HAS GOLD’S D-WAVE BOTTOMED?

It seems like most analysts, and gold bugs are now assuming that the reversal on December 29 marked the bottom of golds D-Wave decline. It’s certainly possible that we saw a bottom two weeks ago but it’s still too early to make that assumption. Gold, and most assets are about to be severely tested. How gold handles that test will be a big clue as to whether or not the correction is over.

What many analysts are overlooking is the impending daily and intermediate cycle correction that is coming due in the stock market. When the stock market moves down into a cycle low, especially an intermediate cycle low, it generates a tremendous amount of selling pressure. Invariably that selling pressure bleeds into virtually every other asset class, even gold, as you can see in the chart below. Over the last two years there were only two daily cycle corrections in the stock market where gold was unaffected (I’ve marked them with green arrows).



The stock market is now in the timing band for a move down into a daily cycle low. As you can see in the chart below those tend to occur almost like clockwork about every 35 to 40 days. As of Friday the stock market was on day 33. On top of that we have a larger intermediate degree cycle that should bottom sometime in March/April. The selling pressure generated at an intermediate bottom is much more intense than a mere daily cycle low. That means sometime around the middle of March or early April things are going to be looking pretty bleak. My best guess is at that time interest rates will be spiking in France and maybe the UK (along with all of the other countries that are already having debt issues).



It’s late enough in the daily cycle that there is a good chance the market began that move down into its daily cycle bottom on Friday, despite recovering most of the sell off before the close. I say that because we have a coil pattern playing out in the stock market. 

Contrary to what most people believe, the initial break out of a volatility coil is usually a false move that is soon followed by a much more powerful and durable move in the opposite direction. In our case the volatility coil broke to the upside and by Friday it was already trying to reverse. Once the stock market moves back through the coil zone it would be very unlikely to recover those levels until after the next intermediate degree bottom, which like I pointed out isn’t due until March/April.

Sometime in the next 4-8 days we should see the stock market break its cycle trend line. It’s very rare for a move down into a daily cycle low not to break the cycle trend line. So for our purposes I think we can probably assume that it will.

If the stock market just retraces 50% of the daily cycle advance (assuming 1297 is the top) then we should see a pretty hefty sell off in the next week or two. 

That kind of selling pressure will almost certainly have some affect on gold. If the D-Wave is still in progress it’s going to have a sharp affect on gold, probably forcing gold back below the $1523 December bottom. How gold handles the stock market moving down into its daily cycle low will give us a big clue as to whether the D-Wave has bottomed or not.

And even stiffer test is going to occur as the stock market moves down into its intermediate bottom in March/April. If gold can’t hold above $1523 as stocks move into a daily cycle low then it is going to get driven much lower during the intense selling pressure that will be generated when stocks move down into a larger degree intermediate bottom.

A couple of things to keep in mind.

The last C-wave was the greatest in both magnitude and duration of the entire secular bull market. Is it possible that a 2 1/2 year, 100%+ rally can be corrected with only a 38% retracement in four short months?

There is also the problem with the last intermediate cycle in gold running very short at only 13 weeks (normal duration is about 20-25 weeks). More often than not a short cycle is followed by a long cycle that evens out the next larger cycle. In this case the next larger cycle would be the yearly cycle. 

If December 29th did mark an intermediate bottom then we would’ve had two intermediate cycles of only 13 weeks each. A short cycle followed by another short cycle is a pretty rare occurrence. In this case exceptionally so because the yearly cycle low isn’t do until February/March. If I take into account nothing else I would have to assume that gold still has about 5 to 6 more weeks before the final D-Wave and yearly cycle low are formed.

That doesn’t mean that gold has to drop a considerable distance below $1523. If it does turn out that gold continues lower into a more normal intermediate timing band I doubt that gold would move below the 50% Fibonacci retracement level, which is at about $1400. That also corresponds with the extensive consolidation zone in the summer of 2010.


One other thing to consider is the powerful correlation of a stronger dollar whenever the stock market moves down into a cycle low. We should continue to see the dollar spike higher over the next couple of weeks as the stock market drops down into its daily cycle trough, followed by a much more powerful rise during the intermediate degree decline due later in the spring. As you can see in the chart below gold has had little ability to resist a rising dollar.



So unless you think that the stock market will never drop down into a cycle low again, or that the market and the dollar will drop simultaneously (very unlikely), then gold is going to be severely tested as the dollar spikes sharply higher during the next few weeks and months as the stock market works its way down into first, a daily cycle low, and then a much more serious intermediate degree correction.


Right now investors need to be on the sidelines while we wait to see how gold handles the stock market’s move down into its daily cycle low. If gold can hold above $1523 while the stock market suffers what is likely to be a rather sharp correction then the odds will improve dramatically that the D-Wave did in fact bottom in December.

If however gold follows the stock market down and breaches that $1523 pivot then the odds are very high that the D-Wave is still in progress and will not bottom until late February/mid-March.

I am currently still running the one week, $10 introductory offer for the SMT premium newsletter. Since we should see the stock market form its daily cycle low sometime in the next 1-2 weeks now would be a perfect time to sample the newsletter.

584 thoughts on “HAS GOLD’S D-WAVE BOTTOMED?”

  2. MrMiyagi

    Jeez Gary, all this for free… you must’ve had a good weekend.

    Futures are green, +62 for the DOW. I have seen this happen many times; up overnight and red when the market opens. This past week it was red overnight on 4 occasions and opened green on 3.

  6. William Wallace

    Miyagi,

    I have seen this happen many times also. If the market reverses tonight it will be when the European markets opens, if opening lower. Asian markets are up pretty decent right now, US futures popped when asian markets opened higher, as they usually do. I have seen US futures pop when asian markets open high, and then drop if european markets open low. I often trade gold futures on these swings, its almost always a given. Right now im long gold off the 200dma, if european markets trade lower and I see gold reverse I will most likely be short tomorrow.

  7. William Wallace

    Elaine,

    I know how you feel, but be at ease, I assure you gold will pull back and present another great buying opportunity. Try not to focus on the price, it’s the trade that is most important.

  12. riley

    WW if you flip short tonight, would appreciate post. I’ll watch euro open. Thinking about buying the Dx dip. Thanks, if not able to post will wait.

  13. Rod (RJ)

    How ironic would it be (after 1 1/2 years of D wave discussion) if the D wave bottom occurred on the day that it was confirmed?

    1524 does seem like a long way off but as we have seen it can happen in the blink of an eye.

  16. Unknown

    Gary:

    Great post but I have a question. From gold’s high of about $1,925 to the low of $1,523 is $400. That is a decline of just under 21%. How do get to 38% as stated in your article?

  18. sophia

    This week is Opex week…will wait for overbought indicators to sell before Friday…usually it turns like a dime and retrace from the following monday… Will the market be at 1310 by then? I have to say that Copper is cruising!

  22. William Wallace

    Gold has broken above the IC trendline on the True Strength Index but still has not moved into positive territory, and Stochastics on a weekly have crossed over and turned up, on a daily starting to become imbedded at the top, first daily cycle of an A-wave behavior.

  27. Arun

    Run of stops over 1300 and we can notice a top either Tues or Wed. Likewise in GC too before 150MA rejects it. Looks like a great risk/reward setup for shorts given we are so close to the timing bands.

  29. Danno

    “…gold is going to be severely tested as the dollar spikes sharply higher during the next few weeks and months..”

    Yeah. Too many people think everything with be wrapped up in a tidy little bow within a few weeks. It’s good that you included the word MONTHS because this could take some time.

  35. William Wallace

    Arun,

    Actually im not trading against my own rules, look what I said earlier…

    “it needs to hit hard resistance to reverse (MA), OR stock futures need to roll over.”

  40. RJM

    Mikezza:
    Something is showing up on the Fed’s balance sheet since it has risen from about 800 billion in 2008 to around 2.6 trillion now, as officially reported.
    A good example of the Fed’s idea of transparency is it’s accounting change of Jan. 6, 2011 whereby future losses in asset values will not reduce capital. This is perhaps intended to reduce the recognition of potential insolvency while it continues to emit currency. I believe Bernanke has expicitly resisted efforts at disclosure on the basis that it would harm market confidence.
    See “Pimco stirs up debate over U.S. Treasury bonds” (ft.com > markets, March 10, 2011) wherein Bill Gross “estimates the Fed has been buying 70% of annualised issuance of Treasuries since QE 2 began in November.” Current rates show that Gross was wrong about QE 2 ending, not the stated estimate. Who knows how it is divied up between the Fed and its bailed out subsidiaries on Wall Street and around the world? He even has absurd quantities of(subprime) mortgage backed “securities” on the balance sheet, valued at exactly what?
    Whatever it takes from day to day, the only way he can keep to his interest rate target is substantial inflation of demand for treasury debt. Our recent history shows a tendency to asset class inflation, dot.com, real estate, treasuries. The magnitude of the inflation is exteme,notwithstanding restaint to the CPI from a weak economy. Liquidity is a euphemism for inflation.

  41. Danno

    Here is an example of a successful Rounding Bottom pattern in $USD. Note the year.

    http://stockcharts.com/h-sc/ui?s=$USD&p=D&st=2007-07-14&en=2008-12-14&id=p45024599112&a=246383195

    And here is the current Rounding Bottom in $USD. I can’t guarantee that price will continue higher, but statistics suggest the odds are good.

    http://stockcharts.com/h-sc/ui?s=$USD&p=D&yr=1&mn=10&dy=0&id=p25565408520&a=243271916

    I may make some small edits to the charts later, but essentially they are complete.

  42. mikezza

    rjm
    that increase of 1.9 trillion since sept 08 was due to qe1 and qe2 and was advertised and completely obvious to the market. their balance sheet has stabilized around 2.8 trillion since the end of qe2 in june, with only a modest uptick to about 2.9 trillion in december associated with some of their self liquidating liquidity programs.
    i’m not arguing that the fed is overly transparent on all their dealings, but they do a good job in disclosing their treasury transactions for in their own accounts. i agree that a lot of their operations are intentionally opaque and in fact, that was at the crux of my question. how are they keeping treasuries well bid without further monetization or expansion of their balance sheet?
    btw, i’m not going to get caught up in another back and forth because i wasted enough time doing this on friday, so no offense if i don’t respond to other posts

  52. Gary

    John,
    No we didn’t. We caught a piece of the move. As I said we have to wait and see how gold handles the impending cycle correction before we can be sure the D-wave has bottomed. If it holds above $1523 then we will enter at the next cycle low which will probably be somewhere around $1600 or maybe a little lower.

    If however the stock market drags gold back down to new lows then we will avoid it and be ready to buy lower in the normal timing band for an intermediate bottom.

    Missing an opportunity, especially one as risky as trying to catch the bottom of a D-wave, isn’t the end of the world. There will always be more opportunities.

  53. mikezza

    rjm
    last post. to clarify, how is the fed adding liquidity and keeping asset prices inflated in the absence of continuing qe and balance sheet expansion which clearly ended in june. are we to believe that this is organic investment demand for treasuries when many of the largest central banks are reducing their holdings. do investors believe that risk assets are benefiting from a true economic recovery or is this all about liquidity. might i suggest that you consider that there could be more going on here than just a flight to safety trade for treasuries or the belief in an economic turnaround for risk assets. since the financial crisis, the fed has turned us all into speculators and investing in this market is all about front-running the money flows induced by the fed. if we are unable to figure out what the fed is doing, then it makes it much more difficult to be anything other than a short-term trader.

  54. Harry

    I am really pushing my shorts here. Absolutely perfect setup as far as cycle analysis goes: well into the timing band for a low and still setting new highs.

  65. Gary

    For the dollar to be topping here one would have to assume that the stock market and dollar will drop together…or that there will never be another profit taking correction (daily or intermediate cycle decline).

    Both of those seem so unlikely that it’s not even worth considering.

  76. conspiracyt(previously known as john)

    t&j
    i understand … but they need to save the market in these situations and no let the price collapse … you may argue it’s a free market … but no … market intervention is part of making a market, that’s why we have market makers trading every stock and buy when there is no bid

  77. RJM

    Gary,

    Last summer I read some commentary about a “crisis of complacency”. A crash of unusual proportions was posited as a possibility, albeit an event of low probability. Thereafter it was observed that the July-August decline failed to reach a true panic-selling level. Do you regard developments along these lines as a possibility during the period covered in your latest post?

  78. Gary

    RJM,
    I’m not sure what you are talking about. During the August semi crash the intermediate score moved down to levels only seen a couple of times in the last ten years. If that’s not an indication of panic selling I don’t know what is.

  79. Gary

    Actually I would count today as 11. Yesterday the US markets weren’t open. If the largest market in the world isn’t trading I don’t count the day.

    All of this is still irrelevant We have to see what happens to gold when the stock market starts to fall.

    It’s not surprising that gold is up as long as extreme buying pressure is coming off the stock market. We need to see what happens when that turns to selling pressure.

    The roof never leaks when the sun is shining.

  80. Veronica

    OK Gary, day 11, TY for clarifying.It seems like gold has a date with the 150 day MA as that was support for a few years and should now be at least some resistance.

  81. RJM

    Gary,

    I was talking about a crash that surpasses the level of a “semi crash” and perhaps the action of October, 2008. I apologize for soliciting an opinion on a “low probability event”, but I was interested in your opinion as to the chances now compared to last summer. Greater?, lesser?, not worth considering?

  82. Gary

    Well we aren’t seeing a runaway move so it’s unlikely we will see another crash. Probably just a very deceptive grind lower over the next two months. Something that kills both bulls and bears alike.

  83. RJM

    It might be noted that Jim Rogers’ recent media comments posit that Merkle-Sarkozy-Obama-Bernanke can cobble something together by way spending-money pumping to boost re-election prospects. Thus big problems can be put off until rather late in the year.
    The EU is now attempting difficult and utterly toxic structural-constitutional changes in order to wind up with an ECB more like the Fed. I doubt that the market will give the EU time to accomplish anything this “clean”.
    So while the crisis rests, I’ve been wondering if it plans to return with a cameo appearance or a one-person show. That could be a “million dollar qestion”.

