123 thoughts on “PORTFOLIO CHANGE

    1. Gary

      If it breaks below the April 3rd low I am. That would signal a left translated intermediate cycle. Although in a currency war almost anything can and does happen.

  1. Adam


    Energy is usually the last to top out before the cyclical bull ends. Perhaps its inability to make new highs is indicative of where we are time-wise in this bull.

    I’m thinking that stocks might have actually bottomed in a very short cycle. I say this because the dollar bottomed on February 29th and peaked shortly thereafter giving us a left-translated cycle. That will be the second in a row indicating a likely trend change rather than just a correction.

    Also, bear in mind what effect the collapse in Treasury yields would likely have on the US dollar. One would think that as investors are paid less to hold a currency, its value depreciates relative to other currencies. That would confirm the above-mentioned cycle interpretation for the $.

    I think we still have some room to run in equities. As the $ moves lower, energy stocks could be one of the bigger beneficiaries relative to the rest of the stock components. The S&P 500′s ADX reading was recently above 40. That’s the highest it has been this entire bull market since the March ’09 lows. I don’t think a trend that strong will roll over and die quickly without a long, drawn-out topping process and plenty of false alarms along the way.

  2. TZ(8155)

    I didn’t get an entry so I decided (perhaps unwisely) to chase.

    I’m 2x a mixture of gold and silver futures with stops near where we started these rallies earlier this morning. I’m risking 2% if these rallies completely fail during the day today.

    I will re-evaluate the purchases this evening since I expect gold and silver might continue higher for the next few hours. If they don’t I might close some or all since rallies tend to retrace overnight and the next morning.

    But for now I decided I simply wanted a position on this strength and because I previously expected there was a good chance the low was in (my earlier post). If I get stopped out I’m gonna feel like I did something stupid that I knew better. If it works then I will feel like the bottom call was correct and now I have a very low basis strong hand position (and I will up the leverage to 4-5x at a later date after I can move existing stops to break even).

    1. Adam

      Excellent! I much prefer hearing that as opposed to a point by point analysis as to why I’m utter clown shoes. haha

  3. Greenspansconscience

    Adam Hamilton (zeal) is a decent bigger picture guy (but then again who isn’t in a decade long bull) but he has nothing on Gary or Doc in terms of timing. Not even close. Not even in the same zip code.

    1. jeff

      I don’t follow Doc but many timing calls have been poor lately. Still better then my calls for sure but I’m completely frustrated with cycles and the market at this point. Even a simple MA or other technical indicators work well most of the time and during other times whipsaw you out of the position like we are getting now. It seems what is more important is having discipline and confidence to know when to listen or not listen to your preferred trading system. And I think in this area, Gary is quite effective.

  4. Quy

    Starting to look like it was just a bear fake 2 days ago, taking it down under the trendline to throw off the bulls, but now resuming the uptrend. Well it’s not going to fake me out if that’s the case, cause I’m back on that bull.

    1. TZ(8155)

      If you are discussing the mining stocks (GDX specifically), then the recovery back into the large triangle as of this week would make it a fairly classic fakeout and recovery. I believe I commented about this a few days ago (not saying it to tout or anything, just saying that a recovery back up like it appears to be doing is GOOD and means that a horrible breakdown heading lower isn’t nearly as likely now.)

    2. TZ(8155)

      That isn’t to say that on an extended basis GDX is going to start outperforming ‘straight metal’ – such facts are not in evidence yet. However they will likely get some rebound effect from being so oversold and have extra gains for a few days like today.

      If they start outperforming on a clear continuous basis I will pay more attention to them to purchase.

    1. jeff

      I believe the explanation that the cycles are now not working for dollar (because Bernanke is somehow “breaking the dollar”) about as much as gold bugs who think commercial traders are tanking precious metals and ruining there forecasts.

  5. Gary

    The dollar cycle hasn’t been effected as far as I can tell. Remember cycles are worthless for spotting tops. It’s possible that the dollars daily and intermediate cycle just topped. Most assets markets seem to be leaning heavily in this direction today where they were leaning in the opposite direction yesterday.

  6. TZ(8155)

    I’m long with my 2x positions, but without much profit at this point. However I am going to hold.

    My opinion is that today wasn’t a “recognition day”, but it was a “pre-recognition” day. In other words today has caused people to take notice that a bottom might be in, but they aren’t sure and they haven’t taken action yet. They are watching.

