THE SECULAR BEAR MARKET & GOLD’S A WAVE ADVANCE

I have decided to post the weekend premium report to the blog this week. In the report I’m going to take a look at what has transpired, and what is likely to come, as the third leg down in the secular bear market begins to intensify.

Back in April of this year I warned investors to get out of stocks in their 401(k) accounts. At the time the dollar was moving into the timing band for a major three year cycle low. It has always been my expectation that the rally out of that major bottom would correspond with the stock market moving down into the third bear market leg of the secular trend that has been in place since 2000. As we now know the dollar did bottom in May of this year and that did correspond with the top of the cyclical bull market that began in March of 2009. It has also been my expectation that the next four year cycle low would occur in the fall of 2012, and that 2012 would be one of the worst economic years in human history.

This is already starting to unfold across the globe as social unrest that began in the middle east has spread to Europe and now the United States. Economic data has been steadily eroding for months now. We should expect this trend to continue and intensify as we get into 2012.

As most of you know I use cycles analysis and sentiment to determine likely timing band’s for major turns in the stock market, gold and the dollar. This is what allowed me to anticipate a bottom in the dollar cycle at a time when everyone was expecting the dollar to collapse, and a top in the stock market when everyone was bullish and expecting a move back to new highs.

An interesting development in the yearly cycle for the stock market has now emerged. Generally speaking most yearly cycles tend to run about 12 months trough to trough. However the Fed’s quantitative easing programs have stretched the yearly cycles from March 2009 into June of 2010, and this year the yearly cycle has stretched again to arrive in October. The market is now set up for the next yearly cycle low to occur in the fall of 2012, which, not surprisingly, is exactly when I have been expecting the next four year cycle low in stocks to bottom.

I have also indicated the expected timing band’s for the next three intermediate degree cycle lows. For reasons explained in the nightly reports I don’t think the current decline is going to move below the October low. I expect we will find a bottom sometime in the next 1-4 days followed by a Santa Claus rally into the middle of December. If the market avoids making a lower low it will embolden the Bulls to continue holding long positions. The hope for a miracle will be misplaced though as the market will almost certainly begin to roll over before making higher highs and by the next intermediate degree bottom in February/March we will see the October lows broken, and the summer 2010 lows tested.

The recent rally out of the October low will undoubtedly be the most powerful countertrend rally of this bear market. Any further countertrend rallies, and there will be several, are likely to be short-lived and weak. The window of opportunity for these long side trades are probably going to be too brief for the average investor/trader to successfully trade. From this point on investors should keep 401(k) accounts solely in money market funds until we reach the bottom sometime in the fall of 2012.

This brings us to the topic of gold. Despite what is happening in the stock market gold is clearly still in a secular bull market. That being said the days of easy money from the gold bull are probably over for the next year as stocks move down into their four year cycle low. In the chart below you can clearly see the affects QE1 & 2 had on the gold bull. 

They drove the largest C-wave advance of this entire secular bull market. However, for reasons that I will explain below I think the C-wave topped in September and gold is now going to enter an extended consolidation phase for the next year.

That begs the question if the C-wave has topped then where was the D-wave? Well I think we just saw it in September. Let me explain.

Because of the massive liquidity floating around the world I now think the D-wave terminated with the overnight spike down to $1535 on September 26. I’m now seriously considering that the last D-wave was exceptionally mild because of the extreme global liquidity. If that is the case then gold has now entered an A-wave advance. As most of you know A-waves don’t tend to make new highs. So my best guess is that gold will test the $1900 level sometime in the next three weeks followed by an extended corrective move down into an intermediate degree bottom in February (B-wave). That bottom should hold above the $1535 level. What should then follow will be a year long frustrating, whipsawing, consolidation that should terminate slightly before the stock market bottoms in the fall of 2012.



At that point gold will start to sniff out the next round of massive quantitative easing as the Fed and central banks around the world go into full panic mode and begin printing unimaginable amounts of money in the attempt to halt the global sovereign debt implosions and economic depression that will have developed. As usual central planners will not account for the unintended consequences of their actions. This time quantitative easing is going to have the opposite affect that it did in 2009. Yes it will put a bottom in stocks, at least temporarily, but it is also going accelerate the cancer that has now infected currency markets. And as currencies start to collapse so will global bond markets. This is the recipe for the final bubble phase in the gold bull market.

While gold is in this long consolidation phase/bear market phase for stocks, trading strategies will be vastly different than they were during QE1 and QE2. Trades are going to be shorter and there will be long periods of time where the correct strategy is to just sit in cash. I started to make the transition to this new trading strategy back in July. The recent breakdown in stocks has now eliminated any reservations I had about the bear market. With that confirmed, there is little doubt that gold has now entered an extended consolidation and that new trading strategies are called for.

Make no mistake, we are now entering what will be one of the toughest markets ever to make money in. So far the model portfolio is performing admirably even in these tough conditions. 

For anyone who would like to sample the nightly premium newsletter, I have opened a $10 one week trial subscription. You will have full access to the SMT premium website including all historical archives, model portfolio, and terminology document for a full week. If during the week you decide the subscription is not for you, or the shorter term trading strategies don’t suit you emotionally than simply cancel your subscription by following the directions on the homepage prior to your week expiring. If you do enjoy the newsletter then simply do nothing and your subscription will convert to a yearly membership at the end of the one week trial. Click here to link to the premium website. You will find the subscribe link on the upper right-hand side of the home page.

785 thoughts on “THE SECULAR BEAR MARKET & GOLD’S A WAVE ADVANCE

  1. Harry235

    Gary since you expect gold to test $1900 in the next month do you expect silver to outperform gold over this same time frame and if so do you see it testing $40?

  2. Gary

    I noted in Wednesday’s report that silver has been trying to decouple from the dollar, stock market and to some extent the gold correction in the last several days.

    That would suggest we could see a nice run in silver although there is virtually zero chance of a move to or above $50 any time in the next year.

  3. ALEX

    GARY

    That is a thorough and well presented report.

    I saw you mention on the blog Yesterday that you felt we may have seen the D-wave and be in the A-Wave…so I went back to all D & A waves to compare.

    Looking at 2006 vs 2011 shows an uncanny resemblance already…and the way 2006 played out…It DOES look tough to make consistent money, even in the GOLD bull.

    Pull up side by side & compare…

    2006

    http://www.screencast.com/t/uaa30Etba0X

    2011

    http://www.screencast.com/t/Xsw7pyM26iW

    POLY has also repeatedly been calling for a GOLD drop soon and caused me to search this out too.

  4. William Wallace

    Alex,

    If the stock market plays out as I mentioned and bounces for a few days and then continues to make a new low before another bear market rally ensues, we will most likely see gold rally to around the $1750 level before rolling over..I would think it will find strong support on the 150dma as the market finds a bottom. What we will see then on the Gold chart is extremely similar to 06′.

    BTW, you know my outlook for the dollar, and the dollar is due to dip into a DCL for a few days, so it all seems pretty fitting at the moment.

  5. wallofworry

    Gary,
    How do you see the gold & silver miners doing next year?
    Many aren’t even at their 2006 highs, but with the price of both metals up significantly I’d assume they’ll go up much like they did when the PM bull market started in 2002. Also, the fact their dividend payouts are increasing should help boost their value.

    Thanks for the report and your insights.

  6. grimweasel

    Sold my FTSE 5000 Put option and converted into GDX for the Santa Claus rally. Will look to sell and go into cash over the holiday season then buy the FTSE Put again in Jan.

  7. William Wallace

    Alex,

    Another thing, if we do see a scenario similar to the 06′ D-wave and gold does push a bit higher now putting in the second peak that you have projected on the 11′ chart, seen in 06′, it would obviously be a test of the lower high (in this case near 1800)…before rolling over again and bottoming at a higher low than the 1535 low (which I mentioned recently, presumably the 150sma 1645 area). On your 06′ chart where you labeled “are we here?” gold was still in a D-wave at that point, this would put gold in an incomplete D-wave currently, with the A-wave ahead of us…this is why I said to Gary the other day that I believe we are possibly still in a D-wave, and spoke of my concerns about the 50sma, which gold has still not reclaimed.

  8. gideon

    gary,

    would it not be more reasonable to expect that a similar thing will happen as in 2008. Then, gold topped after equities, dropped less, and began a new uptrend about 5 months before stocks low. So far this time, gold topped september vs stocks in May(check on point 1). Now, gold will decline significantly, but less than stocks. Then gold will bottom maybe 5 months before stocks(early to mid 2012?) and will begin it’s wave 3 of 3 up. I will make a gentlemen’s bet that gold makes a lower low than 1535 and that it does NOT make it back to 1900 in the next several weeks

  9. Ken

    Uncle Buck (DXY) has tested and held the 79 level twice and getting ready to go verticle through 79.20 on its way to an 80 handle. I’m thinking Uncle Buck doesn’t slow down until it hits the 85 level as the Euro bloodbath really gets going under 1.30 at the same time. I can’t wait to see the look on the faces of the CNBS Market Crooners when the VIX has a 50 handle on it! πŸ™‚

    http://www.marketwatch.com/investing/index/DXY

  10. MΙ™tuΕ‘Γ©laαΈ₯

    gideon,

    That’s pretty much my argument. Gary agreed, until he changed his mind. Now he changed his mind again, but it looks like he is coming around to this original scenario. One more revision and we’ll be there. πŸ˜€

  11. SF Giants Fan

    Anyone willing to make a one year daily gold chart marked with margin increases including increases from other countries. I’ve got some leftover turkey if ur interested.

    Thx

  12. ALEX

    Blogger RJ said…

    If we did see a mild D wave, it is pretty much unnoticeable on the monthly gold log chart:

    I thought that was a good point, however, I did look at your monthly chart and noticed …the same thing on the 2009 DEC top.

    Also If Gold now continues up and then drops again, it’ll also look like the 2006 drop.

  13. ALEX

    W W

    you mentioned “On your 06′ chart where you labeled “are we here?” gold was still in a D-wave at that point, this would put gold in an incomplete D-wave currently, with the A-wave ahead of us….”

    I didnt think so. I believe on the 2006 chart, the D wave ended when it bottomed in JUNE and the A-Wave is the sideways consolidation from then onward.

  14. ALEX

    W W

    also on your post you discussed a bounce to either $1750 or as I drew $1800 area.

    When I look at the 2011 chart, the $1750 is the middle line on the Bol bnd…the $1800 is the top area. Both are reasonable, but I just thought that Gold could go to %1750 in 2 days..so I pictured more upside.

    I actually (prob same as you) just take it day by day from this point and see where it wants to go.

    If the dollar drop is gradual, the dollar could move down to it’s 50sma, and Taking a week or 2…Gold could rally good enough to draw everyone back in. Maybe.

    It’s all just “wait and see” from here I.M.H.O. :]

    I’d rather see it blast off and fly to $2050

  15. TZ(8155)

    GUYS,

    At the end of the LAST post on this blog I put in quite a few comments about IB in relation to other brokers regarding safety, security, protection, insurance, pros/cons, etc.

    These comments were particularly addressed in regard to what happened to MF Global and how:
    A) I dodged that bullet by not being at that firm for some very specific reasons.
    B) How I don’t think I’ll get caught in the future for those same reasons (given in my comments and linked to at IB’s site).

    I HIGHLY encourage anybody who didn’t read them to go back and review – especially if you trade any futures or commodities, etc.

    I also mention how IB solves the same problems for many people who are INTERNATIONAL and keep asking “I’m in X country, what is a good broker”.

  16. TZ(8155)

    GARY,

    One of your own recent posts shows an A and then a B where the A was almost exactly what we just experienced peaking a week or so ago.

    garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    We are now easily in the B with no need for it go any higher as you are arguing.

  17. TZ(8155)

    Your TSI trader guy shows all the ABCD’s to date here:

    2.bp.blogspot[PUT.DOT.HERE.TO.FIX]com/_soZ-vCrr6Y8/TF8Evc0_-MI/AAAAAAAAAuk/L0i_NS2RP-A/s1600/GOLD+ABCD+All+6%2B.png

    Frankly there isn’t much rhyme or reason to the A/B sections. Essentially it boils down to “A and B are the parts where it screws around before finally launching higher into its next main wave”.

    It is tempting to say that A is a rebound back towards the high, but all those examples show it isn’t necessarily the case. We can easily be FINISHED with A now and heading back towards the 1535 low (but not break it).

    Your thoughts?
    Personally I think we may now be in the churn and grind part and missed the sharp A move up already.

  18. ALEX

    TZ

    I agree. I was with ETRADE in 2008, and their stock was getting trashed, so I called and asked about their business practices and believe it or not, the person on the line said

    …” We are working to resolve the current problems that we are finding ourselves in. You dont need to worry though, we have full SIPC and FDIC coverage, but we do not expect any accounts to be frozen and if they were, it’d probably just be for a month max. But your Money is Safe”

    No Joke- they told me straight up that they had a derivative problem that was quite large… I said, “Thanks ” and transferred my acct.

    I dont know where they stand today, but if someone had them, they may want to check.

  19. TZ(8155)

    GARY,

    Interesting difference in those two links. Please explain:

    TSI GUY drew the 2006 D wave down to OCT 06 (which was not the lowest point) whereas you drew the same low down to Jun 06.

    Can you comment?

  20. ALEX

    TZ said

    “….garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    We are now easily in the B with no need for it go any higher as you are arguing.”

    November 24, 2011 6:57 PM

    In that chart,I see exactly what you are saying .

    First labelled was The D (leg down)-

    then had 1 leg up as “A” –

    and the 3rd leg down to retest the “D” low was labelled the “B” leg

    and you’re saying we are currently in that area (‘B’ down to retest “D” low)

    HHHMMMMM

  21. Gary

    Gideon,’
    The big difference between now and 2008 was that 2008 was also the 8 year cycle low for gold. The next one isn’t due until 2016. We just aren’t going to see that kind of decline again in gold until the next 8 year cycle low. Plus now the world is awash in liquidity.

    In these conditions and with no 8 year cycle low there’s almost 0 chance of another decline like 2008.

  22. TZ(8155)

    Well, ALEX, I’m simply saying that is an ABCD chart drawn by the Man himself and the A on that chart went up almost the same amount % wise as this one just did.

    You can see the B leg dribbled back down for 3 months before putting in another seriously buyable low.

    If then then why not now?

    NOTE: I am clearly aware (and all else here should be) that the market essentially never repeats a pattern that is easily visible and studied on charts by the market participants. EACH of these D pullbacks and subsequent actions are known and studied by EVERYBODY. You will notice that not a single one mirrors the others – because that is how markets work. Too many people see and remember and try to trade whatever pattern is closest and thus any pattern that starts to match will break and do something different.

    SO…while it is interesting to look at all these ABCD’s the only REAL comments you seem to be able to take from them is:
    1) once the D low is in it doesn’t break lower (except the 2008 crash which was a mess)
    2) there is some kind of rebound from D called an A, but you don’t know how much or how long.
    3) there is a pullback from the A, but you don’t know how much or how long.
    4) then you get a C where it really starts moving again, but you dont know when that starts.

    Clearly not as useful as it originally seems.

  23. Gary

    TZ,
    Highly unlikely gold is finished with the A-wave yet. The intermediate cycle would be left translated if the A-wave has topped. That would suggest that the B-wave would move below the D-wave bottom, and that can’t happen unless the D-wave has been miscalculated, and I don’t think it has since we saw multiple 100 Blees ratings at that bottom.

  24. Gary

    Actually it’s not that hard to spot a B-wave bottom. It will come at an intermediate cycle low. I’ve been pretty successful at spotting cycle bottoms.

    However just because a B-wave has bottomed doesn’t mean the C-wave is ready to accelerate. There is often an extended consolidation period before the C-wave is ready to accelerate even though technically gold has entered a C-wave advance.

  25. TZ(8155)

    GARY,

    The INT cycle of the A/B in 2006 is left translated and yet the B didn’t go below the A.

    Seems to still argue the A is possibly in since the A here would also be left translated, but might not go below either.

  26. Gary

    The A-wave in 2006 did top in a left translated manner but the B-wave did hold above the D-wave bottom.

    That however was an exception to the odds and I never bet against the odds. More often than not a left translated cycle moves below the prior cycle bottom.

    Since that shouldn’t happen during a B-wave then I can’t trade based on a low percentage outcome. So I’m going to assume that this A-wave (if that’s what it is) will have one more leg up and more fully test the all time highs before dropping down into a B-wave decline.

  27. TZ(8155)

    OK,

    But 2005 did the same thing.
    Left translated on the A peaking in 4 weeks, then sharp pullback almost back to the lows (but not breaking it) on the B.

    The A in that example ALSO rallied up % wise about the same amount as 2006 and now.

    So now that is 2 for the probabilities and they don’t seem so clear anymore.

  28. TZ(8155)

    Dont’ get me wrong. I’m long and looking up with the rest of us, but I still think it isn’t all too clear we aren’t already in a B *AND* heading lower.

    As we enter the fri night turkey takedown zone where gold has been hit last two years I want to point out (unfortunately) that despite all commentary and belief, we do not ACTUALLY have a daily swing low in gold yet.

    Most of us are long on a bit of hope and expectation that the low is actually in. That may not be the case.

    My next lower target is actually closer to 1630 (same with Ross Clark/Hoye) and we may very well find out that not waiting for the daily swing was a mistake.

    I note that (read any news service tonight):
    1) germany is resisting any kind of printing or bailout still.
    2) china is saying tonight that they will not be printing or easing at the moment.

    So we might find that the daily has a bit more to go lower and that this is now a B and going to retrace more.

    Sorry for the pessimism.

  29. TZ(8155)

    WW,

    I dispute that and so does gary from his link:

    garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    bottom was june 06

  30. JReality

    TZ(8155,

    I have an account with IB, but I also have another acount Amp Futures. I’m concerned about the lack of any kind of insurance or SIPC protection with a futures-only account (same thing as a commodity account). In addition they are self-clearing (IB is too) but Amp is a lot smaller operation than IB. I’m concered about what could happen if a bigger trader were to “blow out” their account at Amp…would it affect me?

    I’m thinking it’s probably safer to stay away from commodity-only acounts (futures-only accounts) and move the money from that type of account somewhere else. However, one issue is that all brokerages only have 250K of SIPC protection. I realize IB and other brokers have excess insurance, but if the s**t really hits the fan, then I’m concerned that maybe it would be difficult to impossible to collect on the excess insurance, or even the SIPC insurance itself if the account is a margin account. (even I only really have the margin to avoid the 3 day settlement rule, to avoid free-riding, and so that they will allow me to write naked puts and calls even though I always keep enough cash to cover me if I were to ever by assigned)

    How protected am I with a margin account even if I don’t actually tap into my margin? Will SIPC and/or excess insurance REALLY cover you if you have margin account? I believe that IB can loan out your stock even if you don’t tap into your margin. I’ve received payments in lieu of dividends from IB even when I had no less than 90K extra cash in my margin account (credit balance, meaning I did not actually borrow any stock).

    What is to stop the SIPC and/or excess insurance company from just saying, “sorry, sucker, you had a margin account so we ain’t covering nothin!”??

