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Gary,
You are quite an optimist.
The stock market is not returning to previous highs in the foreseeable future.
With the weakened GDP, the issues with the administration, and the financial problems, we are going down for a long time. The magic word now is short, short, short.
No chance of that happening. We are going to follow the same path as the last 17 years. The Fed has kept interest rates too low for too long and we’re going to have a bubble. When the bubble pops then everything will go south but not until.
The bubble won’t top until sometime in 2018 and the Nasdaq is going to be over 10,000, maybe way over 10,000.
BTW GDP has nothing to do with the stock market. Stocks are driven by money and central banks have printed trillions and trillions of currency units. This was always in our future. Once QE1 started the path to the next bubble began. We just didn’t know until now where it would materialize. Now we know it’s going to be another stock bubble, followed by a bubble in gold.
I’ll be a buyer but only at the next Intermediate Cycle Low. This IC has gone up for 4+ months since the US Election and based on TIME it is close to a top, if it has not topped already.
We may, or may not see one more burst higher but the IC Low is looming at this point. The Tranny’s are pointing the way down from here.
While I agree that this IC has likely topped, the YCL may not play out until mid-to-late April. Much depends on how you are counting the shorter Daily or Trading Cycles. I only have two so far and we almost always get at least three.
I think it probably topped on the SOTU.
I’m expecting the bottom next week when the dollar completes its YCL.
I’l be watching sentiment for an extreme.
Gary
I just don’t get your reasoning. If your expectations are of a retrace to the 50% Fib level, then why would you enter a 3x leveraged etf before?
This would make UPRO at $83. EIGHTY THREE DOLLARS. Why buy in at $97.90?
And please, don’t give me that “it will go far higher than $100” excuse. Because the question is, how do you buy at $97.90 when BY YOUR EXPLANATION, you FULLY expect the S&P to drop 130 points?
Which is it:
A) You bought in thinking it was going to keep going up this week
B) This is an “analysis” you put together after today’s drop
C) You fully expected it to go down, yet figured “might as well pay 15% premium for UPRO”
Heck this one is easy.
First off I don’t have a crystal ball anymore than anyone else. If you had asked me yesterday I would have said I thought we still had one more pop to maybe 2440-50 before the intermediate cycle topped.
So I used 30% of our capital to buy a starter position just in case that scenario played out. We bought on the FOMC meeting, not today.
I saved the other 70% just in case we didn’t get one more pop higher. I will use the last 70% to buy as close to the bottom as I can. Since I think we are about to enter the nutty phase of the bubble I expect the S&P to be much higher than 2400 by the top of the next intermediate cycle. So it doesn’t matter to me if we didn’t time the first 30% perfectly. That was just so we had some skin in the game if we kept going higher. Now I’m just going to get positioned for the next intermediate cycle. This intermediate cycle rallied 15%. I expect the next one will do better. Maybe a lot better.
This is why most people don’t make any money. They are worried about tomorrow. I’m planning a lot further ahead than tomorrow. I’m planning trades now that I will take profits on in August or Sept.
But now you expect a further $12 or so drop, something around 11% in UPRO. Why not close this out and buy the entire lot back at the 50%?
I suppose you can say that “because the market can just turn tomorrow”.
What happens if the PPT steps in and stops the correction tomorrow or Friday?
This is why I’ll never short the stock market. Even if I expect the market to retrace 38 or even 50% there’s no guarantee the PPT will allow that much downward momentum.
The guarantee is to the upside. We don’t have to worry about drawdowns until the bubble pops. So the first entry is safe we will have profits on that by Sept. as well, and the entire trade will be averaged down if we can buy the next couple of tranches close to the ICL.
See this is the kind of nonsense I have to put up with.
The metal portfolio went from +50% to +130% in two months. But what most people focus on is the losing trades. They manage to completely ignore the fact that the winning trades massively outweigh the losing trades so in the end we make money. The kind of money any professional money manager in the world would be ecstatic to make in a year or even in 3 years.
By the time we exit at the next intermediate top we will have made really good money in the stock portfolio as well. But there will always be some idiot who is more worried about one losing trade or one trade that has to weather a drawdown first before it turns profitable, and they will miss the big picture. They will end up making nothing and in the mean time we’ll just keep chugging along.
In that case, why bail out on the miner trades?
Way too late in the intermediate cycle and something strange is going on with miners. They are not following gold. I think the banksters are trying to set the miners up to run the Dec. lows during the next ICL.
If one wants to try to catch every last penny in the metals you’re probably better off to focus on GLD at this point.
Don,
Yes, there is reason to worry about the miners falling with the SM.
Some concern comes also from the CDNX index which is bearish. So GDXJ and JNUG are at more risk.
However, the miners have been beaten down so much that I would expect them to be quite resilient.
XAU, HUI are over the daily averages and are bullish. Gold is bullish.
USD is reaching or breaking through support, and the Yen is reaching resistant or breaking through it.
Every day presents a new trading riddle.
We shall see.
Alex appears to also have had a good call shorting cotton.
Just a little detail: 50% is NOT a fibonacci number.
Sometimes markets like to retrace to that point, still — it’s not fibonacci.
1, on the other hand, is fibonacci — by definition 🙂
0, 1, 2, 3, 5, 8, 13, 21, 34, 55,…
1, 0.618, 0.382, 0.236, 0.146, 0.090,…
In the Stock market, it’s worth 50% Fibonacci.
I don’t have a crystal ball either but I did see the setup for this drop last week when I took short positions in SPXU and BIS.
https://goldtadise.com/?p=398260
How far the manipulation of the stock market has been going?
GDP 1995-2000 was around 4% and the stock market was in a strong bull.
