HISTORY IS BEING MADE

We are truly seeing history being made as the stock market moves down into its yearly cycle bottom.

The last time the market was this oversold was after 9/11.


Breadth has moved to levels even more extreme than the crash of 2008.

When this bottoms, and I think it is days, if not hours away, we are going to see a rally unlike anything we have ever seen before. A rally back up to the 200 day moving average is almost a certainty. Plus the degree of stretch we are seeing right now probably even guarantees a move considerably above the 200 day moving average.

It seems like a great many folks have got it into their head that one is only allowed to make money in the precious metals market. Take a look at the long-term chart of gold though.

This has now become the steepest parabolic move of the entire secular bull market. As we found out in May, parabolic moves are prone to crashes. At this point I have no desire to be in the gold market. I could care less whether it goes to $1800, $1900, or $2000. The risk of getting caught in the crash when the parabola collapses has become too great.

I don’t care where I make money. Gold, silver, or stock market, it’s all the same to me. Profits are profits.

At this point I would rather put capital at risk in a severely oversold stock market than a parabolic gold market.

363 thoughts on “HISTORY IS BEING MADE

  1. RJ

    Shalom,

    Suppose the miners fall along with gold, do you have a stop where you’ll get out or will you continue to buy in all the way down?

    If you have a stop, can you share where it is? e.g. NUGT or GDX.

    Thanks.

  2. Russell

    Nice work Gary,
    Factor shares has a 2x etf which is S&P bullish and US$ bearish. Seems like QE2.o2 or QE3 would make this etf soar as FSG has today(+19%)

  3. Bob loves Hawaii

    Broken, I think you catch his meaning. We can wake up to gold down $200 in overnight trading which will devastate most here that are still in, and I am but pretty hedged. So, safe than sorry.

    Gary breadth readings are at 1940 extremes, this seems more than a run of the mill yearly low to me.

  4. Bob loves Hawaii

    Another thing to bear in mind, some of these hedge funds are long GLD, and may be forced to puke up these shares. ZH says we can see a 20/30% one or to day crash in GLD. Not something I am interested in riding down.

  5. Pierluigi Vernetto

    IMHO it’s pointless to call a top or bottom in a market; I feel much safer holding a core long position in a bull market and at the same time trade volatility – buy the dips and sell the rallies. In the gold market this has proven a much better strategy.

    For this reason I have sold only a very small position on this megarally – I will hold the rest until 4000. We’ll be there in a couple of years – maybe 3.

  6. fubsy_cooter

    Agreed Gary,
    I sold out on Thursday morning when it seemed to me that risk was greater than reward in Gold. Obviously, I was early, but I really don’t fret it. Although its easy to count the profits one misses, the truth is there is always another set up around the corner, and you do a good job of pointing out the setup that’s occurring in stocks now.

    But check out the setup in gold…As far as buying gold at this point, it could easily go up another hundred points, but it could easliy go down a hundred fifty points, and it will when the parabola breaks. I’m licking m chops hoping gold goes higher as I’d love to buy some puts on a vertical move. I know there’s a great chance I can make everything I missed in the rally if I’m in puts for a fall from the parabola.

    So, if gold corrects here, great, maybe we’ll have a shot at another daily cycle up, but if it just rolls higher, we get a shot at playing a broken parabola..one of the most exciting and juicy times to be short, via puts in this case to limit risk. The fall from a parabola is often 3 to 4 times quicker than the rise it took to build it.

  7. fubsy_cooter

    Hack,
    I bought a very small position in ZSL today..3%. I’ll double it on a swing high in Gold, but would much rather limit risk in shorting the pms using puts. Anyway, Silver is definitely seeming weak and not part of this fundamental move.

  8. gold silver troll

    Gary,

    everyone in the world has now agreed that we’re in a bear market and are calling for dooms day…and waiting for short any rally..this seems too easy

    is it possible for us to not only take out highs, but rally to 1500-1600 on the S&P?

    Am I am the only one thinking this way?

  9. Gary

    As bad as this is I don’t think any of us can imagine how bad it is going to be next year.

    Next year will be a 4 year cycle low, not just a yearly cycle low.

    Like I said in the nightly report 2012 will be one of the worst years in human history, certainly in the last century.

  10. David

    Sounds like fun.

    As it is, I can’t imagine what the market is trying to price in right now — but it’s clearly bigger than downgrades or europe. Something really ugly is waiting for us this fall…

  11. Sera

    MARKET TURNS ON RUMORS OF QE3 The market has turned after touching a low of 3765.9 earlier in the day, currently up 3.5 points to 3989.6 points. Rumors have swept the market that QE 3 will be announced tonight.

  12. jeff

    FYI old quote from Bernanke on some options if economy continues its softness.

    On the one hand, the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further. One option would be to provide more explicit guidance about the period over which the federal funds rate and the balance sheet would remain at their current levels. Another approach would be to initiate more securities purchases or to increase the average maturity of our holdings. The Federal Reserve could also reduce the 25 basis point rate of interest it pays to banks on their reserves, thereby putting downward pressure on short-term rates more generally. Of course, our experience with these policies remains relatively limited, and employing them would entail potential risks and costs.

  13. Slumdog

    Starting Oct, the drop in the DJIA will be from the low yesterday/tomorrow a drop of 2000, 4000, and 6000, with targets of 8500, 6500, 4500.

    As of the last week of Sept, we may see a market setup that will be a double monthly top and in essence, a depression as the prices move towards those targets.

  14. Slumdog

    Harry, I’m with you, the top in Gold is in. It just occurred at Jim Sinclair’s target number.

    This will now fall out of bed; the retracement will be the backside of this hourly parabola. 1600, here we come.

