CHARTS OF THE DAY – $NYAD, $SPX

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The $NYAD line is making higher highs. There is virtually no doubt at this point that the 7 year cycle low in sticks is complete, and a new 7 year cycle has begun. Also, there is no chance of this new cycle for stocks topping in less than 3 years.

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The next daily cycle low in the stock market isn’t due until the first week of April. It will be a buying opportunity.

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59 thoughts on “CHARTS OF THE DAY – $NYAD, $SPX

  1. Gary Post author

    Folks I warned that the metals will often top as a breakout. This isn’t coincidence. When big money is ready to take profits they manufacture a breakout to sucker in retail buyers. They then unload their shares and oz. and the intermediate cycle tops. The miners completed a potential false breakout today. Now I don’t know if this will turn out to be the intermediate cycle top or not. But let’s get serious, you don’t go on a buying spree after something has already rallied 90%.

    I’ll say it again: There are only two positions during a baby bull. Either long or on the sidelines. Never short.
    Now might be a good time to be on the sidelines or in another sector. I continue to urge people to move to the stock market, energy or biotech. Of the three biotech has the most potential as it has gotten beaten up the most.

  2. Jacob 2

    Gary…. biotech has gone in the oposite direction for SM rallies. Much of the old leadership are no shows… Healthcare and much of tech. The place,to be has been the worst of the worst your classic participants of a BMR. Not complaing because thats what i generally own. However, unless we start getting broader participation …..i’ll have my doubts as to wether this is the continuation of an ongoing bull or a BMR.

    1. Gary Post author

      Actually this has been one of the strongest rallies in terms of breadth in the last 60 years. Another reason I’m convinced the 7 YCL is complete.

  3. Gold miner

    I wish U are right Gary.Sold CDE,AG,SSRI today.Still keep FCX and CHK.What do u think about FCX Gary?Energy play?

  4. Bud Fox

    No top in SPX in 3 years and miners for 4-5 years.

    Got it.

    Since you in ththe loooooonnnnggggg term forecasting business, when will gold hit $5000?

    1. Gary Post author

      The next 3 YCL in the dollar is too soon. That would be 2017, so I assume the most likely time for it would be at the next one in 2020.

  5. Gary Post author

    There is no futures market to intervene in the NYSE. Consequently the NYSE experienced the full effect of the 7 YCL and broke it’s multi-year trend line and dropped 20%.

    The PPT aborted the move in the S&P and that’s why the drop was shallow.

    1. Joseph

      Hi all, new to the site. Well here goes my first post. Sold HGU at 35.50 today, what triggered this was gold flew WED and miners responded well…. But Thurs, Gold rallies $30 and miners really on the TSX were not impressive so I sold ALL my HGU…..
      Good move….. But in the past, when HGU 1st came out, I bought 14k worth of it…… Was a rookie and didn’t understand how this levereged product worked…… LOST 75% OF MY Monies from being foolish….. My suggestion and I’m sure many are aware of this but in my view I do not hold 2x or 3x ETFs for more than a week. I always close out the trade if the trend is not clear or a good portion of it……

      Cheers
      Joseph

    2. RickyBobby

      Gary, you’ve gotta calm down about stocks. It can’t be good for your heart

      Gold to $1400 now by end of April if similarities to prior bull moves continue

      Markets to drop hard after a fake breakout

      1. Gary Post author

        If stocks make a new high then we are in a new 7 year cycle and there’s no way that could top in less than 3 years.

  6. Stevie

    Based on the A/D numbers, how did the folks do after the Spring of 2015?

    Oh that’s right, they got their ass handed to them. The A/D means a whole out of nada.

    1. Gary Post author

      As you might recall for over a year I said the Nasdaq was going to test the all time highs but wouldn’t have any significant follow through until we got a sharp correction. This was all while bears were trying to pick a top all the way up.

      We got the correction … obviously.

      Now it’s the exact, retail traders have become convinced that a bear market has begun, but they have done so way too late in the 7 year cycle with all the evidence that a major low has been completed.

