THE BEAR MARKET RALLY HAS BEGUN

I’ve been warning bears for a couple of weeks that the market was due for an aggressive bear market rally. That rally has clearly begun.

I have often referenced the Rubber Band theory in my nightly reports. For those not in the know the rubber band theory is nothing more than the tendency for any market to regress to the mean. And the further a market is stretched away from the mean the more violent the snap back tends to be once the pressure is released.

In the case of a rubber band, the further you stretch it in one direction, the harder it snaps forward once you release it. Simple action and reaction.

Markets are really no different than a rubber band. The further you stretch the stock market the more violent and persistent the snap back tends to be once the turn occurs. At the recent yearly cycle low on August 9 the stock market had stretched to ridiculous levels, both sentiment wise and technically. This should generate an extremely convincing bear market rally.

A normal bear market rally will typically last from 4 to 10 weeks. (They have to last long enough to reverse extreme sentiment levels.) Generally speaking that takes a minimum of 4 weeks, and 6-8 weeks is about average.

A bear market rally out of a yearly cycle low (other than a four year cycle low, the move into a yearly cycle low tends to be the most damaging decline in the stock market. This year was certainly no exception) will quite often tag, and occasionally penetrate the declining 200 day moving average. I tend to think that will be the case this time also. My best guess is the market will rally up to the 200 day moving average, then dip slightly into the next daily cycle low around the end of September. That should be followed by an extreme left translated daily cycle that tops slightly above the 200 day moving average (I guessed at about 1300 on the chart below) and then moves down into the next intermediate bottom due in late November or very early December. At which point the market will make a lower low, confirming a new cyclical bear market.

Actually the market has already met all three confirmations that a new cyclical bear market has begun.

1. Dow theory sell signal.
When the industrials and the transports both broke below the March low a Dow theory sell signal was triggered.

2. A move below a previous intermediate bottom.
When the S&P broke below the March low it triggered a new pattern of lower lows and lower highs.

3. The 50 day moving average dropping below the 200 day moving average, and the 200 day moving average turning down.

Investors need to be prepared. This is going to be a very, very convincing rally. The tendency is going to be to buy into the media hype, that this was nothing more than a severe correction in an ongoing bull market.

This was not a correction. This was the first leg down in a new cyclical bear market. And like all bear markets it will be subject to violent countertrend rallies that toy with traders emotions, and ultimately cause investors to ride the bear all the way to the bottom.

307 thoughts on “THE BEAR MARKET RALLY HAS BEGUN

  1. Visitor

    Hope you guys caught the upswing in NXG today. I’ve recommended that name several times here over the course of time. Also that you should have some individual names. More M&A activity in the future IMO

  2. jeff

    Tim,

    Why are central banks speculating by purchasing and “hording” gold in exchange for their fiat currency?

    In fact, if gold is in a bubble, why doesn’t the central banks dump their “gold” in exchange for fiat?

  3. Gary

    And if we lived to 130 years old that chart might be relevant.

    One has to be a little more astute than that. All markets swing from extreme undervaluation to extreme overvaluation. That’s just how human emotions work.

    Since 2000 stocks have been in the secular bear market. Commodities on the other hand have been in a secular bull market. Why?

    Because in 2000 stocks had reached extreme levels of overvaluation. Commodities on the other hand had suffered through a 20 year bear market and reached ridiculous levels of undervaluation, and underinvestment.

    Since it takes time to find and bring an oilfield on line, or a copper mine, or to plant and grow a coffee plantation, commodity bull markets tend to last 15 to 20 years. Eventually supply reaches and exceeds demand and then the large cycles reverse.

    At that point stocks will have reached levels of extreme undervaluation and commodities extreme overvaluation and oversupply. Then a new secular bull market in stocks will begin and another secular bear market in commodities will start.

    But showing 130 year chart that proves commodities are not a good investment is ridiculous. An ounce of gold will always be an ounce of gold, and a barrel of oil will always be a barrel of oil. Commodities will always have intrinsic value. And from time to time that value will increase or decrease depending on supply and demand and whether or not governments are debasing their currency.

  4. makutaku

    Tim,

    In May 2010 Cullen Roche said he disliked Gold as a long term investment, but he would trade it if it ever pulled back to $1100.

    I am wondering if he is still waiting for a pullback to that value.

    He also mentions two flaws of Gold standard:

    * “That they are inflexible”
    * “That they are susceptible to corruption”

    I’d say that the fact that gold is “inflexible” makes it much less susceptible to corruption.

  5. Veronica

    I have no idea, but I hope down:)I do not want to see another parabolic run higher, and I think time is running out for that very short term as the 9 day displaced average will sometimes act as a trampoline but so far has not.

  6. riley

    Visitor, have held nxg for 3yrs due to the fact they produce gold, and not a speculative jr due to that fact. Took profits on 5,000 shares, holding last third. You have to be patient with some of these producers. Auy another i’ve held for 4yrs, not letting go, this one will double in nest yr to 2yrs. Trade the dips on GG. Smoking the market as learned from learned master. Still learning cycles to trade pog.

  7. High 5

    T&J

    How many companies, which existed 130 years ago, would you guess have not gone bankrupt yet. Of course many have merged but many, many more went tits up. When a company shrinks to a certain level it is removed from the index.

  8. RJ

    Anyone suggest or have info on TKRFF?

    I’ve seen silvergoldsilver recommend this for some time yet it hasn’t really moved. Very illiquid.

  9. ALEX

    MICHAEL (your question from the last post-sorry so late to answer!!)

    So sorry man, I was where the hurricane hit in New England-I took my tablet to Starbucks for wifi to trade, but was unable to post here earlier.

    As a matter of co-incidence ( and DG could verify since I mentioned it in a note, but he’s away now too) I had been looking at NXG Last wk. The chart looked ready to pop- on a 3 yr wkly I noticed it popping on Volume and pulled back to $3, so I bought a LOT.

    After this mornings deal was announced pre mkt, I decided to basically sell both around the open-losing $1/ share on AUQ and making $1.20 on NXG. Since I had double the # shares of NXG…I just decided to cash out both & take the profits and just move on ( or see what happens).

    I was in a few acquisitions in the past (BGO, FRG, KGC,ETC)and they tend to stop moving for a while,so I cash out immediately .

    IF I was looking at AUQ now…I see the heavy volume sell off and think it will take time to repair itself. Maybe a bounce and retst on less selling? It has support at $11, but I cant say it’ll hold…If I owned here ,I might wait to sell the bounce,or just hold until it stabilizes? It could bounce to retest the 50sma?

    http://www.screencast.com/t/p5koMuVX

  10. William Wallace

    If this market bounce plays out anything like the break down from the H&S in 08, the Nasdaq will hit resistance at 2600, which is a major pivot, and continue lower for a couple of weeks putting in a slightly new low (around 2300) before a bear market rally occurs.

  11. Tim and Jeanene

    “But showing 130 year chart that proves commodities are not a good investment is ridiculous.”

    LOL Gary – you must not have read the article I included in the link.

    130 years of data are irrelevant? Commodities are not an investment, they are pure speculation is all. Hopefully one can get on the trend for awhile, and off near the top. But to buy and hold commodities as an investment is dumb. Maybe you used the wrong word there and meant – “…showing a chart that commodities are not a good TRADE is dumb”?

