758 thoughts on “Portfolio change”

  2. Turning Japanese

    Gary, in terms of a failed cycle, are you referring to breaking the low of the 25th? If so, I assume then you are using the US market low and not the futures low of 1303, which actually occured the previous night at 1 AM GMT (8 EST I think).

  9. Dan

    What’s the best way to get real time quotes on the iPhone? I have the kitco app but the spread on silver is constatly 20 cents? While the CME app quotes are delayed. I use stockcharts.com to get real time quotes for indices.

    Any sites, ideas?

  10. Poly

    I would not salivate and jump head first into big short positions. Work them in and set your expectations further down the road.
    We’ve had some heavy selling this past 4 weeks and we’re due for some strength and resistance to any downside. Plus any long term trend change takes time to develop, so don’t be surprised to see 1,345 test again, enough of a rally to buck all of you giddy shorts.

  11. Sandy101

    Very well said Poly. Anbody going short has to be mentally ready that they will not sell unless 1345 is violated. That would mean a possible 2 % drawdown from today’s prices.

  16. Gary

    Gregg,
    It’s always a possibility but not a good one now that the down trend line has been broken.

    And yes usually what happens with shorts is a pivot is broken then the market bounces, rolls over makes another marginal break. Repeat.

    It’s not going to be easy to hold on to these and it’s not going to be easy to spot the top of the counter trend rallies.

    Successful shorting is tough. That’s why I said in the portfolio change that everyone should consider whether they really want to mess with this.

  18. Russell

    Gary,
    Both you and Doc stated that 1311 was violated therefore failed cycle. As a cycle newbie,do you consider intraday moves rather than just closing price?

  21. Gary

    Russll,
    Because cycles are only concerned with the lowest print. If the market breaks below a pivot then the previous pivot can’t be a cycle low even if it doesn’t close at that level.

  22. Gary

    I think we are now in bear market conditions. In bear markets one sells rallies not buy dips.

    Once that 1311 level was broken one’s entire mindset has to flip.

  23. Gary

    And at the very least one should step aside if they aren’t prepared to sell rallies or need further confirmation.

  24. Peter

    Gary,

    What are your thoughts on the reported plummetting Silver inventories? The falling supply has to resolve in either a huge drop in demand (from market crash I suppose) or a huge increase in price, as I see it… This resolution looks to be right around the corner IMHO.

    Thanks.

  27. Dan

    All trend lines have officially been broken so it appears the bounce we’ve had the past couple weeks is over.

  31. Gary

    Peter,
    I don’t know that there is a shortage of silver. A month ago all we heard was stories about housewife’s dumping silverware into the market. I was very confident that $50 silver would bring an avalanche of supply back into the market. I think it did.

    I’ve checked a few of the coin dealers and I don’t see silver out of stock. If there was a shortage I would expect to see the dealers completely out of stock.

    Don’t forget this is going to be another deflationary scenario the same as 08, although not as severe. In 08 margin selling took gold and silver down relentlessly even though supply had effectively gone to 0.

    Don’t underestimate the power of human emotions to override fundamentals.

    The bottom line is that it’s time for gold to move down into an intermediate low. That is going to happen regardless of fundamentals.

  32. Shalom Bernanke

    I haven’t yet gotten my signal to short, but it’s been close twice in the last two weeks.

    Equities are in transition from a buy the dip mentality to selling rallies.

    Waiting patiently.

  43. Éamonn

    sure is nice to see some green in my account again. stayed in cash after the silver implosion. i learned a lot from that fallout. still swilling it around in my head making sure learn as much as i can from it

  44. EricH

    And the breakdown continues with the BKX. The signs were there all month for this smack down in this market.

  49. Hot Rod

    Gann,

    Good charts. That 36.32 level looks good (if we get there again) for a bounce top. It’s the low bounce from yesterday and May 26th.

  50. Hot Rod

    The last thing we need is Beanie to come by now and say to short silver.

    Beanie, can you come back and say silver is going to turn on a dime?

  55. Gary

    If it doesn’t then it will almost certainly reverse on Monday as it’s too late in the daily cycle to have much more downside potential.

  58. Ollie

    Gary, are we still in the timing band for a cycle low on the SnP?

    Have gotten burnt before in Jan to jump in a trade too soon only to realise we had to rephase the cycles…thanks

  59. Hot Rod

    Tradingez,

    The million dollar question is “what is the current USD trend?”

    Are we in an uptrend into a new cycle (trying to form a swing low ending the prior cycle) or are we in a downtrend still forming the cycle low?

    IMO, the winner by a nose (right now) is that we are in an uptrend into a new cycle. So, does this mean that we reverse back down on the jobs report?

    I’m confused.

  60. Hot Rod

    Well, silver is clearly back to overbought level on the RSI 10 bar 5 min chart. Looking back at the past few days, any time you could have shorted and done well (stating obvious).

    This is the hardest part of trading for me….

    Is the trend our friend and another downdraft on the horizon? Or is this the turning point where I add more shorts and it grinds higher for a potential better entry.

    From the last seconds action before I post it does look like a rollover is coming again.

    Damn, trading bears is a bear.

  61. Cory

    Like Gary has said, puts are better than shorting because your risk is defined ahead of time. It also gives you the luxury of holding a few extra days instead of getting stopped out. I added to my position yesterday on the favorable candle, volume, and cycle timing. Just waiting for the dollar to pop. Looking to go long junior miners when gold reaches within 10% of it’s last intermediate low as a preliminary target. Will be a bumpy ride. I lost 12% from the silver top, and am now higher than then, Gary has kept me cool through this D wave. I still prefer silver because it cycles with gold but gets dragged down with equities due to it’s industrial uses. The volatility let’s me get stopped out and still catch big moves if I’m wrong. If I can get to the A wave with equal or better reserves than the top of the C wave it will be a success.

  62. Gary

    Hotrod,
    The dollar is too deep in it’s daily cycle to continue down for much longer. It certainly has almost no hope of making a new low at this point.

    We clearly have an intermediate bottom and stocks are telling us that a recession is coming. That means deflation and that means a higher dollar.

    At the moment everything is tethered to the dollar. Every little wiggle is transferred to risk assets.

    Once the dollar cycle bottoms and starts to rally for real everything should get crushed.

  63. EricH

    Gary,
    Ever consider playing this dollar rally with UUP leap options? Yes, it’s a slow mover but premium is so little on this thing.

  64. DG

    IMO trading bears is not much different than trading bulls (except the math as Gary points out; that is you cannot triple your money short a stock). There are violent rallies to be sure, but there are violent declines in a bull. You can “Old Turkey” in a bear market on the short side and not let the rallies bother you. You use them to add to shorts just like you add to longs on dips in a bull market. Once the sentiment gets overwhelmingly bearish you look for the exit, just like when it gets to bullish you do that in a bull.

  65. Hot Rod

    Gary,

    So, it could be possible that we get a frenzy USD selloff tomorrow early, which might be the last possible downdraft before a huge surge higher.

    THis is what I am worried about before placing any more shorts today.

    What would you say is a higher probability:

    a) Big USD selloff followed by immediate spike higher
    b) Immediate USD spike with sustained move higher

  66. Gary

    I’m not sure sentiment is going to help us much during this bear. It’s already too bearish and the daily cycle has only just rolled over.

    Sentiment didn’t work very well during the last bear either.

    We are in a period of time that’s only comparable to the 30’s.

    What worked for the last 70 years isn’t going to work now. The only thing I really have any faith in is cycles at this point.

    BTW I really hate trading bear markets.

  67. torero91

    Good points DG. And because sentiment in the stock market has not reached that euphoric, overwhelmingly bullish stage, the top is not in on this bull.

  69. Haggerty

    Gary
    In the portfolio when you say short 15% in each of those things, do you mean buy puts or what? cause I am pretty sure you are not suggesting 30% of a put position are you?

  70. Gary

    HotRod,
    It’s pretty obvious we have a deflationary period approaching. It would take some kind of special news in my opinion to force a hard sell off on the dollar at this point.

    Besides do you really think you are going to time a perfect short side entry?

    I don’t even try. The bear side is just too volatile. Just take your position with the plan to hold it into the intermediate correction and then forget about it. That’s about the only consistent way I’ve found to make money on the short side.

    Trying to time a perfect entry will almost certainly guarantee you get whipsawed to death.

  72. Gary

    Torreo,
    I would think that myself but if the economy is headed back down into another recession, and it looks very much like it is, then nothing else matters.

  74. Éamonn

    I have a question if anyone can answer it. Say we have another recession and it get pretty bad. And the Fed launches QEIII, and it fails, again. What would likely happen then? What would be the likely government and Fed policy in this situation?

  76. Quy

    oa92000,

    Are you long stocks ? Man you’re brave ! Even though dollar’s down today, everything’s red, so if dollar turns up, things will be toast. I bought GLD puts myself today.

  77. David

    QE2 didn’t fail. It juiced the stock market and relieved a lot of the political pressure on the Fed. Trust me, there will be QE3, QE4, and then permanent QE.

  78. RacerX

    Gary: What are your thoughts on having a position in CHF and possibly other currencies? I’m thinking of having a % just as a USD hedge..

  79. Ben

    David, QE-whatever failed (will fail) because it will lead to a worse economic outcome. Yes, there were certain short term gains; but there will be bigger long term consequences.

  81. pimaCanyon

    agree with Poly regarding loading up shorts here. Big down day yesterday, continued down this morning. Moreover, SPX just bottomed at the bottom of the channel drawn off the early May high AND the much longer term TL drawn off the March 09 low and the 8/27/10 low.

    I plan to start scaling in shorts in small size on a partial retracement of yesterday’s and today’s move down.

    IF Gary is correct regarding where we are in the cycles, then we should not see a move back above the 5/31 high. Unfortunately cycle analysis is not an exact science, so the market can always throw us a curve ball.

  84. pimaCanyon

    Note to those trading in IRA accounts: You can’t short in those accounts because shorting requires margin.

    So do this instead:

    short QQQ = PSQ (short etf, tracks inverse of QQQ0
    short SPY = SH (short etf that tracks inverse of SPX index)

  86. pimaCanyon

    The full ETF short list:

    SH = short SPX
    PSQ = short Nasdaq
    RWM = short Russell 2000
    DOG = short DOW

    Note: These are NOT leveraged (as in the double and triple shorts) so you should not see decay in these when market goes sideways like you do in the leveraged funds.

  87. Dan

    Regarding the jobs report usually being connected with a trend change, considering we’ve been heading down for the past week or so, including today, it should result in the dollar heading upward.

  88. Less is more...

    Something to consider if you want to short this market…

    The next 6 trading day/calendar day ranks (based on 50 years of S&P data). A higher rank is more bullish.

    June 2nd: Neutral
    149 out of 363 on calendar day avg return
    104 out of 363 on calendar day % positive
    113 out of 261 on trading day avg return
    32 out of 261 on trading day % positive

    June 3rd: Neutral
    166 out of 363 on calendar day avg return
    231 out of 363 on calendar day % positive
    94 out of 261 on trading day avg return
    121 out of 261 on trading day % positive

    June 6th: Somewhat Bullish
    80 out of 363 on calendar day avg return
    158 out of 363 on calendar day % positive
    64 out of 261 on trading day avg return
    72 out of 261 on trading day % positive

    June 7th: Bearish
    249 out of 363 on calendar day avg return
    271 out of 363 on calendar day % positive
    181 out of 261 on trading day avg return
    169 out of 261 on trading day % positive

    June 8th: Very Bearish
    296 out of 363 on calendar day avg return
    285 out of 363 on calendar day % positive
    240 out of 261 on trading day avg return
    202 out of 261 on trading day % positive

    June 9th: Very Very Bearish
    353 out of 363 on calendar day avg return
    353 out of 363 on calendar day % positive
    237 out of 261 on trading day avg return
    246 out of 261 on trading day % positive

  91. DG

    Gary: you wrote:

    “I’m not sure sentiment is going to help us much during this bear. It’s already too bearish and the daily cycle has only just rolled over. Sentiment didn’t work very well during the last bear either.
    We are in a period of time that’s only comparable to the 30’s. What worked for the last 70 years isn’t going to work now. The only thing I really have any faith in is cycles at this point.”

    All true, but look at it this way: If sentiment gets hugely bearish and you cover early because of that, you will have made a pile. I agree if we have a serious collapse we will reach new sentiment extremes and that will make it hard to play, but give me a 50% head start on my account and I will suffer through figuring out when to cover 😉

    And it is not like I would be ignoring cycles.

  92. mdsn

    A forex question for the group; If you wanted to go long the dollar, which currency would you pair it against?

  94. Ryan

    DG,
    When will you be initiating shorts and what’s on your short list? I’ve never been good shorting and I would much rather just buy a 1x short ETF.

  95. Frank

    Deflation is a monetary phenomenon, not a credit phenomenon.

    And now gold is back to where it was on May 31.

  97. Gary

    Dan,
    welcome to trading the bear side. Markets go down differently than they go up. Maybe DG can trade these things. But I’ve always found it pretty tough to make money on the short side.

    I think you almost just have to hold your nose and jump.

  99. Driver

    As far as trading the short side, I treat it just like the long side. It’s just a matter of taking my systems’ signals. (Maybe like DG.)

  101. Rosabarba

    Just to play devil’s advocate … consider the possibility that April 18 marked a shortened daily cycle for SPX. While short, it certainly meets your see-it-from-across-the-room test, Gary. If so, the following cycle could still be underway and within a normal timing band for a low, and with sentiment more typical of lows to boot.

    It’s not a suggestion to load up the boat with longs, but perhaps to be careful shorting. Personally, I think cash is a better play at the moment than shorts.

  102. torero91

    Gary,

    Trading the bear side is even more challenging when there is absolutely no, zero, nada confirmation the market has even entered a bear. We are still a whopping 4% off the recent highs. Way too early to think about shorting anything beyond a day trade IMO.

  104. Gary

    I wouldn’t consider the April bottom as a daily cycle low. It came in the timing band for a half cycle plus we now have a bottom that is in the normal timing band and has broken the down trend line.

    Whenever I have a move that fits within the normal cycle parameters I don’t usually look for reasons to invalidate it.

  106. Gary

    T,
    But there is a very big confirmation. A daily cycle low has been violated in only 4 trading days. That also forces the intermediate cycle into a left translated orientation. An intermediate cycle that topped in only 7 weeks will almost certainly violate the prior intermediate low (a Dow Theory sell signal).

    That shouldn’t occur in a bull market.

    This is why I use cycles instead of charts or pure statistics as you seem to be doing. They allow me to spot early when something is terribly amiss, and today’s move is saying something is wrong.

    Besides one would have to assume that we aren’t drifting back into recession to be long. It’s becoming painfully obvious we are. Why would you want to be long the market when you know the economy is tanking?

  107. Rosabarba

    Either way, you have to have a cycle outside normal parameters, yes? The current labeling for the daily cycle just ended ran 49 days, so the choice is between a shorter than normal cycle in April or an extended one at the end of May.

    My point, in any event, is not to push a bullish thesis, only to suggest shorting here might be less than optimal.

  108. Gary

    Well ever since QE was initiated the “normal” duration for the stock market cycles has stretched to 40-60 days.

    49 is right in the middle of the timing band.

  109. DG

    Ryan: I have already started shorting. Just don’t do too much to start and short gap up opening rallies (there will be some and they will fade by 10:30 a.m.) Add to winners but less than your original amount. There will be sharp meaningless rallies, but allow profits to shrink during them and hold fast. Cover some every time it seems like a there’s a mini-panic has hit. Lots of people prefer puts because they don’t get scared out that way. Right now I like shorting oil (lots of ways to do that) and buying EUO to short the euro. Don’t try to shoot the lights out; just try for a decent return. And of course cover and go flat when the timing band for a bottom hits.

  110. Gary

    R,
    You are trying to time an exact entry into the bear. I have never had much success with that. If the market bounces then so be it the model portfolio will just continue to hold positions until the intermediate cycle bottom.

    If this tanks into the close or gaps down big tomorrow then you will be forced to make a decision whether you want to chase or not.

    There is no right or wrong here because we can’t see the future.

    So for me the signal has been given. The daily cycle has been violated. A perfect entry isn’t necessary.