    Now clearly the low may NOT be in yet, but I think there are high enough odds to risk a bit of money which I’m doing.

    If we are now heading up, then we are looking at a full-on recognition day likely within 2-3 days of here. I would say no later than tuesday.

    So while I don’t really have any profit yet and I MIGHT be wrong (and/or gold MIGHT drop a bit overnight so I MIGHE be able to improve my position slightly from here if I was lucky), I think that the real risk here is in being out and getting caught in a recognition move which could come imminently if/when people decide it’s time to go up (for the cycles guys it’s 1696, but there are all kinds of triggers for all kinds of systems).

    I’m also mindful that the huge reverse H&S patter is still in play and we might be moving back up to the 1800 shoulder (which would include that recognition day move).

    So that’s my view and I’m sticking to it for now barring further developments.

  7. TZ(8155)

    The recognition day will be when most people think they need to start buying, are missing a move, and/or don’t have a large enough position. I would suggest that as of today most of us are NOT QUITE at that point yet. We see a few up days and a rational that the low might be in, but we are also aware of the whipsaws last 6 months and are not trustful of this action.

    So we are alert, but not feeling like it’s all go-time. I think that changes in 1-3 days. (Maybe even by fri close).

  8. TZ(8155)

    I’m including myself in that ‘not quite at that point’ situation in this being a bull move, BUT:

    1) my signals are otherwise saying it’s worth a shot; and
    2) if I wait until it feels comfortable to buy then the trade will be too easy and thus be at risk and have lower return.

  9. TZ(8155)

    The 2 ‘recognition day’ moves on the left shoulder and head of the current gold pattern were 10/25 and 1/25. Each rising about $50. I’d expect the same sort of thing in a day or two if we are green.

  10. Dan


    Didnt you term a move in the PMs a few weeks ago as a “recognition move.” I remember Gary used the same phrase that same night in his report. We have only gone down since then though.

    I definitely see your argument though, we could have very well already seen the bottom.

    1. TZ(8155)

      My previous discussion of a recognition day was one of those two dates I mentioned above. Gary commented on it also.

      Such a day is simply a day when the majority of a market recognizes that it is clearly going in one direction (and the party on the wrong side bails out fast leading to a large move).

      It doesn’t mean that you can’t go back down a month later or that that day is permanent through all time. Nothing like that exists in the market.

      Aug/2/11 would be another recognition day. If you look at all these you can see how before and up UNTIL those days a person who was short could have convinced themselves “It will roll over any minute now and I’ll be ok”. Once those days hit, the shorts KNEW they were wrong (and the people waiting on the side went long). Thus strong moves.

    2. TZ(8155)

      Let me rephrase a bit. The use of ‘recognition day’ isn’t a made up term. It means something real.

      Suffice to say right now that most of us can see this going EITHER way at the moment and we aren’t too sure.

      Gary is unsure.
      Doc is unsure.
      Poly is unsure.
      WW is unsure.
      list goes on

      A recognition day will be when we all realize what the answer is and I think we have it by Tuesday.

      Guys like me are taking a bet we know what the direction is. I get hurt more if wrong, but profit if right.

  11. EricH

    I sense you are getting too caught up with the daily movements of the market. Was there a failed cycle anywhere today that should warrant your change of sentiment from “not touching any equity until a bottom” to “must need to get into a position for the inflation play”.

  12. Bill

    Gary, I’m not sure if you’re in GDX, so I can’t through the book at you, but it’s ready here in my hand. 😉

    What happened w/gold cycles, or is this just a short 1 week counter trend deal w/a small position?

    Not but just a few days ago I thought that the cycles were telling you to stay out for several weeks.

    1. Bill

      By the way, I see the swing low in the $HUI. But is that all it takes to turn this cycles magic sh_t up on it’s end?

    2. Bill

      If a swing is all it takes to turn cycles on it’s ass, how about dropping cycles altogether and just trading the swings? Simpler.

      Dang this cycle magic voodoo stuff drives me NUTS!

  13. Bill

    My pea brains still just sees lower highs and lower lows on $GOLD, $SILVER and the $HUI.

    And AAPL didn’t rally w/$SPX, w/AAPL way way overbought, so I still think the original premise I think you had that $SPX will pull gold ‘n miners down is still legit.

    I have no f’ing clue. Have a nice weekend all.