  12. Gary

    Any half way intelligent investor understands that the gold bull market will end at some point.

    The signs are always the same at every secular bull market top. A huge parabolic move. Massive public participation and extreme overvaluation.

    When we see those signs that will be the time to sell our gold and buy stocks.

    I’m pretty sure the next secular bull market will be driven by biotech.

    In the meantime I’m going to ignore that 130 year chart and continue riding the secular bull market in commodities, along with occasionally trading into and out of bear market rallies.

  13. makutaku

    Tim,

    If you choose where to start counting, you can prove anything. Do you want to be right or make money?

    Maybe your time frame for investment is 130 years. Mine, it is until the bull market is over. Whatever bull market for that matter.

  14. makutaku

    Gary,

    What makes you think it will be Biotech? Do you see any signs now?

    I am wondering if your passion for radical sports and excellence, somehow makes you biased in that area… Wishful thinking maybe?

    But in case you are right, do you think Biotech would then drive the next bull market in stocks?

  15. NJ

    Off topic, for a little humor, imagine what would happen if Tim, Beanie and Gary got together for some burritos! 🙂

    Ok – now before your imagination starts to run real wild, back to trading!

  16. DG

    Checking in here for the first time in a while (I am in Italy and posting more on the members blog). Had to comment on that adorable post from T & J:

    I don’t really care what you call an “investment.” An investment, a speculation, or a bliffle. The goal is to maximize after tax profits while limiting risk. My “speculative” profits are worth just as much as my “investment” profits, and no one ever asks me how the dollars were made when I buy something. Too, I sometimes hold an item for a long while but have never held anything for more than 125 years. If I ever plan to I will consult that long term chart, I promise! The folks who bought stocks in 1929 were probably not all that happy to hear that they were way ahead by the 1950’s. As Keynes said “In the long run we’re all dead.” Glad not to have missed gold’s run for the last decade, though I suspect it may not last 12 X that, somehow I don’t care.

  17. DP

    BTW, the upcoming biotech market is going to be amazing.

    The technology is already knocking the door.

    My buddy’s daughter is growing rat’s lungs in a laboratory experiment as a part of her masters/PHD program.

    What humans value more than their own life?

  18. Moondoggie

    Hi DG,

    I figured that you must be on your Italian sojourn, but I haven’t seen you on the member’s blog either .. what does your avatar come up as over there .. I think that it is different

  19. MikeStiller

    Gary-
    From what I understand, the gold market has not followed the classic ABCD cycle since we exited the 8-year cycle low and Q12009 $870 lows. May I suggest that the character of this bull has adapted from a smart-money driven accumulation to a a market dominated by central banks? From what I can tell in Q12009, central banks as a whole became net buyers of gold after years of liquidation mode. Appreciate your comments

  20. Tim and Jeanene

    Maybe that 130 chart can be used by some to realize that the reason they are on the gold train has nothing to do with the reasons they say it is going up – that being “money printing”.

    For trading – you need to be right maku, but a massive bull market allows people to be wrong and still make money. There will be a day when the bull ends badly, but if you hang on because of “currency debasement”, you will get crushed, wondering how in the world in can drop in price when the whole world is supposedly debasing their currency.

    But – most likely you will never hear the words “I was right about the trade for the wrong reasons” here on this blog. Hopefully the other tools in the tool box will over rule the supposed “fundamental” reasons for this move in gold.

  21. Tim and Jeanene

    More proof the fabled “money printing” is not the reason for the supposed gold rip:

    http://pragcap.com/wp-content/uploads/2011/08/qe2.png

    That is not supposed to happen to interest rates in the face of massive liquidity and out of control inflation……

    Remember when everyone was a genius in the dot com days? When eloan.com has the same valuation as the largest mortgage company in the world? Everyone justified the reasons for that bull market as well, and that bull market covered the fact they were wrong about the reasons for the run higher?

    Just sayin……. that 130 (its actually 140 years) chart is screaming – IT IS NOT DIFFERENT THIS TIME FOLKS!

    All traders are confident they can ride the trend accurately and get off at the right time when things are about to turn.

    Don’t let a strong bull make you complacent and falsely confident. We as traders are right, and then get confident. Then the trade starts to go against us and we hold on by justifying the “reasons” we are right. If those reasons are fundamentally flawed, you will get spanked.

    So is the 130 year chart valuable? Absolutely, because now someone who read this and looked at that will learn from the beast inside that is a bull market masking greed, when in fact they think it is genius.

    Just Sayin…….

  22. Tim and Jeanene

    No Le Fou – actually he didn’t ask that I leave….. sorry to disappoint you. He only asked that I not talk about MMT any longer, which I did.

    That is usually most folks response when they run out of answers for why MMT is not wrong. But this is his blog – so I obliged.

  23. Tim and Jeanene

    Jeff asked:

    “Why are central banks speculating by purchasing and “hording” gold in exchange for their fiat currency?

    “In fact, if gold is in a bubble, why doesn’t the central banks dump their “gold” in exchange for fiat?”

    Historically, CB’s are the worst market timers. Remember they all sold their gold in the $200 range. Not sure I want to be on the same side of the trend in the end as the CB’s. They will and can be right in the short term.

    Secondly, I never called gold a bubble. The chart is commodities, not just gold.

    My mantra when I write anymore is to quash the heresy that America is dead. A gold bull That rhetoric has been written about plenty on this blog, therefore, it is on my list of places to come to in order to shed light on “the other side” of the debate is all…..

    Peace

  24. Frank

    Gold is being driven by negative real interest rates. 0% interest rates is part of the Keynesian endgame.

    Luckily, I missed your earlier missives. And what is your purpose here?

    MMT? You have to be kidding. That statist fantasy is the only thing that Austrians, Keynesians and Monetarists agree upon: it’s rubbish.

  25. wolf33

    hui–could this be another day when patience counts—i would look for hui to be up 10 to 20 points. maybe more–JMO BEWARE

  26. Movax2

    The fundamentals for gold are pretty good I think. If gold prices drop, if the ‘bull is over’ where do prices go? $1000 per ounce? $500? why not $20 where they started when the fed was established? Really, if the currency debasement is not inflationary, why is gold not able to fall back to $20? Why was silver removed from coinage? Why was copper removed from pennies? Long term, (since the fed) gold has never had a true bear market, only one long consolidations after a superspike. (Didn’t make new lows)

    Check out the chart.. Before the fed, people understood gold and demanded an honest monetary system based on gold.. after the fed…and this chart is a few years old.

    http://goo.gl/S9Z2B

  27. aljiowa

    T&J, the article was from Dec 2010, it takes time for the money to move through the system.
    http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt

    M2 money supply is increasing sharply. GDP growth is declining. Debts are increasing. The US has already defaulted on it’s debt by way of inflation. The Fed will continue to take action.

    Always appreciate contrarian discussions though, as long as they are productive!

  28. Michael

    Alex,

    No worries that your post was late… Thanks very much for taking the time to explain your position and congratulations on a great trade on NXG… all the best..