  113. torero91

    Gary,
    I have a variety of time-tested tools in my toolbox that I use to enter and exit my swing positions. In full disclosure, I am mostly cash and have been for weeks. I am mostly day trading until the market signals that the correction is over. We are now in the 3rd year of the bull and this market will become more difficult to trade. A trader can never have enough tools, so I keep tabs on your cycle work. Let’s see how this plays out over the next few months and then we can see who made the right call.

  114. MBS

    Gary

    Thoughts on gold priced in francs or euros into this intermediate decline? Dollar rally should hit everything.

  115. Rosabarba

    I’m sure I’m missing something when it comes to cycle analysis, but if a normal cycle can stretch to 60 days, what precludes the cycle begun in mid-March from still running?

  116. Gann360

    GLD GOLD Daily chart: Crazy Ride!

    http://screencast.com/t/dJsIGqCLV

    Just incase we Consolidate or head back up . I sold my Silver short Via ( ZSL ) Off the Table for Now,
    Thank the Lord, Made a Good Buck !

    Will wait and see what happens , with todays close, Just didn’t wanna give any Gains Back, Gold is still in a Uptrend, i wanted to see Gold really selloff today,and Not! Rally back and leave a Tail… Final Hour lets see how they will close.

  118. Gary

    Eric,
    If you were going to short gold you would do so with the intention of holding till you thought the intermediate decline was done. There would be no point in stopping out now on the 18th week of the cycle.

  119. Gary

    R,
    The fact that the market broke the down trend line suggests that this is a new cycle that bottomed 5 days ago.

  121. basil

    The dollar is not done with it’s cycle low, I think we’ll test and possibly break the low shortly.

    That will impact price behavior in stocks and commodities to some upside, probably including silver and gold (why wouldn’t it?).

    The markets are currently just acting confused because investors are yet unclear about in which direction the USD will resolve. I don’t see any imminent downside risk with the dollar acting the way it does.

    Cash may very well be about the worst ting to hold for the coming weeks and months. If the USD dollar breaks the recent low it will probably tank another 10% right there and then. That’s 10% up in smoke for every one holding USD at that time. Cash looks like a high risk position here.

  122. pimaCanyon

    Gary,

    I think what Rosabarba is getting at is this:

    Let’s say today’s low holds for a while, for a couple of days or longer.

    Why couldn’t we label TODAY as the daily cycle low instead of the low that was put in last week?

  123. KAL

    DG, do you mind sharing any short specifics? Your specific calls, or more in line with the current model portfolio? Thanks!

  125. Poly

    I’m going to wait for the jobs numbers before making any moves.

    I believe a horrible number, like the ADP number, is already priced in. What is not priced in is any upside action, like a jobs number at or above expectations, say 150k and above. Market is beaten up and will look for an excuse to rally and blow off some steam.

    If we get a strong enough rally, I will look to place my first SPY short around early afternoon, buying puts on a strong up day is like shopping a Thanks Giving day sale

  126. Gary

    Basil,
    The dollar has run out of time to make a serious attempt at the lows.

    I’ll bet a burrito we get a swing either tomorrow or on Monday.

    We almost certainly have the three year cycle low in place. The odds of that rolling over after only one daily cycle are very slim. Not to mention the current daily cycle is right translated.

  128. Gary

    It’s amazing how every daily cycle low convinces people the trend has changed.

    I’m sure once gold really starts to head down into the next cycle low the same thing will happen. All those who gambled on the long side will become totally despondent. Then we will see enough of a bounce to turn sentiment bullish again…right before the next move down into the intermediate bottom.

  129. basil

    No offense intended, but right here you’re losing me with this whole cycle thing. I don’t see any of it working, certainly none of it short term. There is always a lot of leeway in terms of time, seems to be a lot of confusion, a lot of back and forth. Since silver made it’s high, nothing I read here seems to work anymore. Right now I’m not buying any of it. Hope it’s ok to be so blunt 🙁
    The way I feel right now is that I need to block off some of the noise, including Gary’s, in order to be able to make good investment decisions right here.
    I’m staying out of cash and in agriculture.

  130. Gary

    PC,
    Because the down trend line was broken by the rally Tuesday.

    That stacks the odds in favor of the cycle low coming last week not this week.

  132. Poly

    Basil,

    What’s not clear about the cycles with the current action?

    I know re-characterizing cycles gets a little messy sometimes where it makes you a little skeptical. But in this case the equity, dollar and gold cycles all look very neat and clean. If you’re going to follow any part of them, they’re giving some fairly clear signals.

  133. Gary

    Poly,
    The problem is it’s very hard to sell into a rally. If one is trying to time a perfect entry they are not going to accomplish that by selling into a rising market.

    It’s like all the people who claim they will back up the truck at an intermediate low. When an intermediate low actually arrives it doesn’t look like a bottom. It looks like the end of the world.

    Buying into that is incredibly tough to do. Selling a rally is also incredibly hard to do especially if one is worried about trying to time a perfect entry.

    Then again if the employment numbers confirm the ADP report we could get a hard sell off and you will have to decide whether you are willing to chase into oversold conditions. (The short term indicators have returned to neutral after today’s choppy market so we aren’t even actually short term oversold anymore.)

  134. Gary

    Basil,
    I’m not sure what you think isn’t working. I said I would not trade gold because it’s too late in the cycle. I said I doubted it would make new highs before rolling over. So far that is the case.

    I said the stock market was due for a cycle low. It did put in a cycle low. I expected more of a rally but that doesn’t change the fact that I still expected the rally to fail. Cycles are worthless for calling tops as any cycle can be right or left translated.

    I said if the stock market broke the 1311 pivot we would be dealing with a failed cycle that topped in only 3 days. That is the case unless the market can reverse and make a higher high.

    There is always a small chance of that happening but the odds are too small to bet on it.

    So what is it about cycles that has failed for you? Were you expecting a perfect timing device that would allow you to day trade the market?

    Heck I only missed the top of the HUI rally by two days. Not perfect by pretty darn good wouldn’t you say?

  135. basil

    Poly,

    well, it’s not clear to me. And btw, when I said ‘you’re losing me with the cycles’ I didn’t mean anyone specifically, also not Gary specifically. I guess I pretty much meant the whole blog. It might very well be my personal problem that at times I cannot follow the cycle logic. In no way I wanted to step on anybody’s toes (like I did some times in the past).
    I actually would love to really get these cycles and use them as a tool at all times. I don’t have the clarity about the cycles at this point. If you can lay it out for me in simple lay terms I’d be happy. I just see the cycle analysis say one thing one day, and the markets doing another thing the next.
    Again, no offense to anybody, I just have an ‘Elliot Wave’ moment with these cycles here… 🙂

  139. basil

    Gary,

    I cannot say that you have been wrong with anything here, nor did I mean to say that. Btw, I have no interest in day trading, and usually no problem with buying at a low. Right now I am looking for an ‘edge’ as you some times call it; I just don’t find it here right now, that’s all. It’s not your or anybody else’s responsibility to find me an edge; it’s my responsibility alone. I just think there’s money to be made here (agriculture is one example, and I’ve been holding VNM for the past week until today); that’s the edge I see, and I feel that generalizations on this blog (commodities are due for a big drop; the stock market will have a nasty drop) can lead me to second guess my positions; that’s where I need to protect myself, and I guess voicing my ‘contrarian’ thoughts here, if you will, is one attempt to do that.
    That’s all.
    So, for the reason and for others I happily take your burrito bet and say: The dollar will violate it’s recent low within a month or two.

  140. Poly

    For me personally, it’s important to think of cycles or any of the countless systems as fallible in real time!
    You get into trouble thinking you’ve found a system that works all the time, it just does not exist. Sure you can re-characterize cycles to fit the defined framework and state they are always right, but you can never be 100% (or anywhere near) in real time.

    Not to speak for Gary, but he often speaks in absolutes when describing a given cycle setup, which can be offsetting, when really what he is saying is that the best scenario with the highest probability is XYZ based on the cycle makeup.

    Once you understand the multitude of possible outcomes within a given cycle framework, it greatly assists the trader in defining probability of any given trade.

    The goal is to improve the accuracy of probability associated with each trading scenario/strategy.

  141. Ben

    I did buy Microsoft at the open in October 20th, 1987. No computer access back then, I had to call my broker 20 times before it rung through. Just 30 shares (about $1.5k) which grew to over $120k before my ex sold them in her IRA.

  142. pimaCanyon

    Gary,

    I think for most people, you’re right, it’s tough to sell into a rally, tough to buy into a falling market. Somehow, though, Poly manages to do it. I think it’s because he uses options so often and has seen what a rally does to the put premiums and what a move down does to the call premiums. If you’re playing options–any other options than very deep in the money–then buying puts when the market is rallying and buying calls when it’s tanking gives you the best bang for you buck.

  143. basil

    PS:

    Another thing is that I am still holding a physical silver position. I actually don’t want to sell it. When I contemplate your price target of $21, or even what 77 wrote here two days ago (posted a good link to an article that predicted single digit silver with some impressive statistics to back it up) I should probably pick up the phone and sell my physical silver today. I guess what I am trying to say is that it’s some times not easy to draw a line between one’s own decision and all the noise out there that is potentially impacting you to a degree that it becomes impossible to make a decision and stick with it. In my view that’s the whole problem with day trading, because I think day traders day trade simply because they cannot make up their mind; at least that’s how I was when I tried day trading. It drove me nuts, because every day I saw some good reasons to reverse any trade I’ve made the previous day, etc. Long story short, I always enjoy reading your reports, yet I am not convinced that we are looking at the first leg of a sustainable dollar rally and I am not convinced that everything else is set to drop steeply.

  144. basil

    Poly,

    I guess it is exactly that ‘multitude of possible outcomes’ that makes it seem random some times, short term that is.

    Thank you for your explanation.

  145. basil

    E,

    I made a general apology to everyone who I might have offended in the past. That included you and includes you. If I stepped on your toes, I was wrong.

  147. Poly

    I believe that’s your problem, that you think it’s being sold to you as something that will make your trading go auto-pilot. That it must behave a certain way.

    Cycles just help define and visualize those possible outcomes that give you the best probability of succeeding.
    It’s just a numbers game, over time you will win more (trades) that will show up in the averages (account balance). You still need a personal framework to trade cycles with.

  148. basil

    Poly,

    yes, exactly, because to me it seems a bit like EWs. You’re never wrong with EWs, because you can shift and change and explain everything in hindsight. Looks to me like that’s what happens with cycles too some times; so I haven’t figured out yet how that can help me. Nevertheless, I saw the cycles work August to April. I have yet to see that wasn’t just coincidence. The jury on how Gary’s cycles will play out on commodities, stocks, and dollar is still out.

  149. Mr. T

    Basil – you may consider pairing some LEAP PUTs far from current spot price to protect your physical holdings for cheap. Not much downside either way the price moves…

  150. Poly

    That’s not what I meant though. Gary is not trying to “fix” a broken system or cycle by redefining the cycles.
    Redefining cycles after the fact, is extremely important as it’s required to set the framework for understanding future outcomes/setups.

    You have to lose the mentality that it’s black or white because the cycles say so. There are always any given amount of trades/scenarios/outcomes to any setup, Gary likes to give you the most obvious or highest probability setup based on how it fits within the current cycles. It by no means should discredit Gary or Cycles if that outcomes did come through.

    I don’t see why you would expect anything more than just better trading odds from any system.

  151. Poly

    “Nevertheless, I saw the cycles work August to April. I have yet to see that wasn’t just coincidence.”

    Last point people fail to grasp or what to learn. Cycles are LOW TO LOW points. They define that framework. What occur in between is up for debate, hard to predict and can vary greatly. Focus your trading style/system around the LOW end points and it will provide you with much more clarity.

  152. basil

    Mr. T,

    thank you. Will look into that, even though I tend to shy away from using options. If you could explain what that specific one does exactly and how it could and should be traded, I’d appreciate it.
    Thanks

  153. aklaunch

    Every day you are on here with multiple multiple posts arguing and questioning everything. Critique is very valuable and welcomed by everyone i am sure but….

    Point taken! if the dollar goes down 10% in the next month or two you will be right.

  155. basil

    Poly,

    that last point gives a good guide line; I think that’s the right approach.

    However, the times for the lows can shift dramatically, e.g. four year cycles can change to two, three, or fives years. So even low to low can be questionable, in my view. But, if it is not already obvious, I have no deep insight into how cycles work and am interested to find out more. So far, I am only judging from the facts after the cycle analysis.
    And again, I am not blaming anyone and their work. I am just giving a feedback. No one knows is that four year cycle low in stocks for example in 2011, 2012, 2013. No one knows how low we’ll go on that particular low. So what you are saying, if I understand correctly, is that we know it’s going somewhat lower some time during the next three years and based on that we need to find the best odds for our trades?

  156. basil

    Aklaunch,

    you are wrong. I am not posting every day by far, most days I am away from this site. If I post, there might be five, six posts on average. If that’s too much for you, just skip reading them. As a reader of this blog and subscriber to Gary’s newsletter, I like to voice my opinion just as you voice yours.

  157. Gary

    Basil,
    that is correct. We can’t know ahead of time if a cycle will stretch or contract. All we can do is go with the average duration. That will get us close most of the time, but occasionally we will be way off on a stretched cycle.

    That is one of the limitations of cycles.

  158. E

    with today’s gold/silver action, i am still surprised and part worried that we are not seeing a big drop that we were all hoping/wishing for? what do you guys think?

  159. Dan

    E,

    I am just a little concerned with all tails were seeing on all the charts today. Its the first day of the breakdown for silver, hui etc. and we have all these tails everywhere as if we were already bottoming.

  162. Sleeper

    Gary, you said “The last daily cycle low occurred on May 25 at 1311. The move today violated that pivot.”

    The low today for spot gold was 1518. Where did it violate 1311?

  172. Cool_Loser

    Gary, considering how very long this C wave was for gold, do you see the A and B as equally pronounced as the C or do you think they’ll be of average duration?

  173. Hot Rod

    Gary,

    Just want to go over worst case scenario for a sec.

    What happens if gold intraday tomorrow trades over 1551?

    This will negate the swing correct?

    If (big if) this happens, how would you typically explain it (hypothetically).

    Thanks

  175. Gary

    hot,
    It would just mean the cycle hasn’t topped yet. It will top, it always does.

    Right now the weak dollar is propping gold up. Once the dollar cycle bottoms gold should succumb to gravity.

  177. Haggerty

    Gary
    Let me ask you a question, on day 15 one could have said that gold had a swing high on that day right? But was then negated by day 16’s rally. Now, being that we are on day 19 tomorrow 20, that makes this swing high more likely because of how far we are in it’s timing band for this daily cycle right?

  178. Gary

    Yes the deeper we get into the cycle the more likely a swing will mark the top. The same applies for the dollar.

  179. EricH

    I think Gold is setting up for a serious fall here. One of the key buying interest as of late has been Europe buying gold in Euro because of the Greece debt issue. Well, they agreed on a 3 year plan (kicking the can down the road) today. As soon as USD gets it’s footing, i think the next move up in the dollar is going to put a real smackdown in the gold market.

  182. Bob loves Hawaii

    I think I was one of the last gold c wavers. This morning when gold failed to stay positive I bailed and flipped into my D wave positions.

    Gold looks too much like silver did on the crash and partial retrace, I am thankful it did it during market hours.

    I am going to see if I can sit on these trades short as I sat on them long.

  183. Hot Rod

    Bob,

    Your post was music to my ears an eyes.

    Tremendous news.

    Did you flip “all in” or are you starting with opening positions?

  185. hkc

    Poly:

    I really like your (re)interpretation of Gary’s forecast. I would appreciate if you could do a few of those in the future, so that I can see both sides of the coin. I also would appreciate the expert on the Board to complement Gary’s post with discussion of other factors that might also be coming up. For ex, for yesterday, with Gary’s prediction on the turn of the dollar, coupled with employment number (which most knew was going to be bad), and the “sell in May” …, I mean there are a host of things which I can only put together after the fact, but am hoping that the experience traders on the blog would see and consider discussing them, so hopefully we can come up with providing some more alternatives to Gary’s.

    Thanks much for all the analysis and discussion.

    Basil, I think ak is being appreciative like me, not criticizing your posts…

  186. Le Fou

    Weird thing happening to me on Stockcharts.com. I’m not a subscriber. I just use free charts. But today, for some reason, I can’t get candlesticks on my $USD, $GOLD & $SILVER charts. It says “candlesticks” but the chart is a line chart.

    Anyone else having this problem?

