90% OF TRADERS ARE ALWAYS WRONG AT MAJOR TURNS

For about the last year and a half I’ve been warning that gold was being driven down to test the last C-wave top ($1033). No one believed me.

gold retest

Now that the test has occurred it’s time to go the other way. Again no one believes me. Traders have become so conditioned to gold going down they can’t envision any scenario where it could possibly go up. And that is exactly the kind of sentiment that occurs at major trend changes. We saw the exact opposite sentiment at the stock market top several months ago. Right when I was warning everyone that the market was going to crash.

I’ve covered extensively the 3 year cycle low that is due in commodities this year, and posted numerous charts showing how I think it occurred last month. If the CRB has formed a major 3 year cycle low then I don’t expect gold would diverge from the rest of the commodity complex, and in fact it looks to me like gold bottomed about a month ahead of the general CRB.

crb

With all the talk of deflation bonds have been signalling inflation for almost 8 months now, but no one is paying attention.

bonds

Folks it’s time for some of the inflation that has been pouring into global stock markets for the last 6 years to start leaking out and moving into the commodity markets.

With gold confirming its daily cycle low today, and that low occurring well above the intermediate cycle low of July 24th, the metals are set up for a barn burner rally. And don’t forget that sentiment during the move down into the DCL has dropped all the way back to 13% bulls even though gold didn’t make a lower low. That’s means there it lots and lots of fuel to drive a very big rally during this second daily cycle.

gold sentiment

This is your chance to get on board on virtually day 1 of a new daily cycle, and probably day one of a new cyclical bull market. If you are determined to be one of the 90% that are always on the wrong side of the market at major turns then just ignore this article. If on the other hand you want to change the old destructive habits and buy low for once then now is your chance.

And I’ll even sweeten the deal. Anyone who buys a yearly subscription to the SMT over the next 3 days I will refund your subscription price if miners don’t deliver at least a 20% rally over the next 2 months. ( I expect it will be double or triple that.) You could take $1000 and buy GDX and if you don’t have at least $1200 in 2 months then I’ll refund your purchase price back to you. That’s how strongly I feel that we are at a major inflection point right now. And I want as many people as possible to seize the opportunity before it passes.

47 thoughts on “90% OF TRADERS ARE ALWAYS WRONG AT MAJOR TURNS”

  1. Anthonyo

    1) long-term trends for precious metals remain down. Neither gold, silver, platinum nor palladium has bottomed. That said, don’t be surprised if you see a short-term rally.

    2) bull market in the U.S. dollar — and bear markets in most other currencies — remains intact.

    3) deflation in the commodity sector is not yet over.

    1. gary Post author

      I think you are wrong and are one of the 90%. The 4 year bear has brainwashed you to think in only one direction.

      1. Anthonyo

        And I think you are wrong and are jumping the gun. I am not part of any % of any group. This 90% always do the wrong thing is so cliche Gary, I mean really?

        No, not brain washed, why do you use those terms? I have made great trades in the “interim” bear market in gold which is still alive and well, and it is simply not over yet. We have not seen the bottom in gold yet, or silver, or palladium. Same for deflation, not run its course yet. And USD bull market is also still “on” until further notice when all the scared foreign money will still keep pouring into USD and US stocks.

        Now, if you do not agree with all this, fine. But stop insulting people who don’t agree with your “all is rosy in commodities” scenario by calling them brain-washed.

