Today is a classic example of why I have been warning traders not to push the long side of the stock market. When these creeper trends finally break they often generate a crash or semi crash type of profit-taking event. 

The last 2 1/2 months were a classic example of why I have been warning traders not to short the stock market. These creeper trends can go on much longer than many people expect and shorts just end up getting whipsawed out multiple times until they’re so shell shocked that they can’t hold on when they finally do catch the top.

All in all the correct strategy was to remain in cash until the profit-taking event occurred and then buy as close to the bottom as possible.

If I had to guess I would say this will probably turn into a two step down affair followed by a two-month volatile consolidation as the dollar rally progresses. 

You might recall in my last post I mentioned that the dollar would need to get on the upside of an intermediate cycle before stocks had any realistic chance of correcting. I outlined the conditions that would confirm that the dollar had formed an intermediate cycle low. Those conditions have now been met and it appears that the stock market is ready to deliver the much anticipated profit-taking event.

During this period gold should drift generally downward over the next couple of months as the dollar rallies.

There will be plenty of false rallies (just like last Thursday) to sucker traders back in. But I really doubt gold will put in a lasting bottom until the dollar’s intermediate cycle tops. Barring a public announcement of QE3, that is unlikely to happen until sentiment reaches extremes again. That almost always requires a move to new highs and usually takes a minimum of one and a half to two months to generate that kind of bullish sentiment.

As I have been warning traders for months the dollar’s rally out of its three year cycle low almost certainly isn’t done yet. The rally out of a three year cycle low usually lasts at least a year, and that’s the norm in a secular bear market. Since the three year cycle low bottomed in May of 2011 it’s unlikely that we would see a final top until at least May of this year. And since the three year cycle low in 2011 held above the three year cycle low that occurred in 2008, there is even a case to be made that the dollar has now entered a secular bull market.

This would imply that despite Bernanke’s best efforts the forces of deflation may be overwhelming the central bank’s efforts to reflate. However I’m confident that if 10 trillion isn’t enough Bernanke will not hesitate to print 50 trillion. I have little doubt that no matter how this progresses it is going to end in a massive inflationary currency crisis.


  1. Strat81


    What are the ramifications to the secular bull market in Gold if the Dollar is to enter a new secular Bull market?

  2. Gary

    The dollar would only be in a secular bull market against other currencies. The secular bull market in gold is highly unlikely to end until it reaches extreme overvaluation. Historically that has meant a Dow gold ratio of 1:1.

  3. Gary

    Yes there may be a Bollinger band crash trade in effect on the miners at the end of the day but it’s very unlikely we will see a meaningful bottom until gold forms an intermediate low. That probably isn’t due for another couple of months.

  4. mikezza

    thanks gary. this one is a long term accumulate for me and i just entered a small starter position yesterday. surprised me to see it turn green

  5. MrSu

    I hope the docs were successful with your operation. I guess you might not know for a while. Best wishes!

  6. Gary

    It’s still very early in the daily cycle. This is just getting started… or all hell is going to break loose in the next couple of days which could generate an early bottom.

  7. Elaine


    Thank you, so today is not considered a crash, but rather a decline? I am trying to assess based upon your weekend report.

  8. MrMiyagi

    We, at least I, are talking about a BB, Bollinger Band, crash here, not a market crash although the candlestick sure looks like one.

  9. Elaine

    WW, hang in there. I run regularly and for more than 10 years there I have encountered a man who has a left leg amputated below the knee. He runs with a “c” shaped prosthesis that has a springing action. He’s darn fast too, probably less than 8 minute miles.

    Rest up and get well.

    1. William Wallace

      Thanks Elaine, I ran for years also on that running leg you speak of. Below the knee your just losing your range of motion in your ankle, can still walk up stairs, above the knee is a whole other world.

  10. TZ(8155)

    The 2006 D selloff and then climb back up out of it has numerous similarities to what we see here including an arguement that the selloff is over and this is the low.

    I will probably have more comments on my views later, but there are a number of possible reasons not to expect more downside.

    Yeah, I know. Famous last words.

  11. MikeS


    finally someone sees it too. But if it does follow 2006(as it has been on a % basis to a tee for the past 6 months) this isn’t the low…that low should come in towards the end of the month. Although the bounce is coming

    Gary, in your opinion any chance Feb 10 was the actual low(as the numbers show) which would make today day 16?

  12. TZ(8155)

    There are other metrics than % pullback that argue for a low.

    Remember, sections of charts NEVER duplicate each other. There are always enough differences to throw people off. The general similarities are striking though.

  13. TZ(8155)

    Let me throw out a few thoughts:

    -The selloff last week was clearly a hit. There is ample evidence from enough sources who attribute the selloff to a large order dump (with no concern for profit – i.e. a central bank) timed with the speaking of the world’s fiat currency leader. A hit means that absent that action the buying strength WAS there and was about to set new highs (especially in light of the ECB blowing out another 500billion or so euros.)

    Basically a hit means the market wants to go UP naturally, not down. And wants to go up NOW. So I’m not going to anticipate a long selloff from here due to a temporary hit.