    Best,
    Le Fou

  189. kmisak

    Great report tonight, Gary! Wish I were in Switzerland… have a wonderful time!

    I took the long trade, and did not feel slighted about its failure. gary’s explanation in the report makes good sense, and my expectations are pretty low anyway, at least until the A-wave.

    Now I have my short trades, and we shall see. Will add to them. Maybe.

  190. KAL

    Anybody feeling DUG, SDS/TWM or a gold short yet? The report was pretty explicit about where we sit… Anybody riding the D wave plays? Thanks!

  193. Allenupl

    Le Fou,
    I am having the same problem with Stockcharts. I submitted a problem report to them on their support page. Others should do the same if they are having a problem since that might elevate the priority for getting it fixed.

  194. Gary

    stockcharts said they no longer get open and closing data for commodities.

    Sounds like they just don’t want to pay for the extra data.

    I told them I wasn’t happy.

  195. bamster

    I bought some SLV july 25 puts this morning. That 100,000 buy the other day has me intrigued. Lets see how it plays out.

  196. Jerred

    bamster,

    I believe the 100k order was (order to close)

    the OI has dropped considerably since then.

    Just a heads up

  197. Bob loves Hawaii

    Interesting data point. From silver and gold prices blog.

    Gold/Silver ratio today gapped up to 42.32 (basis Comex close), above its 20 DMA at 41.99. Bear in mind that when a market crosses the 20 DMA that flashes our first signal or confirmation that the momentum is up. An upward ratio usually means falling SILVER and GOLD PRICES.

  201. RA

    If stockcharts is not going to give up opening and closing prices for commodities, does anyone know of good alternatives?

  204. Hot Rod

    This StockCharts public book guy created a couple new charts, one for gold and silver, very long term views.

    If we come close to a mean regression here, holy smokes. We’re in the stratosphere…

    Gold:
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show%5Bs235938992%5D&disp=P

    Silver (parabolic SAR is actually over the 11 month MA at $32.79):

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show%5Bs235939253%5D&disp=P

  205. Gary

    Hot Rod,
    His time frame is way too long to be of any use. The only time we will see the kind of mean regression of that magnitude is at an 8 year cycle low. The next one isn’t due till 2016.

    A much more realistic chart would be weekly gold with a 75 week moving average.

  206. Dan

    Interesting report tonight with some bold predictions. I am just lost on how you plan on being out climbing Switzerland if these huge swings play out. Will be very exciting times if your right.

  207. Ben

    HR, mean regression only is relevant if you factor in two things (primarily) in my opinion — the expansion of the fiat money supply; and the gold supply.

    Correcting for those, they lay on cycles and sentiment and demand and there ought to be a more apparent basis for using longer term history.

    Maybe a better context could be obtained by using using Shadowstats inflation adjusted numbers for gold, compared against the dollar and compared against the DOW and/or S&P500.

  208. Last Shadow Rider

    Glad to be out of that long trade (SPY and IBB). It did what I thought it would do, but I took it just in case. I feel more comfortable with this new short. I cant short stocks in my Fidelity account, so I took the following ETF Trades (PSQ shorts the Nasdaq X 1)and (SRS Shorts real estate X 2). I only went 7.5% on SRS because it is supposed to trade x 2. Im new so if I goofed up please let me know.

  210. Adam

    Gary,

    I agree that today’s action certainly wasn’t what bulls wanted to see. I have a small long position remaining after the day in equities because obviously things are riskier than they were a couple days ago. However, I just want to get your opinion. Not all of the indices are cooperating with this idea of a failed cycle just yet (ie: $NYA, $RUT, $MID).

    http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=1&mn=0&dy=0&id=p80726877390&a=232322377&listNum=1

    What’s your take when you get this non-confirmation? Obviously, falling back thru the trendline immediately isn’t a healthy sign and it sure as shit isn’t what I was expecting. At the same time, the $NYA had rallied for five straight days, should we be giving it some slack on a throwback?

    The other thing that has me wondering about this that neither you or DOC mentioned was the massive rally in Treasury yields. What’s your take on that? Yesterday was day 35 of the reaction cycle which was a potential reversal date. I’ve read that a breakdown to new lows (or highs) on a reversal date is something you can usually fade – and that was exactly the case today. This was especially true because yesterday the price aligned with time nicely on the reaction swing projection (below):

    http://stockcharts.com/h-sc/ui?s=$TYX&p=D&yr=0&mn=11&dy=0&id=p85706531016&a=229794393

    Stocks *should* have shot up with this backdrop, but they didn’t. Negative sign – absolutely. Enough to call a failed cycle – I’m not sure. Interested in your expertise.

  211. Gary

    Adam,
    With the S&P leading it’s only a matter of time before the rest of the indexes follow.

    I think treasuries are rallying because they are sensing the next recession and a stronger dollar.

  213. thedocument

    I’ve also let stockcharts know I am very unhappy with their change in policy regarding commodity charts. To stop providing OHLC data without warning is a rather crummy way to do business, and I suggest anyone here with a stockcharts subscription let them know as much.

    They have blown out months or years worth of saved charts which rely on candlesticks for their interpretative value, and left folks without time to seek a viable alternative. This change no doubt affects thousands of their subscribers who trade commodities and use their service for analysis, and I think every one of them needs to insist stockcharts reinstates the service we paid for.

  214. Le Fou

    The real gall that stockcharts demonstrates is that they just had their big spring promo offering a special deal. I almost signed up, but I held off. Dodged a bullet I’d say.

    Le Fou

  215. KAL

    Thanks Eamonn and Bob. Boy, there’s a big premium on SPY… Eamonn, I’ve got some further out of the money plays on SLV that are a pure speculative play. Other than that, I may ride some short ETF’s. Thanks for sharing dude!

  221. Michael

    For the bareback riders on the short side (and it is tempting) – note that many very smart experienced hedge funds will be 40-70% long when they’re bullish and 0-20% long when they’re bearish. Think about it.

  222. Supermalc

    Thanks Gary, Poly and Basil for yesterday’s discussion, it clarified a lot for me. Thanks also Gary for the smattering of dates and timing estimates in the premium reports recently, I can relax more in the forthcoming holidays. I’m in Orkney all next week, and on a cruise to Juneau in August. Have fun up the Matterhorn.

  223. Harry

    I, too, very nearly bought a stockcharts subscription. I’d be very pissed right now if I had…

    And nothin’ wrong with a little more classic rock on this blog. That particular cover was a bit weak, but an interesting choice for them. I’ve never been a big Phish guy but I respect them.

    Back to business… I’m already sitting on one Aug $1500 gold put and will be looking to add more if we get one last spike down in the DXY. If gold can’t rally past 1550 with the dollar acting like this, and considering we’re late in the daily cycle, I have no compunctions about selling (er, buying puts) into a rally (well, few).

  226. Aaron

    Im extremely pissed at stockcharts. I have used them extensively, and have emailed them about this stupid policy change.

  227. 77

    TGIF traders!!

    Today’s session is of course all about the Non-Farm payrolls
    data due for announcement at 13.30BST. Nervousness surrounding
    this data could not be higher with the S&P 500 already pricing in bad news during its biggest down day since August on Wednesday. Market consensus for Payrolls has dropped to +165k having been around +190k
    at the start of the week with most of the big banks downgrading their forecasts following the consistently bad data on Tuesday

    gold is still trading the range of 1462-1576 with yest. low at the midpoint of that range 1520… the .618 at 1534 and the new moon eclipse high of 1552 was the .786 of the range

  228. Michael

    DocJohn,

    Funds more commonly cash and relative value long-short trades. Directional position shorts are far less common. There’s a lot of work that gets posted by the Marketfolly site about fund positioning.

  232. Edwin

    –uh oh news break

    In may
    54k jobs instead vs 165k,
    5k manufacturing jobs lost

    unemployment rise to 9.1 from 9

    sell off

  233. Gary

    The dollar dropped on the jobs number. however it’s still too late in the cycle for there to be much downside left or upside for gold.

    I actually expect the dollar to reverse either today or Monday as the market figures out that we are drifting back into recession. Recessions are deflationary which will put a bid into the dollar.

    The jobs report is actually dollar positive and the knee jerk reaction is usually reversed during the day.

  235. Gary

    Hmm looks like the dollar reversed immediately. I guess it didn’t take long for people to figure out the first reaction was the wrong one.

  236. Edwin

    for my technical system i’m flashing a buy.

    i have started scaling a position in SPX this week. don’t go all in!
    i buy when people are running on intermediate breaks.

    markets have broken the lines in the sand and are acting very emotional. the jobs no surprised people.

  239. Gary

    I don’t know if I would trust an oversold oscillator at this point. We are dealing with the same kind of daily cycle that produced the Fall 08 crash.

    Not that I think this will crash.

    Those who hesitated on shorts trying to time a perfect entry are now faced with the unpleasant decision of whether to chase a very oversold market.

  240. DG

    For those who feel it is hard to stay short: It is time to go Old Turkey. If you entered when gary said you now have strong hand status. If you are nervous you can put in a mental stop at break-even (we won’t get back there). Add a little on rallies during the next week. Then just sit and don’t worry about your profit going away. It may (theoretically) but the risk/reward is extremely favorable to just sit now. Don’t get shaken out by a rally just like you don;t get shaken out by a dip when you are long after getting a good entry price. Time to sit on your hands. Worst case is break-even. Likely and best case, more money for the A-wave. Don’t chase shorting on big down days an y more than you’d add gold on a huge up day.

  241. Edwin

    Gary,

    we’ll have to see how this plays out.

    if the dollar continues to climb
    it can theoretically continue to rise until end of Dec ’11

    eek, lots of people crying in the stock market/commodity market if that were to happen.

  242. Éamonn

    Any of the more experienced folks here think the low number could be attributed to the Japanese tsunami? Or is it more sinister, with low numbers continuing in the months ahead Thanks

  243. Bob loves Hawaii

    I could not agree more with DG, sit on your hands if you are short. This is going to get wild, but as a business owner, I can tell you without a doubt people are broke and costs must come down.

  245. Poly

    The confirmation has come.

    Time to buy a stake today…..it’s a long way down for here, 15 points is nothing to lose sleep over.

  246. Edwin

    aaron – i buy the panics, i always have cash to deploy.

    on may crash, japan earth quake, recently this unemployment no which was close to 3 times less than expected.

    those black swan events that surprise the markets.

    if it pans out to bounce, which it seems to at least a little bit its profitable.

  248. notGreedIsGood

    gary, dg, or anyone…

    would u be concerned about holding double inverse funds like SRS OR QID , throughout the intermediate correction? eg do you expect volatility to decay the returns of these funds, or you think we’ll have a relatively clean downward trend we can hold on to (just like agq when it was going up) ??

    not

  250. Harry

    Bob, birth/death adjustment was actually 206,000. But what’s 6,000 jobs between friends?

    I am stocking up on gold puts this morning. Enjoy the sale price, everyone.

  254. DG

    Jenny/David: Just sitting is not that hard. Don’t look at the dollar profit and you won’t be tempted to take it…because there is nothing there to take (if you are not looking at it.) Don’t think “Gee. I am up XXX dollars. Just look impersonally at the price of the item you are short and make a business decision. Is it going lower from here or higher from here over the next few weeks? Then act accordingly.

  255. Poly

    Hot,

    It’s a foundation stake, so I’m not going to get too picky this morning, getting in and staking a position is more important. As Gary and DG point out, it’s a l o n g way down.

  258. Less is more...

    Dollar down, Gold up, & Employment horrible… could this mean QE3 is in the card? The question is how the market reacts to QE3? 100% positive? Hmmm…

  259. Duuuuuude

    I am not a stockcharts subscriber, and they may have been the holy grail of charting programs. I find that I need to use a combination of charting programs to get the data feeds and time horizons for what I am most interested in.

    For most applications, I have found Thinkorswim charts to be solid, especially on commodities. It only gives 20 year time horizons however. You can get the software for free by opening (not funding) an account.

    I really like Profit charts, but their data feeds are limiting (eg no $dxy charting)

    Another program that works pretty well is freestockcharts.com.

    After that, it is what ever I can find such as barcharts.

  260. Ollie

    Agree with Edwin here, this looks like some sort of capitualation volume at the open.

    I expect at least a short term bounce and a better risk/reward to put out my shorts

  262. Gary

    Dollar is negative. Until we get the swing and bottom of the stock cycle the weak buck will continue to act to buffer corrections.

    However if history is any indication then today should be the bottom.

  263. sophia

    Intuitive only, but stock market is oversold for the time being, so if a little squarring before the w/e happens, there will be better levels to sell…Also, nobody will take the risk that the ECB comes with a nice package over the w/e….

  264. Ollie

    SPY volume is appx 50m in the first 30 mins, only comparable to May 18th which has led to a bounce

    Also as Gary mentioned the USD is negative plus SPY is already on the BoW list

    I think I’ll stay put until next week

  265. Dan

    The dollar is one sick puppy, even with poor economic news it doesn’t catch a safe haven bid. Still holding my shorts but if we close at these levels or higher were gonna get more tails on the charts and it will increasingly look like the formation we got in mid may.

    Just something to keep an eye on.

  266. Gary

    Now you see why it’s hard to sell short. The government and Fed are going to fight you the whole way. One is nervous on any large drop for fear of an oversold bounce. If you aren’t already in it’s very tough to pull the trigger because one is afraid they aren’t going to time it right. Confirmation just means the market is more oversold and it’s even tougher to short.

    Welcome to the bear side of the market 🙂

  268. Harry

    Gary, why do you say that? Do you suspect people will be unable to hold on to short positions through all the craziness?

  269. DG

    It’s no harder than when you are long. If you are not already in when you want to be long it is just as hard to buy a spike up as well. If you miss your entry point you have a problem on either side. The bull corrects buy timing mistakes and the bear corrects short timing mistakes. Place a stop and forget about it. You don’t need to get an “exact” entry point on the short side any more than you do on the long side. With a stop in place your risk is not “infinite.” The Dow is not going to gap up 1,000 points at the open! The difference is merely nerves and emotions about being short, and the math that your gain is limited to 100% (big deal).

  270. TZ(8155)

    Few people make money on a decline because a decline is a destruction of wealth. It is hard to MAKE wealth on the DESTRUCTION of wealth. Simple fact.

    One of the main reasons it is best to look for an area of wealth creation and try to get a sliver of that. Much easier and, of course, you are simply trying to get SOME of a pile of *already increasing* wealth.

    One is logically walking up a down escallator. The other is simply grabbing onto a bus while riding a skateboard.

  272. Éamonn

    DG, I have a question for you. I’m holding Put options on IWM, expiring in August. Should I sell them when the market is becoming oversold, and then re-buy them when it has become overbought?

  273. Shalom Bernanke

    “The government and Fed are going to fight you the whole way. “- Gary

    Most go the time this holds true, but right now you have the Fed on your side letting assets deflate in order to justify more QE’s, no matter what they call them this time.

    Nice flexibility by the way, exiting your longs and then getting short. Great trading. 🙂

  275. Éamonn

    Shalom Bernanke, have you gone short, and would you give me your opinion on the question I just asked of DG? Thanks…

  276. Edwin

    if you wanted to short the market, it should have been started May 31st

    You’re close to the top for this spike IMO.

    I don’t short fraud street markets.

    Not sure why you guys are deciding to short gold? It’s hasn’t broken down yet. Still on track. It’s only 15pt over bought. But it’s not crashing and burning.

  277. DG

    TZ. Yes, it is harder to get wealthy, but fortunately it is not harder to make decent money (30% let’s say). In fact it is faster because stocks go down faster than they go up. One good decline and you are done for the year.

  279. Shalom Bernanke

    I think there is a difference between shorting markets and picking tops.

    Picking tops is hard, but shorting is not too different from going long other than that moves are sharper with shorter hold times. As the trend is now trying to form on the downside, there will easier money to be made shorting once confirmed.

    Good luck!

  280. DG

    E: I don’t trade options, but I can tell you that oversold doesn’t mean much once the bear gets his teeth in. You can sell 1/2 when they double and ride the rest. Sell as soon as you start thinking about how smart you are and how much money you are going to make.

  282. Shalom Bernanke

    Eamonn,

    I am not yet short, but that is where I’ll likely spend my time and funds.

    I’ll only short spikes, and after the trend is confirmed lower. Right now the market is working to achieve the confirmation.

