THE NEXT SELLING WAVE IS ABOUT TO BEGIN

As many of you already know I expected the dollar index to put in a major three year cycle low sometime this year. The normal timing band would have been for a bottom in the spring. The recent breakout and move to new highs has confirmed that the May bottom did in fact mark the three year cycle low. As expected that also marked the top of the cyclical bull market in stocks.

It’s widely expected that the Fed will announce operation Twist at today’s FOMC meeting. Obviously if printing several trillion dollars didn’t save the economy, then rotating the Fed’s balance sheet from short-term interest rates to long-term in the attempt to hold down the long end of the yield curve isn’t going to have any effect at all as the approaching recession intensifies. Interest rates are already at historic lows. 

Interest rates aren’t the reason why people are not borrowing.With continued high unemployment There simply isn’t enough demand for businesses to expand their operations.  The American consumer is so deeply in debt that he can’t service  it. Unfortunately, we can’t print money like the US government so it doesn’t help us to go deeper into debt. The US consumer will not be borrowing money any time soon.

The bottom line is operation twist will be a miserable failure just like QE1 and QE2.

The stock market, and gold are now moving into the timing band for the next daily cycle low (selling event). The only question now is whether the announcement of operation Twist this afternoon will initiate a short term knee-jerk reaction higher, or whether the market will immediately continue to sell off into that next cycle low that is due to bottom sometime in the next 11 days.

I expect gold to bottom a little sooner as its daily cycle tends to be slightly shorter.

But gold also is at a critical stage. It must hold above the prior daily cycle low of $1705. If it fails to do that it will signal that an intermediate degree decline has begun. It would also signal a left translated intermediate cycle which would have high odds of moving below the prior intermediate degree bottom of $1478.

As you can see in the chart below gold began to struggle just as soon as the aggressive stage of the dollar rally began.

As the stock market moves down into the next daily cycle low and the selling pressure intensifies, this should drive the dollar index much higher. It remains to be seen if gold can reverse this pattern of weakness in the face of dollar strength, especially since the dollar will almost certainly be rallying violently during the intense selling pressure that is coming in the stock market.

All we can do now is wait to see what the initial reaction to operation Twist will be this afternoon. Will there be a temporary knee-jerk rally that quickly fails, or will the market just continue down after yesterdays reversal?

401 thoughts on “THE NEXT SELLING WAVE IS ABOUT TO BEGIN

  1. Danno

    Great commentary and charts Gary.

    Joseph Lemma said…
    “If silver negates the 2008 pattern to the upside, the highs of the years could be breached within a couple of weeks.”

    It will be very interesting either way that’s for sure. A moment of truth seems to be approaching for silver near term. Personally, I would love to see silver take a dump right here so I can buy more but it’s just impossible to say for sure. My guess is lower, but it’s just a guess.

  2. Russell

    Gary,
    Bernanke is a lame duck. He will never be reappointed. He doesn’t come under political pressure. You have stated that he will fight deflation with all his might. He should see that dollar is rising and deflation is the worry. I think he will shock the market with more stimulus to combat deflation. He hasn’t stopped believing his philosophy of monetary supply. I think he scheduled 2 days so he could have more time to establish support for his plans with other members. Just my humble,worried opinion.

  3. Dan

    Joseph-Our Great Teacher,

    So now PMs are going to go down? Weren’t you just telling everyone here to “watch and learn” as gold goes to $1840 just a few days ago?

  4. High 5

    It is fascinating to see the level of power that Benjamin wields. Reminiscent of the power players in the Soviet Union but on a global scale. How can anyone call this capitalism?

  5. Gary

    Russell,
    I know that’s what we all want to believe. I believe that myself until Jackson hole.

    With the market in freefall Bernanke refuse to turn the presses back on. A month later at the next Fed meeting with the market still under pressure he again refused to open liquidity tap.

    After listening to Dallas Fed Pres. Fisher’s recent speech, it’s become abundantly clear that the members of the FOMC understand the unintended consequences of further quantitative easing. At least for right now Bernanke appears to have grown a set of balls.

  6. Dubbelito

    Above else I think that Ben is starting to get fed up (get it? get it?) of being the bad guy in the world. He will stand up and say: “Eeeeh, someone else can take this toxic shit pile we are in. You politicians, start reducing spending goddammit.”

    All this talk about Ben wanting to avoid deflation and his academic background; the guy must also see quite clearly now what the previous two years worth of stimulus brought. Thats empiric research right there. I think he will take a step back and re-assess his thinking here, even if he keeps his core strategy.

  7. High 5

    This toxic shit pile (LMAO) we are in wouldn’t have been possible w/o the fed keeping rates too low for too long. The easy money that politicians love was initiated by rampant paper and paper gold money creation.

  8. Tajir

    Thanks Poly for your response on my previous question. If I understand correctly, you suggest buying ATM calls at IT cycle low and then as the cycle steam picks up somewhere at peak volatility (judgmental call), cash in on vega (and delta since, ATM calls go into ITM, there delta would increase from .5 to .8 or above) and convert the options to front DITM (with intrinsic value to capture remaining upside in the cycle. A followup question is, wouldn’t the rotation to front DITM calls introduce more risk in case of downside price movement. The reason is delta melting, as the price drops delta melting would be faster for DITM calls compared to ATM calls. In short, if I worry about premiums due to high vega, I should switch to DITM calls, but if I worry about downside, I should be better off rotating into ATM calls. Any thoughts on this? Thanks again.

  9. Robert

    Gary,
    the physical demand for gold is exploding in Asia and Europe .That is why every time gold goes below 1800 it goes back up .I agree with you that gold could see the mid to low $1700’s but it will just go back up.Physical demand only increases the more they drop the price.Look at the last month and gold has dropped down to the mid 1700 numerous time and each time it went back up over $1800 within days

  10. Joseph Lemma

    Dan,

    Yes, I’m long gold. And yes, I believe that the next 7 days are crucial for silver. If these levels hold for a while and we don’t see a repeat of 2008, I’m going long silver.

  11. Russell

    Gary,
    I hope for the Country’s sake that you are right. If he was so decided against easing, could he not have accomplished this in a 1 day meeting? The 2 days seems to suggest that time is needed for arm twisting.

  12. Gary

    Robert,
    So does that mean that gold will never suffer another profit taking event again?

    There will never be another D-wave?

    The bull market in gold will never end?

    This kind of mentality is what gets people caught in bear markets.

    I saw it during the oil bubble. The rational was that demand from Asia would never allow oil to drop below $100.