  14. TZ(8155)


    -The selloff in 2006 happened right as a reverse H&S formation was about to complete and go higher. The EXACT same place this one was hit last week. Note also that reverse H&S formations are exceedingly rare in technical analysis, yet they keep happening over and OVER in the gold market. Reason? Gold is essentially the ONLY market in the world with an inside interest trying to push it DOWN. Pretty much any other asset or security existing on wall street is created with the goal of pushing it UP. A reverse H&S pattern is a sign of repeated ‘hits’ to a market to knock it down which are finally overcome to step up higher.

    -The selloff to today’s levels (from the H&S breakdown) was much faster than in 2006, but it has roughly taken gold to the same relative level it dropped to back then (when I say relative I mean something other than %)

  15. TZ(8155)


    -The ‘recognition’ day surge in gold on jan 25 is an important point because it represented the apex of an upwedge (a battle between longs and shorts) that SEEMED to be going lower than the cracked higher violently. It was a ‘recognition’ from one side of the trade and a massive retreat.

    The lows we hit today are approaching and in the zone where that jan 25 surge started. This is a significant technical level and one that should be expected to hold or at least give resistance.

  16. TZ(8155)

    Whereas in 2006 we hadn’t even really BEGUN to print (it was still real estate mania territory), now we find that we are post 2008 (and post EU 2011 stress) and EVERYBODY is printing.

    I find it hard, but not impossible, to think that gold will now perform WORSE than 2006 – even though we just had a long C wave up to almost 1900.

    I believe the sideways zones or pullback periods are going to become shorter and shorter as this bull progresses. More and more people are waking up to what is going on.

  17. Johnny


    I am in too with options to limit risk, despite all my indicators (1-4 weeks) pointing down with the exception of very short term indicators (1-2 day). It was too much too fast, and I thought it was a good risk trade because it felt so bad. We will see how tomorrow goes.

  18. TZ(8155)

    Anyway, I think the low today looked good and was worth a BET at a defined risk that it will hold and we will go higher.

    If right the rewards are high, if wrong I continue to play with a little less money.

    I’ve made my bet for now and we can see how it works out.

  19. TZ(8155)

    Oh, we also had an A-B-C type selloff which many technical guys like to see. We crashed down last wed. Paused a few days. Then resumed today.

    Doesn’t mean I’m right and that the selloff is finished, but often a selloff takes at least 2 phases down and we now have that minimally.

  20. TZ(8155)

    Something else…

    If you take the gold chart daily and draw a big downtrend line on the tops since aug (the break out being that ‘recognition’ day on jan 25) you find that we are approaching it again from above.

    So this could all just be one big retest of the breakout (and the surge on jan 25 certainly acted like a breakout).

  21. TZ(8155)

    So again I see a BUNCH of reasons to leverage a bet here going long. We are only about $10 off the low (assuming I’m right and that low holds) so this is one of those plays I like where I can get great leverage without a large stop.

  22. William Wallace

    TZ, that upper trendline is perfectly converged with the 275dma right now (if gold were to drop directly from here to there tomorrow), which as I mentioned in a previous post was my next level for a possible B-wave bottom above the 300dma, thgough im still leaning towards a test of the 300dma, so there is a ways down to test that trendline from above.

  23. Gary

    A B-wave isn’t going bottom in one failed daily cycle either. It’s going to grind away for months until everyone, bulls and bears alike, throw in the towel.

  24. William Wallace

    From previous posts, thought worth a mention again.

    “I will stress it again, as I did for many weeks before the Dec bottom, every A-wave retraces back to the MA which the D-wave bottoms if not halted by the 200dma first. I doubt this will be one of those times that the 200dma halts the decline, and gold will most likely revisit the 300dma.”

    “B-waves typically retrace to the MA which the D-wave Bottomed, if not halted by the 200dma beforehand.

    02′ B-wave – Bottomed $1 short of the 200dma/on the lower bollinger band.

    03′ B-wave – Bottomed on the 200dma.

    04′ B-wave – Bottomed on the 300dma on a closing basis/on the lower bollinger band.

    05′ B-wave – Bottomed on the 300dma on a closing basis.

    06′ B-wave – Bottomed on the 275dma on a closing basis/just shy of the 300dma.”

    February 29, 2012 at 2:47 pm

  25. William Wallace

    B-waves grind lower, they are made up of a few daily cycles, there will be several consecutive up days (and/or sideways chop) before rolling back over, its within the beginning of new cycles that bulls get stuck for the B-grind lower if not whipsawed out of position first.

  26. TZ(8155)


    In cycle terms, I think my argument would be that a C wave began on December 29 (after 1 cycle A up and 2 cycle B’s down….exactly as in 2006).

    An that the selloff now into the low today is the end of the FIRST (stretched) daily cycle of the new C wave.

    How does that strike you?

    1. Gary

      By definition a B-wave doesn’t move below a D-wave so Dec. couldn’t be a B-wave bottom because it made a lower low.

      I haven’t the slightest doubt that gold is going to grind away at traders for probably a year or more before any sustained move.

      People are going to make a little only to turn around and lose it. And this is going to happen over and over and over until every gold bug in the world is ready to throw up.

      Then when the last bull finally throws in the towel gold will be ready for the next C-wave advance.

    2. james r

      But, but, I bet every gold bug is thinking your way Gary. And the price of gold is going to grind higher and higher leaving the gold bugs with their shorts dropped to their ankles

    3. Gary

      That’s not how human nature works. Just read the blog. Everyone can’t wait for the next C-wave. The last one just ended and we all want the next one to start immediately. Bull markets just don’t work like that.

