Folks I think it’s time to give the metals a rest. They have achieved the minimum target of pushing the weekly stochastics back to overbought levels. There are some concerning signs popping up that the intermediate cycle may be topping.

stock market trade

Yes we all wanted the metals to retest the summer high but it may not be in the cards yet. It appears that the metals are still stuck in a very complex bottoming pattern. No don’t listen to the nonsense that gold is going back to 1040. It’s not. But it also doesn’t appear to be ready to really take off to the upside just yet.

With stocks just starting the bubble phase of this bull market there is too much competition from the “free” money in the stock market for the metals to really kick it in gear yet.

Stocks should drop (probably violently) into their yearly cycle low sometime this month, and that will be the next big opportunity.

We made good money on the metals run. The leveraged portfolio increased from +50% to +158%. The unleveraged portfolio from +50% to +79%. Now it’s time to give the metals a rest.

The next big opportunity will come when stocks complete their yearly cycle low. So build cash and get ready.

I’ll cover this in more detail in the weekend report.
Like our new Facebook page to stay current on all things Smart Money Tracker


  1. TraderPete

    I don’t know why we need to give metals a rest. I make money whether the metals go up or down.

    1. TraderPete

      I’m a trader. I’m not a perma-bull, perma-bear, goldbug, silver-bug, bull-bug, bear-bug, or bear-hug 😎. I trade the short side and the long side. As long as I make money, I’m a happy-bug. 🐞

  2. jeffd5584

    The 1987 analog in the stock market is really tracing out pretty damn closely…On the other hand (and perhaps more conservatively), the 2009-10 analog is also tracing out pretty closely in stocks (which probably is a better comparison). In any event, both suggest the Gary scenario of a violent snapback.

    I’ve been watching some of the “high flier” stocks to gauge momentum/sentiment. The FANGS are just hopelessly oversubscribed and seem to lack any real “animal spirits”. A stock like NVDA on the other hand is the poster child of the euphoria that has built up in the market since Feb 2016. That stock really had the momentum chasers in it and it peaked out with a textbook double top and drop a few weeks back (all the while NDX continued its comatose “drift higher”).

    The only way this stock market “corrects” any longer is with very short term “binary” style price vacuums lower. Since there is a lack of true price discovery in these central bank managed markets, you get the massive robo buying out of cycle lows (everybody was looking at that 94 TD cycle low into the election). The cycle highs are 10x more difficult (right translation, etc). So its no wonder that the market will just churn higher up till and into the final days/weeks that its about to hit the cycle low date (looking like end of March if its still following the 94TD recent cycle).

    Another interesting scenario that I believe has some merit. It was discussed in a piece by Axel Mark yesterday. The notion that the spike higher since Bullard made those inappropriate comments around Feb 8 (no need for rate hikes) and the SPX broke hard thru 2300. Then as the market literally went up everyday for a few weeks the news broke about that short gamma/convexity style trade that some hedge fund (‘yield chasing”) had to delta/gamma hedge in this illiquid market. So the media hype is that the retail euphoria has returned “animal spirits” are back. The Fed in all of their incompetence might be mistaking a massive gamma hedge gone awry (take that one fund and multiply it by 100 that all sell the “teenies”) in a woefully underpriced market (vol wise). So they raise rates into a market with massive price vacuums and voila you unleash another August 24, 2015 flash crash (or worse).

  3. 1970confused

    That’s funny, on Investing.com Gold closed the week @ 1334.50$ and Silver @ 17.998$ and you can also see that GLD and SLV both closed off there highs. That weelky candle does not look as bad. Can you comment Gary?

  4. dboz

    Gary, so you are no longer bullish it seems. We stayed oversold for months. In a bull the gold should stay overbought for some significant time. Now as soon as we hit overbought, it is time to bail. Thanks for the insight regardless. So I am guessing this is not a bull market at this time in your opinion. I see the boat loaded all to the short side as every trader will be shorting on the same 200 WMA break?

    1. Gary Post author

      Read the article again. I never said it’s not a bull market. I said gold is experiencing a complex bottoming pattern

  5. Dday

    So looks like Pedestrian was right,sure his timing was off… But gold looks set to pullback below$1200. How far? who knows, could be $1900, could be $1300, nonsense indeed…

    1. Gary Post author

      I have a feeling it’s going to be tricky. Gold may complete a DCL and make a higher high before heading down. Miners likely won’t be able to confirm though.