    Had I picked the top like yourself, Gary, and the others, I would sit tight with everything and only cover into sharp drops. I would not cover more than half, and probably not that much, maybe 20% into early weakness on Monday and only to ring the register a bit.

    Rather than cover shorts, it might be better to add to them on rallies.

  284. Shalom Bernanke

    And as far as the weekend is concerned, I would not have any problem staying short for fear of gov’t meddling.

    The Fed isn’t likely to get in your way at this juncture. Maybe in a few weeks at the earliest, is my best guess.

  288. Edwin

    if you believe the dollar had hit it’s intermediate low May 4th

    and it’s reversing and going back up then yeah deflation will hit market and commodities should get affected. this is economics 101. before a deflation there’s an inflationary spike.

    but the stock market/commodities are proxies. we’ve seen times where both go up, and both go down. they are not inversely correlated.

    you believe in the dollar trade buy/sell the dollar.

    we got an elephant in the room, China. if they are diversifying their allocation in foreign reserves they will evalute USD risk.

  290. Gary

    I think it’s much harder on the short side than the long side, because markets don’t go down the same way they go up. The counter trend rallies are very hard to hold through. They almost invariably make you think a bottom is in.

    After getting knocked out a couple of times by of those you become gun shy and start covering way too early.

    I’ve been doing this a long time and I have trouble making money on the short side.

  293. Edwin

    china wants what they want when they want. they have a lot of foreign resevers and can manipulate the currency/bond/ and eventually stock markets.

    i don’t what they are up to, but it’s to grow wealth that’s for sure.

  294. DG

    Guys:My last post on this as I think the issue has been made clear— It’s not that hard. Don’t “think” the bottom is in just because there’s a rally. Wait for the timing band. The bottom is not “in” because there’s a sharp up day. Gary is right, the rallies are violent, but you lived through the violent shake-out down days in gold the last few months. Start small if this is your first time shorting, and don’t short into downward cracks. Short rallies then hold until the timing band for a bottom or break-even stop so you don’t lose. People short now should enter a mental break-even stop and go away.

  296. Shalom Bernanke

    Short term trends are clearly down, but daily charts not so much, IMO.

    That said, today looks like it’ll offer a nice intraday shorting opportunity, which means more size with a tighter stop and a hold time of several hours at most.

    I want to see the 50 day MA start to head lower before I take a position with hold times several weeks or more.

  297. Silverhound

    Gary

    Do you mind if I ask your opinion on what you expect to happen during the A wave. Are you expecting Gold and the dollar to rally in tandem or do you expect the inverse relationship to continue and the dollar to have a correction of sorts? I won’t hold you to this of course.

  302. Gary

    My guess is that the A-wave will form as the dollar works it’s way down into the next intermediate bottom in the fall.

  303. Rob L.

    Why not have a mental stop at the daily cycle high, which happened a couple of days ago, at around 1345 on the SPX?

  304. Michael

    DG,

    Thanks for the great advice. However, the break-even stop theory would have us stopped out of the IYT trade from yesterday.. In some cases it works but in others one has to be careful of the whipsaw that Gary warned against…

  306. DG

    Michael: Yes, nothing is guaranteed when you are trading. But those who shorted on the break below 1311 can now sit. And I mostly short the market or major sectors as opposed to IYR for just that reason. If you get stopped out you just start over, shorting into am sharp rally. You have to have the guts to do that, just like you have to have the guts to buy into a decline at a cycle bottom. no different really.

  307. Gary

    Rob,
    That is an option although the market could still take that out and continue down. All your stop would do is whipsaw you out for a needless loss.

  311. Rob L.

    I hear ya, Gary. My only response would be that if our interpretation of the S&P daily cycle is correct then 1345 should not be violated. And if it is, that particular violation might be a reasonable point to exit and perhaps wait for gold’s IT bottom later this summer.

  312. PST

    Gary,
    I’m curious as to why you’re choosing to short real estate into this downturn as opposed to some other sectors. While I don’t disagree that this sector will likely come under pressure, I’m wondering what you’re seeing that leads you to conclude that commercial real estate will underperform (or outperform to the downside) other economically sensative sectors.

  313. EricH

    Gary,

    Great job on flipping your position on this market earlier this week. Not a lot of advisory out there would have done what you did. I applaud you for that.

  314. traderlady

    SB, Thank you for your comments. I do check in and you are one of several I listen to.

    GARY, Have a great trip and climbing experience. Perhaps I can make the next one after the next “C” wave. Stay safe!

    Kerry

  316. William

    USD under a lot of pressure, but nothing is really responding to it. When this thing turns it looks like it could real ugly real fast

  319. Rod

    DG or Anyone else,

    I’m just sitting to the sidelines and watching things waiting for when Gary says its time to jump in on the A-wave. But I have been looking at maybe adding some EUO here at these levels. Any thoughts?

  320. PST

    While you can argue that psychologically there is no difference shorting stocks, there are “structural” differences that make short selling much more difficult including:
    1. Cost to borrow securities
    2. Potential forced covering and risk of being bought-in
    3. Change in SEC rules to protect targets (Ex. Ban on short selling in 2008 to protect financial firms from bear raids)
    4. Company attempts to proactively thwart short sellers
    5. Unlimited loss potential

    Personally, I find it much more difficult to make money on the short side for psychological reasons as well, but apparently this is not an issue for other people.

  321. DG

    I have a modest amount of euo and of course wish I had waited. I will add when the dollar makes a swing low—soon i hope!

  322. Rod

    DG,

    Thank you for your reply on EUO. Please let us know when you do as I think I’ll take a small position just to have something in the game here too.

  324. Cory

    If the dollar ever decides to flip the other direction this is going to be an interesting month. Sentiment should be getting bearish, it’s below the Bollinger Band, and in the timing band for a cycle low. Looks like a classic cycle low IMO.

  325. Ryan

    DG,
    I have started any short positions yet but really thinking hard about going with EUO as well. If you’re going to add to your position, I’m assuming you’re going to hold it for a bit? Until at least mid summer?

  328. DG

    Odd the dollar and stocks are both going down again. I hope Doc and Gary are right that the cycle bottom is at hand…?

  333. coolkevs

    Using Kevin Depew’s Demark Analysis for the DXY Dollar index shows the Daily is on course for a BUY Setup, but is only on bar 6. For the setup to go to perfection, the low of bars 6 and 7 need to be exceeded by bars 8 or 9. So, if Monday is lower than today, either Tuesday or Wednesday needs to exceed this. After that, expect a Thursday through the following Tuesday higher “reaction”. So, expect to see more dollar weakness through early next week. Whether it will be enough to push us through the 72.5 threshold for the final qualification of the MONTHLY sequential remains to be seen.

    With regards to SPX, the 1312 level needs (futures equivalent 1308ish) to be qualified for more downside which cannot occur until we have an up close on the SPX, followed by a down close below the 1312 level and one down tick below that. There was a WEEKLY qualified level on the SPX pointing up to 1415 dangling out there, but Depew seems to think with the June-September MONTHLY SELL in place that the path of least resistance is down. Of course, he could be wrong. I remember there being a January-April 2010 Sell Setup and other than some weakness in January, that was incorrect. So, we shall see.

    Confusing enough for ya??? 🙂 Have a good weekend!

  336. Gary

    White,
    Why so impatient? The dollar is just now moved into the timing band for a bottom. Lately they tend to come either on the employment data or one day on either side. We may be making the bottom today.

  339. Rod

    With Gary thinking the dollar is bottoming here, in addition to EUO, is anyone thinking of playing some UUP too? Both “should” be relative save plays I would think.

  341. Dan

    Wow dollar is absolutely incredible, not far from it’s lows last month. Perhaps this is the final washout.

  342. Michael

    Coolkevs, all those without Bloomberg terminals should be thanking you for the DeMark analysis. It is followed, voodoo-like I suppose, and can be explosive when you hit Weekly and Monthly 9 count reversals etc. Can you post chart for the visual on the upcoming DX and ES potential events or does that infringe on someone’s copyright?

  344. Poly

    Risk assets can’t find a real bid with a falling dollar. Equities just burning off some oversold levels. Once the dollar finds its feet, you better hope you’re standing near an exit sign.

  345. paul

    just bought some DUST…
    GDX broke the trendline yesterday, usually this is a sign of a trend reverse in GDX. That is also iun line with what Gary was thinking, another leg down till july/august…?

  346. robo

    My thoughts on the comments below are – we shall see. However, I am long the dollar for a trade.

    Comments from a dollar Bull.

    The U.S. dollar index bottomed at 70.698 on March 16, 2008, and completed an important higher low at 71.314 on July 15, 2008. As the greenback progressively rallied in the second half of 2008, this led to the unwinding of the global carry trade, which greatly contributed to the sharp decline in liquidity and by extension an accompanying plunge for risk assets. It appears that the U.S. dollar index completed another higher low at 72.696 on May 4, 2011.

    This event may similarly be signaling that investors worldwide will be increasingly seeking out the safe haven of U.S.-dollar time deposits including especially long-dated U.S. Treasuries. Since so many investors today have sold short the U.S. dollar on margin to purchase numerous risk assets on margin including crude oil, silver, and the S&P 500 index, a rising greenback will force hedge-fund managers, commodity-pool operators, and momentum players to close out both ends of this trade.

    http://truecontrarian-sjk.blogspot.com/

  348. deliberate

    HR, I am not really up on my econ speak. Every nation would prefer to have the weakest currency so their exports are cheapest. Debt denomination in USD is getting paid back in ever decreasing valued dollars.

  349. robo

    discreet shopping,

    You could be correct, but you are in the boat with 90% of traders. Could it be different this time – maybe, but my uup position is just a trade for now.

    Good trading to you.

  350. basil

    No way in hell I would go long UUP here or short gold.
    I can already picture the talk here shifting in probably no less than a few trading days.

  351. fubsy_cooter

    Insightful comments today. I agree with Gary that the weakness in the general market in the face of a weak dollar likely portends two things:
    1) the dollar is near a bottom, &
    2) the market is beginning to discount the economy, which is in trouble.

    Currently holding
    SDS @ 21.17
    DUG @ 29.35
    SLV OCT 32 Puts @ 2.10

    Will add EUO when the dollar forms a swing low.

    Fubsy

  353. Ben

    Basil, you are right that there has been a fair amount of thrashing the past few months here. But I smell a washout in the dollar nevertheless.

  354. Harry

    Why would you not short gold here? Late in a daily cycle AND intermediate cycle and dollar making lows in the timing band for a daily cycle low, plus a sharp reduction in liquidity across the market. Not to mention the broken parabola. What’s not to like?

  355. Gary

    This is what happens at cycle lows and tops. Everyone becomes convinced the trend is either going up forever or down forever.

    This is exactly why I use cycle theory so I don’t get caught in that mentality around bottoms and tops.

  356. basil

    Ben,
    if with washout you mean that the dollar will break the low and will go down further, we are on the same page. Is that what you’re saying?

  357. white2ronin

    Gary

    Fair enough, however it has been rallying against EUR for last ten days and it rejected 1.40 pretty convincingly. If it was just today I would agree. What would make you change your mind that EUR continues to rally? We could easily revisit 1.50 then 1.60 (top). I would be as surprised as you, especially with what it happening in Eurozone (and there was more good news on Greece this afternoon) and thank you for making the time

  359. Gary

    White,
    The dollar index would have to break to new lows.

    Pretty unlikely in my opinion with the economy slipping back into recession.

    Recessions are deflationary.

  363. Poly

    To believe the $US isn’t king in a time of crises is in for a rude shock, IMO. If shit hits the fan, just watch how quickly treasuries and the dollar get bought.

    I agree, no way in hell I would ever short gold.

  364. DG

    Basil: “DG, if it’s not at hand it’s stretched, isn’t that the way it goes?” Basically, yes. Your comment seems sarcastic, and if so you are looking for a level of precision that is not possible. There is a middle ground between “worthless” and “precise.” Gary makes the same error when he says ” no one can time the bottom perfectly.” No one is trying to time it “perfectly” like no one is claiming cycles are “precise.” Exaggerating an opponents claim and then showing it is silly is an old debaters trick, but does not lead to useful knowledge if that’s what you are after. Cycles give you an idea of where a turn might be happening, then the swing gives a second idea. And they may both be off, but it is a hell of a lot better than random guessing…at least it has been for me.

  365. Gary

    I did say weeks ago that at some point the trend followers would try to take the dollar back down and re-establish the bear trend.

    It should fail though and the odds are looking like it probably will as we are now very deep in the daily cycle and still quite a ways from the lows.

    Actually it almost has to fail to make new lows if stocks are to put in a yearly cycle low in the normal timing band.

  366. basil

    Gary,
    you keep doing this… You keep saying that “everyone” is doing this and that, being obviously wrong in your opinion. Don’t try to interpret how other trader’s psyche works, please. Let’s just wait and see what happens.
    We got a bet going on about the course of the dollar. I am very clear about all the things that you suggest will happen going forward. I think you might need to back paddle sooner than later. I love the cycles when they work. OFten they don’t. I understand that they have limited predictive value, just might be able to establish a broad course. Poly explained that yesterday. That point is taken. But within this broad direction, there is an awful lot of leeway. Cycles can run short or long (a four year cycle might be four or five years long); they can be stretched, extend, be left or right translated. And then there are all these inter-market relationships that might or might not say this or that. To give an example: The four year cycle low in stocks might be hit after three years in 2011, or after four years in 2012, or after five years in 2013. The low might exceed the March 2009 low, or not exceed it, or perhaps just be a 25% drop. Well, all of the above I have been very clear about long before I knew anything about cycles (and I still know fairly little about cycles). If these cycles would work that reliably, yes I would be jumping into UUP right here, and short gold right here. If these cycles would work that reliably, everybody would do that including ALL the smart money, because they all want the sure bet. There is no such thing, as the last two trades here (long miners & long S&P) prove. I think this might be the third short term trade that will fail. That is my humble opinion. I think you are just rolling the dice here just like anybody else. Yes, you are right, no trend is forever, but as the saying goes some go much longer than you can remain solvent. And I’ve been reading a lot of this or that is ‘not doing what it is supposed to do’ in your posts. Well, that’s because markets have no idea what they are supposed to do.

  367. robo

    basil,

    Isn’t that what makes a market – we need Bulls and Bears.

    My dollar position for now is small, but I will be adding/ scaling in additional positions the next few trading days if we get more weakness. Most folks hate the dollar and that is why I’m buying. It’s not easy being a True Contrarian. Again, 90% of traders support your position and if we get the squeeze and a flight to safety the move will be a big one.

    If I’m incorrect it will be just another losing trade and I have had many. Bill Gross is my best indicator i have to go long the dollar and I use Gary’s cycle work along with some other indicators for my buy signals. Charts are not my thing.

    Good trading.

    Plenty of dollar Bears, but not many Bulls:

    “The long-term fundamentals still look terrible for the dollar,” said Alessio de Longis, a currency strategist in New York for OppenheimerFunds’ global debt team, including its $13 billion Oppenheimer International Bond Fund.

    The dollar may rally from time to time, according to the bearish managers, whose ranks include Daniel Fuss of Loomis Sayles & Co. and Templeton Global Bond Fund’s Michael Hasenstab.
    They expect overseas markets to lure investors over the next several years with faster economic growth, higher interest rates and healthier government finances than those in the U.S.

    “In the currency world, money goes to where it is treated the best,” Thomas Goggins, a manager of the $3 billion John Hancock Strategic Income Fund, said in a telephone interview from Toronto.
    The dollar is down 12 percent in the past year against a trade-weighted basket of six currencies, even after a 4.5 percent increase since April 29, when it reached its lowest level in three years.
    Fund managers at Pacific Investment Management Co., the Newport Beach, California-based firm where [Bill] Gross is co-chief investment officer, are among the most vocal dollar bears.
    Investors should “revolt” against Federal Reserve-engineered low interest rates and seek alternatives to U.S. bonds, “including developing/emerging-market debt at higher yields denominated in non-dollar currencies,” Gross said in a commentary this month on the firm’s website.
    –Charles Stein, “Dollar Unloved by Bond Managers Enticed by Emerging Markets”, http://www.Bloomberg.com, May 25, 2011.

    http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aeTytz7Wwgew

  369. Gary

    Basil,
    You obviously know when I say everyone I don’t literally mean every single trader. I mean the majority of people.

    When I say I expect this or that to happen, even if I word it strongly, you have to know that I’m talking odds not absolutes.

