Market Wrap – My Thoughts

Since Al won’t allow me to comment on the Market Wrap of Kereport anymore, from time to time I’ll add my comments here. In regards to the market wrap today, Doc continues to try to pick a top. He did the same thing with gold’s baby bull. I think it’s a mistake to fight a trend as strong as the one that is in progress in the stock market. The Dow is only 3% from making new all -time highs and the advance decline line is on the verge of making new highs.

Market Wrap

New highs in the Advance-Decline line will draw the market to new highs as well. The average retail investor is still buying puts like we are at the bottom of a 20% sell off. That is a lot of fuel as all those traders have to cover and switch directions 180 degrees. Folks, you’ve got to give up on the bear market theory. The 7 year cycle low has bottomed. It did what it needed to do. It got everyone bearish and on the wrong side of the market. We now have the fuel for the next phase of the bull market.

We are starting the bubble phase and a new 7 year cycle. Even if the 7 year cycle is destined to be left translated (which I think it probably is) there is no chance of a top for at least three years.

For heavens sake, quit fighting the trend. The trend is up and will be for at least another 2-3 years. Get on board, and especially get on board the biotech train. That’s where the bubble phase will focus most aggressively. It’s where the innovation is and it is the sector that got hit the hardest as stocks went into their 7 year cycle low. Remember, the market is like a pendulum. In order to drive a really big move higher it first has to drop very far to the downside and stretch the rubber band. That is exactly what has happened in the biotech sector. You have a very rare opportunity to get in at the very bottom and ride it all the way to the top.

And LPG (also on Al Korelin’s Market Wrap) is too early on gold stocks. We had a 90% rally out of the bear market bottom. It’s going to take at least another month or two of sideways consolidation, or a corrective move that retraces at least back to the 50% Fibonacci level before the next leg up can begin.

Just be patient in the metals sector. If you missed the initial thrust out of the bottom then you just missed it. It’s going to be awhile before the next leg up is ready to go. The earliest one needs to start looking for a bottom will be in May and we need to see sentiment sour and lots of calls for the return of the bear before gold will be ready for the next leg up. If you aren’t scared to death to pull the trigger then it’s still too early. And right now no one is scared of the metals.

Focus on the stock market and energy market for now.

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32 thoughts on “Market Wrap – My Thoughts

  1. Jacob 2

    Gary – As I’m sure your aware you’re the sole owner for the most bullish macro call out there. No one is calling for much upside…low growth and sideways … at best. Personally, I hope you nail it. You’ll be famous and i’ll make a lot of money.

  2. Hillarys Cattle Futures

    IMO; I think the PPT/ESF is going to let the stock markets work off a little bit of their overbought conditions during April … then once we are thru the brunt of April earnings seasons; my best guess is the PPT/ESF puts the pedal to the metal again and brings the oscillators back up to overbought conditions.

    I think the PPT/ESF goosed the markets today primarily because of the very bearish action in Europe & Japan last night … if the PPT/ESF wouldn’t have saved today, then Europe/Japan would have been a bloodbath next Monday.

  3. RayB

    Gary has good reasons to make the calls he does .. thats why I like listening to him, he tells us his reasoning behind it and it always sounds logical to me 🙂 When I listened to Doc .. he would have an opinion but never gave good reasons why .. he would just say his charts tell him .. thats what everyone says 🙂

    1. tulip

      Johan.. this is rehashing.
      Why don’t you go to Ker… and ask Al directly and have him publish his response directly
      and be done with it.
      Ask him if you care.. why he gave out my email address vocally .. and why I was banned
      at the same time…
      Obviously, people are going to come over here—so they will get Garys views…
      a positive imo for Gary…

  4. Chips

    Hello Gary, hey I’m looking at SPY and declining volume over the last few months. Especially yesterday with Friday’s bullsh price action delivering 200% more than Thursday on the same low volume. I mean wow, if that’s PPT magic fairy dust they’re spreading, it sure has a lasting affect! Or more realistically, what if it’s just the current ruling party (including Yellen) creating a mania in stocks to pull in retail investors ahead of the election?

    1. Gary Post author

      I definitely think the establishment wants the markets up during the election year.

    2. Bill

      The big moves are always on declining volume this is why Gary said pick a position and stick with it.