  95. thedocument

    The next couple of months should be quite interesting because it is rare that Gary and I differ so much in our interpretations. For starters, I strongly believe the December low marked an intermediate low for gold… so much so that I bought that low. I’ve scaled back the last couple of days in deference to the need for an equity correction and intend to get aggressive once gold’s daily cycle bottoms as RT.

    I also thought the 13-week cycle that ended in Sep would be followed by a longer cycle. However, the fact that we got a LT daily cycle into the Dec low that was also met by such dismal sentiment… and occurred exactly when I’ve been, for months, anticipating a major commodity low… has me convinced that the two, 13-week cycles balance each other out. In other words, they emulate a single 26-week cycle.

    For reasons I won’t get into here, I expect an intermediate cycle low for stocks in late April or early May. Being roughly 15 weeks away would also allow for a simultaneous ICL in gold.

    So, I see the dollar topping as stocks find a DCL. The dollar will then plunge into an intermediate decline bring a huge surge in commodity prices… the intermediate DX cycle is on Week 12 and is getting ripe for a decline. Sentiment is also sky high. Once the dollar bounces out of its ICL, stocks will then plunge into their April/May low.

    So a burrito and a tall beer says gold saw an ICL in Dec and the DX will set an intermediate peak with the coming DCL in stocks.

  96. Gary

    Doc,
    I don’t know about gold, I’ll just play it in real time instead of forming expectations.

    But you are looking at the wrong sentiment levels. You are focusing on the dollar when you should be focusing on stock market sentiment.

    The dollar and stocks are tethered to each other. If stocks go down it’s going to force the dollar higher no matter what the sentiment levels are. Stock market sentiment has now reached intermediate topping levels not to mention we are now 15 weeks into the intermediate cycle.

  97. ver

    Doc:

    Are you tracking a different timing band for the coming daily cycle low in stocks? Last you posted it sounded like you were expecting another 2-3+ weeks before a low.

    Thanks for sharing.

  98. thedocument

    ver,

    The daily timing band I follow for stocks has always been 30-45 days. Most cycles complete within the 35-40 day range Gary mentions, but I prefer the broader band as it includes far more cycles. So, yes, I am expecting a DCL for stocks within a couple of weeks, and that low should coincide… within a day or two… with a DCL for gold.

  99. SF Giants Fan

    SB

    Two miners released earnings today (KGC and NEM) and both cited higher future operating costs.  My question is do you feel this is a company specific problem or is this something that might trickle down to other miners thus affecting possible future trades in GDX.  Thx

  100. William Wallace

    Covered $1665 gold futures short at $1652. I will be looking to possibly short the 150dma if gold tests it tonight. If gold continues lower I will most likely wait for a DCL to go long again.

  101. gideon

    Gary,

    I love it when our different methods agree, and articles like this are the reason I visit your site! We now have both the same price AND approximate time targets, and I fell confident in them.

  105. William Wallace

    As I mentioned a couple days ago gold would be supported by the 10dma into a right translated cycle, it has, a break below the 10dma now will almost certainly indicate the beginning of a move into a DCL.

  108. Tiho

    Personally, I would not make decisions in the currency markets based on the US Dollar Index, like so many others investors. This is suicide, as the Euro and the Pound hold majority of the weighting and the index is definitely not a good broad measure of Dollar’s strength.

    Last week was interesting. While the US Dollar made a new weekly gain against the Euro, Pound and few other European currencies, it struggled against a lot of other important currencies, including New Zealand Dollar, Australian, Brazilian Real, Indian Rupee, Singapore Dollar, Mexican Peso, South African Rand, Polish Zloty etc etc (list goes on forever).

    In other words, the Dollar strength is NOT broad, but quite narrow. That is where the DXY is letting you down and that is why it will not rally for months like you have said it will.

    On top of that every man and his dog is recommending Euro shorts with COT at extremely negative record levels. Sentiment on the Dollar is also very very high too. The call will prove to be wrong.

  109. Gary

    Then one would have to assume that the stock market and the dollar are going to fall simultaneously since the stock market is now in the timing band for a move down into a daily cycle low, and will soon be in the timing band for a much greater degree intermediate cycle low.

    Since March of 2009 every move by the stock market down into a cycle low has been accompanied by a rally in the dollar. There is no evidence yet that that correlation has been broken.

    You’re making the same mistake as Doc, and focusing on dollar sentiment instead of in the stock market where you should be concentrating. Sentiment in the stock market, especially tech stocks, has now reached levels that typically generate intermediate degree tops.

  110. Gary

    By the way the currency contracts in the COT report have never shown any predictive value. You are wasting your time monitoring the Euro contracts.

  111. Tiho

    I disagree. By the way I do not know who Doc is. Nor do I follow cycles and technicals. Nor do I follow correlations too much either. None of that stuff works all the time. The only thing that does work in the markets is buying panic sell offs and selling climaxes when everyone is super negative on some asset.

    That is why I follow every asset class on its own and it has been working for me for years now without problems or mistakes. I’m still “paying my bills”! Here are some examples:

    I shorted the Euro in November 2009 as sentiment on the USD got extremely bearish, but the stock market did not correct until middle January 2010. And than it still kept going higher into April 2010 with the Dollar moving higher and commodities going lower too.

    So much for correlations. They work until they don’t! So why would I bother following stocks if I am investing in currencies? That is non sense. Smart investors should be waiting for a final drop in the Euro and especially the Swiss Franc.

    They should buy those currencies regardless of what the S&P 500 does or doesn’t do. They will show you huge profits in months to come. The important thing is to wait for a final collapse here, which should do a false break down and trap the last of the bears. Usually that type of a move is accompanied by some type of a catalyst or announcement for the policy makers. That will reverse the trend!

  112. Gary

    Tiho,
    The only problem with your story is that sentiment on the dollar got extremely bearish by May of 2009. If you were really trading off of sentiment like you claim you would have shorted the Euro 6 months too early and suffered a massive drawdown.

    I’m pretty good at spotting BS and you my friend are full of it.

  113. Jayhawk

    William Wallace said…
    Anyone hear from Alex, is he doing ok?

    JANUARY 17, 2012 6:45 PM

    Yea, he’s doing just fine. I think he’s already up well over 25% for his accounts already this year. Maybe he should take the rest of the year off since he’s beat most hedge funds for the year. LOL 🙂

    Seriously…the guy is a master at catching stocks just before they are about to rocket up. (AUMN & he was in many other energy plays–solars, etc.)

    He’s holding a core and waiting with cash to buy the next dip. PS…He has done some extensive back testing of other bottoms in mining shares and thinks that was indeed to bottom back in Dec.

    I’m bragging on him because he’s given me some excellent picks over the years and many I regret not taking. (I missed AUMN like an idiot because it gapped up 4%…and then proceeded to rally like 30% from there. He also pointed out ENER which has gone up like 600% since he told me to buy it. He was in the solars before they moved, etc etc.)

    Cheers all!

  114. Sandy

    Just a word of caution for guys who try trading on Doc’s calls on this blog. I have been a subscriber for last 1 year and had a disastrous time following Doc. His calls for last 3-4 months have been very off. I have suffered substantial losses emulating his portfolio. He has admitted his frustration on his trading record on his blog. He also admitted that his subscriber base is shrinking due to recent track record.

    I would recommend caution at the very least.

  115. Tiho

    I would appreciate you stick to the market discussed and not lower yourself to personal attacks and calling other traders bullish. The funny thing is when others give it back to you, you just remove their post like a little wimp who can’t take it!

    There was no extreme sentiment in May 2009. COT Euro speculator positions were only slightly net long. On top of that 10 day Daily Sentiment Index was not extreme and above 90 to 95% bulls. On top of that Public Opinion was not extreme on absolute level in May 2009. I actually have no idea why you picked May 2009… besides, you shouldn’t get too angry that other traders use your blog as a contrarian indicator. I’ll give you another example, even though you will call this one bullish too:

    Gold sentiment was super bullish in late November according to Bloomberg survey as well as ETP holdings, which just hit a new record high. There was a triangle on Gold, which you dismissed as unimportant and concluded that Gold will not have a D wave or whatever you call it.

    Boy were you wrong, because when I did the opposite I got paid as the triangle broke to the downside and Gold lost $200! I guess it all must be bull shit when others get it right and when you get it wrong, isn’t it? Only you know what you are doing.

    But to be honest reading all of your last posts since August 2011, where you predicted stocks to re test March 2009s, where you predicted no major sell off for Gold and where you are now predicting a spike in USD have all proved wrong or will in due time.

    Come to think of it, what have you actually called right? You know we can spout bullish when we see it, but I rather call it a contrary indicator!

  117. Jayhawk

    Sandy-

    I’m sorry for your recent experience with Doc. I know his recent record has been a bit shaky.

    However, I’ve been a sub to both Gary and Doc (was one of his very first) for quite a while. I think both are excellent and seem to have hot and cold streaks. (We are ALL human).

    I recall Gary getting the subs into what he thought was the start of a C wave blow off top in early 2010 and it turned out to be a pretty hefty sell off that dragged us down into the depths. My account (very conservative, no leverage) was down -25% at the time. I seem to recall we also sold pretty near the bottom for some reason. (Not ripping on Gary. This is VERY tricky stuff and sometimes traders have to make a call that in hindsight looks bad. PS…I think I held onto my shares knowing that “the bull will correct all timing mistakes” Boy oh boy was I relieved to get back to break even and dump my 4000 shares of SLW at 14, EXK at 3, etc etc. LOL!) Both guys nailed the intermediate lows in the summer of 2010 and DOC nailed the to. That was a huge run. Doc nailed the bottom in the start of 2011, was heavy into silver, exited slightly early but we all know that was better than getting caught in the bloodbath.

    Gary has had some rough spells, Doc has had some rough spells, they both have had some home runs and both have WAY outperformed the underlying assets we know and love to trade. (Silver down -9% for 2011 for crying out loud, but we all pretty much killed it last year.)

    Anyway, both are class acts and I’ve learned a ton from these guys. Just wanted to put my 2 cents in.

  118. Gary

    Okay let me be specific end of May beginning of June 2009 sentiment on the dollar index reached a bearish extreme of roughly 25% bulls. In November sentiment was less extreme with about 27% bulls.

    I have never said that gold would not suffer a D-wave decline. That was Doc. We were already in cash by November and waiting for the inevitable correction.

    I also warned that the dollar would put in a major three year cycle low probably sometime in the spring of 2011. That major cycle low occurred in May. Generally speaking the rally out of a three year cycle low tends to last about nine months to a year.

    I have no idea who you are talking about but it certainly wasn’t me.

    Do you just make this stuff up as you go along just to be irritating?

  120. William Wallace

    My wife just reminded me that my Birthday is tomorrow, Jan. 18th. I completely would have forgotten until my kids would have come in singing and jumping on my head in bed.

  121. riley

    James are you for real. At times funny but whatever, you aren’t going to change, Hell neither am I so try your best to keep it funny and not sophomoric.

  123. riley

    Son of a gun, Happy bday. Family makes this stuff real. My daughter blew out my candles a week ago. Many more to you. Out gold, made a few swings for essentially zero, now watching. You a goodun as we say down here in the south. Riley

  124. Rob L

    William Wallace,

    Happy birthday, WW.

    Just make sure that you see a few more than just this one. Your heart trouble troubles many of us.

    Oh, if you want me to come over and jump on your head tomorrow just say the word. 😉

  126. Arive

    Sandy,

    Regarding your feedback about DOC, I have been a subscriber of his for about 11 months.

    It’s fair to highlight that, as he admits, he has been “off form” in last few specific months, but it neglects the all important context of playing in the trading/investment space.

    For example, those that followed DOC into gold after 12/29/11 are absolutely delighted I am sure (I did not enter).

    I also believe DOC’s portfolio went relatively unscathed in the Silver crash of April/May 2011 (I did not exit in time)

    My point is that, I believe Richard Russell once said: “Watch the guy who has made a series of right calls because the very next one will be wrong”.

    NOBODY and I mean NOBODY has (as Gary alludes) a 100% working crystal ball.

    What Gary, DOC and now Poly offer are valuable interpretations using cycles and other tools biased with their personal experiences and analytical insights.

    Deciding which interpretation (if they differ)to act on becomes the individual’s call.

  127. TZ(8155)

    A good site I have read over the years. I was reading an article from back in 2007:

    http://www.generationaldynamics[PUT.DOT.HERE.TO.FIX]com/cgi-bin/D.PL?s=Eb35FS&d=ww2010.i.panic070820

    Overall the article is great at predicting the upcoming 2008 crisis and showing ways the market was overvalued.

    I draw your attention to the bottom where he reviews an earlier discussion (higher up on the page; the whole page is good reading) of P/E ratios over the last 100+years.

    He makes a very interesting observation (back in 2007) that the P/E lows (after bubbles and financial manias) are occurring approx 31yrs apart and that the next one is due approx 2011.

    If you give leeway of a few months or even a year (surely things can’t be *THAT* exact and the fed is REALLY trying to stop things) then he has an interesting conjecture that might argue for a catastrophic decline and valuation reversion in the near future of this year.

    What makes that interesting is:

    1) this is a cycle type argument (which I happen to believe in since new people who never experienced the mistakes of those older tend to repeat them)

    2) it coincides with gary’s expectation of 2012 being a *very* bad year coming up.

    So we have an interesting cycle reversion argument here on this chart with three data points.

    Thoughts anyone?

  128. TZ(8155)

    PS: one of the arguments for no P/E crash low earlier than the first one of approx 1918 on that chart is that there was no FED before 1913. It is possible the FED and national fiat is necessary to create those lows.

    You could also argue a slow increase in the 31yr duration of those cycle lows by simply incorporating a longer lifespan/workspan of people

  129. Beksachi

    TZ,

    I met the guy for lunch because I was fascinated by his site. A big fan of 4 turning book as well.

    But I doubt we will see a depression….war however very likely

  130. TZ(8155)

    I neither mentioned war nor depression (although I think we are already in a depression by many measures and that war soon is likely-distract the masses and allow printing and profits of elite.).

    My comment on his chart and lower part of that article is in how stock P/E’s seem to bottom every 31yrs approx. Interesting and wanted to point it out since many here are cyclical and also cause gary is already on record calling 2012 likely to be a VERY bad year.

