OIL & STOCKS STARTING THE MOVE DOWN INTO DAILY CYCLE LOWS

oil and stock

As I mentioned in one of my prior charts the oil and stock cycles have been tethered together for a while now. Once oil began the move down into its daily cycle low stocks will most likely follow. This morning oil has broken it’s cycle trend line so the odds are good that the corrective move into the cycle low has begun. This will be the phase where the bears will come out of the wood work calling for the end of the rally and stocks will soon crash. They will be wrong. This is just a normal corrective move after what has been one of the most powerful rallies in the last 60 years. Once it works off the overbought conditions I’m going to predict that during the second daily cycle we will see the S&P test the all-time highs.

Remember the time to buy is when you are scared. We should get one of those opportunities in the next 5-7 days.

Like our new Facebook page to stay current on all things Smart Money Tracker

65 thoughts on “OIL & STOCKS STARTING THE MOVE DOWN INTO DAILY CYCLE LOWS

    1. Gary Post author

      I wouldn’t short. Remember the Fed has a printing press and they’ve already stopped one daily cycle on day 26 and one on day 16. It’s always dangerous to short in our modern markets because you never know when the PPT may decide enough is enough and intervene.

      1. ensenada Jim

        Nice first call of the day Gary, PPT is already at work turning SM higher including XBI, LABU !

  1. Rainman

    Gary, How do you rule out this trend line break as not a half cycle low? What do you look for in half cycle low?

    1. Gary Post author

      It’s possible, but not likely as we are too deep into the daily cycle for this to really have much chance of being a half cycle low. Today is day 29. Most natural DCL’s occur between day 33-38.

  2. Stevie

    So instead of selling into this strength, you now have to weather a drawdown. Where will Labu be when this is done? 3s?

    1. joel

      Gary;
      Back in July and August OF 2015, $WTIC on numerous occasions dropped as low as the low teens on the 5 day RSI and continued lower. This recent rally in oil appeared to end as it bumped up against the 200 day moving average. Your thoughts? Thank you.

      1. Gary Post author

        When an intermediate cycle is in decline that’s when you get deeply oversold conditions that last for weeks. In the advancing phase of an intermediate cycle oversold conditions get bought quickly. Oil is still in the advancing phase of its intermediate cycle so this will just be a short term corrective move and I’m confident once the correction has done its job and reset sentiment then oil will break through the 200 DMA during its second daily cycle.

    2. Huckleberry Finn

      Yeah. But because the stock will trade with 6 times the volume at 2.5 than it did at 15, Gary will interpret that as “massive smartmoney buying” even though $ amount will be the same. It is for these pearls of wisdom that I stop by here.

      1. Gary Post author

        Huck,
        You also keep missing the point. It is the sudden surge in volume that interests me. It is the bell ringing that someone is accumulating huge positions. If volume just slowly increased as price dropped then yes you would be correct. But that isn’t what happens. All of a sudden one day volume spikes and stays elevated or even increases. That sudden spike is what catches my attention. It has worked every single time it has happened in both NUGT and DUST. It also signaled the bottom in ERX. I heard these same arguments for those cases as well and they proved false just like I said they would.

    3. Gary Post author

      Steve,
      You keep missing the point. I don’t care if it goes under 4 as long as it goes to 20 later in the year, and I believe it will because I think the 7 YCL is complete and the bubble phase is just getting started.

    4. stewie

      Dude can you get a different scree name please.

      IT APPEARS YOU’RE TRYING TO CLONE ME AND TROLL GARY.

      I’m a subscriber on Gary’s reports and don’t want him to associate your trolling with my screename.

      GET A DIFFERENT SCREE NAME PLEASE

  3. Galen

    Gary
    If biotech/labu is going to lead the next SM advance, is it correct to assume they will hit the their DCL and reverse before the SM? Thanks.

    1. Gary Post author

      No that’s not how the beginning of a bubble starts. For a bubble to grow you first have to create extreme pessimism. A bubble has to be the furthest thing from anyones mind. You have to stretch the pendulum a long ways in the wrong direction to build the fuel to drive the bubble. See oil in early 2007 and stocks in 1998 for an example of what I’m talking about. No one was thinking bubble at the time of those vicious corrections, but that is what had to happen to build enough fuel to drive the bubble phase.

  4. Ralph Wiederzane

    Just say the word and I’m ready to hop on the G-train via XBI. I was thinking miners might present an opportunity to add first, but looking like biotechs are next up. That’s ok since I’m already heavy into miners. I’m choosing XBI over oil for the reason I already have exposure to commodities.

    1. Ralph Wiederzane

      A massive move either way? That can be said at any point in time, “there will be a massive move in one direction or the other in the future”.

          1. Ralph Wiederzane

            Cliven Mound, now you’re talking!!! He’s been the best fade of the last 4 months so definitely worth the read!

        1. Ralph Wiederzane

          No need to read this one, I agree there will be a big move in some direction at some point in the future. Further, the longer we have to wait for the move to occur, the more likely it becomes by the day. 🙂

          1. Gary Post author

            Oh I doubt the DCL is done in only two days. DCL’s as a rule need to create fear and that usually means at least pushing the 5 day RSI to oversold.

            The only caveat is that we have to be aware that a potential intervention could occur to stop the DCL prematurely. If allowed to run naturally then the 5 day RSI should get oversold.

          2. Richard

            Gary-
            From everything I read, the FED is concerned of stock complacency. It would not make sense for them to intervene at this juncture, so let’s see how the market reacts when the DCL is due and at what level. 1950 would probably shake people up quite a bit.