    Please tell me I don’t have to quantify every single statement I make. If that’s the case I’m not going to have many adjectives that I can use in the nightly reports any more.

  370. basil

    Poly,
    what crisis? The dollar has fallen during two years of one crisis after the next, foreign and domestic.

  371. David Kafrick

    The biggest misconception that people have is that you can only win 100% by shorting something. That is just very wrong. You can win just as much as going long, provided you adjust your position so that your exposure to that asset remains the same.

    The difference is that when you are long, the rise and fall of the asset will not change your exposure to that asset, because your account will be going up and down together with the price of the asset. When you are short, you need to add to the position when it goes your way and lighten up when it goes against you so that your exposure remains the same.

  375. basil

    DG, Gary,

    DG, as you put it, I agree that is between worthless and precise, some times closer to one end, another time closer to the other. I have been finding it very helpful at times and equally driving me nuts at other times.

    Also, I am not using ‘debater’s tricks’. To me there seems to be an absoluteness in many of Gary’s comments. If that’s not the intention then I’m fine with that, but I am reading the words as they are written. If I remember correctly you yourself insinuated some absoluteness in Gary’s statements.

    And Gary, it’s not about semantics, I am not misreading your wording, I believe. I believe I completely understand what you are writing in you nightly reports.

  376. pimaCanyon

    Basil,

    Did you read DG post?

    There is nothing in the TA toolbox or sentiment toolbox or EW toolbox or whatever toolbox you want to use that will give you the precision your comments are suggesting that cycles should give you. Cycles just add another tool to help with timing. They will not be precise to the day, but they can give a timing band when a low is expected. By using them you increase your odds that your trades will be profitable, and that’s what trading is all about, stacking the odds in your favor.

    If you’re looking for the Holy Grail, good luck! No one has found it yet, and believe me, if they did, do you think they would post it on a blog?

  377. Gary

    Basil,
    I covered the long S&P and long miners trade in last nights report. The long miners was a profitable trade. I only missed the top by two days.

    The S&P trade was only partially taken based on a daily cycle low and “normal” market behavior out of a low.

    The main reason for the trade was sentiment.

    The cycles didn’t fail. We got a cycle bottom right in the expected timing band. What we couldn’t know before hand was that this was one of the very few times when the correct choice was to take the 10% odds instead of the 90%.

    No trade is 100% so every once in a while a trade will defy the odds. However if you want to make money you never bet against the odds. It’s that simple.

    Right now the odds are heavily in favor of the dollar having put in intermediate cycle low. Actually those odds are 100%. The dollar has put in an intermediate cycle low. The odds are also very high that the dollar has put in the three year cycle low. If that’s the case then one doesn’t want to bet on new lows, at least not this early.

    Now sure maybe 5-10% of the time the very low percentage trade will work out. That is what you are betting on, that the dollar will roll over very quickly into another intermediate decline and that the three year cycle low is still ahead of us.

    I can’t make that bet because I never bet on any trade that only has a 5-10% chance of playing out.

  378. pimaCanyon

    Basil,

    Regarding Gary’s emphatic language, I will have to agree with you on that. He does talk in certainties at times when the reality is that probabilities might be high, but nothing is certain. Knowing that, you just have to take those statements that sound like certainties with a grain of salt.

  379. basil

    Robo,

    not sure if there are more dollar bears than bulls. I have been reading lots of bullish dollar comments lately (including Jim Rogers). What every one is aware is that we are at an inflection point and close to strong support in the dollar. That makes for a rather bullish undertone, I’d say.

  380. fubsy_cooter

    Watching the action today and was feeling a bit perturbed by my DUG, but looking at the chart of XLE it looks pretty good. Just rallying into the meat of this weeks decline. I suspect we are on our way to testing the neckline on XLE at around 72.80. If that’s the case, I’ll buy more DUG on a close below that level.

    Also, still waiting for the dollar to form a swing low to add some EUO to the portfolio.

    I really am very light still with only 18% invested. The EUO would bring me up to appx 25%.

    f

  381. PST

    Fubsy,
    What happened to initiating a position in SKF? I started a position in FAZ several weeks ago when we exchanged posts. So far, so good, however it’s too small to really move the needle.

    David,
    In terms of the dollar and the euro, I’m also in the strengthening dollar camp. I also plan on starting a position in UUP, either today or early next week. I posted several weeks ago about thresholds for the EUR/USD and USD/JPY pairs and I believe that we have reached that threshold (~1.45) for the former. As we reach this upper bound, coupled with Gary’s cycle work, I feel pretty comfortable in taking a starter position even before the dollar forms a swing low.

    Europe’s numbers are deteriorating and clearly the sovereign debt issue is again rearing it’s ugly head (any Greece solution will be a patch fix and the ECB / IMF will be forced to deal with other periphery countries and potentially a core one shortly). Besides, Europe still has an inflation issue, so an interest rate increase still looks pretty likely.

    Poly,
    I couldn’t agree with your comment more. When (if) the SHTF, we will again see money flow into the dollar and treasuries like it did after QE to the dismay of all…that is until the Fed decides to debase the currency even more and then the race to the bottom will resume.

  385. Gary

    Dollar sentiment is back to neutral but it reached multiyear lows a month ago.

    That’s what I would expect to see at a three year cycle low.

    Then you have the rubber band effect. Anytime sentiment gets that out of whack it usually requires a trip all the way back to the other extreme. It rarely stops half way. So I would expect dollar sentiment to reach bullish extremes and not just go half way and reverse.

  387. Gary

    UUP doesn’t track the dollar index perfectly. The dollar still has most of a whole point before it breaks the lows.

  388. Rick 4779

    Here is a nice quote regarding trends from “Dow Theory for the 21st Century” by Schannep

    “A person watching the tide come in and who wishes to know the exact spot which marks the high tide, sets a stick in the sand at the points reached by the incoming tide until the stick reaches a position where the waves do not come up to it, and finally recedes enough to show that the tide has turned. This method holds good in watching and determining the flood tide of the stock markets.”
    Charles Dow 1901

  390. white2ronin

    Gary

    You mean a DXY breaking 72.9 – we are at 73.6 right now and it looks like it will roll over and through the low.

    What would change you mind that dollar/dxy is headed below the April 30 low? thanks

  393. aklaunch

    My 2 Cents…..

    This dollar controversy!

    I have been watching our dollar fall apart for days now. I am looking at gold and silver fluttering as if they are not sure which way to go. Oil is walking a tight rope to. My guess is that even if the dollar goes down through next week and makes new lows we might see gold go up a whopping 4-5% at the most. Yay…….. Hooray…..

    Maybe silver a few points to? Maybe not? And then there is oil. I am sure we are all hoping for oil to hit 150$ again so 15% of us on this board can loose our jobs as the economy collapses.

    That is F’ing great.

  395. robo

    MrMiyagi

    Calling a change in the trend is not easy or popular. However, this is why I started getting Gary’s service a few years ago. He calls it like he sees it and then you must decide.

    Gary,

    Thanks for not being afraid to go out on a limb with your market calls. NOBOBY – can be correct all of the time, but you do one hell of a job!

    Keeping coming….

  397. MrMiyagi

    It seems that a lot of times some people here are expecting a sudden sustained change that does not waver.
    That is just not possible.

  399. Alex in Montana

    UUP for dollar bulls

    There is a gap to be filled around 20.96 or so in UUP a level from the dollar breakout off its bottom. If you have not bought and are dollar bullish, that might be a good entry point.

    cooklevs spoke about Demark, so maybe Monday might be the day to buy. Gary says today we may hit bottom and that might right as well.

    Ross Clark also feels a test of the low is a buy point.

    Looks like we are close to a bottom.

  401. Felix Felicissimi

    Alex,

    Someone correct a learner please, but since UUP is a leveraged derivative of the dollar, you have to examine the dollar and not UUP for prediction…No?

  402. basil

    Mr. M,

    it’s not ‘Gary against the rest’. It’s just me, I think, and I am not against Gary either; far from it in fact; just voicing my thoughts on the matter.

    And to your last comment: That were entirely true if this blog wouldn’t entertain short term trades.

  403. William

    USD is at 73.71, the previous low was 72.69, we are certainly a lot closer to the low today than we were a few days ago, but no risk assets are confirming this move, GLD has been hanging out at 150 for 5 days now while the USD has dropped from 75.00 to 73.70 and the S&P has moved straight down for 3 days. Risk assets are not moving up when they should be.

  404. robo

    aklaunch,

    My trading positions are based I what I think will happen. I try and take all emotions out of my trading and save it for Football games. We do have big problems in this country and I don’t want the country to go to hell because I’m short. However, we have plenty of problems thats for sure, and even The Master Bubble Blower Alan Greenspan is worried.

    http://video.cnbc.com/gallery/?video=3000025564

  410. MrMiyagi

    Personally, I appreciate all the input and understand there are personal opinions based on trading styles and perhaps influenced by holdings. If are bull gold, for example, you will mentally disregard all the negative news and if you are a bear you will search out negative news.
    I have some SLV puts and although I see strong support for silver I think (hope) that it will go down at least a couple of bucks. If I had calls, I’d probably think “US$ is going down, it has no support”.

    The main mystery to me is hw the hell does NFLX keep going up?

  411. Dan

    Seems we may be selling into the close…that would be a positive sign for those shorting and it would get rid of those ugly tails on the charts.

  412. DG

    Basil: Just for the record, I think your questions and points have been fair and your tone has been respectful. Every newsletter writer/blogger has biases and styles (like every other human being) and they need to adjusted for. Gary speaks strongly and in absolutes (“charts are worthless and chartists brain dead,” “no one can pick a bottom,” etc.) Just take what is worth taking and leave the rest. Mentally delete the adjectives and go for the meat. There’s is a lot he has to offer, I believe. I now subscribe to DOC as well, for counterpoint within the same approach.

  414. Haggerty

    DDnf3
    the reason I like Gold is because it’s close to it’s all time high, don’t get me wrong I have some exposure to silver but Gold is more heavily favored in my puts.

  415. basil

    Thank you , DG. I agree and will keep trying to filter out the meat. I am also considering a subscription to Doc’s newsletter.

  416. wingwalker

    Anybody get anywhere with Stockcharts? I haven’t heard anything back on my question regarding commodity service. Anybody have any other good chart services? or ideas?

  417. wmp

    None of you have mentioned the vacation barometer…seems, this year anyway, when Gary’s been gone bad shit happens… I predict an eventful week!

    To Gary and all of you SMT’ers making the trek, have a great time and a safe trip!

  418. Gary

    Just to be clear, because this seems to always be taken out of context. I think charts by themselves without any other tool are mostly worthless. You will almost always miss the big turning points.

    And I don’t think anyone will consistently pick bottoms and especially tops no matter what system they use. If they could they would be a billionaire within a year.

    DG has said himself that he wins about 30% of the time. So that means he’s getting the tops and bottoms right about 3 times out of 10. Not what I would consider consistently picking turning points.

    Now that being said one can still make money even if they only get 30% of their calls right if they have excellent risk management.

    So let’s be clear about what I said and not take it out of context.

  419. rose

    DG and basil,

    Hello! Am new here and trying very hard to keep up with the discussions. Some abbreviations and references are unfamiliar to me. Among other things I would be glad to know what DOC’s newsletter is.

    With thanks in advance and with kind regards,

    rosegardener 🙂

  427. aklaunch

    MrMiyagi!!

    I have been eyeballing NFLX for a couple of days to. I wish i had the funds to blow and the cojones to buy a bunch of Sept. 250 puts but i am not man enough. They are like 13 bucks a share.

  430. MrMiyagi

    aklaunch,
    I bought this at 180$ and sold at 205$, a handful of shares and small profit. At that time i thought it was overvalued but I was wrong!
    This has got to be one of the most pimped-pumped and possibly eventually dumped stock in recent years.
    I just don’t get it, they keep talking about foreign expansuion but here in Canada where I am limited to 20GB and each movie in their pathetic lineup is 2-4GB, there are very few subscribers but a lot of “free trials”.
    I’m not interested in wasting good porn bandwidth.. uh I mean stock market… band..width.. yeah.. on some crappy movie that is part of the very limited offering.

  431. Cool_Loser

    Gary, Aside from your website, is there any more information on Gold’s A,B,C and D waves for those interested in learning more on the subject? Thanks.

  432. Wav_ridah

    PCLN is another to look at. It took a $100 haircut last summer when it was around 260. It’s above 500 and looks to have broken its trend line.

  435. MrMiyagi

    Allright kids, MrMiyagi better get down in the basement and continue renovations so that MrsMiyagi doesn’t crane him. Prefer wax on wax off…

    Enjoy your weekend folks.

  440. Cristian

    “The last daily cycle low occurred on May 25 at 1311. The move today violated that pivot.”
    Thanks Gary. And I assume that May 25 was a pivot due to the fact that the LH on May 19 was taken out on a closing basis on May 31? Got to look into cycles a bit 🙂

  442. Haggerty

    Cool L
    If it does what Gary said is a possibility in last nights report, I will get out close to that level and wait for a bounce to re enter, and be very happy about it. But I bought Julys to be safe, my guess is close to 1500

  443. Dan

    This frustrating back and forth, going no where, action is very typical of the summer doldrums. I think it will continue with a downward bias. We must remember corrections are not only in price but also in time. It is meant to weed out the new guys with the lack of action. I think in the next couple months the chatter on this board will also slow down considerably.

  445. Natanarchist

    @Hot Rod…you crack me up…me thinks you are looking for a reason to be bearish on Gold. Must be you are betting the short side. What do you see in the COT that leads you to believe it is SUPER bearish? It certainly was not last week at least based on the blees rating. You posted a long term chart of gold the other day, fretting about how gold was going to crash to negative numbers (-ok I am joking about negative numbers part). here is another look at a long term chart of gold. Just like when gold left $35.00 behind and NEVER to be seen again, Gold left 300.00 behind and most likely 1000.00 behind and never to be seen again.

  449. DG

    Gary: Fair enough about “charts by themselves” but cycles by themselves are also inadequate which is why you use sentiment. Each technical tool is virtually useless completely by itself, which is why no one uses just one. But you don’t say that consistently about the others. If your bashing of chartists leaves what you call a misimpression, it’s not surprising. If you say “GET OUT OF STOCKS RIGHT NOW” and then later say, “what I meant was just…” that will also leave a misimpression. You can go back and quote the tiny disclaimer but the way things are presented matters. Perhaps that’s why there have been a number of miscommunications of late. A carefully used caveat here and there and less certainty in the adjectives might reduce them. I have learned what to filter, but maybe all these misimpressions are pointing to something. Could be everyone’s an idiot, or perhaps a change is warranted…? Just a thought. Really, just something to look at. Or not if you don’t want to. I’m a problem solver by nature and thought this one could actually be solved.

    Have a great weekend. I hope things resolve next week for DXY!

  450. Natanarchist

    DXY…haha..you know, it is different this time. Up until a few years ago around 2008, Central Banks were sellers of gold. Washington agreement etc…that is not happening and will not happen for the foreseeable future. Now that does not mean the folks at the Crimex can’t manipulate the price to some stupid level for a day or week, but this isn’t 2008.

    Banks still have financial weapons of mass destruction on their balance sheets. Gov’ts are broke. The whole world is diversifying into Gold as the superior currency. not dollars. And ya know what is great. an ounce of gold is still an ounce of gold. But a dollar is now a piece of shit.

    Folks you can’t be fighting the whole world and expect to survive. War has bankrupted and destroyed the American Empire and American dollar hegemony. Your leaders and their propagandists in the media will have you believe different that its SS and medicare (yeah there ponzi schemes too) but nothing compared to the wealth destruction of war.

    Gary, Doc, or anyone else, a question. I think gold will trade above 1650 and even 1700.00 by the end of the year 2011. Seems to me one of the drawbacks of the cycle is using the dollar as the anchor…or let me put it this way…people have now waking up to the fact the earth or dollar, revolves around the Sun or Gold and NOT the other way around. 70 years of obfuscation has come to an end. Therefore the dollar or fiat currency cycles would be altered.

    Just a thought.

  451. jeff

    wife’ 401 is sitting in cash. I cant wait for her to start asking when to put it back in. of course she might not ask till 2013 =)

  452. Hot Rod

    My observation of the Gold COT was a declining OI and small specs going long (rather aggressively), which are normally wrong way players, as well as bearish commercial sentiment direction.