  31. JReality

    TZ(8155) This is something I received from IB when I asked about why I was receiving payments in lieu of dividends when I didn’t tap into my margin. I don’t fully understand it, but it sounds like they are saying there was a shortage of the stock that I bought and it was “owed to me” so I received payments in lieu of dividends. It sounds like they hold everyone’s stock together in one big database and there wasn’t actually enough stock held by IB to cover what was supposed to be in everyone’s cash account so some people got payment in lieu of dividend even if they didn’t tap into margin. If you have any idea what they actually mean in the following message, please let me know. If I’m misunderstanding then let me know. Here’s the message I received:
    ____________________
    Please be advised that IB would not loan your stock if the account does not have a margin loan. With that being said, the segregation is performed on a net basis. As such, it is possible to have a technical segregation deficiency due to matters outside the broker’s control, such as fail to deliver or an increase in segregation requirement for accounts that were previously borrowing funds. When these types of situations occur and shares cannot be secured, a Payment in Lieu will take place
    _______________________

  32. William Wallace

    Until the market shows me that it has any intention of significantly bouncing from here, which at this point I am not counting on in the least…I have been stressing since early October that this market rallied too hard too fast and the result would be that this cycle would top in a left translated manner because this market wasnt going much higher than the 200dma, not without more QE…I simply cant ignore that there is nothing in the past bears (or any reason for that matter right now) that suggests anything other than the fact that when the initial bear market rallies rollover we dont see the next one until a new low is put in, it seems like a stretch below the prior cycle low is a requirement to spawn the next bear market rally. We see this in the consolidation stages also after the head and shoulders tops waterfall decline, all three bears made a marginal new low before spawning the first bear market rallies. Its no coincidence we see the same behavior in this and the two previous bear markets, its human nature, its the stuff cycles are made of. I covered all my shorts yesterday and went long, then I said to myself what the hell am I crazy going long right now, and stuck to my outlook and took off the SPX long right before the market puked into the close. I do hope we get a significant bounce so I can put the short back on at higher levels than I covered.

  33. JReality

    I had written some Puts/calls during that month, so I wonder if, even though I had the cash to cover those puts/calls, they use any writing of options (even if fully cash-covered in the event of an assignment) as an excuse to say “he’s using margin, lets loan out his stock” ??

  34. JReality

    William Wallace,

    But, Beanie says everything is going to fine and this selling is ridiculous, and we should keep buying dips…. πŸ™‚

    Do you think SPX will retest last summer’s low of around 1000 before the next bear rally?

  35. Gary

    Anything is possible but with sentiment at extreme levels again I think it’s unlikely that gold has a significant decline right now. Plus we still haven’t had the dollar move down into it’s cycle low yet.

  36. TZ(8155)

    OK, thanks gary.

    Just wanted to push the analysis. It is always important to look BOTH ways on a trade and I wanted to make sure we were.

    I do think monday was a valid low as I have said (at least certain enough to bet some money on), but there are arguments for lower as well.

    We will see what happens.

  37. Gary

    Sure it could go lower. But it’s deep enough in the daily cycle that I think our entry is “close enough” and any further downside will be quickly recovered.

    I’m not heavily leveraged so I don’t have to pick a perfect entry, I just have to get close, and I think we probably did that.

  38. William Wallace

    JR,

    If this bear market is anything like the past two, and it has proven to be just that in many more ways than one (its almost silly to just ignore it), we will certainly see a test of 1000 before the next bear market rally. A complete divergence from the way markets go down would suggest otherwise, there is nothing right now indicating that….the dollar will have to crack for that to happen. I was expecting and calling for a new low before the Oct 4th low was put in for a true bear market rally to ensue, we got that…I wasnt just guessing or trying to predict this, its how bear markets behave… I would say its pretty clear that the world is running to the cleanest dirty shirt in the closet right now also – $USD.

  39. TZ(8155)

    WW,

    I wasn’t trying to be a jerk. People post stuff here all the time without indicating which security and people have to figure it out. Clearly people will get it wrong some % of time and it is simply an unnecessary error to have.

    “..Until the market shows me that it has any intention of significantly bouncing from here, which at this point I am not counting on in the least…I have been stressing since early October that this market rallied too hard too fast and the result would be that this cycle would top in a left translated manner because this market wasnt going much higher than the 200dma, not without more QE……”

    That sounded EXACTLY like you were talking about gold and then other parts conflicted so I just gave up trying to figure out the post.

  40. William Wallace

    TZ,

    I think it was pretty clear that I was speaking about the SPX and not gold when saying “I have been stressing since early October that this market rallied too hard too fast and the result would be that this cycle would top in a left translated manner because this market wasnt going much higher than the 200dma”

  41. Ananyavrat

    i dont know A wave or D wave…..
    but Gary everyone is still invested big time in gold in asia….
    and if gold goes to 1900$… asian currency terms the move will be parabolic….

    Gary can you give us an inverse view? if
    gold has already topped around 1921$ levels….
    and headed much much lower, what is our stoploss for longs?

  42. TZ(8155)

    Reduced down to about 2x gold.
    I’m more comfortable with that amount all things considered tonight.

    My stop is higher than the “daily swing” low of 1667 by about $5. I don’t want to hold down to that point. If we are that soft then i’m not sure that was a daily low yet.

  43. TZ(8155)

    I’m about 1.5x now with a stop I’m willing to take below wed’s low.

    The turkey shoot on gold seems underway now. Thanksgiving fri 2011.

  44. TZ(8155)

    JR,

    If you have a CASH account at a broker they are not supposed to loan out any securities you have. MARGIN accounts they can loan out securities. In either case you still are owed what you own. I don’t think the loaning out increases your risk much and IB is seeming to say that if for some reason an entity with your shares cant provide them that would be given the same amount of cash (and could therefore just buy it back on the mkt). This whole scenario sounds very unlikely to occur and there are significant advantages to having a margin vs. cash account.

    I have never found in the US that you can have a margin account with its advantages and yet prevent your broker from loaning out securities you own. It would be nice but either it is written into the regulations or it is so pervasive it will never be changed.

    You just have to deal with it, but again I don’t think it is a big deal.

    As far at all the puts and call stuff I don’t really do options. I don’t like losing my money πŸ™‚

    You had one additional comment about dividend and payments in lieu of. If a person borrows your shares to short, they are responsible for paying you any dividends that the stock issues out of their own money. That is one of the costs of being short. So that is all it appears IB is explaining to you.

    Disclaimer of course: this is just helpful advice that I THINK is correct. You are ultimately responsible for getting accurate information and understanding what you are doing.

  45. TZ(8155)

    JR,

    As for your info on SIPC it appears vague and misunderstood.

    SIPC (google it) has a website with clear brochures on what they do and what they cover. $250k is only ONE of the applicable numbers and only for certain instruments.

    And remember that MF has shown that SIPC only covers a ‘security’ account and not a ‘commodity’ account.

    Disclaimer again: my comments believed correct, but you are responsible for trusting them.

  46. William Wallace

    TZ,

    said:

    “WW,

    I dispute that and so does gary from his link:

    garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    bottom was june 06″

    I agree and dispute myself πŸ™‚
    Most B-waves break below the 200dma and C-waves are born on the 200dma…fits well with my analysis.

    But Alex still had it wrong I believe in saying

    “I believe on the 2006 chart, the D wave ended when it bottomed in JUNE and the A-Wave is the sideways consolidation from then onward.”

  47. JReality

    TZ,

    If you ever plan on going 100% cash in your account, then the
    250K number is what matters, IMHO, unless the excess insurance covers cash and you believe you could collect on the excess insurance it if the s**t hits the fan.

    I still wonder if SIPC, etc. could say “you have a margin account, so your securities may have been loaned out and if we can’t recover them, you are out of luck”

  48. Wav_ridah

    EURUSD, this donkey is having a hell of a time finding a bottom. Looking like we have date with 1.325, the lower trendline on the falling wedge.

  49. Neo

    TZ,

    Last year, the pushing down on Gold was only on Black Friday or did it extend on monday. Maybe we may only have our botton on monday….

    What´s your thought ?

    Thks.

  50. ALEX

    Not arguing anything here ..no “tit for tat” but- simply For Clarity-

    Just so people reading last nights discussion can understand clearly…what a basic A-B-C-D in the Gold Bull looks like

    http://www.screencast.com/t/jdh9tQbriSY

    The “A” point goes from the LOW of the D point (which ended in JUNE 2006) , So “A” starts in JUNE..and goes sideways to ‘upward’ in a consolidation, almost reaching (in some cases closer than others) the prior “C” point high, then drops into a “B” wave low.

    So my statements were all correct.

    -The D-Wave ended in JUNE (in no way did it go to October)-

    -Where it ends, the A-wave begins-

    -The “A” wave ENDS at the next highest point –

    – before dropping into the next low called “B”

    I believe this is also how Gary views this pattern.

    That just for clarity : ]

  51. Blog Posts - RNM

    Gary – you’ve suggested that in the coming year “currencies will collapse”.

    Obviously they can’t “all collapse” so….which do you see/envision “benefiting” from the coming storm?

    And which do you imagine to be debased/devalued the most?

    The money has to go / be held/exchanged one way or another so….who wins?..who loses?

  52. sophia

    EURO-CHF: Rumours circulating that SNB to move the band with reports of
    a press conference to be held at 5pm local time. Euro-chf currently
    deals Chf1.2311.

  53. William Wallace

    Alex,

    Just sounded for a second like you eliminated the B in saying

    “I believe on the 2006 chart, the D wave ended when it bottomed in JUNE and the A-Wave is the sideways consolidation from then onward.”

    Thanks for clearing that up, I knew you wouldn’t let my comment escape you bro…lol
    No biggie were all on the same page basically, I think it’s great, this blog is like a well oiled machine…a killer team πŸ™‚

  54. Gary

    Yes we are starting to see some truly extreme breadth levels. Down pressure has reached levels only seen a couple of times in the last decade. The NYMO is at levels usually only associated with extreme intermediate degree bottoms.

    It seems unlikely that the market will continue to drop another hundred points in the next two or three days despite these massively oversold conditions. I think it’s more likely we are going to put in a narrow range day soon and then form a swing that should mark the bottom of the daily cycle.

  55. ALEX

    WW

    OH, I see what it looked like I said. Like ‘D’ to ‘A’ for that entire sideways move until the next ‘C’ arrived (skipping a “B”) LOL

    Gotch, It kind of did sound like that when I termed “A” as the rest of the sideways move.

    :]

  56. ALEX

    GARY

    If Monday remains the low, and we get a swing , do you count yesterday as a day too ( Gold did trade elsewhere).

    And if today broke Mondays low and a swing forms…you just start today as day 1. correct?

  57. ALEX

    Actually, Yesterday was showing up on one of my Gold charts, and not showing up on Stockcharts.

    So I’m assuming you skip yesterday- I remember you saying you have to see it on the chart (no overnight , etc)

  58. Gary

    Alex,
    I think I would tend to ignore yesterday because NY didn’t trade. At this point I would prefer gold make a slightly lower low and start the cycle count fresh because I would prefer not to waste several days of a new cycle churning.

  59. muttonfish

    Looking to me like we might kiss WW’s 150sma. I think that might be the slightly lower low, looks to be about 1640ish right now. That would also be enough to freak a lot of people out and convince them to sell right at the lows.

  60. Tiho

    Stocks falling to and below March 2009 lows on the S&P 500 is a deflationist dream… and it will not happen.

    Printing starts at 1000 or below!

  61. Gary

    Tiho,
    The nominal price isn’t terribly important. We just need to see P/E ratios in the single digits and dividend yields above 4%. Once we get those conditions we should be at valuations where a true secular bear market low is forming.

    That being said I think we probably will see marginally lower lows in 2012 but the earnings will be much better than in 2009 so P/e ratios will be much lower.

  62. sophia

    Someone either knows something or is just having fun here…Gold cruising, stocks up and mostly Treasuries down, which means that they are taking advantage of a small volume day to move things around..!?!

  63. Ken

    I find it telling that gold couldn’t make it above $1700 and silver couldn’t make it through $31.50 on the back of a SNB currency intervention to support the Euro. Gold and silver are going to get smacked hard when the Euro breaks the October low. The waterfall slide in the Euro should slice through the 1.30 level forcing commodity complex lower and the USD higher.

  64. Gary

    Ken,
    Time to bet on that kind of outcome isn’t 20+ days into a daily cycle. This is why I use cycles in the first place because technicals will cause one to make the wrong decision at turning points.

    Now isn’t the time to be pressing the short side of anything. Even if there is further downside it’s so late in the cycle that your window of opportunity to profit is going to be very narrow and you risk getting caught in a sharp reversal.

  65. Ken

    It’s a good thing that Gary’s SMT portfolio up 20% YTD on trades since July. I’m thinking he’ll close out the current model portfolio position at a 5-10% loss or when gold falls back below $1600 and silver into the high to mid 20’s. Everyone’s looking for upside when they should be looking for downside… What a perfect setup!

  66. Ken

    Gary I’ve been watching you for years and you’re good, damn good, but it’s time for the gold bull to throw you a curveball. Being up 20% YTD since July is better than every hedge fund manager in America. It’s time for a loser trade and the collapes of the Euro should do just that. The market is trading with the thesis that eventually Germany or the ECB will print, but that isn’t going to happen. Gold, silver, oil etc. has done a wonderful job shrugging off the USD strength, but they’ll play catch up with the indexes as the flush below 1100 SPX drags them down. We are going into a global recession/depression and the money printing (if we ever get it) will come around SXP 950 and not before. The Fed will use the Euro/Market Crash as the reason to launch QE3 but too much damage will have been done and it will prove in effective. The global financial system is terminal and all we can do now is sit back and watch it die. Hopefully it is quick and easy (deflationary credit collapes) rather than long and drawn out (hyperinflation) but either way we go we’re going down.

  67. William Wallace

    Keep in mind people, we have a left translated daily cycle in stocks in the first bear market rally, a first for the last three bear markets. Both prior bear markets had right translated initial bear market rallies. Gold is clearly refusing to decouple from stocks, and the dollar still has atleast two daily cycles left in this intermediate cycle.

  68. Gary

    Ken,
    Fortunately everyone is starting to think like you. And as we all know when everyone is thinking the same thing then no one is thinking.

    That’s the recipe for a reversal as too many people get on the wrong side of the boat.

    I don’t have to time a perfect entry, just “close enough” Even if gold has one more dip below $1667 it will almost certainly be quickly recovered and even though we didn’t get in at the exact bottom our positions should still show a decent profit. All markets have a large gap above that will almost certainly get filled during the next daily cycle.

    GDX has a gap above $60 that should get filled. Even if the rebound only fills those gaps we will make money and the model portfolio will then score another base hit and tack on another couple of percent.

    This is how the model portfolio continues to rack up steady gains in one of the toughest trading environments in history, because I concentrate on cycles and sentiment instead of charts and the news.

  69. Gary

    William Wallace,
    Not necessarily true. What if the dollar double tops here, confirming the 3 year cycle low in the CRB?

    In that scenario stocks could continue to churn sideways while commodities rally.

  70. Ken

    The only thing shorts need to worry about is holding onto them (cycles be damned). We have too much intervention in the markets and cyles while good are going to prove ineffective. Those shorts who panic cover on rumors of a Euro bailout (that’s when you should enter into shorts) will find it hard to re-short in a declining market. The best news I heard all day was that Tim Knight over at Slope Of Hope panic covered all his shorts this morning. Tim will watch the biggest crash in the last 70+ years from the sidelines. If you’re short turn off the computor and let your winners run. The $VIX is only at 34 and I expect a rocket shot into the 50’s before I cover any of my shorts and a 1% $TNX and a 2% $TYX before I sell any of my bonds. When I cover my shorts and sell my bonds I will be exiting the paper financial system.

  71. Gary

    At this point I would prefer gold dip below $1667 because I would rather not see it churn and waste the first few days of a new cycle.

    I try not to stop out at daily cycle lows. So at this point I have no stops. My risk control is position size not a stop.

  72. Ken

    We’re smack dab in the middle of the D-Wave decline Gary. When the USD/Bonds moonshot higher on a waterfall collapes of the Euro/Equity Markets margin selling pressure will hit gold/silver hard. The rumor of Isreal attacking Iran is baseless and has held the commodity complex higher than it otherwise should be. I’m looking to buy back gold/miners below $1500 and silver in the low $20’s. I don’t think you’ll be in your model portfolio position(s) too much longer. While you can stomach a -10%+ account drawdown your subscribers can’t. I bet many start to panic sell their AU under $1600 and AG under $28.

  73. Gary

    Ken,
    If the market was in the timing band for an intermediate cycle low I would agree with you, but this isn’t an intermediate degree decline, it’s a daily cycle low.

    It’s already too late in the cycle to keep pushing the downside unless you don’t mind holding on during the next violent rally.

    Today was the 37th day of the cycle. Most of the time they bottom on the 37-39th day. Occasionally one will make it to 40.

    But we are already seeing extreme breadth readings that have only occurred a few times in the last decade. It seems unlikely that the next 1-2 days will be able to muster another 100 points down from here.

    We now have another narrow range day forming. That is one of the things I’m looking for to ease the parameters for a swing low, possibly on Monday. Plus we’ve seen several large Bow days. That is almost always a sign that big money is starting to step back in. When that happens it’s usually not long before a bottom forms.

  74. muttonfish

    Gary,

    Haven’t you said before that when a daily cycle looks like it is bottoming early in the DCL, that bottom is often tested or slightly exceeded late in the cycle. That may be what we’re looking at.

  75. William Wallace

    Gary,

    As of now I will stay focused on what the last two bear markets are telling me, until I see otherwise… being we are seeing the same behavior playout without fail time and again (that same behavior and history that enabled you to say that we would see stocks rally to the 200dma before rolling over if we are indeed in a bear market), right now im pretty convinced that any sideways move in stocks will be short lived…and as I have been saying we will see gold most likely push higher in that time, but if the market continues to fall off gold will not bounce until the next bear market rally in stocks, which I am almost certain at this point will not ensue until the Oct 4th is broken. This bear market is proving to be no different than the last two, until it does im not going to ignore the fact.

  76. Gary

    Ken,
    First off you will never be able to pull the trigger below $1500 because the same conditions would exist then as do now. Your target would have evolved lower to $1200 or $1000.

    We saw the COT trigger multiple 100 Blees ratings at the 1600 level. The only time a 90+ Blees level has ever been penetrated was during the market crash and 8 year cycle low in 2008.

    The next one of those isn’t due until 2016.

  77. Ken

    Coming into today’s trading the good folks over at Bespoke reported that the decline of -4.43% coming into today will go down as the worst Thanksgiving week ever for the S&P 500 (since the government officially designated Thanksgiving as the fourth Thursday of November in 1941).

    http://www.bespokeinvest.com/thinkbig/2011/11/23/worst-thanksgiving-week-ever.html

    I can’t wait to see the the size of the red candlesticks we print on the charts over the comming weeks/months. They’ll be Epic in size and should blow everyone’s mind. Something in the way of the BRD’s silver printed in May and September is what I’m looking for.

  78. Gary

    Ken,
    And I think you will probably get that but not until February when the next intermediate cycle is due to bottom. You likely have the right out outcome but your probably just a little early still.

  79. Ken

    Frankly I could care less what the price of gold and silver are or what time we are in a particular cycle. I’m looking for two things before I completely transfer my paper wealth into real assets.

    1) 1% $TNX & 2% $TYX level
    2) Euro Fail or USD parity

    When I see that I’ll be buying. Gold/Silver need the printing of money (credit expansion) in order to go higher and that isn’t going to happen until we see serious blood in the street which hasn’t happened, yet. Deflation is winning.

  80. Gary

    WW,
    The problem is that we are just running out of time for that scenario. We would need the market to drop over 100 points in 3 or less days. The NYMO is already at -120 and downward pressure is already at levels only seen a couple of times in the last decade.

    The market is now at risk of a selling exhaustion and more importantly it’s fast approaching the end of the timing band for that to happen.

  81. Gary

    Unmknown,
    Gold and miners both are still in a clear pattern of higher highs and higher lows.

    Gold would have to dip below $1604 to break that pattern.