      And I didn’t really understand your comment about the AD line. It generated a slight divergence at the May 15 high which was warning that a correction could be imminent.

      1. Jay

        Yep, I remember Gary saying NASDAQ would make new high, or at least test it, many times on the KEReport, before it did. He was right.

  7. Don

    I sold my small 100 share position in LABU today at a small loss. I just don’t feel comfortable with Gary’s call for a bubble phase Biotechs. Heck, he was calling for a Biotech bubble way back in FEB of 2015 and here we are 13 months later with Biotecks and Pharma being the worst performing sectors of the past year! That’s a fact. Even worse is that IBB continues to fail while the S&P soars. Sorry, I just can’t get on board with this bubble thing. I also disagree with the call that we are headed for new highs for the S&P. That’s doubtful. The NYA chart looks like a classic bear rally in progress. As powerful as the rally has been, the NYA still hasn’t crossed it’s 200 day MA.

    1. Gary Post author

      You need to be corrected. At no time in 2015 was I making a call to buy biotech for the start of the run to a bubble. I was cautioning traders to remain patient and wait for the correction that has to happen first before a bubble phase can begin. We now have that correction. Now is the time to start buying, not back in 2015.

    2. Bill

      I seriously doubt you even bought Biotech and sold it at a loss, fact is if you did it just proves you are no trader, you lack patience and you lack the ability to make money IE Buy low sell high. No one said Bio was gonna make a fast turn around it was and still is a buy and hold….

  8. Don

    The DAX, the Euro STOXX, the Nikkei, the FTSE and others, are all exhibiting clear patterns of lower highs and lower lows, (A.K.A. bear market action). It would seem that their Central Banks are doing a lousy job of keeping their markets up despite extreme stimulus measures. Perhaps they could use some coaching from the FED? Is it reasonable to expect that US markets will remain immune to a world wide contagion of stagnating growth and lower business profits? In my opinion, only an American would think so.

    1. Hillarys Cattle Futures

      Yes … many of the major Intl. indexes are looking increasingly weak lately.

    2. Gary Post author

      Don,
      Don’t let recency bias cloud your view of the markets. It’s not going to be long before all markets are back to making higher highs and higher lows. The AD line is already warning that it is coming.

    1. Bill

      Ive been saying it for the last few years now, this DEFLATIONARY BS was just that BS… we have a printing press and we will use it. Now everyone is trained to think lower Oil prices is the new norm, as Gary notes its amazing how easily brainwashed the retail trader becomes…

      1. Richard

        Bill, every dividend cycle, companies are issuing more debt to pay dividends and stock buybacks.

        At some point, the market is going to start to be “concerned” about this issue.

        Valeant was a prime example. The balance sheet was horrible, yet the stock was partying above $250. It then dropped to $100 and $50 and people became “concerned” with the balance sheet??? In other words, they were not concerned until the price fell.

        Awhile back there was concern about how much the dollar was affecting oil prices. I still do not have a view on this, but was feeling something like 10%-20%.

        As for deflation, there are still no clear signs of a deflationary concern within the next 3-6 months. Oil could very well be a precursor for a deflation in the future, and I believe it is, but this could still be 6 months, 1 YR or more out.

        1. Herman

          Gold and oil show very clearly that we are deflating, and the process will accelerate to the downside in the coming months. Soon this will end in a bust; this bust will be short-lived but very severe. Even if takes only a few months to materialize, it will be devastating. Central banks will react to this bust by flooding the street with money, which will start a real inflation cycle.

          So, this is the time to get out of asset classes that are hit hard by a bust (gold, oil, commodities, stocks), but buy them back immediately afterwards, especially physical PM (extremely favorable risk/reward ratio) Because gold, and especially silver, will shine very brightly during this inflation cycle.

          1. Herman

            it is best to exit around the top of these countertrend rallies that are materializing right now. I am riding this countertrend (even opened a position in LABU yesterday), but keep my finger at the trigger.

          2. Richard

            Ah, so we slightly different views on this. If money printing isn’t working now, why would it work after a deflationary bust? Hyper-inflation?