    It went to $35

  13. Razvan

    “the physical demand for gold is exploding in Asia and Europe .That is why every time gold goes below 1800 it goes back up .”

    this is a bunch of crap. There was a better story about physical demand outstripping supply when silver went to $50 but that did not stop it from dropping 30%
    Everyday there was a story about the Comex going belly up and Jp Morgan going bankrupt. It is amazing how quickly it has been forgotten.

  14. Michael (Hulk)

    The only thing that we know for sure is that it’s *not* going to be like 2008 because so many people keep from so may walks of life constantly keep using it as a reference point. There are some rhythms which rhyme with the current charts for example in the big sell-offs in 1994 (resolved down and sideways) and 2001 (resolved sideways and up)worth exploring.

  15. Robert

    Gary,
    Of course not. but gold is not in a bubble and sure people will take profits .All your poiints are valid but i think we will see gold over $2000 before we see a big decline you are talking about.I still go back to the physical demand–its exploding every where but in the U.S–as long as that demand stays strong gold will hold up–

  16. wolf33

    JL

    still think silver $40-$41 opex;

    if blastoff comes likely after experiation–but if before they have lost control.

    someone here hates hlv and can see why but they have linked dividend to pos.

    NEM did as well.

  17. High 5

    It is possible that Benjamin might announce some effort to stabilize the European situation that would include the creation of massive amounts of liquidity.

    One man wielding such grand powers, an academic puke with no real life experience in anything but book reading. Everyone from Soros to the lowest novice investor hanging on his every word.

    If this doesn’t frighten you concerning our future nothing will.

  18. Danno

    It might be interesting to note this is exactly where silver popped up one last trading session (on July 31, 2008) before it began to plummet. Silver popped over its 50MA, then it collapsed.

    No two charts follow each other exactly so it may not mean anything. It’s just interesting.

  19. Gary

    Whether gold goes to 2000 before it profit-taking event or not will depend on where the next daily cycle low occurs at.

    I will say this though, at $2000 an ounce gold will again be stretched over 30% above the 200 day moving average. It’s pretty unlikely that it will be able to gain significantly above those levels. Even if there is one more leg up the big profits have already been made.

    The real money isn’t going to be made trying to catch the last penny of the C wave. The big money will be in buying the bottom of the D-Wave.

  20. Blindweb

    Can gold rally in the face of a rising dollar?… or more like can the dollar sustain a rally in the face of an explosive final gold rally?
    Hard for me to believe that this will play out the same as 2008

  21. St. Deluise

    still going to attempt an /es long in the 1173 area, hopefully on a kneejerk plunge.

    no positions otherwise but am suspicious of the dollar here. no one has been buying it since it peaked out. is it really just going to consolidate here for 2 weeks on such a monumental breakout?

    probably find out very soon

  22. Gary

    The dollar isn’t influenced by the price of gold. It is influenced by the stock and bond markets. If stocks are accelerating down into a daily cycle low the dollar should rally violently.

    If gold can hold up in the face of that rally then we almost certainly are in a consolidation with probably one more push slightly above $2000 before the D-Wave sets in.

  23. Gary

    Actually operation twist would be a negative for banks as it would raise short-term borrowing costs and lower long-term interest rates… theoretically.

    That would squeeze bank profit margins.

  24. wolf33

    i look at gbci a mountain states bank and looks pukey. worse than majors. i would guess many others pukey—internals pukey. i have wanted to shord but will not—that too is pukey. especially jpm.

  25. Poly

    Tajir,

    The strategy is much more detailed than the explanation afforded via a blogs comments section.

    But yes your review is correct, to add, volatility swings in gold are rather high and you want to avoid sitting in calls as gold chops sideways in the latter parts of an IT cycle, as it often does once the intermediate cycle reaches the midpoint.
    As for downside risk and holding high delta, owning stock, ETF’s or leveraged ETF’s are a good option. It’s also where the protection of cycles play a key roll, they provide tight stops for the remaining positions. Also knowing how to roll out of the initial positions towards a daily cycle top and adding back a DCL, all within the existing IT cycle is a key component.

    Big day today, to say the least.

  26. St. Deluise

    less money in /dx now than at its lows at 76.6 and there has been above average selling all morning.

    going to be hard to push it lower than 76 but my spidey sense is tingling like a mofo.

  27. sophia

    question,

    if the Feb says ” get lost, no operation twist” which of those will sell off faster: Stocks, PMs or Treasuries?
    I guess Treasuries..

  28. Shalom Bernanke

    Just peeking in for a moment, as Fed day is always a waste of time and energy.

    It’s now clear that the “failed breakout” in the HUI that brought it back down to 585 has failed itself, and was nothing more than a shakeout. Textbook example, IMO.

  29. Gary

    It does look that way. Now we just need to see if the HUI can continue to hold the breakout as gold puts in it’s daily cycle low.

  30. Harry

    Gary, whether we get one more little spike here for the big boys to sell into, it would appear you’re anticipating a top to this int cycle this week (Week 6), which would make it extremely left-translated. Correct?

  31. Shalom Bernanke

    I consider all breakouts more of a range than a line in the sand. By this approach, HUI’s breakout never failed.

    In fact, buying the perceived failure is one of the best trades in the book for me. Had we not been in Sept, with a 2-day Fed meeting announced weeks before (keeping people from getting involved), I would typically have raised my total risk substantially.

  32. Shalom Bernanke

    I went to an estate auction yesterday evening, was lucky to pick us some “junk” silver coins at roughly $26/ounce.

    Also scored a dandy 1847 seated liberty silver coin in excellent shape for $16. I’m not a coin grading expert, but the guides say it’s worth a minimum of $250, and probably closer to $500 if I’m reading it correctly.

    Physical is great b/c you seldom get the inkling to take profits, allowing one to ride the secular bull for all it’s worth.

  33. Shalom Bernanke

    Lots of dimes, quarters, and 40% silver Kennedy halves, with an old Spanish coin frequently used in the original 13 colonies (dated 1788).

    That last one was the one I would’ve guessed was worth the most, but I was wrong. It’s only worth around $70, but I paid $16. Has 26 grams of silver in it.

    Like I mentioned, I’m not a coin expert although I have been lucky. I just buy for the silver content.

