60 thoughts on “CHART OF THE DAY – Intermediate Cycle Low?

  1. Gary Post author

    The NYMO is diverging and short term sentiment reached the same level as the election night ICL.

    Tomorrow needs to be a down day. If not I’m going to have to seriously consider that the PPT may have already aborted the rest of the ICL.

    1. jeffd5584

      Following the 94TD cycle (which worked all of 2016), looks like we are “in the window”. The stick save of IWM/RUT yesterday was what I watched most of the day (for direction in other indicies). That ledge area contains that “price vacuum” in Russell following the election. It seems paramount that Russell is contained and bounced which triggers the buying in the headline indicies.

      The 94TD cycle shows a bottom on Mar 27.

  2. Robert

    Bought some SPY May calls yesterday. I think they will abort any serious decline. Gold and miners already stalling, this suggests that the fear is about done. Stocks to make me highs by next month?

  3. Don

    I very much doubt we have seen the bottom of this decline nor did today’s action look like anyone was going on a buying spree. What would be the PPT motivation be to intervene at all? To protect Trump? Not likely! We might see a few days of choppy upside or sideways action and then another slam down. That’s just pure guess work on my part.

    1. Mac

      I’m sure I’ve worn out my welcome on this site so I’ll make one last post and then disappear. The election night conspiracy stuff is more nonsense used by people who missed the market turn again. Take a look and you’ll see many of the indices and sectors were actually bought right at their support on 11/7 two days before the election. Fingerprints can be better observed in the futures markets but you can also see clues in ETFs like IWM, XLF, XLE, XLI, etc. In other words, positioning of portfolios by professionals was evident in the futures market and the follow-on “recognition” move came days later after the election. Again to use my Druckenmiller example, take a look at his quarterly holdings and compare them to the support and buy signals from the charts of the above mentioned ETFs.

      1. Gary Post author

        No one would ever buy into a locked limit down market. One would risk getting caught in a crash. That’s just absurd to think that turn happened naturally. A natural bottom would have taken a few days to play out as the market cooled down and traders came to their senses and realized that a Trump presidency wasn’t going to be the end of the world.

        1. jeffd5584

          Gary;

          I believe that Mac is correct about this. The election night market was a manipulated event AFTER all of the major indicies had tested/held their rising 200 day MA’s AND the ICL tagged on various indicies around the first week of November. If you remember, there was a Sunday night gap higher after a weak Friday close (the MSM headlines that weekend were talking about the longest daily decline since 1980 in SPX). On cue, the market gapped and ran into that Tuesday, Nov 8 election day. The floor had been set, the cycles were on target and the 94 TD cycle fell on election day.

          The biggest pitfall of cycle analysis, IMHO, is that there is typically only one aspect of it that can be depended on (i.e. in bull markets, cycle lows seem pinpoint…cycle highs are a complete guessing game filled with false signals). Here we are again in late March, the prior cycles in stocks topped out far earlier, but this is clearly extremely right translated.

  4. Gary Post author

    If the PPT stops the ICL right here then I can forget about the dollar continuing down. If stocks turn and go back up it will pull the dollar up with it.

      1. Bob

        If the USD starts driving gold down again it increases the possibility of gold’s head and shoulders pattern completing and breaking the neckline at around 1200. That sets up for some scary lows in gold.

    1. Dday

      Dependant on the Health bill vote. If it goes through confidence restored in Trump, up goes the market, and vice versa….

  5. Goild

    Can someone please explain why the rate hike is not reflected in the bonds yield?
    In fact the yields are going down!
    Please!

    1. Ed

      It means King Dollar still reigns. Money flowing enmasse to bonds against the stocks. No data to support my saying this. Just my hunch. Plus bonds yields heavily manipulated like gold. Considering amore than half of TB issued are bought by the same how difficult would that be to play around with yield. As long as we have PPT worshipper it should not be all that difficult. That is also my hunch. I am still in TZA FAZ GDX about 30% each and 5% DRV.

    2. Mac

      OK, I lied and will post a few more today before I leave.

      Goild, You could spend 15 minutes on the internet and I’d bet you find your answer and know more about bonds then almost everyone here. However I am at least heartened that someone is willing to put their ego aside and admit they don’t understand something and ask a legitimate question. I’ll answer your question later but first let’s let the board or its moderator take a crack at it. Or how about another basic question: If you currently own a bond and rates change, what happens to the amount that you receive?

    3. Don

      I will try. Consider that the rate hike was highly anticipated. The smart money was selling their bonds months ago while the dumb money began doing so much later. Their selling caused the pendulum to swing too far with bonds becoming oversold and yields too high. Then the rate hike is announced and the dumb money wants to continue the selling party but it’s way to late. The smart is now driving the bonds back up (yields down) and will probably do so until the last bear is squeezed out at which time the bonds will reverse once again and yields will rise. Hope that made sense.

  6. Don

    The market has declined less than 2.7% from it’s all time high. I just can’t believe that the PPT would intervene on such a shallow pullback. That would be absurd.

