Caution is warranted. I don’t think stocks, oil, or the Shanghai composite are finished dropping into their intermediate cycle lows.

36 thoughts on “JUST A BOUNCE

  1. Alexandru Popovici

    I bailed-out of the double-short gold trade with an equity loss of -0.3%
    I don’t like gold’s strength in spite of USX’ expected strength

    1. Gary Post author

      The dollar is very late in it’s daily cycle. 24 days into the cycle isn’t the best time to be going long. Better to get long on day 1,2 or 3.

      The dollar is also very late in it’s intermediate cycle. When it starts to move down in earnest that should release gold to finish its intermediate rally.

      1. Alexandru Popovici

        Thank you, Gary!
        I think USX put its DCL early on JAN11 at 98.14 and ICL sometime btw DEC9-15 at about 97.2

  2. victor

    Thank you Gary, I positioned for the early fall stock market bottom. Would be good if you touch the gold move up to that time. I think early fall will be the best opportunity to enter long-long commodities…, that’s my plan to follow….

  3. Patrick

    Have been a follower of your blog for over a year and really enjoy your educational posts so thank you. Your input is very refreshing against all the talking heads on TV.

    My question is would you recommend still just sitting on the sidelines in cash until we see the final seven year low or do you now feel confident enough to get in short at some point next week?

  4. tulip

    Thanks gary- maybe the fed doesn’t care about the stock market but cares more about Main St…
    and does not do anything….but raises rates..?….

  5. Gallo

    Gary: I’m not sure I heard you correctly: are you saying that we begin our move towards 1500 on the S&P as soon as next week or the beginning of February? If so, I thought I read one of your comments on the earlier thread saying that stocks and commodities are likely to bottom next week and begin a move higher form there. Thank you

  6. Jacob

    An fan of your work. Concur need more blood before a trend change is possible. If you pay any attention to mainstram financial commentary in Barron’s Stephanie Pomboy, Larry Jeddloah and Jim Paulsen think were going to also get a huge sector rotation into all the stuff nobody likes: gold , commodities and emerging markets. Believe your in good company. Im ready when you are.

    First time poster…. Thanks for your dedication and solid work.

    1. Jacob

      Unbelievable, I do not encounter many Jacobs, weren’t others saying people with the same name appear on the site soon after they start posting, seems strange.
      I agree again Gary, I’m long right now, just for next week I think. Then I’ll go short, hoping for a big move down, maybe even a flash crash, some time around when Bernie sanders needs it.

  7. james moffett

    Gary–nice review. Question–while possible or likely, a 7-year cycle low in stocks is NOT absolutely required, correct? No law requires it, right? Isn’t it just cycle theory?

    1. Gary Post author

      Actually I do think it is necessary. The Fed has to start QE4, and everyone has to get on the wrong side of the market before there is enough fuel to drive the final bubble phase.

  8. Theryl

    Looks like a V-shaped recovery in oil to me. I recognize that from 2009 when people were insisting that SPX had to fall further still. Nope, it kept going up and never looked back.

  9. mm

    Everyone expecting oil and market to make new lows. Gary calling for an 87 style crash.

    No one believes in this latest little rally. I expect a few days rest and continued upside.

    For all we know, the Fed could be in the energy market ????

  10. jack

    The Fed released the chains on oil to save the stock market. The artificial deflation created by Fed to hurt emerging markets.

  11. Walt

    Theryl & mm ,
    That would be perfect , because the fed says they are raising rates 4 times in 2016 and if we get the V shaped stock recovery you predict , they can normal rates easily. With the next rate raise in march .
    We’ll see if you’re correct . That would surely make the Fed’s job of raising rates easy .

  12. Chris

    I have noticed that $HUI have tested a nice round number 100. It undercut it, made a weekly doji. Could be a false breakdown to get all to sell, or even short. With false moves , comes fast moves. Lets see if this could bounce big.

  13. Alexandru Popovici

    1) USX halted and closed ther week right at the 99.65 pivot 🙂 mentioned yesterday before the opening to produce the bears-bulls fight.

    2) Gold is diverging both from miners and commodities as expected BUT…not at the desired intensity –> intrinsic strength is warranted to keep me 100% cash.

    3) Stocks market does show weakness –> definately a dead-cat bounce to last into next week at least as FED’s doing nothing will boost some temporary optimism.

  14. Chris

    When i go back since early 2000 and draw trendlines for copper and silver, early 2000 as point 1, 2008 crash as point2, they are touching the 3rd point the first time. Its a very neat trendline. Given how oversold they are, a good rally should be there. This could turn out to be a new commodities bull.

  15. Dan

    The most simple path is most likely: a steeper and faster bear market than 2008. We’ll blow through 1550 regardless of what the Fed criminals do. You give them too much credit. Bubbles like biotech already collapsed. I was warning people back in July with 95%+ bullish sentiment.

    We already had the fall 2015 short squeeze. Ive been pounding the table bearish and will be piling in to UVXY calls soon.

    1. Gary Post author

      I don’t think biotech qualifies as a bubble yet. Bubbles usually rally 100% or more in a year or less and often stretch at least 50-100% above the 200 DMA. They also tend to get the public heavily involved and I have yet to see anyone talking about their biotech stocks in any public venues.

      This just looks like the first stage in the biotech bull with a much much bigger bubble phase still too come.

  16. Bluebear87


    Is it quite possible that the actuall bubble froth already have taken place in the end of year 2015 “fang gang” stocks instead of biotech 2016?

    Sure looked to me like a “blowoff top” phenomena.

    Also any thoughts of the Fed PPT surging oil Friday?
    Compared to vehicles like XOP not being in sync.



    1. Gary Post author

      I didn’t really see anything that qualified as a bubble yet. We need the public to pile in for a bubble to form and I didn’t see that in anything yet. Plus one would have to assume that the Fed is just going to sit on the sidelines and watch everything unravel without doing anything.

      I really doubt that will be the case. I think there will come a time soon where the Fed will panic and start QE4. Once it begins then we should get the phase where stocks rocket higher into a final bubble.

      1. Bluebear87

        Thanks Gary!

        Wouldn’t you think the “magic bullet” could possibly be for the Fed to uphold the markets is simply driving up the price of oil?
        Easy Peesy no?

  17. Anthonyo


    Good pints on Biotech and QE4 eventuality.

    OIL: viscous rumors circling in cycle analysts circles that it will rally to up to $50 to everyone’s surprise. Your thoughts?

  18. ChrisG

    Rambus on the other hand feels that gold is making a slanted HS , and gold is at its neckline. When breached, gold is heading for $700 ish. Rambus is quite accurate too during this entire commodity bear.

    Bottom line, with gold, silver copper etc at important juncture, a bottom is either in, or a huge breakdown is ensuing. Let’s see.

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