  133. sophia

    I think that it is playing exactly as SMT is playing it… Last retail guys getting nailed by buying at 1300.
    It is Opex week, so we could rally until Friday and then….woosh..

  136. ckpc

    WW,
    Happy Birthday from Paris! So, as they say here, “Bon Anniversaire!”

    I’m wishing you lots of joy with your family today, and many, many happy, healthy years to come.

    You are a class act, WW. It’s worth digging through all the “noise” on this blog to find your pearls of insight. Many thanks, and best wishes to you.

  141. ...at ease

    Trade Station has had problems over the weekend and still having problems with mini futures contracts. I thought I was going crazy thinking I was in a trade and in a totally different one when I woke up the next day. Happened again over night. I thought I was flat and found myself in two contracts long. I called and they said they had problems over the weekend. I told them they are still having problems. At one time it had me in four positions and I never trade four positions at a time. Just to let anyone else know if they trade using Trade station futures.

  147. thedocument

    Jayhawk & Arive,

    Thanks for the good words. I appreciate that. Yes, every trader goes through rough spells. It’s part of the learning process, and anyone that expects me, Gary, or anyone else to be right all the time will be disappointed. The key is money management so one never gets blown out. I think I have done that part quite well, as all four of my years of independent trading (since I left Citi) have produced positive results, the last two… once I adopted cycles as my primary methodology… spectacularly so.

    Gary: just to clarify again, I never said gold would not suffer serious declines, only that I did not see value in labeling ABCD movements. I recognized those waves during the first 8 years of the bull, but they have become less structured since 2008, and I simply don’t see the value added beyond what one can get from cycles. Gold and silver will always suffer severe pull-backs after parabolic phases. Whether you label it a D-wave, post-parabolic hangover, or whatever, it is still just an intermediate cycle decline.

    I also think we are both in agreement that if gold’s current daily cycle forms as RT, the DCL will constitute a huge buying opportunity, regardless of wave labeling.

    Everyone is going to have different ways of looking at the market and should never just blindly rely on another’s interpretation. When Gary turned me onto cycle analysis, I studied the methodology from the ground up, counting cycles and labeling years worth of charts from scratch. The process gave me an in-depth understanding and also helped me introduce several new techniques of my own. That’s why I started my own subscription newsletter.

    I recommend that everyone serious about trading take the time to perform the exercise of chart labeling because then you can read SMT or The DOCument with a fuller understanding and obtain a higher level of confidence through that understanding. Without confidence, one’s emotions will get the best of them as soon as the market ticks against you.

  148. Shalom Bernanke

    If the HUI can get down to around 505 and stay there into tomorrow morning, I’ll begin adding again to my miners.

    For today though, nothing that requires action on my part. Good luck out there. 🙂

  149. ...at ease

    Well Said Doc,
    Every trade must entered must be taken with a personally known exit strategy if turns against you. Capital Preservation should be foremost ahead of profits. If you can anticipate the worse and be prepared for it, you will be much more confident on when it’s safe to enter back into the water. You win some, you lose some, all part of the game here.

  150. sophia

    Doc,

    I am a suscriber as well and I am appalled by the judgement made earlier on! I made very nice money on your call last July Long Gold, Short S&P and made money this month as well, in and out of Silver.
    Thanks to Gary also to let people discuss views and exchange ideas on this blog, it is what makes it interesting!!

  152. Haggerty

    No problem with either Doc or Gary, BTW if it wasn’t for Gary I would have rode mining stocks all the way down which is more valuable than the basehits we’ve been hitting.

  158. Danno

    The market is far too difficult for even most experienced traders to navigate alone. Our odds are much better if we are a part of a group of minds working together to solve the problem. The group needs leadership, but even leaders can benefit from the added hours of labor the group provides. So long as people are actually working (e.g reading books, marking charts) and not just looking over each others’ shoulders.

  159. Shalom Bernanke

    Haggerty,

    PSLV had an additional offering, thus the decline today. I wouldn’t touch it for awhile until the dust settles. The premium was up near 20% yesterday before the announcement, so who knows where it should trade in the short run?

  162. SF Giants Fan

    SB or anyone

    Two miners released earnings Yesterday (KGC and NEM) and both cited higher future operating costs.  My question is do you feel this is a company specific problem or is this something that might trickle down to other miners thus affecting possible future trades in GDX and GDXJ.  Thx

  163. Shalom Bernanke

    SFGiantsfan,

    I would think this will affect all miners to some degree, sooner or later.

    However that doesn’t shake my belief that miners must be owned. The more expensive it is to mine gold, the higher the price b/c of perceived supply shortages. It might affect a miner in the short run (any one quarter), but the bigger picture is quite rosy and possibly the best place to be.

    I’m also looking to a few other commodity stocks like agriculture and even energy the last few days, but my focus will remain on the miners for the next couple years. I also missed the purchase areas on the fertilizer names already, but they look attractive into pullbacks, IMO.

  164. Shalom Bernanke

    Yes, GDX and GDXJ will be affected like the components, but to a lesser degree. This is always the case, including the upside when good news comes out on just one or two names in the etfs.

  165. Farm Girl

    I really think the LTRO – which will be larger than QE1 and QE2 combined – is stretching cycles just as the QEs did. If we are on Day 35 of a 55 day cycle, we should be within 5 to 7 days of the top.

    For those who think the news from Europe is bad – it’s not. There are from last night:

    “Price action can sometimes be very revealing. On three occasions since the start of last week there have been powerful short-covering rallies in the single currency which have imposed pain and suffering on all of those record short positions amongst the trading community. This morning’s jump from a low of 1.2650 to a high of 1.28 is the latest episode, and once again it is difficult to pinpoint any real trigger for the move. Indeed, the euro is now not that far from where it was trading prior to the commencement of Friday’s S&P credit rating-downgrade rumours. The single currency has managed to recover despite the now distinct likelihood that Greece will default before too long as well as the scathing criticism of a draft of the fiscal compact from an ECB board member. Euro shorts will be taking note of the inability of the single currency to sustain sell-offs on bad news.”
    http://www.fxpro.com/yahoo/news/forex-news/20120117/another-powerful-euro-short-covering-episode

    French borrowing costs fell at the country’s first debt auction since Standard Poor’s cut its credit rating last week.

    Spain Monday auctioned 12-month debt at an average yield of 2.049 percent, compared with 4.05 percent at a sale on Dec. 13. Greece sold 1.625 billion euros ($2.1 billion) of 13-week bills Monday with a yield of 4.64 percent, down from 4.68 percent on Dec. 20.

    Investor risk appetite will be tested later on Wednesday when Portugal sells treasury bills in its biggest debt auction since last year’s bailout. Germany also holds a debt auction on Wednesday.

    Spain and France, both of which saw solid demand for their bill auctions early this week, will face a tougher challenge when they tap the market with longer-dated debts by Friday.
    ——————–
    Also, the Portugal debt auction went very well:
    http://www.bloomberg.com/news/2012-01-18/portugal-issues-maximum-amount-of-3-6-11-month-treasury-bills-at-sale.html
    ————————

    I am not “hoping” or “expecting” anything. Ned Davis wrote a great book, Being Right or Making Money. I no longer have an ego involvement in being right. I just want to identify the trend early enough to ride it, and then get off right after it changes. Gary is great at catching bottom trend changes.

    Still long NUGT.

  166. Gary

    Farm girl,
    Actually a normal duration is 35-45 days. I suspect this will continue at least until it breaks the down trend line at 1315-14 forcing all the technical traders to cover their shorts.

  175. EricH

    USD index still above 80 as this market continues to head higher.

    I see strength across the board with the ‘RETAIL’ sector hitting new all time highs. We got a runaway move on the weekly chart for RTH. A massive multi-year breakout assuming this move sticks.

    Anyone following the European markets (DAX & FTSE)? The charts look mightily bullish.

    I think this could be one of the WORST years in human history might have been aborted, but not by the action of our Federal Reserve led by Ben Benanke. Instead it might have been the action of our cross Atlantic partners in crime (Euro Nations).

  176. Gary

    Eric,
    This is why I don’t waste time with charts. At tops it always looks bullish, and at bottoms it looks like the end of the world is coming.

    Cycles and sentiment both are saying we are very close to an intermediate top and by March we are going to have serious problems in the European debt markets.

  178. asm

    “and by March we are going to have serious problems in the European debt markets.”

    Remember, at 29 February ECB will have another LTRO where they might print another $1 trillion. I really don’t know but cycles might get stretched.

  180. Tim and Jeanene

    2nd Trade call….

    This is the year the Sell in May and go away pattern works well.

    Look to rebuy stocks in August/September for a decent rally.

    Careful in November.

    Again, results in a year….

  187. Liquid Motion

    Hmmmmm!!!
    ST noise in a long term bull market for GOLD.
    We all know ( or at least should know) that the name of the “game” is currency debasement. This has been true more importantly for the better part of a decade.
    The players…the usual suspects…USD, EURO and RMB.
    While China exports deflation to the world, the Euro battles the US and the RMB, whilst concurrently the US battles China to ensure it does not suffer deflationary effects.
    The winner of course in this currency war will be the CB’s and anyone shrewd enough to buy and store physical GOLD. Although Gold is not part of the monetary system like it has been in history when countries go to extremes in a fight for survival / growth, it is and always has been considered the only true money.
    Whilst the governments and cb’s continue to print money, be it an overt or covert fashion, currencies will continue the stampede to the bottom. This is inevitable.
    I’ve said it before…”stay the course of this bull for its entirety”. Forget about the ST noise and market gyrations, they will do their best to knock you off so that you never come back. Strong hands during this period will become stronger in the years ahead.

  189. James

    Let’s face it. The bears have lost this fight. This is most probably the start of a new bull market.

    The Fed has lost control of money velocity.

  190. Unknown

    James:

    Pardon my French but I don’t know how else to put it….. you are full of sh*t.

    Good God, what are your looking at?

    Money velocity is at historical lows. Benny would trade his left nut for raging money velocity. Where in hell have you been?

  191. Gary

    James,
    I don’t know if the bull market is over or not. But this is a classic example of why I don’t put much stock in charts.

    If all you do is look at charts a top will never look like a top and a bottom will look like it’s continuing down forever. You need different tools to spot turning points. This is why I use cycles and sentiment.

    I think there is a pretty good chance that the market is going to break the down trend line causing shorts to cover and emotional retail traders to buy into the move. We will almost certainly see an intermediate top at that point.

    Then we will start moving back in the other direction until we get to a point where everyone is sure that all European debt markets are on the verge of imploding. Then right about the time you are convinced that the market is ready to crash we’ll put in a bottom.

  192. Frank

    This disagreement between Doc and Gary highlights a fundamental flaw in this cycle analysis. Importantly, it shows the significance of interpretative bias. Back around the June bottom when Gary also was predicting imminent D-wave lows, the reasoning was again cycle duration and intermediate cycle lows.

    A first step toward an improved methodology that is free from bias is to introduce statistical analysis rather than saying the duration is “usually” X days. You need to say that the median during is X with a 95% confidence level of plus/minus Y and a standard deviation of Z. This will at least put some rigor into the methodology.

    The statistical analysis can in turn introduce a core holding of X% into the system, which is based on the level of uncertainty of the situation coupled with partial selling near peaks and partial accumulation near bottoms. The all-in vs. all-out approach is based on exuberance about the system, which is not justified by the track record. I have been following this since late summer 2009.

  193. bamster

    Gary,

    Why aren’t we trading this? We are trying to catch one side of the trade, on the long side. But we’ve missed a few trades on the long side lately. I know what you say about going short but there are ways to hedge and make money both ways. The rope is skipping but nobody is jumping in because we’re to afraid to get tripped up. I have confidence in you that most of the time you will get us in and out without that happening, and of course we have to accept the odd time we do step on the rope. C’mon Gary, lets get back in the saddle.

  194. Gary

    bamster,
    I don’t know how many times you have to lose money trying to sell short before you finally learn your lesson, but I have, so I don’t do it anymore.

    By the way we are in the saddle, we have a position in the dollar index which is based on the market moving down into its cycle low. The positive is that the dollar is much less volatile and the long side is much easier to trade than the short side.

    For the vast majority of traders the short side is more about bragging rights than making money. I am confident that the vast majority of traders lose more money than they make selling short, I know I have.

    Bottom line, if I don’t make money at it, I don’t do it.

  195. Gary

    Frank,
    We’ve made a huge amount of money since the summer of 2009. Most people are up way over 100%.

    I’m not sure what’s wrong with that track record.

  196. Arive

    Frank,

    Relax!

    It took the car industry decades to adopt statistical process analysis and leverage other sophisticated tools like Design of Experiments (all derived originally from the US military) so that we could finally get rid of our crappy BIG 3 cars and enjoy ultra predictable Toyotas & Hondas.

    Poly may be a trendsetter with his Cycle Analyzer which appears to be adopting (?) some rigour and statistical analysis into cycles theory- but I am not sure- I only look to his results.

    Maybe some hedge fund has already painstakingly done a multi regression modelling of cycles theory and but I doubt it- till then we will have to depend on the experiences and knowledge of the cycles gurus

  197. Liquid Motion

    Gary,

    I recall you recently said wait for the swing low to prove that the d-wave in gold has been put.
    Well ….are we there yet….??
    If we wait for confirmation any longer than “we” miss the bottom.
    Gold is now a FACTOR of fear out of the EURO zone (EURO loss of value)and not just an inverse correlation of USD as your slide show evidently portrays.
    More scenes and drama than a greek tragedy.

  199. TZ(8155)

    Frank,

    Anytime you want to start posting ACTUAL buy and sell orders we will start ranking your performance and give you whatever credit (or insult) is due.

    Until then it is easy to cheer and boo from the stands…and of little benefit.

    (And the SPY hindsight comment is less than useless because it is being used as a jab to suggest ‘if only you had done this’ when you or most other people had no idea at the time. We are waiting and welcome for you to suggest the security to buy *NOW* which will outperform *GOING FORWARD*. It isn’t so easy without a free charting service to calculate the historical return.)