  15. jeff

    I recall Jim Sincliar offered an open $1M bet on his blog that gold would be $1500 by Jan 2011. No one took him up on it and he removed the entry from his blog ๐Ÿ™‚

  16. Slumdog

    Sinclair doesn’t just call these numbers. After the fact, last time, he stated he acts on these climax points by terminating his long positions, and stepping aside.

    He’s now done this twice within the past few years.

  17. Vonda

    Hurray! Thanks Éamonn!

    I so wanted to stay up and wait for “the turn,” (Like watching for Saint Nick). At least it’ll be nice to go to bed with visions of green.

  18. Frank

    While you guys are sleeping ES an NQ are up by 1%, coming back from the abyss. Gold is off the highs of 1775 but has actually started rallying in tandem with ES.

    This could be bullish for miners if the trend holds…..

  19. Frank

    Wouldn’t it be nice if gold could stabilize around 1750 and pull the miners back up?

    Your online broker should provide futures. TD Ameritrade has them on their otherwise annoying Iphone app.

  20. falou

    I trade the futures sometimes on Ameritrade’s Android app, it actually works pretty well.

    ES is unbelievable tonight, up over 30 now.

  21. McBryde

    “…Something really ugly is waiting for us this fall…” Could be the ominous black clouds forming over Syria = oil threats, etc

  22. Slumdog

    Not bad, as I quit the blog.. called the top at 10:58 and 2 hours later, silver’s rolled out of bed, down 0.70 and on its way, and gold can’t do more than mark time.

    The breakaway gap of gold down to 1720, and a cross right through it, is a very normal, high probability event.

    I think 1600 will appear very quickly.

  23. McBryde

    I have to go out in a min and haven’t time to read all the comments so far, but I want to ask ‘the panel’ if anyone in their experience has been in this situation before – where markets [like SPX and gold] are hugely overstretched and the FOMC meeting is around the corner.
    If I was controller of the financial world, I wouldn’t want things to be so obvious as to do what almost every single trader and institution is expecting right now today…

    {Ran out of time!]

  24. Sasa

    McBryde,

    i dont know what David had in mind, but i’m very afraid that whatever it is, consequences will be the same.

    Look at mindless vandalism in London going on last few days. Put some more pressure on people of US and EU with another economy crash and things can go nuts in VERY short order on a much larger scale.

  25. Dubbelito

    McBryde and all,
    Would be kinda cool fi Bennie stands up today and go all Rage against the Machine on the market sayin’ “FU I won’t do what you tell me!

    Ironically that would be the long-term right thing to do, but fingers crossed he’ll juice up the markets a bit more ๐Ÿ™‚

  26. NJ

    Yeah Gary…echoing comments above, why can’t we have the 4 year cycle low in SPX this year instead of next? After all the 2002, 4 year cycle was the longest ever in history….Maybe this 4 year equity cycle is the shortest.

    Also, the current IT cycle for SPX is LT, having topped at week 7. Shouldn’t all future IT cycles also be LT till the 4 year low? Given the carnage this past 10 days, I would think the odds of the SPX making new highs (or challenging the old highs) in an LT fashion are pretty slim.

  27. Blindweb

    1764 is a long term channel breakout I believe. Dan Norcini and Eric Degroot, both connected to Sinclair, were saying something similar

  28. Duuuuuude

    Gary, regarding parabolas…..

    I am a commodity broker working primarily in the agricultural space and am familiar with parabolas. You have mentioned many times that once a parabola breaks that it takes a lot of time for them to come back together, if ever. Why do the gold parabolas seem to come back so quickly? Do you ignore the gold parabolas and instead just focus on the waves and cycles?

  29. Shalom Bernanke

    RJ,

    It’s possible miners will fall with gold if it turns lower. The way I’m playing it is to add small amounts into the smash lower. Volatility is through the roof so cut size and use much wider stops so one can stay in the trade.

    When we get moves like this there are bargains to be had, but I’ve also found these potential huge gains will probably take longer to materialize. Positive sentiment will take time to rebuild, but that is ok as long as you’re thinking “buy” into these pullbacks and can keep a level head, not be a slave to emotions. We will almost never get it perfect, so leave a wide margin for error.

    I do not own GDX as yet, and would not consider NUGT into a down trending market. NUGT is for uptrends. If I were to buy GDX today, I would use a stop of roughly $7/share loss (2x average weekly range to compensate for increased volatility),then size accordingly.

    For example, if you’re willing to lose $70,000 on the trade you would only buy 10,000 shares. This might not be as many shares as you’d like if GDX turns higher, but it’ll guarantee you can think straight and stay on the right side of the bull. One can always add if miners find solid footing, but I’d suggest keeping overall risk at the original level as it’s something that was predetermined before the heat of battle.

    I’d say consistent position sizing within a trader’s comfort zone is the single most important factor a determining a trader’s profitability. picking the exact turn and giving a .50 stop with huge size will destabilize a trader, IMO. If one only wants large size with close stops, I wouldn’t be buying right now. Wide stops and smaller size are not as exciting as taking a big stake and nailing the turn higher, but they’ll keep a trader focused on the bigger picture. Nailing the price is not nearly as important as seeing the bull for it’s potential and staying on, IMO.

    Whatever keeps you on the bull. ๐Ÿ™‚

  30. Shalom Bernanke

    Last point, and especially pertaining to declining markets like we’re witnessing, I will not chase prices higher and instead ONLY buy into weakness.

    There are times I can “pay up”, but this is not one of them barring some news like QE3 or something. If the Fed openly starts to debase, then I’ll buy size as quickly as possible. Until then, only pukeouts should be bought with the realization more pain is likely before getting paid.

  31. Ivan

    Maybe it is time for correction in Gold and rally in stocks.From early morning Mr.Bernanke picture is everywhere in internet news sites,even here on the blog:)

  32. Poly

    $1,770 gold was my price objective starting out on July 5th, hitting it much sooner here, but time to cash in the chips at the open.