  7. Alexandru Popovici

    Just a short lived bounce of USX, nonPM commodities and stocks going on through early April, nothing serious to be worth trading.

  8. Dday

    Things to note…
    -Gold been strong silver hasn’t ration looking bearish again
    -Dollar needs to hold 99.3
    -miners indicating golds bull run isn’t that convincing……

  9. Alexandru Popovici

    As expected EUR on a swing high and crude oil on a swing low.
    As I was affraid and told Dave Robso 2 days ago, JPY’s strength is relentless.

    PS: moved my sell stop one bit up @1244 , below today’s low.

  10. Ed

    Just saying today is going g to be just a lot of noises no action day. All the fireworks are saved for tomorrow. Remember if you wait the news it will be too late. Either way a big move day tomorrow

  11. Gary Post author

    For some reason the blog is moderating every comment. Phil is looking into it. Hopefully he’ll have it fixed soon. It’s a hassle having to approve everything.

  12. Robert

    Gary it appears gold and miners still has to produce an ICL if your suggestion of a new stock market rally comes through. So gold should make a lower low maybe to 1180-1190

  13. Bigdaddy

    I sold my LABD at a profit but I am getting killed on my miners position. Don, help! Should I average down or is more pain coming? I wish I had paid attention and sold when you did. Are you still thinking SOXS is a buy? The market looks strong and Gary thinks we have seen the bottom for the market. It’s looking that way to me.

  14. Don

    BD: It probably would not hurt to average down if that is what you want to do but I am not buying any miner positions at the moment. Silver is holding up well and I think platinum is a buy. As far as the stock market goes, I doubt it will sell off today, but tomorrow, maybe. I don’t think we will be racing up to new highs. SOXS is risky as the semiconductors have been very strong for months. I can’t tell you what to do except to say I have kept all of my rather large SOXS position and am willing to accept the risk. Are you?

  15. Don

    The insiders have been bailing out for weeks, the FED is shrinking it’s balance sheet, most analysts are bullish, and the Americans are continuing to provoke Russia with troop buildups right on Russia’s border. Then there is the North Korea problem that is getting worse with every passing day. I don’t see how this can end well for the stock market.

  16. Dday

    How many times have SM bears been slapped in the face last 9 years….. I completely agree that the markets are due for a sizeable correction, but when now, next year, two years…. Is there such a thing as catching a rising knife?

    1. Vortex

      With in 3-5 years the DOW will likely be sitting at somewhere around 30,000. If money velocity accelerates and the safe haven status in US markets kicks in internationally the SM could rise to 40,000. I would imagine gold and silver will accelerate to the upside as well.

      Gary is correct, the SM is posed for a massive blow off phase over the next few years.

  17. ARends

    Here is confirmation on Gay statement by this article: ‘I am staggered to see how the McClellan Oscillator has come back from ultra-bearish levels to be practically back to positive momentum at present. This month, the momentum indicator actually reached the same levels we saw back in February of last year, when the S&P rocketed out of its own intermediate low.

    The last three intermediate bottoms in the S&P have resulted in the oscillator getting heavily oversold and then capital entering the market en masse. Then in the aftermath of the buying, the oscillator would become overbought which led to more gains thereafter. Does this mean any significant correction over the near term will get quickly bought? That is what it would seem at present. Naturally, the stock market wants to drop, but every dip is being met by heavy buying. It is simply too dangerous to short this market at present.’
    http://seekingalpha.com/article/4057450-s-and-p-500-gets-rescued-2400-sights

  18. Goild

    Don,
    How are you doing?

    I am waiting for more of a drop on gold.
    Have a few shares on JNUG, 2K.
    Yesterday I was doing well but a last minute trade made me lose the profit.
    Today a recovered and I am ++ greener.

  19. Goild

    As per the sock market, as long as the GPD remains weak, there is a force that will make the SM fall.
    There is no way around it.
    The GDP has been week for 8 years. The current administration is losing the credibility that made the SM go up. The first stop for the SM stock market is the election day level.

    1. Don

      Goild: I suggest you go back (use google) and study GDP numbers and compare those numbers to what the stock market was doing at the time. You will that see something that will surprise you. The ‘correlation” is useless! A perfect example is to look at when the market peaked in October 2007 and the GDP reported in December was a rip snorting 4.4% followed by a respectable 3% as reported in March. Meanwhile, the stock market was well on it’s way to being one of the worst bear markets in history. All the time Obama was president, the GDP never hit 3% even once and today we are under 2% with stock markets at nose bleed levels. Forget following GDP numbers. They are clearly a piss poor indicator. http://www.multpl.com/us-gdp-growth-rate/table/by-quarter

  20. JJHarmen

    I now have a large stake in inverse stock market ETFs, mostly doubled leveraged. I agree with Don, and others, and think the market is going to tank. Don, what do you see for tomorrow and then next week? Appreciate what ever thoughts you are willing to share.