    I am not short gold.

  453. Gary

    Nat,
    Hard to say at this point. I would think that a dollar rally brought on by a whiff of deflation would be the best opportunity for a D-wave type decline. But I think Doc is probably right and we won’t see gold drop below the last intermediate cycle low.

    Perhaps we do get a powerful surge this fall into a parabolic blowoff top.

    I know we need those scary D-wave corrections if gold is going to keep Joe Sixpack off the bull. We haven’t really had anything like that in over three years now.

    Unfortunately the last spike was pretty modest so the correction should be mild. Not really what I’m looking for to put fear in the average guy.

    At some point we need that parabolic move and the collapse that always follows. Silver just did it but now it’s being propped up by strong gold prices.

    I know everyone would like the bull to just continue higher but the best thing for the bull would be to shake everyone off. The bull will ultimately go much further if it can continue the ABCD pattern.

  455. Ben

    jeff, my wife never asks; if I tell her, her eyes glaze over when I say, “Your 401k…zzzzzzz”

    It would be easier if we did point-counterpoint with our (my) investment choices. Oh well, that’s what Gary/the blog/other forums are for, eh?

  458. Ben

    Gary, the thought does occur to me every day I see continued strength in gold that maybe, just maybe, it did shake everyone (us) off.

    At the same time, I am fully aware of the declines of the $US and the lack of punch in gold. I still believe it’s best to be out right now.

    Can’t shake those doubts that I’ve been shaken out, though. We’ll see soon enough, I suppose.

  459. Natanarchist

    thanks for the thoughts Gary. from 2008 lows until about month ago, i always thought i would sell all my trading positions around now and let a d wave takes it course and then do the whole cycle again. I am still long both gold and silver, albeit at very reduced levels and strong hand. I don’t know yet if i will sell these or just keep them and add some more this summer. We could we be range bound in the PM’s for the summer. 1450-1550 in gold, 30’s for silver….with maybe a spike down to 29/28 and perhaps a spike above 40. That would probably keep many OFF the Pm’s and allow a another base for a good spike in the fall.

    Something else I was watching, Platinum and Palladium seem to be holding up well.

    It took you a year and a half to drill old turkey into my brain, I just don’t want to give up all my positions..because well its a bull market and surprises are on the upside.

  460. Last Shadow Rider

    When we first entered the gold trade Gary said the target would be 1550 to 1600. Well guess what happened? I should have gotten out after we went through 1550 and came back down to 1550. The Euphoria stage of the market cycle caused me to go for more. Bottom line is, if we did get shaken out, I still made the most money I have ever made on one trade. 😉

  461. Gary

    Ben,
    I’m confident that gold will drop into an intermediate cycle low but it’s going to do everything it can to convince everyone that it’s going higher so it can then drag the everyone down and then kick them off at the bottom.

    The gold bull is one sneaky SOB.

  462. Éamonn

    Gary, have you any sense that today’s employment numbers were a blip (maybe due to Japan?), and that next month’s figures will be better?

  467. flaunt

    Gary,

    I’ve been thinking about how you say you like to wait for high probability plays. I know it’s impossible to say with certainty, but when do you think you’ll have an edge and get that confidence again?

    Thanks.

  469. Harry

    I’ve been saying for about 6 months now that when NFLX gets to $275 I’m going to take out a massive short position just for fun. Well, time to put my money where my mouth is…

  472. flaunt

    Shorting NFLX seems kind of risky to me. Sure, it’s a high-flyer and might get drawn down in a broad market crash, but it’s not necessarily a bad stock for a depression. It’s entertainment on the cheap, and is actually more likely to benefit as people stop going to theaters and start watching movies at home. Also, I know people who have already ditched their cable in favor of Netflix.

    In fact, if there were a big crash in NFLX I would be tempted to buy some.

  473. Harry

    That was mostly a joke. Really I saw NFLX as a bellwether for an overbought stock market and I saw the $275 area as a probable target for a top – looks like I was pretty close! I don’t think I’m going to short any individual equities. I may take a small short position in the Russell 2000 if we get a bounce. We’ll see.

  476. Brian

    Basil, I think if you had been around for more than a little while, you would have been very surprised at how accurate Gary’s long term cycle calls have actually been. I can provide some historical data that I stored for reference, but you are arguing against a man that has this dollar/metal market synchronized very tightly.

  477. Natanarchist

    Hey Gary and Trackers, particularly American trackers in Swiss land…three questions:

    1. Can you ask the Swiss citizens if they are “worried” that their neighbour might, and most probably has, a firearm, GUN, in their house?

    2. If they were forced to choose, would they put their wealth in Gold, Swiss francs, Euro’s or US dollars?

    3. After you go through the drive thru, it is appropriate to throw your trash, garbage, waste, etc on the street?

  478. basil

    Brian,

    I see that somewhat different. Of course, you might be around much, much longer than me and therefore have a better insight. I have been around here for 1.5+ years, long enough to see what has worked and what hasn’t. I don’t think I make any more or less of it than what it actually is. An analytical tool that some times works on a blog that some times gets it right; so far and as long as I am here it’s gotten it right on PMs because of two things: PMs are in a secular bull market and how wrong can you really get it (lots of PM bulls got it right without knowing a thing about cycles)? And secondly, Gary recognized the C wave ins and outs rather well and then stuck with an unwavering strong hand (which was great, I thought). That’s the facts in my view. No more no less.

  479. Gary

    Flaunt,
    There was nothing wrong with stockcharts data. That was nothing more than an lame excuse for why they pulled the candlestick charts.

    They simply didn’t want to pay for data feeds.

  481. gilbert500

    Could anybody try to whats going to happen to Gold the following week, there a lot of different opinions about.

    Any suggestions ?

  482. Gary

    Gilbert,
    Gold is due for an intermediate degree correction. They come like clockwork every 20-25 weeks and have for years and years.

    It’s been my experience that intermediate tops last just long enough that everyone becomes convinced this time is different. At tops we find all kinds of reasons for why it’s different this time. It never is. Then once everybody is on board the correction begins.

    It’s also been my experience that intermediate corrections drop far enough and long enough to kick off everybody that bought the top and are scary enough at the bottom that very few people are able to pull the trigger and buy.

    We are currently in the topping process. Gold is trying to sucker everyone back in. Once it does down we will go until everyone panics out.

  483. 86d4life

    Nat,
    I thought I`d heard at sometime that gun ownership and training was mandatory in Switzerland? Every home has to be armed? Something like that. And they have one of the absolute lowest violent crime rates of any country in the world.

  487. Harry

    The stockcharts.com situation is disgraceful, but I really think we’re all smart enough to improvise with Microsoft Paint.

  488. Shawk

    In TOS, if you set up your chart within the “Chart” tab and not the “Trade” tab and you use the Chart section (not Prophet or Flexible Grid), then you will notice on the upper right buttons there will be a tiny button that looks like a printer in between the “symbols” and “reset” buttons. Click on that you can “take picture” opening another window and at the top you get an option to save the chart as a PNG graphic file that you can then upload to the blog.

    Also on those charts, you can change styles, edit studies and use drawings. In the drawings area of course you can add trendlines, pricelines, etc. There is an option for “text note” that should allow you to annotate.

    It’s cumbersome, buggy at time and not very intuitive, but could get you buy for the time being.

  489. Gary

    Thanks Shawk that helps alot.

    One question is there a way to add empty time to the right side of the chart?

    So I can draw in expected trajectories?

  490. Gary

    Never mind I figured it out. I think I will be able to work with TOS charts, although at a somewhat diminished level.

    Stockcharts just lost my renewal.

  491. thedocument

    Shawk,

    I second the ToS endorsement. I was messing with it all day yesterday and interacting with live support to get questions answered. The platform is clunky and a little more time-consuming, but it will serve the cycle-charting purpose until stockcharts.com loses enough customers to come to their senses.

  492. thedocument

    Oh, and by the way Gary… there is an option under the Drawings menu to save your charts so you can come back to them and update annotations later.

    Have a safe trip…

  494. Rob L.

    Gary,

    you are looking for the ‘right expansion’ settings.

    At the bottom of the chart there is a button that has a left/right arrows. click it and it will let you set a time frame.

  495. pimaCanyon

    Gary,

    Stockcharts has dropped the candle data for continuous contract futures, but what about the current active contract? Those won’t be good enough for very long term studies, but should be fine for charts with a time frame of a year or less, maybe even two years. You’ll just need to start using the active month for gold futures, silver futures, and the dollar index.

  496. pimaCanyon

    Gary,

    Have a great trip!

    Post some pix if you can. Wish I could have joined you–maybe in a couple of years of trading using your analysis I will have made enough money to afford a trip like that!

  497. Bruce

    Gary,

    Check out the 5 year/monthly chart of Gold; looks like a nice high’n tight bull flag that has another leg up left in there, no?

    I may have to dance with the devil, yet again.;)

  500. Frank

    I have just sent an email to [email protected] demanding them to restore the candlestick charts ASAP.

    Hope everyone reading this blog and having a Stockcharts.com subscription can do the same. Thanks!

  502. Rosabarba

    ak,

    It seems the more relevant trendline for the $USD monthly connects the Nov. ’09 and ’10 pivots. That line resides above and has yet to be tested. Personally, I think the jury is still out w/r/t a sustained shift up in the dollar.

  503. Rosabarba

    Addendum: There is also the descending trendline from the 2010 high that has contained the upside for the dollar for the current calendar year.

  504. Ben

    aklaunch,

    I believe in the cycles for the dollar and other commodities, but a triple bottom being bullish… no. That ignores trillions in garbage backstopping and outright printing by the Fed. Game changers coming our way soon: accumulation of gold by central banks, esp. China, India, and Brazil; QE to infinity by the US; the dollar losing it’s singular reserve status (definitely within 7 years, probably transitioning away via a basket within 3-4 years).

  505. Gary

    The thing is the world is now in a deflationary environment since 07. The Fed is fighting that by doubling, tripling, and quadrupling the money supply. Whenever the Fed takes it’s foot off the gas deflation comes roaring back.

    In the coming months the Fed is scheduled to turn off the presses. Europe on the other hand is going to have to crank up the presses in order to rescue Greece, Portugal, Ireland, Spain and probably Italy. That will tend to depress the Euro.

    That along with a whiff of deflation should cause the dollar to rally this summer.

    Ultimately though the dollar is doomed. We’ve run up debts so massive that we can never service them. Once the next recession starts tax receipts will collapse again.

    At that point the government will have no choice but to either default or print just to service the interest payments on the debt.

    We are on the path to hyperinflation unless we at some point make the tough decision to default and suffer through a deflationary depression much worse than the thirties.

  507. Gary

    Either that or eventually a hyperinflation. One way or another we have to rid the system of 40 years of debt.

  510. SF Giants Fan

    Gary

    Hope all goes well with you and all ur guests and everyone has a great time. Hope ur going to take a break from the blog and SMT premium for a couple of days. I mean u are on vacation …

  512. Ben

    Éamonn, yes it is that bad. No country/empire in history has recovered from a 95% debt to GDP ratio, and we are pushing 100%. Include shady stuff from that Fed and we are probably much higher; and further include the GAAP style accounting, and our obligations absolutely dwarf receipts. And this is all without an uptick in interest payments thanks to reserve currency status (print up dollars to pay interest). They way out was years ago, the kicking the can down the road has made the situation impossible to resolve the way you’d say pay off your overpriced/underwater mortgage — it’s like trying to do that when you’ve lost one of your family’s two jobs. Ain’t gonna happen, default through inflation and likely through curtailment of the benefits people have been promised (another nail in the coffin of the economy over the next ten years).

    Keep in mind we are doing that just as other country’s central banks run a surplus and are buying gold for future stability — India and China esp.

    There’s simply no expanding industry in the US — people going forward will be spending about 1/2 of what they spent two years ago in real terms, and that will occur in perpetuity. It’s a regression to the mean not unlike what happened to England going forward from the 30s and 40s as the US began to eat their lunch. Now the baton is being passed to the Chinese right when we’ve racked up incredible debts and obligations on projections of a future which cannot come to pass in real terms, only deflated dollar terms.

  515. aklaunch

    Yeah…. Thats depressing.

    I know just the cure!! I have full chicken on the grill and a nice bottle of Oregon Pinot Noir.

    For all you guys off to Swissland have a good trip!

  516. Harry

    Gary, is it possible we’ve already put in a new daily cycle low for gold? The previous one stretched long so wouldn’t it make sense that this one only lasted 20 days or so?

  517. Gary

    Well unless you think the cycle low occurred on day 8 I don’t see anything that looks even vaguely like a daily cycle correction yet.

    It’s only day 20. The normal duration is from 18-28 days. So gold has just now entered the timing band. It could drop for 8 days and not even be a stretched cycle.

  518. Ben

    aklaunch, one of the best bottles of wine I ever had at a restaurant was an Argyle pinot noir, at the Canlis in Seattle. Excellent… it was a few years ago, and the wine steward helped us choose from a number of Willamette Valley pinot noir wines. He thought there were better ones, but some were well over $100. That was $42, plenty for our special occasion.

  519. jeff

    gary
    so if we get something that looks like a daily cycle low within the timing band, will we go long ?
    where are we at with the d-wave? is it still comeing?
    it seems everything is in neutral and sideways?
    is it possible to stay sideways and not get a correction, more like a relaxation ( which is stressfull i find )

  521. Sky

    This is my first time leaving a comment and really appreciate everyone’s postings – this is a great forum.

    Gary’s weekend report said Gold was getting ready to move into a cycle low, but not until the dollar starts to rally.

    I always thought that when the dollar is weak PM are strong? What am I missing…

  522. KAL

    Usually dollar up = PM’s down.
    Dollar down = PM’s up.
    The dollar’s value has a huge effect on the price of gold, since gold is priced in dollars. Dollar more in demand or more valuable = gold is cheaper since you have to buy it with dollars. Simple and very generalized but works for me.

  523. Gary

    Jeff,
    gold needs to have at least one daily cycle failure before an intermediate decline can begin. Once gold drops into the current cycle low then we should see one more full daily cycle down before the intermediate bottom.

    Just be patient for another 4-6 weeks.

  524. jeff

    Gary
    Thankyou
    That is what I was understanding, but bits and pieces along the way were throwing me for a loop. Got it =)

  525. Haggerty

    Sky the only thing that your missing, is that your not missing anything. Reread what you wrote. Gold has been holding strong lately because of weakness in the dollar.

  531. 86d4life

    Nope. Seasons done. This seasons catch is ready to go to the tannery. It`s Garden time. Everything has a season, just like the markets. Next comes wild rice the first of Sept.

  536. Éamonn

    86d4life, nope, no EUO calls. Currencies fluctuate a little too much for my liking. They are very sensitive to geopolitical events

  537. Harry

    Gary, I’m looking at the GC contract and counting from the May 5th low. There was a swing high on Day 18 topping at $1551 and then the bottom on Day 19 at $1520. That’s within the timing band, no? I know it’s shallow on the chart, and I generally prefer to leave the cycle analysis to you, but I thought I’d at least propose it. Wouldn’t it make sense combined with the long cycle preceding it and with your idea in the weekend report of one last push higher this week, making the new cycle left translated?

  538. ...at ease

    Dan,
    Why would we be counting our losses shorting?

    86d4life,
    I think it’s just a busy weekend, and Gary is traveling. We should give him some down time, at least enough time to get from one continent to another. 😉

  540. fat boy

    Phew just arrived in UK, sure looks as if austerity is in vogue. London next tue, wednesday
    Then home to sunny Nevada
    Funny a weak dollar has not led to really strong GBP

    I have been trying small options positions (puts calls) hopefully get to grip by next c wave
    Good luck in Switzerland, chance of Matterhorn climbable < 5%

  544. Haggerty

    BTW I caught up on the blog when I was away and loved reading CMT and Miyagi and how they did without and saved and still drive an old car because it runs. I am doing the exact same thing now hoping to get there someday. I am just as happy throwing a couple of burgers on the grill and drinking a glass of wine, then blowing a few hundred bucks at steak joint. I also have 2 cars well over 10 years old and they run great.

  545. 86d4life

    Like the Ramsey Mobile. I thought he was really the man until I heard him putting down gold. That`s when I KNEW he was working for the other side. 🙂 From the people I know and see, the one thing to me that is in escapable is that the mainstream public has no concept that all the problems we are having now are based on debt. The general public is all about shop `til you drop and blow the wad. The majority of people choose to live with their head in the sand.