  29. pimaCanyon

    aljiowa,

    You wrote “The US has already defaulted on its debts by way of inflation.” You are absolutely correct. However, this is not anything new, it’s not something that began in the last year or two, not something that Bernanke engineered.

    The US has been “defaulting” on its debt by way of inflation for decades! It’s only recently that more and more of its citizens are realizing this, and some are in an uproar about it. Where were these folks in the 70’s and why weren’t they yelling “the US is defaulting on its debt” then? IMO it’s a red herring.

  30. aljiowa

    Be patient. From what I understand US government revenue is dependent on GDP. Unfortunately at this point GDP will be hurt from deflation and inflation, but which option do you think the Fed prefers? Some day interest rates will rise, and our debt burden along with it.
    I’m not predicting a doomsday scenario here, I’m just looking at the cards on the table.

  31. Gary

    The next year will be deflationary as we sink back into recession or more likely depression. But the response will be the same more debt and more money printing.

    Historically when a country goes down this debt spiral the end result is a hyperinflation as there simply is no other way to service the debt other than to default honestly.

  32. Poly

    If we’re not already in recession right now, today, it likely will not be long.

    ISM and monthly jobs numbers out this week. In a sharply contracting economy, there are many downside risks.

    Although I believe a 4 week rally should unfold here, as the oversold sentiment and cycle positions suggest, I’m not playing it. It’s akin to shorting gold. Equities are now in a cyclical bear market, within a long standing secular bear. The surprises and shocks (although we’ve had many lately) will come to the downside. We’re already in week 4 of the new IT equities cycle and S&P add some 100 points. At this point, I’m focused on adding to short SPY positions on days of strength, knowing I’m likely early, but focused on building formidable positions for what promises to be an interesting fall season.

  33. jeff

    Tim
    The irony is central banks instead of holding “negative yielding” treasuries choose to horde or accumulate gold. Why would they horde gold and say not apple stock? Think about it, it might tell you something about what bankers really think of fiat and the nature of money. (And don’t construe this as hyperinflation which is a possibility and you feel a rather low probability one. Rather the hording of gold is a subtle concern with fiat by most central bankers that many monetary descriptions fail to fully account for.

    Also if you look beyond 130 years of commodities you might see a different cycle emerge. Something to consider. I may not agree with his conclusion.
    http://www.safehaven.com/article/1755/are-there-cycles-in-commodity-prices

    Sure you can cherry pick timeframe that bonds do well. But can you direct an investor in/out of asset classes, as they rise and fall to protect them from drawdowns?

  34. Michael

    Alex,

    I was not able to follow your last link on Screencast from your post to me.. Would you mind re-posting it? ARe you still bullish and holding RIC?

    Thx

  35. Shalom Bernanke

    I haven’t made any moves today, keeping everything as is, and looking for opportunities to add to miners.

    I won’t be adding to PHYS for some time, just miners.

    Stepping away so I don’t get pulled into a poor decision.

    Good luck fellers. 🙂

  36. jeff

    Pima,
    Re. 70’s. That’s the point.

    We are at moment like the 1930s where FDR confiscated gold and devalued the dollar to gold and “defaulted” on debt.

    Or like in 1971 where nixon closed the gold window, floated the USD and “defaulted” on debt.

    Notice the relationship gold/debt/USD one of them will change significantly in coming years. Granted today we have fiat so governments probable choice is to print to inflate away debts and thus not “default”.

    But when the deficits are not productively spent, what effect does this have on gold/debt/USD?

    The answer is where hyperinflationist, deflationist, strong bond/USD, gold bugs differ.

  37. Tim and Jeanene

    Jeff –

    “Sure you can cherry pick timeframe that bonds do well. But can you direct an investor in/out of asset classes, as they rise and fall to protect them from drawdowns?”

    Cherry pick? The out-performance on the chart shows 90 years of data.

    Next you ask can one direct an investor in and out of asset classes to protect from drawdown?

    Sure.

    It’s called diversification:

    http://harrybrowne.org/images/Perman6.gif

    Harry came up with the permanent portfolio and as you can see, up until his death, he didn’t lose much. The trend has continued as the portfolio is at new highs and the volatility has remained very low. Much easier than trying to guess where the next big thing is.

  38. Poly

    Michael, not really, especially if we rally the coming 4 weeks to the next FOMC. For me, that would be a sell the news event, as the QE would be light or seen as useless AND we would be in the timing band for a daily cycle top and deep enough in the IT cycle for it to fail out of the proceeding daily cycle.

    As we most likely already topped out for this 4 year cycle and the expectation for a “Savage bear” (pun intended) market to follow, just starting to get into the mindset and position to ride it down.

  39. Tajir

    Poly,

    You mentioned that you had small position in gold (metal) (not just miners). Are you planning to increase position and on what conditions (since it looks like DCL has been printed).

    appreciate your thoughts on the blog.

  40. Michael

    Poly,

    Thanks. I agree with you and am looking for shorting opportunities.. I think the effect of QE3 would be short lived except for maybe in bonds… depending if they opt for the “TWIST’option..

    Can you mention why you prefer shorting rather than using PUTS.

    Your posts are very much appreciated…

  41. Poly

    Tajir, I will add and on another good dip or test in the low to mid $1,700’s. Otherwise, I would have to buy a solid breakout. I have enough of a position to be happy with a solid breakout, but I’m sure I would want more 🙂

    There air up here is thinner, I’m far more cautious than I was on the run up to $1,770, the low lying fruit has been picked.

    Michael, I use puts.

  42. EricHendrick

    It appears that they are greasing the skids for additional stimulus. The following was posted August 25th:

    CBO: At Least 1 Million More People Working Today Because of Stimulus
    As the president reportedly plans to announce a new jobs package early next month — which may resemble a smaller version of 2009’s stimulus package — the nonpartisan Congressional Budget Office says the original American Reinvestment and Recovery Act is still creating jobs.
    The stimulus increased the number of employed workers by as much as 2.9 million last quarter, according to a new report by the CBO. The agency outlined other effects the legislation had on the second quarter of 2011 that wouldn’t have happened otherwise. Those effects include:
    • an increase in GDP by .8 percent to 2.5 percent
    • a decrease in the unemployment rate by 0.5 to 1.6 percentage points
    • an increase in the number of employed people by 1 million to 2.9 million
    • an increase in the number of full-time equivalent jobs by 1.4 million to 4 million
    The report also predicts that the stimulus will increase the the number of people employed next year by 400,000 to 1.1 million. That’s an improvement from a CBO report released earlier this spring, which estimated the 2012 effect would be much smaller.
    Still, the stimulus’ effects are waning, and they have been since the end of 2010, according to the study.
    The country’s unemployment rate is currently 9.1 percent, and it’s hovered around that rate all year

  43. PST

    If the stock market rallies into the end of September, that will weaken the case for the Fed to announce any significant action at the September 21st FOMC meeting. I don’t believe that the Fed intends on announcing any additional asset purchases yet anyways and the market is incorrectly assuming that it was promised another round at this meeting. The Fed is aware that additional QE will not prevent a recession at this point, and it could only exacerbate the problem if it sends commodity prices surging. Perhaps, failing to announce additional purchases at the September meeting will be the catalyst for the market to rollover and begin its decline into the next intermediate bottom. Either that, or the announcement of any actions that stops short of expanding their balance sheet could provide for a temporary bounce (bounce out of the daily cycle low???), before the market digests the implications of the Fed’s move.

