Could stocks finally decline into an overdue cycle low? Possibly. Here’s why:

With the bank of Japan leaving monetary policy unchanged, the global markets are selling off this morning. This may be the chance for the stock market to move down into a clear & recognizable daily cycle low, clear the overbought conditions, and reset sentiment before a drive higher to retest the all-time highs.

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  1. Ralph Wiederzane

    Its gonna be hard not to take profits in the miners if GDX can get up to the 25-27 range in this surge, that would be the second leg from the bottom with the flag in the middle that formed between 19-21. It might not even get there and today could be it for the upside, then back to test the consolidation zone G-money has been talking about, we’ll just have to wait and see.

    1. Steffmeister

      Seasonality says a low mid summer, but the cycle is inverted so it might be a high instead.

      Moved my gold miners into silver dito.

    2. Gary Post author

      If you want to move the trade into a capital gains tax rate you have to stick with the Old Turky plan and just hang on.

    3. novice

      Just a thought, not sure how big the total market cap in this sector at this moment? GDX only 9 Billion?
      It does not take too much capital to push the price.
      I agreed reverse to the mean, but should apply to both bull and bear markets. If turning the GDX chart upside down for last two years, I barely see the price reverse to its’ mean. My question is “if we are done the selling”?
      if it is, then we should “buy and hold”.
      just my way of thinking.. maybe I am wrong, will see.

      1. novice

        Gary’s analogy to pushing the ball under the water describes GDX perfectly.. WOW, look the GDX..

  2. Steffmeister

    Nice to see you adopting to my analysis haha, there is a risk/opportunity that Spx will correct -20% before end of October imo

    1. Gary Post author

      Not a chance. And don’t do something stupid like trying to short the stock market. This is a rigged game and the PPT can come in at any time and prevent a DCL from completing.

      If we get a correction then use it to buy, but for heavens sake don’t fight the PPT and try to short the stock market.

      1. Steffmeister

        I do not trade Spx or other common stock I am a precious metals dude all day long, nice breakout today !

    1. Gary Post author

      It is until it isn’t. I’m hoping we will get a true DCL and negate the runaway scenario. I don’t like them as they ruin the cycle counts and there’s no way to tell when they are going to end.

  3. Gary Post author

    Dang the PPT is at it again turning the futures back around. They’ve erased over half the erarly morning sell off and the NDX is already positive.

    1. Gary Post author

      What are you talking about? They’ve manufactured a massive rally over the last 4 years and the Nikkei is just consolidating those gains. Get away from the day trading mentality and look at the bigger picture more often.

      1. Don

        I admit that I don’t understand what motivates these PPTeams to interven when they do.. The Japanese PPT ‘allowed’ the Nikkei to drop nearly 4.5 % and as such, are obviously not too concerned about the drop being a consumer confidence killer. On the other hand, we have the American PPT stepping in anytime the S&P futures drops a mere 1%. One would think that they would have the same agendas.

  4. Surf City

    Here is my analysis on the “Darlings of Wall Street”, or some of the Street’s favorite stocks. Not advising shorting the market here but it would also seem that the PPT was not able stop the bear markets of 2000-02 and 2008-09 so they do not have complete control especially if the global economy slows down as it appears it may be doing. If this is a Bear market here, it seems to be taking the slower path down similar to 2000-02.

    1. Gary Post author

      My thought is that they can’t stop a bubble from imploding once it starts. 2002 and 2009 were caused by bubble popping. But they also can’t seem to prevent the bubbles from forming. We are heading into the next series of bubbles over the next 3-5 years.

  5. novice

    Gary’s analogy to pushing the ball under the water describes GDX perfectly.. WOW, look the GDX..

  6. Robert


    Seems you were wrong about miners and gold. They are not going to correct by much and analysts may be right with just sideways correction. BOJ and GDP were catalysts for much more upside. There is no news that can take down miners and gold meaningfully. Luck if we see 1200 again and GDX at 20.

    1. Gary Post author

      No I’m going to be exactly right. The miners are going to at the very least retest the consolidation zone at the ICL in June. I guarantee it.

      Only emotional retail traders would be stupid enough to chase with the sector this overbought. But like I said that’s how retail traders think. The longer something rallies the more confident they become that the rally will never end. That’s why they always get caught at the top.

      We made an insane amount of money in our metals trade and we’ll make even more on our next metals trade, but we aren’t going to do something stupid like chasing a rally that’s 22 weeks into its intermediate cycle and stretched 50+% above the 200 DMA.

      1. Robert

        And what will be the catalyst for that? The FED is not going to raise rates in the foreseeable future. Neg interest rate in Japan, and GDP lower than expected. You also have gold on borderline about to stop out all the COT shorts. It will skyrocket if that happens. I really wanted a pullback on gold 1180 to go long but may not get that ever again.

        1. Gary Post author

          The same thing that is the catalyst for every correction in a bull market. Extreme sentiment leading to a profit taking event.

      2. Surf City

        Gary, It sure looks to me that the Miners found a DCL on the 25 and that this is a new Trading or Daily cycle here. Time based “Consolidation” ICLs are very rare, but they do occur. For over a Year now Gold has been making ICLs like clockwork about every 5 months and mid April is 5+ months from the Dec 2015 ICL. Just Sayin….