        1. Bud E Fox I

          Anthonyo….I think your wrong, gold. I my own
          technical indicator, and I made the best trade
          in AEM, a gold mining stock. From my own
          work – point being. My indicator, while unique
          is in agreement with Gary S. I wish you would
          be respectful, and if you disagree. Short the GDX.
          Then call me on a few weeks, tell my how you
          did….Bud

    2. Bill

      Gary do you have an ignore function? this clown or paid troll has been consistently wrong. Obviously a novice hanger on…

    4. Bill

      My Hedge fund manager buddy is the most accurate forecaster anywhere I know. Sold all commodities 2010-11. There will be no commodity bull. Any rally’s will be shorted. If you go up against his 24 year track record you will be smoked….Funds up 50% in the last 2 yrs. We are bullish the USD and select stocks avoiding most all other markets…

  2. Pingback: Gary thinks this is a big day for gold! « Korelin Economics Report

  3. Mr Edge

    Gary,for the record, I think you are correct with your research and analysis. For those of us that are investing with real money however, I think it is great that you get push back because when you post you provide info that gives confidence to make the correct move. thanks

  4. James

    Just joined today. Wanted to see what it was like behind the curtain here. Posted very occasionally on Al Korelin as James (not the lesser), but have just been listening in these days rather than posting.

    Decided to spend the money to see what was going on after my bids on 5 gold miners didn’t get filled because the entry point was too low. Just my luck, if I had done the same thing yesterday, I would not have had that problem. Being too early in the past has now led me being too late now.

    Anyway, just saying hello as a new member.

    J.

  6. David Silver

    Mr. Savage seems to have a crystal ball.
    Commodities are on fire today and seems to confirm his vision. Pre FOMC precursor?

    Nice work!

  7. mm

    I’m holding till u say sell but the only obstacle I see is another round of earnings season where everyone beats estimates again and continually squeezes shorts and forces others to chase while algos continue to hit commodities. .. same old same old

  8. felix

    Gary, do you think metals have done the MAJOR bottom already, or you are still expecting new lows in 2016.
    Thanks!

    Felix.

    1. gary Post author

      I have no expectation at that moment. I will need to see how far this rally goes and where the next intermediate cycle bottoms before I can say for sure whether the bear is over.

  9. Crawford

    Gary,
    From the weekly chart of gold, the mid term GOLD will probably head back to the lows, and down to the 1050 level, however as time goes on that level could change as the chart develops.
    We have not broken out of the weekly channel, and normally the longer a channel holds, the more credibility they have. So I think there is more selling on the way. The next few days, will be important as the FED come to the forefront and decide on what they do with rates.
    Also, You can see the MACD is tipping over, and that is not a good sign for the short to medium term.

    I could be wrong on my analysis … but I will wait for lower prices before a LONG position in NUGT GDXJ or GDX.

    1. gary Post author

      As I’ve pointed out many times in the past, charts are worthless at major turning points. At multi-year cycle bottoms the charts will always say price is going down. You need different tools to spot these kind of bottoms and the charts will always lie to you at times like this. You need cycles and sentiment, not chart patterns and indicators.

      Actually MACD is showing a huge positive divergence that has signaled ahead of big rallies in the past.

      1. carlos

        ABX, GG, GDX, NEM and SLW daily charts all showed pretty crystal clear Double Bottoms with solid positive divergence today. Even though were all waiting for what the feds have to say tomorrow, it was nice to finally see some type of buying. The charts coupled with your analysis Gary adds greatly to the reversal at hand with the industry as a whole clearly preparing for something…

  10. Dan

    Nice call on a sharp rally anyway, although you were early in August.

    Shorting the bloated stock market around here (obvious pump stop run into the meeting by Fed criminals) is still the better trade here IMO.

  11. Bud E Fox I

    GDX
    Gary….thanks for the heads-up on GDX, I used AEM,
    which also worked out well. No wish to sell….Bud

  12. Bill in Tokyo

    Gary might be right. Probably is.

    But, Gary, as you well know, there are many kinds of traders out there. Because you use cycles and sentiment, etc. you are able to get in a little early and pick a bottom, as you are doing here. Cycles enable you to be a bottom picker.

