump and the retail dry powder will hopefully be dried up so the shorting side is ripe?

    LOL, I swear this is how it works 🙂

  233. CMT

    Bought more SLV puts today.

    More importantly, found a place to live within minutes of Marco Island. I’m moving to Florida. Goodbye north Texas weather!

  234. MrMiyagi

    GLD closed almost at the day low today and typically that means a pop in the morning trade with a normal stock (gold has overnight action so it would affect GLD).
    On the other hand, it formed a Doji.

  235. Poly

    Picked up a bunch of AAPL July $315 calls at the bell.

    That’s been some 20 day sell off and today’s drop and hammer pattern smell of a temporary bottom and strong reversal coming, IMO.

  236. MrMiyagi

    Poly,
    I’ve been looking at AAPL and wondering why it’s not participating in the mini-rally here. I don’t see any negative news so I’m at a loss.

  237. traderlady

    Gee, Boring day, Mr. Market! SB must be sleeping and JAYHAWK is gone.

    ALEX, Unfortunate, on your plans and Sept. is hurricane season so who knows. JEFF maybe here. I will except for a week in Maine(fav. time there)

    CMT, Good for you on a FL purchase. Nice RE sales here as you probably found. Marco just beautiful 🙂

    I would like a nice draw down to go LONG into. Time shall tell.

  238. Rosabarba

    “Record low volume” for SLV?

    Today’s volume is about twice last summer’s average. If you wanted to weight it by value, it’s closer to 4x.

    SLV might still be in a bear flag, but it is also still within a triangle consolidation.

    I’m sure the expectation is that metals will take their cue from currencies, which should be catalyzed by tomorrow’s vote in Greece and Wednesday’s FOMC. Silver’s next big move should be clear by the end of the week, I would think.

  239. DG

    For the record I completely agree with Gary [doesn’t always happen 🙂 ] I am net long as I have more longs than I have in EUO. I cut back a little in EUO at 17.60, but will hold until it gets into the low 20’s. There are a LOT of overly-bearish sentiment indicators calling for higher prices and we are still in an uptrend. Shorting now is ill-advised.

  240. Rosabarba

    Respectable breakout for EUR/USD underway from both a bull flag on the 60min and the descending trendline marked by the 6/9 and 6/14 highs.

  241. flaunt

    Dan, on what time scale are you seeing a bear flag in silver? On the daily chart it now looks more like a bull flag than a bear flag to me.

    The weekly chart kind of looks like a bear flag, but with the two conflicting how can you say for sure?

Comments are closed.