  202. Liquid Motion

    James R
    Dont expect a stampede just yet…
    Thats coming when the shorts need to cover ….and they will cover BIG TIME…because we have some very NEW large interest in Gold waiting to pounce.

  203. Danno

    Liquid Motion,
    Look at this chart I drew over a month ago based on statistical averages. It has been highly accurate so far (which is an understatement). I cannot guarantee what will come next, but I see no reason to begin doubting the chart now.

    It also syncs with the idea that we may see some kind of cycle related reversal fairly soon.

    In addition, the chart matches other patterns we are seeing such as the confirmedRounding Bottom in $USD as well as the 4+ year overhead resistance coming up at 1330 on $SPX.

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=1&mn=9&dy=0&id=p71062551266&a=241643000

  211. Gary

    Unfortunately neither can gold, which probably means we are going to see another hard leg down when the dollar cycle bottoms and the stock market tops.

  212. St. Deluise

    haven’t posted in a while, just wanted to say “Great Post” to gary and i think the next few weeks will prove him catastrophically correct.

    also happy belated bday to WW!

  213. Razvan

    hard leg down or soft left down, one thing is for sure…silver is not going anywhere close to $21. In fact i would be willing to bet anyone $1000 that silver will not go below $25.

  214. Tim and Jeanene

    razvan –

    Define in more detail….. ever in our life? Or Today? Or this year?

    I would be willing to take you up on the bet if you flesh out the details.

    We can open an escrow account with the details spelled out.

    So you have a bettor if you define the details and I still agree.

  215. Razvan

    i want to say for the rest of the bull market but that would mean i would have to wait a few years to double up my money. Lets make the bet for the rest of 2012.
    escrow account or letting Gary hold the money sounds good to me.

  217. sharpnquickly

    James, play your own hand….going back to March of last year and listening to advice here (as opposed to many other places). Great opportunities were lost due to a t o t a l miscall on silver )lost most gains and all opportunity on the downside). Also missed calls the biggest part of the gold run. Trust your own analysis. This advice, like most…even if spoken with authority…is worth about what you pay for it….not much.

  221. james r

    Still holding my short position in silver. Interesting no matter what the news gold and silver barely budged.

    It seems the market was already extended, hence a pullback in the works.

  222. Tim and Jeanene

    razvan –

    I’ll save you a little money and let you know that your offer was almost a guaranteed win for me.

    All I have to do is buy 200 shares of slv at $30.00 and sell the Mar 2013 $30 calls for $500 each.

    If the price hits under $25 by expiration, I get your $1000, and also lose $1000 in the stock price but gain $1000 in the call sales. If the market rips higher, I lose $1000 to you, and gain $1000 in call options for a wash trade. The only way I lose money is if the price close somewhere between $25 and $30 at expiry, while never touching below $25. I would have the calls to offset the loss to you, and would be long SLV at $30. That is my worst case scenario. With volatility in SLV high, chances of closing in Jun of 2013 between $25 and $30 while never dropping below $25 are slim to none, although a chance does exist.

    So with that, I will save you the money, as it’s pretty much an easy bet to hedge off. You make it more attractive with you bet since it is really just a knock-in style option, which I can’t get in the market

    Everyone should bet you…. 🙂

  225. gold silver troll

    stocks are wiping out shorts…could have made a lot more money just being long stocks…

    like gary says gold is done for a while…too many “we buy gold and silver” stores in my neighborhood…sentiment needs to cool a bit

  226. Gary

    Unfortunately none of us gets the luxury of trading in hindsight… although many of the trolls would like us to believe they do 🙂

    In real time one simply can’t buy into the market once it passes day 30 of a daily cycle.

  228. Frank

    I looked at some numbers since June 15, 2009.

    GDX and SPY are only up 40%. GLD is up 75%+. SLV is up 100%. My two biggest holdings (SLW and NGD) are up 200%+.

    I doubt that any of Gary’s acolytes (people who emulate every move) would have had 100% returns in this period unless they got lucky with the silver leverage earlier this year.

    But my important point is that there are some serious flaws in this cycle system that should be addressed to make it less susceptible to interpretative bias.

    Furthermore, I am not a trader. Neither was Gary until this recent incarnation post May 2011.

  229. Gary

    Frank,
    Cycles aren’t a perfect tool anymore than anything else. I’ve said it at least 100 times. All cycles are really good for is telling us when to step on the gas and when to coast.

    We are getting a perfect example right now. Emotional technical traders are going to assume that since the market has been going up it’s going to keep going up. Cycles, sentiment, and money flows on the other hand are telling us a major turn is coming.

    So using those tools we will be sitting on the sidelines while everyone else gets caught in the downdraft.

    Using cycles and sentiment I completely avoided getting caught in the D-Wave decline. That alone should be worth the price of a subscription.

    If you want to trade in hindsight and point out what one could have, or should have done, that’s fine. The problem is none of us actually have the luxury of doing that. We all have to make our decisions in real time without the benefit of knowing what the future holds.

  230. Visitor

    Tim & Jean –
    Are you making the bet or not? “Ill Save you a little money” Sounds like you are backing down and full of hot air. – Put up or shut up.

    razvan –

    I’ll save you a little money and let you know that your offer was almost a guaranteed win for me.

  231. Tim and Jeanene

    I have no problem making the bet….. I’ll make it with you too. Maybe that clams you up as well?

    If you stopped and came down from your huffy puffy fit….. and understood what I was saying, I can’t really lose.

    I can make $1000 if it goes under $25. I can break even if it stays at $30 or higher. All I need to do is hedge my bet in the options market. The only way I lose is if SLV closes between $25-$30, and NEVER touches $24.99 or lower in 18 months. If he – OR YOU, want to make that bet – let me know.

    As a matter of fact…. let’s up it to $10,000, hothead.

    You on?

  233. Tim and Jeanene

    The point being, I have no idea where Silver will end up. But the terms of his bet are pretty enticing.

    It’s about managing risk, not trying to prove who is right. You seem to want to do that. I either win $1000, or walk away with a break even trade and lose some face. I am all for taking a near risk free trade for a little face. I don’t care nearly as much as you do about being right.

    To me – it’s a risk free trade.

  235. Tim and Jeanene

    I’m just being the bookie for a trade razvan or visitor is proposing, in which the odds are clearly in the houses favor in this one, thanks to the ability to offset the risk to the option market.

    Not a market call, just a calculated gamble.

    Let me know if you want to do it still, or maybe you have come to your senses, understanding that the other side of your bet doesn’t really have to take any risk.

  236. Tim and Jeanene

    EricH –

    I could do that to to hedge off the bet risk. A naked put sale has the exact same risk parameters as a covered call that I am proposing to do if he wants the bet.

    But you are correct, I could do that as well.

  239. Tim and Jeanene

    If razvan wasn’t so emotionally tied to this gamble, he would see that he can bet the market place and have better odds.

    He can just sell 2 $30 March 2013 puts today for $500 each.

    If the market swings down this week and touches $25, his puts will probably not be in a $1000 hole like he would be with me. If SLV closes right at $25 In Mar 2013, then he break even. Anthing above $25 and he makes from $0-$1000.

    Yet he wants to prove his mettle I guess by betting someone else that he is right.

    Again, not the bet that is in his best interest.

  241. Tim and Jeanene

    gold and silver troll –

    I agree.

    I have been telling clients we actually could make new all time highs over the next 18 months before the next “surpirse” hits stocks.

    It will be volatile up and down, but the general trend is probably up for awhile.

    The market “knows” about the problems.

  243. Tim and Jeanene

    Aaron –

    That’s fine. That is what makes a market.

    If you think you know of some big surprise that the market doesn’t, please share.

    Chances are, if you “know” it, so do they.

  244. Aaron

    T&J, you missed my point. Saying that the market knows everything is silly, that doesnt mean that I or you know things that it doesnt. Its like saying the market is a barometer for the economy, or the market has the news baked in, or the market knows whats coming. Makes no sense.

  245. Tim and Jeanene

    Forgive me for assuming then.

    Most market players currently, who think the market is doomed and will crash soon, like to use debt levels as the reason.

    The market is pretty much aware of Euro debt, and is not concerned with US, UK, or Japanese debt.

  246. Aaron

    Those are just opinions. There are many companies at valuations that make absolutely no sense, trading at prices that are detached from reality…so what?
    Trading based on those ideas will make you broke.

  247. Tim and Jeanene

    There are also many companies trading at values that make a ton of sense.

    Especially in relation to bond yields.

    In fact, the Dow is in the exact opposite position today than it was in 2000. I wrote this almost a year ago, when everyone kept telling me the market was going back to the lows of 2008:

    http://seekingalpha.com/article/255201-the-case-for-a-higher-dow

    The case still stands from that article. Even though the Dow is 600 points higher, the case is actually even stronger based on free cash flows over the past 12 months, as well as the lower share counts.

    Not sure valuing companies in relation to the risk free rate will make me broke. While I am not him, Warren Buffet is pretty far from being broke.

  248. Aaron

    In a 50 year time frame, you are probably right.
    I was never a Buffet fan… more of a Soros fan when it comes to investment stsyles.

  249. elad

    Tim & Jeanene,

    A really smart guy/girl like you should have your own blog to pontificate on instead of trolling on someone else’s.

  251. hoppymap

    Tim and Jeanene,
    Never mind Graham and Dodd’s Security Analysis! If you want the best value investing resource available then you really need to invest the $1200 for a copy of Margin of Safety by Seth Klarman.

  252. Tim and Jeanene

    Great reco hoppy –

    I have heard great things about it – but have always been too cheap to plunk down the dough when one is actually available. I’d be willing to rent yours for $100 for a month…. 🙂

    Love Klarman. He is one of the “gurus” we clone in our hedge fund. He is also the reason we found BBEP in the low teens. Thing pays 9% and is trading below book value still. The guy is good.

  257. Big Money J

    T&J – are you going to take Razvan’s bet or not?

    Sure Razvan could take his bet to the market, but let’s leave the tax man out of this. Besides, bets are more fun when you know exactly whose money you’re taking.

  258. Tim and Jeanene

    I said I would take the bet – yes.

    Read up the thread.

    I even upped the anti to $10,000 if he wants.

    You want to make that same bet too?

    I’ll be the bookie for anyone that wants to make that bet.

    I’ll just hedge all the risk off. If you win, you can say you took T&J’s money and sleep with a smile. I’ll take the money from the options market.

    If I win, can you live with yourself?

  260. riley

    WW did you short today, or off that spike over 1660 just now? or are you still waiting for 150ma or DCL whichever comes first?

  263. Tim and Jeanene

    See Big Money J –

    It is Razvan who needs to be certain of the market, which is a pretty balsy thing.

    Taking the other side and hedging off the risk just allows him a playground to play in.

    When you win a sports bet, do you tell the bookie – HA! Take that, I told you so.

    That’s fine. In the end, it is the bookie who makes all the money and the gamblers either win big, or blow out. I am pretty comfortable that SLV will close above $30 or touch under $25 by mid 2013. If not, that is my risk. From $25.00 in silver,each penny it closes above that, my risk goes down.

    Pretty small window of potential loss. Big upside though.

    So sure, I’ll make the bet with anyone who wants to take it. Potentially any dollar amount too.

  266. Tim and Jeanene

    earnings blowout from big tech ex GOOG.

    INTC earnings usually blow out – and the market tops a few days after.

    Time for a breather in stocks in the short term, but then powering to new all-time highs by mid 2013 imo.

  267. riley

    At ease, yeah, shorted off 1670 at 67 closed at 1654. Think might hit 150ma and will try again with close stop. Giving back on DX but reduced yesterday as may hit 79.5.

  271. William Wallace

    Riley,

    Went long last night at $1656, covered at the 50dma $1670. As I mentioned a couple days ago, I expected that the 50dma would stop gold before it reached the 150dma, it did. Now im watching to see if gold will continue down into a DCL, I may take a short at a break of the 10dma, which is almost always indicative of the move down into the DCL. If gold pushes higher tonight I will look to short at resistance, I have to watch for the reversal as usual. BTW, a late Happy Birthday to you mt friend.

    THANK YOU everyone for the Happy Birthday wishes, I really appreciate it, made me smile, thanks. 🙂

  272. riley

    WW thanks, I’m usually late to enter as like proof of resitance and early to take profits, but profits is profits. Will be watching 10dma, keep it up so can toast another capricorn yr(don’t really pay attention to astrological signs)lol

  276. basil

    DJT pushed nicely higher today (1.6%), which could be the prelude to one more little push higher, even if short-lived, but I tend to think that it’s foreboding an imminent yet relatively small correction starting Friday or Monday/Tuesday. So I prefer to lighten up some.

    For the coming months, however, I don’t see any reason for a decline in the stock market as dramatic as forecasted by some.
    The European crisis is ‘done’ as far as I’m concerned, which means there is no European Armageddon coming, the talk will ebb away, slowly but surely. It’s talked up in the US, no one over there really considers it anything close to what it is made up to be in the US media. As far as CHina, nobody knows, so I can go only with Chinese astrology, and the year of the dragon that will start next week should be roaring and mighty. And Iran will be postponed as always.

    In general, the collapse talk is getting long in the tooth and because of that I would not be surprised to see stocks do somewhat well, but equally I would not be surprised if gold’s performance would possibly be a bit disappointing going forward, for the same reason – no imminent crisis.

    For sure, a ‘collapse’ of any sort will be replaced by the ‘slow growth’ story and by the realization that there is something a lot more moderate and mundane coming our way, and nothing at all as flamboyant as the panic mongers have been suggesting; thus I don’t see any knee-jerk reactions in the markets for the time being.
    That doesn’t mean that it won’t change again, but that’s later, not now.

    Short term, I’m lightening up on my holdings, but not for long, and to speak with Chancy, the gardener, I see a beautiful spring ahead of us.

  278. ver

    If I’m eyeballing the USD chart correctly, the dollar just broke its intermediate cycle trendline. I agree with the outlook that the dollar is due to put in a daily cycle low any day now while stocks and gold correct but doesn’t the trendline break suggest the intermediate top is in, which makes it highly likely that we’re going to see higher lows in PMs and stocks. Certainly explains the kind of buying pressure we’re seeing in all “risk-on” asset classes.