  82. Ken

    We are starting to see “The Plan” start to work. As the European banks collapes the TBPT banks like WFC are making bids on distressed assets. Europes financial loss is our gain.

    1) Lower borrowing costs to government with a flight to safety/quality fron the Euro/Euro Bonds into the USD/US Bonds.

    2) the TBTF banks borrow from the Federal Reserve at 0% to buy up assets (debt) in Europe for pennies on the dollar.

    http://www.bloomberg.com/news/2011-11-25/bank-of-ireland-said-to-near-sale-of-burdale-lending-unit-to-wells-fargo.html

    Who ever thought of this evil plan for the US TBTF banks to seize assets in Europe for nothing was a genious. I expect we’ll see more of this sort of activity soon.

  83. William Wallace

    Gary,

    Right now it looks to me that you may be a bit early, The first bear market rallies in stocks stretch well beyond 40 days…the previous two bear markets actually had right translated daily cycles(First bear market rallies), and they both stretched well beyond 40 days. After stocks top and rollover into a waterfall decline (as we see in all three bear markets), the consolidation stage that follows that decline are roughly all 40 day DC’s that occur before the first bear market rallies ensue. Again, all initial bear market rallies that follow that consolidation stage and 40 day DC’s are stretched DC’s. Thats what makes me believe we are going to see this daily cycle (left translated) will certainly stretch, possibly taking out the Oct 4th low.

  84. Ken

    If gold doesn’t get it’s butt back above $1700 and quick it runs the risk of getting pulled down with the equity markets. All I can say is that the SPX 1120 levl had better hold or this sucker is really going to come unglued. Seven straight days of selling is starting to look and feel a lot like the late July early August time period. When does one start to think or better yet call waterfall collapes?

  85. William Wallace

    Ken,

    We should see the SPX make a new low and bottom, 50-70 handles below the Oct 4th low, this will only pressure gold to the 150sma at most (1650 level), especially if we get a 3-7 day bounce next week in the SPX before rolling over again. After the SPX bottoms below the Oct 4th low the NEXT bear market rally will ensue, and gold will most likely test the 1800level again during that time. So if gold is going to drop to $1500 it will not be until the NEXT bear market rally tops and rolls over.

  86. Venicerain

    Neo said…
    Wow, have a look at the SOS on SPY. So soon an already this value.

    SPY was the #1 on the SOS all morning long with about $125 MM I believe, and it disappeared from the list in the end. Something is cooking IMO.

  87. Poly

    What’s cooking is that SPY went negative πŸ™‚

    Hence the removal from the Selling on “Strength” list. The underlying selling was still there.

  88. TZ(8155)

    >Gold and silver are going to get smacked hard when the Euro breaks the October low.

    Unless central banks and govts do what they usually do and announce something over the weekend.

    At SOME point the printing (or some other kind of idiotic move) will start. Gold loves idiots in govt.

  89. Robert

    Excellent comments by Ed Butler on silver /gold and the manipulation of thee markets –oh i forgot they are not manipulated ,its just profit taking

    “The manipulation, which I liken to financial terrorism, takes on a regular pattern. There’s a group of around 20 commercials on the COMEX, including JPMorgan, that know how to suddenly rig prices lower (usually in the middle of the night or at some other thinly-traded time). Knowing that this will scare some people into selling and keep others from buying, this small group of commercials then sits back and waits to buy what they can scare others into selling. The proof of this is that government data consistently reveals that these commercials are always the big buyers on any sharp sell-off in silver. No exceptions. Some might call this just good luck on the part of these commercials. I call it manipulation and financial terrorism.”
    “The most ironic thing is that most silver and gold investors originally bought precious metals as protection against exactly the type of financial crisis we are going through now. In other words, the price of gold and silver should be soaring based upon current conditions. Instead, the manipulation and financial terrorism is so pronounced that the crooked commercials on the COMEX have managed to convince the market that financial crises involving a flight from paper assets is somehow bad for precious metals. That’s preposterous…and you should not be fooled by their crooked games. The proof is that these commercial crooks are buying hand over fist on the contrived sell-offs. So should you.”

  90. Poly

    The dollar has a habit of riding bollinger bands.

    http://screencast.com/t/oMFLOFJsO

    Say what you will about our FED and our deficits, but the dollar’s 3yr cycle position, macro news and the recent action in the dollar is extremely bullish IMO. We’re due a move to a DCL low, but that’s immaterial on a weekly chart.

  91. SF Giants Fan

    Robert

    There is IMO indirect manipulation. It’s called the CME with their margin increases. Why the margin increase in silver in sept after the collapse in may?
    The margin Increase is by far the biggest unknown and can crush a good thing for us PM investors.

  92. lodmund

    Ken

    you have a lot of posts on here all of which seem to exhibit a great deal of certainty about what is to happen next……what’s your track record ? have you got posts here or elsewhere that i can view to see if you have called it correctly in the past?

  93. Bill

    Robert, the thing I don’t get about the market manipulation theory by JPM et al is, why in heck did they allow gold to get above $1000? If I were the boss of this group of ringleaders, I’d consider them an absolute failure. Trying get’s one no points in my book; execution and delivery do. The fact that gold went from $300 to $500 to $700 to $1000 to $1500 to $1900, makes these guys an absolute failure in my book. Doesn’t make sense, does it? These guys don’t play to loose; they play to win; but they’re loosing; so they ain’t playing!

  94. Bill

    Sophia, on the daily chart the Swiss Frank ETF (FXF) is looking like it’s about to turn up (as is the Euro). Is that what you’re seeing, too? Thanks.

  95. Bill

    I think $GOLD’s about to go up. It may have 1 more down day, as this week’s action looks like a flag; but any close above $1700 spot and I go in.

  96. Silverman

    For those that think the dollar can continue to run higher on euro weakness, just remember that Big Ben will begin to push back on that at some point. The Fed’s bias is to inflate. Continued dollar strength only gets us closer to QE3.

  97. TommyD

    Sophia,
    Thank you! I will be meeting the wife someplace in Europe in March. Where are you located?
    She works in central Asia so connecting in eastern Europe makes sense. Prague is a place I would love to see. Email me at [email protected]

  98. Ken

    I have no track record other that what I’ve done personally and for my clients. I’m a registered FA at a major wire house firm and am personally up over 35% YTD by shorting stocks and going long gold and silver. I was short from June 2nd until August 6th when I went long and then shorted the market again on Oct 13th (a little too early on my entry) and after suffering over a 10% account drawdown I’m positive by 4% on my current short trade. I’m looking for a lot more downside which should feed its way into gold and silver via margin selling pressure and I’m thinking I’ll be covering shorts and going long AU and AG sometime in mid-December or early January around SPX 950.

  99. Gary

    WW,
    I’m not sure what you mean by stretched cycles. Every cycle during the last bear was between 35 and 38 days except two short cycles that ran 25 days.

    During extreme market declines it’s not unusual for the selling pressure to exhaust itself quicker than normal. Both of those short cycles came during the Sept-November crash.

  100. Tiho

    One problem with all this cycle non sense is that you are all extremely bullish on Gold with quotes like there is almost 0 chance of that type of a decline – referring to a repeat of 2008.

    I’m not a prophet so I am not here to tell you that I saw it in the future. I do not know what will happen. However, Gold is now up 11 years in the row – one of the rarest events in financial markets for any asset class. I remember Nikkei finished off its run with 10 annual gains into 1990 and than crashed. I do not think Golds secular bull is done at all, but having said that a huge bull trap could be in the process.

    You see Gold had an amazing run into mid 1970s before falling 40 to 50% into 1976. It shook the living lights out of every Gold bull who panikced and closed out their investments. A 50% fall is not easy to hold onto, that is for sure.

    Afterwards, Gold went up almost 9 times, I think it was 850% in 4 years into the final secular blow off top in early 1980. So many missed out only to start the buying chase closer to the end of the move.

    Today we have the same type of an outlook. So many people are so eager to buy Gold, claiming that only a MINIMAL correction will occur. My friends email me telling me to buy and their reason is Europe or US debt, Gary tells you to buy and his reason is cycles, Sprott tells you to buy and his reasons is whatever and Peter Schiff tells you to buy and his reason is a USD collapse.

    History doesn’t reap itself, but it does ryheme. Gold doesn’t have to repeat the mid 70s drama of a bull trap, however after 11 straight years of gains, and every single investment bank quote “negative interest rates” as the reason to buy… there are too many people bullish on Gold right now from the long term perspective… despite what Public Opinion and COT and Hulbert Gold Sentiment read. It would just be too easy to buy here and expect a sideways consolidation like 2006/07…

  101. Γ‰amonn

    High 5, good post :o) I bought his book “Currency Wars”. I like the way he has an intuition about the big picture. I watch what he has to say & learn a lot from him

  102. Gary

    WW,
    I missed the slightly long cycle in the summer of 08. The stretched cycle in early 2011 was triggered by QE and was to the upside.

    But I doubt we are going to see another 100 point loss on the S&P this late in a daily cycle. It would require the dollar cycle to stretch really long and break through resistance at the prior intermediate top, and it would require an increase in selling pressure which has already stretched to levels only seen a few times in the last decade.

    I think it’s more likely we get a bottom in the next few days and a more sustained move down in the timing band for an intermediate bottom in Feb.

    The McClellen oscillator is stretched to levels that can rarely be maintained for very long. For stocks to drop below the Oct. low we would have to see the NYMO move to levels probably never seen in history. Doesn’t seem very likely.

  103. William Wallace

    Gary,

    If we get a decent bounce 4-5%, or trade up to sideways for a few days before rolling over, it will relieve some of the oversold conditions, will it not? This is what we see in the prior two bear markets before a new low is put in.

  104. Gary

    Another consideration is that we’ve now had 7 down days in a row. That’s pretty rare and the first up day is going to set up a potential swing that will likely mark the bottom of the cycle. To drop another 100 points we would probably need to see 9-11 down days in a row.

    One of the worst market crashes in history unfolded over 8 down days in Oct. 2008. In order to penetrate the Oct. low we would probably have to exceed that streak.

  105. Gary

    Yes a 4-5% bounce would definitely qualify as a daily cycle bottom which should be followed by another left translated cycle that penetrates the Oct. low.

    The real damage from this bear market should occur next summer and especially next fall.

  106. William Wallace

    Thats what I have been saying for some time now, that the next DC would fail and take out the Oct 4th low…I just wasnt sure if you would mark a 4-5% bounce as a new cycle or a continuation of this one, so I was just refering to it as a stretched cycle now. That clear things up πŸ™‚

  107. William Wallace

    That is what I meant when I was saying just recently that this particular daily cycle in a bear market (the DC following the first bear market rally) fails very quickly and rolls over within 4-9 days (4-5% bounce) or so.

  108. William Wallace

    So now you understand why I am compelled to expect a 4-5% bounce next week before the market rolls over and takes out the Oct 4th low, and why I have been saying that I dont believe that we will be seeing the next substantial bear market rally until a new low is put in. Lets see what happens.

  109. William Wallace

    Thing is, if the market does bounce 4-5% and then rolls over to take out the Oct 4th low, how high will gold rally and how much of a pullback will we see if it continues to follow the market. Gary, what percentage will gold rise in correlation to the markets 4-5%, do you have an idea?

  110. Gary

    Not a clue. I’m just trading based on what I expect to be a right translated intermediate cycle and the tendency for A-waves to test the highs. So if the rally can make it to day 10 then I’m going to start thinking about taking profits.

  111. Time to Die

    Thanks for posting Ken. We typically get some know it all come along and brag about how gold is gonna crash right around the time it’s about to launch higher! Beenie, Mylifemytrade (mylifeislame), etc etc.

  112. SF Giants Fan

    Time to die

    Yes ur right. They come and they go but mostly they go. He did state a good case for a collapse. To bad he wasn’t here 2 weeks ago when the market and gold was higher. It’s easy now after the decline.

  113. Bill

    I’m bullish on gold for currency reasons, but one thing that I keep in the back of my mind is the $50T in derivatives that could unwind – if that starts to go, it would plummet the S&P, wouldn’t it? And like in 2008, wouldn’t that take gold down? Also, related, the GLD ETF may becoming large enough to affect the spot price of gold, rather than the ETF tracking it; so like domino’s, the derivative death star could implode, bringing down the S&P, along with everyone’s 5-10% share in GLD, which forces down the spot price. Just saying it could happen is all.

  114. Bill

    On the charts, I just noticed that $SILVER made a lower low today (Fri) on a market closing basis. $GOLD did not. Focusing back to just silver, it wouldn’t surprise me to see another low on Monday, then a turn up to start the new trend (I hope).

  115. SF Giants Fan

    http://www.grandich.com/2011/11/mistakes-i-made-a-few-no-make-that-many/

     
    3. “Hope” is not an investment strategy—When it comes to faith, hope is very good, but in investing it can be a killer. If I only had a dollar for every time I heard an investor say they’re “hoping” their stock goes back up so they can get their money back. Look, if you’re hoping the price will rise yet not willing to buy more at the reduced price, who do you expect to do so and pay up to the price you originally paid? Just hoping for these changes without sound fundamental reasons to back  up that hope is a license for disaster.

  116. William Wallace

    Revised post.

    Gary,

    Just to name a few stretched daily cycles from the last two SPX bear markets….

    A.) 10/19/00 to 12/20/00 – 45 day Daily Cycle (which I refer to as the consolidation cycle that occurs after the head and shoulders waterfall decline)

    B.) The following DC…12/22/00 to 3/22/01 – 61 day Daily Cycle (which I refer to as the first bear market rally)

    A.) 1/23/08 to 3/17/08 – 38 day Daily Cycle (which I refer to as the consolidation cycle that occurs after the head and shoulders waterfall decline)

    B.) 3/18/08 to the Daily Cycle top – 44 days. If you count from trough to trough (3/18/08 to 7/15/08) – 83 day Daily Cycle…(which I refer to as the first bear market rally)

    A.) The last Daily cycle (8/10/11 to 10/4/11) – 39 day Daily Cycle…(which I refer to as the consolidation cycle that occurs after the head and shoulders waterfall decline)

    B.) Current Daily Cycle began 10/5/11 – 37 days so far…(which I refer to as the first bear market rally, and I believe you agree with me)

    Now If you notice the “consolidation cycles” are roughly 40 days and the following “first bear market rallies” are stretched Daily Cycles (beyond 40 days)
    And if the prior two bear markets, and so far this one also, are any indication…the market will make a new low before the next substantial bear market rally begins.

    If you remember (and I kept stressing it), back in August I was telling you that I believed that the Aug 9th low was not going to be what spawned a bear market rally, and that the SPX would consolidate and put in a new low before a substantial bear market rally would ensue… you disagreed with me.

  117. Ken

    Keep your head on a swivel because December 13th is a FOMC meeting/statement. I’d expect the doves to start chirping about GDP targeting etc as GDP goes negative. Remember that GDP is at 2% and should go negative sometime next year as the world’s recession/depression gathers steam. Something to think about going into 2012 is the FOMC statements and cycles.

    2012 FOMC Meetings
    January 24-25
    March 13
    April 24-25
    June 19-20
    July 31
    September 12
    October 23-24
    December 11

    http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

  118. Gary

    Ken,
    Nobody here disagrees with you on the direction of the stock market in 2012. I’ve been calling for this for more than 6 months. Heck I’ve been desperately trying to warn Beanie so he wouldn’t get caught in another bear market. Of course he ignored me and did get caught again.

    I’m just skeptical that the market is ready to crash right here right now. It’s too late in the daily cycle. If I had to guess I would say the first day that spikes the Vix at least 10-15% is going to mark the bottom followed by a convincing Santa Claus rally.

    What you are looking for is more likely to occur during the next daily cycle when it moves down into a much larger intermediate degree decline due to bottom in Feb or March.

  119. hamvestor

    From today’s Barron’s, an alternative view to the pervasive negativity we’re seeing on the blog at the moment:

    “On this Thanksgiving 2011, start by giving thanks that the U.S. economy is “no turkey,” according to a Wednesday missive from the economists at Credit Suisse.

    The Credit Suisse recession-probability model now puts the risk of recession in the U.S. at one in 10 (specifically, 11%), based on preliminary estimates for November that admittedly include projections. But that’s way down from the high end of more than one chance in three (36%) as recently as September.”

  120. Gary

    I think Barrons may be looking at the world through rose colored glasses with the hidden agenda of trying to increase circulation πŸ™‚

  121. hamvestor

    Gary, lol, but I think the Barron’s formula for many years has been the negativity, gloom & doom is what actually sells. The same goes for many financial newsletters. You call them as you see them, but yours is still one of the most balanced out there.

  122. ILUVPMS

    Gary,

    I was reading a blog posted by TJ,

    The author expects a rally to 36 followed by a plunge to 18 and ultimately a drop to 6.50 in 2012..

    If euro breaks apart that may happen as the dollar gets extremely strong… Armstrong has been talking about a retest of support for gold so we may get a drop to 1100, no

  123. Gary

    We saw multiple COT 100 Blees ratings during the move down to $1600.

    Since the next 8 year cycle low isn’t due until 2016 it’s very unlikely we will see gold or silver trade back below those levels for the remainder of the secular bull market.

  124. Gary

    Also I wouldn’t make the mistake of thinking that a collapsing Euro is the same thing as dollar strength.

    The dollar is measured against the Euro and in that regard price can rise. But when measured against something real like gold or oil the truth is observed, that the purchasing power of the dollar is not rising or only very marginally.

  125. Bill

    Gary, new topic, on cycles. What price action would it take for you to say, “cycles don’t work”? ‘Cause the exceptions and lack of hard commitment start to feel like EW – you know how they’re always renumbering after the fact, after the price move, so that everyone misses it, but their charts now look pretty. I feel cycles are not reliable – too fuzzy. But, back to my q, what would it take for YOU to say that cycles don’t work? Gold at $1000? $SPX making new highs? Am just curious, i.e. I have no baseball bat in hand. πŸ˜‰ Thanks.

  126. Gary

    Bill,
    Cycles do work. Better than any tool I’ve ever found. Cycles are just a way to quantify human emotions. Unless human emotions change cycles are never going to “fail”.

    When used in combination with sentiment, a bull market, and technicals They give me an edge. The performance of the model portfolio just since July is a clear indication of that.

    You are trying to make cycles do something they’re not designed to do. Cycles aren’t a tool that is going to allow you to pick a perfect entries and exits 100% of the time. They aren’t going to give you guaranteed targets. No tool or strategy ever invented does that.

    All I need cycles to do is tell me when the odds are in my favor to step on the gas and when it’s prudent to tap the brakes.

    I don’t have to get perfect entries and exits. I just need to get “close enough”. My trading system allows me to do that most of the time.

  127. Bill

    I understand and agree that your combined trading system is great, as evinced by your track record of results. But I still think that cycles isn’t helping as much.

    Look at the $GOLD chart you posted on this public blog on Oct 8th.

    http://smartmoneytracker.blogspot.com/search?updated-max=2011-10-24T06:04:00-07:00&max-results=7

    Scroll to near the bottom to see the Oct 7th $GOLD chart, where cycles are listed. Cycle periods listed are 13 weeks, 30, 25, 26, 22, 13 weeks respectively. I mean, focusing in on this alone, w/out sentiment and all your other tools, this is way way too loose, don’t you agree? Imagine going back in time, not knowing if the bottom is this week, or next, or even 17 weeks further down the road (17 = 30-13). Seems insane to me. Just looking at this chart.

  128. Bill

    And I *do* agree that markets inhale and exhale, I’m just saying that the periods (trough to trough) are not consistent enough to trade off of. Your chart proves this.