  34. Shalom Bernanke

    Trendfriend,

    No, I knew the people who’s estate was being auctioned, as well as the auctioneer who’s a friend that gave me a heads up. Otherwise I don’t typically take too much time to visit events like that. I’m not a collector of other people’s junk, just their junk silver. ๐Ÿ™‚

    Yes, the dimes and quarters were in their own bags and we were allowed to peek at them. With my friend the auctioneer, I wasn’t worried about getting scammed. I know where he lives! lol

  35. Joseph Lemma

    The Sunday before the big fall from the top in silver I went to a local fair where a teenager and his dad were going to every single coin seller and offering what was at the time 15% over spot. They didn’t even ask for prices, they just made offers straight away. They were clearly people who had just heard about the white metal.

  36. coolkevs

    Markets holding in surprisingly well after BAC/WFC downgrades. As I pointed out yesterday, there are quite a few BUY setups for the banks in Demark land.
    Could this be a buy the news??? And I don’t have to tell everyone that if the financials catch a bid, everything else will follow.
    Here’s a summary of all the Demark BUYs that are showing up:
    MS DAILY BUY on 9/20 – good for 12 days
    MS WEEKLY – Combo BUY – currently active, but needs a bullish price flip (close above the close 4 weeks previous)
    – Sequential BUY – Week 11 of 13
    GS and JPM – WEEKLY TD Combo 13 BUY this week, good for 12 weeks (3 months)
    – Also, overlapping WEEKLY BUY Setup – 1 to 4 week upside reaction starting next week.
    – DAILY Sequential BUY records today 9/21 – good for 12 days, but needs a bullish price flip

    BAC – WEEKLY TD Sequential 13 BUY is already in place, but awaits a bullish price flip
    – DAILY TD Sequential 13 BUY recorded on 9/20 – good for 12 days, and needs a bullish price flip

    General Market: SPX is on DAILY Bar 9 of 13 of sequential. This requires more downside to record, but can be erased by a SELL setup. Essentially, a minimum of 4 more days of potential downside and then we are emerging from the 1-4 month SELL window once September ends. Followed by the emergence from the 12-year SELL window come December 31 …

  37. Joseph Lemma

    SB,

    No idea, but I told the dad “That’s not the right way to accumulate silver” and he just told me that it was going to the moon a a sure bet in these uncertain times so he was buying all the coins he could get his hands on. They are probably back on the market by now. Picked up 2 5 reichsmark coins for 30% under spot today. Almost no coins to be seen at the antiques market. They are being melted left and right, which means there’s more upside.

  38. sophia

    I am an optimistic….I cannot help but think tgat tge economy is actually slowly rebounding…so stocks higher in the next 3-6 months from thid level

  39. Harry

    Daniel, only 20 mins to go before Benny and the High Priests emerge, so I think this is just pre-announcement nervousness. We’ll see a more significant move very shortly.

  40. John V

    Regardless of his past comments, with all of the bank downgrades, it may be tough for Bernanke not to announce more easing of some kind. The dollar move may be anticipting this.

  41. Le Fou

    Fed to Shift Treasury Holdings to Longer-Term Securities in Stimulus Step

    The central bank will buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. The action is intended to “put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said in a statement. The Fed will also reinvest maturing mortgage debt into mortgage-backed securities instead of Treasuries. Three officials dissented, the same as at the prior meeting in August.

    Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second- quarter growth. Today’s action, dubbed “Operation Twist” by economists after a similar Fed action in 1961, may lower interest rates and avoids reprising the money creation that sparked Republican criticism last year.

    http://www.bloomberg.com/news/2011-09-21/fed-to-shift-treasury-holdings-to-longer-term-securities-in-stimulus-step.html

  42. Vonda

    Burrito time again–Great call, Gary!
    (and Doc too, if you’re in the vicinity.)

    Gee, looks like I might be able to get a .5% mortgage if I just be patient . . .

    Ugh.

  43. wolf33

    bot tiny qqqs options. likely day trade win or lose.

    opex goes down—just maybe silver explodes up

    4 now da boyz want 40 41 sllver

    1750-1790 gold

  44. Russell

    The Fed didn’t ease as total balance sheet did not change. 400B short terms will be converted to 400B longer term. I think that is why stocks and gold were disappointed. The dollar seems to like the news.

  45. Vonda

    Sad but true, SB — on the macro level.

    For me, I should be so lucky. I could get chickens! Store my physical under their bunkhouse . . .

  46. oa92000

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

    Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.

  47. Gary

    Deluise,
    Why would you go long stocks as they move into the timing band for a daily cycle low?

    And why would you go short the dollar on the fourth day out of a daily cycle low?

  48. St. Deluise

    gary,

    because that’s what i see the money doing. that can change in a heartbeat but right now that’s still my take.

    tremendous hourly bar in /dx but there was less buy volume in it than then 6 hours of sell volume preceeding it.

    time will tell. definitely not going to be stubborn about cutting these loose.

  49. props

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  50. sophia

    My take,

    I understand why Gold and Silver are lower, but I don’t get why the stockmarket is lower…No QE3, but they are helping the long end sort of…

  51. sophia

    But Earnings seem ok so far, so my guess is dollar up, stocks up, Gold down, treasury down…
    Just because we are going to come very soon to the realisation that it is not as bad as feared during the summer

  52. Shalom Bernanke

    We might get the last good buying opportunity in miners if stocks can puke out into the first week of October and bring them down some.

    Get your buy list ready and stay patient. I’d love to see 2 weeks of lower stocks while miners drift lower in sympathy.

  53. Gary

    Sophia,
    stocks are weak because the dollar is rallying. There is no true productivity in the global economy at this time. The only way for stocks to rise is by debasing the currency.

    Since the global economy is rolling over into recession that is unleashing deflationary forces. In a deflation the value of currency rises.

    Stocks should have roughly 5 to 10 days before they bottom. That would suggest that the dollar is going to rally for the next two weeks.

    This is the period that is critical for gold. It must hold above $1705 during the next two weeks.

    You are making the mistake of looking in the rear view mirror. as the economy slides deeper into recession those earnings are going to evaporate. The stock market is starting to price that in.

    The fact that we couldn’t even get a decent bear market rally suggests that this is going to be one of the most devastating bear markets in history.

  54. Joseph Lemma

    The best bank in the country is now down 4.6% and possible retesting very important support. Congratulations Benny B, you just destroyed the freakin yield curve.

  55. William Wallace

    Lower trendline of bear flag on the Nasdaq is around 2500, a daily cycle low should break the lower trendline of this upward channel I would assume, and possibly spiral below the august low.