        1. tom

          Gary,
          When is a good time to accumulate some labu, if it’s up almost 300% today, then there will be a day down 400%?

      1. Joe

        It reversed split last night 1 for 4. That’s where over 250% of it came from (or are you just jerking Gary’s chain).

    1. Don

      Correct. You could also say that LABU closed yesterday at 24.76 (post reverse split) and is now at 24.50, as the time I am typing this.

  5. Enoch

    gdx in green surging now, can you imagine if the stock market was to rebound this sector would be on fire

      1. Gary Post author

        I’m expecting biotech to take off during the second daily cycle. When it becomes clear that we are not starting a bear market all the laggards will start to catch up to the rest of the market.

  6. Don

    AMZN is doing it’s part to hold up the market. Biotechs are all over the map, first selling off, then a sudden surge of buying and now selling down again.

  7. Ralph Wiederzane

    Just had trouble accessing this site, thought that Al and his Mossad buddies were jamming the G-man for a minute!

    Looks like this morning was the time to buy XBI?

  8. Herman

    I am watching EUR/USD, has already corrected for too long (also due to Brussels attacks and hawkish FED talk). It will spike rather soon, which results in another thrust up for gold, commodities and stocks. Investors who got out yesterday will enter again, adding more fuel to the rally. I look for EUR/USD at 1,20 as the reversal point.

  9. Brent

    I’m not taking a position against the majority here, but for sake of well rounded data and input I’m putting it out there that I haven’t sold my gold miners.
    I intend to stay long (on this stock category) since my paradigm for investing at all in the markets is to hedge against global economic loss, not necessarily to get rich. ( Although if that occurs so be it! : P ).
    So of my 8 gold miners, 5 are up today despite the $USD and another gold downturn. Of the other 3, 2 are down 1cent and one less than 1 percent.
    So far so good.

  10. Rob

    Gary,

    Any idea why GDX is holding so strong despite the fact gold went all the way down to 1218? Does the cycle low apply to GDX as well or just gold? Seems only gold is going down…maybe its still time to buy mining stocks here and not wait till April/May

    1. Gary Post author

      Like I said, it’s not going to be an easy move down into the ICL. We aren’t in a bear market anymore. That means the character of the market is going to change. Long term investors will be buying the dips so don’t expect gold to just crash lower like it has for the last 4 years.

      For the next year ICL’s will probably be tortuous affairs with lots of counter trend rallies. So very hard for both bulls and bears to make money.

      The strategy now is to buy dips. That means at times you need to just sit on the sidelines patiently and wait for the dip to play out.

      Selling short is unlikely to be profitable from now on unless you are just lucky or a very short term trader.

  11. Chris

    For those gold lovers, go look at the chart below. Its weekly shows that this could only be just a big bounce. It did not close above those moving averages. Note, silver did not higher high still. Anyway, just dont get too carried away. However, this isnt stopping me from buying at Fib levels.

    http://stockcharts.com/h-sc/ui

    1. stewie

      Chris i agree. Gary seems to be of the opinion that we’re in bull market which is false, at least for now.
      As correctly pointed in your chart Gold would need to breach 1308 and go past that in order to make a higher high. That has not happened therefore this was bear market rally.

      If you disagree look at Jan 2015 rally on the chart according to Gary it made higher high so this was beginning of bull market yet it was not and we made lower low. We didn’t make higher high above 1308 so this is same scenario as with Jan 2015 rally. We can still definitely make lower low still.

      Also bear market rally are sharp and this rally was parabolic but stopped short of 1308 which means decline will be as equal of the magnitude of this one. As Gary correctly pointed out bull markets start when gold climbs wall of worry not goes parabolically higher and stops before making higher high (1308). Also notice numerous tops in my chart with stochs and macd that compare to 2011 top. You should get the picture then and judge for yourself but I gotta give props to gary for calling this rally, even tho he also said 1308 and 1400 for second wave which failed so that was bad call.

      http://tinypic.com/view.php?pic=11h7w5z&s=9

      1. Chris

        But gary is right about just buying on the lows. Becos, even if wrong, you still make good money. He said gold could go higher, 1308 etc, but also mentioned its best to take most profits off the table.

      2. stewie

        Also based on Gary’s cycles gold failed 2nd Daily cycle that would have taken gold past 1308-1400 it means that whole intermediate cycle has failed. Which means this was not beginning of bull market but bear market rally and if so we will make lower low. Look at my chart and you will see we’re still in bear channel

        http://i67.tinypic.com/11h7w5z.jpg

        1. Gary Post author

          Your cycles analysis leaves a bit to be desired 🙂

          Golds intermediate cycle rallied for 14 weeks. That makes it a right translated cycle. And that’s another confirmation that the bear market is over. Right translated intermediate cycles typically only occur during bull markets.

          1. stewie

            Gary i’m not cycle guy but we did not make higher high in gold and neither did we in silver so metals are not in bull trend but still in bear.

            Did we break 1308????

            See my chart and show me how we are in bull market?

  12. Jay

    I had a feeling that stocks would not be selling off huge today (as predicted in the #TimeStamped post I made yesterday 🙂 ) Should be interesting to see if stocks sell off next week.

    1. Chris

      Nope Jay, until thursday, market unlikely to drop much. Month end and quarter end. Likely scenario is close near the highs for the month.

  13. Alexandru Popovici

    Victor, I just saw ur post.
    Thank you for letting me know about something you see interesting!
    Pls give me the link.
    I dont know who Sid is.

Comments are closed.