      The bigger the C-wave the longer the consolidation that follows it will be. It takes a long time to work off that kind of bullish sentiment. A two and a half year C-wave that gained over 100% isn’t going to consolidate in 5 months. This isn’t going to be measured in months, this consolidation will almost certainly be measured in years and the next breakout won’t occur until every last gold bug in the world throws up their hands in frustration.

      Kind of like what’s been happening with miners for the last year. When we see that kind of hopeless sentiment on gold then it will be time for the next C-wave to breakout and run.

    4. james r

      Maybe, but the nature of gold has gone parabolic which I think means less time to consolidate. In fact this year we may see gold and metals decouple from the general market due to inflation starting to peak its ugly head

    5. Gary

      The nature of gold didn’t change. We just witnessed a C-wave topping. They all look like that, some even more parabolic than this one.

  27. Matt

    Sold my /GC @ 1678. It may continue higher, but must stick to my plan. I learned this from WW. See WW, I was paying attention. Thanks for the 11 ticks.

  28. TZ(8155)

    Or…maybe this selloff was simply a powerful engineered hit and the fact that it is violating many cycles ‘rules’ is irrelvant and should be ignored?

    That we WERE in a 2nd daily cycle for the C wave and progressing higher (after a low mid feb) and the hit simply had knocked things off course temporarily but should not be interpreted as some new big cycle interpretation which changes everything.


    It can’t reasonably be argued that the markets ALWAYS obey cycle rules and that there is NO ACTION whatsoever which can break them or smack them around. Right?

    Maybe last week will just become and oddball on the cycle chart which will have to be redrawn or relabeled (or ignored) at some point in the future?

    1. Gary

      Folks this wasn’t a “hit” This was just people taking a large position expecting a move higher and then when it didn’t work a lot of people had to panic out of that leveraged position quickly. Heck 3000 SMT subs all hit the sell button that day also.

      The large bock trade that everyone seems so fascinated with as proof of manipulation was almost certainly just a hedge fund that took on too large of a position that quickly went against them forcing them to panic out.

      Gartman had just advised everyone to buy gold. Now the trade quickly went against him. Which do you think is easier. Admit you screwed up on the timing or blame the move on some mysterious “takedown”.

      Gartman was just taking the easy way out and blaming his poor timing on someone else. Nothing new there GATA perfected that strategy years ago.

    2. Liquid Motion

      Without Q…a perfectly timed HIT.
      ECB comes out with a 535BLn Euro package to support the EUR banks….which was very much GOLD positive and the market was prepping for it….ready to move beyond 1800, Benmeister made his speech and effectively took QEIII off the table. That was a $30 HIT instantly. Algo’s were triggered thereafter and the rest of the move swiftly down $100 where the bid was caught. Make no mistake the Gold (& Silver)price is being suppressed. Where they should be priced at is unfathomable and effectively implies worthless paper currency….together with massive loss of wealth and power.
      Its now paper vs physical….in the end physical is the strongest hand.

    3. Unknown

      I don’t buy the “hit” theory. That said, if it was a hit, I hope they hit it again. I want to buy cheaper physical gold.

      If some “cabal” is driving the gold price lower then all they are doing is making it cheaper to buy the real thing; i.e., physical gold. In the end there will only be a real market for physical gold because the paper entities will have been shown they don’t have the metal to back their paper.

      These “hits” are only giving buyers of physical gold, as in China, India, central banks, etc. great buying opps to buy the real thing. If Gary is right and gold runs to $5,000 – $10,000, there is no way in hell the COMEX, the LBMA, and ETFs like GLD are going to be able to get their hands on enough physical gold to cover the paper they are selling. No way in hell. There just is not going to be enough of it around. The real stuff will be king as well as the gold miners with politically secure gold reserves in the ground.

  29. Liquid Motion

    Thanks for the update.
    What in your opinion will drive the $$ higher to form an IT cycle top over the coming months ?
    Anything to do with the flight to safety in light of a possible issue with Greek Debt Funding (9.3.12)??
    That aside, everything else I see is all $$ negative….Gold and Stocks positive. Liquidity is increasing in both magnitude and frequency.
    Besides the USDX is fast becoming IMO an antiquated measure.
    One interesting observation though (from the displayed charts)is the correlation of the move of the $$$ from Nov 11 to Jan 12 and that of the S&P for same period. One out of the box (they are supposed to be inverse). Gold interestingly went effectively nowhere over the same period.
    I’m with TZ in terms of where Gold is at.
    Stong base formed at breakout and we are into the C-Wave…(the strongest one of this Secular Bull).

  30. Gary

    Just pull up a three year chart of gold and you can already see what is unfolding. Gold has entered an extended churning phase. This is necessary after the kind of massive C-wave we just saw.
    Gold is going to have to consolidate for a long time before the next C-wave can begin in earnest.

    1. Gary

      The dollar is still rallying out of its three year cycle low. There’s no need to try and find a fundamental reason for it. There probably isn’t one. That still doesn’t prevent the rally from happening.

      It takes time work off the sentiment extremes that were generated at the three year cycle low last May. Like I pointed out that has always taken a minimum of a year and that’s in a secular bear market. The dollar may not be in a secular bear market anymore. If that’s the case then the dollar index isn’t going to top for probably the next two, maybe two and a half years.