  56. Joseph Lemma

    This announcement is extremely unexpected in that it decapitalizes the banks. Does Bernanke really want to undo so many months of debt monetization? I’m either extremely confused or things are really, really bad. Like six sigma bad. ๐Ÿ™‚

  57. Gary

    Sophia,
    Rule number one:
    Never, never, never, never, never, never short a bull market.

    The surprises come on the upside and it’s also getting late in the cycle so your potential gain by shorting gold and silver is small and would require you to time a perfect exit.

    If you want to short something short the stock market as it drops into its daily cycle low. At least there you have the cyclical trend in your favor.

  58. William Wallace

    Miyagi,

    Take a look at a daily of the Nasdaq, its locked in a perfect upward channel and reversed at the upper trendline, if this channel breaks to the downside, which I cant see it not happening at this point, any chance of a bear market rally i would say may evaporate. I guess we will have to see how this DCL plays out.

  59. Le Fou

    Thanks Gary,

    I wanted to buy GDX yesterday. I wanted to sell UUP this morning. I wanted to buy UUP this afternoon. I managed just to sit tight in my appropriately sized UUP position thanks to you.

    Best,
    Le Fou

  60. Gary

    There will be nothing stagflationary about what’s coming.

    We are in a major deleveraging process the same as the 30s. Barring the government printing enough money to mail every man, woman, and child a check for $100,000 we are facing a severe deflationary period ahead.

  61. High 5

    Check deflation during the thirties, it was very low and short lived. FDR eliminated it immediately upon taking office by cranking up the printing presses.

    The nominal value of things we want (bought on credit) will go down and of things we need (bought with cash) will go up.

    The only reason Ben isn’t initiating another QE is that inflation is high and rising presently. And that is the official inflation number which anyone with half a brain knows is bullshit.

  62. High 5

    As measured in 1980 the current inflation rate is right around 12%.

    The official numbers by month (CPI-U): 2011 1.63% 2.11% 2.68% 3.16% 3.57% 3.56% 3.63% 3.77%

  63. Gary

    No argument with the current real inflation rate, but it’s about to change.

    The CRB is headed down into its three year cycle low, and the stock market will probably put in one of the worst bear market legs down in November in history.

    The global economy is rolling over into what will almost certainly be one of the worst recessions/depressions in human history. That is deflationary.

    You are making the same mistake that almost all humans make. They project the past into the future.

    I can assure you our impending future is not going to look anything at all like our recent past.

  64. High 5

    I think Ben has a better handle on the future inflation rate than either of us and he has decided to worry about inflation. Beleive me, he will do everything within his power, which is substantial, to prevent deflation. It has been the obsession of his life.

  65. Hack

    Stagflation means that imported goods will cost more while stuff we export will be more expensive to other countries hence low demand. Wages will remain flat to lower and inflation will grow. This happened under Carter, it is happening now. And just as with Carter, we are in a leadership crises which will be easily remedied in 2012. Right now we know that Obama’s economic experiment has failed. ObamaCare, SOX 404 and DoddFrank will be repealed, then we will pick up the pieces and resume our normal course to prosperity.

  66. Shalom Bernanke

    “As measured in 1980 the current inflation rate is right around 12%.”-High5

    Sounds about right. And Benny will always print more, even if he takes a breather every now and then. It’s script, and the $ is already worth far less than people believe, and 12% a year starts to wake people up.

    I also agree we’ll see some of Gary’s deflation. As far as the inflation/deflation debate, it’ll depend where we look.

  67. Poly

    Nice call on the dollar Gary.

    With a deadlocked congress, 3 FED dissenters and seemingly the last bullet fired, and the Europeans following each other over a cliff, the logic call now is the dollar.

    Gold still can go either way, never to be discounted, but it’s now a wait and see. It will need to produce the results but will certainly have dollar headwinds.

    Stocks, well they have shown they can not move forward in the weeks of this new IT cycle. They are certainly headed much lower by the end of this cycle, likely significantly lower. Looking to add the 2nd short position now in very short order.

  68. RALF

    Thanks Harry, I figured but the fake picture really just threw me off. who is that guy – looks like my uncle after thanksgiving dinner!

    Well said Gary. I think your second to last word is where the meat is at. RECENT is important, because there are numerous sovereign debt crises to compare to (ie almost all nations have been through them, just not at the same time – other than 1930/1). the question is how can countries differentiate themselves and who will emerge as the front running power. It has to be the producer countries and or countries with hard assets.

    for one thing, i don’t want to be holding paper when the music stops, but i agree over the near term USD is the place to be.

  69. High 5

    Depression/inflation are not mutually exclusive. Check Weimar Germany and Zimbabwe if you doubt this.

    There are many other examples but photographs of these periods show that times were not very peachy and inflation rates were scary high.

    Remember that US annual deficits are now 1.5 trillion plus and climbing higher as the economy slows. If anything we have the opposite of deleveraging because this same over leveraging is occuring throughout the world by sovereigns.

    As inflation climbs the governments expenses skyrocket while revenues drop, causing greater deficits, more money creation (borrowing), etc.. Bernanke is walking a tightrope.

  70. Gary

    Actually gold is not a one-way street. In a deflation the purchasing power of gold increases but the nominal price can drop sharply.

    We experienced this during the deflation of 08 and 09.

  71. KAL

    Poly et al,

    Thinking of shorting the SPY or QQQ’s with a portion of my stash that’s currently in el dolar. Any ideas? A chance of a snapback rally tomorrow?

  72. Shalom Bernanke

    You’re best choices in deflation are the dollar or gold, I’ll take gold.

    Gary,

    Nice report tonight. You could get me interested in the S&P short, with appropriate bet size. As far as miners, I have to stick with them and expect to get tested, possibly for weeks but I’ll keep buying pukes until they shut me off. ๐Ÿ™‚

  73. Avann

    So is this naive?
    If all counties are desperately trying to debase their currencies in order to pay their debt with inflated crap … why not just borrow as much money as you can and then pay it back later with the same crap?

  74. Ben

    Avann, it’s a confidence game. Get overly zealous, and the jig will be up. Instead, drip drip drip, 97% of the dollar’s value lost since the Fed created in 1913.

    Heck, they even have most Americans thinking they are inflation fighters rather than their true function of (monetary) inflation creators.

    Get too aggressive with the debasement, and somebody with a trillion dollars just might puke them up and torpedo your currency.

  75. Sleeper

    Kal,

    I’m no Poly, that’s for sure, but I did recently stay at a Holiday Inn Express!