      1. Strike

        My interpretation of your note above Gary is
        a) $GOLD will break 1264.90 but GDX will not break 25.71
        b) After that, $GOLD will head toward 1124.30 and GDX will approach 18.58.

        Am I misinterpreting you Gary? Thanks.

        1. Gary Post author

          Those are your targets not mine. I don’t know where the sector is headed. Like I said I think it’s forming a very complex bottom that is going to be very difficult to trade. We made some very nice gains on the run out of the YCL. Now that some warning bells are starting to pop up I’m inclined not to risk them getting caught in a difficult trading environment.

  6. Goild

    I was saying that in my view gold will continue in his way up.
    Look at oil, it is consolidating after a nightmare, and so gold is likely doing the same.
    If there is the view that SM is bubbling then gold should continue rising albeit slow and then faster as the SM corrects.
    We are in the 21st century, everything is expensive.

  7. Robert

    Gary, why a YCL in stock market? There are different views out there based on other analysts are follow. Some say that we will get 1 more daily cycle in stocks since this one was right translated. So a brief dip that should be bought and then maybe we get a new high SPY 2500 and then we start the ICL. You must have meant that the ICL coming will also be the YCL as well?

    1. Gary Post author

      It could unfold as either some kind of crash event at the end of this daily cycle, or another short daily cycle after this one.

      I’m leaning more towards the crash event because stocks are already going to be in the timing band for the ICL next week, and price is stretch extremely far above the mean. Another daily cycle would probably cause the larger intermediate cycle to stretch. It’s not out of the question but I generally expect normal cycle lengths 90% of the time.

      1. Robert

        Ok makes sense. Its gonna be a frightening drop, If buying leverage and not timed correctly could suffer a big drawdown. Im not sure how long the drop may last

  8. Goild


    Would you please introduce us to your trading style?
    Just a summary would be great!

    1. TraderPete

      Goild, Thanks for asking,

      I’m basically a swing trader, but if the market spikes I will take a quick profit. I follow seasonal patterns, cycles, TSA, RSI (14 and 3), ParabolicSAR, Bollinger Bands, Keltner Channels, MACD, GSR, slope regression, TSI, a modified EWT and ETM, and divergences. I also use trend lines, channel lines, and triangles. I’ve probably left something out, but that’s basically it. 👍

      1. Albertarocks

        I know one thing you left out. And I know you practice it… or else you wouldn’t be as successful as I think you are. Masterful cash management so that you don’t *ever* get decimated.

        1. TraderPete

          Absolutely. I also left out support and resistance bands, and Fibonacci numerical targets.

    1. Gary Post author

      It might mean the miners have found a daily cycle low. But the volume on the weekly chart is in the red and the inverse fund has huge positive volume. That often signals a bottom in the inverse fund and top in the miners. With the many conflicting signals it seems like the sector is entering a tough trading environment. Not sure it’s going to be worth the hassle when there is going to be free money in the stock market soon. 🙂

  9. tulip

    From Surf-

    Gold and USD Update…Reversals ?
    March 4, 2017; 9:32 am Surf City
    Here is my weekend recap of where I think we are. I had mentioned on Thursday (see link) that, other than Time, there was scant evidence on the charts that a Turn in the USD and Gold was very near. We are not out of the woods yet and we need continued follow through next week but I would say we are off to a good start.


    Cycle Turns almost always start with an Intraday reversal near my timing bands and that is what I told you I was looking for on Friday. Again, all the FED speeches were Hawkish about a March interest rate hike but this was baked in as I suspected so the USD was “sold on the news.” That is one nasty Red Candle on Friday that started to move after Janet was done Yellen… 😉

    So compare these charts below to those in my link above and remember that Time is a very important element of how I trade. I am not always right and we won’t know for sure until we see evidence of more follow through next week but this sure looks like a good start to me.

  10. chrisG

    I am from the camp that dollar will rally some more. That Gary is wrong about the dollar. He has been wrong on dollar for months. I happen to see technically, gold re testing 1050 to form a powerful double bottom. Oops, that’s gonna wipe the smile of gold bugs. Time for gold to test 200 mth EMA, if that fails, then 200 mth SMA. Ouch, that means sub 1k.

    Anyway, doesn’t matter. Timing wise, look to May to buy PM. Let’s see how low gold is then.