  14. Bill

    Last post: Gary, I figured out why you follow cycles. Too much testosterone, and not enough vitamins. No vitamins in chicken burrito’s. Might want to start chugging vitamin pills. 😉

    1. Bill

      Don’t know. Not sure I get your q. Do you mean 2X or 3X ETF’s? Like 2x’s for PM’s are GLL and ZSL. Sorry, I never use leverage. Using real money is scary enough for me. 😉

    2. Danno

      The answer is 50% long and 50% short. Next question: If you identified when a period of sideways chop was ending and a significant move was about to take place (but you were unsure of which direction)… what would happen if you bought 50% ETF and 50% Inverse ETF. Could you make money?

    3. Bill

      Hey Danno – I was out having dinner – back now.

      I thought of this idea several yrs ago – the idea of buying $100 of each AGQ and ZSL, w/a 3% stop loss under each. Let the winner run, stop the looser after a 3% loss. As long as the winner wins more than 3% one makes money. That’s what you’re talking about, right?

      But since then I’ve seen that shorting any bull market is very very risky business, and gaps alone can hope over floors. So I now just try to buy into bull markets, like gold.

      Teach me what you’ve learned!

    4. Danno

      typo “the miracle of compounding interest will cause the profits in your winning position to outpace the losses of your losing position”

    5. Bill

      Danno, back to your 1st q, about “What is the maximum possible hedge using an ETF and its Inverse ETF?”

      Who cares about hedging? By def it’s a net net break even, and not even that after taxes.

    6. Danno

      Bill, Sorry pal. That is wrong. For example: +1% gains added over and over to an ever-larger winning leg will begin to outpace -1% losses deducted from an ever-smaller losing leg. $100 +5% = $105 right? $100 -5% = $95 right? Sure, but what happens if price keeps moving the same direction. $105 +5% does not equal $105. It equals $110.25. $95 minus -5% does not equal $90. It equals $90.25. It’s the power of compounding interest. The math is solid. The back testing works. The difficult part is waiting for, and identifying when, a large move of significant duration will occur. Then entering your position and waiting again. It takes the patience of Job. The glory is even if you get it wrong your losses are very small, but your gains are potentially unlimited.

  15. Bill

    Danno, you may be right – had a beer after my ride and I can barely play chess now – mind is wasted. Will re-read in the morning.

    1. Danno

      It’s cool. I understand. Try to resist quitting your job once you do some back testing. It’s going to take practice. You may only have one big trade per year. Loooots of waiting.

  16. TZ(8155)

    Well…my long trade not looking correct so far but there is a small down wedge pattern in gold which may signal a bottom here.

    I’m still long, but halfway to my stop at this point.

  17. TZ(8155)

    I used that down wedge pattern and the fact that we were past the common ‘early morning drop’ of LBMA fixing times to say ‘if we are going to hold and not start retracing much more of then then that wedge should stop things’.

    We’ll see how my call works out. Saved 1% at this point.

  18. EricH

    Look a the dollar go today.
    Again, what changed that warranted a position yesterday?

    I don’t get it. If you are going to front run the move, why not do it at 46 when it based there for 3 days.

    1. Gary

      In real time what you are calling a base could have been a consolidation in preparation for a continuation down. We only know it was a base after the fact.

      Like I always say Monday morning quarterbacking is always 100%, unfortunately none of us get that luxury, we have to trade in real time.

    2. EricH

      Gary, I didn’t question the move after today’s open. If you go further up, i questioned it last night when gold was still trading above 1675 and the stock market futures were essentially flat.

      If the bullish percentage of mining stocks were an indicator you were looking at, why wasn’t it brought up or mentioned days before? Was it at 10 last week? GDX was trading in the 46 for 5 days.

      So even if this market is ready to head down and the leaders (PCLN & AAPL) are also starting to break and no cycle failure confirmation, the bullish percentage of mining stocks indicator superseded all of that?

      I think one of the reason you’ve struggled this year based on your performance (since 1/1/2012) might be the lack of consistency.

    3. Gary

      The trade signaled yesterday with the strong move up. I don’t take trades until I see some sign of a trend change. So yes I was already monitoring the BPGDM but until yesterday nothing had happened to suggest a bottom had formed. Yesterday we got that sign. Until then one would just be trying to catch a falling knife.

      The problem isn’t consistency. I consistently take every setup that comes along. The problem has been lack of follow through. This is just a very tough market with no sustainable trends except in the stock market. But I’ve already gone over that. I can’t buy stocks when they are 27 weeks into an intermediate trend.