    I’m all about shorting this IT decline in stocks. I’ve been using TZA because I think the small caps will lead both up and down (was using TNA for the recent rallies). I bought in my middle 1/3 of my position after FOMC today, and will look to get the last third in tomorrow. There should be some gratuitous bounce in the morning which should roll over again by afternoon. I plan to ride these positions to the DCL, sell, and then reload after the next rally to final target of IT low in Nov.

  76. Blindweb

    Gary,

    Yes I agree the dollar doesn’t move necessarily because of gold’s movement. But the same things that will move the dollar higher will move gold higher. If there was ever a time for them to move in tandem now is it. The lessons have been learned since 2008… Phase one: Bonds up, gold down. Phase two: gold up, bonds up. Phase 3: gold up, bonds down.

    The same thing that would move gold higher may shorten the dollar rally. Not cause and effect but mutually arising events. The world is not made up of linear relationships. Cycle don’t follow the news, nor the opposite…mutually arising events. Even the chicken and the egg were mutually arising events.

    I think we’ll have a rush to gold this time, the opposite of 2008. After a final spike, crushing deflation will bring gold down to oscillate for a long period.

  77. Gary

    Gold is way too stretched above the 200 DMA to have any significant upside left.

    Too many people are way too complacent about gold and convinced there is no downside risk.

    Just another reason I want no part of gold right now.

    There is one place and one place only that has potential for a strong trending move. We are already positioned in that asset class at this time.

  78. Rob L

    Blindweb,

    From the look of today’s action, it seemed like gold is on the brink of something. It, as well as the miners, lost a lot of ground in the afternoon.

    When do you believe the rush into gold will happen, because it definitely didn’t happen this afternoon, which should have been the ‘tell’.

    BTW, I too hope that gold will rocket from here, but today’s action has me thinking.

  79. SF Giants Fan

    I wonder how many people got sucked in yesterday’s big move in the HUI? Of course no SMTers did…

    Man NFLX looks tempting for a trade up to the 5 dma . Volume dropped off today. there can’t be very many sellers left.

  80. ejoys

    Hi Gary,

    Earlier you said, “The surprises come on the upside and it’s also getting late in the cycle so your potential gain by shorting gold and silver is small and would require you to time a perfect exit.”

    But later, “Gold is way too stretched above the 200 DMA to have any significant upside left.”

    I am confused. Are you basically saying a range rather than directional move?

  81. Gary

    ejoys,
    I have no idea whether gold is in a trading range or a topping process.

    I do know after many years of making this mistake over and over that I learned my lesson and never never violate rule #1, because it is a low percentage trade.

    Rule #1:
    Never, never, never, never, never, short a bull market.

    Expecting a move down isn’t the same thing as doing something stupid like shorting a bull market.

    If you expect a move down then you sit patiently and twiddle your thumbs until the move occurs and then buy.

    You don’t get cute and try to play the downside because more often than not you lose money.

  82. KAL

    Thanks, Sleeper.

    I appreciate you sharing your strategy. My problem is I get it right one time (TQQQ during the rally Gary led us into, a great return) and then I mess up with position sizing and leverage (the GDX trade we recently had). So, I ended up with very little to show from those two recent adventures. Emotions are certainly not in check yet. I guess I need to spend some time at a monastery learning kung fu and such before I get into 3x ETF’s for real.

    (On a totally unrelated note: Why would Grasshopper want to leave the Master in Winter? I mean, sure, the snow felt good on those brand marks from the cauldron, but walking in the Himalayas barefoot in snow? No thanks! Leave the pebble in his hand until the “green shoots” of a spring recovery are visible!)

    I probably should stick to the slow lane for now, since I can’t (work and all) and shouldn’t (skill) be a day trader. I think Gary’s style works for me. I can hang through the tests of swing lows and see the logic of the trades this way a little better.

    So, I may just hang out with Gary for now, maybe keep a little $ in reserve for a “just in case” moment. Looks like the downside to the SPY is good, but would I be able to hold through the possible relief rallies without GarBear guiding me? I dunno. Plus it’s stressful and my 2 year old doesn’t want to go nitenite EVER.

    Thanks again for answering my call. I do appreciate it.

  83. Gary

    Not really. The currency markets are much less volatile than stocks. Our risk was initially only 4% and in reality I would have known long before it reached that point that something was wrong so our actual risk, even though we took a 100% position, was probably 2% or less.

    And BTW I am going to erase your comment as it is information that should only be available to subscribers.

  84. Natanarchist

    I thought the FED announcing more MBS purchase was interesting. Cash in exchange for garbage. Not a bad deal for the mortgage banks. Lets see what they do with the cash.

    We also know we will zero fed funds rate for …well forever..haha..

    We know the FED is aiding European CB and banks.

    I also believe the FED knows exactly how bad things are, compared to ’08.

    However none of the remedies proposed will create any meaningful jobs.

    Clearly this President and Congress, as has been the case for the last number of years, are inept. As long as the American people keep sending 5th rate losers to rule over them, this country will never turn around.

    From a 1958 interview of Mike Wallace interviewing Aldous Huxley (Brave New World)

    “WALLACE: And we’ll be persuaded to vote for a candidate that we do not know that we are being persuaded to vote for.

    HUXLEY: Exactly. I mean this is the rather alarming picture that you’re being persuaded below the level of choice and reason.”

    He said that 53 years ago…think it has come true?

    That describes the last 4 or 5 presidents minimum. It also describes whats happened to Americans. By design of course. Huxley lays it out in the interview…especially discussing how American children will be “cannon fodder” for propaganda. We are living the result.

    Watch the whole interview here:

    http://www.hrc.utexas.edu/multimedia/video/2008/wallace/huxley_aldous.html

    Having said that, I don’t want any part of the market now. Happy to sit in mostly cash.

  85. blammo

    SF Giants… That is like looking at a plane crash. One guy that doesn’t know what he is doing, encouraging (charging!) others to follow him.

  86. Danno

    It is uncanny the way silver is tracking 2008, even though other markets may not be tracking 2008 (yet). Is silver the canary in the coal mine?

  87. Gary

    Hmm, It seems very unlikely that gold will be able to hold above $1705 considering the magnitude of today’s decline.

    I think the odds are very high that gold is now caught in a D-wave and will follow the rest of the commodity index down into the CRB’s 3 year cycle low.

  88. SF Giants Fan

    Gary

    What can the fed and the boys on the hill do to fix this whole mess? Is there an easy answer?

    Based on Ben’s track record (0-8) what will his next stupid move be?