    What happens next is still up for debate, look at all the options. I doubt we’re heading for an IT low, that would involve a $300 drop to qualify.

  33. deshy

    Poly: I know the ‘rules of a bull market’–but would you play the short side of gold given the huge short-term surge?

  34. Poly

    Deshy,

    I wouldn’t recommend it, although I’m probably going to take a “little” punt myself ๐Ÿ™‚
    Something very small, looking for a quick $100 over 3 day correction.

  35. St. Deluise

    how stretched is GLD? here are a bunch of keltner bands on the daily

    http://i53.tinypic.com/2qlzz3l.png

    think GLD sees at least 170.35 before it tanks though.

    the question for me is, will the first decline turn out to be a bear trap? look at 2008- hit the red band, corrected 9%, then blasted back up 30% again before really eating it during the crash. not unreasonable to expect something similar if you really think the 4 year cycle low in stocks is due next year.

    i would seriously just not short it, like at all, ever.

  36. deshy

    Poly: Thanks–my idea was to go little as well–less than 1% total capital in. As Doc suggests just a ‘feeler’ position ๐Ÿ™‚

  37. deshy

    Poly:…sorry also wanted to ask how you developed your specific exit price of 1770? What general techniques are you using to come up with these targets? THX

  38. Chrys

    Gary – I understand your concern about the gold parabola but we are only 24% above the 200 dSMA. During the silver run up you looked at the 30-40% and the 40-60% envelopes as a measure of extendedness. At today’s high of 1778 we are only at 24% above the 200 dSMA. The 30% band is at 1893 and the 40% band is at 2039. So based on this analysis we still have a ways to go before we need to get overly cautious. Just me 2 cents.

  39. PST

    Interactive Brokers now has short sale restrictions on BAC, C, JPM, MS, GS and FAS from 10:30 yesterday until 8:00 PM tonight.

  40. Poly

    Thanks WW.

    Deshy, mainly projections based on past blow-offs and based upon the way this IT cycle began (formed) in relation to it’s past cycles and in terms of the action once it got under way.
    What may it difficult was you had to see this being a blowoff from the start and in addition, without a dollar collapse.
    Mature bull markets are also a lot about “demand”, not just the dollar. Where we go from here is not so clear, IMO.

  41. Gary

    Chrys,
    Those numbers are extremes. Once gold moves over 15% above the 200 day moving average it has reached a dangerous territory.

    Throw in the fact that the mining stocks have been diverging for months, extreme bullish sentiment, silver now diverging, and you have the recipe for getting caught in a D-Wave decline.

    It easy to talk Old Turkey when gold is moving higher. But just a typical D-Wave decline would take gold back to $1200-$1300.

    I guarantee every single one of you would poop your pants if you get caught in a D-Wave decline.

    I’m trying to protect people from getting caught in something like that. But most of you are looking at the pie in the sky instead of the downside risk, where you should be looking.

    I have been doing this a long time, and there is a reason I have survived and made money. It’s because I learned to control my emotions and when risk becomes too great I step aside.

    I’ve violated that rule in May and paid a heavy price. I’m not going to make the mistake again.

  42. Ken

    Damn the futures aren’t blood red like I wanted walking in this morning. I was looking for a down 30+ handle type morning which would have been an easy buy. I don’t think we get a “gap and go” so I’m going to wait for this mornings gap to be faded by the johnny come lately shorts who refuse to let go of the bulls balls for even one minute. I’m going to put 1/2 on the gap fill and the other 1/2 just before the FOMC’s announcement at 11:15 am (PST). I love this market as you can make or loose 3-5% in one day provided you’re on the right side of it. Fast money is so good!

  43. Ivan G

    So,

    what if the FED decides to to their job. I mean their real job and do not help the market. Just because they did not do it so far does not mean it can’t happen ?

  44. Ken

    Gary’s got “old hand status” and shares that with the many. Everyone who comes to the S.M.T. realizes Gary’s as calm, cool and collected when the MARKET and YOU are freaking out. Thanks for doing what you do Gary.

  45. catbird

    Shalom,

    Don’t sweat the long posts…not every blog has a banker of your eminence as a regular. ; )

    Big day today for you.

  46. DG

    This hitting-extremes-pre-opening stuff is going to drive me nuts. We should have opened lower and I’d have taken my positions! This smells just like silver topping overnight. Now with the gap open it becomes problematic. I will buy some on the first pullback I suppose, but no more “all-in,” I am quite conservative and need a perfect set-up to go all in, and we had it until this morning…

    I may need to get that futures account like TZ’s been championing. But then what…you don’t ever sleep? besides I can;t get my real-time sentiment data during overnight trading. Oh well.

  47. Poly

    Spending cuts, tax increases, austerity, deleveraging, defaults, excess capacity utilization, higher unemployment, collapsing oil prices and soft aggregate demand. Not buzz words, they are what we’re going to experience in spades.

    All of these will rain down deflation and Bernanke will need to respond with all he has. It will not be pretty. Interesting times all right.

  48. McBryde

    Poly said: “Great chance there is no QE3 and no new signs from the FED which sends gold down into at least a sharp DCL.”

    Yes, this might fit. It somehow doesn’t seem that realistic to believe that the wording from FOMC will trigger a simultaneous exodus from gold to the stock market. Bernanke’s picture is all over the place, and seems the majority expect a magic word from the meistro to lift stocks.
    I think it will happen soon, but not necessarily today..

    Maybe there’ll be news of holding interest rates further than an extended period.

    Perhaps gold money, feeling a bit precarious, will shunt into bonds for a while, thus bringing gold down, but keeping stocks oscillating within a range for a while.

    Can we wait as long as the Jackson Hole event for relief?

    All indulgent conjecture – the market will reveal all soon, no doubt.

