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We all know hindsight is 20/20. There are definitely some spots on that chart that would cause you some concern as to whether the market was rolling over or not. I wonder how many people who bought in 2011 and 2012 thought it was just a short term correction? Really it comes down respecting the 200 DMA. Buy at the 200 DMA and if it doesn’t hold look to get out.
That is one workable strategy, and one that many professional funds use. They stay long above the 200, and stay out below it. Which is one reason why I think the PPT will try to make sure the stock market stays above the 200 DMA.
Gary I am new subscriber here and probably a complete idiot but this seems counter intuitive to me – if you’re well below 200 DMA isn’t it the time to buy? Shouldn’t the price eventually go up to meet the DMA even if the DMA is sloping down? I mean one has to understand why things are happening of course, but buying above the 200 just means the stock (or whatever) today is growing better than it did for the last 200 days – how is this an indication of how it will perform tomorrow?
The slope is as important as whether price is above or below.
Correct. And simply selling below and buying above will cause one to register some whipsaws along the way.
Question is what is stronger the market or PPT. If there is a panic and mass run for the exit would the PPT be able to stop it. It’s an unknown.
They stopped the bear market in 2009 with QE1. Just saying…
Perhaps, but the 2009 low was BELOW the 2002 low. In the current rounded top formation, we have not even seen a 38% retrace yet out of the 2009 low.
Also, the real first step in “Confirming a 7 year low” from a Cycles standpoint, is both a Higher IC Low and a Higher IC High. Neither of these has happened yet so declaring that the 7 Year low in Stocks is behind us is a bit premature, IMO.
So why did they let the market crash 60% they didn’t do a very good job.
Perhaps that was the PPT’s plan back in 2000 and 2008 (i.e. get Big money out, and Crash the market to let Big Smart Money pick up the scraps at the bottom.) What if that is the plan this time around?
Sure, speculation on my part but claiming that the PPT will always save the market sure did not work out very well for you back in 2000 and 2008. Just Sayin……
My question is the can the PPT prevent crashes or only react to them?
I think they learned their lesson in 2008 and they won’t allow it to get out of control again.
The problem of course is that by continually protecting the markets they create bubbles. Once a bubble pops nothing they can do will stop it. That’s kind of what happened the last time. They stayed too easy for too long and let the housing market runaway into a bubble.
I expect they will make the same mistake again this time. So I’m expecting a stock market bubble to be followed by a bubble in the metals.
In Cycle Trading, however, if you buy at what you think is a DCL, you stop should be at or slightly below that DCL correct ?
Correct. The problem nowadays is that cycles have become too popular so it’s becoming tough to determine when the real DCL has been struck. The cycle durations on almost everything is starting to stretch. Some of this is caused by market interventions, some by QE and negative interest rates and some just because the market eventually breaks every system once it becomes too popular.
Perhaps, but if you get a lower low than your perceived DCL you should exit as your trade based on the premise that you bought near the DCL was wrong and further analysis is needed to identify the real DCL.
Minimize the damage and wait for the next setup based on new cycle analysis (i.e. next swing low plus a trend line break would provide a better setup).
That’s the problem with the current state of the markets. How many times must one try to catch the DCL before it finally forms? I’ve been struggling with this one for about a year and a half now. How to determine when the real DCL is forming? I haven’t been able to come up with anything dependable yet. But ultimately a cycle bottom always forms. Modern markets haven’t eliminated cycles, only made them a bit more erratic.
So if the longer Intermediate Cycle still works, what is your timing band for the next one.
You also mentioned in another post that Cycles are “worthless for picking tops” So if this is true, how do you know that we will see the ATH in stocks sometime in June??
Gary, are you saying that wherever someone puts his money he is gonna make money in a period of 4-5 years or do you have some specific ETFs (sectors?!) in your mind ?
Obviously this doesn’t apply to individual stocks. Those can go bankrupt even in a bull market.
Crazy Man, Oscar is bearish on the stock market and bullish on Gold in his latest video.
https://www.youtube.com/watch?list=UUez8uA1o_fDYsrSf4auWSjg&v=oIKcf_s3r3w
Shouldn’t stops be put below prior pivot points?
Seem like you are nip picking here on some novice traders. Everyone has internet these days and it probably take les than 10 minutes of searching to understand where stops should be put.
Gary, if cycles are the key why did you not see this collpase in LABU and also missed out on almost another 50-80% on NUGT.
As I’ve said many times in the past cycles are worthless for picking tops. And it was never important to catch every last penny of the rally in miners. What was important was not to get caught in the ICL. We accomplished that. The next goal will be to reenter at the bottom of the next intermediate correction where we should easily make up for missing some of the first rally.