    Happy Belated Birthday, WW!

  280. Tim and Jeanene

    basil –

    Wow – I wondered why Gary and others like to take jabs and mock you. Now I know why….. you speak an opinion that goes agaist everything that is written here. Therefore, you are a threat to the thesis of many traders here, as well as in blogosphere. The end of America as it has been is the main selling point for people looking to sell gold newsletter subscriptions. Doom and Gloon sells.

    Well done. as a side note – I too agree with your thesis.

  284. Gary

    Ver,
    What’s to say that this decline won’t form the half cycle low that will determine the pivot for the intermediate trendline?

  285. TZ(8155)

    http://www.caseyresearch[PUT.DOT.HERE.TO.FIX]com/cdd/getting-rich-gold-stocks-patience-please

    The main returns on gold stocks in the 70’s bull happened AFTER gold had already peaked. See the chart.

    They were likely factoring a higher overall average gold price into continuing earnings. They were also likely held more by the dumb masses than ‘straight gold’ so the masses probably didn’t know gold had peaked and were still playing the mania late (as the masses tend to do).

    Notice from the chart also that the mining stocks made their big rally as gold made its REBOUND rally (after peaking). So the stock players interpreted that rebound as a new leg up likely – instead of realizing the party was over.

  288. ver

    Gary:

    Perhaps I’ve got the vocab wrong, but isn’t an intermediate cycle trendline set by the lows of the daily cycles it contains, in which case it is already set?

    Or do you mean that the intermediate decline here will set a half-cycle low and pivot for the yearly cycle trendline?

    I’m certainly not arguing that the dollar is done making higher highs next intermediate cycle, only that we may be in an intermediate decline now and that the market may be sniffing this out, keeping a strong bid under risk-on assets as they put in a daily cycle low .

  290. ver

    That would still coincide with your timeframe for an intermediate cycle correction in stocks, but it means that in the meantime we see a strong rally in PMs and stocks while the dollar works its way into a intermediate cycle low. This also gives the euro plenty of time to convince everyone that the problem is solved and for the ultra-bearish sentiment to dissipate, at which point Europe will resurface, everyone will think the world is going to end, etc.

  291. ver

    Don’t you have to respect the previous daily cycle lows as setting the intermediate trendline?

    I guess it’s tricky to do this if the daily cycles make higher highs but the lows keep breaking the previous trendline, which may be going on with the USD chart (I haven’t charted it, don’t have access to a correct one).

  292. Gary

    None of that works with a “normal timing band” for the stock market to move down into an intermediate bottom.

    In two weeks the stock market is going to enter the timing band for an intermediate bottom. That would suggest the intermediate bottom has to occur during the next daily cycle.

    The only way the dollar can put in an intermediate top right now would be for the stock market to form an intermediate cycle with four daily cycles nested within it. That would imply an extremely stretched intermediate cycle.

    I always assume a normal duration cycle unless the preceding cycle was short.

  295. Tiho

    Gary said:

    “By the way we are in the saddle, we have a position in the dollar index which is based on the market moving down into its cycle low. The positive is that the dollar is much less volatile and the long side is much easier to trade than the short side.”

    Going long the Dollar Index is actually the same thing as being short mainly the Euro – plus the Pound, Yen, Lonnie, Franc and Krona. Since currencies are relative, you are not actually long anything like stocks, bonds or commodities. You sell one to buy another.

    In regards to being long the Dollar, it has already topped, but you just haven’t figured it out yet. The Dollar has made a top against the following currencies already:

    – Swedish Krona
    – Korean Won
    – Taiwan Dollar
    – Singapore Dollar
    – Australian Dollar
    – New Zealand Dollar
    – Canadian Dollar
    – Chilean Peso
    – South African Rand
    – Mexican Peso
    – Indian Rupee
    – Russian Ruble
    – Brazilian Real
    – Thai Baht
    – Indonesian Rupiah

    Yes, there is a chance that Euro has not bottomed out properly just yet. Obviously there is a crisis going on in Europe, which affects these currencies more than others, so the same could be true with a few other European proximity currencies like Swiss Franc, Polish Zloty, Hungarian Forint, Czech Krona, Turkish Lira etc etc – but even they are starting to look strong against the Dollar! And lets remember a simple rule here:

    “Markets are strongest when they are broad and weakest when they narrow. This is why breadth very important. Think of it as strength in numbers. Broad momentum is hard to stop.”

    The Dollar Index is an awful measure of Dollar strength. You are essentially shorting the Euro (more than half of DXY weighting), even though you think you are long the Dollar.

    Now do you want to be shorting the Euro with every single man and his doing doing it too? That is a dangerous play that is so consensus – chart here.

    Since we both scribe to the same data provider (SentimenTrader), I’m pretty sure we both understand that many many indicators are now suggesting that the stock market is overbought and ripe for a correction.

    However, where we differ is that you are using the stock market as an excuse to long the Dollar, when you should be actually :watching” the Dollar itself as a broad measure to decide whatever you will be long the Dollar. Lets remember that in recent times the Euro has been in a free fall from $1.41 down to $1.26 and the stock market has actually held up well.

    Correlations is not 100% guaranteed. Global currencies are actually telling you to get out of Dollars – the rally is over.

  296. TZ(8155)

    GARY,

    My post was actually yesterday. Here is the page again:

    http://www.generationaldynamics[PUT.DOT.HERE.TO.FIX]com/cgi-bin/D.PL?s=Eb35FS&d=ww2010.i.panic070820

    Look near the end at the P/E chart and the guys comments. There is approx a 31yr cycle in the P/E lows of stocks. If it holds then we have another low imminent (which coincides with your comments of 2012 being a horrible year).

    I also conjectured that there was no earlier low than the 20’s due to, possibly, 1) No Fed aka stable money. 2) society wasn’t as much ‘stock market’ based or industrial and perhaps there WERE earlier ‘cycles’ of valuation lows but just not in stocks. Tulips. Spices. Whatever

    I finally conjectured that the 31yr cycle of lows likely is also due to generational shifts (in fact that is what that guy’s site is about) so the 31yr duration would be expected to grow a bit over time as lifespan/workspan increases. People who live through a stupid financial mania and a crash tend to not repeat it…so it takes time for a new generation to show up and screw up again.

    Anyway…that 31yr P/E low cycle is interesting eh?

  298. mikezza

    gary
    question regarding your comment – the only way the dollar can put in an intermediate top right now would be for the stock market to form an intermediate cycle with four daily cycles nested within it. That would imply an extremely stretched intermediate cycle

    i was under the assumption that your cycles put a very low probability of the dollar putting in an intermediate top at this point. based on the comment above though, it seems like there is a very real possibility of the stock market cycle stretching to a fourth daily cycle, especially given the effect that prior episodes of qe have had on cycles. are the chances of this happening that remote or is it just that you start with a normal duration cycle as a base case and play it as it evolves

  299. Gary

    Tiho,
    We aren’t actually trading the Forex market just buying UUP.

    Yes the dollar has put in a daily cycle top. It’s now in the timing band for a bottom. Based on the stock market cycle the dollar should still have one and maybe two more legs up before an intermediate top is formed.

  300. Gary

    Mike,
    So far the stock market has two daily cycles nested within the intermediate cycle.

    Since the current daily cycle is on day 36 there isn’t enough time for an intermediate degree decline to unfold during this daily cycle.

    That suggests that we are going to need one more daily cycle in order to move down into the larger degree intermediate bottom. Two more daily cycles would stretch the intermediate cycle way beyond a “normal duration”.

    Like I said I never assume a cycle is going to stretch or shrink unless the preceding cycle was abnormally long or short.

  305. Tiho

    Well, when we look at currency markets, sentiment and money flow is definitely against you. Globally all money is moving out of Dollars now and back into Emerging Markets currencies, Commodity currencies and many others.

    So all you got is the cycles connecting to a possible equity correction, which could than push the Dollar up slightly. That is why I was asking if cycles are one of your most important indicators – it definitely sounds like it.

  306. Gary

    What makes you think this is anything more than a short term correction in the dollar?

    The only thing that has stretched the stock market cycles is QE. We haven’t had any for 6 months. Once QE ended the stock market cycles returned to normal durations.

    As long as that continues then we should see the stock market drop down into a daily cycle low within the next 5-10 days. It should continue down into an intermediate bottom sometime in the next 4-7 weeks.

    It seems very unlikely that we would see the stock market and the dollar drop together. Unless one thinks that will happen then we are going to see the dollar rise when stocks start down into those tow cycle lows.

    Oh and we have also reached extreme bullish sentiment levels on stocks. The kind of sentiment extremes that generate intermediate degree tops.

    Finally we have signs that big money is selling into this rally. Never a good sign for sustainable gains if big money is sneaking out the back door.

  307. ver

    Gary:

    I share your expectation but to play devil’s advocate, stocks have held up quite well the face of a rising dollar. One explanation (which I think you used) for why stocks held up well is because the dollar rally was driven by a declining euro rather than true deflation. That means we could see this unwind in the same way, with stocks and PMs ignoring the dollar declines because it’s being driven by strength returning to the euro. Euro sentiment and COT reports have been ultra-bullish for the euro.

  309. Tiho

    “What makes you think this is anything more than a short term correction in the dollar?”

    Its simple. The Dollar has topped against almost every single currency in the world, including:

    – Swedish Krona
    – Korean Won
    – Taiwan Dollar
    – Singapore Dollar
    – Australian Dollar
    – New Zealand Dollar
    – Canadian Dollar
    – Chilean Peso
    – South African Rand
    – Mexican Peso
    – Indian Rupee
    – Russian Ruble
    – Brazilian Real
    – Thai Baht
    – Indonesian Rupiah

    Plus many others… The writing is on the wall, but you just haven’t realised it yet. The Dollar rally is over and the money is flowing into other currencies. The new trend is now down for the Dollar. Sure there will be a counter rallies in the Dollar, but that is just another shorting opportunity. Either way, the DXY will show you that in due time…

  310. Tiho

    p.s. I have no position in stocks and I agree with the correction. Maybe a put should be bought since everyone is buying so many calls.

    But my point is currencies do not have to correlate with stocks. The Dollar has topped. If stocks correct, DXY won’t take out 82 on the Index. There will be no spike, like you showed in your chart on this post. As a matter of fact, quite the opposite will happen. The Dollar will be much lower 3 months from now!

  311. Tiho

    p.s.s. The Dollar has crashed in recent weeks against Mexican Peso, which is as sensitive as the VIX to global turbulence.

    Dollar has also taken a huge beating against the Singapore Dollar, which is one of the few currencies in the world where the government does not intervene and shows true price based on fundamental and technical developments.

    Finally, have a look at the super move of Swedish Krona against the US Dollar. That is a major major reversal. Krona is also part of the DXY Index.

    The Dollar rally was done as early as December, yet you are still expecting it to spike massively. No way…

  312. guy

    I noticed the euro just touched a 78.6% fib retracement from it’s January 3 high.
    Does this have any value or is it just a bunch crap?

  313. Z1

    Gary said: “Using cycles and sentiment I completely avoided getting caught in the D-Wave decline. That alone should be worth the price of a subscription.”

    There is no question about that. IMO just all the bottom spotting is worth much more then the subscription price not to mention that we have a countinuous trading/speculating/investing course/school here.

  316. Danno

    Pull out to a 5 year $HUI chart and notice how price is slumping over to the right, like it’s about to give way. It doesn’t look good. It looks like it’s in the process of rolling over (on a large scale). In some ways the setup looks even worse than 2008.

  317. Gary

    Tiho,
    I’m not really sure how you saying it has topped makes it so. This just looks like a normal daily cycle correction. One that happens on average about every 20 days. Friday is the 20th day of the cycle.

    And like I said we don’t trade the Forex markets were just trading the dollar index.

  318. SF Giants Fan

    Danno

    I wasn’t trading PM in 08 but to watch the hui go from 500 to 150 must have wiped out a lot of accounts. But that was a once in a lifetime liquidation event.

  319. Danno

    SF,
    Not saying 2008 will happen again. But not saying it won’t happen again either. I would not bet against the S&P500 never retesting 666. Will PMs resist being sucked into the void again if that happens? Doubtful. What’s going on in Europe is said to be 17 times worse than the Lehman disaster that triggered 2008. But when in doubt look at the chart. I believe the $HUI is telling us that something is not right.

  320. Tiho

    The difference between this Dollar sell off and other sell offs is that it is occurring after a panic spike Dollar made during August and September. That means the Dollar has already made majority of it’s move.

    On top of that, it is happening while majority are bullish on the Dollar, both with COT, Public Opinion and Daily Sentiment Index. It’s a consensus trade.

    Finally, buying the Dollar Index with UUP still means you are shorting the Euro. So esentinally you are shorting here. Same shit, different smell.

  322. Gary

    The dollar rallied 2.3 % above the double top breakout. That seems like a panic spike to you?

    The dollar just got stretched above the 200 and 50 day moving average. It has now worked off the stretch by consolidating for most of the last cycle. All moving averages have turned higher. That means that smart money is going to be looking to re-enter the trend at some point.

    I think you are going to find out that the dollar rally isn’t done once stocks start down into their daily & intermediate cycle lows.

  323. Gary

    MY best guess is we will get a top on stocks after the Fed meeting Tuesday. We may already have the bottom in the dollar index.

  324. Tiho

    Gary, the Dollar has spiked majorly against so many currencies. You are wasting your timing following the DXY, which is an awful measure of Dollars broad strength.

    Dollar spiked in August and September against Singapore Dollar, Korean Won, Brazilian Real, Indian Rupee, Russian Ruble, Mexican Peso, South African Rand and so many other “risk on” currencies.

    It’s was a huge spike. Pull up the charts. I cannot believe how West centric your methods of following DXY are. There is a world away from the Euro, Dollar and the Pound.

    I guess the market will teach you soon enough.

  325. Danno

    Tiho,
    Please refer to a chart that you marked up and posted here on SMT that achieved any degree of tradable predictive accuracy. Otherwise, please stop being so rude.