    4. Gary

      Here’s a question for you. Is silver basing or breaking down?

      It isn’t a slam dunk answer in real time is it?

    5. Gann360

      Amen to that Gary,,,

      Silver is going to either Pop or Drop Hard !,
      and you don’t Wanna be on the Wrong side of that Trade !

      and i have no Idea, which it’s going to be,i have a Pivot in Time for Late April, but,,, is it Going to be
      a Pivot High, or Pivot Low ?

    6. Gann360

      Silver is on it’s Seventh Week Down,,,

      7 is the Number of *Panic*, In Time..

      Suggests a Possible Low could take Place here, And that Yesterday’s Move ( Reversal Up) Could be the
      Start of that Move,,But, it would of been nice to get Follow Through .

  19. Gary

    The bullish percentage of mining stocks is at 10. Yesterday we saw a sharp reversal in the precious metals sector which was accompanied by a very large buying on weakness numbers in GLD the day before. The extreme oversold nature of the sector as evidenced by the bullish percentage chart would warrant a position even without the reversal yesterday. It’s late in the intermediate cycle and even if there is one more move down it will almost certainly be easily recovered once the cycle bottoms. And as of right now it looks like the miners have bottomed.

    Here’s the thing. One can wait until one’s emotions give you the ‘go’ signal, but that invariably is the same time everyone else feels comfortable to buy, and you run out of buyers, which ends up being a short-term top. Then you have to suffer through a draw down. Most people just end up getting whipsawed out in that scenario.

    Plus the longer one waits the further away one’s stop potentially gets and the larger your risk becomes.

    Of course nothing is guaranteed in this business, but with the bullish percentage at 10, and a strong sign of a reversal yesterday, and with stops fairly close, I think one has to take the trade and then let it play out.

  20. James

    Gold has completely negated yestaerday’s advance. This looks like a huge blow to the bulls.
    Ouch. I am getting nervous here.

  21. Shawn

    “… with the bullish percentage at 10, and a strong sign of a reversal yesterday … one has to take the trade and then let it play out.”

    Gary, is it an IT bottom, or just another ST bottom for GDX? Thanks

  22. EricH

    Bernanke had a chance today to break the dollar in his speech at 2pm. He gave nothing, so down goes gold and silver.

    1. Gary

      Yes but the miners are not confirming the move. Last week they would have turned around and made new lows. They are finally starting to show some relative strength. I’m not inclined to give up on the trade here, rather I would be more interested in adding to positions if a lower low were made. It’s late enough in the intermediate cycle and the BPGDM is oversold enough that if we haven’t already seen the bottom there probably isn’t much downside left and any further decline will be easily recovered.

  23. Adam

    It looks like a half cycle low in the dollar to me. A full cycle seems to last about two months. It still looks to be in a left-translated cycle since the late Feb low bounced hard, peaked quickly and hasn’t been able to sustain that trend. The break in Treasury yields suggests lower dollar ahead.

    What the two day rally did was help establish a short-term floor in equity prices. Now that a ST floor has probably been established, stocks can retest that as more data trickles in. It’s not a big deal if we marginally break the ST lows since we’re still early in the timing band as is. A marginal break that quickly reverses signals to me that the trend is still intact.

    Oscillator-wise, we have a nice trend divergence between the last two cycle bottoms which suggests a run @ SPX 1,434.27.

  24. Bill


    Why are you long if the cycles say to be short?

    The LAW is in town, man. No wiggle room on this one!

    2 posts ago, on April 4th, 4:04 pm, in a comment to me, you wrote:


    “The dollar is only on day one of a new daily cycle and gold is still very early in it’s daily cycle and has already generated a failed cycle. It has a long way to drop and a long time to do it in. A test of the Dec. low is probably a given. And if the dollar generates a third daily cycle higher gold will probably break to new lows and test the 2010 consolidation zone thus confirming a D-wave continuation.”

    “Patience is required for at least the next two and maybe three weeks.”


    That was just 1 week back. You said cycles said to wait 2 or maybe 3 weeks.

    So cycles are fucked, eh? FUCKED. Checkmate on them. You can’t wiggle out of this one mate! ha ha ha. 😉

    OK, off my podium, what’s going on w/cycles? Because in court this one looks GUILTY! 😉

    1. Gary

      The unexpected strength in miners yesterday coupled with a bullish percentage of 10 and extremely negative sentiment demanded that I take a trade in miners. The stop is close, so the risk is small.