  129. Bill

    Let me say this another way – for me, to know when to put on the brakes or step on the gas, I’d need variation of +/- 1 week max. So like 25 weeks, then 24, then 25, then 26, then 25, type thing. Not 13, then 30, then 25, for an average of maybe 25, but with HUGE variation. That’s all I’m saying.

    Luckily this is saved by your other tools, so that the overall net effect is that you’re a very successful trader.

  130. Bill

    I think cycles is actually a bad thing, because it creates an expectation of what is about to happen in the future. When in fact, there’s no way we can know that.

    For instance, it seems cycle-wise that gold and the S&P are about to go up, big-time. But if they go down, it would not surprise me, but I can’t get you to drop cycles if they go down. You’d just renumber them, same as EW in my mind.

    Me, though I’m a beginner trader, I think that the best way to trade is to have no expectation about anything, and to just follow the trend, wherever that trend lies (and few things are trending at the moment, so I’m in cash).

  131. Bill

    Again, my comments are only about cycles, not you. I do see and understand that you’re a very successful trader. It’s for that reason that I’m perplexed by why you are using cycles. The variation between periods is enormous. I just can’t net this out.

    Anyways, all the best to you, but I gotta go back to my Zen way of trading – no expecations, just go w/the flow. Simple, but hard to do what w/all the news and all. Getting out of my own way is the hardest thing to do.

  132. Gary

    Bill,
    Your mistake is trying to trade intermediate cycles without paying attention to the daily cycles nested within each intermediate cycle. The timing band for the daily cycle is +/- one week.

    I’m not sure you understand the concept that every cycle of whatever degree bottoms at the same time.

    As an example a daily cycle trough may just be a daily cycle bottom. But it could also be not only a daily cycle trough but an intermediate cycle trough if the asset is in the timing band for that higher degree bottom. It could also be a daily cycle trough, intermediate cycle trough and a yearly cycle trough. Think of it as a series of waves all crashing at the same time.

    The higher degree cycle bottom it is the more severe the decline will be because there will be multiple waves bottoming at the same time. In the case of an eight year cycle low you have a daily, intermediate, yearly, and eight year cycle that are all bottoming at the same time.

    Still no matter what degree cycle bottom is forming you still trade it by following the current daily cycle. And often sentiment will tell you when a higher degree cycle is bottoming, especially if you’re in the timing band for that bottom.

  133. Gary

    Veronica,
    I measure translation by the average cycle duration. So any gold cycle that rallies 12 days or longer would be considered right translated even if it eventually stretches past 25 days.

  134. Gary

    BTW my expectations of where the market is heading has nothing to do with cycles. Whether cycles are heading uphill or downhill depends on whether one is in a bull or bear market and/or on the downside of an intermediate degree decline.

    One still has to adapt in real time to changes as they occur.

    As an example if the stock market were to bottom early next week and then rally back above the 200 day moving average I would have to seriously question whether or not we are in a bear market. But based on recent market action since May it appears we are. But that doesn’t mean Bernanke couldn’t initiate a massive quantitative easing program next week and temporarily abort the bear market.

    That would be the kind of fundamental change that could abort the dollars rally out of the three year cycle low and turn that major cycle back down early.

  135. Bill

    Thanks for that Gary. That helps a bit.

    So, back to your Oct 8th $GOLD chart showing weekly troughs at weeks 13, 30, 25, 26, 22, at 13 – was that a “combo” chart showing both daily and intermediate troughs? If so you are correct that it wasn’t clear to me, and that helps explain a LOT! πŸ˜‰

    Still though, I wish to refine cycles by fire. πŸ˜‰ You know, in discipline of engineering, the key question is at what point something will break, as that point confirms the design. Applying here, if gold started to fall, would that mean that the current expection for a daily cycle low was wrong, i.e. that daily cycles don’t work, are broken? Kind of like having 2 low tides in a row, type thing?

  136. Gary

    If gold makes a lower low next week that doesn’t mean the cycle failed. Gold is still in the timing band for a low so it would just mean that the cycle is bottoming a little later than we thought.

    Then if the next daily cycle breaks to new lows it would mean that the intermediate cycle has topped. In that case we would look for a final bottom sometime around the 18th to 25th week. We would do that by tracking the daily cycle that bottoms in that timing band.

  137. High 5

    Alan Greenspan 1966:

    “The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit…The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

  138. POT

    Gary,

    Your cycles analysis says that gold should peak sometime in 2014. I know that your crystal ball is broken, and mine is in the shop, but would you care to speculate on what might happen to gold and the whole commodities complex after that? Governments all over the world have insurmountable problems, and in the coming decades governments will be reneging on billions of promises they have made, with all of the attendant social, financial, and political problems. There is no way that this will be sorted out by 2014. Would it fit within your cycles analysis that there be a hard crash in gold prices in 2014, a la 2008, but then followed by another multi-year uptrend in gold, continuing the bull market, until some final top around 2020? Or, do you think some other commodity will take the lead after 2014? Or, something else?

    O

  139. Gary

    I don’t know if 2014 will be the final bottom in the secular bear market for the dollar or not. What I do know is that eventually stocks are going to reach ridiculous levels of undervaluation and gold is going to get extremely overvalued. At that point liquidity will start to flow back into undervalued assets.

    When it comes right down to it, this is the driver of all secular trends. The move from extreme undervaluation to the extreme overvaluation and back again.

  140. MP

    Happy Birthday tomorrow, Gary!

    From astrologer Georgia Nicols: Daily Horoscope: Sunday, November 27, 2011
    If Your Birthday Is Today
    Martial arts master/actor/philosopher Bruce Lee (1940 – 1973) shares your birthday today. You are fast and impulsive. You respond to stimuli quickly. Because of this, you generate excitement around you. Nevertheless, you focus your energy with enormous determination. You value family and close friendships. You respond to others instinctively. You need freedom of action to be happy. In the year ahead, you will learn something valuable for your future. Your rewards will soon follow!

  141. Cory

    SF,

    Great charts, but does sell in May and go away vs. Santa Claus make any difference?

    Just for discussion, I’m just following the cycles as usual…

  142. Phil

    Retailers are giving up margin for the sake of sales. Revenue/sales will be “wonderful” this holiday season only to give way to a lump of coal on the balance sheet a couple of months from now. Pretty much pathetic but more or less represents what we’ve become as a “society”.

  143. Phil

    Nope…at least not on “non-essential” items. I can get a PS3, wii, laptop, tablet, flat screen TV, hard drive, etc….at lower prices than last year….but my milk, bread, beef, tuna, fruit juice, beer :-(….etc. Are all more expensive…but I feel better about ‘earning’ 0.2 percent on my savings because I can get an iPad for cheap from walmart!

  144. Danno

    Food prices are a bit odd. I have been tracking a certain canned tuna at Trader Joe’s since 1994 (back when I used to eat between 6 to 8 cans a day for bodybuilding). The last time I checked its price was around 2 years ago. The price had not changed in 16 years.

    However, I have also been tracking Hormel and Libby canned corned beef at Walmart and other stores for the last 5 years or so. The price used to be less than $2. Good luck finding it for less than $4 now. Some grocery stores sell it for as much as $8.

    My conclusion is that inflation is happening, but so far it has been fairly mild and selective. In other words, if people think this is bad… they haven’t seen anything yet.

  145. Phil

    I agree…the problem is is that cows cost lots of $$$ to raise…..hence, beef prices are rising quickly. Next it will be pork, then chicken etc…we are very spoiled in America or should I say USA, and yes, we ain’t seen nothin yet!

  146. John

    me think market going up

    $indu may or may not slightly breach 10400 before heading up … 6469 in 20009 was THE bottom

    silver $47 – correction – then take out $50

  147. sophia

    HAPPY BIRTHDAY TO YOU, GARY!!

    too bad that you live so far away, would have drop by with a nice choc cake!!
    LOL and thanks again for all your help!!

  148. Ken

    It looks like Italy’s new PM just exchanged physical gold reserves in exchange for digital fiat paper. Too bad Italian citizens don’t realize the new PM and the new head of the ECB works for Goldman Sachs. It’s sad to see this play out in real terms. Rather than walking away from their debts a la Iceland and stiffing creditors their elected officials would rather loot their gold reserves. It is pathetic to see real wealth confiscated. If the US Government or the FED try to allow the IMF to make a loan to the USA and force austerity measures to pay back the 15 trillion plus we owe I say the guns should come out to stop it. All of these debts can never be repaid, to think so is and exercise of extreme lunacy.

    http://www.bloomberg.com/news/2011-11-27/imf-readying-600-billion-euro-loan-offer-for-italy-stampa-says.html

  149. Gary

    That is why most retail traders rarely make money on the short side. Markets go down differently than they go up. Breakdowns rarely have any follow through. In order to make money selling short you have to enter at a top (exceedingly tough to do), survived the multiple whipsaw’s, and then exit before getting caught in the next violent bear market rally.

    This is why I typically avoid trying to sell short. It’s just too hard to make money on the short side. Your window of opportunity is small and your timing has to be impeccable.

    Since our cycles tool is basically only good for spotting bottoms I found I make more money by just going to cash when I think the market is going to drop and then using cycles and sentiment to try and spot the bottom.

  150. Ken

    What would be the cause of Isreal’s market making a reversal? Would it or could it be that one bankrupt nation or better yet a group of bankrupt nations (IMF) has agreed to throw more money down the rabbitt hole? Unless the IMF has agreed to print (can they even do that?) $30 trillion dollars we’re getiting one step closer to the deflationary credit collapes. Sooner or later the market is going to realize that even if they wanted to the FED and the ECB couldn’t print $30 trillion and get away with it. QE has been tried, it failed and now we get DEFLATION to DESTROY the debts that the FED and ECB created in the first place.

  151. Gary

    The IMF can print an unlimited amount of SDR’s. In a purely Fiat monetary system deflation is a political choice not an inevitability.

    In theory the Fed could print enough money to mail every man woman and child a check for $1 million.

    Ultimately we have little to fear from deflation and the end game is not going to be a deflationary collapse. It’s going to be currency collapse as the cancer spreads from sovereign debt into the currency markets.

  152. DP

    Bill —

    Let me return to your question about high scattering of cycle periods.

    It seems to me, that the cycle concept is difficult to accept to people (including me) with technical background, since we were all educated on the examples of sinusoidal waves with fixed periods. Gary’s science is about waves with flexible periods.

    What helps — if you have extremely short cycle of 13 weeks, just like in picture you are referring, it is usually preceded or followed by the stretched cycle, in this case of 30 weeks, so (13+30)/2=21.5 still falls very close to the average.

  153. Ken

    While I’d love to see a waterfall crash in the coming weeks/months I’m more inclined to think that we continue to get the slow bleed. Why? The reason why we get the slow bleed rather than the all out crash is because all this talk of more intervention. Talk… Rumor… Talk… Is all the FED, ECB and IMF have left in their bag of tricks. We saw civil unrest in the Middle East due to the FED’s ZIRP policy and the US has exported so much inflation to the rest of the world it has cause governments to fall. It seems to me that should they (FED, ECB and IMF) embark on yet another shot of QE we may see civil unrest in developed markets (G7) and in fact see a G7 government (Japan, France or the UK) collapes themself. PIIGS are starting to be an afterthought at this point as many are starting to look at the bigger nations as a default threat/risk. If the FED, ECB and IMF do deside to launch another round of QE I would think it would be seen as an opportunity to get insanely short as the desired effect of asset (debt) support would last less than 3-6 months, drive food and energy costs to the moon and speed up the negative feedback loops to the governments themselves. With oil over $100 and gold over $2000 the collapes comes sooner rather than later. Either way you look at it print or not print the governments are going default and civil unrest is soon to follow. Guns, gold, ammo and food might be the best investments and not in that order. Good luck to everyone regardless of how you’re currently positioned. Taking care of family, you health and your long-term personal wellbeing is going to matter a lot more going forward. If you haven’t taken steps to survive 6-12 months off the grid I’d advise you to do so yesterday.

  154. Ken

    Bernake has been opperating in theory his whole career at the FED. These theories have proven useless and he’s in a box of his own making and pushing up against physical limits in the real world. We have 45 million people in the US alone who have nothing to lose and who would tear Bernanke’s eyes and heart out if he sent gas at the pump over $5 per/gallon. These Ivy League and Wall Street types are going to be hunted down and killed if they choose the (Hyper)Inflation path. The OWS and Tea Party Movements are catching on to what the Cental Bankers have done and are doing to the economy with the aid of politicians around the world. Unless the Cental Bankers and Governments want this to get BLOODY in a G7 nation they’d better STOP IT with these phony little ponzi schemes to leach off the productivity of the masses. I myself would welcome a day I could walk down Wall Street or the Streets of DC and see the financail and political criminals of our time hanging from lamp post for their crimes against society. That day isn’t far off and American’s have fought for liberty against tyrany (and won) more than once. We’ll fight again even if the enemy is within (evil central bankers, wall st bankers and their bought and paid for polititians). The FED, ECB and IMF is skating on very thin ice and had better watch their backs.

  155. Danno

    Bernake was intentionally put in place because it was understood he would print. These things don’t happen by accident.

    The people in power are not stupid. They know exactly what they are trying to do.

    The trick is to figure out what their intentions are, and take measures to protect your family.

  156. Frank

    No, the IMF cannot “print” unlimited SDRs. It can only issue SDRs up to the total quota paid in by members. Please also see my commentary on the premium site.

  157. John

    Just like they put a.moron from texas to take us to their wars … now people blame the stupid puppet … hidden hand goes unsuspected

  158. Daniel

    Gary

    I would just like to say thankyou for all your hard work and efforts that you put into your analysis. I thought that i was pretty good at spotting bottoms but i think ill have to pass that crown to you. Thanks for all your patience. Im a seasoned trader and it can often be frustrating reading some of the comments on here. Anyone reading this i advise you to just buy a subscription, it will be the best investment you will ever make. Its already paid for itself many many times over.

    Ps. look for a Fakemas rally.

    Daniel Williams

  159. Gary

    I think we clearly have a cycle low in place. Shorts are now trapped as the market explodes higher overnight. If you got in late you are losing most of your profits or you are already negative.

    If you are stubborn then you will continue holding and watch your losses mount as the rally accelerates.

    Now I don’t really believe the market will clsoe back above the 200 DMA but the pattern of higher highs and higher lows is still intact.

    If Ben can abort the dollar rally then it’s possible he could short circuit the new bear market…at least temporarily.

    This is why I usually don’t trade from the short side. I know of no tools that consistently spot tops in real time, but I do have a tool that’s pretty consistent at spotting bottoms.

    So I use the tool and strategies that have the most consistent success.

  160. James

    If that’s a double top in the usd index, I’d say the dollar is in a worse position than the eur, but what do I know? I’m still in school.

  161. John

    Schoooool????!!!!!!!
    U can learn more sitting in your couch about economics than you would in an MBa program … I mean brainwashing program

  162. Daniel

    Gary

    i can see a lot of confluence (price & time) around 5th December, we could get a large push up here to sucker in longs, only to reverse back down into 5th December?

    Im already in but this is something that i am wary of partiularly if i see the dow find resistance at the 11,500 level.

  163. Harry

    The HR people also know a MBA ain’t worth shit. What do you call it when everyone knows something is a load of bullshit but everyone keeps on pretending it’s not? A bubble!

  164. James

    Harry,

    so what do you suggest?

    There’s no other way to get into the big boys’ game. I’ve been escorted by security from interviews at two big banks because I tried to demonstrate how good I am and the stupid hr people couldn’t see it.

  165. William Wallace

    Although I dont typically trade miners and focus strictly on gold, I am pretty confident that we will see the miners rally for atleast a few days, so I may put on NUGT in the morning.

  166. James

    Harry,

    The first interview was at a (former) major European merchant bank that has recently been nationalised. This was in July 2007 and I was pretty young, arrogant and confident. Basically I told the person interviewing me that their bank was insolvent, that they should fire 10 of their useless overpaid monkeys and replace them with me and “are you blind? unless you idiots change your ways, you’re not going to have a job in a few months. I’ve just written the best paper on Austrian economics you’ve read in your life and I’m sure I’m a solid hire, so just hire me”. When I realised that they thought I was crazy or stupid, the insults just started flying. When I suggested that the place was so useless it should burn down, they called security.

  167. Daniel

    James,

    Maybe a lesson from my experiencies working for IB’s. Only shoot your mouth off when you are in a position to do the hiring and firing. Ive seen countless Billy “big balls” walk in the door and out again because whilst they may have had the smarts they were too ill disciplined in the game to actually make any use of it.

    The “smiling crocodile” always worked for me.

  168. Harry

    Eamonn, while studying at Wharton I discovered Hayek, then Austrian economics, then Gary’s blog. Needless to say they did not teach us the stuff you see on zerohedge in class; I was driven to teaching myself this stuff out of frustration. It was sadly ironic to see the people most others are counting on as experts and erudite academics carrying on about CAPM and lowering interest rates while the financial system was burning down outside the classroom in ’08/’09. I knew there was something seriously wrong and resolved to find out what was really going on.

    Through my study of history (this was my real academic passion, not business) I had always gravitated towards a cyclical interpretation of things. This was reinforced through my study of Chinese history and language, and further reinforced when I was working in Shanghai. The incorporation of this cyclical worldview into my trading was only a matter of time. I naturally gravitated to Gary and Doc and soon enough I was hooked.

    As far as trading is concerned I began trading stocks on my own at age 13. I did reasonably well for myself and got out for the most part in ’07 (this was simply cashing out so I could pay for school and not any sort of foresight, though I did start to warn about a housing bubble in mid ’06). I bought back in around May ’09 and also started trading futures.

  169. Harry

    James, that is hilarious! Good for you. These people at the big banks care only about their next bonus and by necessity have drunk the kool-aid. Maybe someday they’ll think back and realize they should have seen it coming.

    Post your paper on Austrian econ! I’m sure we’d all love to read it πŸ™‚

  170. ALEX

    Right now GOLD is trading at $1705 but was up over $1707.80

    To me this could become a perfect scenario, because Gold dropped below its 50sma (currently around $1705.48) and traded there sideways for a couple of days. I heard many rumors of a “Bear Flag Forming” for the next leg down to the 200sma.

    Did people ‘short Gold there?

    A gap or close over the 50sma will look like a recovery. And IF “Gold Recovered its 50dma” –

    …(I.M.H.O.) would cause those who dared to short Gold to sweat, and cover. Then those who sold Gold long positions may also begin to pile back in , since Gold Recovered it’s 50sma…and that wasnt a bear flag.

    http://www.screencast.com/t/tR5R7PcE

    THEN we’d be on the way to getting that swing.

    After all…We are due!!

  171. grimweasel

    Boom!! Risk on! Gary’s Cycles work well. Amazing how Bloomey et al always has to find a reason for the swing other than technical or cycles!

    Harry – not true on MBA analysis – all depends on which Uni you get it from. As long as the Big Banks are happy to take people with MBAs then don’t fight the system. The MBA shows the banks that you mean business and are prepared to invest (quite a sum) to prove that. It also acts as a common starting base so that everyone has the same basic understanding of what makes a business tick. It’s like trend trading. Ride the trend till the bend at the end. Until banks’ HR depts start dismissing MBAs then either cough up or shut up!

  172. grimweasel

    However, I do agree on some of your earlier comments Harry. I tried to debate the fallacy of CAPM and WACC with my Finance Professor but he was having none of it. He said’ Its the best we have until some genius comes up with another way of managing risk!’
    The likes of James Montier have published articles on why CAPM is CRAP (Completely Redundant Asset Pricing Model). If you mention Tech Analysis people in Uni look at you as if you were mental – it’s not academic, just voodoo one lecturer told me!