    As mentioned before, I think that the Fed will try to keep the markets anticipating QE3 for as long as possible, without actually using it until absolutely necessary. In the meantime, they are pinning their hopes on additional fiscal stimulus from the administration / congress (jobs program, housing reforms, infrastructure bank, extension of payroll tax cuts, repatriation of foreign earnings, etc.), which would explain Bernanke’s emphasis on this topic during his Jackson Hole speech. The Fed is also engaging in a game of central bank chicken with the ECB, hoping their deployment of additional debt monetization and passage of the EFSF will be sufficient to keep markets stabilized (although hilariously the German parliament leaked the day prior to Jackson Hole that they would postpone the EFSF vote until 9/29 when the effects of the Fed non-action can be observed). If you believe that this isn’t all carefully coordinated, then you haven’t been watching close enough.

  44. pimaCanyon

    Jeff,

    Good points!

    You wrote: “But when the deficits are not productively spent, what effect does this have on gold/debt/USD?

    The answer is where hyperinflationist, deflationist, strong bond/USD, gold bugs differ.”

    What’s your answer to that question, what effect does deficits being poorly spent have on gold, debt, and the US dollar?

  45. Michael

    Poly,

    Thanks for the reply.. do mind me asking what expiration and stikes you are using?

    Gann,

    You going for a short term scalp or a little longer on your short?

    Thx for your input..

  46. Daniel

    PST–
    I appreciate your analysis when you post– I usually agree with many of your points! Please continue to post when the thought hits you!! Thanks 🙂

  47. jeff

    Pima you should really ask Tim that question because he has all the answer and not me.

    What’s worse is the Euro is having their own currency/debt problems now. For me, the reality is this is a political decision (i.e Nixon or FDR). No one would predict nixon was closing the window or FDR was confiscating gold. Will the Fed/Obama (or another prez) choose to print or move back to a gold standard or lose the reserve currency or join a war to stimulate the economy (ww2). Or maybe something else I’m not not smart enough to guess?

    The information we have at this time, makes me agree with Gary that government will continue to print and keep rates low. And so gold will rise until the monetary system/interest rates are resolved. $10k invested in treasury will return $10k but adjusted for exchange rate and inflation there is some notable risk. The USD will have to decrease in purchasing power. It may rally along the way if we get deflation as capital “seeks” stability (i.e safety behind the US military and economic might).

    Notice I put no timeframe 🙂

    Seriously how can we know, we gather evidence, make a prediction and if the facts change we have to change our forecast.

    The best case for US, is that some new industry akin to tech in 80s revitalizes the economy. I’m hopeful but don’t see it yet.

  48. Ben

    “The combination of arrogance and ignorance you display is shocking.”

    That pretty much sums it up. Future investing carcasses, if history is any guide at all.

  49. Gann360

    Hi Michael

    i covered my short here at 1204 ,Banked 9 points,i am going to wait n see if we retest the High’s and maybe hit 1220.i was looking for the first few days of September as a Possible high, but we tagged my 1214 already, so i am nnot sure,

    It seems to early for e selloff here,
    but i could be wrong.i ‘ll and see

  50. Tim and Jeanene

    Interesting jab Jeff –

    I have all the answers? Because I took your comment and wondered out loud how you accuse me of cherry picking when I put up a chart of 90 years worth of data?

    Then you asked somewhat sarcastically I assume if I have some ability to pick every asset class and time is correctly, to which I basically said no – the only answer there is diversification and rebalancing. That answer is the epitome of saying “I don’t know, therefore, own it all and rebalance it.”

    If I though I knew it all – I would start a blog and charge people for my opinion where I think the market was going.

    Big difference there. But I understand your jabs got blocked, and you might be reeling a bit – therefore it’s time to turn things personal.

  51. Daniel

    T and J

    Read this–
    http://mises.org/daily/5574/On-the-Brink-of-Inflationary-Disaster

    I particularly liked the following (from link above)!!

    There are several (possibly overlapping) explanations for this break from the past. Keynesians such as Paul Krugman argue that this was the predictable outcome during a liquidity trap. Proponents of MMT (modern monetary theory) argue that the economic textbook discussions have things upside down, and that banks are never constrained by reserves when deciding on making new loans. Quasi monetarists lament the Federal Reserve’s decision in October 2008 to start paying interest on excess reserves — a policy whereby the Fed actually bribes banks not to make loans to their customers. Free-market guys like Mish (as well as some card-carrying Austrians) have argued all along that significant price inflation was never on the table, so long as the financial system worked through a painful process of deleveraging.

  52. Tim and Jeanene

    Daniel –

    I haven’t even brought up MMT again except to mention Gary ask I not talk about it again. So I won’t be drawn back into that debate out of respect for his request.

    I am talking purely commodities and money printing. The long term chart I posted shows that the real price of them hasn’t even kept up with T-Bills over time. I just find it interesting that the gold bull market ignores this history as everyone claims to know what the price of gold is higher today than 10 years ago. The truth is, gold has been way undervalued compared to most asset classes and is just now having it’s turn in the spot light. Unfortunately, the bull is sold as the End of America. The Keynesian end game as has been stated.

    Nothing more than people on a bull market finding reasons to try to convince themselves to stay on.

    I prefer to not be so tunnel visioned is all. Ride it while its good, but don’t try to blame the Fed and supposed US “money printing” as the reason. There are many stronger correlations than those:

    http://pragcap.com/do-gold-prices-correlate-with-u-s-inflation

  53. jeff

    Tim yep I was over the top. Re. getting personal…you do realize you came on the site to say silly people why are you worrying about inflation…avoid commodities dumb dumbs. I exaggerate but you get my point.

    If diversification is profitable for you great. And if others can buy a commodity such as gold near the bottom and sell close to the top well that’s fine too don’t you think?

    Sorry I’m being such a jerk to you, I guess it comes naturally to me.

    Also re. interest yield (and I realize the Fed controls yield curve) but this my be of interest (no pun intended).
    http://www.mcoscillator.com/index.php?/learning_center/weekly_chart/60-year_cycle_in_interest_rates/#When:18:46:34Z60-year_cycle_in_interest_rates

  54. Tim and Jeanene

    Thanks Jeff –

    I reread my first post and tried to see it through the way you interpreted it, and I can see your perspective. I will use more tact next time.

    My intention, for the record was to share it and hopefully get people to think that commodities are not the only safe haven to run to as America Collapses. I spend a ton of time refuting those fear mongers who talk about the End of America.

    That said – don’t be a dumb dumb…… (I’m kidding)

    Just know that was not my intent. I should know by now that people on here are ready to fight any time I post anything though (thanks to the debate/argument on MMT) – so not sure I can post anything that is against the grain and not be accused of being ignorant and arrogant.