      In that scenario then stocks probably just put in a double top and the next cyclical bear market has begun. We do have a glaring Dow Theory non confirmation and Lowery’s buying pressure is well below selling pressure.

      We’ll just have to wait and see if a Dow theory sell signal is generated before we can say for sure.

    2. Liquid Motion

      Isnt it feasible to assume that the ECB’s massive liquidity injection > 1.0 TLn Euro over the term of 3 months could shorten the consolidation phase for Gold ?

    3. Gary

      I Doubt it. That liquidity will find something else to land on, probably oil.

      Just look at every C-wave. They all required an extended consolidation phase before the C-wave could breakout.

      The bigger the C-wave the bigger the consolidation that follows, and the bigger the consolidation the bigger the next C-wave.

      This is just how bull markets and human nature work.

  31. William Wallace

    The 07 C-wave took 11 months to break out, and the first 11 months was a sickening choppy consolidation. That was the worst C-wave, all the others were nothing like it.

  32. William Wallace

    At ease,

    I have talked about this for a long time, many times in realtime, and went over it with you personally.

    Buy as close to an intraday low as possible, and keep the position on until gold tags the 200sma on a 5 minute /GC chart, then take it off no matter what as soon as its tagged.

    Its important that you be able to recognize bottoms and try to put the long on with a break even stop, or a tight stop, but not so tight that you get whipsawed out immediately. If one can recognize a bottom and get in near the bottom gold will move away from your entry more often then not and you can move your stop up immediately to break even. If you did happen to get stopped out with say a 3 point stop below your entry, then you didnt catch the bottom and gold will most likely drop another $5-$10. Dont even attempt it until you can recognize a bottom, to recognize a bottom you must watch a 5 min chart of /GC for as long as it takes for you to clearly recognize a bottom.

  33. riley

    WW I’m looking to sell around the euro open again like last night, nice scalp. Will watch and see, might hold off till thursday night to give this move room for bounce, WHat do you think?

    Gary I’m very willing to wait for next C wave, but nothing wrong with scalping a little here and there in my opinion. I like the dollars chances for next week still not sure past $82 though.

    1. William Wallace

      At ease,

      Yeah I know, you have your head in too many reports and books, etc.. too much just serves as a distraction, always told you that. You’ll forget what I said again in about 2 days…lol

  34. ...at ease

    WW, if today I had bought around the 1670 range, I would take the trade off tonight around 10:30 pm as it hit the 200 sma 5 min? And I on the right track again?

    1. William Wallace

      I wouldn’t go short at that point, because of the fact that gold almost always makes it back to the 200sma on a 5 min, that doesn’t mean that it is reversing off it.

  35. TZ(8155)


    You guys made some kind of blog template change in the last 24hrs and the body font reverted back to “Georgia Serif”.

    Georgia and Serif fonts (with the little whisps on the characters) are the WORST way to read small characters on any computing device. The resolution simply isn’t there (like the almost infinite resolution of print) to accurately display little curlys and flags on letters. They end up looking rough and jagged.

    Most sites learned this and made the change ages ago (even the venerable WSJ who stuck it out for a while against reason).

    You are using a old formatting template from 2004. Please change the default font to “Arial, Tahoma, Helvetica, FreeSans, sans-serif”.

    This is a simple change and everybody’s eyes will thank you.

    If you want to see the visual difference please refer to the text on norcini’s blog which is using these settings:

    1. TZ(8155)

      I think you should bump the font up 2 points. It really is borderline too small based on most human standards even if, selectively, they can all CTRL-+ it every day. (Anybody wanting it smaller can CTRL minus it back). Just my opinion.

  36. Unknown

    Many readers here a re still not looking at a large enough picture – when looking at the dollar – and the forces at work here. Have you ever heard of the Carry trade?…..well…..its obvious that the U.S numbers are currently beating most others….and its also painfully obvious that Japan is now “easing” considerabely.

    So?….the carry trade has/is shifting back to selling the Yen as opposed to the use of the dollar! U.S will raise rates sooner than expected (they have to!) and thus…..the U.S won;t be bottom of the barrel anymore – YEN will be!

    Check out USD/JPY now reversing (finally) its looooooooooooong term trend! – the big money – and I mean the big money – is obviously starting to shift from selling the dollar (and buying AUD,NZD,CAD) as carry……back to YEN as the underdog!

    Stocks/Gold have little to do with this MACRO TRADE that many of you likely don’t even know exists!

  37. High 5

    Unknown said:

    “There just is not going to be enough of it around. The real stuff will be king as well as the gold miners with politically secure gold reserves in the ground.”

    “Politically secure” is an oxymoron. LOL.

  38. Tiho

    Wow, super bullish on Dollar in the medium term! But now there is more surprises for us poor unsuccessful investors… because of one moving average, the fundamentals have changed, and apparently the Dollar is now entering a secular bull market. That’s mad!

    1. Gary

      Only against other currencies and it will take time to confirm. Right now we just have a three year cycle low that held above the prior one and a 200 week moving average that has turned up for the first time in a decade.

      This is just a possibility based on what has happened recently. There is no guarantee. Believe me I find it as unbelievable as you do but the facts are the facts. Just because I don’t want to believe it doesn’t make it so.