  546. Gary

    Made it to Zermatt. The view of the Matterhorn out my window is absolutely stunning.

    Of all the years I’ve been trading gold It’s never missed an intermediate decline. And every intermediate decline was severe enough to make most people question whether the bull had ended.

    I don’t see why this time would be any different. Just be patient and sometime in late June or early July we will get or buying opportunity.

  549. robo

    Still holding small positions in UUP – IYR and VXX.

    Good trading to all this week, Bulls and Bears.

    BUY U.S. DOLLARS NOW, AND HOLD FOR 2-3 YEARS (June 5, 2011): The U.S. dollar has become an extremely unpopular currency worldwide. Some are obsessed with huge U.S. budget and trade deficits. Others are aggressively shorting the U.S. dollar on margin in order to buy numerous risk assets including silver, crude oil, and S&P 500 futures on margin; this is known popularly as the “carry trade”. Still others are convinced that the U.S. dollar will collapse as hard assets such as precious metals will soar in price. Some are concerned with how QE3 and other actions by the U.S. Federal Reserve could erode the value of the U.S. dollar. Recently, the respected Market Vane survey showed that only 7% of investors were bullish toward the greenback.

    http://truecontrarian-sjk.blogspot.com/

  550. Haggerty

    Poly
    I was thinking about taking a reasonable position in some Aug puts a little out of the money on the qqq and S&P. What do you think of that strategy?

  551. ...at ease

    Gary, Enjoy the crisp clean air up there! Don’t let go as we need you back! Have fun all. Look forward to hearing of your adventures.

  555. DG

    Those of you who shorted on the cycle low break now have about 20 points in SPY. That’s strong hand status. My strategy is to just hold until break even or a much larger profit. We should be down nicely over the next few weeks. Don;t take a tiny profit as it will be hard to add. You can add to your short position on the next sharp up day so long as the add on is not more than about 1/2 of the original stake.

  557. Poly

    Haggerty,

    Sounds like a good strategy, I went with Sep as they should easily cover the entire equities IT cycle, with a little room.
    You would need to be mentally prepared to show losses for a little while, no reason the market doesn’t try to buy a dip sooner or later.

  563. DG

    Daniele: I mean whatever your execution price was for the short. If I have a position that gets well into the black I place a stop at my original prices so I do not let e profit turn into a loss. Playing with “house money” (your profit) creates less pressure to over-trade and get out on a rally. Then cover at the next cycle bottom rather than just because we bounce of a day or two.

  564. ...at ease

    Ben, I can relate to your wife’s response of 401 zzzz. My hubby, has a similar response anytime he asks me if he is making money and I answer him in Gary lingo. His hand goes up and says I have no idea what you are talking about. So I have learned to just say, money is in holding pattern, or ready to make more, or no, it’s actually dropped, but will be back up soon. He only wants to hear $$$$s are being made. Other than that, doesn’t want to hear anything else. I am beginning to think it is what 75% of the population thinks about the stock markets. Is it making me money or taking my money? That is all they want to know. Guess it’s the rest of the 25% who are asking why…

  565. MrMiyagi

    DG,
    Good reasoning about not taking tiny profits but sometimes it’s hard to sit and watch and wonder if it would turn the other way like silver did in early May….

  566. GGuy

    Does anybody know where i can find hourly data for spx or ES future. Just need 2-3 months back.

    Thanks in advance.

  567. wmp

    I can’t remember who it was.Someone suggested a short strategy of buying puts in a long fund rather than calls in a short fund to reduce slippage. I’ll use SSO as an example..buying puts in SSO as opposed to buying calls in SDS. Does anyone recall that or have comments? Thanks in advance.

  570. DG

    Mr. M: Silver turned because it had been crushed. If the SPX drops 800 points in a four days it would be worth covering! IMO, people generally cover because they get nervous not because there is any reason to cover. No one goes broke taking a profit, but people do go broke taking small profits so they can feel good and say “Gee. I made a little something” because the small profits are not enough to make up for the inevitable losses.

  571. traderlady

    AT EASE, I think so. Yourself, Ryan, and I started here at the same time.
    I look forward to the “A” wave. I looked at Google Earth at where GARY is. It looks so exciting except the meal tab.

  573. Ryan

    traderlady,
    I’m kind of in the same mode. Vacation trading mode that is. I never was good at shorting so I’m still out and just waiting. If we do get a big sharp rally, just MAYBE I’ll go short but it’s probably best for me just to wait for the a-wave. Did you end up taking the short trade?

  574. ...at ease

    Trader Lady,
    I only have 2% invested in PUTs, the rest is cash waiting for the A wave also. Would rather enjoy my summer and time off from watching that gosh darn dollar twitch. I didn’t realize you started in Feb also. Looking forward to starting at the bottom of a wave all in. I understand you are in Sarasota? I hear it is real nice down there. Do you enjoy the summer months also?

    I had to laugh when I read on Gary’s latest post he would not be up at the wee hours of the morning partying or posting. From what I remember those are working folks in Europe and it will be more like MO than Vegas with most of the action going on during the day. It is beautiful there and I am sure he will enjoy the Oompah atmosphere.

  575. traderlady

    Ryan, No I have not shorted yet. Bad luck in the past. I know to short
    on a rally so I listen to DG and SB and Gary of course. I know we will make $$$ in the fall. Last summer was not worth the general stock market, IMO.

  576. traderlady

    AT EASE, Yes, great golfing right now,no crowds and many deals. I am up to 4 times a week. Then by August too hot and winter, real pricy.
    Enjoy, VA, I have a daughter in ROA and fly there in Oct. Take Care:)

  577. ...at ease

    Ryan and Trader Lady, I am in learning mode and only shorted what I was willing to lose in PUTs. I have to agree, right now, you are better off waiting for bottom of A wave, as I see a lot of red lately. Mostly learning how this will play out and learning patience. I will let you know if I think it was worth the risk or learning experience and if it turns green. Short in SLV, GLD and SPY, QQQ and IYR PUTs. I had Calls on GLD, GDX, GDXJ and wish I had held a bit longer, remembering Gary is early on his tops. But moving on to learning about PUTs.

  578. pimaCanyon

    at ease,

    I agree with you re the markets and most of the public. But I would guess it’s more like 95 percent who don’t want to know the details, just tell me if I’m making money.

  579. 86d4life

    Jeff,
    Your right. There is something almost Fibinocci like about the 85/90-15/10% ratio that aplies to many areas of life. I have never heard or read anything on this, just what I have experienced. Maybe a human nature gene. Many mysteries out there.

  580. ...at ease

    Hubby wants to move to Villages for golfing, please tell me where else we can go in Sarasota, or FL that provides the same all he wants golfing. I need water, I just can’t picture myself inland and there (My visit there was surreal watching oldsters riding everywhere in their kiddie carts). He is adamant that this is what he wants and having followed him around for 39 years, I am holding my ground until I know for sure, there are no alternatives that we can agree on. I have heard your area and Naples area is nice. Our home is in Fairfax, VA (not there much right now, that he works in London). Hubby went to Lynchburg college and I remember the Roanoke area was beautiful, and we had Smith Mountain Lake property that we sold to buy the house in Fairfax 15 years ago as we realized we would not end up back down there.

  583. jeff

    Don’t want to know
    If I want a deer caught in the headlights look,I just mention gold or the market
    I should start taking pictures after I try to bring it up
    That would be funny ( or sad) suff

  585. Romeo Bravo

    WMP, you buy puts in a leveraged long fund for example, TNA, because it has natural decay. Even on a “go nowhere day” the leveraged fund will still decline. It can be better than buying calls in a leveraged inverse fund because you need the market to decline and do with force each day or your call on that fund will lose on “go nowhere day” Make sense?

    Remember, options can kill, and be careful if you are a rookie!

  586. Shalom Bernanke

    Hi traderlady,

    Things are great, thanks for asking. 🙂

    I’ll definitely chime in when I take a position, but have not as yet. Stocks look like they’re making progress in an overall topping pattern, but unlike others here I don’t expect a straight fall from here. I’ll short into a bounce (maybe to the 50 day MA, or an overbought oscillator), but not right here, even if I miss the trade.

    I’m also getting my strategy ready to start buying miners again, though that should be several weeks away at least. It’s possible I do a little nibbling before then, and I’ll post if I do.

    Good luck fellow traders!

  587. Shalom Bernanke

    In fact, I will likely start buying miners into further sharp breaks if they occur with small size and VERY wide stops to weather the volatility.

    I like some prices I’m seeing but just don’t feel like they’re resuming the uptrend anytime soon, so no since being early with the bulk of my intended positions. Investing something like 4-5% of overall capital each week might be appropriate.

  588. ...at ease

    Jeff,
    LOL, It doesn’t even have to be gold. I was there once also and had a long way to go to learn more. I didn’t realize how much I didn’t know until I started reading and said, OMG, this is going to be a lifelong learning process. I had no choice in the matter, I had to learn out of necessity starting with Erisa law after I discovered my employer stole my 401 funds (contracting work). I had to take them to court to sue and get it back into my account before they went out of business. Then the 2008 downturn took a big chunk out! Last year I decided it was time to take charge and do something to grow those funds (what was left). I still feel ignorant, however I feel I have excellent guidance here on SMTP. Hopefully we all come away much more learned on cycles and the market. Patience seems to be the key here.

  590. ...at ease

    PC,
    I would agree, 95%, I probably underestimated. I have learned more here than I did in the last 3 years reading on myown.
    My husband has a friend who has a whole lot more money than I do and has a broker who trades for him. He asked my husband to ask me if he should allow him to trade on margin. I just told him, that I was not the person to be asking, and suggested he read up on trading on margin, as I personally won’t do it at this time.no position to advise him. I don’t manage his funds and I certainly wouldn’t know how much he is willing to pay in fees or take on in losses.

  591. traderlady

    SB, Thanks for your comments.

    AT EASE, The Villages do offer a nice package to check them out. I think you would like Sarasota and hubby can do plenty of golf and leave you be.
    Palmer Ranch to me is ideal. Close to the Gulf but a nice distance if there is a storm. Very close to Siesta Key beach rated tops in the country and one of the best in the world. It is pure quartz sand. Near many golf courses and 2 golf communitys within it. Sarasota Sq mall near my by with Imax.

    Real estate on sale here big time but people are buying from the rough winters North. Can check it out on Google Earth. Go to Central Sarasota Parkway to start.

    Jeff, LOL

  592. Ryan

    At ease,
    Thanks for the update. Smart to go small in size to learn. I think when I did short, I went too big and freaked out and couldn’t hold on.

  593. DG

    At Ease: Tell your friend “NO!” It’s bad enough he is letting this guy trade for him, but on margin would be nuts. I was a broker myself and I know how the industry works. Most of the guys are honest but there is a built in conflict of interest. The broker’s interest and your friend’s are not in alignment. The broker makes money on every trade whether profitable or not (unless there is some special arrangement.) Letting him go on margin may eventually wind up in a blown out account. Just MO, but I would never let someone trade my money with leverage. One bad mistake and it’s bye-bye account balance.

  594. ...at ease

    Trader Lady, We went down in February and toured on our own. Met up with a realtor who just wanted to sell us a place. So didn’t get to enjoy the amenities. I have suggested to my hubby we rent before buying or as you suggest take the tour they offer in October when we are back in the states again. Hubby was enchanted, I was a bit more put off from it all. I would prefer my own pool, not 62 pools and clubhouses and 27 golf courses. I guess I prefer quaint. Seemed to be overkill to me. Like Disney land for seniors. I just couldn’t picture myself living in Disneyland. We are looking for mainly the winter months, however if I found a nice place to live, I would move there permanently since we travel a lot anyway. I will definatley check out your suggestions. Thanks for the input on the area, I have heard great things about Sarasota.

  595. ...at ease

    DG, thanks, I will pass that on to my husband to let him know exactly what you said. Much more forceful of a “no way” than I did.

  603. Poly

    Wav,

    I “was” invested for a double top or slight break to new high’s, but when it dropped last week so late in the daily cycle i cashed my chips. At this point I have no opinion, to late in the cycle for my liking. i don’t buy a new daily cycle formed. Even if true, the IT cycle low is on the horizon and it will soon drag gold down. That said, I would never short gold, ever.

  604. Poly

    Eamonn,

    Waiting for the market reaction to this oversold and over bearish condition. If we don’t get that, then at least further confirmation that we’re going to hell!

  611. MrMiyagi

    GLD SLV seem like they have run out of steam. GDX is in need of CPR…

    It feels like one more blip up, maybe at the open tomorrow, and then down for a while.
    This is just my take.

  612. Michael

    Heads up on the shorter time-frames (not to influence the strong handed positions!) and those looking to board the bus: Good chance of run back into 1310-1315 ES confluence zone this week if 1290 holding – market is very short here, crapped the bed last week and bowels look emptyish here …

  613. sophia

    DG,

    Could I ask you for your expertise? For the Bollinger Crash, do I take the daily charts, apply BB ( 10,1.9) to it and see if the close is below and the RSI (5) is below 30?
    I was trying to apply it to the DAX for a quick trade tomorrow morning…
    Thanks in advance

  615. TommyD

    Anyone,
    If one cannot short QQQ and IYR directly are there any 1X ETFs to use for real estate? SRS is the only one I can find and that is a volatile 2X.
    PSQ looks to be the thing for shorting QQQ 1X though…
    TIA

  616. EricH

    Again, if there are new highs coming in gold, then why is the miners breaking lower again.

    Anyone shorted this morning pop?

  621. Ollie

    The ZSL chart looks bullish to me as it is a small range low volume candle

    If the dollar is about to turn up it would put pressure on silver

    However I’m not sure about shorting silver…

    Anyone looking at ZSL?

  622. DG

    Sophia: The BB crash trade doesn’t use RSI as it stands alone. You buy when the item closes below the lower BB and sell when profitable or after two weeks whichever comes first. I never trade based on this alone because when it doesn’t work you can lose a lot.

  623. ...at ease

    Jeff,
    Villages, FL or Sarasota? Inerested in any info, as I do not have a lot of knowledge of the FL area. Personally prefer ocean over anything. Any insight is appreciated. I know a lot of folks rave about the Villages, but I follow my instincts when it comes to lifetime decisions. And my instincts are telling me to run the other way!

  625. ...at ease

    Gann360,
    Are you originally from Turks and Caicos? Just wondering as I am intriqued to talk to anyone about moving to the Islands.

  629. Dan

    Nice move down in everything including PM stocks but gold and silver holding strong against dollar bounce. Quite annoying.

  637. ALEX

    whitebear

    I thought I was alone…I am thinking the same thing 🙂

    Still watching to be selective, But I expect a bounce soon, maybe reverses at the close..or gap down capitulation sell and rally tomorrow?? Cant tell, but I am almost getting a buy signal.

  638. Gann360

    well it’s an Island ,, great Beach great Restaurants ,Lots to do when it’s Sunny,,,, Not much when it Rains…..

    it’s not! a City…So at first my Wife didn’t like it,At All,, but, SHE Loves it Today,,,so go Figure…

  640. MrMiyagi

    A good chunk up on LVS put, itching to sell but looking at your chart Gann that you made for me makes me feel a bit greedy here…
    It’s only Monday, bad start to the week may continue down??

  642. niven

    isn’t it a bit dangerous to be buying calls on qqq now? the dollar is already in a timing band for a rally..if it moves up equities should fall even harder

  645. sophia

    I agree with Aaron,Alex and Whitebear. Will try to buy tomorrow morning for Tuesday reversal…At the end of the day, nothing new: the US will not create jobs, Europe is creating jobs despite Greece and Portugal disaster and we have a bit of inflation

  647. Gann360

    it’s expensive as far as Hydro/Water /and Food…..Example Tomatoes are 1-2 each,,Fish at the Market is Expensive as well, but i know a Fisherman ,brings inn Fresh catch daily at 1/3 the Price …

    Ask your self…..But would you rather Pay $1 or $2 Bucks a Tomato or 50% Taxes ?

  648. Wav_ridah

    Niven,
    Yes it is dangerous. Option trading will leave you broke when done incorrectly. I think we are due for an oversold bounce but if it doesn’t come I’m prepared to exit my position immediately. This is probably a 4 day hold for me at the most.