    Rest assured I will still sleep well tonight knowing that though. 🙂

  55. coolkevs

    In DeMark land from Kevin Depew at minyanville.com, SP futures saw a qualified break of a TD line, giving a price objective of 1261.5. We are today on Bar 5 of 9 of a DAILY TD Sell Setup. If this happens to record, that will interrupt a TD Sequential 13 BUY sequence, which would more than likely mean the “low” is in. However, we are entering the last month (Sept) of a MONTHLY Sell Setup and what a good call that has been. MONTHLY, we also are in a TD Combo SELL signal that recorded in April, good through next March. This is where I diverge from Gary, in that we are emerging from a 12-year SP SELL signal at the end of 2011, so that big pressure of selling will be complete. Perhaps we see a new low, perhaps not – jury to me is still out on whether this is a new bear market. As I have said, I’m still not getting that warm fuzzy Lehman/Bear Stearns feel I had when I was a shortaholic in 2007/2008.
    Otherwise, DAX market has a DAILY TD Combo BUY signal in place as well as a qualified TD Propulsion UP level giving a target of 5903.87.
    Gold – recently recorded a DAILY TD Sequential SELL, and a WEEKLY TD SELL Setup 9 has recorded this week – 1 to 4 weeks starting next week of weakness with gold.
    AAPL – the belle of the stock ball. Recorded a DAILY 13 SELL yesterday, good for 12 days. However, there is a TD Propulsion Momentum break up with target of 400.02. Also, on Bar 5 of an overlapping DAILY SELL setup – so momentum should carry stock up to 400 before the 13 kicks in. Longer-term time frames, TD Sequential 13 sell signals have recorded on both the WEEKLY and MONTHLY charts, so AAPL is a stay away stock.
    Thanks for reading!

  56. Movax2

    T&J

    Simple question – if someone offered you an ounce of gold, or a 100 ounce bar, for free, would you accept? Of course you would, despite your feelings on gold. Even the most staunch gold-hater would accept (maybe with few exceptions) because they know that, even if they don’t care for a certain investment or item, it still has value to others. If the others (market) decide that something is valuable, your personal feelings/opinion is irrelevant, no matter how right you are.

  57. MrMiyagi

    Movax2
    Anyone with a functioning brain cell would accept an item of value for free, some even would take illicit and contraband.
    So, where’s this gold you speak of?

  58. jeff

    Tim…I’m cool. I find sometimes inflation deniers can be as dogmatic as they claim some death to america folks to be.

    Personally both groups have good insights and I can move back and forth in opinion. That said, I like to slant the bet towards where the facts are pointing me to at the moment. At the end of the day all that matters is that we are both profitable and therefore correct 🙂

  59. pimaCanyon

    T&J,

    As many here have pointed out, most of us do not have 130 year investing horizons.

    If you zoom in on your chart and look at the very same data from the year 2000 to present (you can even use your own chart to do this), you’ll see that PM’s outperformed all other asset classes during that time frame.

    11 years may not be long enough for you to consider it a long term investment horizon, but I think most of us here would consider 11 years (with likely another 4 to 8 years ahead of us) to be plenty long enough.

  60. Dan

    Gold continues to outperform PM shares today again. Can someone explain to me why u would go long PM shares instead of gold ETF?

    I’m really at a loss with this recent trade of PM shares instead of the gold.

  61. wolf33

    HUI—approaching +10 again—just seems to me this could fly to +20
    but is a struggle. Like yes i can,
    yes I can. Still think today can do it.

  62. MarkMarin

    Rapper,

    I added to RIC this morning on the breakout above $10.10. Great move today, up 15% and should appreciate much more. Of course, many of the junior miners are performing well today, but RIC leads the pack.

  63. Hack

    Gary;

    I call them like I see them. Please don’t shoot the messenger. I am however keeping my miners, AAPL and MCD in any event. Adding a short here and there…

  64. ALEX

    Michael

    Sorry again, I was away from here today. You asked (THIS MORNING) if I still held and liked RIC here-

    ahhh, if i didnt I would lie and say ‘yes’ now lOL

    Actually , I do. I posted this a couple wks ago and got in then and added since then

    http://www.screencast.com/t/SAx60S7Q

    I also bought SVM yesterday , I added to my JVA position ,JDSU and GPL this morning, but since I am so “off and on” here lately, its best to come up with an exit plan if anyone follows my buys. I apologize for sporadic posts…I used to read each and every post…but it gets off track at times, and so I just go elsewhere.

    JDSU I was just trading ,maybe sell at the 50sma?

    I also saw this on JVA & bought

    http://www.screencast.com/t/zZ0nRjchNPM

    I had traded it when it ran from $3 to $30 in a month!! At that point I traded the coffee stocks ( see also CBOU).

    Best Wishes

  65. ALEX

    DAN

    I guess its a matter of preference and stdy?

    If one knows what to look for , one could be in RIC, SVM, EXK, GPL, CGR, SHZ today. These I drecently purchased. (also JVA, CBOU, and JDSU)

    %-wise they tower over GOLD ,if you trade them — (unless you use options like POLY and BOBLOVES HAWII WINGMAN and DG and a few others who have their own style and do very well).

  66. Gary

    Hack,
    Just curious, what is it about an up trending market rallying out of severely oversold conditions, that makes you think we are reaching an exhaustion stage before we’ve even triggered a four day rule trend reversal?

    This is how bears get destroyed in bear markets. They never give the bear market rally enough time to finish it’s move.

    You could at least wait for the market to drop back below the 10 day moving average.

  67. Gary

    The market is short-term overbought. I was actually surprised that it showed as much strength as it did today. I was expecting a more choppy or even slightly down market.

    If I had to guess I would say tomorrow will probably be one of those back-and-forth days to work off the short-term extremes.

    However tomorrow might be the day that the miners breakout of the nine month consolidation.

  68. ALEX

    RUSSELL

    LOL

    I had to read that 2x before I got what you were saying 🙂

    Getting ready for dinnertime on the East Coast- Gnite all

  69. Ben

    Today made me a little more of a believer that gold might chop around in a shrinking triangle. I added to some miners (mostly GDXJ), was happy to be sitting on a chunk of RIC. My biggest position is NGD, and it continues to move.

    I’ll probably sit on this level for a bit. Amazingly, I still owned some GDXJ that was underwater before today. A catch-up move would be very welcome.

  70. Pangloss

    T&J,

    Here is an example of your comments and why people think you come here to fight:

    “If I though I knew it all – I would start a blog and charge people for my opinion where I think the market was going.”

    Why the dig at Gary?

  71. Tim and Jeanene

    No doubt that was a shot at Gary – but first read back through the blogs and find out who first called who and idiot and other names……

    Gary many times has shown he can’t have a debate. He is right – and everyone who doesn’t agree with him is an idiot.

    That was not a dig at you or anyone else.

    To be fair – I have actually tried hooking Gary up with a firm that can promote his site. So while I have engaged him in debate, and withstood some of his personal jabs, I have also tried to help increase his business.

    Don’t get too caught up in defending Gary. The dude is a weight lifting stud, and a Judo Guy. He can handle himself.

  72. Brian

    T&J….. please. Why are you hanging around. Please go find your own circle of friends. We really are not interested…. please…

  73. Jayhawk

    Tim-

    Most of us hear are trading the bull market we see in front of our faces. The whole inflation/deflation thing is a big yawner to most. If the chart says get out of gold and silver, we will.

    —thanks for your concern!

