Mar. 18 morning update

I’ve been thinking about this all night and I find it hard to believe that the first intermediate rally out of a final bear market bottom would fail to at least retrace 38% of the drop. As I noted in the next chart that would be a move to roughly $1460ish.

I also find it hard to believe that the first intermediate cycle out of a final bear market bottom would unfold as a left translated cycle. 

Granted in a heavily manipulated market anything is possible, but I’ve gotten it in my head that what we may be seeing is a stretched daily cycle in progress that was driven beyond the normal cycle duration by the Ukraine situation. 

The other three sector metals look like they are all dropping down into cycle lows here. None of them look like they formed a cycle low 9 days ago, which is roughly where I thought gold had it’s fuzzy cycle bottom. 

If I’m right then this isn’t day 10, it’s going to be day 32 and a cycle that is that late will form a bottom on the next swing. 

In order for this to qualify as a DCL gold would need to break it’s daily cycle trendline, but not break the intermediate trend line.

I also think gold would need to retrace at least 38% of the 2nd daily cycle rally. That would be enough to give it a trend line break but still keep the intermediate cycle intact.

If this is going to happen I think it will come on the FOMC statement tomorrow afternoon, and we should see a nice reversal candlestick by the end of the day.

Perhaps we also see a reversal candlestick in the stock market Wednesday afternoon only in the other direction. With the next DCL for stocks due during either the last week of March or the first week of April that would put the inverse relationship for gold and stocks back in place for 2 or 3 more weeks, allowing gold to finish it’s intermediate rally while stocks drop down into their DCL.

So for now I’m going to hold the reduced positions in the metals portfolio and plan on going back to full strength if we get that reversal tomorrow. 

I’ll also probably take profits on our half stock market positions right before the FOMC statement comes out at 2:00 tomorrow. The real money will come buying at the next DCL anyway. There’s no need to try to scalp a percent or two this late in the cycle. Today is day 28. There should only be 7 to 12 days left in this cycle. It’s late enough now that we might see a retest of the highs tomorrow followed by a 7 to 11 day slide into the DCL. 


53 thoughts on “Mar. 18 morning update

    1. Gary

      If I’m right then gold has to break the daily cycle trend line. It still hasn’t done it yet. Minimum would be a move back to roughly 1340ish.

    2. FiatFlatline

      And if pog drops to 1,340, meanders a bit, then continues to drop to, say 1,325 or lower would you admit your cycles count/approach is not working?
      Yes, I’m very frustrated. You were so keen just a few days ago that gold was going to 1420 and above (you thought even overshooting to 1460 plus) by the end of March, and now this hit. We may get a reversal in a day or two, but how can we trust that it doesn’t stall again at around 1,370-1,375, then meander for another two months?
      With the US dollar dropping, isn’t some form of manipulation still working against gold?

    3. Onlooker


      I respect Gary’s work, but one thing you have to keep in mind when following his advice is that he can tend to speak VERY confidently of his latest predictions (as with the 1420+ target). I think he should temper that quite a bit, as I believe he leads many less experienced (and even others) to be overconfident and thus overextend themselves.

      Another thing is that if we are indeed in a new bull market (which evidence supports) then trying to trade around daily cycle declines is almost impossible to do on any consistent basis. If you try you’ll more often just whipsaw yourself and raise your basis (i.e. opportunity cost). You’d be better off just buy & hold (which used to be Gary’s dominant advice in the previous bull cycle; don’t know now as I don’t subscribe).

      Of course the key is knowing for certain (as certain as these things ever are, of course) that the bear market is over. And we can only know that when we get a right translated interm cycle and a higher interm high & low. So for now you can either keep positions small, thus reducing risk if the bear returns, or cut your risk when things get cloudy (as Gary did), knowing that you may forgo some opportunity.

      Just my 2 cents.

  1. Rui

    Perhaps that December low was not the bear market bottom after all and this rally has been a correction. Let’s keep that option on the table.

    1. Gary

      I think the bear is done and we will get a big rally in gold by the end of the year as the dollar moves down into it’s three year cycle low.

    2. dutchisu

      One option would be for the dollar to rally out of this ICL pushing Gold down into 1 final bottom before the decline into the dollars 3 year cycle low begins in earnest later this Summer and into next Fall. Look no further than the January 2013 bottom in the dollar to see how this would happen.

      I know you don’t believe in elliot wave analysis but the potential path I describe for the dollar would line up well with some what some of the better elliot wave guys are think will happen to gold through the rest of the year.

    1. Gary

      I think the dollar has to break the Oct. low before we can get a final ICL.

      Keep in mind rising interest rates means liquidity is coming out of bonds. It’s why gold rose right along with interest rates in the 70’s and 80’s until they peaked at about 17%. As long as the secular trend is up for rates then rising rates will not hurt gold. They start to hurt gold when they peak and start heading down. That means liquidity is flowing back into bonds.

  2. FiatFlatline

    Gary –

    About eight postings above (replying to your comment) I asked, “With the US dollar dropping, isn’t some form of manipulation still working against gold?”

    1. Gary

      Like I said in the post I think the gold cycle may have gotten stretched by the Ukraine situation. They aren’t common but stretched cycles do happen. It’s hard to trade them because they aren’t the norm and one must always trade expecting normal duration’s because most of the time that’s what happens.