    Still, I did learn lots about economics and why the world is so screwed and why Keynes was/is a fool and his policies are doomed. Personally, I don’t think the globe can support constant growth of 5% or more YoY. Not until the next Kondratiev Wave produces a new technology to propel us into the next 60 years!

  173. Danno

    Like a couple of people have said now, and like I mentioned last week… it will be interesting to see if the dollar has formed a double top.

    http://thepatternsite.com/aadt.html

    That said, I still anticipate the dollar breaking well over 80 and onto 90 (or even beyond 90) but my guess is, that will not happen until early next year.

  174. TZ(8155)

    I would now say the low at 1667 was likely legitimate. It bounced for days and put in a triangle which we have now broken higher as of this morning.

    Multiple stories across bloomberg and others about the central banks all taking (or about to take) serious easing actions. IMF (aka the dollar) is looking to come in and support Italy too.

    The bankers remember 2008 just like everybody else and they don’t want that to happen again – so it likely wont.

    Even if “it” does happen again, it will not happen the same way as 2008. Markets(aka people) learn from NEAR history (not OLD history…big difference) and 2008 is too close to repeat the same.

    I’m 1.5x (almost 2x actually) gold futures and ‘straight metal’ investments like CEF and might try to add if I can see an entry next 24-48hrs. Like gary I think we are right near a low here and probably a good risk/reward buy point. There is still gold futures rollover today and tomorrow which might have a bit of shakeout or downward pressure.

    Otherwise though we might mostly be out of the woods for now.

  175. William Wallace

    Dont get married to long positions people, we are clearly in a bear market (and a left translated daily cycle) and its likely we will be seeing a failed daily cycle and the market will be rolling over in short order. Take the money and run.

  176. Gary

    Ken,
    I think you better cover immediately or you are going to risk giving back any profits you have left.

    These violent bear market rallies are why it’s so hard to make money on the short side.

    On Friday the technicals said the market was going lower. Cycles warned it was getting too late to be short any longer.

    This is why I don’t trade based solely on technicals. The odds of making any long term money by doing nothing more strenuous than looking at charts is very very slim. It’s why most retail traders don’t make money because their concept of due diligence is to only look at charts.

  177. Gary

    WW,
    I wouldn’t getting married to the bear market theory just yet.

    If the dollar has put in a double top and is now headed down then we can kiss the bear market goodbye, at least temporarily.

    It’s always bothered me that the CRB looks like it has put in a bottom for its three year cycle. In order to do that the dollar has to be headed back down.

  178. William Wallace

    Right now its more likely we will see the next daily cycle is stocks fail rather quickly and the market roll over, than getting any substantial bear market rally from this overdue bounce.

  179. Jarek

    what if dollar will fall only a little or will bottom above 75

    this would mean that this was just a correction and dollar is heading again up (stocks down) right ?

  180. Gary

    Yes if the dollar just undergoes a correction and then heads higher the bear market is definitely in progress.

    However that doesn’t explain the CRB making what looks like a three year cycle low in October.

    I would also note that despite a left translated daily cycle the stock market is still holding its pattern of higher highs and higher lows. That is the definition of a uptrend.

  181. William Wallace

    Im not going to put any faith in the dollar putting in a double top here, if Ben were to abort this dollar rally yes, but im not going to trade counting on that at this point.

  182. sophia

    That is funny…Just took profit on my tiny long Nasdaq and Dax over the weekend…Thought I was doing well…
    Now listening to some comments here and there, NOBODY, I mean NOBODY believes that the rally can last more than 1-3 days!!
    Maybe this market is going to squeeze like a maniac and nobody will be on board!!

  183. Jarek

    dollar need to drop more to put daily cycle low, -1% after high is not enough

    swing high was just made so how to expect swing low day after it ?

    so conclusion is: dollar need to fall more

  184. ALEX

    GARY said

    “On Friday the technicals said the market was going lower. Cycles warned it was getting too late to be short any longer. “

    Not really (maybe if you only know the Basic chart interpretation) , I am long due to BOTH Tech and cycles for “timing”. Both are necessary /combined I.M.O.

    http://www.screencast.com/t/4ywSQzRh

    http://www.screencast.com/t/tR5R7PcE

    This said 79.50 possible

    http://www.screencast.com/t/fXcKznSS8zx

    http://www.screencast.com/t/RdsfA35nT

    “Time” with cycles AND Technicals was getting too late to short too. They lined up well I.M.O.

    I believe you’re better off Adding the cycles and technicals and when you get “confluence” , you get more confidence.

  185. Jarek

    there is important EU leaders meeting on 9 december similiar to that on october, “strategic decisions” to be made

    i know that trading fundamentals is not wise but remember that dollar made it daily cycle low after last meeting when they announced help for greece

    so i wouldnt be suprised if dollar will make daily cycle low just before 9 december announcements (bad news = resume of dollar rally) or after it (drop to bottom after “good news” and then rally because we all know that those good news would be bullshit)

  186. Danno

    The main problem I have with the dollar exploding higher right here, right now, is that it would suggest the EU ‘crisis’ was climaxing. I don’t think the EU crisis will climax until sometime next year at the earliest. This is just too great an opportunity to frighten people so badly that the EU leaders can push through very unpopular measures, consolidate power and build a foundation for the political, economic and military juggernaut they have clearly been dreaming of for many years.

  187. TrendTraderBH

    Sold all DGP on the open as I don’t like to hold 2x/3x etf’s for more than a short term trade.

    Keeping GDX and SLV. However, if they tag their respective upper bollinger bands on a 60min, I will sell 1/2 of each (GDX~57.50, SLV~31.75).

  188. riley

    WW

    Will be watching gold futures closely and might take profits if hits 1750. If we get 3days into rally wary of bear and close quickly. Alex’s chart inviting though and possible retest 1900? Hard market, will watch ma’s closely.

    SB looking good on your adds, kudo’s. Hard to buy those dips.

  189. Sleeper

    WW,

    I am long PMs but cautious too, and would not be surprised to see SPX turn down sooner than later.

    However, I have trouble with pulling random SMAs out and calling solid resistance (or support) on them. As Doc and others have pointed out before, each index seems to have it’s “favorite” MA that it seems to turn on and adhere to, and it’s not always the traditional 50 and 200. ie, the 150 sma seems to have halted most of the IT declines in this gold bull market.

    So, It seems there is always some MA that one could punch up on the chart and make it fit the price points, and then say “beware”, etc. I’ve seen folks put stock (pun intended) in so many different *X* daily MA that it approaches ridiculousness. There are SO many numbers being thrown around (How ’bout that 139.71 MA on the XYZ index!).

    WW, I say this with all due respect, and the 100sma may be magic this time, who knows. I’m just pointing out a pet peeve of mine. I think you’ve seen this , too. πŸ™‚

  190. William Wallace

    Sleeper,

    I agree 100%. Any mention of an SMA by me is due to historical data, the 100sma has proven to be a reversal MA in the past two bear markets. There are more than a few times that we see the S&P drop below the 100sma, retrace back up to it and reverse down again….so no magic here πŸ™‚

  191. William Wallace

    Sleeper,

    Pull up a daily chart of the SPX and take a look at 6/12/08 to 6/17/08, we see the market have a three day bounce and retracement up to the 100dma, at which it reverses and heads to new lows.

  192. Sleeper

    My only problem with trying to use historical chart data and say that history will repeat itself is that the macro-economic/fundamental/big picture is often quite different.

    TA is a useful tool when used in combination with other tools, but not so good in isolation. Context is crucial.

  193. William Wallace

    Sleeper,

    Human nature doesn’t change though, it is no coincidence that all three bear markets have 1.) Head and Shoulder tops, 2.)roughly 40 day consolidation DC’s after the break down waterfall decline from the H&S, 3.) that bottoms at a new low before the first substantial bear market rally ensues, 4.) which rallies roughly to the the 200dma before rolling over.

    By not ignoring these facts and bear market behavior I doubled my account trading the market both long and short since the August 9th low. Since August 9th I had one losing trade, it was due to shorting the market early because I was expecting a half cycle low, and then taking the short off early because I was considering the possibilty that the bear market was aborted. But I regained that loss on my recent short.

  194. William Wallace

    Sleeper,

    Let me ask you a question…do you think that “macro-economic/fundamental/big picture” is what caused this market to rally so violently out of the Oct 4th low and then roll over and sell off the way it has?

  195. MrMiyagi

    WW,
    Good to hear about your green trades; they will come in handy paying off hospital bills.
    House is under offer, fingers crossed for everything to go right.

  196. William Wallace

    Riley,

    If you remember, I mentioned last week that I was waiting for the market to bottom to put the futures back on. As soon as I seen stock market futures opened last night higher, I knew that gold would push right up.

  197. MrMiyagi

    Rob,
    Somewhere on Vancouver Island at her insistence. I’m not a big BC fan but the prospect of warm winters after the Yukon is appealing; higher costs for everything is not.

  198. Rob L

    MM

    I remember you talking about Nanaimo a while back. Although I’m not a fan of that place, if you do check it out, stick to the north end.

    Also, check out Ladysmith. It’s a quaint town with a lot of amenities.

  199. MrMiyagi

    Nanaimo is a big ol’ thumbs down to live in; we like Qualicum and Parksville further north.
    Frankly I’d like to live in the Laurentians on a lake but the summers are so damned hot.

  200. riley

    WW
    Thanks, glad you got in then, I had been in at 1701 and waiting while in the red, nice finally turned, wait and see for new breakdown? Still leaning to grinding market until Feb, who knows, will let market tell me. Good luck on contract MM.

  201. Rob L

    MM,

    I hear those areas on the island are good for retirees.

    I think you also might wanna check out lantzville on your way there.,,just a thought.

    And I’m sure you know about all the rain here. If either of you suffer from arthritis you could be in for a surprise. πŸ™‚

  202. MrMiyagi

    Rob,
    Yep, a lot of retirees in Qualicum so the housing market is a bit stale. Checked out Lantzville/north Nanaimo as well.

    Adam,
    Lived in Langford & Sidney in 2009; liked Sidney not so much Victoria.

  203. student123

    MrMiyagi,

    I am from Canada too, but from the east coast. Do you think that canadian real estate is topping, or starting to crush. I read the Garth Turner’s blog(may be you hear about him, he blogs about canadian real estate is doomed). I would very appreciate your thoughts about the future of housing in canada, I am planning to buy but been waiting for almost three yares for a correction.

  204. William Wallace

    Sleeper,

    “the 150 sma seems to have halted most of the IT declines in this gold bull market.”

    If you look into the SMA’s a bit further you will see that during this entire C-wave gold is not only halted at the 150sma for IC bottoms, on the way down into ICL’s gold bounces off the 75sma and 100sma for a couple days…I have called these bounces in real time on the blog, Gary also mentioned these “pauses” in the nightly reports in the past.

    The July IC low was actually right on the 100sma, not the 150sma as previous ICL’s.

  205. MrMiyagi

    student123;
    My take is that it is very regional; look at East coast (NS, NB PEI) and see how economically related it is and you can buy a house for 150k. Look at Montreal where there is a seesaw with the economy and house prices are still pretty cheap but holding, then look at Toronto where it is becoming like LA; everyone is buying regardless of price it seems; same applies to Vancouver.
    The prairies are depressed aside from Calgary and Edmonton due to oil but even there the prices have come down by 15%. Forget about boomtowns with oil/nat gas because they are anomalies. Then there is the North where the prices are higher due to material/labor costs and of course in the Yukon it is gold price mining associated but a house here is half a million bucks.
    I think that house prices in high flying areas are getting unsustainable and will eventually retreat heavily; I don’t think they will be like Detroit…

  206. Sleeper

    Sleeper,

    Let me ask you a question…do you think that “macro-economic/fundamental/big picture” is what caused this market to rally so violently out of the Oct 4th low and then roll over and sell off the way it has?

    WW,

    In a word, No.

    But do you think that the SPX rolled over just because of the 200sma was in the way? What if it sliced up through it like butter, would you say TA failed you? Of course not. Recent action has been heavily influenced by the US dollar, cycles, DCLs due, sentiment, Europe getting thrashed, etc. Not just a line on a chart. Putting it all together is the key…

    Not arguing, just playing devils advocate. I’m happy you’re up so much. I, too, am up 100% YTD in both trading and 401k accounts. Mostly by following Gary, and also thinking for myself.

    I hope we all continue to prosper going forward! I must admit I do take notice of you’re timing calls, I just don’t always jump in!

    Peace.

  207. deshy

    Not a housing blog (I know) but living in Toronto I can attest to the ridiculous housing prices where people are getting offers over their asking price (and no the asking is not a ‘low ball’ price). It’s crazy out there!

  208. MrMiyagi

    deshy,
    I am shocked at some prices I see here in Whitehorse; I don’t mind getting what we got for our house but would be very weary paying it unless I HAD A NON VOLATILE JOB.

  209. student123

    MrMiyagi,
    Thank you for your response. I live in Torronto. I think that house prices here are insane, everybody is talking about ” real estate is the best investment in such economic environment, and the prices will never go down”.
    Sales are cooling now, but seems like nobody want to reduce the asking price. Probably I have to wait for another three years to buy. Tired of renting but do not want to enter this market at the top.

  210. William Wallace

    Sleeper,

    Basically what I was saying is that we react to whats going on around us on a daily basis, but it always paints a similar picture. Great to hear your up 100% also πŸ™‚

  211. MrMiyagi

    123;
    Those that say prices will never go down need to look at what happened in LA a few years ago, for example.
    Even Calgary three years ago was booming. Now it has come down and stabilized.

  212. Matt

    Harry,

    I live and work in central Bucks County. I drive the Blue Route very often to visit clients located in Delaware County.

  213. Leo

    Student123,

    Prices are very relative, having lived in Paris for some years and in Boston before that I do not find RE prices in Toronto quite as outlandish as the locals make you think.

    Yes, there has not been a correction here in many years and it may still come, but you have to understand why the prices are holding up so well. It’s demographics. Toronto is one of the fastest growing cities in the world and most likely will stay that way. Most newcomers are professionals with decent incomes. Why WOULD the prices go down under the circumstances? COmpare it with Berlin, also a big city but very cheap for what you get (hint: Germans are dying out).

    So you may have to wait for many years before the correction.

    You can borrow money at 2.5% today. Just do your due diligence and pick the right neighborhood.

  214. student123

    MrMiyagi,
    The most common answer is “canada is different”, “this time is different” lol.
    Thank you, i will do my research, but still afraid to buy.

  215. intelliblue2000

    I joined in July and didn’t have a chance to double yet. Hopefully I can ride part of this gold bull market.

    The recent volatility in the stock and gold market really is nauseating to me, even when I am not 100% invested and not using leverage. I am beginning to think that the miners or silver will never get back up again. Blah.

  216. grimweasel

    Check the price action on Crude today. That thing will tank tomorrow to next support around $91. USD index showing a hammer too. A one day pop up for the big boys to sell into. The Bear is only just getting started in my view

  217. William Wallace

    Sleeper,

    I forgot to mention earlier, pull up a daily SPX chart with the 100sma, take a look at 11/18/11…if you recall from my posts I put my short on this day, I shorted at a tag of the 100sma, the market reversed directly off the 100 so my entry was basically perfect and right at the daily high.

  218. Ken

    Gary,

    You talked me into closing down my Russell 2000 short and my US Bond positions just before today’s market close. Although I remain a staunch bear intermediate and long-term the short-term charts are deeply oversold not to mention that the $NYA50R, $SPXA200R and $NYMO are all in areas that we’ve bounced from in the past. We have a small gap that remains unfilled at SPX 1155.46 so maybe we get a one more scare before the Santa Claus/Year End Window (401k/Brokerage Statement) Rally gets underway? Hopefully I’ll make money in this long trade and get a better short entry.

    Long: GDX at $55.97, SLV at $31.24, and AG at $14.85 (I know you don’t like individual miners but what the hell). Now please let the FED, ECB, IMF idiocy of money printing commence in earnest.

    P.S. Thanks for being a sounding board we can bounce ideas off of. Right, wrong or indifferent… win, lose or draw… I own this trade but it’s nice to have a guy like you who understands cycle theory to poke holes in a thesis when an idea/trade might not fit the probabilities in the short-term. Thank you! πŸ˜‰

  219. Bill

    Wasn’t the gold cartel supposed to bring gold down to it’s knees this past weekend?

    What do cartel believers say to this? πŸ˜‰

    It’s time to WAKE UP TO THE FACTS. πŸ˜‰

  220. Harry

    Looks like someone wanted a fresh page πŸ˜‰

    Going to be a late night for me – I’m expecting a nice bounce overnight and don’t want to miss it!

  221. RJ

    Anyone see the COT reports?

    http://snalaska.net/cot/current/charts/GC.png

    The last 4 weeks of data for the small specs looks really suspect. Check out their short position. 21K then up to 34K then down to 23K then up to 36K.

    Also, check out the large specs short position last week. 46K down to 33K.

    This is as of last tuesday after the Wed, Thurs, Fri Mon gold smash.

    How can violent small spec selling take gold down this far?

  222. RJ

    WW,

    The only selling came from 13k small spec shorts and 11k large spec long liquidations. Ok, u r right, it could have been from the large spec long liquidations and/or a combo of them both.

    Either way it is unusual for the small specs to be on the right side of a trade with this much intensity.

  223. Danno

    Rumor has it, the EU must come up with something big within days. Something like 3 to 10 days. If this happens my guess is that the EU ‘crisis’ will simply reignite sometime in Q1 and even more drastic measures will be ‘needed’.

    This would go hand in hand with a dollar double top (now) followed by a massive dollar rally (later).

    Just thinking out loud.

  224. Danno

    Whoa. Check this out…

    Double Top
    Trend end: If a double top appears after a long-term DECLINE, confirmation of the top may mean that the end of the decline is near (10% to 20% below and a month away).

    In other words, once the double top has played out and resolved downward… we could see USD over $100 in 2012. Wow.

    I don’t know. Just say’n.

    http://thepatternsite.com/aadt.html

  225. Fast trader

    this is why C3X analysis is among the best. Balanced and quality analysis.

    Why Dec is the last hurrah

    They have called 4 trends in the last 4 months and each and every trend call has been accurate. Now they call for dec rally which will pale in comparison on past dec rallies. Theire Live trading room is where nearly 200 subsc interact with the team directly challening them but mostly following them

  226. DP

    That’s the heresy.

    But, the last cycle is not LEFT, it is RIGHT translated.

    To properly interpret it, one should look at short enough N-point moving average N/2 points left displaced.

    For those FT low-pass filter challenged πŸ˜€

  227. Greggy_M

    Gary or anyone,

    Currently I use TD Ameritrade but after hearing about the nightmare with MF Global I wonder how safe my account is. Is TD a safe broker or should I find someone safer?
    Thanks

  228. Aaron

    Greggy, the fact is that you should never keep all your money at one brokerage. MF was a huge screw up…and I have yet to see a penny of my money, and it can happen to anyone.

  229. Gary

    I would disagree. The dollar is behaving nothing like it did out of the 08 three year cycle low.

    It trade back below the 200 day moving average. That didn’t happen and 2008.

    And so far it has been unable to move above the prior intermediate top at 81.50. In 08 the dollar took out the previous intermediate top very quickly.

    Despite all the troubles in Europe it appears that there is just so much liquidity that the dollar is having trouble sustaining the rally out of the three year cycle low.

  230. William Wallace

    Gary,

    I meant as far as riding the 10dma, we see the dollar stretch above it only to pull back to it and continue to ride it higher. Only difference was the fact that the dollar pulled below the 200dma instead of finding support on the 50dma as in 08′.