  650. Gann360

    No . my Kids are now 5-4-2 years of age,, there are great Private schools here ,but not sure how many More years i am Going stay Resident here,,, My Parents are getting older and starting to need more help ,,,so i will never sell my Condo, but , may have a few years left,,,

    But i love the Island…and so do the Kids

  651. niven

    well it does look like the bb trade will work just for a few days..good luck on your trade. I bought puts on qqq earlier but I plan to hold them longer… I think the S&P may be testing the march lows.

  652. Haggerty

    Dollar could be putting in a swing low here, I don’t know about buying calls here. Plus if this is the 4th day down in a row this could be seen as a 4 day rule right?

  656. Gann360

    I Manage Portfolio’s for Friends and Family & Swing and Day-Trade, and i own Property as well. Both Commercial and Residential .

  657. ALEX

    On the spy, there is still a gap down at 126 that may want to get filled before any meaningful bounce comes about…and even if it bounces then, the bounce may barely reach where we are now-

    So I want to be careful before I go long if I do get a buy signal and then take it a day at a time. I

    It may just be a nice oversold bounce to add more short positions.

  658. Poly

    Short term trades like that are great, for the guys that know how to milk them.
    Just keep in mind though, we should be entering the stage where surprises will come to the downside, for equities.

  659. Edwin

    markets still fearful. still another down day ahead.

    remember, gold/silver/platinum are currencies not commodities.

  664. Poly

    It’s not that the trade is not there, just saying that the good money is made following and sitting on the longer trend. If Gary/Doc are correct, which I believe they are, they have identified a significant trend break here and laying a case for a sizable move down into the next IT cycle low. Dedicating resources to this trend should be very rewarding, where as selling positions and reversing to play a short bounce is distracting and set’s one up to chasing the wiggles. IMO, of course.

  666. Gann360

    I Called the Top in Realestate in 2007 and the top in the SP-500/Dow Jones in Fall 2007. Called the low in March /09 but got the Bounce all wrong ,,didn;t think it would Rally 2 years Off the Lows…( and i lost good money on the Bounce )So at times this is a Bitch of a Way to make a Living..i did well on Silver rally ,and now waiting to see if Silver Falls once again…

    You need Discipline to be a successful trader.and leave emotions out of the equation .

  667. Gary

    Actually the rules for a BB trade call for taking positions at the open not the close. Although I think in the long run the results will probably be the same.

  668. ...at ease

    Gann360,
    Wow, so you can make a living from trading or investing properly. Good to know. I am in the learning phase, so even though I am not sure what I am doing, I am following Gary and Doc on trades and learning a little on my own, as we go. I thought I might like the trading side more, however I am learning to enjoy getting into a postion or letting the price come to me. Biggest lesson learned so far.

  670. Rosabarba

    MM,

    Bear in mind average volume for SLV will carry a huge skew as long as it factors in the parabolic move and crash. Volumes in the summer months also tend to be lower.

  673. ALEX

    Either someone hacked into Garys account, or he’s too excited over there to sleep!! Isnt it midnight??

  675. Cristian

    Due to Gary’s call, I thought I would try to chart the Dollar Index (DX) and see if a bounce might be due. I have a weekly chart going back to 1989 with Andrew’s pitchfork on it (don’t use any other indicators). It seems to get the price frequency fairly good. You can think of the lines as support/resistance, which is what they are. Chart shows that there could be a possibility of a bounce into the 86’s. I thought I would share this with you.

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

  676. MrMiyagi

    Rosabarba,
    Yep, I do see that, and the fact that the average before May 1st was around 35 million shares or so… Either we’re back to normal or neglect/give up mode.
    I do think that whover still holds SLV shares or calls is going to cash in soon and switch to something else. then when it goes back up, they’ll pile back on.

  677. MrMiyagi

    Finally sold my Disney October puts, modest gain about a weeks’ pay for most. Also sold my LVS puts, couldn’t justify not taking that 4 day profit.
    Disney was tenacious I’m glad they were so far in the timeframe but I had to wait 3 months for the profit. Tomorrow, of course, it will drop 2$!

    I think in the morning we can expect a bounce and maybe down afterward in the S&P and Dow. Don’t know about PMs or miners.

    Okay then, off to break my back and continue renovations 9for the next 3 months..).

    Thanks again for the insight and charts folks while I just spew crap!

  679. Supermalc

    If there was to be an S&P bounce tomorrow, and I wanted to add to my short position, where is the best point for me to do so?

  680. fubsy_cooter

    Noticing lots of breakdowns out there. Particularly compelling are the small caps, which have broken down from an almost perfect H&S formation. That in itself isn’t a big deal, but the combination of the S&P and Dow closing handily below the April lows and showing weakness even with a weak dollar and it happening so early in the cycle, Treasuries renewing their strength over the past few weeks, and the dollar moving into its DCL timing band, I’m looking for opptys to increase my shorts.

    Currently holding
    SDS and DUG with only 18% exposure. Will add to DUG with XLE closing below 72.78. Will add EUO with a swing low in USD.
    Not sure when, but with continued weakness will seek low risk opptys to add to SDS. I’d like to bring my exposure up to 45-50% to hold into the next intermediate cycle bottom.

    fubsy

  682. RJ

    Large volume at the close on UUP today. This was on 60 minute chart so I couldn’t see if it was uptick or downtick volume.

    Man, I hope today wasn’t a bear flag.

  684. Dan

    Interesting comparison of 1980s silver crash to now…

    http://www.321gold.com/editorials/mcclellan/mcclellan060611.html

    I realize this was the final parabolic top but there obviously are similarities in the action. Also having reviewed past runs in this bull market since 2000, there have been a couple occasions where silver crashes then bobs around for a month or two and then crashes again to a final low. Could this be how we play out this time? Go no where for another couple weeks then final down hard later this month….

  685. David

    Possible, though that analogy only works if you think that the bull market in PM’s is over. I don’t.

    I also think that it’s easy to get done in by “investing by analogy” — find a chart that looks like a chart from the past, then assume that it’s going to unfold the same way. I’ve personally lost money thinking this way in the past, and Tim Knight has been losing money that way for years.

    I personally think what we’ve just seen is more like the 1974 parabola in silver, to be followed by years of grinding, frustrating consolidation before taking off again. It may be that the easy money — both on the long and short sides — has already been made.

  686. Edwin

    dan, history doesn’t repeat itself all the time.

    don’t trade with any stuck ideas thinking oh it’s a broken parabola, it gotta go down etc.

    you may get burned. there’s a lot more going on behind the scenes.

    stick to a solid system – leave emotion out. best of luck.

  689. Robert

    Comex Physical Silver Drops To Fresh All Time Low Of 28.8 Million Ounces, 3% Drop Overnight, 30% Drop In Six Weeksfrom zero hedge – on a long enough timeline, the survival rate for everyone drops to zero by Tyler Durden

    When we first started paying attention to the physical (“Registered”) silver held in COMEX warehouses on April 20 following the explosion in the silver price, the total amounted to just over 41 million ounces. As of today, a short 6 weeks later, the total physical silver held throughout the entire Comex complex, has dropped by 30% over that period. As of close today, the total amount of Registered silver is now 28,773,375 ounces, a decline of 2.9% overnight from 29,636,513. This is due to a withdrawal of physical from both Brinks and Scotia Mocatta, as well as the ongoing reclassification of 438,708 ounces of Registered into Eligible silver over at HSBC (but wait, it will revert back to Registered any moment… we promise). At this rate of withdrawal and “adjustment”, there will be no physical silver left in the entire Comex in about 5 months. At that point, even one delivery intention will send the price of silver to previously unseen levels.

  691. fubsy_cooter

    Reviewing more charts.
    My oppty to add to SDS and DUG, maybe initiate a little SKF will be on any bounce in the general market that rolls over. I’ll use a swing high and a break down through recent lows to add. I won’t get too aggressive, but am willing to push it a bit here.

    Always control for risk.

    F

  697. sophia

    Great report Gary!
    It could be fun this summer if not only Spanish, Italian and Portuguese bonds collapse, but US ones as well…I am not sure how the $ would react then…..

  700. RJ

    Holy shit, is silver inversely correlated to the USD movements again…

    Bring on the swing.

    (Hotrod here with a new handle)

  704. ...at ease

    Gary, I promise you if you wear yourself out today with activity, you will sleep well tonight. It’s tough to go in that direction for time zone/sleep schedule. You will find it much easier going back home with the time zone changes.

  712. pimaCanyon

    Gary,

    I’ve heard of folks using melatonin to help with jet lag. You take 3 to 5 mg in the evening.

    Another thing that helps some people is coffee. (This works best for those who don’t do caffeine on a daily basis.) But do it in the morning, not in the evening! 🙂

  713. pimaCanyon

    William,

    You mean short GLD by using put options, or do you mean shorting (selling) call options?

    I’ve considered buying some lotto pus on gold, but will probably stick to shorting the overall stock market. Silver is tempting though… Crude, as well… 🙂

  715. William

    pimaCanyon,

    Whats the difference?

    “You mean short GLD by using put options, or do you mean shorting (selling) call options?”

    Thanks

  717. Romeo Bravo

    William, please, please, if you don’t know much about options let me warn you. Save you many thousand of dollars or euros, paper trade first. Try it as “play” without real money. Though it won’t be the exact experience, you will learn much. Otherwise new options traders are usually taken to the cleaners and robbed. But you decide which experience you want.

  718. MrMiyagi

    William,
    Start by Googling for information.
    Short answer, puts limit your losses but please learn before you buy any, you can lose a lot of money very quick with the wrong option.

  721. Harry

    Anyone want to explain what “leave your emotions out of it” really means? I’d like to hear a more experienced trader actually explain that one. It strikes me as one of these cliched, somewhat ambiguous phrases people throw out there a lot, kind of like “thinking outside the box.”

  722. Duuuuuude

    I am still learning about cycles, but today we are on day 23 of the gold cycle? It seems like this thing has a lot of moving to do in the next week to take out the previous low. This is a right translated cycle which means gold should see smaller declines?

    Thanks

  724. Ms C.

    Harry,

    You have to have rules for buying and selling. Cycles, charting, sentiment etc. Otherwise, based on your emotions you sell at bottoms and buy at tops.

  725. wmp

    If we get that SPX BB bounce would we expect it to be quick or sustained over a couple of days? Any thoughts?

  726. Bullion Trader

    DG or TZ (or any other person with thoughts on the subject),

    Would you keep a short on silver right now. It’s acting very strong. I still have some profits in my short but ot sure if I should give it some time or just cover here. Any thoughts are appreciated.

  727. Haggerty

    I was just looking at Docs use of bb and he gives many examples over a number of years on the S@P, and every move over the next month was up huge. So now I don’t know what to do about my shorts

  728. fubsy_cooter

    BT,
    I’m keeping my SLV OCT 32 puts. Not even the tiniest inkling to sell them. My risk is defined at 1%. The only change I may consider is to double the position on a failed rally. As far as shorts go, when I sell short I always do it with a setup, meaning that there is a defined pivot nearby which I use as a mental stop so my risk is known. I never enter a short position without knowing how much I’m willing to lose, and knowing there is a favorable risk/reward ratio operating. If you have that in place, you can let it ride. If not, you could take a profit and use any of the setups below to get back in, but I’d recommend using puts rather than shorts as it strictly defines your risk.

    Looking at futures this morning, its easy to imagine a little relief rally over the next day or two. That would be a decent setup to add to shorts with limited risk using a swing high reversal, a break of a bear flag or a drop through the lows of yesterday, or all of the above.

    f

  729. ALEX

    HARRY

    MS C is correct, and in addition to that, some people may have those buy or sell rules , but may ignore them due to emotions.

    For example: some may ‘fall in love’ with a company ( say microsoft or Dell) and refuse to sell a position even when it goes against them. So they may have specific ‘sell’ rules, but they change or ignore them due to emotions.

    Others buy a stock and if it goes against them, they refuse to sell, because they emotionally cant stand taking a loss. As the stock continues to drop day after day…they eventually “panic’ and sell right as it bounces. Then they emotionally jump back in to get their lost money back- etc etc etc

    Its a lack of discipline due to “hope’ or ‘greed’ or even ‘fear’, rather than a good trading plan and sticking to it.

  730. wingwalker

    Haggerty,
    I think the BB touch that DOC is referring to could signal the bottom of an IT cycle. We are way to early in the IT cycle – I believe in 12th wk now.

    Also it looks like Gary’s $ chart is of the $future not the index. The index made a new low yesterday (& this morning for that matter). So the swing point is a little different.

    Saw some people mention silver here and holding shorts. I actually closed a silver short yesterday w/ small loss. Looked @ gold strength and $ not confirming a swing low yet and decided to cover it and wait for better entry.

  731. fubsy_cooter

    Harry,
    The subject is huge as the emotions of market participants are the drivers of the markets. To add to Ms. C and Alex, who each are correct, once a atrader has the experience to link their emotions to certain ehavioral patterns, they can use their emotions to profit. For example, when one feels giddy, its likely a good time to start scaling out or outright sell a position..the emotions of participants with Silver at 45, 46, 47, etc..is a good example of that one, when one starts counting sure profits they don’t have yet, you can bet there is a euphoria settling over the market, use that as a tell to get out. Also, when one feels like puking up positions, chances are other participants feel the same way, and smart money is picking up those shares to establish positions, a good time to buy as long as your risk is defined..i.e you know when to sell if you’re wrong or your position size is small enough to let you ride a draw down without getting hurt.

    The time to push is when the market in question is in a clearly defined trend, and has counter trend moves that enter overbought or oversold conditions, and subsequently reverse back toward the primary trend. These are non-emotional or counter emotional tactics that help one limit losses.

    f

  732. ALEX

    HAGGERTY

    That is very interesting- I havent looked into that. I was planning on adding to short positions on the bounce if conditions for shorting developed.

    Doc often reads this blog, so I ask…Is that what he is implying?? If so-maybe we should all subscribe for at least a month to his report too, and see how it plays out. 🙂 My sub with him expired a bit back and I have been just too lazy to re submit

  734. Haggerty

    Wing walker
    After rereading Docs uses, he was talking about how Int lows will sometimes cause a BB crash. Thanks for pointing that out.

  735. Ms C.

    Haggerty,

    Speaking of Doc, does it make any difference to your shorts if Doc is right and we allready have a cycle low in gold ?

  736. Aaron

    The SnP is bouncing! The only question is how high can it go…1310 is one obstacle, the other is at 1325ish…interesting to see if it can make it to either level.

  737. Haggerty

    Ms C Not to sure what you are asking
    By shorts I mean puts. I have them on Gold SPY and QQQ.
    Now as far as Gold I know Doc thinks we put in a weak cycle low in Gold, So I am hopeful this next daily cycle is extremely left translated.

  738. Dan

    If silver were to get to $38+ tomorrow or later this week that will be great place to put in shorts. Heavy resistance in that area.

  739. DG

    Beksachi: No more euro for me(and I am light) till the swing low is made on the dollar

    Bullion: I own July 30 puts on SLV to limit my risk and do not plan to do shares due to the volatility. This way I can just sit.

  740. MrMiyagi

    I’ve got a few July 32 SLV puts myself. Bought SLV shares yesterday near the close, will sell this morning into the bounce.

  743. Felix Felicissimi

    …whatever will make the most money for those who already know what he will say…

    I believe they’re saying “dovish on int. rates” but too soon for QE3.

  746. Dan

    Gann,

    Thanks for the update. You adding any shorts on this bounce or waiting for a move back up to the top of the channel?

  748. Gann360

    I am just waiting til the end of the week, i got a Little Pivot in Time over the weekend, so i am thinking that Silver/ Gold may Bounce around sideways to up til then , and Fall right after,,, so i will add to my Position short ( via ZSL ) ON Friday, or should Silver break down sooner, i will add then.

    Goodluck

  750. Harry

    Woohoo! Put me down for best-timed put option purchase ever. I had an order for a 1535 Aug gold put that got filled about 8 seconds before the big drop…

  754. Silverhound

    Gann360

    I’ve noticed a couple of your charts with fib’s in time.

    Do you find these tradeable, ie hold a position from one turn date to the next, or do you just wait to see what price does leading into the turn dates to see if it confirms your expectation?

  756. Michael

    Bob Loves Hawaii (or others).. when watching charts for short term (1-2 weeks) overbought or oversold conditions in order to add or subtract from positions, what settings would one use for the RSI, Stochastics, and Oscillators on daily charts…

    Thanks in advance..

    M

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