  89. sophia

    Joseph,

    despite my poor track record this year, I am an old chick in the trading bizz and I can assure that Gary is right when he tells you that you and other folks will have problem holding in a D wave…

  90. Shalom Bernanke

    Lordy am I in for a thumping today. It ain’t easy watching profits go up in smoke, especially when I feel more pain is likely over the next couple weeks.

    We knew Sept-Oct could be rough, my test is here. I’m on the same plan, but will not likely add today and if I do, it will hardly be worth mentioning.

    CRB looks to have 2-3 weeks lower, IMO.

  91. William Wallace

    I watched gold futures closely and waited patiently until not long after yesterday’s open to say anything (“Gold futures are trading nothing like they had…Gravity is taking hold”) pertaining to a drop…I have been out of gold and miners since the day I said gold and miners looked tired…I just dont understand why certain people refuse to let go when its time to let go.

  92. Danno

    This profit taking sell off in PMs (if it intensifies) could easily last months, not just weeks IMO. We might not see the absolute PM bottom for 2-5 months.

  93. Gary

    There is nothing the Fed can do to “stop” this. They already tried and that is what caused this in the first place.

    As of right now Ben is “sort of” doing the right thing by stepping aside and letting the market take over.

    However he will almost certainly panic, probably in Nov. and make the same mistake again thus guaranteeing that 2012 is one of the worst years in human history.

  94. tom

    Money needs to find a new home now and nice dividend paying stocks should see some as will Gold which I still don’t think will see a massive D wave down.After the run up Gold should have a pullback of 10-15% or so and it sure wouldn’t be the end of the world and quite normal to me.By the way the 200dma for Gold is about $1520 and still rising.Many miners will print money at those prices.No worry here as buyers around the world will step up.Still to little supply and to much demand.Good Luck

  95. St. Deluise

    well dollar rally.. ON
    gold decline.. ON

    stock decline i am hesistant about. there is still an epic amount of buy volume in there. someone or some country has been hoarding stocks over the last few weeks to a degree i can’t recall ever seeing.

    /es & /gc 4 hour
    http://i51.tinypic.com/2uzc9co.png

    we should be trading in the mid 1200’s. gold pointing to 1600’s. i got kicked out of all my positions so just sitting here for now.

  96. Joseph Lemma

    Too many six sigma events on the horizon not to own gold. What we are living is probably close to what happened in 1933: a few years of deflation until 1937, when inflation sets in and we all know how all the unemployed around the world found work next.

    Germany is probably printing new Deutsch Marks right about now.

  97. Russell

    Cramer just stated that gold is undergoing a liquidation event from hedge funds on the wrong side of short dollar/ long gold. He described a “liquidation event” as something not to be in front of. Reminded me of Gary’s D wave

  98. Gary

    I would think twice before making excuse to stay in a losing trade.

    Gold is suffering a profit taking event. Emotions are now in control not fundamentals.

  99. Tony

    I read somewhere the average maturity of a high percentage of US goverment debt is only 4 years. This move by the Federal Reserve will help the US government to continue to borrow at lower rates further into the future. I doubt it was even intended to somehow spur economic growth unless you think US government deficit speding spurs economic growth.

    Isn’t the Federal Reserve’s new policy effectively deflationary? If you take money out of short duration treasuries and buy longer duration debt, aren’t you temporarily removing liquidity from the system?

  100. Russell

    Cramer admitted that he did not see this liquidation coming, but stated that once it starts it does not stop. He gave example of FCX going from 80 to 15 previously with a selloff in gold/ copper.

  101. Gary

    Hedging is a waste of time and money for the small retail trader. If you want to be market neutral sell your positions and go to cash.

    Convincing the average retail trader that he needs to hedge his portfolio was probably one of the greatest scams Wall Street ever pulled on investors.

  102. Razvan

    I cant believe this! Gold is down $50. This is an opportunity of a lifetime..time to buy buy!
    My system tells me we are going to the -134.7sma which puts a final target of $2300.

  103. Gary

    Folks the HUI completed the 1-2-3 reversal. Gold breaking $1705 is now just a formality. Gold is almost certainly caught in a D-wave decline. That isn’t going to end until November although there will be plenty of counter trend moves to keep everyone holding all the way down.

    Buying gold and miners at the bottom of the D-Wave in November is going to be one of the hardest trades you will ever make in your life. It will also be one of the most profitable.

  104. Shalom Bernanke

    paul,

    Not yet. I’m taking inventory, getting smacked pretty hard, although still up overall and not near stopout levels.

    If I didn’t have any miners, I would buy some in here, D-wave or not, for the long haul.

  105. Frank

    Gary, you used to write about being a strong hand. Most of my core portfolio in miners are purchases like NGD at $1, SLW at $3, etc. So, yes, I can weather a drawdown.

    Depending on how I count I am about ~50% in cash and things like TIP and some Swedish perpetual bonds @ 9% interest.

    But, wow, if you go back to noon yesterday, this is one hell of a slaughter in the mining sector. I didn’t really expect this magnitude.

  106. Shalom Bernanke

    paul,

    If I add too heavily and things continue lower for 2-4 weeks, I will have sacrificed my strong hand status.

    I need the cushion to weather more beatin’s should they come. ๐Ÿ™‚

  107. Shalom Bernanke

    I suspect we’ve seen the worst for today (or close to it), but even if we rally some from here, we’ll get more chances to buy over the next week or two. No need to try and stop the fall, I’ll just let them go where they want.

  108. Shalom Bernanke

    WW,

    No, you are incorrect. I’ve bought pukes often throughout the last few months. This is a severe enough move lower that I choose to keep size where I’m at. I don’t just buy cuz they’re down, even though I usually only make purchases into pullbacks when I make them.

  109. Shalom Bernanke

    And I will keep all positions unless stopped out, D-wave or not. It’s just I won’t add more at what I perceive could be a D-wave.

    Plenty of time, fellas. This is not a 2 day trade. Size accordingly.

  110. William Wallace

    SB,

    There have been three significant pukes since the june low…you mentioned several times that you will be buying pukes but during each of those three you said that you will not be adding because your anticipating further weakness.

  111. Frank

    If I didn’t own miners, I would start buying specific miners here or just below. I don’t buy into this “D wave” correction. Or you have to work the probabilities and start scaling in.

    NGD, GSS are some interesting plays. NXG is under-valued relative to Aurico’s share price. SBB on the TSX.

  112. Shalom Bernanke

    Well, I do anticipate further weakness, but I have bought and only into pukes.

    I don;’t buy all pukes just because they’re lower. They have to look tired of going down to me, this does not yet feel that way.