  21. ARends

    A funny thing happened on the way to the Dow surpassing 21,000 for the first time: Corporate insider selling of shares has jumped “to levels rarely seen.”

    Around the last week of February, insiders’ sale transactions on the NYSE outnumbered their purchase transactons by more than 11 to 1, according to Vickers.

    This Stock Market Indicator Jumps to “Levels Rarely Seen”
    History reveals why investors should keep a close watch on corporate insider selling
    http://www.elliottwave.com/Stocks/This-Stock-Market-Indicator-Jumps-to-Levels-Rarely-Seen

  22. Don

    JJ: I have no clue what tomorrow will bring nor do I for next week but I am bearish and tend to trade for the longer term ( I occasionally do day trades in small amounts, just for fun) I am looking for more downside but concede that Gary may be right and we are headed back up. However here is what I see in the coming months and that there are three possible scenarios.

    The first is seeing the market go through a series of sell off and recoveries with no new high or a new high by only a marginal amount. The second is a sharp sell off with one sharp recovery that fails long before a new high is reached then followed by a lengthy decline. The third is a complete 1929 type of crash. No recovery to speak of. Just ugly.

    I do not believe there will be a parabolic explosion up. I am a baby boomer and those I know, in my age bracket, want out of the markets, not in. The FED is no longer pumping money into the system and it won’t be long before Europe and Japan stop doing so also. Higher interest rates are going to seriously cut down on corporate buybacks. So, where is the money going to come from to drive a parabolic crack up boom? Maybe Gary can shed some light on that question because I just can’t envision anything of the sort happening.
    I suppose that if the EU were to break up, money might rush into US stocks. That is speculation and I wouldn’t count on it. I see bonds as being the likely beneficiary of that event, not stocks.

    Good luck with those inverse ETFs. ( which ones if you don’t mind me asking?) We are in the same boat .

  23. Goild

    Don,

    Thank you for taking time to reply.
    While I agree that not necessarily GDP is a SM predictor, it is one more reason to expect a decline.
    Tomorrow is a Friday and not a pay day, a good day to have a good SM drop.

  24. Don

    I am out of here. I am another one of those nuts that needs a work out so I can think clearly. Good day to all and good luck tomorrow.

  25. Alexandru Popovici

    Cotton seems to be on track of producing a bull trap, a higher high, on Prospective Plantings report next Friday. The higher high + a swing high after the release of the report will have me back shorting it.
    Till then, I am short gold.

  26. Goild

    Good morning,

    Mac, Don,

    Thank you for addressing my question about the rate hike.
    After reflecting on I believe here is a plausible answer:

    The interest rate hike is on the prime rate. The yield on the bonds and other loans depends on demand, time to maturity, and risk.

    The charts for the UST10Y and UST2Y bonds tell it clear.

    Last July the UST10Y was at about 1.3 to begin now it is at about 2.5. The increased happened before the hikes on December and on March.

    The UST2Y is closer to the prime rate as it was at about 0.6 to be now at about 1.3.

    The bond yield increase precedes the actual prime rate hike and has been overshooting.

    Lesson: the bond people know things before they happen.

  27. Ed

    As long as people are willing to park their money at lower yields in bonds, the yields stay low regardless of what FED does. As long as FED stays behind the curve, that is ,FED stay slower in reacting market rise in interest rate, Gold will benefit. That is why Gold rise in spite of rate hike. Current bond yield lower after rate hike is pure risk adverse nature of investors fleeing stock market and parking their money in bonds. Not directly related to rate hike.

  28. Alexandru Popovici

    Thank you, Chris!
    I have the stop loss @ 1253 and the short entry @ 1245 (I used the alternative signal of miners’ swing high on day 9 and resistance @ 50dma).

  29. Ed

    I bet you people are willing g to park their money in bonds at zero percent if they see a prolonged stock market down turn. FED rate hike is interbank interest rate where banks borrow money from FED. When FED increases rate that eats their profits they made from playing in stock markets. Currently ECB and NOR are holding the stock markets. They are keep buying bank debts at really low rates and banks are using these freshly minted money to invest highest investment vehicle, that is stock markets. Once PE stays high while the market conditions deteriate, people start move their money to bonds and gold. Gold being a red hair step child for last 6 years it can only go up. That is why I have chosen to be a perma gold bug.
    I realized I have over allocated to TZA and FAZ, I have moved to cash yesterday afternoon. ACA bill will likely pass and in the end, it really does not matter because money will keep flowing in from Europe . The Stock market will go up until It Does Not. I think catalyst for next great depression is from disintegration EU . So watch French election.

    1. Gary Post author

      I tend to think the catalyst will be the same as it was in 2008. A bubble will pop (this time in the stock market) liquidity will flow into the commodity markets causing inflation, and economic activity will come to a halt.

      The exact same thing that happened in 2008.

      Stocks need to complete their bubble phase first and produce a parabolic rise.

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