  74. Hack

    Market up today on weak volume. We’ll see tomorrow if the prop desk guys are right in selling longs and/or shorting the market…

    In any event we have retraced 50% of the yearly high…

  75. Tim and Jeanene

    Huh – section 8 trash? You sure you have the right guy?

    Some of you might verbalize that you get nothing from the debates, but I have had plenty of people read my articles and respond and email me directly with questions. So while I have no misguided ideas that the majority is interested, the fact that some are getting educated on the reality of the situation is well worth my efforts. Trust me, I get no benefit from spending time doing it, but it sure is satisfying to see someone get the weight of the “End of America” fears off their shoulders.

    I had to go through that process as well. I used to be Mr. Gloom and Doom and had ZeroHedge as my browser home page.

    So – if you despise me – just skip my posts dude, no one is forcing you to waste your time reading my drivel. Bot for every ten who hate my guts, there is one who realizes there is another side to the end game story and they take the time to learn it. Well worth my efforts.

  76. Keys

    Feel free to ignore…

    I took off my hedges for my core…feeling the parabolic threat is still there, but can be monitored instead. I find it disappointing gold is acting this way, it will make for more confident investors that may lose quite a bit when the real deal hits.

    The fact is that the gold bull will end with a parabolic run at some point….the fundie support will be there, the public will be in, and the price action will be screaming higher…

    Many will leverage up into the trade as the thing goes up, and when it corrects it will destroy probably many who followed the gold bull, as they leverage their gains into more investments.

    I will continue to trade out of parabolic moments, but for now things seem to have settled(volatile) but not crash to 800, so enough for me to release my core without put protection.

    As per the miners, I grow concerned over time…as an old turkey strategy, with perhaps the exception of SLW, which is not a miner…

    With a surge in demand for gold, the easy gold is gone, miners have to dig deeper and longer to get the ounces out. If we get a true economic blow out, and gold surges, demand will surge….ironically peak gold(as defined as a cost function, not a quantity function)…may take its effect on miners…hence going forward there will be no old turkey strategy on miners going forward.

    I look forward to adding to my physical core in gold as we get through this strange time…

  77. Skogie1

    Gary, do you have any opinion on the Consumer Sentiment Survey? I read today that it covers 3,000 households across the nation. Across the whole nation, are you kidding? That’s like .000025% of the population or something. Seems like a thin sample.

  78. Veronica

    Even though gold looks flaggy to me and it’s doing a crawl on the 9 day displaced average, my system will go back to a buy 35 bucks higher from here.

  79. Natanarchist

    @keys. re: miners and low cost gold.

    While perhaps it is true for the big miners, that their low cost gold is coming to an end, there might be many juniors with low cost gold ripe for a take over/buyout. Those are the ones to find.

    As for old turkey, I prefer to do that with physical metal and CEF. Like you I doubt I will do that with a miner.

    @ T& J

    What does this mean?

    “…but it sure is satisfying to see someone get the weight of the “End of America” fears off their shoulders.”

    What “America” are we talking about that might end? Clearly America today is not the America of 1776 or 1876 or even 1976….so what does your end of America mean? And is that really what people fear?

  80. Gary

    I never really understood that either. What Americans fear is being out of work, of not being able to afford the necessities of life, of losing their homes, of losing their savings, etc.

    The monetary policies of the current and past administrations and Federal Reserve are making these fears real and no amount of hocus-pocus monetary theory will change that.

  81. High 5

    Personally I welcome the “End of America” if by that you mean the end of the cancer of American Socialism.

    The real fear is that this abortion of freedom continues unabated and that idiots continue to imagine they can centrally control the worlds most powerful economy by turning knobs and pulling levers on the printing presses.

    Central Planning
    “From the saintly and single-minded idealist to the fanatic is often but a step.”
    F A Hayek

  82. RJ

    Quick little fun fact for what it is worth.

    I “eyeballed” the daily GDX chart.

    Today’s close was only the 4th time at $63+…

  83. jeff

    I’m guessing he believes if someone is pro-Gold than they must believe in “collapse of america” …i.e get a gun, canned beans and gold bars for hyperinflation and head to the secret hideout. I’m not in that camp just yet but I can see how it can play out.

  84. Keys

    Natanarchist,

    I think we are saying similiar items. The risk/reward of old turkey on miners is too great…of course there are those miners that will do well; I would expect it.

    But I will keep my core in physical; my only exception, as noted, will be parabolic moves..in which case I will do the best of my abilities to hedge with puts(most likely) until the scare is over.

    Thanks for sharing!

    PS still nervous about gold, just on the monitor now instead of hedged out. Will put the hedges back on, if Gold does something stupid yet again…but for now it seems to want to consolidate for a bit, which to me implies still upwards to go.

  85. DG

    T & J: I have no problem with your posting here. So long as you are respectful (which you almost always are) what’s the problem? Yes, posts can simply be skipped.

    Re “The End of America” being widespread…the majority is RIGHT in the middle of a move. Obviously the U.S. is in trouble, so it is not surprising that that camp is gaining adherents. I have not seen one realistic scenario that gets us out of this mess. The fact that the public is discouraged means nothing to me re contrarianism.

  86. Turenne

    @ GARY

    1) what are the chances that GOLD and Silver will not go through a D-Wave before the end of 2011?

    2) Is there a time of the bull market at which you will buy physical instead of ETFs?

    thanks

  87. Ivan G

    @Turene,

    I don’t think anyone can bet on time of the D-wave. I guess all of us here have the goal to be prepared when we see it looming.

  88. Gary

    One has to admit Stansberry has hit the ball out of the park with every single one of his predictions.

    I guess one could call it fear mongering. I tend to think of it as someone who understands how real markets work and the consequences of bad decision making in government.

  89. St. Deluise

    looks like i might be bailing on my SPY long today. 123.22 (233 hourly MA) is my target.

    probably end up being a week early but there is way too big a volume profile gap in the 123-124 area to get through without huge move lower in the dollar. and as i keep yelling into the wind, the dollar is on the verge of something big.. to the upside!

    GDX still looks good (to mid 64’s at least), still hate GLD here but whatever!

  90. St. Deluise

    what week are we on? 3?

    what i think may happen is it just stalls out here until bernanke delays the printing again at the next fomc meeting in a few weeks. at that point people will realize there won’t be any more printing (for a while) and the bear resumes.

    to be honest my system is pointing to SPY 131.3 but i’m overruling that one.

    anyway out for today, good luck everyone

  91. Movax2

    MrMiyagi,

    Some people would surprise you:
    http://www.youtube.com/watch?v=WAaVK5AkZzI

    I think my point was clear. I was trying to say it doesn’t matter what your personal beliefs and feelings are, the market is always right, if the masses think gold is the place to be, and abandon the dollar, it doesn’t matter what the (theoretical) math says.

  92. Silverhound

    Alex

    You are a charting machine. If you are trading all those miners at once, I bet things get busy on the big down days 🙂

    How is it going trading in the hurricane zone? I was in cyclone Yasi and we lost power for a week here. Had the mini laptop running on batteries to check my trades each day. I try to only have a couple of positions going at any one time so it wasn’t so bad.

    Best of luck.