    But yes, I will buy into this pullback at some point, just not today. Can’t be much more clear than that.

  113. Frank

    Strong dollar, eh? Not if you spend time in Japan. It’s pushing toward 76.00.

    EUR/JPY is approaching 100. I think it must have been around 190 in mid-2008. I was buying yen back then and had half my cash in the currency, but I sold when USD/JPY hit 100. I had to sell because I was changing banks and the thought never occurred to me that I would spend time in Japan in the future.

  114. Poly

    Gary, good call, again.

    I was stopped out of half my (gold) positions on yesterday’s drop and I sold the remainder this morning. It’s wait and see for now, but overall a very profitable IT cycle.

    SPY puts keeping it all in check.

    Adding a dollar long here too. For the most part, will stay around 50% cash and keep eyes wide open for opportunities, looking to add a 2nd SPY short position, but will have to wait a little now.

    Looks like gold want’s to play out plan B scenario I posted here on 9/16.

    GOLD_Then

    GOLD_Now

  115. St. Deluise

    interesting how NFLX hasn’t budged through all this.

    a short squeeze there combined with all the newjack index shorts should be a good immediate term blastoff.

  116. Tim and Jeanene

    Gary –

    Just an FYI – That fun little bet you and I made on the forums about the long bond hitting it’s peak and starting to collapse (your bet) compared to me saying we will see new highs…..

    You owe me a burrito….. ๐Ÿ˜‰

  117. Elaine

    Gary,

    Gold has to stay above $1705 for two weeks from today in order to avoid a failed cycle? Or is there an earlier date for the count?

    Thank you.

  118. Poly

    BlindWeb, if addressed to me, I was referring to his dollar call, not gold. Gold still $250 above the last ICL, but now time to respect this move down.

  119. TZ(8155)

    I intend to be buying gold futures slightly above the previous low of 1705 with the expectation that we will hold/bounce. (I will sell some on a bounce so I’m breakeven even if we ultimately go lower. If we never bounce I’m gonna lose 1-2% as normal).

    This buy is the final remaining buy of my “we are going to triangle/congest” expectation.

    We all know this is a possibility instead of a full on D correction and I mentioned earlier I had two points I would attempt buys.
    This is the second such point.
    (The first was obviously a loser).

    If we don’t hold here, I expect a decline to 1600ish for a full on correction. If we do hold here and ultimately this is a congestion and not a massive D pullback, then I will have ended up with an excellent entry. Worth a 1-2% loss anyway.

  120. TZ(8155)

    As a note, before somebody asks, I have different strategy than gary whereby I actually attempt to pick bottoms with very tight stops. Certain levels are my own choosing, such as now, which is not a gary technique. However when he comes close to expecting a low it assists my buys in the same zone. So, for example, if this fails and we continue lower, then gary’s expertise in sensing a low is near helps me sync up my technique with his (for higher leverage).

  121. Gary

    Blind,
    you are mistaking an early exit as a bad call. If you will remember all of those trades were profitable. Now we are safely out of the way. The D-Wave can run its course and we will get back in as close to the bottom as possible.

    There is nothing “bad call” about that. It is just one of the inherent problems with trying to spot tops. As far as I know no one has ever invented a system that can consistently do that. So just like every other human being in the world I have trouble calling tops in real time. I prefer to just make sure I am out early and not get caught on the backside.

    If you prefer the other scenario and exit late, that’s fine. But sometimes you get caught in a crash like what happened to silver in May.

    Since we have to trade in real time and not in hindsight I prefer to just make sure that I don’t get caught in crashes at the expense of probably missing some upside.

  122. TZ(8155)

    >What’s your stop from 1705?

    The low is 1705.4 and my stop is roughly near that point. I don’t want to say exactly because how I pick the stop point is based on some real analysis and having others use a similar stop can really increase slippage if hit.

  123. Danno

    On the equivalent of this day in 2008 (Aug 4, 2008) silver began to take a dump and closed just above its 200 MA just as it is now.

    In the following days silver really crashed. It will be fascinating to watch and see if history repeats itself.

  124. CMT

    Joseph L.,

    on an unrelated note, are you familiar with Marathon watches? One of my old employees gave me a Marathon as a gift a few years ago. It’s an automatic dive watch marked U.S. Government. A google search tells me it’s some gov’t overstock, but I can’t find much else about it. Rugged little watch, love the tritium illumination, runs a bit fast. Just never heard much about them.

  125. Joseph Lemma

    I don’t really know Marathon that as it’s not a real manufacturer. I think there are plenty of those around. It’s a nice sports/ diving watch and has a cheap off-the-shelf ETA auto movement.

  126. William Wallace

    Joseph,

    Miayagi said, “Joseph,
    On your blogger profile you have written that you collect watches.
    Doesn’t take a genius….”

    Dont take offense Miyagi just doesn’t like kids, or watches…lol

  127. Tony

    wolf33,

    Do you remember back in May Gary called the dollar rally and he said it would take time to consolidate before moving higher.

    I would say that was a pretty good call.

  128. MrMiyagi

    WW,
    I don’t like kids either and haven’t worn a watch since…. 1984 or so. There’s always a clock or wearer somewhere.
    There’s also a kid or fifty somewhere..

  129. coolkevs

    Nice timing with your article yesterday, Gary – hope it helped people get out of the way!
    In Demark land from Kevin Depew at Minyanville, we are looking for a new low in SP pit futures with a reference low from Aug 9 at 1093.50. We are through Bar 10 of a potential TD Sequential 13 DAILY BUY signal. We should record Bar 11 today and Bar 12 tomorrow.
    Russell RTY recorded a DAILY 13 Sequential BUY yesterday, but needs a bullish price flip (close above the close 4 days earlier) – not happening today…
    NDX is on bar 9 of 13 of a potential DAILY BUY.
    Gold? Think it may be of interest here ๐Ÿ™‚ It’s on bar 7 down of 9 of a potential DAILY 9 BUY setup which could record on Monday, but requires a lower low tomorrow or Monday to perfect. But then Tuesday-Friday (1-4 day reaction) of next week should be good for gold.
    US Dollar Index – the cog in this whole operation? No exhaustion on the DAILY chart, but potentially could qualify a WEEKLY breakout of TD Propulsion Up Momentum with a close above 77.42 this week and a higher open next week, yielding a target up of 82.15! 72.59 seems to be the low (that 72.5 that I harped on forever could be left dangling, but it was pretty close wasn’t it ๐Ÿ™‚ ) Also, we did record a QUARTERLY BUY signal at the end of December – will this be the quarter we finally get a BULLISH price flip (close above the close 4 quarters earlier)?
    Still, however, we are exiting the MONTHLY SELL Setup window across major indices at the end of next week. Is that an implication of dollar strength AND a renewed stock rally into the end of the year??? We shall see – stocks rallied with our currency after all the mayhem of the 1970’s – it could happen again!
    Thanks for reading!