  49. St. Deluise

    definitely planning on a down gap fill before adding SSO part 2-of-4 long positions here.

    expect to see one more push down, actually. will leave an open order at 36.20.

    fishing for volatility-inspired lowball bids circa 2:15 might be a good idea too.

  50. Tim and Jeanene

    Speculation of collapse is much greater than the reality of America’s demise. Treasuries have actually OUTPERFORMED Gold these past 5 days. That is not supposed to happen in a collapse. A ton of commodities are down on the year, some more than stocks. Oil is down over double digits. Corn is down YTD. Cotton, Beans, Wheat etc. Again – not supposed to happen in the collapse of America scenario everyone talks about.

    Gary – I think your get out of gold and get long stocks here is going to be epic…….

  51. Ken

    Opening gaps filled in opening hour. That was easy short money. Get ready for a slow drift upward into the FOMC statement and then a rocket shot upward. Bears are going to get CRUSHED for messing around with Ben. Threw the first 1/2 of cash on the filled gaps and I’ll throw the other 1/2 on when we go higher with buy limit orders just above the day’s highs going into the FOMC statement. If we go dowm on disappointment they’ll never get filled as the market dropped and then I’ll stop the first 1/2 out at the overnight futures lows. Small risk… huge reward!

  52. Duuuuuude

    Good one WW. That one is just a blind folded dart throwing contest. I would have no idea!

    Lexmark and Google were the only two companies in the S&P above the 50 dma. My brother works at Lexmark, so I need to let him know he is doing a fine job!

  53. TommyD

    Felix,
    That’s a nice chart there. I guess we find out after the 2:15 meeting how things go. Maybe one more shakeout going into and during the speech. Then a buying frenzy going all the way into the close? Stay tuned…

  54. DG

    That pullback to even was great!! Bought QLD at 69.54 and TNA at 39.11. It’s important to have a plan and then stick to it. The historic readings meant we are at or near the bottom, so the pullback was a gift as the scared folks saw some green finally and sold it down.

  55. Charles

    Why is gold weakening on this, the day of the great and wonderful QE3 announcement? Perhaps more balls than brains I’m short Gold via 7 GLL Sept $19 calls @ $0.85

  56. Bob loves Hawaii

    T an J, now know you have no clue about money and debt. Look at John Exeter’s pyramid of risk.

    Since the world is aswash with debt and margin, as fear grips the markets a scramble for liquidity ensues. Investors abandon risk assets for risk averse assets, see chart attached.

    Gold is the safest, then dollars, then Treasuries. You are simply seeing a scramble for tangible vs margin derivatives.

    http://www.lesjones.com/2009/09/09/word-of-the-day-john-exters-inverted-pyramid-of-assets/

  57. D

    Adding to what I asked yesterday about buying options when the VIX is high…

    So today since the VIX fell, my options are also lost some value due to the loss of volatility?

  58. Tim and Jeanene

    Right Bob – you have me pegged – I know nothing about money……

    Bottom line – in the event of an all out collapse as you seem to predict – the ONLY investment will be commodities like food – and maybe gold.

    The fact most commodities are down, and TSY’s have outperformed gold in this short crash show that people are not giving up on the “system” as you probably are preparing for.

    As I often say: Queue up the countdown for Bob to tell us how the evil Fed kicked the can down the road and just delayed the inevitable, and how that end will be even more painful and devastating……

  59. auger

    BTW, hello SM Trackers, a non-subscriber here. Hope people don’t mind me posting a few trade related charts/comments, from time to time. ๐Ÿ™‚

  60. Frank

    Don’t get too hung up about your option greeks. I just closed my QQQ trade with ~50% gain. (I tripled down at the close.) Don’t hold on too long when the volatility is high. The imp vol still around 43 when I sold. My options expired in 10 days so at 52 they mostly had time value when I sold. My experience is that you are either very right or very wrong so that the imp vol doesn’t matter too much in the grand scheme of things. Not so if you hold them for months.

  61. McBryde

    Has anyone considered the possibility that multiple rises of margin requirements will be visiting gold futures at this [parabolic] level – thus creating a May 1st/silver-type collapse?

    Or does it have to be near contract renewal date to make that effective??

  62. St. Deluise

    theory: ‘disappointing’ fed announcement, kneejerk selloff/beartrap to a slightly lower low which then marks the bottom anyway.

    unfortunately i’ll be at the dentist while this is all happening! weekly SPY pivot at 109.74. open SSO buy order at 36.20. here’s hoping.

    good luck and duh auggie, post away

  63. Frank

    If anyone is looking for a miner bargain, GSS is trading in the 1.80s.

    Buyer beware. Read the release from yesterday first.

  64. x change

    Fed announces NO easing = all assets tank
    Fed announces easing = All assets soar
    Fed hints easing = All assets move higher

    Can anyone suggest other scenarios?

    I expect a violent reaction up or down on Fed announcement. Any ideas on how to play this appreciated.

  65. William Wallace

    Gary,

    What are you expecting to happen if QE is not announced, will you still keep position in QQQ?

    If you addressed this in the nightly report my apologies.

  66. Peter

    D,

    That is correct. It is more desirable to sell options with volatility this high than to buy them.

    A drop in volatility lowers option premiums.

  67. ALEX

    F.W.I.W.

    I am thinking that Gold may still have one more “massive” leg up.

    I am not long Gold right here, but if conditions are favorable, I am believing that the pullback will hit $1632 MOST LIKELY , if it closes below $1667 ( $1667 is my first target down, but less likely).

    Then I think Gold puts in the REAL parabola and the markets may even turn and retest yesterdays bottom.

    Thats how I see it SO FAR…things could change and I’ll know as time goes on.

  68. jeff

    D your options lost more value today than if let’s say the vix would have not fallen or had increased. Your options can of course can be positive – it depends on how large the vega factor is.