  93. JohnChurchill

    Should I own gold now or will I get trashed in a major correction? Is there a chance that the D wave will not occur because Gold does not follow the pattern anymore?

  94. Tim and Jeanene

    “One has to admit Stansberry has hit the ball out of the park with every single one of his predictions.”

    Not really they don’t. He might be analyzing what is going on accurately, but his predictions of the future and conclusions he draws have not happened, and most likely won’t. He is stuck in gold standard brain.

  95. MrMiyagi

    Movax2,
    I saw that clip a while back and could not believe the stupidity! That’s why I wrote “..functioning brain cell” because there are far too many without.

  96. Gann360

    Mr M

    We were Big time over sold,So a bounce i knew was coming,,,i just wanted a retest Pierce ,,of the Lows with a Bottoming tail Reversal,Than we would of had a Positive Divergence on the Oscillators,

    But i have a Pivot in Time for the end of this week, so maybe we Peak today/Tomorrow , and Than get a Nice pullback from here.

    Depending on the Pullback, we may go back up again to new high’s , Above 1230 ish, should 1230 hold that is.

    There’s a ghost Print on the SPY to around $127 ish,, a few Candles ago,,Maybe we go there in Time…lol

  97. TommyD

    Larry,
    People like t&j was the reason I drank for 45 years.
    Now I just set back making doily’s at my local rehab centers. It gets better, honest!

  98. Gann360

    Take note of that Ghost [email protected] 127 ish,,,,i did, if/when we go back up , that Print will no longer be there,(it will be removed ) but, watch that level, cause it may come into Play..

    i have noticed it happening ,Since 2008….again and again ,we get a Ghost Print, and we end up Tagging it,,,,

    Please do not take a position ,cause of a Ghost Print,i;m Not,,but for fun ,rememberSPY $ 127, and we shall see if it Get Hit..

  99. Daniel

    T and J
    Many of us are not Gloom and Doomers. being a Gold Bull does not automatically make one an “End Of America” believer! Even if we are mostly Austrians (my guess) as opposed to MMT believers! Case in point– I like to make money in stocks as much as I like to make money in gold–and sooner or later (probably late in 2012- near the height of end of the world talk) we will be able to “BACK UP THE TRUCK” and purchase stocks!

  100. St. Deluise

    elaine, here’s a pic of it

    http://i52.tinypic.com/11jokus.png

    i think they must have something to do with options being exercised. on a tick chart there was very little volume during this one. however, there was a large amount of selling at around 10:53. i’ve seen them be leading indicators and i’ve seen them fail miserably.

    effective volume in most indexes currently pointing towards a test of yesterday’s low. seems like the majority got cold feet and booked it during yesterday’s selloff at the end.

  101. MrMiyagi

    Elaine, Michael,
    I could pretend I know the exact cause but I’d be bullshitting you.
    Sometimes it is an error in the data, the ones I posted links to don’t seem to be errors. The volume doesn’t go nuts as with a huge buy order so I don’t know. I find them interesting and wonder if there is a buyer paying that much above asking for real or is it a Market Maker trying to push up the price.

  102. Gann360

    Maybe it’s Uncle Ben , Giving his Boys a Smoke Signal Heads Up on $127..lol

    Just Kidding

    it’s the Market Makers, maybe a bunch of orders hit at the same time,and for a split second there isn’t any sell orders, and we get a Spike on the chart, it’s all BS..

    Unless it’s a crash, Like when,so many sell orders hit and continue to hit without stopping,which causes a Panic ,and more selling hits,cause of that) market makers will not step in front of that ) ,like on May 6 2010

    But these little Blips in Volume, should be Eaten by the Market Makers, imo they should not! Happen.

  103. Gann360

    Years ago, one guy told me it;s late orders that didn’t get filled,,,Yeah ,Right

    Thats total BS,,,,Again

    why would late orders get filled 50 points above the Market !!!

    watch ,Today’s Ghost Print,Should be removed.

  104. MrMiyagi

    They are supposed to keep the market moving fairly but no one bothers to check, they are all in it together but we try to nibble without being seen.

  105. MrMiyagi

    WW,
    I’ve noticed those as well but the difference there is that there is volume, as you stated. The huge buy order takes out all asks until it gets filled and that is why you will usually see something like 1,500,000 @ 117.8841$ as the whole lot’s price is averaged.

  106. Avann

    Eamon … Canadian here and here’s what I use.

    HSU for S&P 2x levered
    HQU for Nasdaq 2x levered
    HBU for gold 2x levered
    HZU for silver 2x levered
    XGD for miners not levered
    ZJG for juniors not levered

    I do not worry too much about the volume (low on some) … I’ll use a limit order to protect if I think I may get fleeced … never been a problem so far in 4 years of trading them.

  107. Éamonn

    Is the Canadian dollar a hard currency? Does the Canadian Government have a Ben Bernanke? Excuse my ignorance, I haven’t a clue

  108. deshy

    Eamon: A cdn bullion etf that tracks almost in sync with GLD is CGL (Claymore bullion). There are no miners in this one unlike the others (except HBU of course)

  109. William Wallace

    Hit that Nasdaq 2600 resistance I was expecting, took my TQQQ off and put on the QID, and like I have been saying if this plays out like 08 we will be putting in lower highs over the next couple of weeks until we put in a new low and then the bear market rally will begin.

  110. oa92000

    ” William Wallace said…
    Hit that Nasdaq 2600 resistance I was expecting, took my TQQQ off and put on the QID”

    WOW! is that it?? the end of rally??

  111. St. Deluise

    the tell here is that gold is falling with equities this time.

    and sure enough, good ol’ DXY fading all this QE3 hullabloo and has been for the last month.

    next couple months should be a real mess.

  112. Hack

    Larry;

    I see volatility; quality companies taking a hit plus retail numbers tomorrow and jobs numbers Friday. Look at TZA if you want to walk on the wild side…

  113. traderlady

    Today, end of the month window dressing. Unless you are a day trader then do not sweat the wiggles:) The
    first day of the month is almost always positive:)

  114. DG

    My take on where we are: We are not going down any time soon. We had one of the most severe drops in history and the bearishness is still high, the trend has started up, and insiders are buying at record amounts. Just doesn’t make sense to start another down-leg yet. Anything is possible of course, but if you bought the Q’s when Gary said, put in a mental break even stop if you like (it won’t get hit) and just let the profit run a bit. Taking tiny profits will never make up for the inevitable losses, so if get a good entry point you have to let it run.

  115. David

    Rob,

    I think he said to place a stop at your buy price.

    I took his advice this time and placed stops a little above my buy price — though I tend to think that a mental stop is worthless. Few people honor them.

    If you have a hard stop in, you’ll honor it.

  116. Clarkatroid

    I execute all garys trades, when he does them in recommended %, but I deviated on qqq trade and went for EWY instead- Ishares msci south Korea- When Gary trades the general Market his trades (so far) are restricted to American stock Market trackers.

    I did this because it’s liquid, tech weighted, and probably more oversold than any index in thd world.

    I’d be interested in or anyone’s thoughts on Market trackers outside his Borders

    EWD, msci Sweden is also a favourite of mine , a well run country with a good balance sheet

  117. TZ(8155)

    ROB L,

    >Did today’s leap higher in gold change any of your near-term expectations?