GDP 2001-2003 was less than 2% and the SM crashed.
GDP 2004-2007 was lager than 3% and the SM was in a bull.
GDP 2007-2009 was about zero and the SM crashed.
GDP 2010-2017 was less than 2% and the SM is the longest bull. What a manipulation!
The end is now.
Expect dire consequences.
I think the PPT will rescue the market, and if necessary lower interests rates and restart QE.
USD GDP is about $19T.
US Total Market Capitalization is 131% of GDP or about 25T.
US National debt is also around $19T.
US total debt is about $68T.
Making the market capitalization go up 4% requires at worst say $1T.
$1T divided by 100M households is $10,000.00.
Market capitalization is at historic highs. The average is about 79% of the GDP.
The SM is going down as there is no more money to keep pumping it up.
Once fear sets we will have in series a black Monday, a black Tuesday, a black Wednesday, a black Thursday, and to wrap it all the fall a double black Friday.
Goild, I think you’re being too pessimistic.
There’s plenty of money out there, Buffet has put $12 billion in the market since the election, that was as of January, maybe more by now. If he’s putting that kind of money to work you can bet other big funds are also, not to mention money from the middle east or Asia.
The night of the elction, Carl Icahn bought a $billion worth of futures when they were limit down, or close to it, that must have been a nice payday, but you can bet other big players are also taking advantage of drops. Course the market’s come a long way since then, so needs definitely needs a pull back, who knows how far.
I thought I would share a trading site I like.
http://nakedtrader.co.uk/agree.htm
I think its great because the guy posts all his trades, with target price and stop loss, you can see successful and unsuccessful trades alike. No subscriptions, but he has written a few books….. In my mind this is the best approach if you are offering a subscription service. Its all very well throwing we made 100…150%….at people but without context of seeing both winning and loosing trades how is a potential subscriber to know how you have performed in the past. Just a thought, it would cut through any doubt…I think thats whats generally missing from most trading/subscription services…Honesty is the best policy….
My winners and losers are recorded in real time.
Brexit next Wednesday, could that be the catalyst for the bottom? With the pound seemingly strengthening into the actual event id imagine a fall once it actually happened.
ZKOT, finally someone said it: 50% retracement is not a fib-retrace.
It is simply: the 50%-retracement.
GARY,
It is too early for USX to find its YCL next week, both by time (last YCL was in May20016) and by COT reports of USX, JPY, and EUR.
We need to see those COT reports w/ heavy commercials’ net buying first.
On last Friday we saw resumed JPY buying of commercials – exactly the case for extended (several weeks) appreciation of JPY.
Thus, we need one or two more daily cycles of EUR and JPY appreciation before these currencies top and USD bottoms to its YCL.
…COT report w/ heavy buying of USX, I meant, mirrored by heavy net selling of EUR and JPY by commercials.
As I was hinting yesterday, it is quite likely that we’ve had the DCL of USX today (and DCH of gold).
So up in a dead-cat bounce of USX –> gold buying opportunity in early April, i.e. now in less than 2w time.
Commodities other than PM to get a respite until USX completes its dead-cat bounce –> both commodities and USX to produce left-translated daily cycles.
I am moving my stop in my cotton-short trade slightly into profit zone.
Alexandru you were also saying the stock market would tank months back. You have zero credibility so my guess is nobody cares what you think. If I were you I would be too embarrassed to post predictions given your track record of failures.
Good morning,
TraderPete,
Yes, my comment above is way too pessimist.
Good trading to all today.
GBP looks to have put its DCH today, on day 6 — on its way to the final bottom on Art 50 triggering next week.
Both GBP and gold will make great buying opportunities in matter of couple of weeks.
If you say so Alexandru. You also predicted the stock market scorch months back and it went up every day after your predictions. ZERO CREDIBILITY. Why do you continue to post your predictions when you have ZERO CREDIBILITY?
He just missed a trade. He’s gotten many others right.
Missing a trade doesn’t mean one has no credibility it just means he got one wrong. Eveyone in the world gets trades wrong. As a matter of fact the best traders in the world usually only get about 60% right.
One can even be wrong 70 or 80% of the time and still make big money if you let the winners run and cut the losers quickly.
Here is an example. We got five trades right and three trades wrong during the intermediate rally in gold. So my winning percentage is only 62%. Yet we still went from +50% to +130%.
It is a little bit more than just one missed trade when someone comes here daily and tells everyone with great conviction that the market is going to tank and then for months the market goes up every day to all time highs. In my book that equates to zero credibility.
LOL in the end he’ll probably end up being correct and the trade will make money. Maybe not very much money but some by the time the YCL forms.
Thank you, Gary! 🙂
I got stopped 4 times out of my short stock market pilots.
Historical COT level in cotton tells me that shorting cotton can makes a better proxy for running the ensuing/ongoing YC decline of risk-on assets than stock market.
…but I have my stop down at 77.80 (slight profit to cover any potential slippage on the upside of price) just in case my assumption that commodities (other than PM) are on a dead-cat bounce abreast USX proves to be accurate.
Dave Robson, do you see what’s now happening w/ JPY ? –> exactly as I was telling you yesterday I was afraid it would: JPY to keep on going up (USDJPY pair down) while USX begins its new daily cycle and EUR & GBP start rolling over along with gold topping today too.
There is a very bullish theme for JPY underway, stronger than for EUR or GBP short term at least.
Great post Gary.
Glad to see you’re not distracted by the roulette-like randomness in miners to gold price.
Let’s leverage the PPT for a change!
I’ll be watching for the TQQQ trigger then…..to the moon.
JNUG and NUGT are dead money.