  69. Nike Boy2008

    Alex,

    thank you for the update..

    yea it seems doubtful that gold goes straight down…a nice 150 point correction followed by another parabola would be unexpected ๐Ÿ™‚

    Maybe Gary will see the same thing as well when the time arrives

  70. Duuuuuude

    I am not convinced we need QE3 to cause stocks to turn. When the financial crisis began in 08, we had a very similar situation and price pattern on stocks. At point 1 which I marked on this chart, stocks roared higher to point 2 where they then dropped precipitously till QE1 was ultimately announced.

    http://screencast.com/t/y5IGA30Yz

    Different times today, but the world banks are trying not to get into a currency war now. I expect further QE will be more coordinated.

  71. Felix

    I’m not entirely sure of this because I can’t tell how accurate Netdania’s data is but it may be that there was a shift in the past half-an-hour to PMs trading in tandem with the dollar.

    Could this shift preview both their reactions to add’l liquidity

  72. gold silver troll

    Gary,

    A follow up question on the parabola for gold.

    You mentioned that collapse of the parabola will get gold to retrace back to 1200-1300

    how long would this retracement take? 6 months? or the normal 4-8 weeks of d wave?

  73. ...at ease

    High 5,
    I am always on the move and away from home a lot. My current avatar is the walkway up to my house this past spring when I got to be at home for a bit.

  74. ALEX

    DARELLL

    Really nice gallery , thx.

    So is there a focused USE for these? In other words…do you look at them and assume time to sell when they get thin and whispy because they’re stretched…or when they get darker and richer , they are gathering energy nearing a bottom??

    Its a different perspective for sure, DO you have software that draws them or are they someone elses??

    I am in and out today so I apologize if you write and I dont respond right away.

  75. ALEX

    1 side point to my comment earlier about the possibility of another leg up in GOLD.

    Gary is correct that the end of this parabola will probably be we wake up 1 morning and GOLD is down $40 or $50 , just like it was up $30 or $40 recently.

    BUT if we get a reasonable correction to relieve sentiment somewhat and form a daily clcle low, I believe that the next FINAL leg would HAVE TO BE longer than the RECENT one.

    I observe the TOP in 2009 was much like this one, even about as steep really( maybe this one was a tad steeper? )…but the 2009 top was just ‘a part’ of this C-Wave, not the blow off top part. Since IT WAS NOT a blow off parabola TOP…I would expect that a real BLOW OFF PARABOLA wouldnt look just like the 2009 top.

    A pullback and One more leg up would be Even MORE EXPLOSIVE, and another $200+ I.M.H.O. Very worth buying the pullback.

  76. William Wallace

    Alex,

    Said:

    “Gary is correct that the end of this parabola will probably be we wake up 1 morning and GOLD is down $40 or $50 , just like it was up $30 or $40 recently.”

    Gold was $60 off its highs this morning, and was up over $60 yesterday…a collapse of gold’s parabola will be alot worse then a $40 – $50 drop.

  77. Danno

    I think Gary has the right idea. Gold is getting ripe for some profit taking and I have suffered through several of gold’s profit taking sell offs. Sure it could go higher first, but what if it doesn’t? And even if it does go higher first it is still ripe for profit taking at any moment.

    Another way to play this if you do not want to sell your gold shares (or you want to protect your physical) is to hedge your long position with some shares of an inverse gold fund or a few put options.

  78. Hack

    The institutional traders are luring in the retail investors today before they shut the trap. That’s why gold is on the upswing, they’ll catch the ride on both ends…

  79. ALEX

    William,

    I dont dis agree, But-

    Its possible, but it also could gap up $40 and then the next day gap up $40 and the next the same, then reverse THAT DAY and drop in a fast sell off.

    So what I am saying ( and its all risk related…each has to ask “is it worth it to me”) is that when I see a stock gap open and rise , gap open and rise etc…I’m out.

    When gold goes up $40 1 day, then $40, the next , $40 the next…its time.

    Tops are observable, and Silver top was too. So IF we get a pullback for a week or so…and I see a set up for another leg up…or even just a double top…It’ll be a trade for me…with caution at the top.

  80. samppa_nyman

    Wanting to do some discount shopping but have no free capital, would have to borrow at high interest to invest, maybe a bad idea at an uncertain time like this.

  81. William Wallace

    Alex,

    “So IF we get a pullback for a week or so…and I see a set up for another leg up…or even just a double top…It’ll be a trade for me…with caution at the top.”

    If you are able please post when you think we will see a leg up after gold pulls back, I really appreciate all your input and charting ๐Ÿ™‚ Thanks alex.

  82. gold silver troll

    heads up for gold longs:

    record volume on DZZ today again…

    day is only half over – we’re already have a volume greater than yesterday’s volume which was 4x normal volume

    by today’s end, we could be at 8x-10x normal volume

  83. Avann

    Some anon on CNBC just posted this … I thought it was funny.

    I think the name of the game the government and bankers are playing is called “I win”. Oh we wrote bad loans “I win”. Oh we can’t pay our debts “I win”. Oh we are going broke at war “I win”. Why? Because “I win”. Charlie Sheen for president.

  84. ALEX

    William

    I will, I will post a chart and the reason why if things work out that way. IF gold were to just take off after Bernanke speaks…Its too risky to gat into Gold without it having a proper rest.

    I would only post out here on this blog- I wouldnt be posting on the subscriber blog any ideas that may not mesh with Gary’s current thoughts.

    I’m in & out 2day helping a buddy of mine…so good day all!

  85. ALEX

    GOLD SILVER TROLL

    Good call, same on GLD…could be a high volume reversal. A top , and then we see how this all wants to play out.

    Not sure what you thought about the DZZ, but it looks like the Volumes HUGE and yet price down is not (minimal), which would indicate ( to me) distribution, and a direct change soon.

    ok, out for now, cya

  86. Avann

    Well OK … I think it close enough to “The Emperor’s Speech” to place my stops (a few points below the open) … good luck all.