    I am of the same opinion that gold peaked last week.

    Granted the rally up in the last few days is stronger than I expected, but it still does not go high enough (yet) to significantly argue against a peak. At this point it appears to be only a sharp bounce designed to sucker people back in (or get them hold).

    Alternately, If we continue higher I will tend to then shift to gary’s possible “triangle” scenario – but that would still take a while to play out and offer entry points closer to the recent lows. So not too much damage in waiting.

    While not intentional, I have found that Hoye/Clark’s last two recent posts are very much in tune with my thoughts or projections of gold from here. I came to my comments independently, but it is useful to see someone else agree with them due to different historical observations:

    http://www.321gold[PUT.DOT.HERE.TO.FIX]com/archives/archives_authors.php?author=Bob+Hoye

    Unless I see a triangle forming I think gold is still heading towards 1600. (Or, obviously, unless we break the high and continue screaming higher).

  118. TZ(8155)

    I sold much of my core (what I had left in excess) around 1750 on gold. That means when it rebounded back up to 1840 I felt pretty darn stupid and that I should have bought back or never sold.

    Mission accomplished – that is what markets do.

    Now that it has done that it can now proceed back lower. Hopefully I was simply good enough to resist that urge and my beliefs are correct.

  119. TZ(8155)

    Note that I’m not trading QQQ or S&P. It isn’t my thing. I feel more comfortable with bullion. And I have other things to do right now so I could use the break.

    I’m just mostly cash waiting to see what gold has in store here. Might take a few weeks and I might miss some upside or have to chase if I’m wrong. So be it.

  120. KAL

    Did anyone else notice that the QQQ’s tagged the 50dma today and were turned back? SPY still 3.5 points from the 50dma. I seem to remember someone smart saying it usually takes a couple attempts to bust through the 50. Anyone? Just trying to get my tenderfoot badge here so I’m not so much of a rookie. Thanks!

  121. youks

    Moneyman said…

    What about this?

    http://brucekrasting.blogspot.com/

    I think that we might go higher then anyone expect..Everyone is waiting to short the stockmarket but I think we might go a lot higher..

    They will do everything to prop up the market and the economy..
    ——————————

    If this were to happen, does this equate to printing money ie., bullish for PMs?

  122. JG

    Farm girl,

    There are WAY too many gold bulls, just myself i’ve noticed:

    – People at work with no previous interest in the markets talking about gold
    – So many adds on the internet and in the papers (europe) advertising gold

    BUt what really caught my attention was this news story on the BBC on Australians quitting their jobs and moving to the country to pan for gold – you’ve gotta laugh! add to this how stretched gold is above the 200mva and what you have here is a fools rush!

    I think the USD is more of a safe haven right now than PMs.

    I’m sure alot of other PM followers on this blog have noticed the same thing.

  123. Frank

    I saw a piece on unemployed Californians in 2009 or 2010 who were panning for gold.

    And when I was in the US this past winter there was a “reality” show about some guys with big beards who were engaged in amateur gold mining in Alaska. Apparently they were all broke and were liable for underwater house in the lower 48.

    So what? This is fringe stuff.

    In 1980 there was a real mania. In Copenhagen where I grew up average people lined up for blocks in order to buy silver and gold coins.

    The average conventional wisdom in the media is that owning gold is foolish.

  124. DG

    Kal: Yes, a declining 50DMA does often act as resistance, but not always. If you are wanting to short or sell it’s a good place to do it, but in a bull move it’ll just stop the advance once or twice…but sometimes you just go through or gap right through. This is a tough game and the consistent rules are few…which is what makes it so much fun!

  125. Driver

    Gary/all,

    Does my purchase of CEF mean that they hold that gold/silver and that I can claim the physical any time I want? In other words, am I buying physical and they’re storing it for me? Thanks.

  126. Shalom Bernanke

    Let’s see if the ISM# at 10am is a catalyst to get stocks moving one way or the other.

    I didn’t do anything yesterday, except cut firewood. 🙂

    Most likely won’t be doing any buying today, but will no more after 10am. Not remotely considering any sells, only looking to buy more miners at some point.

    Good luck today!

  127. Shalom Bernanke

    I also re-calibrated my miner basket so that it has 7 names instead of the 5 prior.

    No new shares added as yet, but further purchases will be spread between all 7 names (weighted on expected volatility).

  128. Avann

    Driver … if you tried to convert your CEF shares to physical pretty sure that would be a no.
    I called CEF directly on this and that’s what I was told … you cannot convert shares into physical.

  129. TZ(8155)

    Gold has been pushing 1840 for almost 4 days now from the bottom in an apparent triangle formation.

    We MAY go higher, BUT if we do not there would be a pretty rapid unwind and selling by people who thought we would go higher or who never sold the first decline last week and suspect it will resume.

    This tight coil for days is about to break and my opinion (along with Bob Hoye and Ross Clark) is that it resumes lower.

    By tomorrow the direction of this week should be pretty clear and if the week is again down rather strongly then I believe my view that this is only a bear rally for a few days will be correct.

  130. sophia

    TZ,

    I knew that you never traded stocks but I wanted to make sure that my little favoritr, ie the German stockmarket was getting trashed when you sent your note.
    Btw, I agree with you vis-a-vis gold….too many people looking for 2000-2200

  131. TZ(8155)

    Sophia,

    I still think we get 2000+ by end of year. I just believe we drop to 1600 or so first.

    If we rally back towards the high, however, I will start believing this is a large triangle instead.

  132. Avann

    Eamonn and anyone else who may have seen my post regarding ZJG (Canadian Junior ETF). I wouldn’t bother with it … although it’s easy to get filled sometimes the spread is just too drastic and with the low volume you’re forced to take what the market maker offers. I’ve been trading it the last few days and it’s just not working out for me. Furthermore the data feeds are not accurate … the volume it shows today is actually less then what I have traded … I give up on it.

  133. deshy

    Avann: Thanks for the heads up. I was ready to pull trigger on ZJG when time is right…but given your comments may pass. Let me know if you find anything else…I couldn’t.

  134. Gann360

    Avann

    CEF is something i like on the Canadian Side

    It’s not an ETF, But something worth looking into.

    they Hold Real Gold-Silver !

    Not Paper Promises

  135. Avann

    Thanks Gann360 … I do trade CEF as my insurance against a paper failure.
    BTW I love your charts and follow you on twitter … thanks

  136. Poly

    Gold building a base and the bid beneath it’s wings is evident. While it remains above $1,705 AND below $1,850, we’re in good hands, but we need much more than 7 days to work off the last 30% run, lose some weak spec’s and let the averages work up.
    I’m now suspecting (hoping)we may see a short (through Sep), flat and range bound daily cycle here, allowing for a parabolic run to unfold in Oct and Nov to top off a monster IT cycle and C Wave. Working thought’s still, but the action is encouraging, for now.

  137. Gary

    It would be pretty rare for an intermediate cycle to roll over after only three weeks. This should just be the move down into the half cycle low followed by another push higher.

    The pattern of higher highs and higher lows is still intact.

    Not that I want to buy the stock market anymore. We sold the other day when the QQQ’s couldn’t break through the 50 DMA.

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