  326. PST

    I’m by no means a currency expert, but here’s my 2 cents. An earlier post on this blog hit the nail on the head when it said that this market is all about front-running the money flows induced by the fed. Through coordinated central bank actions, the Fed and its partners have been attempting to manage this crisis by maintaining the relative stability in currency and securities markets. A disorderly collapse in the value of the Euro and the consequential rise in the dollar are in no one’s interest and exchange rate ranges will probably be defended vigorously. Rather than the market dictating the true exchange rates, I expect that the central banks will attempt to stair-step the value of Euro down in an orderly fashion (until/unless we see another round of QE). Several months ago I mentioned how the EUR/USD rate was likely being maintained in a range of roughly 1.30 to 1.40. I suspect that the central banks will now try to establish a new range somewhere between 1.20 and 1.30 (or 1.25 and 1.35) given what is going on in the sovereign debt markets. Whether they will be successful in doing so in the face of potential sovereign defaults, money printing, liquidity enhancements and other general market forces is anybody’s guess. However, expect plenty of jawboning, rumors and outright interventions in the process.

    As a side note, people really should familiarize themselves with the Fed’s 2008 playbook as we are seeing very similar actions being taken in the US as well as abroad. For all the self-proclaimed monetary policy experts, many really don’t understand how the Fed and ECB are currently intervening in the markets and how it is impacting the various currency and asset markets. We are really seeing central planning at its best and worst.

  327. Gary

    I guess you can use technioals and your perception of a panic spike. I’m just going to continue using my cycles, sentiment, and money flow system. It has served me well and even allowed us to make a respectable 25% gain during a time when virtually all other money managers have struggled or lost money.

  328. mikezza

    very nice pst. looks like someone has done their homework on the central banks. i can’t comment on the fx analysis but i agree with the rest.

  330. EricH

    Cycle have it’s place and simple TA works too. If one would had bought the breakout of S&P above 1292, they would had netted 1.7%.

  331. Greenspansconscience

    If the world has finally had enough of US treasuries, the break could become self sustaining like no other. The reason being is that the Fed will have to start monetizing to keep yields from going ballistic. Ulimately they will be the buyer of last and only resort and gold goes to infinity in nominal $usd terms as a result. 🙂

  332. PST

    Greenspansconscience,
    I wouldn’t be so quick to jump to any conclusions on Treasuries based on the price action this week. This has been a week full of POMOs including a $2.5B operation this morning focused on 25-30 year treasuries. I’d wait a bit before coming to any conclusions.

  333. Greenspansconscience

    @PST
    Oh yeah, I agree. Especially in the short run. TMV is just over the 50dma today and is a bit extended technically.

    Also, I imagine the Fed will hold nothing back in terms of keeping the system together in the short run, including shorting commodities, buying USD (with freshly printed money–how ironic is that?), hell even shorting stocks if it looks like the market is about to pull a Zimbabwe.

    A nice global conflagration, aka WWIII, would also do nicely to keep the beast alive. Cornered animals (the Fed and the US govt) will do anything to maintain power, of that I have zero doubt. Wouldn’t shock me one bit if we go to war with Iran and set off the powderkeg.

  334. Greenspansconscience

    Yes silver is arguably way overbought on the daily chart and is kissing the 50dma, but it’s acting like a champ today. Monday will probably be a red day. The proverbial wall of worry.

  337. TZ(8155)

    TIHO,

    You are spewing out a list of currencies and don’t seem to understand how size and weighting work so I will help.

    This is a chart of the FED’s **BROAD** trade weighted dollar index. It is NOT the DXY which you seem to have a problem with.

    research.stlouisfed.org/fred2/series/TWEXB?cid=105

    You will see under the chart (which has NOT peaked in case you have troubled vision) that the index includes:

    Euro Area, Canada, Japan, Mexico, China, United Kingdom, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Switzerland, Thailand, Philippines, Australia, Indonesia, India, Israel, Saudi Arabia, Russia, Sweden, Argentina, Venezuela, Chile and Colombia

    So would you like to revise your assertions from earlier?

    (Oh…and the chart was last updated two days ago).

  338. TZ(8155)

    So regardless of whatever charts you are looking at and whatever math or aggregation you THINK is signaling ‘they have all peaked’, the fact remainst that a broad trade weighted dollar index including almost every major currency IN THE WORLD does not show such peak.

  340. TZ(8155)

    TIHO,

    We await your own chart or similar proof of the dollar peak in ‘what i’m looking at’. Barring that I think I’m gonna go with Gary on this one.

  341. TZ(8155)

    I’m sorry if I’m coming off harsh, but if somebody is going to attempt to alter our plan or give ‘facts’ which argue a different strategy they better be sure the facts are correct.

    I don’t like losing money.

  342. RJM

    Re. Gary’s Post at 9:04 P.M. last night:

    Maintenance of ZIRP(actually Negative IRP in real terms) has made me sceptical that QE 2 really ended. However, impairment of the private sector as a transmission mechanism for monetary policy along with the theory(?) that sustained inflationist policiy requires doses of increasing strength to have an impact are additional factors supporting Gary’s position.
    Contra Jim Rogers, the current political environment is not very friendly to aggressive monetary policy by standards of the recent past. This includes the possibility that the market and the economy are still in a late stage of digesting QE2 and the fact that the relevant authorities may have enough insight to regard the prospect of QE3 with trepidation. By this way of thinking, a return of crisis will be necessary to provoke QE3. It may be recalled that, despite its size, QE1 had no immediate impact.

  345. Gary

    Yes and if it can hang on to a decent portion of those gains during the next DCL then we will be looking to buy silver at that time.

  350. thedocument

    sophia,

    Silver is certainly providing strong evidence of my view that an intermediate cycle is behind us. However, it would be dangerous to chase a move so far into a cycle. As Gary has stated many times and I have written in my letter, the time to get aggressive will be gold’s next DCL, whether or not that pivot occurs at a higher or lower point from here. The idea is to buy safe, not to catch every movement of the market.

    We also still need a daily cycle decline for stocks. My guess is the dollar will bounce soon, inducing daily cycle corrections in both gold and the SPX. The buck will then roll over into an intermediate cycle decline, and the PM rallies will accelerate.

  351. SF Giants Fan

    There was a big block trade of GDX after the close yesterday. I think someone posted it was over 1.5m shares. With the move in silver today I wonder what’s going on?

  352. William Wallace

    Aaron,

    When I take a short off a SMA I usually expect that it will reverse directly off that MA, so I place my stop at break even immediately after it pulls back. If the trade is going to work its going to continue to pull back off the MA, maybe a test of that top but then another move off that MA. If the trade doesn’t work then im out at break even and expect to see gold move above that MA at some point. Too early to call a target still, the trade may go against me, but hopefully a DCL.

  354. PST

    Greenspansconscience,
    Sorry, I got pulled away from the computer. I wasn’t disagreeing with your conclusion, just cautioning on making a judgment from this week’s action. Don’t let me talk you out of trade though if you’ve got conviction. Good luck whichever way you go.

  356. Greenspansconscience

    I’m looking at TMV in the context of the daily and weekly charts covering 6 month and 3 years on stockcharts.com. In particular, I look at the bollinger bands (they are currently very narrow implying a big move soon), RSI and stochastics and any signs of positive divergence in order to gauge how oversold it is.

    We are either going to get bonds going into a blowoff a la nasdaq 1999 or we have already seen the end the 30 year bull market . I think we will know the answer in the next couple of months.

  357. sophia

    Doc,

    Thanks for taking the time to take care of me! Considering where Silver is, it was a bad idea…BUT we are very close to print a DCL, so I will keep this one for a week and see how it behaves!

  360. Farm Girl

    It looks like the rest of the world has caught on to the impact of the Long-Term Refinancing Operation (LTRO) on both sovereign and bank liquidity in the Eurozone, and worldwide liquidity as the huge LTRO effort – much larger than QE1 and QE2 – leaks into other economies. The “Quarterly Review and Outlook” from Hoisington Investment Management is written by Lacy Hunt (ex-Fed) and Van Hoisington. The new one says:

    “QE3 has actually begun, in stealth form, via the European bailout. Since this program was announced, the price of oil and some other commodities has risen, bringing along the risk of a further drop in the real income of consumers. The unintended negative consequences of Federal Reserve actions appear to be continuing.

    “Writing in the Wall Street Journal on December 28, 2011, Gerald P. O’Driscoll Jr. of the Cato Institute and a former Dallas Fed Vice President said the Federal Reserve is engaged in a bailout of European banks under the guise of what the Fed terms ‘a temporary U.S. dollar liquidity swap arrangement.’ Dr. O’Driscoll indicates the Fed and ECB are engaged in this roundabout transaction since each needs a ‘fig leaf’ because the Fed does not want it known that the Fed’s balance sheet is being made available to foreign banks. He cites three problems with this approach. ‘First, the Fed has no authority for a bailout of Europe. …Second, these Federal Reserve swap arrangements foster the moral hazards and distortions that government credit allocation entails. …Third, the nontransparency of the swap arrangements is troublesome in a democracy.’

    “In addition to these problems, we would add that, in the final analysis, this new program is simply another expansion of the Fed’s balance sheet. This program will make the Fed’s balance sheet even more bloated relative to its mere $54 billion of capital, just 1.9% of total liabilities. Without evidence to the contrary, we fail to see how this cleverly named swap program can achieve any type of satisfactory outcome. In fact, any other balance sheet expansion activities, such as the additional purchases of mortgage-backed securities, will also fail to result in positive GDP expansion. On the contrary, the uncertainty created by untested Fed interventions will inhibit business planning and reduce risk taking, thereby slowing growth.”

  361. Danno

    Sophia,
    Well… thanks? I guess. I was a bit early with ZSL but thankfully I haven’t taken a big bite yet. I expected $USD’s rounding bottom to develop a handle (drop some). I should have realized that would mean ZSL would also drop some.

  362. Aaron

    Gold seems to have a super hard time breaking out… since the swing did form today, it could be done for this run. Next week should be very interesting. I think gold is up strictly due to silver.

  363. Elaine

    Trader Dan Norcini notes resistance for SLV at 32.50. If silver can get above that the next level of strong resistance is $35. Could make for some quick profits, but sounds like everyone is thinking the wheels will fall off early next week.

  367. William Wallace

    AT EASE,

    Like I said before to Aaron, my stop for my gold short was at break even $1667,stocks helped gold move above it into the close. I would like to see another close above SPX 1315 to cover the short.

  370. riley

    AT Ease I can’t speak for ww but think he meant out, and will get out spx short if snp closes over 15. I’m still short gold, if jumps sunday night will get out and watch 150ma.

  374. thedocument

    James,

    I’ve been saying for several weeks that Dec marked an intermediate low. However, chasing silver here seems a little dangerous. It certainly could continue to explode higher next week, but given an aging gold cycle and the fact that gold is approaching both its 150DMA and the downtrend line from the previous intermediate cycle, the setup seems more likely to push PMs into a daily cycle decline. That next low will be worth buying aggressively, IMO.

  375. William Wallace

    At ease,

    Yup out of gold right now, I expect we will see gold push above the 50dma now unless news over the weekend drops everything out of the gate. I will look for another perfect top entry next week. Today’s entry was perfect, gold backed right off the 50dma 3 times before stocks rallied into the close and finally helped force gold through it. Maybe we get another nice short entry right on the 150 next week if gold pushes higher as this equities cycle continues to stretch.

    Riley,

    Thanks 🙂

  378. Tiho

    TZ(8155) said…

    So would you like to revise your assertions from earlier?

    No. The Dollar has topped. Good luck with your Dollar long trade.

  380. William Wallace

    James,

    Before gold began its decent into a D-wave I had been saying exactly where a new advance would be born – the 300dma. And it’s looking more each day that I was dead on. I prepared everyone for this move, and always said gold’s cycles would be dictated by MA’s, a regression to the mean. Just a day or so into this move I told everyone “clear your minds of further downside”, and that “I believe many would be left behind”. I benefited greatly from my analysis, I wish everyone else did with me. Even if gold’s D-wave is incomplete, history has shown us time and time again where Significant bounces will occur, as long as one doesn’t ignore it the opportunities are there, it’s no coincidence that the first day of this DC launched off the 300dma, just pull up a 10yr daily with a 275 and 300dma applied. Gold’s cycles always have been and will continue to be bent, twisted, stretched, cut short, pulled, pushed, resisted and supported by the mean. We should be in a new intermediate advance, unless we are to see another 08 type correction.

  381. Danno

    Tiho, Before you decide that the dollar has topped, you might want to look at this $USD chart I drew last week…

    http://stockcharts.com/h-sc/ui?s=$USD&p=D&yr=1&mn=10&dy=0&id=p25565408520&a=243271916

    If you don’t believe anyone here knows anything about predictive charting, you might want to look at this $GOLD chart I drew over a month ago…

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=1&mn=9&dy=0&id=p71062551266&a=241643000

    Or maybe this $SPX chart I drew a month ago…

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=11&dy=15&id=p13367984103&a=241443770

    You can’t make blanket statements. You have to back up your words with statistical data (e.g. charts, cycles, etc) if you want anyone to take you seriously.

    Now to be fair, I have a ZSL chart that is not working out (yet). But I just drew it a few days ago so I need to give it more time.

    http://stockcharts.com/h-sc/ui?s=ZSL&p=D&yr=0&mn=9&dy=10&id=p83906096668&a=247076279

    Good luck. We are all doing the best we can here. This stuff is not easy.

  385. Tiho

    Thanks for those charts. Nevertheless, you are going to be wrong, because the Dollar has topped in December and here we are in late Jan still talking about it. I’m trying to help you, but it is not working.

    And so I do not sound like a broken record, I’l disclose my positions which put my money where my mouth is. I have already bought Silver at $26.50 for both my hedge fund as well as a leveraged position for myself in my own personal account. I know I know… no one ever believes anything or that anyone is capable of buying bottoms or selling tops, therefore I run a blog of my hedge fund I run in Hong Kong in real time with a blog post updates of my portfolio – and its for free. Here is the Silver trade. I’m also short the US Dollar vs Swiss Franc and I’m thinking about buying more as soon as stocks correct and the Dollar stages a bit of a pop from short term oversold levels.