  11. chrisG

    Gary, it is my view that technically, spx needs to break the trendline formed from 2009, 2011, 2016 lows. Currently around 2k. Thereafter, all turn bearish. That will be nice.

  12. macman1519

    Well, this SM rally has been instigated because of Trumps promises to do all these marvellous things to boost the economy into overdrive, hence an over exuberant SM rise. Reality is starting to sink in that maybe he wont be able to do all the things he has promised due to congress difference of opinions and now risk of stagnation with numerous investigations that could lead to who knows where. My point, the level of uncertainty and risk is at the highest level since trump became president. Does that not speak to gold moving higher and SMs trending down????

  13. Ed

    I am a little bit not sure about weekly Stochastic Chart on GDX. All other daily charts I am using for Gold miners GDX showing the sector is oversold and turning up. Mainly, I use RSI and Directional Movement Index. I find Stochastic chart’s exaggerated wave length movements very hard to use.

    Even DMI and RSI weekly charts are not showing anything overbought as Stochastic chart showing prominently.
    Anyway, what do I know about charts, cycles day counts?

    I am more into Macroeconomics.
    I know anytime FOMC members jawboning to raise to 75% market expectancy on rate means they are raising interest rate in March.

    I know rate hike means 10 Yr bond rate may go over 2.6%. When 10Yr Treasury bond gives risk-free 2.6% or more yield, money start rotate to bond markets considering how elevated stock markets are today and their associated risk level.

    I know Gold won’t really benefit until both bond and stock market investors get skittish.
    I know, the chance of major prolonged stock market corrections is very small because all pension funds domestic and foreign are tied to US markets.

    I know deflation is FOMC created imaginary problem but inflation is something no one can fix once it is out of control.

    Rate hike means liquidity will dry up little and less stock buybacks. Both effects negatively impact stock markets.
    Money moves to bond markets but current and immediate future bond investors will lose their shirts as constant rise of how small and insignificant rate rise continues while money keep rotating to bond markets because of rising yield, risk free. However, soon people realize US government is running Ponzi scheme where we are buying our own debts. US Treasury Department issues bonds to fund deficit spending, trade deficits, bond rollovers and interest payments, and Fed buys these bonds with its printing press. All the while other countries stop buying US treasury instead buy physical gold.
    And then US investors follow foreign investors buying gold.
    This is why Gold should be my longest term investment strategy.
    In mean time, I am becoming fastly addicted Gold Miners day trader trying to perfect my short-term trading skills.

    And for silver, as long as JPM has world’s largest hoard of silver, I will never play with stand alone silver miners.

    Also, Silver is a part of industrial metals and not a best hedge against economic downturn.

    Another fact a lot of PM investors are overlooking is political risks of silver mining locations.
    Mexico, Peru, Argentina are not best of American Friends. Such abundant silver deposits in these countries also exclude potential possibility of silver becoming a monetary metals.

    Never invest in GLD SLV because they are a part of Gold Silver price manipulating cartel using your own presumably own gold and silver.

    I will only play with GDX, GDXJ, day trade in NUGT and DUST. I never had good experience with Proshares but Drexions look very straight forward.

    1. Pedestrian

      Well rates on the rise equals bonds going down and where bond prices go gold follows according to the current correlation. This is easily proven by examining a daily chart of gold versus a daily chart of treasuries so there can be no dispute that the two are moving in harmony. A rate hike is therefore bad news for gold and do not for a second listen to any gold bugs tell you otherwise because most don’t know what in hell they are talking about.

      The one worry now is that the next rate hike *could* result in the long bond breaking down below its long term trend channel. That is a real possibility and the moment it happens you will have people coming out of the woodwork saying the bond bubble has burst.

      Whatever happens there will be technical damage. But if the so-called “bond bubble” really breaks and gold is moving in harmony with bonds then expect a poor outcome for precious metals for quite a long time because the algos are programmed to dump gold when bonds fall (rates rise).

      So get ready. It’s likely coming to a theatre near you VERY soon.

  14. bginvestor

    After reading ur post, I calculated a correlation between gld and tlt for 2017 (so far) at zero and .61..

    Last year was better but still had some major correlation dips.. so loosely correlated at specific time frames..

    Does this concern u about ur conclusions?

    1. bginvestor

      Oops, in Jan it did hit 1.0 for a short term .. but not as strongly correlated as suggested..

Comments are closed.