    2. Tiho

      Well I guess both of us are in the unbelievable camp than. As you already know I think the Dollar will not make a 52 week new high and will instead make a new low this year. In other words, the Euro will move above high $1.40s. It is far from the possibility in anyones mind right now and is probably just as unbelievable, but what is the use of of being consensus. Good luck with your trade. 😉



    thanks for your sliver update. I am not sure I understand the chart though.. what is the purpose of your bright dots?


  40. Vodni


    I just read here, but have been most impressed in the past months with your trading calls and overall strategy. Glad to hear that you are back home and recovering!

    What would be your plan if we assume that gold just cuts straight throuh the 300 dma and keeps falling? How can one pick the bottom in this situation?

    To which dma did gold drop back in 2008?

    1. Gary

      One would monitor the cycle count and try to pick a bottom based on a swing in the timing band for a bottom.

  41. Unknown

    Tiho.easing = bad for currency…while tightening = good.

    EUR to 1.40? – give your head a shake ..and check out bond yields blowing up in Portugal and now Hungary..you obviously have no ‘world view’

    The tide has turned and U.S buck will fly…as the U.S will tighten looong before anyone else….or at least Japan which is really all that matters

    1. Tiho

      Unknown, thank you for advice. I’m going to go home, shake my head and remain away from “the world view” as you put it so descriptively.

    2. n1tro


      Tell me how the US is going to tighten up? Increasing interest rates which increases their debt servicing costs? Where is the US gov’t going to get this money to pay for it all?

  42. sophia


    well done on your long 6x…It must be nice to start the day in positive territory…
    I cannot get to touch it yet..

  43. sophia


    what do you think of this sudden move in Oil, Gold…Time to bail out or normal think to try to suck in some buyers?

    1. Gary

      This is what B-waves do. The bounce, roll over make a marginal new low then bounce. Repeat until everyone is so frustrated that they can’t see straight. I can assure you that if we are in a B-wave and it looks like we are it isn’t going to bottom for months yet.

  44. Unknown

    Hilarious…..Im no fan of the U.S by any means…..but you think u have any clue as to the actual reality of the situation in the EU Zone?

    This thing is just getting started – as the ‘cooked books’ slowly…and i do mean slowly come into the light.

  45. William Wallace


    Buyers stepping into gold oversold above the 200dma. Its likely we see gold crawl the 200dma before the next leg down, unless it has bottomed already, which is unlikely.

  46. Unknown

    And Brutus Maximus is an obnoxious jerk trying to stir the pot and get some attention his narcissistic ego so badly craves.

  47. R41

    Looks like Brutus’ Junior High School must be out this week for spring break. Now you run up stairs sugar and help mom fold the clothes.

    1. ...at ease

      Twiddle, twiddle, thumb roll…Not much happening we didn’t expect, so will head out and enjoy some of this nice weather today. 🙂 Everyone have a great day!

  48. TZ(8155)


    Excellent article about apple and the phone/pad situation. Most of the radical tech changes with this new paradigm are over. It is now software and incremental changes going forward (Until the NEXT big change like AI or bio computing or whatever).

    Apple is going to lose the ability to keep extracting cash from its customers and android is likely to continue picking up steam and eventually win like windows did if apple trys to keep a fully locked, high-prices, protected garden around their products.

    Yes they will still have customers and still make money and still exist, but this whole 500billion in stock and continually squeezing their customers by incrementally adding bit by bit to each new product is coming to an end I think.

  49. TZ(8155)


    My comment was about the font TYPEFACE and not the font SIZE (which I know how to change).

    I see that you or gurvir corrected it to a san-serif (no ‘wispy’) character set.

    Thank you. Much cleaner.

    Remember that you can still bump up the font size easily by the same process of making one change the templace CSS. I’m aware you see it fine and so do I and that people can use CTRL-+, but you don’t have to settle if you would PREFER it bigger.


  50. MrMiyagi

    Sold all equities I bought yesterday near the close; small gains but good enough.
    Possibly more upside tomorrow but feels a bit weak.

  51. TZ(8155)


    >TZ, well done on your long 6x.

    I’m 5x actually. Will lighten to 4x close to my 1700 target and move stops LOWER to near yesterday’s lows for a breakeven position and lock that in.

    I still think the lows are in and I think people aren’t looking at 2006 much as a possible example.

    Gary’s comments about sideways action for a while before NEW HIGHS (note those words) may be correct, BUT…his comments of this nature allude to gold being FLAT up and until it makes new highs. This is not born out by history.

    Yes…the gains don’t accellerate necessarily and until new highs, but the uptrend clearly continues.

    Jan 2007 was a low similar to what we have now and it is true that gold didn’t make NEW HIGHS utnil Oct, but gold still climbed up and to the right during that entire time gaining 20% BEFORE that ‘new high’ point.

    Yes, it was more choppy than usual, but it had clear lows that could be bought and a ‘turkey’ position could be held for profit.

    There are similar arguments and examples.
    The important point is not confusing the ‘new highs months later’ with where we are NOW and the GAINS that occur by time you GET TO those highs.

    We are $235 below the ‘new highs’. I don’t see that as being disregarded and wrapped up into statments about “it will be a while before we get to ‘new highs'”. Ok. Clearly.

    But we don’t know how long. It is a bull mkt. And there is $235 available to grab on the table.

    I still think there are good odds the low is in.