  87. McBryde

    At ease ..
    my daughter moved out of her flat yesterday as the riots are getting closer.
    In the area where my wife’s flat is just now in the process of selling [just exchanging contracts] she saw in the paper today someone describing it as a war zone! [That makes her a bit jumpy!]

  88. gold silver troll

    ALEX,

    Yep…huge volume with not much price change (distribution)

    I saw the same thing with ZSL in April end (volume started increasing exponentially) BUT I ignored it and paid the price.

    Can’t make the same mistake twice and don’t want others to make the same mistake as me either.

    The volume in DZZ is really saying something.

  89. Dan

    Anyone know any good feeds or live updates for bernanke statement as zerohedge is probably gonna crash again.

  90. hkc

    Alex and gold silver troll:

    Could you elaborate on the volume and distribution point that you are discussing? I am learning… Thanks,

  91. 86d4life

    gold silver troll,
    I am familiar with the term distribution as in a dividend. You are using it differently here. Would you please explain. Thanks.

  92. Dan

    Distribution=big(smart) money selling to small(dumb) money and vice versa. This type of action tends to occur at major turns hence the large volume.

  93. Michael (Hulk)

    That’s a grand total of about $20 mn in DZZ traded today. Like the majority of these ETFs, just a rounding error for the underlying futures/cash markets.

  94. ckpc

    Accumulation/Distribution
    What Does It Mean?

    A momentum indicator that attempts to gauge supply and demand by determining whether investors are generally “accumulating” (buying) or “distributing” (selling) a certain stock by identifying divergences between stock price and volume flow.

    Investopedia explains: Accumulation/Distribution
    For example, many up days occurring with high volume in a downtrend could signal that the demand for the underlying is starting to increase. In practice, this indicator is used to find situations in which the indicator is heading in the opposite direction as the price. Once this divergence has been identified, the trader will wait to confirm the reversal and make his or her transaction decisions using other technical indicators.

    Read more: http://www.investopedia.com/terms/a/accumulationdistribution.asp#ixzz1UYVSGjAt

  95. 86d4life

    Dan,
    so basically the same thing we would see, say with SOS on GLD yesterday. Price doesn`t really have to change much as long as shares are being transferred from one to the other. Thanks Dan.

  96. Shalom Bernanke

    Careful jumping to conclusions:

    No QE might be trigger a selloff in gold, but all that would mean is we’re in the same situation as last week, meaning weak stocks and possibly gold as the safe haven after a shock lower. Besides, more money is getting printed whether they announce it today or not. ๐Ÿ™‚

    I try not to react or change positions on Fed days, so will stay with what I have.

  97. hkc

    ckpc and Dan:

    Thanks, but I still don’t get Dan’s question on adding DZZ if no monetary easing is announced. I thought that if Bernanke doesn’t announce anything, the market would tank and Gold would shoot through the roof… Appreciate all your effort in sharing your knowledge. Thanks,

  98. aklaunch

    WW,

    This is reminding me of Silver in April. Dollar would go down a touch and silver would go up and vise versa. It was simply amazing to watch. Now seeing Gold do this with the SPY is the same but different.

    If i was a thinking man i would correlate this with the past but all is confusing at the moment.

  99. Dan

    Hkc,

    No further monetary easing is bullish for the dollar as monetary easing=indirect printing of dollars. No QE is deflationary.

    Atleast in theory this is how it should all work.

  100. Bill

    Big down day for RGLD … in the short term (6 mos) it looks like RGLD leads GLD up and down – a good sign (for me)

  101. aklaunch

    WW,

    When the dollar broke Silver got killed. I think that would happen right here and now if the SPY took off with Gold. The question is will the market rally like crazy? My heart is pounding. There is going to panic buying and selling here real soon. This is going to be one interesting couple of hours.

  102. William Wallace

    86,

    Good brother, keeping a close eye on things right now, been trading TQQQ this morning. Holding a small position right now, ready to sell if Bernank tanks the market…will add if we rally…see what happens with gold, maybe pick up some DZZ

  103. auger

    ckpc, that is an explanation of Marc Chaikin’s Accumulation/Distribution line indicator.

    Distribution is defined as trading volume which is higher than the previous days volume, without the price appreciating.

  104. Shalom Bernanke

    Dan,

    That’s correct, but the good thing about QE of any sort is the Fed doesn’t have to ask permission. They could sya they won’t do it today and see how stocks react, then announce it tomorrow.

    Make no mistake, QE will continue until the end game when the dollar is dead. ๐Ÿ™‚

  105. Frank

    There was no way that they were going to announce QE3 so quickly. They would lose the little credibility they have.

    But the zero rate until 2013 is a signal.

  106. Frank

    USD/CHF at 0.72
    EUR/CHF 1.028

    Insane…. so people think that the Swiss are still on the gold standard. It shows how rotten Euroland and the US both are today.

  107. wingwalker

    I don’t remember who talked about NLY in the past few months. But the fed stmt makes the mortgage REITS look pretty good for the nxt few years.

  108. Felix

    some guy with a weird accent just said on CNBS that they are waiting to see whether European liquidity boosts US equities before they do a new QE. Makes sense

  109. Hack

    Gold is up and the market is down. How hard is it to figure out we missed the boat, and we are headed to a recession…

  110. Dan

    Frank,

    No i think its just that the Swiss Franc has most gold per currency unit of all currencies. It’s best thing we got unfortunately.

  111. Jason

    Sold all my positions shortly after the meeting. Back to 100% cash, just too volatile for me to play. Made a small profit to cover my trading costs from BIDU.

  112. Bill

    Another possible sign that GLD will tumble: TBT is showing strong pos divergence on the 60 min chart, and price can’t go lower, so I expect it to climb. I may take a small position upon a breakout. Slow and steady wins the race.