        1. Gary Post author

          Don’t fool yourself into thinking gold isn’t going to have an ICL, it is.

          If you want to catch every penny of the rally just hold Old Turkey, but don’t then sell at the bottom of the ICL.

          1. Surf City

            Gold has clearly broken the ICL downtrend line today to the upside (at least the one I have). If it moves above 1287 will you still consider the move part of the current IC or perhaps that we did have a “Time Based” Consolidation ICL?


        2. Gary Post author

          There is no such thing as a time based ICL. An ICL has to change sentiment. Sentimment is still bullish to extremely bullish in the metals. The ICL will come in June.

      3. muskie032

        Look at that chart sentiment is coming down while gold and gdx go up? What’s the deal with that?

  7. Don

    I am selling the majority of my silver holdings today. I will keep all my gold penny stocks that have been doing quite well in terms of percentage gains. ( one penny to two is a 100% increase). Gold appears to be heading for the 1300+ area.

  8. Don

    I am heavily short TLT. Most do not believe the FED can raise rates because higher rates would do so much damage to debtors, the US government, blah, blah. Just watch them do exactly that.

  9. Don

    Staying short the S&P by way of inverse ETFs, I don’t buy into this ‘runaway’ move thing.

    1. Gary Post author

      For heavens sake how much money do you have to lose trying to fight the PPT before you finally realize shorting just isn’t a winning strategy in anything right now?

      Everything has completed multi-year cycle lows.

  10. Gary Post author

    Remember the job of a baby bull is to cause the shorts maximum pain, and longs that aren’t in the maximum amount of anxiety. Once the final short covers and the last long panics into the market thats when the top will come and a sharp correction will begin.

    Those that can wait for it and control their greed will be rewarded. Those that panic back in will get caught at the top when the baby bull finally reaches exhaustion.

    Most of the early shorts have now destroyed their portfolio’s just like I said they would. I tried and tried to warn traders not to short a baby bull, but some people just have to learn lessons the hard way.

  11. CaliJoe

    Do you think this rally in metals is to trap retail investors? Do you recommend trading in and out?

    1. Gary Post author

      You either buy and hold Old Turkey or you have to trade. The time to buy will be at the next ICL in June. Chasing right now is stupid and it’s what most retail traders do as price moves into an intermediate top. They can’t control their greed and they are afraid they will miss out. So they panic in at tops after prices has already rallied huge.

      A professional understands that sooner or later there will be an intermediate pullback and that’s when the pros will be buying. The COT will be bullish at that time and retail traders will again be unable to pull the trigger. This pattern never changes and it’s why a few people make money, but most lose money. Only a very few people can buy low and sell high.

      Most people buy high and sell low because they can’t imagine any scenario in which the trends reverse. Perfect case in point 4 months ago. No one could envision any scenario where gold could rise. So no one was buying (except the SMT). Now it’s the exact oppostie, no one can envsion any scenario where gold could drop (except me).

  12. Gary Post author

    There is a possible T1 pattern in play in miners. It’s too close to the potential top to chase. Wait for the retest of the consolidation zone in June for the next run up. That rally will be sustainable. This one won’t. ONce the top forms all the recent gains will be given back.

    1. Ray_B

      I feel sorry for Gary .. people keep asking him the same questions over and over and over again and he has to reply with the same answers over and over and over again … don’t people read his updates???

    1. Gary Post author

      If the runaway move is in effect then this should be where the SPX turns back up. It has delivered another 40 point drop and the 5 day RSI has reached oversold. The NDX has a clear move down into a DCL and the 5 day RSI is at 11.

      We should know tomorrow by whether the SPX reverses and erases all of today’s drop.

    2. Ralph Wiederzane

      Sell in May and go away? I see the SPY also triggered a parabolic SAR sell signal on the daily as well. Not looking good for stocks it seems, except the dicks at the Fed will never let the market pull back.

  13. jhmoffett

    Gary — good timing video!…Stocks are selling off, time to reduce longs until a DCL occurs, or holding/buying more here at SPX 2075?

  14. rcun

    Premium site says back in 5-10 minutes for the past hour or so.

    We have been due an ICL in gold since I sold out of NUGT at $60. Today it is $100 ;(
    That’s a whole lot of burritos!

    1. Ray_B

      I sold my miners weeks ago and I’ve also been feeling the pain of watching them keep rising also. But thats just part of trading, everyone feels pain, even Old Turkeys as they watch the roller coaster of prices go up and down. I bought some USO while I’m waiting for miners to correct, so profit off them helps reduce some of the pain from selling miners too soon.

      1. Ray_B

        You’re right Gary, if I had to do it over again I would of not sold my GDXJ and just hold Old Turkey. Now I’m waiting for it to correct so i can buy back in it. NFL Draft starts tonight, so gives me a chance to get my mind off stocks for a few nights 🙂

  15. novice

    “Sit tight” is easy said than done. It is very hard thing to do
    It is a pain trade by selling too soon, but better than losing money.

Comments are closed.