    1. William Wallace

      “I still think the lows are in and I think people aren’t looking at 2006 much as a possible example.”

      If we were to compare now to 06′ we still have two full daily cycles to a bottom,Atleast a move back down to the 275dma, and this B-wave will have retraced almost the entire A-wave.

      If your not just dismissing the ABCD pattern then B-waves dont move below D-waves, it didn’t happen in 06’… and if you dont expect it to happen now and think the bottom is in, then this would be the first B-wave ever that was only a 1/2 cycle long.

    2. TZ(8155)

      I’m not a big cycles guy. It is just a system like any other system and we all know the rules break.

      Getting hung up on that december low going lower when it was a clear low-volume hit during the span from xmas to new years when nobody was in the market doesn’t make sense to me.

      It went a tad lower. So what?
      They were gunning for stops when nobody was paying attention and blew some out.
      It doesn’t automatically dictate some huge change in how gold will trade going forward.

      I remind that the FED was passed into law on 1913 right before xmas eve when nobody was paying attention either and the ‘volume’ of congress was low.

      The guys running this show know what they are doing.

    1. MrMiyagi

      Settled on renting for 6-7 months to see if we like it here; so far it’s a no but it is livable enough for us to see where we can settle. If I was a petroleum engineer, I’d go to Saudi Arabia but I’m just a bum.

  52. TZ(8155)


    Hilsenrath is the chosen ‘leaker’ for the fed in common understanding.

    The only reason the fed starts floating comments of ‘sterilization’ is because they are thinking of printing more soon and need another lie as a way to try and make the world not realize what it really is.

    With the ECB massive printing and the Fed looking to gear up again and with everything going on I simply think last week was a hit to prevent a breakout and that the low is in.

    The fed next week could announce something. Clearly there are gears turning if this story was written.

    I could be wrong about the low in gold, but that is always a true statement. I’ve decided on a risk amount to make that bet and so far so good. We will see.

    I think EVERYBODY sold last week and I think if we creep up here there are going to be a lot of people trying to get back in.

    1. William Wallace

      “I think EVERYBODY sold last week and I think if we creep up here there are going to be a lot of people trying to get back in.”

      This is why new cycles are formed, and bounces occur with in D-waves, B-waves, and Intermediate declines. And when those “people trying to get back in” are all in, the cycle is failing and rolling over and continues to grind lower.

    2. Slumdog

      WW, there’s a very high risk that those who’ve just entered into the SnP are going to get their heads handed to them, big time tomorrow or Friday.

      The problem and the driver is that the USG and now the Europeans think they can print paper and demand it carry the same value as the prior paper in existence. Clipping coins is not a new trick. The government is the government. Hail Cesar.

  53. TZ(8155)


    The deadline for Greek bond holders to tender their bids to exchange existing debt for the ‘haircut’ debt is 8pm tomorrow or 2pm EASTERN time.

  54. TZ(8155)

    I’m aware that my comments calling a possible low in gold do NOT mesh with cycles theory.

    I would have the same problem if there was a cycle low call from gary and MY approach didn’t look good from MY side.

    None of my comments can convince or change the fact that cycles don’t show a low here. I’m not trying to change anybody’s mind and any good trader knows you stick with what works for you. You can’t catch every trade. And gary isn’t suited to my approach or me to WW or whatever.

    Gary is good. WW is good. I may be right, they may be right. None may be right. Time will tell and I’ll either get stopped out and join you guys waiting or the rest of the group will adjust and join me.

    1. William Wallace

      TZ, If you remember my post on what to expect from a B-wave, and what levels I would be looking at for a bottom as far as MA’s go, I said that even though “I dont think the 200dma will stop the decline” to “start buying the 200dma”. So I definitely think anyone who is looking to start building a position, it wouldnt be a bad idea at all to start buying at this level (200dma), just be prepared to hold through a drawdown because its a high probability that the bottom is not in and one will be whipsawed out of position.

    2. TZ(8155)

      We are in a C and moving up and the market is going to have to take me out to prove me wrong.

      I didn’t buy yesterday based on cycles. I bought because other tools I use make me think that low has a reasonable chance of holding. I outlined a few of the reasons here.

      If we climb just a bit higher my position will be break even. Very likely and not bad for a 4x trade that might work.

  55. TZ(8155)

    By the way, Gold had already put in a normal and believable “B” bottom on Dec 15 and was holding and moving up as normal. (Multiple cycles people had already called that bottom.)

    The guys in charge waited until the xmas-NewYear week “in the dead of night” and in the span of TWO DAYS launched an attack – blowing things downward.

    The volume on those two days is NON-EXISTANT. Look at a proper futures chart if you want to see it. LOWEST TWO DAYS OF VOLUME FOR THE ENTIRE YEAR!! They are GOOD!

    They accomplished exactly the goal – a blindside hit when the market was weakest and when few were looking.

    Since it was a hit, the market recovered VIOLENTLY in TWO DAYS completely reversing the action…and shot skyward. Exactly as you would expect.

    This is where the people who understand what gold really IS and why there are people running the fiat system gunning for it have an advantage over people who don’t read history and can’t understand the game.

    Believe what you want (history shows thats what people do anyway).

    That drop midweek was a hit – pure and simple – and using the fact that it made a ‘lower lower’ to change all interpretations going forward is a mistake, imo.