            Yes, there is a good chance that oil is forewarning of a deflationary bust. But this can be very early. Gold, I don’t think so. Gold is a currency and is reacting differently, just because gold in USD terms declined as the USD was in a bull market, gold was in bull markets in other currencies!

            If we have a deflationary bust now, it will not be a short cycle till we have an inflationary explosion. This would more or less be 10’s of years.

  9. Don

    Inflation never left nor has it been subdued. The true inflation rate is far far higher the the ‘official’ number. My food, power, water, insurance, and dental bills say so. (OK, gasoline went down some).

    1. Richard

      Don- I review many construction materials pricing lists. Back in 2008 when oil was peaking, price increases on materials were literally coming in every 2-3 weeks.

      They used the excuse of oil; however, all of these price increases continue to roll in. Drywall, sensitive to fuel, just had an increase of 15% January 1. When I showed the supplier a receipt from four years ago, he could not even believe the price increased so much in four years and he works with it everyday.

  10. Duncan Smith

    Are you saying a market can only downturn after a bubble phase? Looking at the S&p 500 its had two major downturns already in 2000 and 2008, was it in bubble phases at those points, or was it influenced by external bubbles. Could the next bubble phase be the derivatives bubble opposed to the asset bubble.Its clear the markets are either going sky high from here or are they are going to crash hard. It will interesting looking back in a years time.

    1. Gary Post author

      “Are you saying a market can only downturn after a bubble phase? ”

      Absolutely. Tech bubble in 2000. Real estate bubble followed by a bubble in energy in 2008.

        1. Gary Post author

          Not the S&P. Real estate was where the bubble manifested in 2006 & 07.

          This time I think it will occur first in stocks (most aggressively in biotech) and then we will get the bubble phase in gold once the bubble in the stock market pops and all that liquidity tries to flow into the commodity markets (most aggressively into the precious metals).

          1. Duncan Smith

            I agree the bubble could be in stocks or derivatives. It will be very interesting in a years time.

    1. Bill

      I took a small DUST position sold off all my miners positions ( Thank you Gary ) and took a position in DBA check out coffee IE: JO

      1. Richard

        Bill – I saw this and am in JO options, took off 50% yesterday and looking to go back in.
        Watch the water situation in Brazil.

        Regarding gold mining shares, I am not sure what type of trader you are (day, short, int, long), but pay attention to the HUI 150 x 180 range. The HUI wants to get to 250 and a breakout of 180 will cause this quick.
        Of course it can fall back in here, but for me, it is not worth the time or effort to short while still in this range. I decreased back to 100% long yesterday and will look to go back to 200% soon, conditions permitting. Watch the reactions of GDX between 18 and 20.

    2. Gary Post author

      It might still be too early to short gold folks. Silver is still making new highs and the dollar still hasn’t delivered a bloodbath phase that would signal an ICL.

      How many times must I deliver this warning. There are only two viable positions during a baby bull. You are either long or you are on the sidelines.

      Just trade something else. The stocks market and energy have tremendous upside potential and nothing has more potential than biotech.

      1. Richard

        Agree Gary, now money will rotate into silver from gold to play catch-up. Also, need the bloodbath phase of usd.

        “How many times must I deliver this warning. There are only two viable positions during a baby bull. You are either long or you are on the sidelines. ”

        100% agree, unless you are a futures day trader with knowledge of order flow.

  11. Ralph Wiederzane

    I’ll defer to Gary on this one, because I’ve seen when he has a hot hand before and he is right on the money for long periods of time, and for the best moves in markets. However, as far as the S&P I can’t work out how inflation won’t force the Fed to raise rates and thus stifle markets or worse? I understand cycles point higher but fundamentals seem the opposite.

      1. Richard

        Yes, the FED will follow the rates. Market needs to show FED it wants to go up. That is why there is so much confusion at the FED and a bunch of BS in the press conferences.