  231. William Wallace

    The market was juiced and over did it to the upside, the dollar stretched to the downside, The rubber band snapped back. So obviously I believe we are about to see the market roll over again soon and the dollar push higher.

  232. TrendTraderBH

    Open orders to:

    1)take 1/3 GDX off near today’s upper bollinger band on a 60min chart (~57.15) leaving 2/3 position to run.

    2) take 1/2 SLV off near today’s upper bollinger band on a 60min chart (~31.75) leaving 1/2 position to run.

    This exit strategy follows what I learned from Ira Epstein – always enter into a trade with two contracts (in futures) and take profits on the first position at the bollinger band top/bottom and let the other ride, or get out out of the second at break even plus commissions, whichever happens first.

  233. Aaron

    DP, its commodities we are talking about, so the position may be covered by the CME, but your money isnt. So the position is valid, but without the money its useless.

  234. Aaron

    DP, the futures dont have any guarantees, and one is basically at the mercy of the trustee that is liquidating assets. Im just saying that everyone should use caution, there are no safeguards in the industry like there are for securities.

  235. Aaron

    With an ETF, you should be covered by the SIPC. Make sure you understand what they cover (and the amounts) and whats not covered if your brokerage fails. The volume on the futures has thinned significantly due to the MF issue and people just pulling away from it all. The ETFs that are futures based, Id be careful of… simple caution is warranted more so for futures than securities.

  236. Avann

    Aaron … yeah that also confuses me.
    Every chart I look at shows the low forming on Nov 20.
    Gary says Nov 21 and then also discounts 1 day because of the holiday.
    But no matter how you look at it this swing is taking a long time to form.

  237. Aaron

    my charts show the low on Nov 21, and today being day 5 of the so called new cycle without a swing too.
    Who do you use for charting?

  238. Avann

    Good thing you asked … I use flightdesk/iTrade and I just checked them … they actually show Nov 21.

    I usually just use one of the free Java Apps … they seem to be more timely and they all show Nov 20th.

  239. Ben

    In the last 12 months, GDX is down 4%, GDXJ is down 27%, and GLD is up about 25%.

    That is just sad… S&P has beaten the miner ETFs over the past 12 months.

    That is really sad…

    Interesting that three months ago, everybody wanted to be all in at 1750 gold, and now almost everybody wants out. What a difference a few weeks makes in sentiment! It’s easy to see how a prolonged slump occurs (as with silver re: May short parabola).

  240. Ben

    Chart date differentials may be due to whether it’s using EST or GMT for the master clock. Calendars use GMT, so 1/3 of the time, the actual full moon is the day before the one listed on the calendar in my time zone (which is GMT – 8 hrs).

  241. Sleeper

    WW,

    Interesting confluence of 20, 50, 100 sma on SPY chart. eerily similar to late July…Hmmm.

    What say yea about these squiggly chart lines? πŸ™‚

  242. intelliblue2000

    What is the PM sector waiting for? Back and worth, one step forward and two steps back. (Can anybody tell I am really cranky). Blah, more fun to Christmas shop than to watch the pukey market.

  243. TZ(8155)

    AARON,

    You and others discussing brokerage safety and how there are “…no safeguards in the industry like there are for securities. …” are incorrect unless you take the most narrow and unneccesary strict view of ‘safeguards’.

    I posted a number of comments near the end of the last thread covering some very specific protections existing with IB that do not exist with any other firm I have found to date.

    http://smartmoneytracker.blogspot.com/2011/11/portfolio-change_22.html?commentPage=2

    To anybody who thinks these are ignorable or not important I would introduce you to MF Global which broke a great deal of them.

    These are my opinions only, of course. Buyer beware. DYODD.

  244. Aaron

    Side note; The only problem I (personally) have with IB is the lack of a 24 hr trade desk where I can call orders in and speak with a manager.

  245. William Wallace

    Haggerty,

    Cycles stretch, in 08′ we see the dollar’s second daily cycle out of the bottom rally for 28 days, with a 3 day DCL. The dollar could continue to push higher from here, especially if the market rolls over and moves down toward a new low, which I believe at the moment it will sooner than later.

  246. TZ(8155)

    AARON,

    IB maintains TWO accounts per customer (their “Universal account”). All balances other than margin (which go to CME and which were safe in the instance of MF Global) are swept nightly into the “security” account (from the “commodity” account) at IB.

    So my comments were quite on topic and applicable to a ‘security’ vs ‘commodity’ account discussion.

    IB set this up SPECIFICALLY due to the issues you mention. MF Global had no such setup from my information.

    I would darn sure call it a ‘safeguard’ and one that a person is willingly able to choose should they be proactive and act to protect their money. (Such that MF Global was the biggest firm just shows how few people care or do necessary checking.)

    IB has an entire list of stuff like this, but I have done what I can by pointing people who care in the right direction. (And if after reading my comments they have a BETTER broker, then I am all ears.)

    I am only a customer myself and have nothing to gain personally here besides giving helpful advice I believe to be correct. Don’t trust my comments. Verify yourself.

  247. William Wallace

    Right now what I see is a typical bear market that back tested and backed right off the 50dma, a dollar that is still above the 10dma and above the daily cycle trendline, and gold simply refuses to move on its own with any conviction (atleast lately)…and that tells me something is wrong.

  248. TZ(8155)

    WW,

    Agree with your comment above. Just saw it.

    Got this gold congestion pattern but it is so far unable to break higher and we have passed the usual zone of high volume (till 1:30pm eastern) when such a break is best.

    If a congestion runs like this all day and doesn’t break higher it offers a lot of weak hands who bought/chased (like me) right near the line hoping for a run. All they have to do now is drop it $5 or so and those all get blown out.

  249. TZ(8155)

    Clearly gold or any security can move at any time…and it still might.

    I’m watching and deciding and maybe will jump back in with a small stop, but for now I wanted to see more strength.

  250. DP

    TZ, Aaron —

    Thanks for contributing into safety discussion.

    Just read IB reference provided by TZ, and see that unfortunately there is no protection for futures in IB either.

  251. Ken

    I see today’s price action as one more shake out of weak longs before the big news of global coordinated central bank intervention drops and we rocket shot higher. If you haven’t secured long positions and are waiting on the sidelines in the safety of cash be mentally prepared to chase price higher to secure an entry. Be ready and try to stay calm.

  252. ver

    Hey WW:

    What do you think of a long gold / short stocks position? Seems like a good way to get exposed to the upside of gold, doubly so if gold / stocks decouple, while hedging the downside risk if the coupling holds (in which case we’re likely to see more extreme legs down in stocks vs. gold, especially if cycles dictate that the 1535 low in gold shouldn’t be violated until 2016).

    Probably doesn’t fit your trading style but would be interested in your take nonetheless.

  253. ver

    Yes you are indeed, misread your recent comments and thought you took off your gold long. Glad to hear it…

    Gold may finally put in a swing low if there’s a bit more follow through on this little breakout.

  254. Ken

    I’m still a bear IT and LT but ST I see a chance to make a lot more $$$ on the long side. The USD/US Bonds are running out of steam while nobody believes in the market and the miners. Deep down I’m a contrarian and taking Gary’s advice by closing down the short trade seems prudent. Hopefully I can add to my YTD gains by +5-10% in early December only flip short/long bonds again on the USD’s DCL. QE3 is coming soon.

    Long: 45% GDX, 25% SLV, 20% QQQ, 10% AG

  255. William Wallace

    Ver,

    If stocks do decouple from gold, gold is still going to drop if the market continues lower (and it will without QE) because the dollar will be rallying. So im not getting comfy in any gold positions (im in and out with profits, I trade gold so it doesnt matter to me if I catch the meat of a DC) until I see things change.

  256. TZ(8155)

    SO far this climb up in gold has been a ‘wall of worry’ type feel.

    Not many people are convinced we are going higher and there isn’t a “pile on” effect yet.

    That’s good, cause when those chasers arrive it is usually too late to buy.

    The fact that I couldn’t decide to add to longs or not and kept changing my mind is probably a good sign.

    Still..we need to get over 1725 for a good clear break. After that I think anything with a stop of 1715 or so is probably safe.

  257. ver

    WW:

    Agreed, in and out for the meat of the daily cycle seems like the most profitable strategy at this point.

    The decoupling I’m wondering about is where gold and the dollar rise together like they did this summer while stocks trend lower. Especially if dollar strength is being driven by euro weakness, it seems like a real possibility. This presents an opportunity to win on both trades (gold up, stocks down) while mitigating the risk of a 2008-like crash (gold down, stocks down more).

    There’s less of a need to hedge in this way when trading futures, but I’m growing quite weary of holding long, unhedged “risk-on” PM positions overnight because of the massive gap risk if (when?) global markets start falling apart.

  258. Ken

    TZ(8155) said: “I think we are on the edge of a Paulson type ‘bazooka’ from the EU.”

    Yeah and you can bet the farm that congress critters and staffers have purchased calls from their brokers. Hedge funds need a big winner to salvage the year or else they’re going to see major redemptions. I bet they’re loading the boat on Greek, Italian, Spanish and Irish debt and banking stocks as we speak. I don’t have inside information but I’ll take my chances with gold and silver to win in the end.

    As Alan Greedscam once said back in 1967,

    “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

    If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

    This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

    We may not get nor need an official gold standard to make vast sums of wealth in the end. All we need is a quasi global fiat debt based system to meltdown forcing average individuals into alternatives to fiat paper. Statists will push money printing to an extreme only fall back into necessary reforms needed to instill confidence in the current system. As it stands the Federal Reserve and Central Banks around the world may loose their power to control the world’s monetary bases and hence control of the global economies.

    Hopefully I’m wrong and they run their printing presses till they break which will cause a total loss of confidence of people world over in a Bretton Woods system of a fully fiat currency. If that’s the case will get a gold and silver standard allowing convertibility to the local (around the world) fiat currency of ones choosing… Time will tell! πŸ˜‰

  259. Danno

    The dollar is (so far) not showing the kind of explosive strength it did in 2008. I wouldn’t put too much faith in a magnificent dollar rally in December.

  260. riley

    Sold my 2 gold futures 1723, don’t trust this, will wait till confirms around veronica’s buy and S+P confirmation. plus can’t watch tape any longer and don’t like to leave hard stops in futures. Maybe buy back tonight. Still long all miners

  261. TZ(8155)

    I’m 4x mostly gold futures right now (about 1.5-2x from earlier and the rest is a cowboy move today).

    So far so good. Continued grind higher but no capitulation buying yet.

    I think we will see it shortly.

  262. William Wallace

    For gold to be clear its got to get back above 1740, the 75dma. The 75 proved to be stiff resistance in the first DC of this IC, bulls and bears were getting gutted between the 10dma and the 75dma throughtout the first DC of until it broke below the 10 and bottomed on the 150dma.

  263. TZ(8155)

    VER,

    >I’m growing quite weary of holding long, unhedged “risk-on” PM positions overnight because of the massive gap risk

    Trade futures instead of crippled ETFs and US time zone securities.

  264. catbird

    TZ,

    The level of skittishness and general anxiety over on Gary’s premium area indicates an explosive move up is coming soon. I mean, those people supposedly read Gary every day, and look at them!

    As Gary says, sentiment is second only to cycles.

  265. TZ(8155)

    >Yeah than Ver could stay up all night with me and you until his eyeballs are leaking out of his head πŸ™‚

    I understand your joke, but want to point out for those who do not that the ABILITY to trade or get in/out of a position at all hours does not PREVENT a person from sleeping and only looking at their computer during normal US hours.

    A car analogy will be useful for the mentally impared:

    If one car can only drive up to 30MPH and a 2nd car can drive up to 200MPH, it does not in any way prevent a person from only driving the 2nd car at 30MPH. But the first person surely doesn’t have the option of doing anything else.

  266. sophia

    catbird,

    I was having the same thoughts! And also, Gary has been off the whole day, which means that he is pretty relax about his position, which is a good sign…

  267. TZ(8155)

    And if the 2nd Ferrari car costs the same amount of money as the first car and if the Ferrari car has tax preferred status, then it becomes a difficult argument to buy the first car.

    Yet that is what most people on this board are doing.

    πŸ™‚

  268. Bill

    The $SPX is loosing momentum – SLV is red like QQQ – SIL has a shooting star tail now – seems like the floor could easily fall out here.

  269. TZ(8155)

    I love this analogy, let us continue:

    Those here who DO buy the first car often state, in their defense, that

    “if I bought the faster car I would have trouble preventing myself from driving too fast and crashing into a tree. So to stop from killing myself I will only buy the toyota instead of the ferrari. I simply can’t control myself from pushing down on the pedal.”

    To which others of us say “really?”, “you can’t just drive slower than 200mph?”.

    “No. I can’t. Besides…the toyota is what gary drives.”

    πŸ™‚

  270. Bill

    Thanks for sharing, Ken. I didn’t know about the triangle in gold – no wonder we’re still coiling. We don’t have a swing low in yet, either.

  271. blammo

    Unfortunately, I have to drive the Ferrari all night long as it is not allowed to park or idle. On the other hand, I sometimes wake up in the morning and the Toyota is no where near where I parked it.

  272. Ken

    Jim Rogers (NYSEARCA:RJI) made headlines by saying gold is due for a correction, and should be used as an entry point by investors seeking the precious metal. If gold retreats towards $1,200 per ounce, he would be “extremely excited.” Rogers explained, “I’d probably get more interested at $1,600. At $1,710 or whatever it is today, I’m not buying gold, I’m just watching, and likewise for silver.” Rogers also explained that he still prefers to buy silver, because it is 40% below its all time high, while gold is only 20% of its all time high.

  273. blammo

    Ken, in your own chart, you have a cluster of ‘distribution’ days at the June low, right before launch. What does that tell you?

  274. ver

    TZ, WW:

    Ha yes that concern–staying up all night with my finger on the trigger for futures–has crossed my mind but I share TZ’s point of view. The reality is that one can/will stress out all night regardless of whether a trade can be executed. Arguably it’s that much harder to sleep when you know you *can’t* get out of a failed trade until the gap down the following morning.

    I don’t need to be sold on futures, I’m a big fan of the flexibility and tax treatment not to mention the cheap commissions and leverage. The only catch is that you need to be disciplined as all hell so you don’t whipsaw yourself to death and/or lever up to the moon and blow out your account. Even here the fact of the matter is that you can achieve the same disastrous result without futures, trying to be too cute with options or even leveraged ETFs.

    I’ve actually opened an account with IB but not yet made the switch. I have to say the IB tools are pretty awful so that alone has me sitting on the sidelines till I get a better hang of it. I’ll probably make the transition at the next daily and/or intermediate cycle low.

  275. coolkevs

    In DeMark land, so that Euro BUY Setup I mentioned before T-giving didn’t pan out too well… Also, a SPX DAILY BUY setup that was shaping up got canceled with the rally of the last couple days, so back to square one. However, the BKX banking index and XLF are recording imperfect DAILY BUY setups today. So, this tells us full selling exhaustion was not achieved – so possibly could see a return down to 34.70ish BKX before a rally occurs?? Given the S&P downgrades, it could very well be the case. GS is also showing this imperfect DAILY BUY setup, but only has to go down to 87.60 for exhaustion to be achieved (which it has done after hours, but not sure if that counts). JPM also has an imperfected DAILY 9 – 28.28 for exhaustion.xlf

    I also see the BKX along with BAC showing a perfected WEEKLY TD Sequential 13 BUY this week! 3 months of better luck?? JPM already recorded a WEEKLY 13 BUY last week. GS and XLF have 2 more weeks to go for theirs. Monthly BKX, could achieve a 9 in December, but perfection requires a trip down to 32.56. BAC will already achieve perfection as today took off last month’s low. GS has to go below 84.27 for a perfected MONTHLY BUY. So, things are lining up to show financials might finally catch a break from Jan-Apr 2012!!!
    Thanks for reading!

  276. TZ(8155)

    A warning about today. I found myself chasing and pulling cowboy trades going long (closed them end of day; down about 0.8%).

    Not only did I do that, but independently someone else I know did the same thing.

    It is a sign, and a warning.

    Whenever I find that I and others I know are either buying/increasing with anticipation of something (or selling positions out of fear or expectation lower) It usually means we are experienceing exactly what the rest of the market is and signaling a change.

    In the past I would usually say that I would be on the wrong side of an impending action. I think I have improved over the years such that the odds might be 50/50. Sometimes my abilities are actually leading me in the right direction. Sometimes not.

    So really I don’t know, but what I do know is that I’m now on high alert for something to move here likely in the next 24hrs.

    It occurs to me that the direction of most surprise that would catch many and cause fast selling would be a continued move lower in gold and miners.

    Let’s hope not, but me feeling the urge to increase today might not be a good sign.

  277. William Wallace

    Been watching too, nice $10 pop in 5 minute candle. We seen this yesterday also, golds whole surge higher yesterday was done in three separate pulses higher carried out within a little over an hours time, the rest of the time gold traded sideways. I would rather see gold steadily grind higher, hopefully this holds for a couple days.

  278. William Wallace

    Gold just tagged the upper trendline of the C-wave channel, but hasn’t broken back out of the channel yet, kissed the trendline at 1731 and backed off. The 75dma is right above the trendline.

  279. riley

    WW
    If hits 75sma on daily you gonna scalp a trade short. Ive got a buy in at 1719 and thinking of shorting if hits 1742(75ma?). night trades only, dont like staying in unless macro changes

  280. TZ(8155)

    Not much follow through. They walked the spike all the way back down.

    Of course this is probably the lowest vol of the day.

    Still…it could have been a stop run (to the upside) instead of the real beginnings of a move higher.
    Still need to stay alert for a strong move down starting.

    I’m in agreement with gary that going much lower from here (the last few days range) really isn’t a good sign.

  281. Poly

    Absolutely should not be going below $1,700 from here in this cycle.

    Either way from this point, we should see a pop to $1,750 before any decisive movement up or down is made, IMO. Any move sharply lower would most likely come first from a bursting higher headfake.

    Good night all.

  282. riley

    Thanks Poly, Good stuff. And thanks ww been scalping a few trades a week with your info. 50% return last 2mos, lot safer than trying to hit home runs, I keep the longer plays to Gary’s plays(if you can call it that). Have a core that never touch. Glad I found you guys, quite helpful and nice for letting me ask.

  283. TZ(8155)

    Beyond WW,Poly, and Gary who have an issue with 1700 on gold, I do as well from my own system work. Below that point is bad.

    I have moved up the stop on 1/2 my position (which was near last week’s lows of 1675 or so) to a bit under 1700.

    The other half of my recent ‘chase’ purchase here is near 1710.

    The spike got retraced but we are climbing again. So far so good.

  284. TZ(8155)

    I’ll be sure to open the door on the train when we pass you at 1740. Start running to get a head start. Might yank your arms off otherwise.

    πŸ™‚

  285. TZ(8155)

    One more note of market sentiment:

    Just like I got antsy and was buying longs today, only this evening are we seeing that Gary, Poly, WW and one or two others are now hesitant with this gold ‘rally’ and starting to worry or create exit plans if we decline to 1700ish.

    That is another sign I think. The market strung us all out long enough that people wobbled (me) and/or are now doubting the bull or looking for exits (or not even buying in cause the strength doesn’t seem to be there.)

    I again argue that this means we have an imminent and sharp move probably between now and tomorrow afternoon. The market has done its work in messing everybody up and today seemed to be the key day.

    Perhaps the sharp move is already starting and it is up. Or this spike up fails and we drop hard.

    I’m betting up right now.

  286. Aaron

    That came close, but no swing on gold yet… probably comes overnight or tomorrow though. Im showing a high of 1727.4 on Nov 21, todays high is showing as 1726.0

  287. William Wallace

    Gary,

    Did you see my message on the site, you need to check out the two 4 year cycle low charts on the terminology page. One chart has the 4 year low marked on 3/17/08, and the left and right translation chart has it marked on 3/2/09.