    You’d be better served by saying “wow…they are good” and learning about paper money and precious metals.

    That there are so many credible sources of the truth out there and yet people still say “it’s just the market” and “it is just a hunk of metal” amazes me.

    I promise you the guys at the top laugh at their genius when even moderately smart people refuse to see the truth. It must be funny to gaze out across the land and see the people willingly enslave themselves and actually act to HELP those who steal from them.

    1. n1tro

      100% agree with you that the drop in gold last week was a deliberate hit. I know Gary said it is more plausible that a large hedge fund made a “wrong” bet and was getting out of the position when they didn’t hear talk of qe3. But let me ask those who believe this scenario, ask yourself, when did this large hedge fund get into the position? Certainly it wasn’t the minute before the announcement or gold would have jump $80 but more likely got in days prior resulting in the run up in gold prices . So I’m just confused why this hedge fund would unload all at once in a thinly traded market (ie gold market vs stockmarket vs forex market) dropping gold $80 or so versus selling into the “strength” before Bernanke spoke. Aren’t these hedge fund types the “smart money” we are trying “track”? Whatever the cause for the selling, the effect is that the charts looked bad (ie. 1 min, 5 min) right there and then thus the herd followed and dumped too. Just my humble opinion.

  56. Johnny

    TZ, you make a good argument. With everybody reading charts it is not hard for major players to paint them! It is certainly going to be a fun week because I am long too.
    My (1-2 day )short term momentum are positive and the longer term ones( 1-4 weeks) look to be bottoming. Directional are non-conclusive but looking positive. Could be wrong, but I do it is worth a bet.

    Aside from that, buying gold on a the 150 day average price is a good move period. Money printing has not stopped..

  57. riley

    TZ respect your position, like baseball team with homerun hitters. I’m more singles guy as scalp trades, but totally disabuse this with a core that I never touch. I will swing for fence when what I percieve as total alignment. Now not that time. What Gary says is true, when all truly against gold is time to go all in. I did that in 2008 with my core miners. Now prudent with small amounts for trades. In your defense small stop loss will work for you in long run as eventually hit the parabolic time(just when who knows). Just your style different. Thanks.

    1. William Wallace

      BTW, my above reply is from last night immediately after my $1685 entry. Doesn’t do anyone any good being it didn’t post to the blog until this morning.

  58. riley

    WW held off last night, looking good for scalp on euor open tonight. If I can stay awake, been busy, not as busy as you, but as you know kids need loving too. Great updates.

    As an aside must say following Gary’s portfolio with some of my money has been easiest gains to date. Thanks

    1. Gary

      hmm….possible. If gold can’t close back above $1700 then I would stick with the on going daily cycle theory.

  59. TZ(8155)

    TARGET REACHED on my position. I’ve sold part of the gold futures just below 1700 and reduced down to about 4x+.

    I’m now breakeven on the position with stops near the lows tuesday and holding with expectation that those lows will hold for the rest of this bull mkt.

    I love it when a plan comes together

  60. hamvestor

    WW, I have the 150 dma for gold at $1715. If you expect gold to roll over at the 150 dma (only $15 from here), and we are only in day 2 of a new cycle, it could be a very short cycle, right?

  61. William Wallace

    We have the 20dma crossed over the 10dma on a gold daily, as I mentioned recently a good indication that a trend change is indeed in effect, would like to see a test of the 150dma for a possible short.

  62. TZ(8155)


    >W2,You and your MAs are doing to great job! Thanks for sharing

    You KIDDING me?
    I’m KILLING it over here and I *still* don’t get the girl?!

    Baby, he’s a one trick pony – moving averages only.
    It’s all flash and polyester.

    He can’t take care of you like I can.
    Cavier vs. tuna fish.

    If you know what’s good for you you’ll dump him.
    He’ll only hurt you in the end.

  63. sophia

    TZ, TZ… ,

    I gave you my compliment for your early entry when everybody wanted to sell, and you corrected me about the leverage ( 5x instead of 6x). Girls like to be talked to nicely… 🙂

    JUST KIDDING! Hope that you are having a ball today, I don’t personnally, I want this market down…LOL

  64. ...at ease

    TZ, I like your posts as you have made some good calls and some that didn’t turn out. However, either way you are consistent as you post the good and the bad and you always reevaluate.

  65. William Wallace


    You can have em all, they are high maintenance not so sure you will be able to take care of them though, and in the end you may be left serenading hamvestor…lol

    1. ...at ease

      I asked last week any chance the dollar will roll over and gold goes up higher…
      Guess we will see with jobs report if head fake or rollover.

    2. ...at ease

      I agree, maybe not 1900, however could still go higher as we were headed that way with this A wave, until we had that fat finger, flub, hit… whatever they want to call it.
      Believe, me, I would love to see a tank, so we can move on. 🙂

    3. William Wallace

      There was weakness in gold before the fat finger. But thats beside the point now, my point is that even in D-waves and B-waves (in all waves for that matter) there will be daily cycles, and as one cycle bottoms and another begins there will be significant bounces. The bounce, beginning of a new daily cycle, doesn’t suggest that the up trend is still intact. So its possible we see the dollar continue lower, gold push to the upside for a few days (new daily cycle beginning, old cycle possibly ended on tuesday) and then gold rolls over in a left translated daily cycle and continues lower locked in a B-wave down trend. Its a mistake to try and correlate gold with the dollar on a daily basis. If gold followed the dollar in lock step, the dollar would have traded in an inverse ABCD pattern over the last 10 years.