  113. Hack

    I am really getting pissed over this “QE3 will make the market go higher” talk and buying QQQ instead of gold…

  114. Bill

    60 min chart: GLD up, GDX and SIL down, w/SLV down for the day as well.

    Fear trade. Thankfully, fear is an emotion that can’t last forever. Wish it would settle faster though. But buying GLD here is insane, as it’s so overbought.

    Just babbling here wondering what to do…

  115. William Wallace

    Gold is not rallying higher…I would not go near gold anymore until it corrects severely..we saw the top. The only way gold is going higher is if the market absolutely falls apart at the seems.

  116. Bill

    at ease, right you are

    It’s a good time to do something like gardening, or split a cord of wood, but it’s 4 am here in Tokyo… so here I sit in the dark like a cave troll.

  117. aklaunch

    I just bought puts in GLD at 1760. Fingers crossed. I am going to shut this computer off and not look at it for a few hours.

    I wish all fellow traders well during these difficult times.

  118. Frank

    Hey Bill. I normally live in Tokyo too, but am in Europe for the month.

    It’s pretty tough tough to do the market over there. I usually hang in until 2 am.

  119. ...at ease

    Myagi,
    I thought I saw some ink paw prints a few times on those charts. And to think we only thought he was the proof reader. Poor Toby, he works like a dog! No wonder he looks tired waking up. ๐Ÿ˜‰

  120. 86d4life

    Bill,
    Frank was just saying about royal gold, I started watching GGN closer. WTF!! But it is heavy to miners and has a set dividend so as things get cheaper, our dividend rises. By the time the mania phase kicks in and miners go ballistic, our shares should be worth a hundred bucks a pop!! And lots of `em.

  121. 86d4life

    I used to take my dog up on the roof when I was roofing. Until he got to be about a hundred pounds. Then the problem wasn`t getting him up there but getting him back on my shoulder and getting on the ladder without wiping out.

  122. Frank

    Actually this is very bullish for gold — what’s happening with the bond market. I have no idea where gold will be in the short term. In the long term it will be higher.

    I ascribe the RGLD sell off more to the volatility and liquidation.

  123. samppa_nyman

    This gold run is insane, some people are going to get really hurt with that.
    But I’d love to hold a bar in my hands now. 100% small cap stocks. Not doing so well.
    Seems like every investor in the world is thinking the same thing: “As soon as gold dips, I’m buying!” So this parabola might be crazy long…

  124. Frank

    NGD up 5% now. Not complaining. That company is a rock. NGD was just about to take off because they reported on Thursday and it was fantastic and then the sell-off took hold.

    GSS is reversing. I picked up some at 1.80. Now over 2.

  125. 86d4life

    I think Garys going to say look at the cycle timing, sentiment is in the sewer. Look at the charts he posted of indicators. Granted, if Captain Lucifer is flying the SPX, the true bottom is zero, but we are Majorly Oversold. It`s hard to see and watch, cause I have skin in the game, but I think it`s time for lift off. Strap in Folks. (now we`ll just tank………)

  126. Billy

    TommyD, can’t get a swing low today since today made a new low. Swing will come tomorrow if we move above the high from today.

    Anyone have the testicular fortitude to buy that dip?

  127. William Wallace

    I said this a while back..that the dollar would trade sideways while gold rallies…thats what happened…now what? Dollar still trades sideways while gold corrects and stocks rally.

  128. ALEX

    at 3.05 p.m. I went 100% into the mkts LONG.

    I was watching intraday charts and the sell offs were light, the buyers were buying back heavy.

    below is a simple chart of PCX

    Sell offs on LIGHT volume (red) , Buyers were heavily scooping up their shares (GREEN)

    http://www.screencast.com/t/nEsGVMIu7

    Stops in place

    TRADERLADY

    SCORE!!!! NICE CHART, that looks GREAT

  129. SW

    sp down, gold up. sp up, gold up. hahaha, ridiculously strong. maybe no down move until margin increase.

  130. Billy

    Cycle trend line for the USD is right around $74. USD is currently at $74.10. If we break $74 the chances of a failed cycle greatly increase and if that happens it should be sayonara for the buck.

  131. catbird

    Hey Shalom, I was a little disappointed in your ho-hum announcements this afternoon.

    ZIRP through Barry’s reelection? :yawn:

    Where’s our assurance of QE3? And what’s up with the 3 dissenters?

    Are you losing your edge, man? ; )

  132. Felix

    Hack,

    I had some SLV puts and DZZ from yesterday, got some ZSL when you did, good timing on that!

    Still in the Q’s from yesterday.

  133. ALEX

    DAN,

    no, sorry, that was just an equity I was watching because it just dropped from $25 to $12 on AWESOME earnings ๐Ÿ™‚ I thought it’d be a great bounce.

    Look at TQQQ , TJ mentioned it to me and it looks ready to explode.

    And of course quite a few other charts and indicators…I scour charts like a fanatic at possible turning points.

  134. Frank

    People have to understand that the CHF shows the real weakness of the USD, not the EUR. If the EUR were the equivalent of the old DM then it would be at the equivalent of EUR 1.75 today. (Divide by 2.2 to get old DM exchange rate.)

    So the dollar is extremely weak and this is a currency crisis.

  135. Gary

    This isn’t directed to anyone in particular.

    Notice how silver is diverging again today.

    When the gold parabola collapses I’m going to tell everybody “I told you so”.

    Like I said in the article I don’t care where I make money. There’s no rule that says that we have to make money in gold.

    The trade with the least risk right now is the stock market, the trade with the most risk is gold.

    I try to protect people from their own stupidity and all I get is grief. Unbelievable!

  136. Mikey

    The dollar’s 3-year cycle low may yet be ahead of us, but gold looks like it’s done. The miners should be the place to be.