  130. MrMiyagi

    WW,
    I don’t know of any dollar futures lotteries and with the big gap down, lotteries were yesterday.
    However, LVS October 35-38 puts would probably go up 6-10 fold if the markets hit and go below the August low.
    It’s a little short on timeframe but take a peek.

  131. Greenspansconscience

    Until the Fed states it will be expanding its balance sheet, there is no hope whatsoever for any asset in nominal USD terms, including gold. Unless the market thinks Bernanke is bluffing on “no money printing,” gold should, in theory, go down in price as USDs get margin called out of existence.

    That being said, commodities bottomed at least a month before QE2 was announced in Jackson Hole in 2010, as the TBTF insiders had advance knowledge.

    Today’s huge gap down below 610 on the HUI is obviously not good, especially on the weekly chart. It should not have closed below the breakout on the weekly chart (I’m assuming we don’t close the gap by Friday). The only other time it has done something similar was in 2008.

    I will never ever ignore Gary’s calls again. He has played this whole mess superbly (quite obvious in hindsight, I know). I don’t know whether to laugh or cry.

  132. Hack

    Equity investment has been broken since Y2K and HFT algorithims. There is no way to beat the machines. Having said that bonds are still a solid investment. Personally I can’t wait to back up the truck on more gold coins…

  133. Shalom Bernanke

    Jeez, normally when I step away for awhile I’m pleasantly surprised when I check in again, not today.

    Tomorrow could be quite ugly as well. Sitting tight with what I have, but took a huge dent to my profits today. If this keeps up, they might all be gone by the close.

    What a day.

  134. Shalom Bernanke

    Razvan,

    Nahh, I have too much confetti I want out of over time. I’ll have to be patient for the bull to let me out. That said, it looks like lower prices ahead.

    Only way I’d sell here is if I believed the bull was finished. At this point I’m really only focused on when to add. If stopped out before then, so be it.

  135. Greenspansconscience

    On a short term time frame, the CCI (looking at ETF GCC intraday) is massively oversold. We are hitting 3 on the 5 day RSI! That is ridiculously low. We did not come close to that even in 2008. The daily stochastics are comparably low.

    So expect a bounce, very very soon. Hell, it might even be a bottom. But only Benny, Lloyd Blankfein and Jamie Dimon know that.

  136. Vonda

    Anyone thinking of dabbling in something long here at the end?

    I’m salivating over AGQ. I know I shouldn’t — and I probably won’t. No, no, of course I won’t.

  137. St. Deluise

    still partial long the qqq’s but will wait for tomorrow’s open to complete it.

    the buy volume divergence in it is absolutely ridiculous at these prices. worse than the dollar before it took off, and worse than gold when it double topped. remains to be seen if this one plays out though.

  138. ckpc

    I bought some AGQ puts yesterday as Bernanke was speaking based on his prediction that the global economy would remain weak, and on the fact that we are moving into a DCL for gold. We’ve learned never to short a gold bull market, but silver is a broken parabola, and is seen as an industrial commodity by some, so I figured silver would get hurt by Bernanke’s prediction. Therefore, I took the chance on buying the AGQ puts, and I’m very glad that I did!!
    Up 186% in 24 hours.
    That, along with the fantastic gains on UUP leaves me totally in awe of Gary’s prognosticating skills.

    Oh-h-h-h Gary! You rock!

  139. wolf33

    Of course, only insiders will know when Benny is about to turn on the presses again.

    been short fslr–bennie solar does not work. BO just throwing our $ down the crapper.

  140. Vonda

    Thanks guys. And congrats, CKPC! What a wonderful day for you!!

    I can’t short AGQ thru Schwab (whom I can’t bear to leave.) But am looking forward to dancing with that monster once again on the upside. Maybe decorate this year’s yule tree with its tinsel.

  141. TommyD

    Looks like someone is scooping up EEM at a good clip ( high volume). Buying on weakness, the etf for emerging markets.
    Any thoughts anyone?

  142. wolf33

    TommyD said…
    Looks like someone is scooping up EEM at a good clip ( high volume). Buying on weakness, the etf for emerging markets.
    Any thoughts anyone

    there will be bounces but HSI been deathly. ct is pure awful.

  143. wolf33

    If gold 1750-1790 on OPEX would be superb.

    Silver–perhaps boyz going 4 more$ at lower than $41. getting caugt up as industrial medal. Would avoid.

  144. Joseph Lemma

    The little lone candlestick (I can’t remember the pattern’s name)on the chart for gld could be extremely bullish. It’s sitting on the 50 sma. We either go right back up or right down. A gap up tomorrow would mean the lows are in.

  145. Greenspansconscience

    Most of the oscillators on commodities/miners are crazy oversold right now. Every single time they have hit these levels it has marked a low. The question is, is this 2008 (or worse), where the oscillators bounce and then go even lower.

    Ostensibly, only one person in the entire world knows the answer to that question.

  146. Poly

    That little lone candlestick don’t look so hot when you flip the chart to weekly.

    We’re going to bounce here VERY soon, which will mark our 2nd DCL. Holding $1,705 keeps “the dream” alive, in terms of probabilities.

  147. Le Fou

    I find this kind of scary, but it seems to square with Gary’s expectations:

    Randy Wray: The Biggest Bubble of All Time – Commodities Market Speculation

    By L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College. Cross posted from EconoMonitor

    Back in fall of 2008 I wrote a piece examining what was then the biggest bubble in human history: http://www.levyinstitute.org/pubs/ppb_96.pdf.

    Say what? You thought that was tulip bulb mania? Or, maybe the NASDAQ hi-tech hysteria?

    No, folks, those were child’s play. From 2004 to 2008 we experienced the biggest commodities bubble the world had ever seen. If you looked to the top 25 traded commodities, you found prices had doubled over the period. For the top 8, the price inflation was much more spectacular.

    Read the rest here:
    http://preview.tinyurl.com/4484n2e

    Good trading,
    Le Fou

  148. Strat81

    I wouldn’t take the WSJ Money-Flows on most ETFs too seriously. The numbers can be heavily influenced by arbitrageurs utilizing the ETF Share creation/redemption process.

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