      At the moment I’m only expecting a counter trend rally in a bear market. But those tend to be the most violent rallies.

      If it doesn’t pan out I’ll try again once another bottoming signal pops up. If the dollar were to signal a failed daily cycle by moving below the April 3 intraday low it would clear up the picture. As long as the dollar continues to form higher highs and higher lows this is going to continue to be a difficult market to trade. That being said a difficult market isn’t an excuse to pass up an opportunity when one comes around. And one popped up yesterday.

    2. Bill

      Just to be clear to others – I think the WORLD of Gary – he’s an outstanding trader and I have every respect for him – however, I just don’t think that cycles work in the real world. Price action trumps everything, even cycles. Gary rocks, but cycles are a mystery!

    3. Bill

      Not one word about cycles in your explanation.

      You said that cycles dictate that we can wait out for 2 or 3 weeks. Then you go in a week later. This is so obvious man. Look outside at that big sky in Nevada and take a deep breath, and realize that cycles are a myth. It’s OK man – let it go – because the rest of your trading stuff is really really good. You don’t need cycles. They do nothing for you, and confuse the heck out of folks like me who would otherwise be subs.

      I’ve seen this cycle stuff flip flop 2 or 3 times earlier. I got this one on the record now. I am vindicated.

      Seriously mate, if you just dropped cycles, you’d be perfect. Take it out of your thinking for a second, and you gotta agree that it’s more of a guideline and not a rule.

      Guidelines don’t count for SQUAT in trading. RULES RULE.

      Speaking of squat, are you still at 190? W/your bad knee, I suppose that will be your record. Very impressive considering your low body weight.

  25. Gary

    FWIW you are making the same mistake that many novices to cycles make in assuming that cycles are predetermined. I discussed this in last night’s report.

    1. Bill

      Yes I am a novice.

      But you are not.

      And YOU are the one who said that cycles said to wait 2 or 3 weeks, not me.

      I am not trying to attack you. I am trying to wake you up mate! You said that cycles told you to wait 2 or 3 weeks, but then a week later you decided to go in, due to price action.

      I agree w/the notion of going in, and I agree that no one knows how long it will last.

      But cycles don’t work. You gotta see this.

      This is the single and only reason why I’m not a sub anymore. It was too hard for me a beginner to see an advanced guru like you say that “cycles say to wait 2 or 3 weeks; wait; cycles now say to get in”. Too much churn. Too many changes.

      When I look at you, and take cycles out of everything you say, the rest is gold.

      If I had my Zen cane w/me, I’d whack you on your left shoulder to try to awaken you to this mate. You gotta take the cane yourself and see reality for what it is.

      The rest of you rocks mate!

    2. Gary

      We will just have to agree to disagree because cycles have made me a ton of money over the years. just because a period of extreme monetary manipulation is making them less effective at the moment doesn’t mean that I’m going to throw away a tool that I know is a very good tool.

    3. Bill

      Money has been manipulated since QE1 began. I have no doubt that cycles worked up until yr 2000, or maybe until QE1 began at S&P 666. But they don’t work now. You yourself said once that nothing works forever – at the time you said this I think you were teaching me that support/resistance doesn’t work anymore. Never in the history of man has our debt been $50T, nor has anyone ever printed $1T. The Andromeda galaxy has 1T stars in it. Massive, massive numbers. Bear Sterns gone. Lehman Brothers gone. We are not in Kansas anymore. Cycles don’t work.

      Cycles told you last week to wait for 2 or 3 weeks. Then despite this, you went long this week. If anomolies like this can exist, you have to at least admit that cycles can no longer take center stage in your trading model. They are less effective now. Not as reliable.

      In the end, only price matters.

      I feel my grub body now turning into a pupa. Or it could just be a dream. 😉

    4. Bill

      Just wanted to re-state something too … the reason why I was a sub twice for a month each, and then quit, was because of this churn and lack of reliability. And I’ve read comments here and there saying the same. It’s something to think about. Maybe you an expert can navigate, but the rest of the folks in the bus are waiting for the next stop to get out. Me, I went out the window en route, as it was just way too much pain to have everything make sense one day, then the next day have it all thrown out.

      My trading model is much much simpler and has no churn. I follow price.

    5. Gary

      And how well has that been working for you considering that precious metal prices have been whipsawing back and forth?