Like I’ve been saying for months now: If you want to catch every last penny then just adopt an Old Turkey strategy. I expect anyone who thought it important to not miss any of the rally did go to Old Turkey. The draw back of course is that they will have to weather the ICL when it comes. Hopefully they won’t abandon their plan and sell at the bottom.
Some thoughts on Gold and BioTech.
https://goldtadise.com/?p=369783
Joseph, I can provide insight…..Gary’s not a day trader or appears not to be but who knows. Its based on his trading system he summarizes as per this blog. Day trader or swing trader would be closing positions at least weekly or a portion of trade as I’ve said a few times regarding. 3x i.e LABU.
Not a sub but will be once this volatility slows down but there’s 1000s of folks will predict future trends in all markets……. VERY Tough…… Analyze, review, keep a open mind, don’t follow blindly and monitor success during UP, DN and sideway markets to ensure the firm you go with to provide investment feedback suits your current and future needs.
Anyhow, I’m long next week and went long FR, been doing great and look to continue to do so !!
No arguing now about whether its a kiss or a cross.
It’s a cross.
http://schrts.co/rflNJK
Not so fast. The exponential averages give a much more dependable signal. Over the last 36 years the simple moving average has generated multiple false signals. The exponential has delivered no false signals.
Peter Brandt with just a classic quote:
“There are two components to a successful trade — direction and timing. If one component is wrong, the trade is wrong.”
Of course it depends on your time frame. One could say that John Paulson was wrong on his trade shorting the housing market because he was a couple of years too early… but he ultimately made billions off the trade.
So was his trade wrong?
Peter was way way too early in his recomendations to buy minres. Like 2-3 years too early. But ultimately they will almost certainly turn out to be big winners.
I would suggest that the reason retail traders almost never make the big money is because they are almost always too short term focused. They can never hang on long enough to make real money.
So how do you set your stops for Subs on trades?
What is your secret?
I wait until I have a confirmed cycle low. The stop goes right below that bottom.
So take the stock market right now. Once we have a confirmed DCL we will place a stop right below the lowest pivot. If price goes below that we will know that the intermediate cycle has topped and we will get out and stay out until the next ICL.
Very interesting. So your betting, to some extent, that the next Low is the DCL you expect and not the nastier IC Low that you did not forsee?
Ever been wrong on that kind of bet?
Well a DCL and an ICL always occur together. So I’m not sure what you mean.
But regarding the current setup, it’s too early for the ICL. At the earliest we would need one more daily cycle before stocks drop down into an ICL. So right now we are just waiting for confirmation of a DCL. Once that is in place then we would place a stop right below it. If that level gets breached then we know the next daily cycle will be working it’s way down into an ICL.
What I mean it that the current move down could possibly be the start of a move into a lower IC Low than what we saw in Jan / Feb. Remember, in Bear markets, ICs tend to be Left Translated or fail.
The BioTech chart on the weekly has all the elements of a Weinstein Stage 4 Bear market price action (30ema pointing down and rallies being capped now by the 30ema). Quite easy to see this in the charts.
Then why did you exit your gold and miners and even LABU? Aren’t you just being a hypocrite?
Because I don’t want to ride out an ICL. And most subs simply can’t make it through an ICL. They panic and sell at the bottom no matter how much I try to coach them through it.
If one can make it through ICL’s then Old Turkey is the strategy for you. But I dare say the only ones capable of doing that are subs that have been with me for 4-5 years and have seen enough of these that they no longer panic.
Carl Icahn bearish on stocks here, loading up on the Big Short.
http://www.reuters.com/article/us-icahn-enter-shortposition-idUSKCN0Y60UY
Holy crap, depending on when and where those shorts were placed he’s getting his teeth kicked in.
Maybe he doesn’t use stops either 😉
Huge funds like that simply can’t use stops like the average guy. They hedge. It’s way too hard for them to get in and out of the market.
So what’s the story, is this going to be a run away love or not? Are we going to wait for another 100 point move higher than make a call AFTER the facts.
Gary, is the market a buy right here, right now?
I would wait a day or two and see if the DCL is going to make a lower low and drop down to test the 200 DMA. Either way though the DCL will form sometime this week, so as long as you are able to hang on through a brief drawdown any purchase right here will end up as a winning trade during the next daily cycle.
What about LABU? If it takes out 20 (prior low), then what? That would be a 50% haircut from your recent 30 entry.
One has to be able to ride out big swings in the leveraged funds. tight stops applies even more to those. If you are going to trade the leveraged funds you have to be willing to stick to your decision. Stops will just guarantee you lose money.