  288. TZ(8155)

    AARON,

    You are using esignal or qcharts, right?

    They don’t roll the GC #F symbol properly by my calculations.

    You are supposed to roll the contract when the volume shifts, but if you look at GC Z1 (still representing GC #F) compared to GC G2 (active feb contract) you will see that they should be using GC G2 in GC #F by now. They aren’t. (The roll should have happened early this morning or yesterday evening.)

    Good luck getting them to fix it.
    Ameritrade is probably rolling the contract correctly which is what Gary is using and sees the higher high.

  289. riley

    Hey TZ
    You sound very informed and knowledgeable. But have the inate Jekyll and Hyde that I have. Go for broke but maybe not as could go other way. LOL Anyway seems you are doing okay and keep posting might open 1B due to your post, thanks, Riley

  290. TZ(8155)

    OUT all my trading positions. Back to cash (and core metals position). Up a bit of money from last weekend’s close but clearly lost a few % due to all the games yesterday and last night.

    This isn’t holding anything I expected and the spike last night is now looking like a pop and drop.

    We are heading to 1700 which isn’t good cause it breaks support for the last few days.

    And now this whole week of sideways action has the look of a bear flag to me (the spike last night hit the very top of it exactly).

    I’ll regroup and re-evaluate after sleep. A continuation of the B down near to the A low may be where we are headed. 1630 or would be my next guess if so.

    A sample gary chart:
    http://4.bp.blogspot.com/_V7Pddp58Py0/S4aTS9V8BaI/AAAAAAAAC18/ADKHgH1o-H0/s640/abcd.png

    Bit unsure of all of it frankly. Back to the tall grass.

  291. sophia

    So far European equities sold off early morning but recovered within the first hour of trading…Eur/USD seems OK as well… And the US Bonds are not moving up at all…So tempest in a tea cup?

  292. TZ(8155)

    So far I’ve gotten really whipsawed out hard last 24hrs.

    disappointing;

    My main mistake was in not buying the 1670 low a week ago and I’ve been paying for it since due to poor entries and volatility.

    (I was working on my system when that 1670 low hit and I thought I had come up with a new modification that made that NOT a buy point. Only a day later after backtesting it did I realize it wasn’t true. By then I had missed the easy window.)

  293. TZ(8155)

    World central banks taking some actions. I closed my eyes and bought at 1733 with a $10 stop.

    Let’s hope the entire spike doesn’t get retraced like last time.

    Very poor entry and trade on my part and I know it, but I really really don’t want to miss a big move here.

  294. TZ(8155)

    Closed my chasing buy with small profit. I can’t chase a spike up like this. Just asking for trouble.

    I miss whatever I miss unfortunately.

    Got whipped around last day or two and didn’t buy the low last week like I should have.

    Now I’m stuck higher up in the air with positions that are harder to hold.

    I’ll be back in and making profit, but the last week has really tried my patience. Cheers to all who are riding it.

  295. TZ(8155)

    I KNEW something was coming in the next 24hrs. Said it here. That’s what hurts the most. I called the direction right too, but lost all confidence when we dropped overnight.

  296. Gary

    Funny how the news always manages to confirm cycle reversals.

    I figured out a long time ago that trying to trade chart patterns wasn’t going to make me any money.

    Trading cycles and sentiment however has made me a lot of money.

  297. Aaron

    Gold rallies hard after a QEish announcement but then usually retraces most of the gains within a week. Should be interesting to see what develops here.
    Im flat.

  298. TZ(8155)

    AARON,

    >Gold rallies hard after a QEish announcement but then usually retraces most of the gains within a week.

    Agree. The fed can’t stop the initial response, but if they just allow it to run a bit, suck in buyers, and go on for a day or three then it finally exhausts (at least the initial move up).

    That’s when it becomes vunerable and you will see significant retracement.

    If I was long from lower I would just hold strong hand, but I’m not. Buying this spike just puts me in that retracement category and that’s tough.

    So I’ll wait like you and see when things ease. Might be much higher though.

  299. Gary

    If you would just get rid of the leverage you would be able to hold your positions. I would be willing to bet that the model portfolio has outperformed your constant leverage and certainly will over any significant period of time.

    Folks, making money is all about controlling risk.

    Rule #2. It catches up to everyone eventually. It doesn’t matter how many times you win, one mistake with heavy leverage and you will wipe out years worth of gains.

  300. Aaron

    Gary, that simply isnt true. One can use stops, and when used right they can easily control risk. Using leverage doesnt mean you have to max out on leverage all the time.

  301. Ken

    Did I call it or did I call it? I called it! πŸ™‚

    Yesterrday I said I was looking for a global central bank coordinated intervention and it looks like we got one overnight. I also said that to those waiting on the sidelines in cash, be prepared to chase price higher. Well the price is higher, we just got the first of many interventions and you’re still in cash while the price is higher. If you didn’t get you positions already it might be time to panic and buy and if you’re short (like I was the otherday, thanks for the talk Gary, I feel for you because I was short myself on Monday and know what a 35-50 handle overnight ramp job feels like going up the pooper. It doesn’t feel good but damn being long GDX, SLV, QQQ and AG sure will today!

  302. TrendTraderBH

    I am a real time example of Gary’s two rules. Before I would have too much leverage – make a lot, than lose even more. Now no leverage and making money. It just takes time to drill it in one’s head – because it seems counter-intuitive. Got a long way to catch up to break even but at least I’m on the right path.

  303. TZ(8155)

    Gary,

    >If you would just get rid of the leverage you would be able to hold your positions. I would be willing to bet that the model portfolio has outperformed your constant leverage and certainly will over any significant period of time.

    I’m up many multiples of you this year.

  304. St. Deluise

    you know what, all this really is is a 50 bp cut in the dollar funding rate from 1% to 0.5%

    don’t get me wrong, this is extremely dollar negative and indicative of a serious problem–and i’m long–but i wouldn’t lose my mind buying this gap up this morning.

    in fact this almost looks like a good short opp for the true bears out there. we’re at the 377 day in SPY again (~75 week) on essentially 2 overnight gaps.

  305. TZ(8155)

    GARY,

    I post what I do because the way I trade is more suitable to me and because, like you say, often this is just boring dead time as we wait and watch, so why not discuss something.

    My posts aren’t really a cry for help. I’m a subscriber and aware of what you buy and how you do it. I follow, in parts, but in my own way.

    I’m really just posting as a different angle and commentary for whatever it is worth. If/when what I do doesn’t work like I want then I’ll switch over to more of what you do (and have at times). Note that I’m long about 0.4x or so and just holding on a core. The leveraged stuff is the extra juice.

  306. Ken

    Aa TZ(8155) said: “I think we are on the edge of a Paulson type ‘bazooka’ from the EU.”

    Yeah and you can bet the farm that congress critters and staffers have purchased calls from their brokers. Hedge funds need a big winner to salvage the year or else they’re going to see major redemptions. I bet they’re loading the boat on Greek, Italian, Spanish and Irish debt and banking stocks as we speak. I don’t have inside information but I’ll take my chances with gold and silver to win in the end”

    I wonder how much money the congress critters, their staffers and all the hedgefunds will make on their calls they bought yesterday w/ inside info?

  307. Gary

    WW,
    This is only the third day of a new daily cycle. Seems awful early to start selling short unless you are just daytrading.

  308. TZ(8155)

    GARY,

    With everything I said, I *DO* appreciate and thank you for your comments and suggestions.

    Your approach and view of investing HAS had a positive effect.

  309. Michael (Hulk)

    St., That will be the first reaction of many to fade this. However, the statistical research on gaps of this size is unequivocal – do not fade them as they are could continue. The bigger the opening the more chance it has of being a runaway gap and we’re looking at a 3.3% gap in SPY at the open versus a 2% threshold for those that are getting unlikely to fill.

  310. St. Deluise

    thx hulk. i was definitely buying the monday one, and this one may very well hold, but i gotta follow my system on this one.

    way too far on not enough buying this time, and on, imo, very dubious and overblown news.

    if i’m wrong i’ll lose 10-20 points.

  311. Gary

    WW,
    What makes you think the market was about to crash? Despite a left translated cycle it couldn’t even make a lower low.

    Unless something changes this looks exactly like the bottom in 2010.

  312. SF Giants Fan

    Ken

    Please estimate your savings by not being short and send 10% to Gary’s weightlifting team fund.

    Gary said…
    Ken,
    I think you better cover immediately or you are going to risk giving back any profits you have left.

    These violent bear market rallies are why it’s so hard to make money on the short side.

    On Friday the technicals said the market was going lower. Cycles warned it was getting too late to be short any longer.

    This is why I don’t trade based solely on technicals. The odds of making any long term money by doing nothing more strenuous than looking at charts is very very slim. It’s why most retail traders don’t make money because their concept of due diligence is to only look at charts.

    November 28, 2011 6:03 AM

  313. Razvan

    something is not right with the metals. Silver is not confirming this move being up only 50 cents while gold up 50 dollars from last week.
    I am still long both buth not happy at all with the price action.

  314. Harry

    I feel like one of those guys at a Pentecostal thing where they’re running up and down the aisles shouting “yabayabayabadooo” and talking about how Jesus cured their lymphoma…

    But seriously now, all I did was buy when I thought we were close to a bottom, set a stop when I thought the bottom was in, and waited for the cycles to do their thing. That’s it. Even with massive leverage my risk was defined once the stop was set and I just walked away after that. IMO that’s the way to trade cycles with leverage. I’ll stay up late to watch but I have to train myself to keep away from the sell button when it looks scary, as it did last night.

  315. William Wallace

    Gary,

    The same things I was seeing that made me disagree with you when you were initially saying that the August 9th low was an intermediate cycle bottom in stocks and that we were about to see a violent bear market rally…and I kept stressing that we will see another DC and a new low before a substantial bear market rally would ensue. I even asked you after the August low was in, if we were to see a new low would you rephase it to be the ICL, you told me no, and then did exactly that. I always talk about why I think something is going to happen, so im not sure why you even ask…unless you just want to bust my chops. Its like me asking you why didnt you take profits when miners filled the last gap, you obviously believed that they were going higher from there and I didnt, I disagreed and said that miners were going to remain below 610 for a while, but I didnt break your chops about it πŸ™‚

  316. William Wallace

    DD,

    I follow Gary’s calls also, that doesnt mean I have to follow him blindly, and never place a trade unless Gary does. Gary knows how much I respect and admire him, but I dont always agree with him.

  317. ALEX

    HULKSTER…Where you been Brutha : ]

    Nice to hear you on the “possible run away gap”

    WW

    Just a thought, GOLD just gapped up over your 75dma and more. You thought it may act as resistance, so wouldnt you now view it as support?

    just a thought.

  318. William Wallace

    I have been saying that I believe that the market will bounce for 3-7days and roll over into a new low, without this QE talk I think it would have been sooner than later, and the market definately wouldnt have popped today and gold would have been headed back towards 1700Even though cycles dictated otherwise we seen it happening over night, gold was dropping off and market futures were deep in the red all night. Lets see what happens.

  319. Gary

    WW,
    I rarely read the comments in the blog anymore. There are just too many. Occasionally in the morning is about it. So I must have missed your thoughts on the stock market.

    That being said there was no way in real time to call the Aug low anything but an intermediate bottom. To do other wise would be to assume that the bounce in July was a shortened intermediate cycle. I never call a short cycle until it becomes apparent that is the correct call.

    The correct assumption was that the Oct. low was the first cycle down in a new inte3rmediate cycle. However the force of the rally made it clear that was an intermediate bottom not a daily cycle bottom. At that point I had to rephase the last two intermediate cycles.

    This can’t be done until all the evidence is in.

  320. William Wallace

    Alex,

    I all depends on what the dollar and the market do from here…the market rolls and dollar pops hard out of this DCL we may see gold tank, the weakness overnight wasn’t too convincing of a substantial rally, and without this QE talk I think we would have see gold near 1700 again today, as it was last night.

  321. ALEX

    WW

    Ok, But we can watch for your 75 MA to act as support…It is also where the 20sma is (more support)

    So Gold regained the 10sma the 20sma, the 50sma, the 75 sma.

    http://www.screencast.com/t/WLqWL2nRnIb

    Ignore the blue lines ( I drew this for my brother in law earlier).

    also drew this for someone discussing how POLY feels cycle timing and Gold will drop soon ( as a cautionary measure…it’s good to know.

    http://www.screencast.com/t/CLSF6EcZ8

    To keep him alert…I circled PURPLE the explosive days that didnt go to da moon : ]

    BUT I TRADE DAY TO DAY and this looks strong (SO FAR)

  322. Michael (Hulk)

    Hey Alex! I’m good thanks, not as proactive with the good charts and postings as you! Bit much for me to wade through on this forum often but the contributions from you, TZ, Ken, St, WW, Slumdog and *others* are cool and valuable – thanks.

  323. Gary

    The Euro has now hit the front cover of the magazines. What better sign that this is overblown? Plus dollar sentiment just hit extreme levels again.

    What better time for the dollar to top and begin the slide down into the 2014 three year cycle low.

    Ultimately the dollar is in much worse shape than virtually every other currency. Many traders lose sight of that in the day to day action.

  324. Ken

    SF Giants Fan said: “Ken Please estimate your savings by not being short and send 10% to Gary’s weightlifting team fund.”

    Good idea SF Giants Fan! I’ll be sure and do it!

    Thanks again Gary and SMT’s! πŸ™‚

  325. St. Deluise

    will be getting flat at es 1239. i’ll try a short on a swing high if it happens this week.

    really think paying the dollar any attention is a lost cause at this point. would not be surprised at all to see it rally with gold and stocks.

    much better to watch the 10 year UST- there’s your demand for govt paper, and not eur/usd which this morning is officially as helpful as the ratio of oak leaves to pine needles.

  326. ALEX

    Gary said,

    “What better time for the dollar to top and begin the slide down into the 2014 three year cycle low. “

    Wow…that threw me a bit.

  327. Gary

    Folks the world just told you that they have decided to take the easy way out and print.

    Why in the world would anybody want to try and sell that short?

    if you need a historical guide just look at what happened to shorts during QE1 and QE2. Now we have the whole world on board.

  328. Russell

    Reminds me of something someone once said…..”when are traders nervous?
    When they are losing money and when they are making money.” I have to confess, I’m sitting on my hands trying not to take profits. Total global printing has to be the perfect setup for a revisit to 1900 gold.

  329. ND

    A lot of people ain’t believing this rally, just a rebound, makes me think well go to take out new highs. Many out shorting now, lets see. New highs would be the perfect scare to bears, then we fall.

  330. ckpc

    I just listened to what Ron Paul was saying on CNBC and it reinforces Gary’s comment above.

    Gary said:
    “Folks the world just told you that they have decided to take the easy way out and print.”

    Ron Paul said: (paraphrasing)
    “For central banks all over the world to start easing, even getting China to go along with it, shows how desperate they have become.”

    He then added that this puts the burden of bailing out Europe on the shoulders of the American taxpayers.

  331. Strat81

    Gary,

    I may be mistaking, but this news inst exactly synonymous with QE1 or QE2. Isn’t this just an agreement to swap foreign currency and assets for USD. The central banks aren’t “buying” anything, just acting as a foreign exchange provider.

  332. Blindweb

    I suspect the swap lines are just a hold over until an IMF bailout is ready,or something similar. The central bankers learned their lesson in 2007

  333. Movax2

    Strat81,

    If it was as simple as ‘should’ some would say gold should be in the $8500 to $15,000 range. The swap lines are open because of the Feds fear of deflation – that means there is pressure downward on prices and they are trying to push back.

  334. Strat81

    Movax2,

    My point is that the magnitude of the move suggests the market doesn’t quite view it as “turning on the printing presses”.

  335. mikezza

    ww
    i follow you comments and believe that you and i are following the same analog from 2008. i think that you think we are around 6-13-08 and that this new cycle will roll over after 3-5 up days to see a new bottom below 1075. this mean that you think we already had the top (#13) on 10-27-11 and are half way down to the next analog low point from 7-15-08. might i suggest that you consider that the top is still ahead of us and we get it instead in early december. then we start the fall from top #13 to the low #14 by end of january below 1075.

  336. Gary

    Strat,
    I suspect the market doesn’t share your view of all of the move occurring in one day.

    If that was the case then the market would’ve immediately jumped from the 2009 lows to the 2011 highs overnight once it became apparent that mark to market was going to be suspended and printing was going to be initiated.

    You seem to have some preconceived notion of how large the move should be when the fundamentals change. It takes time for the market to digest and fully price in a fundamental change.

  337. Poly

    Swaps are hardly printing.

    One currency is “swapped” for another at a fixed exchange rate, for the duration of the swap. It’s an asset swap at a fixed guaranteed rate between C.B’s only. As the exchange rate is fixed and Central banks are backing it, it becomes a pure wash.

    It’s purely a contingency measure and nothing to be bullish about, IMO. If anything it shadows the numerous 2008 FED movements where we had program after program announced to “solve the problem”. In each of those cases we had sharp counter squeeze rallies.

    I ask myself what is really wrong and why the need to coordinate and announce such a program. Most are more short term minded thinking “liquidity, must be bullish, so I must buy buy buy”.

    The cause of liquidity and funding strain in world markets is the repricing of European debt and the stress this is creating to bank capital and their ratio’s. Nothing addresses the cancer.

  338. William Wallace

    Poly,

    I agree, though I could not have expressed it as eloquently as you my friend πŸ™‚

    Like I said the other day, talk of “solving the problem” is not going to change anything.

  339. Strat81

    Meaning if this translates in to turning on the printing presses, then notion of an even remotely efficient market is laughable. Basically all I am arguing is that the market doesn’t seem to think this is QE1/QE2 like, especially given the fact that the market now knows the results of such a program.

  340. sophia

    Have been off most of the day…wow, the picture has changed since 12PM London time!!
    Wishing you all some decent gains on this move. LOL

  341. ND

    gary,

    the fed has to print in order to swap, could you please elaborate? getting confused, many saying this has nothing to do with printing.

    cheers

  342. Strat81

    I don’t believe that fundamental changes are priced in a single day and I think EMH is only valid over a longer term. In the short term its obvious that moves can be exaggerated by simple liquidity supply/demand dynamics. I imagine a lot of people got caught with their pants down being short today which is probably exaggerating the move in equities. It just seems to me that a move equally large in Gold would occur if the whole world has now decided to print in unison.

  343. Ken

    The Botton Line Today: Global Central Banks have gone all in, period. Whether or not you think today’s intervention will work or won’t long-term (and don’t think it will) bears/shorts have been put on notice. If you hold overnight you run the risk of a 35-50 handle SPX rip shoved up your @ss. They way I see it being long gold and silver is like being short the market and what the Global Central Banks are trying to accomplish. Gary’s right about oil too. Eventually all of this global liquidity is going to get soaked away with higher food and energy costs and that my friends is going to take some time. Oil at $147 did it with only the Federal Reserve printing. I’m thinking anything above $125 or $5 at the pump with 10%+ unemployment in is going to do the trick this time around. Give it time but this sucker is going down, down, down!

  344. ver

    Ken:

    When are you looking to go short again?

    Also, you talk about gold/silver as a way to short but do you mean in the near-term or long-term? In the near-term, we’ve seen no signs that PMs have or will decouple from stocks.