      Hey we’re making money so something is working.

  3. Gary

    I just noticed that gold didn’t close below the 10 DMA Feb. 28 or March 7th. I think a DCL has to at least close below the 10 DMA. That tends to make me even more confident that this is going to turn out to be a DCL with another third cycle up still to come.

  4. FiatFlatline

    Gary –

    This morning’s report said, “So for now I’m going to hold the reduced positions in the metals portfolio and plan on going back to full strength if we get that reversal tomorrow.

    I’ll also probably take profits on our half stock market positions right before the FOMC statement comes out at 2:00 tomorrow.”

    So … for now, it’s all about the FOMC statement, and you believe it will knock the markets down?

    1. Gary

      I think the FOMC is the most likely trigger for trend reversals in both stocks and gold. And for a continuation into an ICL for the dollar.

    1. Gary

      If you are talking about gold it would be March 7th. It started out as Feb. 28th but the cycle was prevented from dropping down into its normal DCL timing band by the Ukraine mess. So the HCL migrated to March 7 and gold is moving down into it’s DCL now.

  5. Gary

    Keep in mind cycles aren’t set in stone and they can be stretched or shrunk by rogue events. It looks like this one has been stretched.

  6. vaco

    Gary If I read you right if your analisis is correct we should se tommorow the start of the next third cycle up and it should go to 1460??..what would be the time frame for this to happend?

  7. Victor H

    Gary, your premium site has been down almost 2 weeks. Don’t you have a professional company handling your hosting and web site design? If so any problems shouldn’t take more than a few hours to resolve. Also when your site eventually comes back up I hope you are going to give your paying subscribers some sort of credit for the time we haven’t been able to access the site.

    1. Gary

      This was a much bigger mess than could be fixed in a couple of hours. Everything had to be backed up multiple times and word press reinstalled along with all the plugins. The subscription plugin was no longer in business so we had to transfer everything to a new subscription system. It takes time to move almost 2500 active files to a new system.

      I would be happy to credit everyone an extra week except it’s impossible to do. I would have to go in a manually cancelled everyone’s subscription (thus breaking the auto renew function). Manually recreate their account, and then manually track their expiration and manually send out a notice the day before expiration.

      Needless to say if I tried to do all that we could just add another 2-3 weeks that the system would be down.

    2. Gary

      I haven’t missed any nightly reports or even any portfolio changes. I posted multiple times before the comments section went down that the reports would be moved to the blog and tweeted every time a report was published with a link back to the blog. So no needed to miss any reports.

    3. Nixim

      “Everything had to be backed up multiple times” ????? These guys must be kidding you. When I was doing this business 15 years ago we had daily, weekly, and a monthly backup all the time. In your case a SQL DB I guess. Installing the server from scratch including WP and its plugins 1 day at most. Tuning the system, well lets give them another day for that. 2 weeks? No way.
      But not asking for compensation, this site works, so did not miss anything.

    4. dutchisu

      So 2500 active subscriptions times lets say $20/month = $50,000 a month that you are taking in and you think it is acceptable to have a website down for 2 weeks. Wow

    5. Gary

      Sentimentrader got hacked a couple of years ago and he was down for almost 2 weeks too. So these people that seem to think this was an easy fix have no idea what they are talking about. We made the best of the situation. No reports were missed, and portfolio changes got posted in real time.

    6. BOBBO

      Gary, Your subscribers should lighten up. You’re giving them all the information on this site. They should worry more about whats going on in the stock market.

  8. Fellow

    It seems you inclined more onto holding remaining miners and SLV until tomorrow’s bottom and then loading up once bottom is in for a day?

    1. Gary

      As long as gold doesn’t break the intermediate trend line I’m leaning towards going back to full positions once gold forms a swing.

  9. Joe Wollenberg

    Are you thinking that gold will go below 1350 after the FOMC meet and then will start back up. If so for those that didn’t take positions
    off should we do so sometime before the meet or today

  10. Troy

    Heavy buying in GDX….about to go green. The low came within 13 cents of filling the 3/11 gap. Probably should’ve waited until today to add…

  11. TraderT

    Silver miners seem to be outperforming SLV. At least my positions in HL and AG are doing so. Adding to SLV based on this fact alone.
    My comment on premium site also shows in moderation. Not working…

  12. eliyahu

    guyz, I think most of you can enjoy themselves going to the beach. Learning to take Gary’s advice to your special needs is something you need to learn well before you can make big $$$.
    It took me 10 years to understand I’m a lousy daily trader. Just identify the trend, buy stocks and not options (if you must use options- something far in the future, and for fun – you can try and buy some near – I did and now it’s kaput:)), and ride the trend, exit only on extreme overbought and don’t try to guess the trend.

    Gary is just great identifying soft spots but use him to your needs. I use him to understand this amazing count system.

    that’s my 2 cents.

    Oh, and about pog, gdx etc, as I said yesterday I believe it is just noise and we’re in the very beginning of a fantastic bull market. I lost the last bull market on stuff like exiting early on red days.


  13. tombba

    I’m starting to think Gary”s original thought of a blow off top (nasdaq 5000 spx 1950 +)might be a possibility starting right now.I don”t trust the Fed to give up and
    “let” the market correct just yet.

Comments are closed.