    1. Gary Post author

      Markets can build momentum and continue higher for a long time after the Fed starts raising rates. They started raising in the summer of 04 but the housing bubble didn’t pop until the fall of 06.

  12. Alexandru Popovici

    Hello, hello, Z! ๐Ÿ™‚

    I have no target in sight. It is rarely that I can set a price target [but when I do it pretty much gets there ๐Ÿ˜› ]
    On the other hand, I have a time target: around APR8.
    Why? It is simple:
    – USX put its DCL today which happens also to be ICL, while USX is very late in its DC
    – USX broke down deep yesterday while two major bearish signals for gold occurred:
    — gold did not manage to break to new high
    — gold advanced only slightly but on HUGE VOLUME –> sign of exhaustion while forming a double top.
    – gold is late in its IC but
    – very early in its DC, so that GOLD HAS PLENTY OF TIME ROOM TO GO DOWN.

    How much down? I have no idea but I can guess it could be enough so as to shake its 50Wma now at 1149 while USX will see its advance towards its ICH.

    1. Gary Post author

      Why do you keep trying to call these cycle turns before they even form a swing? I don’t think you’ve gotten one right yet. Just a little more patience my friend.

      The dollar is dropping into an ICL. Those typically create panic. We have yet to see panic or even any kind of sentiment extreme in the dollar. It’s not out of the question that the dollar could drop below the Aug. low and confirm that the 3 year cycle has topped before it bottoms.

      It’s been my theory for a while that the dollar could be forming a megaphone topping pattern. If that’s the case it will need to move below the Aug. low before the ICL is complete.

      1. Richard

        Yes, Gary, there is an air-gap below on the dollar. There has not been panic yet because there has been no need to panic.
        But we are now at “concern” for the USD long position. Drop a little more and concern will turn into panic right at the air-gap.

  13. zkotpen

    Cheers Alex!

    I’m looking for 61.8% fibonacci retracement: ~1243, in conjunction with a more statistically based price indicator that I track in real time. The fibo is based on what looks like a double zig zag retracement from yesterday’s high.

    But I would not put cash at risk on fibonacci alone. If the stats line up with the pattern in gold and miners, I will go long GDX. If not, I’ll keep watching and tracking until I see a pattern I recognize, combined with stats…

  14. zkotpen

    Alex,

    Hmm…

    I recall your comments about 0.9% per win vis a vis -0.44% per loss, average.

    What is your win/loss percentage?

    1. Alexandru Popovici

      pretty low since the beginning of the year = 45% sharp (i.e. after excluding virtually nil trades).
      I’ve head many pilots trying to get a trend, pilots which failed –> my main losses were my long stocks (LNKD, FB, STMP) initiated on JAN6.
      The highest loss per trade has -0.75% during this fairly difficult period.

  15. Alexandru Popovici

    VICTOR, sorry, man! I just saw your call yesterday. Pls see my comment to Z above.
    Good luck with that short stocks trade, even though I would not place the short just now and even if ‘d do it I’d start it on a small pilot, with a tight stop loss, so that your capital at risk to be minimum.

    1. victor

      Thank you Alex, will see end of the day how it finishes, I think Gary is right – small pull back and back to marginal high so maybe not worth to short or small amount at risk, Make Oliver too confirming stocks decline. .. cautious

  16. Richard

    I never thought I would see Chevron back to $100 with $30/bbl oil.

    Wasn’t it at $100 back in ’08 with oil at $150 ๐Ÿ˜‰

  17. zkotpen

    Alex,

    Without crunching the numbers, it looks like your trades are still net profit.

    I guess the question is, if you can boost your win-loss percentage.

    I know people who trade coin flips. Japan’s #1 day trader, CIS, cites a historical 60-40 win-loss percentage…

  18. tulip

    Gary, can you please advise which etc for biotech… you said you didn’t like 3x etfs…so why do you like LABU..??

    1. Enoch

      I recall he did say that but he also said biotech is at the bottom and the first leg up will be very powerful and so he believes labu is the way to go, once he exits at an IC top, the next entry will probably back in the regular unleveraged funds like IBB/XBI

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