Mar. 18

Stocks:

Well I’d say the Fed has accomplished their goal. Stocks have clearly reversed from the Ukraine sell off and I’d say the Fed now has the cover to initiate the third taper tomorrow.

I plan to sell our half position into what I expect will be a spike up right after the announcement. That may just end up being a test of 1880, or as I have depicted in the chart maybe a quick test of that 1900 level. But I don’t think it will hold and I think stocks will quickly reverse and drift down into a daily cycle low over the next couple of weeks. That cycle low is where I will buy full positions for the model portfolio.


Dollar:

The dollar is forming a tight coil as we head into tomorrows FOMC meeting. 

As most of you may remember about 70% of the time the initial move out of a coil will usually end up being a false move that is soon reversed. Given that the dollar is late in it’s intermediate cycle I suspect what we will see is the dollar breaking down very harshly tomorrow on the third taper. But one or two weeks of that and we should reach true sentiment extremes. Enough for the dollar to put in an intermediate cycle low and deliver at least a 4-6 week rally before it gets serious about collapsing down into it’s three year cycle low later this fall. 

Gold:

I don’t think I need to go over the plan for gold again. I made it pretty clear in the morning report what I’m going to be looking for tomorrow.

If we get a reversal candlestick that will be the signal to buy before the close. If not then we will wait till gold forms a swing and make sure it doesn’t break the intermediate trend line. If it were to do that then we will lock up the rest of the positions in the metals portfolio and go on vacation for a couple of months while the ICL does it’s thing. 

Gary

26 thoughts on “Mar. 18

    1. David Akridge

      Gary, I just replied to the last text I received from you. Thanks.

      So if gold breaks below the intermediate trend line, we twiddle our thumbs for a couple of months in the metals & miners portfolio? In your opinion, will gold be heading down into the YCL in May or June?

  1. David Akridge

    Gary, I reread your last two reports here on the blog and hope we get the reverse candlestick after the FOMC meeting and you go back to full positions. Couple of scenarios that could happen. Gold doesn’t break below the daily trend line but heads up. The other is if gold does break below the intermediate trend line and heads down. Why does it matter since we just wait for a swing low confirmation and then go back in? Thanks.

    1. Gary

      If gold breaks the intermediate trend line before forming a swing we don’t go back in as the odds would be high that the IC has topped. If that happens the metals portfolio will go on vacation for a couple of months.

  2. TraderT

    tried this on premium site:
    TraderT
    March 19, 2014 at 1:38 am
    Your comment is awaiting moderation.
    This link is a sales pitch for a subscription to Matt Badiali’s resource report. I am posting it because it condenses what China is doing with gold. Still it is fairly long. Everyone will be affected by what they are doing. Goldbugs may not even know all the info given.
    http://pro.stansberryresearch.com/1402OILCHNGO/EOILQ385/?email=topodinapoli%40gmail.com&a=1&o=29090&s=31784&u=3597032&l=282988&r=MC&g=0&h=true

  3. TraderT

    Seems the old turkeys have gone into hibernation. At least I have not seen a comment for months regarding core PM positions. I have maintained a USD short position via UUP puts since January that is beginning to get interesting. Just sitting on hands now as my trading account is all in. I have a heavier weighting in Silver than Gold that has hurt recently. Eager to see Silver catch up and then some.

    1. Gary

      Taper 1 & 2 should have been dollar positive. That fact that it hasn’t stopped the dollar from dropping is saying something. I expect the third taper today will start a complete rout in the dollar over the next 1-2 weeks.

    2. vaco

      Gary. If your análisis is right about the dollar….you expect gold to reach at least 1460 in the next 2-3 weeks???

  4. TraderT

    GLDX has broken out of resistance on fairly heavy volume. Chart is looking better than GDXJ, GDX and GLD. Just noticed this. May have to sell some GDXJ to buy GLDX.

  5. FiatFlatline

    Hi, Gary –

    In yesterday’s Morning Report you said, “I’ll also probably take profits on our half stock market positions right before the FOMC statement comes out at 2:00 tomorrow.”

    In the next report, you said you will sell AFTER the announcement. Can you clarify the distinction? It could make a significant difference, right?

    1. Gary

      I’m not sure how I want to play this one. If the market has rallied back to 1880 I’ll probably sell before the statement comes out. If not I may wait till after. I think there’s a good chance the market spikes on the statement but there’s also a small chance that it sells off, especially if the dollar tanks immediately. I might decide to just play this safe and take profits early rather than risk getting caught if it does the unexpected and sells off.

  6. BOBBO

    Gary,Gold as of now as broken the daily cycle trend line. Silver broken below breakout of 20.67. Would like to see it stay above at least 20.40. Your scenario of a turn around after the fed announcement is one that I also have thought about and hope happens. If not, as you said Gold has to at least stay above the intermediate trend line. GDX and GDXJ have to least stay in its consolidation range, if they don’t that is a very ominous sign. At least Ukraine has been put to bed after Putin’s dovish statement yesterday, and gold’s price has completely taken out any premium, and should be a non factor going forward.

  7. Le Fou

    Hi Gary,

    What’s your line in the sand for crossing the intermediate trendline?
    It looks to me to be about 1325.

    Best,
    Le Fou

  8. Concord

    Gary,
    Gold shares are extremely weak this morning. Gold is dropping unlike most FOMC statement days where it is usually flat. Feels ominous.

  9. Concord

    Gary,
    One other thing the volume in gold shares is unusually high today considering the stocks are falling. Why are they bailing before the statement?

  10. FiatFlatline

    Gary –

    The markets appear to be pricing in an expected continuation of the taper – assuming such an announcement would be bearish for stocks. The hoped-for rise of the S&P to 1,880 has only 3.5 hours to materialize. A quandry.

Comments are closed.