    6. Gary

      The simple fact is that in strongly trending markets it’s easy to make money with just about any tool. But at tops and bottoms technical tools are worthless. At least with cycles & sentiment I can pick bottoms pretty consistently. And I can almost always avoid intermediate degree corrections. One is never going to do that with nothing more than a charting service and standard technical tools.

      Tops are still a bitch with any tool.

  26. Gary

    Best squat 205.

    You are still making the same mistake with cycles. They aren’t predetermined. Maybe you didn’t read yesterdays report. As an example March 2008 was a 4 year cycle low in the stock market. What followed was the most extreme left translated cycle in history that should have led to a deflationary depression. However QE1 aborted that and forced a re-phasing of the 4 year cycle low to March 2009.

    Cycles aren’t set in stone. They are fluid and can be altered by monetary policy or a fundamental change. For example a cycle that has clearly bottomed in the normal timing band can be stretched by a change in monetary policy.

    It doesn’t happen often but it is always a possibility. So while gold should be in another left translated cycle and have another leg down it’s not behaving like it does. It’s behaving like we just got either a very stretched cycle of 39 days or a slightly short cycle of 17 days followed by an normal cycle of 21 days that bottomed on April 4.

    At the moment I don’t know which scenario is going to turn out to be correct but yesterday’s reversal signaled it was time to take a shot at the long side for at least a counter trend rally.

    The unfortunate truth is that we are trying to invest in the middle of a currency war. That is making things difficult, but not completely impossible.

  27. matrix

    Interesting juncture that will resolve in 16-25 days. Interesting debate Gary-Bill. Still on the side that the ICL or whatever you may like to call it, is ahead, for Gold and Miners. SPX is in a Wave C down after giving it all back today, where the trend is clearly down. Yesterday bounce from Miners was again a “follow the SPX’ bounce, no good volume and definetely not IMPULSIVE. Volume on GLD is still miserable, and we havent seen Capitulation. The GDX:GLD ratio is still below 0.31, not to mention 0.3157. With SPX target of 1293-1313 in this EW down, there is no compelling reason, for me, to go long theMiners nor the Metals. Silver needs more downside and both, with Gold need a Bloodbath Capitulation. Other hard commodities like Copper are trending down ( bounced yesterday to broken support), so all things added up says to me, to wait.

  28. sophia


    I agree with you….Gary is great at picking botttoms, but I cannot buy anything yet as the stockmarkets seem ripe for a correction of 5-8%.
    I agree that you can always start building a core position onthe PMs at those levels if you are ready to handle volatility in P&L.
    But aggressively buying now seems more dangerous….

  29. Danno

    They say the hardest thing for most traders to do is to stay in cash for months. For the first time in my trading career I am going to do the hardest thing. I plan to wait until one of these trendlines is either tagged or penetrated. Then I will most likely enter into some kind of ‘strangle’ trade using ETFs, going both long and short simultaneously. I have plenty of time to figure that out what ratio I will use and exactly which ETFs so my exact trade is not set in stone yet. Funny. This week I resisted turning on my computer during market hours. I suddenly found that I had more free time than I knew what to do with! Watching ‘Puss in Boots’ was maybe both the low point and high point of my week.


  30. Haggerty

    Guys I need a little help here
    I have already submitted my taxes and have paid for all of my capital gains as far as my 1099′s…..now recently I have received my k1 stuff from AGQ and my accountant is telling me that I need to pay for those gains…..but those gains are already included in my 1099′s/ My accountant is telling me my 1099′s need to be amended and my brokerages won’t do it saying they don’t do that. Does or is anyone else having this problem? He is telling me that I am going to owe a lot more? I would be paying on my gains twice. I need advice here seriously because I can’t pay what they are asking

    1. SF Giants Fan

      Amend your taxes. Use info on k-1 and Not on 1099 for AGQ UUP or any other ETF that uses k-1 form. I had to do the same thing last year. I feel ur pain…

    2. Ben

      SF, I used both the 1099 and the K-1’s. If you don’t, I believe you will surely be audited because your 1099 will not match up with your return. Taxes come out very nearly the same (but not precisely the same) because the K-1 shows the adjustment to the cost basis to be made for each lot. So my 1099 from my broker has the exact same sales total as on my Sch.D. but my cost basis was raised by the same amount as the K-1 line that transfers over to the Sch.D. In addition, the K-1 includes a few other necessary items treated differently on taxes — dividends, straddles, etc.