  137. William Wallace

    Gary,

    Dont grieve my friend…you cant make everyone happy…I think you know that, thats why your able to do this…I would be looking to hunt people down and make their life miserable!

  138. Gary

    Frank,
    Today is meaningless. What I want to see is what happens to the miners after gold has taken $150-$200 hit.

    If the miners can hold strong through that then yes I will be ready to buy gold at the bottom of the correction.

  139. ALEX

    I said…

    Look at TQQQ , TJ mentioned it to me and it looks ready to explode.

    I meant JHNEWMAN told me to check it out. sorry!

  140. marksomething

    it seems you’re getting grief from the “lottery people”. they just want to win and when their expectations are not met they need to blame someone. My regret is that it is aimed at the person helping them the most.

    Blaming their teachers for poor grades. Truly and uniquely american.

  141. aljiowa

    Gary, shout out from those of us ‘quiet’ readers and investors. Your expertise and insights are much appreciated. Everyone owns their investment decisions and consequences. Although debate and discussion are EXTREMELY helpful on this blog, I have to say those that are placing blame and criticism need to put up or shut up. Hindsight is 20/20.

  142. Troy

    Gary,

    I just read your message about the grief you are getting.

    For every 1 that gives you grief there are 10 of us that are learning and have profited from your service.

    DON’T LET THE IDIOTS GET YOU DOWN.

  143. A

    St. Deluise,
    Your posting @ 8:32 this morning was prophetic. WHile you were gettiing drilled at the dentist, I followed your strategy and loaded up on TNA near the low as per your prediction. THanks for sharing your wisdom. Aman

  144. Haggerty

    Alex
    Thanks for getting back to me. I miss the blog, I just happened to be home today and probably tomorrow, I have to admit I almost got shaken out 2 hours ago.

    Gary Thanks for the guidance.

  145. Cool_Loser

    I’m interested to know if you’ll be shorting the gold parabola? I know you don’t short gold, but I’ve read that the only time it is appropriate to short anything is during a broken parabola.

  146. Vonda

    And we’re off again — in the other direction. Going to be fun to watch the world markets tonight. What a beast!

    Great calls, Gary! Thank you!!

    I’m in old-fashioned equities, LLY and CCE. Even going to get a dividend!

    And yes, also much appreciate the righteous sense of humor on the board. “Testicular fortitude” indeed!

  147. Frank

    Rather than messing around with QQQ and SPY (ok, I admit that I took a gamble with options that I closed this am) then people could establish or add to long term miner positions. For example, GSS was down 13% this am after a disappointing report and finished up 6.3%. Right now it looks like miner are moving with the market and it is supported by a strong gold price.

    If miners continue to rally then I will lighten some positions while maintaining a core. I find this to be a better strategy then all-in/ all-out moves. It’s also better for Americans who have to pay short term capital gains at a much higher rate.

    Gary correctly noted that a bounce in QQQ/SPY is a dead cat bounce. The only question is how high it bounces and if you can catch that peak, which is very difficult.

    In the old days, Gary used to correctly preach about being a “strong hand”. The last few days was an opportunity for some miners.

  148. ALEX

    William

    hold on, thats a mighty big bull you re riding ๐Ÿ˜‰

    Haggerty

    Yeah, I miss some of the blog too,I’ve been posting less often. Many missing names from the winter ( some great new names too) but I dont see Jayhawk as much, Razvan, Nikeboy, ( actually..too many to mention!! ) Still see DG and POLY , they were here before me, so good to see them.

    Maybe its just the summer? Market conditions?
    Well, Say Hello to EDITH for me!

    GARY

    What you do is a service to a ton of your subs, especially new ones. They can make $$ — hold onto it during drawdowns –and get back in.
    AND MOST KNOW IT…it’s just living in “REAL TIME” …missing a move up, or buying 1 day early on a downday that brings out the emotions.

    Its all good in the end tho, isnt it!
    Every April when the TAXMAN cometh…if they gripe about the amount their paying in…you know you made them 3x that much at least!

  149. ALEX

    FRANK

    I agree…that looks like a real move to me today ( reversal in miners). It would be great to see them run with this market while Gold pulls back.

    Goodnight all

  150. ALEX

    GOLD Silver Troll

    I saw that too. Gold just dropped $40 in after hours

    – I also looked at these miners and some of those have reversed in a big way.I think MANY equities are going to be huge % gainers..its hard to pick.
    I own JVA and CBOU…they were huge %wise today.

    Some of these look exceptionally great…I’m trying not to be giddy hehe ๐Ÿ™‚

    Later!

  151. gold silver troll

    Alex,

    Hehe…yea..

    after the trashing we took, it dont matter what you buy ๐Ÿ™‚ that’s what I love…no need to think to see what to put money in ๐Ÿ™‚

    btw, i wouldnt be surprised if we retest the lows tomorrow to shake out some people from today

  152. gold silver troll

    Alex,

    One last thing: if the dollar tanks here (looks like it will), we might totally have your scenario in play.

    Gold corrects hard here to 1600 and sentiment subsides and then goes parabolic to 1900 while the dollar makes a three year low in Fall

    Whole lot of possibilities here…market keeps changing…stay sharp folks ๐Ÿ™‚

  153. sophia

    At ease,

    Thanks for your kind thoughts…
    We are in France for the moment but apparentely some suburds of London are under curfew…Martial Law in the UK, unbelievable…

  154. DG

    I have lightened up considerably (I was pretty heavy). I have never seen action like this and have taken my football and gone home. I simply do not need to play every day and am content to wait until i get conviction again. I had it yesterday and caught the whole gain, but IMO today should not have happened. I suspect it is algos and HFT as no humans would trade like this. If they rally to the 200 DMA I expect to catch a good piece of it…just not from right here.

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