    I won’t bother with the rest. The market will decided who is wrong or right. Nonetheless, when they call you crazy or lucky, you know you are on the right track. My fund boss used to call me that, until I became his boss… *ckeeky smile*

  386. Tiho

    So strong is the bullish consensus on the Dollar, that it can be seen everywhere from finance industry to media and television. My work mates constantly call me crazy for not being long the Dollar as of December.

    As a matter of fact I also got a bet with a friend of mine who also runs a hedge fun in HK as well, about the Dollar too. If Dollar spikes higher above $1.20 per Euro – something like 85 on the Index, he wins a bottle of vintage Dom Perignon. On the other hand, I’m saying the Dollar is about to make a new low in the Dollar Index in 2012 – something like $1.49 per Euro. You can read it here… so as you can see its not only money, Im also betting alcohol, which for us Australians is more important and valuable haha!

  387. Gary

    Tiho,
    Actually buying bottoms isn’t all that hard. We’ve been doing it on a pretty consistent basis using cycles analysis.

    That being said gold was, and maybe still is, in a D-Wave decline. Those can be especially tricky.

    I want to see how the next daily cycle low plays out before buying aggressively. Considering that gold hasn’t been able to make much headway since passing the $1600 level, I think it’s a pretty good bet that it is going to at least retest $1600 at the next daily cycle low. That would be the point where we have a higher high and higher low.

    That’s the point where I can buy aggressively.

    For now I will ignore any further rally because it’s simply too late in the daily cycle to chase, plus I have no idea how hard the S&P is going to sell off into this next daily cycle low, and whether or not that selling pressure is going to severely impact the precious metals sector.

    Once I get the daily cycle low in the stock market and in gold behind me I will be much more comfortable entering long positions.

  391. Tiho

    I agree 100% with the Gold point. I’ve been saying all along that Gold has had an 11 year advance and that a 20% decline over a few months is NOT enough to work that gain off. There needs to a bull trap similar to 1974-76 with a 45% decline. Since Gold is half way, maybe this time is the one…

    I know you recently said something similar too, using Fib numbers, which I do not pay too much attention too.

    Finally, I did not meant the links to be brags about bottom buying, it is just that no one ever believes anything if you tell them you did something, so it is the best to do it in “real time”, sort of like a track record.

  392. Gary

    I’m not sure why you think that.

    You asked the same question that has been asked about a hundred times and that I already answered in the comment above yours. You apparently already knew the answer.

    So why did you ask?

    Do you blame me for not wanting to repeat the same thing over and over?

    I don’t trade based on charts. That is the easiest thing for big money to manipulate. It’s why most retail traders don’t make money in the market, because they aren’t willing to do any more due diligence than look at charts.

    Tell me, was buying the breakout in October a good strategy?

  393. Gary

    BTW there is no breakout in silver. That would only occur on a move above $33.72 or more convincingly on a move above $35.78.

  394. Tiho

    Silver bottomed in late September / early October 2011, same time stocks as well as risk currencies like Aussie Dollar bottomed and Treasuries topped. Your outlook on 2012 being “the worst ever economic disaster in modern history” was a major consensus outlook so many other investors, including retail mums and dads thought too.

    The outcome is a complete opposite scenario where Treasuries will sell off, Euro will rally and the Dollar will tank. That will boast commodities, including Agriculture (especially Wheat with record net shorts) as well as PMs. Here is something interesting I thought you might want to read:

    “At the same time, commercial traders of both T-Bond and T-Note futures are getting to a point of being net short in the biggest way that they have been in years. Commitment Of Traders (COT) Report data is something that I address every Friday in the Daily Edition. And commercial traders are also net long the euro in the biggest way in the history of that future contract. So the big smart-money traders are betting on a euro rebound and a T-Bond selloff. “

    Obviously you will claim that COT is at no use, but I disagree. You just have to know how to use it and more importantly WHEN to use it. It is pretty obvious that one indicator on its own does nothing to help.

    But, put it all together, and it is just as obvious that the Dollar is now exhausted and Dumb Money is betting on a March 2009 low retest for S&P 500 in 2012 and on a Euro collapse / Dollar spike.

    p.s. I just got a Citigroup fund flow report which shows after the worst ever outflows from GEMs since 2001, last week was the biggest inflow. Money is now leaving Treasuries!

  395. Gary

    Tiho,
    It seems to be extremely important to you to be “right”.

    I could care less if I’m right. All I care about is making money.

    The four year cycle in the stock market should bottom in 2012. However if Bernanke can break the dollar rally that scenario is off the table and we will probably see another stretched cycle.

    The stock market is now due to move down into an intermediate cycle bottom. That should force the dollar higher for at least one or maybe two more daily cycles.

    However if the dollar were to break the pattern of higher highs and higher lows I will have no problem reversing course 180°.

    If it becomes clear to me that the intermediate cycle in the dollar has topped then I will have no problem getting aggressively long commodities.

    Heck I plan on getting long at the next daily cycle low anyway. The only difference is that I would hold the position much longer if I was convinced that the dollar’s intermediate cycle had topped. If that were to happen we would have a much greater chance of seeing a strong trend develop in all asset classes.

  396. Unknown

    Tiho-

    You’re piling the BS quite high regarding your silver holding. You say in your post you are long from $26.50. So how come your web site says you started your hedge fund on December 12 and bought PSLV, Eric Sprott’s closed end fund, as a long term hold?

    That would be here, Tiho:

    http://theshortsideoflong.blogspot.com/2011_12_01_archive.html

    Really stupid buy, Tiho. You bought silver at a 25 – 30% premium over PSLV’s NAV. Furthermore, PSLV was over $14 on December 12. PSLV closed at $13.90 today. Sprott screwed you up with his secondary. You’re underwater, Tiho.

    So….. what other BS are you piling up here, Tiho?

  397. Unknown

    Tiho,

    You seem to rather have a strange and increasingly disturbing obsession with Gary and this blog, especially for some big shot hedge fund boss as you claim yourself to be.

    Why are you so compelled and determined to beat your chest and/or to prove Gary wrong among us lowly retailers? Don’t you as a big timer have more productive and important things to do than to post the same old crap that no one gives a damn about on blog?

    Oh right, you’re trying to “help” us and offering free and of course, the right advice by making multiple posts on the same sht every day. And it would especially be helpful for us to visit your free blog when you’re a hedge fund manager lol!

    I didn’t and won’t click on your links. If you truly are who you say you are, then post real information like the fund you run and your real name, not a bunch of links to blogspot which can easily contain some nasty surprises.

  398. Unknown

    Be careful when you have these kinds of posters who lurk around, beat their chests, and proclaim to make right calls and then they post a bunch of links or offer to send you something that will ‘help’ you make money easily… this occurred on a major PM website before, where a guy kept posting on a daily basis his moves and seemingly being very successful at it, then offering to share his ‘secret’ algorithm (and FREE of course) trading Gold futures to members… it ends up the guy had shady intentions and was trying to infect the members there.

    So just be careful with these kinds of posters around…

  399. Unknown

    Click on the “silver trade” link at Tiho’s post at 4:34 PM. It is the same web site link I posted on my 9:34 PM post. Scroll down on the site until you see the piece titled “Portfolio Update: Long Silver”.

    He clearly states that he started his fund on December 12, 2011 and his first buys were made in agriculture and physical silver via Eric Sprott’s closed end fund. That would be PSLV which has been trading at a 25 – 30% premium to spot silver for most of the past year. If you look at the price history of PSLV you will see that Tiho bought PSLV as high as $14.42 that day or $14.63 the next day. Since he said this was his first buy I’ll assume December 12 and PSLV at somethng over $14. It closed today at $13.90.

    Anybody buying silver via PSLV at 25 – 30% over spot isn’t the sharpest knife in the drawer. This guy is full of himself as well as more than little bull****.

  400. Tiho

    Reason I follow the blog is because it attracts a large amount of retail money in retail and therefore it is a great barometer of market sentiment and contrarian signals. I don’t have to post – I can stop and continue to read instead.

  401. Tiho

    Yeah I bought at $14.60 or whatever you said because you are a great reader… You might want to buy glasses. There is a link, so open it and read it and than see what it really says instead of making it up. Entry was $12.85.

  402. Danno

    conspiracyt(previously known as john),
    Thanks for posting your dollar chart on Jan 17th. Not saying I agree or disagree, but am checking it out. It appears people may not be able to see your chart unless they are logged into StockCharts.com however. Not sure how that happened. You might want to try posting it again.

  406. Gary

    Tiho,
    You aren’t going to get accurate sentiment by reading this blog. Readers here are much more likely to be smart money and get bullish at bottoms and bearish at tops.

    If you want real sentiment levels get a subscription to sentimentrader.com.

  407. smt_troll

    “Dollar has also taken a huge beating against the Singapore Dollar, which is one of the few currencies in the world where the government does not intervene and shows true price based on fundamental and technical developments.”

    You don’t know what you are talking about. The government of Singapore MANAGES THE EXCHANGE RATE (instead of interest rates) as their main lever of economic policy.

    “If the world has finally had enough of US treasuries, the break could become self sustaining like no other.”

    Never underestimate the power of the U.S. government to force U.S. banks to purchase treasuries (think of incentives and penalties for treasury holdings as part of the capital structure of banks).

    “That will boast commodities, including Agriculture (especially Wheat with record net shorts) as well as PMs. Here is something interesting I thought you might want to read:”

    Call me skeptical, but with the ethanol subsidy expiring, and a record wheat crop (worldwide) on the way, I am betting on lower prices for corn and wheat.

    Having said all of that, I am at the moment (massively) long the Euro (even though I hate it). The thing that really does determine the relative value of currencies (swap rates) is pointing to a higher EUR/USD. No idea how long it will last, and I certainly don’t expect a large move (weak European nations absolutely can’t stand a higher Euro, and more easing from the ECB is likely on the way), but the short term direction is up (not to 1.49 though, unless Germany manages to kick out the weaker dozen or so Eurozone members).

  409. Unknown

    Tiho:

    Whatever you bought PSLV at, and your blog says you bought on December 12, it was the stupid buy of the year. You paid 25 – 30% over spot for silver.

    Sprott is now going to do secondaries rather than let PSLV get to the insane premiums of the past year. That means PSLV will face some headwinds until the premium comes down to half what it still is. Good luck. You’ll need owning that fund.

  412. James

    Sprott is not any better than the conspiracy nuts who believe that central banks are shorting the metals. If you buy pslv you deserve to lose money.

  413. Veronica

    Not sure why people feel the need to beat up on Tiho. I rather like his commentary and his view on currencies. If you feel the need to beat up on someone do it to someone really delusional such as T&J:)He seems to think he’s done really great things by keeping his clients in the S&P which has gone sideways for 10 years and has been decimated factoring in for inflation, which BTW he says does not exist as everyone’s living standards have actually gotten better as wages have kept up !

  414. Gary

    ‘ve never had a problem with diverging opinions, but when someone is purposely rude I take offense.

    Tiho has on multiple occasions been extremely rude and abrasive. He acts like the SMT has caused people to lose their life savings.

    It just isn’t true. The model portfolio return speaks for itself and in a period of time when most money managers have done nothing or lost money.

    If one has a differing opinion then by all means feel free to share it. I may or may not choose to debate you about it.

    But if your intention is just to be an ass, then I would prefer one take their opinion elsewhere.

  415. Veronica

    As a veteran of this gold bull,Gary’s SMT has been the single best tool I’ve found since the cycle work of David Marantette was stopped on his imprisonment early last decade.It has made many of us millionaires and anyone who thinks otherwise does not have much wisdom.

  416. ...at ease

    Veronica,
    I wish I had known about Gary sooner, as I had great run last year following Gary. All we can do is follow and pray we continue the same type of returns from his cycles analysis.

  419. Danno

    I’ve been going over statistical averages of trend lines and trend line penetrations (breakouts).

    The odds that gold’s penetration (downward breakout) of its nearly 3 year rising trend line… was a false breakout… are extraordinarily poor.

    Meaning, the odds that gold is merely back testing a broken trend line before heading significantly lower… are extremely GOOD.

    Regardless whether the market pushes a bit higher and excites silver… now is NOT the time to be buying PMs. Absolutely not. The risk is FAR too high.

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=3&mn=11&dy=0&id=p26989721386&a=253184115

  421. Rod (RJ)

    Danno,

    Check this one out:

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2094095&cmd=show%5Bs210659846%5D&disp=P

    Note the following trend at the top in the Wm%R(40) stat:

    In EVERY case on this chart since 10/2008, when the index moves up and out of the oversold level of -80 AND it makes a clean break of the -50 midline (which it just did last week)….In EVERY instance it hits the overbought level of -20 BEFORE it gets back under -80 again….

    Remember, things keep working….until they don;t.

  423. William Wallace

    RJ,

    Problem with that trendline whether using a log scale or not is that gold was bouncing off the daily 150sma creating the intermediate troughs and not that trendline, that trendline was basically useless throughout this entire C-wave. Danno would be better off using a backtest of the daily 150sma instead of that trendline to calculate further downside targets. Another thing, gold was bouncing directly off the 150 SMA, not the EMA. If you apply both you’ll see what I mean.

  424. William Wallace

    Gold is back in positive territory on the True Strength Index and doesn’t go negative again until in a B-wave, except for the 08′ correction. If gold dips back into negative territory I would assume its going to take a further beating and this D-wave is definitely not over.

  427. Danno

    WW,
    Thanks for the info about the 150ma. I was just sharing that statistically speaking, a downward breakout from a beautiful 3 year trend line is an unholy specter for longs. Not to be taken lightly until proven otherwise. Statistically is ranks as… run for your life until you are absolutely sure the coast is clear.

  431. Shalom Bernanke

    This is a pleasant way to start the week. One of my positions (MFN) is up big this morning, though I can’t find any news on it yet.

    It won’t be long before everybody realizes miners are the best place to be, IMO.

  432. Gary

    Once we put in a daily cycle low we will join you in the miners for sure. They have been terribly beaten up.

    That being said I’m happy we avoided most of the last 5 months.

  434. Shalom Bernanke

    Gary,

    I hear you on the last five months, but it really hasn’t been that bad if one took on more risk into dropping prices. But it has been a hairy ride, especially when one looks at the Silver chart around the end of Sept.