      1. j

        ? this is just pure crap, volume is what drives the markets. One just has to look at moves in stocks or markets with very little volume compared to the opposite. Volume is one of the best indicators available. Dismiss it at your own expense.

      2. Gary Post author

        Actually it’s not crap, it’s empirical evidence. While at first it would seem logical that markets need volume to rally, if you take the time to look at the historical evidence most rallies start, and rise on light volume.

        From a commonsense perspective it does make sense. At bottoms most traders are skeptical, they want to wait for further evidence. So the bottom occurs not on heavy buying, but because a market simply runs out of sellers. Then as the market moves higher more and more traders become comfortable with the move and start to jump on board. So often what you get is a surge in volume as a top is being made but light volume at the bottom and on the way up.

        Of course this isn’t always the case and a big volume surge in the 3X funds is almost always a sign of a bottom. But history has proven that light volume IS NOT a consistent sign that a rally will fail.

        1. Bill

          I could not have said it better myself Gary. Again my trading account speaks volume and this isn’t a retirement account this is a cash account … My okay money . I’m sticking with what works the rest is just noise. Like I said I’ve played the world is coming to and end trade and I almost went busy till like you I changed my thinking … We have a printing press and WE WILL use it. The rest of you enjoy you bunkers, caves and surplus survival kits I’m here to make money .

  5. Stefan

    In Elliot Wave terms we are close to a B-wave top for US index. A possible top at 2080 for Spx?

    We will see next week.

    1. Gary Post author

      Be careful trying to call a top. We’ve watched as top caller after top caller has gotten run over by this market, and dismiss the PPT at your own peril.

      The risk now is that oil could complete it’s DCL at any time, and once oil turns and heads back up it’s just going to add even more force to the rally.

      1. david

        Gary,

        After oil completes its DCL, what is your short term swing top? and how quick should it take,
        Any thoughts of oil price in 3 months from now? in 6 months?
        TIA
        DAVID.

  6. Rm

    Many biotech names are down over 70 percent that’s not a corrective move in an uptrend it’s a bubble bursting decline after a huge move the last 4-5 years.

    1. Gary Post author

      No it’s a 7 YCL and the 7 YCL is now over. So it’s time for the rubber band that got stretched very far to the downside to go a long long way in the other direction.

      This is the mistake that recency bias causes traders to make. They assume that since stocks are down 70% that the bear market will just continue and keep going down. They don’t allow for the possibility that the bear market has gone far enough and it’s time for it to end.

      This is the main reason I started studying cycles so I would know when to start looking for trends to reverse. It is time for the bear trends in stocks to reverse.

      1. Bill

        And now the Workd coming to and end callers are saying bio is do to fall lol we already moved multiples of dollars in the other direction and they still sit there and watch lol

        LABU will be $52 bucks and the cave dwellers will be saying ” any day now the collapse is coming ” … Sure it is.

  7. marie

    Gary, are you back in the biotech yet? You sold LABU few days ago. Thanks for all you do.

      1. beartrap

        Actually it’s an info for subscribers…

        GUYS WE ARE MAKING A TON OF MONEY WITH GARY AS SUBSCRIBERS.
        The subscription’s price is just nuts comparing the money we are making here.

        There are real time updates when to enter and when to get out a trade.

  8. Vic Monto

    Markets are fast approaching a crossroads…..decent, not great, financial quarterly reports will bring in volume on the buy side….I think Gary is spot on when he says to not short “the bull”…Thanks for all your research and analysis Gary…you continually are staying ahead of the curve!?

  9. Bill

    “And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”–

    Jesse Livermore

  10. mm

    2080 and 2100 are next spots to watch for a pullback. If LABU is up 20% or more, the prudent thing would be to move into XBI or IBB or cash in case there is a pullback. 7 ycl or not, there are gonna be nice corrections not to mention Gary could be wrong on his call.

    To hold a 3x etf is crazy. U should use the same approach that Gary says to use with options … only play with what you’re willing to lose.

    1. Bill

      Ill worry more when we break out which we haven’t yet, look at the three month chart until I see 52 or better LABU is a hold before any major pull back … We’re still adding fuel to the fire before the take off…the price has moved four or five bucks which is chicken feed for a x3 talk to me when we move multiples of ten then I’ll get excited …

      http://www.marketwatch.com/investing/Fund/LABU

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