    But, many traders are trend followers. They hunt for 80% of the rise, and are OK w/missing the bottom (and the top). And right now the long term trend is still down, but yes, this may be a turning point, and good for you to get on board. But understand that trend followers like me choose to *not* try to time the bottom, and to wait for an uptrend to develop, and to get on board once a fresh sequence of higher lows and higher highs develops – even on a 2 or 1 hr chart is good enough for me. These trend traders are part of the 10%. Maybe bottom pickers like you are in the 2%?

    Right now we have a new higher high. So far so good. If after FOMC we have a higher low, I’ll get on board then.

    The danger, to me, of picking a bottom (w/out your cycle tools) is that, this could be a Pop before a Drop. But your cycles tell you this is a bottom, so I hope it works for you.

    I again am waiting for a higher low now.

    1. Bill in Tokyo

      Just to add … this bottom, if it is a bottom, in GDX, is really a mess. Like a slow-motion train wreck. A month and a half of bi-polar ups and downs. This is *not* a simple swing. And despite today’s rise, it’s not all that different than other rises during this period. I’m not sure how to wrestle this one to be honest. The weekly MACD is still wide open. I’m a safety guy, trying to survive the long term, so I’m glad to be out.

    2. gary Post author

      Bill,
      The problem with that strategy is that if this is only a bear market rally then you will be buying right about the time the rally tops. Until we are sure the bull is back traders can’t depend on a long term trending move.

      If it was easy to spot a trend before it happens then everyone would do it. And if it was easy to ride a trend all the way to completion and hop off at the top no one would get caught in the crashes.

      I dare say a lot of trend followers got caught in the stock market crash because they got suckered into holding too long.

  13. Aida

    Gary, if we are witnessing THE bottom in gold and miners, I would think this rally out of the bottom should be on HUGE volume, not average volume as it is today. Do you not look at volume as an indicator?

    1. Spectator

      Looks like short cooveringt before the FOMC. If interest rates rise, it will be negative for gold initially. I’m not sure how accurate cycle theory is at calling bottoms. Are you seriously saying this is the first time you have called it since 2011? The chartists called the top, so give them a little credibility.

        1. Spectator

          Explain how I’m wrong on all fronts. You don’t think the buing in good yesterday was short covering. This is the first bottom Gary has called since 2011. Or chartists didn’t call the top. Please elaborate.

  17. stewie

    Fantastic analysis Gary and rebuttals too. I agree 100% with your thoughts and they are right on.
    I really liked your rebuttal on hedging.

    Gary i see a lot of trolls here lately and your comments have jumped significantly. That says to me you’re on right track as trolls always show up to discredit someone and if that is the case then that means you’re right.

  19. David Silver

    Surprised how many haters let alone second string quarterbacks come out of the woodwork.

    I think we shouldn’t steal Mr. Savage’s thunder and just let him shine besides this is his baby not ours!

    1. Gregor

      Most bullish FED decision for all assets is a 25 bp hike, and then a strong message that inflation, wage growth, and other indicators are way below FED targets, such that *no hiking cycle has begun.* However, even in that best case outcome, I expect Gold to break down viciously after this FED meeting.

  22. Gregor

    Sentiment has been terrible on Gold multiple, multiple times the past few years–and at best this produced small, tradeable rallies. Perhaps this will happen again. Gary your thinking overall is pretty solid on commodities, but there’s not reason Gold must follow. Sure, Gold followed commodities last decade, but the relationship has in this decade broken down. But in the near term there is a much more important dynamic for those trying to trade gold–and that’s this: Gold has a nasty habit of breaking down after important FED meetings. No matter what the FED does today, it’s an important meeting.

    I wonder what the explanation will be, should Gold have a true meltdown in the 3 trading sessions following the FED decision. Because that’s what I’m expecting.

    G

  24. RickH

    Gold and Miners killing it. Now we get to see how this holds up over the rest of the day and the next couple weeks. Great start. Good job Gary pounding the table over and over on this one.

  28. Richard

    Gary – I like your conviction and I hope you prove me wrong on thinking next year will bottom.. Bold call.

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