  66. TopSpin

    Gary, great call again on the stock market – as usual totally wrong !
    I do not recall that many of your predictions have worked out regarding equities over the last 2 years.
    You seem to function better as a contrarian indicator – hey better than nothing.
    Gary, you are mountain climber dude trading his P.A nothing more.
    Btw. great embarrasment to fly to Zermatt not knowing when the Matterhorn is open for climbing – nearly as classy as not knowing the price structure in CH –
    GARY YOU ARE JUST A SIMPLE GUY;and usually I would tell you that you SUCK, but a guy in his 40s NOT MARRIED – NO KIDS – this sounds to clichee,hahahaha

  67. ckpc

    We are not going to tolerate that kind of bashing here.
    So far, this is playing out exactly as Gary had hoped, with the markets coming back before rolling over toward the middle or end of the month. We are not going to put up with trolls who put this site in jeopardy of being shut down due to jerks like you. STFU.

  68. Unknown

    People like TopSpin should not be allowed to breed and should be removed from the gene pool ASAP. They lower both the IQ and civility standards of the planet.

  69. 86d4life

    It is almost kind of funny. Gary just called a half cycle low in the last day or two. What the hell did Morona think was going to happen?

  70. TZ(8155)

    As a warning, there is a reasonable chance that gold heads back down to the lows before friday’s close – even if it ultimately has bottomed.

    Such a move would serve to cast doubt on recent buyers and also confirm emotions of those out or short. The drop into tuesday from last week was violent and it’s only normal for emotions to hang around causing whipsaws.

    That will be compounded potentially by the greek results and the UE report.

    And of course the fed is next week assuming gold doesn’t climb much higher than it is now (which is fine technically, but we aren’t THAT much off the lows).

    There was a reason I sold part of my holdings to break even and moved my stop DOWN to the tues zone. It was so I hopefully can’t get shaken out (In fact I actually already plan to ADD more if such a drop occurs – re-risking the 1% or so that I had on the first position)

    1. William Wallace


      Your talking about breaking even on part of your position, and unrealized gains on the remaining, if im not mistaken, where’s the dough to support the chick?

    2. TZ(8155)

      My 4x+ gold futures is now break even (it was 5x+ before I lightened at my target of roughly 1700 as I said previously).

      That means if everything reverses down and continues lower I will lose roughly nothing from where I started this trade on tues. It’s a free position at this point with strong hand status based on Tues lows.

    1. TZ(8155)


      I think the miners are irrelevant to the discussion of precious metals vs the fiat currency system.

      The food you will eat next year could be argued ‘in the ground’ also, like miners. But if you want to be sure you are eating you will buy ACTUAL food NOW.

      I’ve made my various comments about miners before. Most continue to ignore them.

  71. riley

    Sophia Usd/jpy still looking good. Wish I had gone that route. Just kidding, never wish anymore in this game, just throw you off. Not able to make any trades in 2 days getting ichy fimgers, which means lay off. Will wiat for monday and leave jobs report alone. Good luck all, and Tz good move, break-even at least.

    On a side some people like jabbing and getting arise until someone like Mike tyson used to say punches then in the nose then they quite down. Markets good at punching people in the nose.

  72. TZ(8155)


    Despite your comment tonight I hope you read this.

    You are a great trader and the newsletter became a hit.

    You drew in a number of people who are ALSO good traders – yet using systems significantly different than your own.

    I believe your continued (somewhat FORCED) exposure to them as well as interacting and answering questions is actually killing your ability to function cleanly in your own style.

    This is not the first time or example out of many in history. Templeton, Livermore, etc…all said that they made more money when they tuned out other opinions and emotions.

    I think you should back off like you say and just post evening comments (short, long, or ‘nothing changed’ as you see fit…don’t burn out trying to write something complex every day). Don’t engage or discuss or handhold or whatever the various people unless, now and then, you just enjoy it.

    Bottom line I think the interaction and also the pressure of having other people’s money on the line (and the silver hit also) are hurting.

    Back things off into your own space and pretend none of us are here. The results are in the returns, not how nice you are to people or how many questions you answer.

  73. William Wallace

    Gold’s 20dma has crossed below the 10dma, almost always indicitive of a trend change. The 150dma and 10dma have now converged, and after a sharp pullback and stretch below the 10dma like we seen gold usually bounces back up to the 10dma before rolling over again and riding the 10dma lower. For any futures traders, I will look to take off my remaining long from $1685 and put on a short at the 150dma with a stop above the 40dma ($1721) Its a fairly tight stop and will result in a small loss if the 150dma offers no resistance, but if the 150dma acts as resistance it should be pretty stiff and demand a reversal that would initiate the next leg down and a new low. Gold will have to push through the 10dma, 150dma and $1720 handle to hit my stop, so it has some work ahead of it.

  74. Tiho

    Is anyone actually long the USD against any currencies here? I’m just wondering if anyone actually followed what this post was about?

  75. William Wallace

    Gold moved back below the 75dma, a close below the 50dma is likely to initiate the next leg down and push gold back below the 200dma as the B-wave grind sucks in and puts a beating on bulls.

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