  345. MikeStiller

    Gary-
    Since the previous dollar cycle stretched long at 30 days, what are the odds we actually bottomed on 11/18 in 16 days? That would put this daily cycle at 8 days. Of course the other scenario is this cycle is also stretching long at 24 days.
    Thanks

  346. Kate

    Dear SMT’ers,

    Besides NUGT, does anyone know what other 2xETF’s are becoming 3x?
    (AGQ? DGP?) Also, what source do you favor for this type of info? Many thanks, KP

  347. Ken

    Like it or not the lunatics (Keynesian’s & Monetarists) have taken control and are running the asylum folks. What I mean by that is they’ve gone “all in” with fiat currency debasement in an all out global effort to stem the deflationary tide.

    I believe if the three year cycle low in the USD is violated we’ll get Gary’s (Hyper) Inflationary thesis before I get my (Hyper) Deflationary thesis. I think running the printing presses will lift assets values, but it won’t restore asset values or consumer confidence it’ll actually destroy it faster.

    Higher input costs destroy end user demand and it intensifies the lack of confidence in government backed fiat paper/debt. The lunatics (again the Keynesian’s & Monetarists) who run this asylum won’t be taken out in body bags until the masses repudiate the “paper promises” or “full faith guarantee” which is worthless in real terms going forward.

    Keynesian Endpoint for the lunatics is when the market/masses walk-a-way from the USD/US Bonds and their paper promises and their so called guarantees in exchange for real assets. Being long gold and silver is being short the lunatics and the asylum they control.

  348. Russell

    I hope the after hours traders in Asia appreciate that gold is popping out of a DCL and continue the momentum overnight. I hated was I saw at 4am EST when I got up and checked gold. Whoever that was that sold gold down to 1705 may be having some regrets about now.

  349. coolkevs

    For GDXJ, I reported a DAILY Sequential BUY in DeMark land on 11/17/11. It wandered in the wilderness for a few days, but you need to wait for a bullish price flip (close above the close 4 days previous) which it actually achieved on Monday, confirming the signal. There are still 4 days left of the signal now. On a MONTHLY scale, GDXJ is on Bar 6 of a BUY setup, so there could be a potential for a few more months into the mid 20’s. BUY potentially could record in February for a March-June time frame. GDX doesn’t have a very clear set up at all on any time scale at the moment.
    Banks – well, rally may just be beginning – back up to my post yesterday on how selling exhaustion is shaping up on DAILY, WEEKLY, and MONTHLY time frames. January – April might be a good time for the banks!

  350. sophia

    US Bonds are the tale … Rally might for real, the Bonds are not behaving well…Time for rolling from ultra expensive bonds into underpriced equities??

  351. W

    Kate,
    There are 10 etf’s by the same company going from 2x to 3x, but NUGT/DUST are the only ones most SMT’ers have any interest in

  352. sophia

    US TSYS VIEW: MacNeil Curry, chief rates and currencies technical
    strategist at BoA/Merrill, is watching the 21-day moving average
    (currently at 1.999%) in the 10-year US Tsy yield. He says “a daily
    close through the 21-day moving average” will be needed for yields to
    move higher. “This average has done a very good job at defining the
    multi-week trends in Treasury yields and would provide us with
    confirmation that the burgeoning bear trend is reasserting, ultimately
    targeting a move to 2.60%,” Curry says.

  353. Blindweb

    Mish’s blog:
    “This immediately raises the hope for further cuts in policy rates in the US and Europe. Right now, foreign banks can fund themselves cheaper in US Dollars than US banks. This will almost certainly mean the discount rate will be cut by 25 bps and before the weekend.”

  354. Unknown

    Ditto Poly.

    Swaps are NOT printing. Also, these swap lines between the Fed and the other CBs have been in place for years. The only thing that was done today was to extend the swap agreements into 2013 from mid 2012 AND to lower the inter-bank rate on those swaps by 50bps. BFD. Now they can borrow at under 1% instead of just over 1%

    Does anyone really think that 50bps is going to make a difference to any country or bank in Euroland that is staring into the abyss? Are you sh*ttin’ me? Italy just borrowed 6 month money at 7.85% and you think 50bps is a life-saver?

    This is Benny’s attempt to look like something is being done but unless he starts buying PIIGS debt, nothing has changed.

    The credit markets are not impressed. Eventually the stock jockies will figure it out and head for the exits but it always takes them longer to figure out what has really happened. After all, it’s all algos and HFT machines trading these markets anyway so what would you expect?

  355. Unknown

    Ditto Poly.

    Swaps are NOT printing. Also, these swap lines between the Fed and the other CBs have been in place for years. The only thing that was done today was to extend the swap agreements into 2013 from mid 2012 AND to lower the inter-bank rate on those swaps by 50bps. BFD. Now they can borrow at under 1% instead of just over 1%

    Does anyone really think that 50bps is going to make a difference to any country or bank in Euroland that is staring into the abyss? Are you sh*ttin’ me? Italy just borrowed 6 month money at 7.85% and you think 50bps is a life-saver?

    This is Benny’s attempt to look like something is being done but unless he starts buying PIIGS debt, nothing has changed.

    The credit markets are not impressed. Eventually the stock jockies will figure it out and head for the exits but it always takes them longer to figure out what has really happened. After all, it’s all algos and HFT machines trading these markets anyway so what would you expect?

  356. Unknown

    Ditto Poly.

    Swaps are NOT printing. Also, these swap lines between the Fed and the other CBs have been in place for years. The only thing that was done today was to extend the swap agreements into 2013 from mid 2012 AND to lower the inter-bank rate on those swaps by 50bps. BFD. Now they can borrow at under 1% instead of just over 1%

    Does anyone really think that 50bps is going to make a difference to any country or bank in Euroland that is staring into the abyss? Are you sh*ttin’ me? Italy just borrowed 6 month money at 7.85% and you think 50bps is a life-saver?

    This is Benny’s attempt to look like something is being done but unless he starts buying PIIGS debt, nothing has changed.

    The credit markets are not impressed. Eventually the stock jockies will figure it out and head for the exits but it always takes them longer to figure out what has really happened. After all, it’s all algos and HFT machines trading these markets anyway so what would you expect?

  357. TrendTraderBH

    I thought I remember Gary saying that silver typically lags at the beginning of a new move but catches up with a vengeance afterwards…not sure if the broken parabola changes that outlook or not.

  358. W

    Poly and unknown
    Apperciate you comments and agree as far as they go. Both of you seem to be overlooking that these swaps are going to be done with newly created money on BOTH sides. This is backdooring new money into numerous economies without the stigma of direct injection…in short, money laundering at the centeal bank level and done purely to muddy the understanding of what is happening.

  359. Shalom Bernanke

    Pleasant surprise today. I’m staying long everything and even turned up my risk a bit today, not much because I don’t get too excited buying into strength, but days like this are when I’m willing.

    The debate over whether or not this Fed action is considered printing is irrelevant in my opinion. One has to be crazy to entertain selling miners (or metal) in this environment, and the price action confirms this. And shorting anything is an even worse bet, even if it works for a a day or two.

    I’ll be back from vacation next week. Good luck to all, and congratulations to those that have not gotten shaken off the bull. πŸ™‚

  360. Bullion Trader

    SB,

    If one doesn’t have exposure yet would you buy tomorrow or wait until after the fed announcement? Also, do you like NUGT (or even GDX, GDXJ, etx)or do you buy individual names?

  361. james r

    A powerful gap was created in HUI today.

    Looking at the five year chart on the HUI this has never happened.

    This event did occur in Feb. 2002 and never looked back.

    Anyone waiting for cheaper prices may be out of luck.

    Oh my!

  362. Harry

    I’m closing my gold futures long here. Might try it again on a tag of the 10 DMA. I need a good night’s sleep at some point, and that’s been hard with ten contracts!

  363. Liquid Motion

    James R
    As I pointed out in a previous post “watch the HUI going into early December it will follow the previous move in the prior year and make a higher high”. Pattern for end of year GOLD moves.
    Seems to coincide with santa claus rallies in equities too.
    One thing is consistent …these rallies dont last. They fail into the early new year.
    Could very well be the opportunity to exit before the correction and buy back in at a lower point….or if you have deep pockets…ride it out and buy more on the downswing. I have no diubt that Gold stocks will go substantially higher in the years to come, but can you handle the volatility ?

  364. PST

    Sorry everybody, but today’s news isn’t the game changer that it is being reported to be in the media. This is not additional quantitative easing or the global central banks going all in. It’s simply an effort to address the developing liquidity crisis that European banks are faced with by reducing the rate at which the ECB and other central banks enter into US dollar swap lines with the Fed. This simply enables foreign banks to borrow USD more cheaply from their central banks, thereby reducing their funding costs. This step does nothing to solve, let alone even begin to address the issue of sovereign debt, and it is nothing more than an effort aimed at preventing a freeze up in liquidity for the banking system. It may well represent the central banks willingness to attempt to provide a coordinated effort to address the crisis, however, it is a far cry from anyone stepping up to be the ultimate backstop of future sovereign debt issuance.

    In fact, this move by the central banks should feel somewhat like déjà vu to everyone. It was just two months ago (9/15) that the Fed, ECB, BOJ, SNB, et al. teamed up to announce “coordinated liquidity operations”, which was effectively just extending their existing repo operations. Both of these actions are right out of the 2008 playbook (yes today’s “unprecedented” move was also used in 2008), which means we will likely see additional announcements in the future that include enlarged swap lines, expanded lists of eligible collateral, guarantees on intra-bank loans, extensions of repo and swap terms, etc. Today’s action may be successful in temporarily forestalling a liquidity crisis, but the central banks have not addressed the larger problem (for the banks) that many of Europe’s financial institutions will be technically insolvent if price discovery in sovereign credits and other distressed assets occurs.

    Enjoy the rally while it lasts, but know that we are far from a comprehensive solution to the sovereign debt crisis. As long as the central banks fail to address the root cause (excess debt) and instead focus only on the effects (liquidity crisis), these actions will continue to be nothing more than temporary band-aids before the ultimate day of reckoning.

  365. Venicerain

    looking at the weekly chart of dollar, it seems to me that it is a repeat of 2008/2009. A 5-6 months consolidation around the 3 year cycle low followed by a strong rally which finally forms a double top pattern. difference is that this time, the whole rally out of the 3 year cycle low was much weaker. If it repeats, dollar will have a long way to fall. This is just a start.

  366. Danno

    Venicerain,
    Very doubtful the dollar rally is over for good. It may just be over for December. EU essentially kicked the can down the road. Things will most likely flare up again sometime early next year.

  367. Unknown

    Looks like Gary and others believe in the old models: don’t fight the fed – when they poor on the liquidity, it’s risk on. Francois Trahan and other have suggested that the new ‘fed funds rate’ is the price of oil. That is the problem with thinking banks can poor stimulus as needed. The price of oil, and everything that is related to it, will go up with further QE-type actions – it will cause the consumer to retrench further. With oil at $100 as the CBs start up their engines, think I’ll stay with my risk-off positions.

  368. Gary

    Yes eventually high commodity prices will destroy what’s left of the global economy.

    I’m not sure why that means you don’t want to make money in the secular gold bull market when we come out of cycle bottoms though.

    That’s kind of like cutting off your nose to spite your face.

    Ultimately when central banks print they destroy the purchasing power of the currency. If you don’t convert your dollars to something of real value you aren’t actually in a risk off position, you are in a position for the government to steal your wealth through inflation.

  369. Danno

    Yep. This is what motivated me to look at gold back in 2004. I was burnt out on the market back then and had no desire to dabble in trading. But it dawned on me that if I had all of my money in dollars, I was in fact 100% long the dollar. So I was trading in spite of not wanting to trade. The Fed has forced the common man to become a speculator if he wants to protect his wealth.

  370. Gary

    There isn’t going to be a split. It’s just going to start trading as a triple fund instead of a double. You need to reduce your position size if you want to keep the same risk control parameters on the position.

  371. mikezza

    gary
    you said that the crb has put in the 3 year low. if you look at it for 2011 it has continued to trade in a channel with lower highs and lower lows. why do you think this will not continue

  372. Gary

    I don’t know for certain yet that it has but the Oct. low did come right in the middle of the timing band for that low.

  373. Aaron

    ECB just announced that they fear deflation in the Euro…meaning bond purchases coming up… I doubt the dollar will be falling like most expect.

  374. coolkevs

    Kevin Depew has returned to Minyanville to update DeMark stuff:
    http://www.minyanville.com/businessmarkets/articles/technical-analysis-stock-market-analysis-tdst/12/1/2011/id/38164
    Here’s a summary:
    SPX
    Daily: We are on bar 12 of a DAILY TD Sequential 13 sell signal that requires a high above 1275.92 to record. TDST Down support is at 1151.81.
    Weekly: We have a qualified TDST Down break at 1219.50, with a target down of 1144.76.
    Monthly: We are on bar 6 down of a potential TD Buy Setup 9, but there is an overlapping TD Sequential 13 sell signal that could potentially record if we get a high above 1327.22 before we reach bar 9 of the Buy Setup. TDST Down support here is 1049.33.

    NDX
    Daily: Similar to SPX, a high above 2355.78 is necessary to complete a TD Sequential 13 sell signal. TDST Down support is at 2169.57.
    Weekly: We are on bar 4 down of a potential TD 9 Buy Setup with TDST Down support at 1854.43.
    Monthly: A TD Sequential 13 sell signal recorded in May. We are now more than halfway through it with TDST Down support at 1767.43. That’s about 22 percent lower.

    RTY:
    Daily: Bar 3 up of a potential TD 9 Sell Setup, TDST Up resistance at 841.82.
    Weekly: Bar 2 down of potential TD 9 Buy Setup. TDST Down support at 628.48.
    Monthly: Bar 5 down of TD ( Buy Setup. TDST Down support at 602.43.

    Of the three indexes, the RTY is most bullish. The SPX and NDX have near-term downside risk, but I expect in the worst case for MONTHLY TDST Down levels to hold. With the NDX TDST Down level 22 percent lower the downside risk is apparent, but I view those longer-term TDST levels as low probability.

  375. Gary

    I’m not sure why one would waste their time trying to pick individual juniors when we have a perfectly good ETF that tracks the sector.

    At least 50% of the time you end up with these underperformers. And then right about the time you get disgusted and sell that’s when they take off.

  376. EricH

    Gary,

    Not sure if this has been discussed and i simply missed it, but currently do you have a stop on Gold?

    If 1667 was the bottom, this would be day 7 of the new cycle?

  377. Danno

    Troll,
    It may be the gap in GLD that is causing traders to pause. The gap may not be filled, but I suspect quite a few traders are waiting for some kind of confirmation. You can almost hear the gears grinding as the entire market tries to shift from reverse into first. The positive market price action was a shock to a lot of latecomers.

  378. Visitor

    I strongly disagree with Gary’s statement about picking winning juniors (see below). In fact, I wonder why so many regular contributors post multiple times a day about unimportant crap when they could do just a little leg work and find some great bargains (at least in the past), both for a long hold and short term trading opportunities. The volatility can be a great friend on some of these names, but I’ll only trade a miner I have researched and believe in. The majority of the sector (juniors) is mispriced to begin with, so when the overall market temporarily dips, I snag them for nice returns.

    I own physical, indexes and individual names. My experience is that my juniors (individual names) have far exceeded my index returns both real and on paper.

    Gary used to preach a strategy of owning individual basket but abandoned this some time ago. We all have individual strategies and you have to figure out what works best for ourselves, but the blanket statement below doesn’t hold water for me.

    Gary said – – I’m not sure why one would waste their time trying to pick individual juniors when we have a perfectly good ETF that tracks the sector.

    At least 50% of the time you end up with these underperformers. And then right about the time you get disgusted and sell that’s when they take off.

  379. Danno

    IMO there is a 60% chance the gap in GLD (and inversely the gap in UUP) will be filled over the next few days. But that still leaves a 40% chance the gap will act as support and we will see an explosive move higher in gold, I’d guess Monday, after people have time to digest what the heck just happened.

  380. Bill

    Danno, which gaps in GLD are you referring to? On the 60 min chart, I see 2 below and 1 above. On the latter we seem to be at gap resistance now, correct? Thanks.

  381. Jarek

    Gary – don’t you think that there is big possiblity that DCL for dollar will came just before or just after BIG NEWS i mean 9th december when EU guys HAVE TO show “solution” for EU crisis ?

    last DCL was made because of same kind of “last hope” EU leaders meeting

    could this cycle be so strechted ?

  382. Danno

    Jarek,
    Actually the opposite could happen. The dollar could drift higher next week to fill the gap on UUP and on the 9th (to the surprise of everyone) the EU may actually come up with some kind of agreement. Because word on the street is that they must this time. If so the 3rd week in December could see the dollar plummet and the market and PMs rally hard… right before Christmas. And there’s your Christmas rally. But, of course, only guessing.

  383. Frank

    Juniors require a combination of skill and luck, but is worth the effort. GDXJ is a horrible under-performer this year.I picked up SBB.TO around the October lows in the CAD 2.60-3.00 range and it’s now at 4. You can’t do that with an index. On the flip side, I did the same with KGN and it’s down a bit but much less than my gains with SBB.

    My experience is that you should avoid “value” miners like JAG, KGN and GSS, although you can make good money short term when they really get hammered. But catching a falling knife is tough and I am going to stay away from these in the future, even though I have not lost money on any of these investments. Worst case are the likes of GSS and JAG who have bad operations.

    The ones to look out for are potential “franchises” like NGD. AUQ might follow the NGD path after the NXG acquisition; I think that’s their template. And of course there is also the carrot of picking a junior that gets acquired.

    Speaking of which, the only significant drop today for me was in AUQ. (2%) Why? Turns out that Jim Cramer issued a SELL. Christ, if that’s the reason then it’s pathetic.

  384. Jayhawk

    I like hand picking my own juniors for a good chunk of my picks, but it can be a pain in the butt and juicing the cycles early on with some options seems to do the trick. I like AG, FSM, PZK, AXU, EXK. There are others, but I was wondering about this stock (Pinetree Capital)…They invest in the true micro caps in PM’s and other commodities, so you get a diversified basket without the hang wringing of trying to pick the perfect winner. I micro-cap GDXJ for junior commodity miners if you will.

    Anyone is this one?

    http://www.pinetreecapital.com/

  385. Jayhawk

    Meant to say just juicing your returns by buying options early in the cycle in GDX, SLW, GLD, SLV etc seems to give you a nice pop vs trying to obsess over the perfect junior portfolio.

    PS…Like AUQ too, but it’s spastic these days.

  386. Danno

    WW,
    Not holding my breath for the dollar to do much more than fill that gap in UUP. But not saying the gap will actually be filled either. It’s a toss up IMO. If that gap in GLD was a gap-and-go then PMs could be off to the races. For example, the gap in GLD between July 7 and July 8… was never filled. And the MACD signal line action looks very similar. The fast MACD is threatening to cross over the slow MACD right around the center line. The MACD Histogram is about to flip into positive territory. The combination can cause an explosive move. The only thing that makes me pause is that the Stochastic is pretty high. Then again, it was sky high on July 7th and it basically just stayed high. This is a tricky one. Good luck.

  387. trond56

    Jay, I bought Pinetree primo October. Since then it’s had a nice gain. Presently trading for a discount to its Nav.
    In April 2007, price was 16$, 10x current.. then at a premium to its Nav.
    I mentioned it a few weeks ago here and at Doc’s blog.
    It leverages the CDNX in an ok way. Trades at Nasdaq. (And Toronto)

    Adam, why beware?

  388. Slumdog

    China’s RMB has started moving quickly back to its recent high. Xinhua news reported 2 days ago that their govt is taking a prudent approach to their currency value.

    The West wants to ream them as they have been mercantilist capitalists.

    I think they are going to get the chops smacked by a fast rising RMB, literally now.

Comments are closed.