    3. Ben

      Haggerty, on the flip side of the K-1 from e.g. AGQ, it shows a table with a few figures for your sales and your partnership profits. You must fill out the rest of that table to get the correct adjusted cost basis. If e.g. your 1099 shows a lot which had a cost basis of 1000 and a sales basis of 2000, your standard ‘profit’ would be 1000.

      Then you get a k-1 which shows overall partnership profit of 1000 (box 8). While it may appear on the surface that you would be double taxed, if you read the instructions you’ll see that you won’t be. Flip it over and on the next page you’ll see the table you complete in order to correct the cost basis of that lot — column 5 is the original purchase amount, add in column 6 to get the adjusted cost basis of column 7. Go back to your Turbo Tax and adjust the cost basis for that lot.

      I’d suggest keeping careful records of before and after, like I did. My taxes after the incorporation of k-1s did not change at all.

      If you aren’t sure (and I’m not a tax advisor) consult a paid professional. It is unfortunate that this entity is constructed in this manner, because it is a royal pain in the ass.

  31. Veronica

    Every trading methodology will have periods where they work and when they don’t. Criticizing an extremely effective cycle methodology during a period of underperformance just seems short sighted to me. Criticizing a world class trader with great money management skills who can identify an edge, define the risk of every trade and act without hesitation is even more short sighted IMO.

    1. jeff

      There is that old wall street adage that any trader can be profitable in a bull market but can they be profitable during a bear market?

  32. uncletex


    I am not an accountant but I do not think your accountant is correct.

    My understanding is that the cost basis on the 1099’s provided by your brokerage needs to be adjusted (reduced) by your accountant based on the “Cumulative Adjustment to Tax Basis” (Column 6) on the 2011 Sales Schedule of your Schedule K1. If your accountant does not make this adjustment to your 1099 Cost Basis, you will end up paying double taxation on your gains.

    I hope this helps.

  33. uncletex

    BTW, I recommend you amend your tax return with the Schedule K1 info if you have already filed your taxes. The IRS will be receiving these K1’s from the ETF company and matching them up with your return. I think you would raise a red flag at the IRS if you do not include them.

  34. Haggerty

    My accountant is saying that the 1099 from the brokerages needs to be amended by them or else the numbers won’t match? anybody live in queens ny and recommend an accountant who can fill out the paperwork for me? 1040x or whatever.

    1. Ben

      You are right… the numbers won’t match. However, your overall gains WILL match (to within a couple dollars) if you follow the k-1 instructions. See my note above.

      I don’t think there is any way you can compel your broker to adjust your 1099 based on the k-1… they would have to do your taxes, basically. And that would involve wash sale adjustments based on the 1099, not the adjusted.

      However you slice it, it truly is a mess and a headache. Just another example of our effed up tax structure in the US.

  35. James

    Hi Guys, I also have a question about the K-1 form.
    I am a non-resident alien and I got one for UUP ( I had no idea this was a partnership) with zeros all over the place (there were no distributions and I don’t pay capital gains taxes in the US)

    I am a non-resident alien, so do I have to file a 1040nr and report this ( $0 )? Any advice would be appreciated.

  36. TZ(8155)

    Gold has reactivated my “it isn’t looking good, stay away until better technicals” indicator (based on how it closed last week). I can see a few options:

    1) we are currently on the right shoulder of a possible 4 week reverse H&S pattern if gold goes up here. That would also keep the MASSIVE 8 month reverse H&S pattern in play also.

    2) or we continue lower to 1575-1525 zone and put in a higher low (based on dec low); which would set us up for a large triangle pattern (probably heading higher later in the year)

    3) we break all the previous lows and go sub 1500 in another credit crunch BEFORE the fed reacts and does QE3.

    I’m not sure which one plays out, but as I said my approach says to stay back and watch for the moment.

  37. TZ(8155)

    I didn’t buy it, but the dip this morning was a very buyable drop that might have been the last nibble lower before we shoot up. I have that feeling.

  38. TZ(8155)

    If all these reverse H&S patterns are legit and going to play out, then we are getting very close to the point where they have to shoot higher or else.

    Remember I suggested we would see some sort of recognition of where this thing was going by today. Let’s see how that call works out.

  39. MikeS

    oh yeah, you did say by tuesday….well, looks like we’re on our way up which isn’t all that surprising

    $1875 Gold and $42 Silver 🙂

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