    Sooth Sayah,

    Congrats to you too. As nice as it is for MFN, I hope not too many of my names are taken out while miners are so undervalued. Once HUI is over 800, we’ll really start to see some froth. 🙂

  435. Keys

    I tend to agree with the wait until the DCL to buy in. Those that bought before are simply holding now. We are due for a corrective dip, and the longer it takes the more severe that dip will be. That being said I am not selling, just starting new positions here may not make sense.
    Of course if anything has been proven with this gold bull, is that it does whatever it wants.

  437. ...at ease

    Why is Peter Schiff having a one week sale on gold? Must be going to drop?

    We are pleased to offer our customers ½ ounce Gold American Eagles at the same price per ounce as the 1 ounce coin.
    For one week only. Until next Monday, January 30.

    DETAILS:
    Sale ends Monday, Jan 30.
    Supplies are limited. We may run out of inventory prior to Jan 30.
    Minimum purchase: 10 coins (5 ounces)
    Mint condition: Coins are all 2011 and uncirculated
    Pricing: 5.75% over spot on 40 coins (20 ounces) and over. 6.25% under 40 coins.

  438. Keys

    SB,

    I do have to say it is nice to get out of the parabolic days and get back to holding that which has value again. Many think the “old turkey” is dangerous, but really it is the most conservative of investment methods.

    Well good luck to SMT today, I am out, nothing to do on the investment side.

  440. Dan

    At ease,

    By “price” I think they meant to say “premium” cause there is no way they are selling 1/2 ounce coins for same price as 1ounce.

  441. ...at ease

    Don’t know Dan, I just cut and paste.

    here is his add:

    ½ ounce Gold American Eagles are on sale this week. As low as
    5.75% over the spot price of gold.

    As a rule, I recommend that gold buyers stick to the low premiums and high liquidity offered by the meat-and-potatoes, 1 ounce nationally minted coins such as Canadian Maple Leafs and American Gold Eagles.

    But as the price of gold rises towards $2,000 per oz, some buyers are gravitating towards the greater flexibility that smaller, less expensive coins provide. These ½ ounce “fractional” coins offer the same investment as 1 oz coins – but with more flexibility and liquidity when it comes to sell. Normally this extra liquidity comes with a significantly higher premium.

    However, for the next week, that’s going to change.

    We are pleased to offer our customers ½ ounce Gold American Eagles at the same price per ounce as the 1 ounce coin.

    For one week only. Until next Monday, January 30.

    This means you can buy these coins for as low as 5.75% above

  444. Visitor

    The buyouts continue. That’s why I keep telling you to own individual names. This time MFN. This is the 3rd or 4th one for me.

    Having fun sitting on the sidelines?????

  445. Greenspansconscience

    On a risk adjusted basis it hasn’t made sense to own individual miners. That being said, that’s all I invest in. I refuse to buy ETFs as I feel they are nothing short of a ponzi scheme. Does anyone actually believe a vehicle like NUGT will survive a “call” on the system? We got a taste of this with MF Global.

  452. sophia

    Gary,

    I have a technical question. You say that stockmarkets cycles tend to run 35-45 days. If today is Day 39, does it mean that we should buy the dip in more or less the next 7 trading days?

  454. sophia

    W2, thanks…but am I right in my reasoning to say that if we follow the cycles theory, the markets should bottom within the next 6 sessions?

  460. Wav_ridah

    Like the huge volume on TVIX. TVIX moves fast so its always best to get in early b/c you’ll have a very difficult time chasing this high flyer.

  462. Tim and Jeanene

    Veronica –

    I love it when someone takes a jab at someone else, and brings up false information to make their case:

    “If you feel the need to beat up on someone do it to someone really delusional such as T&J:)He seems to think he’s done really great things by keeping his clients in the S&P which has gone sideways for 10 years and has been decimated factoring in for inflation”

    This part in particular gets me to actually chuckle:

    “He seems to think he’s done really great things by keeping his clients in the S&P which has gone sideways for 10 years”

    That is like me saying:

    “Veronica claims to have been long in Gold since $250/oz at 2X leverage, and has become a millionaire in the process”

    That is delusional, because you never said that, yet I am making stuff up in order to undermine you as a person. Childish.

    Please, bring the proof of where I have EVER said such nonsense, and I will pay you $5,000 as a reward.

    Your anger towards my ideas, causes you anger towards me, and causes you to be the one putting out false and delusional information.

    You have much to learn in your debating skills.

  463. Tim and Jeanene

    Veronica –

    Just to show your evil intentions, I have been in the business of money management since Feb, 2008.

    So, please explain to the world how I feel I have done great for my clients for 10 years in the SP 500 with it being flat?

    This should be interesting……

  464. Dan

    T&J,

    Your posts are really starting to get boring. Its either you picking a fight or its one of your page long economic theory posts.

  465. hamvestor

    “…starting to get boring”? lol.

    T&J has succeeded in hijacking the blog, rendering it largely useless when he/she is around. For me the biggest surprise is that Gary repeatedly engages him, which simply exacerbates the problem.

  469. Veronica

    T&J, you should carefully read that statement again
    “He seems to think he’s done really great things by keeping his clients in the S&P which has gone sideways for 10 years”

  471. Keys

    T&J,
    “I have been in the business of money management since Feb, 2008.”

    Are you saying that you have only managed money for 4 years? Which would imply you as a junior? Which implies that you graduated perhaps 5 years ago, and are most likely doing your CFA exams now?

  474. Danno

    Rod (RJ),
    I hear what you are saying about not using log charts to draw trendlines. It’s a very good point. It is still true that log charts can be of some value when drawing trendlines.

    “The stock has closed below an up-sloping trendline. This is the first indication of a trend change. The longer the trendline the more reliable it is. Switch to the weekly (or higher time) scale and check the trendline again. Use the log scale for earlier exit trendline signals.

    http://www.thepatternsite.com/tradehelp.html

  478. ...at ease

    WW,
    Missed your perfect entry as price was down by the time you posted. Got stopped out 3 times on break even method.
    Woke up this morning and looks like a possible swoop to go long? What say you, you still short or going long?

  480. William Wallace

    at ease,

    My gold futures short was at the 150dma, gold never moved back up to the 150dma so im not sure how you were stopped out at break even, unless your stop was below $1682.

  484. William Wallace

    at ease,

    There is nothing even resembling a swoop at this point, if your going to try and catch a long your going to be whipsawed and turn a winning short into a losing trade. If you decide to take off the short, just keep it off until we get a clear DCL to go long again.

  485. riley

    Thanks WW then I’ll give it room. I always hate giving back once in the money. Think I’ll do something else today and just keep my breakeven stop at 1681.5. Hell made enough last few months not to worry. Thanks again

  488. Farm Girl

    Out of NUGT and everything except one biotech long-term hold yesterday, which was Day 43 of the 86-day S&P cycle. Day 43 often is a major turn day. The next one, although not as important as this, is Day 54 on February 7. I’m expecting that to coincide with Gary’s call of a bottom. I think LTRO is stretching the cycles, just like QE1 & QE2.

  489. gold silver troll

    making money hasn’t been this easy for a while…just buy the dips with a stop and lock profits as you go

    the trend is your friend until it isn’t…

    good luck to everyone…safe trading.

  495. Gary

    You aren’t going to get any kind of edge charting an ultra fund. They have decay. You need to watch the underlying asset.

  496. Gary

    Now you see why I dislike selling short. Even if you time the top correctly the intraday moves will kick you out of your position.

  497. Greenspansconscience

    Take a look at exk’s weekly chart with the default bollinger bands at stockcharts.com

    That is a picture perfect triangle/t-1 consolidation. I think it allows for exk to still move down to the mid 9’s intra week and still hold the bottom part of the triangle. we are getting closer to a break, one way or the other.

  498. William Wallace

    At ease,

    Said:

    “Missed your perfect entry as price was down by the time you posted”

    I actually posted on last Friday that I expected that gold would push up to the 150dma being it moved above the 50dma, and that I would be looking to short the 150dma.

  499. TZ(8155)

    Up wedge on gold chart last 2 weeks or so. Put in a seeming fakeout break higher yesterday, then back down. Appears we are heading lower. (Wedges can break higher like in jul 11, but it isn’t as common.)

    Appears are selloff is close at hand. A wedge break is usually pretty sharp.

  502. mikezza

    ww
    if i remember correctly, weren’t you thinking that there could be a scenario where golds next bounce out of the dcl could be extremely left translated and rollover to new lows. do you still see that as a possibility or is that off the table.

  504. William Wallace

    At ease,

    I actually mentioned my intentions to short the 150dma as early as last Tuesday.

    “Covered $1665 gold futures short at $1652. I will be looking to possibly short the 150dma if gold tests it tonight. If gold continues lower I will most likely wait for a DCL to go long again.”

    January 17, 2012 4:50 PM

  505. EricH

    “Then we will start moving back in the other direction until we get to a point where everyone is sure that all European debt markets are on the verge of imploding. Then right about the time you are convinced that the market is ready to crash we’ll put in a bottom.”

    Gary, why are you still focusing on the European debt? Over the past 5 months, the market has completely ignored it. A lot of the European 10 year notes seem to be trading just fine with very little sign of risk.

  507. Gary

    Eric,
    That’s just how markets work. I think everyone knows the problem hasn’t gone away. We’ve just managed to paper over it temporarily. At some point the cancer breaks out again.

    It usually means we are going to head down into an intermediate low.

    Remember we went through this as the mortgage market was imploding. The market gyrated back and forth until the problem became undeniable, then we crashed.

  509. Greenspansconscience

    Either $usd has topped or treasury yields have bottomed or both. This is going to act to support gold and silver and limit selloffs significantly. And yeah, i could be dead wrong. Lol.

  510. ...at ease

    WW,
    Perhaps it’s our trade vehicles (priced differently) As my mini YGG12 is at different price levels than YGJ12.
    I know for sure we are not looking at the same charts as I don’t have access to yours real time.
    So unless I see you post real time entries, I am guessing when you are entering at 150 or 50 dma.

    As I said in the very beginning, I have a hard time keeping up with you.
    I think I will nickname you “Tigger”.
    🙂

  513. coolkevs

    AAPL bulls?
    DeMark is showing a DAILY 13 Sequential SELL signal recorded 3 days ago and will be confirmed today with a bearish price flip (close below the close 4 days earlier).
    Not too much new in the DeMark realm. There is a MONTHLY Sequential SELL signal that could record in the S&P futures when it gets above 1326.5 – good for 12 months. NDX already had one of these last May which is good until April.
    How are those financials doing for you? BAC up 30+% since I highlighted it at the end of the year. Euro up 400 pips since I highlighted it. Ford almost up 30%. GDX/GDXJ – pretty much flat on the year – gotta diversify and hit it to quit it 🙂

  516. Aaron

    HUI back under 500…doesnt look very strong despite the gold and the snp rallies thusfar. Should go lower in the DCLs forming in both…and ripe for a buy!

  525. ver

    Hey WW:

    Do you think the dollar low is in or do we have another push lower? October was an intermediate low so by that comparison we may have a a bit further to go. But I’d love for you to tell me that we’re on the up and up 🙂

  527. coolkevs

    Oh well – was wrong about AAPL – but I did have a straddle/strangle with a couple puts/calls, so I should make money tomorrow!
    Anyway, possible NQ and ES futures DAILY SELL setup possibly recording on Thursday – Friday through next Wednesday look for a downside reaction. We’ll see what Boom Boom and his merry band have to say tomorrow that could shake up the market!

  528. William Wallace

    Ver,

    As soon as the market decides to roll over the dollar will most likely blast off, it looks like it’s just testing the 50dma now. I can’t see any reason for the dollar doing anything other than dipping into a DCL right now, unless the market continues to grind higher and forces it into an ICL.

  532. William Wallace

    Ryan,

    I am waiting until tomorrow, this market doesn’t sell off on the Fed meeting I think it may be in a runaway move and I’m going to throw in the towel. It will almost certainly tank after I cover my short, for the market to exhaust my patience it is almost certainly in a runaway move or a day away from reversing after I pull out.

  534. Ryan

    WW,
    Ahh don’t say that, I’m in enough pain as it is lol. Now if it doesn’t drop after the fed meeting I’m going to think maybe I should just hang on a little longer and then it will truly be a runaway move!

  539. Phil

    If the market doesn’t sell off after Barry talks about making the wealthy pay their “fair” share tonight coupled with a “no QE” announcement tomorrow….I’ll no longer want any part of it…short or long!!

  545. riley

    at ease cool site, thanks. I’m adding to my shorts snp shorts in am then will hang until 1330. Risking 5-7%. Gold futures always harder. Still thinking of moving stop to at 1670. I will get on sidelines if breaks 1680 until a swing low in place

  547. SF Giants Fan

    Wall street = The Rich

    Tax increases for the rich = Wall street ;-(((

    Wall street will punish tax increases by lower prices.

    QE 3 isn’t going to do any thing different than QE 1&2 except to add the the ever growing debt bubble. Any pop in the market will be short lived.

  550. Phil

    SFGF–

    Yup–THE RICH will very likely teach Barry a lesson if he tries to follow through with the fair share business. I for one just hope I can refinance at record low rates–heck maybe they’ll even forgive some of my principle!!

  553. Glenn

    Gary…something wrong with the public blog…comments stopped on the 18th….showing only 200 comments vs over 500 on blog count?

  557. William Wallace

    Looks like TLT is about to pop off the 120dma, found support and bounced of it yesterday and today. Stochastics are bottomed and turning, and the True Strength Index looks to have possibly put in a low.

  562. Heads Up

    Thanks for the DeMark video, SFGF. We had a higher close Monday and went marginally lower today. All A-OK.

    AAPL’s earnings moved the markets AH, which gives me pause. Trust it’s only a knee-jerk reaction and we move $ higher and $SPX lower, Wednesday, aligning with DeMark’s message.

    FOMC statement is 12:30 ET, Bernanke 2:15 ET. No whispers of QE3 a must, though.

    Others thoughts?

  565. TZ(8155)

    Gold at bottom of up-wedge right now. Looks like it’s gonna break and the down action start (magically in time for the fed…imagine that.)

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