71 thoughts on “MARKET WRAP – BUBBLE PHASE IN STOCKS?

  1. cazabrujas

    Hey Gary, thanks for the video. I checked out sentimentrader.com and it has lots of interesting information, especially the smart money/dumb money index. I saw that both smart and dumb money are in neutral territory, but smart money is becoming more bullish while dumb money is becoming more bearish.

    What information/levels do you pay more attention to on that site to trade gold/miners? Thanks!

  2. Gary Post author

    Poke around a bit and you will find the commodities section. You can find intermediate sentiment levels for gold and short term sentiment levels for GDX, GDXJ and GLD.

    1. cazabrujas

      Yeah, saw that, just wanted to see if I was on the same page. short term sentiments for miners are very bearish, but not extremely negative yet. I guess the very short term bounce you were predicting will come soon after the sentiment becomes very extreme.

  3. zkotpen

    Pedestrian,

    I agree we don’t need to agree ๐Ÿ™‚ I do think there’s value in keeping track of where we stand on the markets heading into FOMC meeting and minutes. I don’t always agree with Gary, but lately, he and I have been on the same page more often than not. All 3 of us were on the same page rounding the turn into the last FOMC meeting, but for some strange reason, we each talked ourselves out of our correct assessment down the stretch. It was vexing to miss out on that opportunity. I can still feel the sting of it, though ever less as time goes by.

    I will be looking into gold more closely as we round the turn this weekend. But you should take note of my posts from Sunday, after I posted those charts. I knew there were gaps in my analysis, and I hardly moved from my desk until I figured them out and did as much backtesting as I could. Basically, I was using limited optics on my charts. Like trying to study the moon using a big zoom lens. Sure, you can get a larger than life image of the moon with that magnification, but if you want to study it, enough to put your studies to profitable use, you absolutely must use a telescope. Gotta use the right lens for each object of interest. So I’m still using the same lenses as before, but I’ve added a few more lenses to my bag — to fill in the gaps, plug up the holes.

    This week, I’m doing real time testing, making adjustments and, then see if I have time to look at broader application as well — perhaps over the weekend. As I mentioned earlier, I gotta get off the graveyard shift!

    Sunday was a big step forward in my market analysis, a rare event. I have made some strategic adjustments as well. I posted on here in February that, just over a year after first coming up with my hypothesis about markets, I was pleased with my progress, and I figured that I will have something substantial after 10,000 hours & let folks know. That would be late 2020, I’m guessing, if the practical affairs of life go well.

    1. Pedestrian

      Well I for one appreciate your dedication to sorting out the mechanics of the market. I have been at it many years and there is still not enough time in a day to learn something new. If I had done one thing differently in the beginning it would have been to take a structural approach to technicals like you are doing. Instead I learned seat of my pants and it was rather costly since I was too proud to listen to other people back then.

  4. zkotpen

    Ped,

    “I have a conflict in the really big picture though since I am a deflationist and deflation should have negative consequences for all commodities”

    Elimination of all bias, my friend, is the path to pure enlightenment. Easier said than done; all we can do is lend each other a helping hand.

  5. zkotpen

    Ped,

    “Gold should be the easiest of all commodities to play. For some reason traders make it so complicated they end up losing their shirts. My suggestion is to limit risk if you are not sure of breakouts or breakdowns at turns but to otherwise play it aggressively based on the obvious cycle built right into the pattern.”

    Amazing conclusion! And traders’ complications manifest most notably in the miners — indeed, this is baffling — the only place you will find some semblance of an answer is in Chaplin’s 1925 film, “The Gold Rush”. Pretty much spells out exactly how prospectors [i.e., speculators] complicate things — in hilarious fashion.

    Still, to paraphrase your suggestion, “Though this be madness, yet there is method in ‘t.” ๐Ÿ˜‰

    1. Gary Post author

      The only way anything is easy to trade is if one has a working crystal ball. As far as I know no one has ever found one yet…

      1. Pedestrian

        Objectively Gary, every trade is just a 50/50 proposition. All you need to really do is limit the chances of buying the direction that is not in your favour. That should not really be that hard since doing no homework at all will theoretically yield a positive hit every second trade. Generally I don’t have trouble with direction. It’s almost always timing the entry that gives me the biggest headaches.

        When it comes to gold though we are inundated with charts, graphs and fundamental analysis from every direction save Sunday. There is factually no other commodity that gets the kind of scrutiny and analysis that gold does and so this is the trade I would recommend novices to begin with.

        There are almost unlimited trading resources on this one single topic. Have you ever seen anything similar on cattle futures, cocoa or rice though? Hell no. If you want to cut your teeth on commodities you start in the gold pits and if you have what it takes you can move to platinum and silver. Or maybe something exciting like crude oil.

        I don’t mean to say trading gold is risk free. But technically its a pleasure compared to other trades.

    2. Pedestrian

      Thanks Zkot. Glad you appreciated reading my approach. It all boils down to one simple idea….

      I hate giving back profits once I have achieved them so I don’t like riding out cycles past their expiry date.

    1. Christian

      If that’s true then you should turn to your wife and GRUNT with glee in your eyes ๐Ÿ™‚

    1. Gary Post author

      I doubt it. Short term sentiment is too extreme and price is already stretched too far below the 10 DMA. At worst the miners will probably trade sideways for a few days to allow the 10 DMA some time to catch up.

    2. Pedestrian

      Jnug most likely wants to go below its prior December lows of 4.00 or so. It’s just a matter of waiting Robert. Personally I am not buying anything gold related at the moment. Even when it hits bottom I would not rush to enter a trade until I saw its worked out this decline.

    3. Pedestrian

      Robert, check out the GLD monthly chart. I don’t know why I have not noticed this until today but GLD price was in fact repelled almost perfectly right at its top rail resistance line (its imaginary so you have to draw it in yourself). The line as you know runs from the peak in 2011 to the most recent highs including the highs of mid April.

      If gold itself were to head higher from here we can pretty much assume GLD will give us a technical bullish break out.
      http://finviz.com/quote.ashx?t=GLD&ty=c&ta=0&p=m

      Odds would favour a decline back in the direction of 100 though.

  6. Bigdaddy

    It sure looks like the S&P is going to make new highs soon. I would like to buy a gold mining ETF but Gary is so negative on them so it would be smart to wait.

    1. Gary Post author

      2-3 months from now what you are going to find is that you made little or nothing from trying to mimic the day traders. Or even worse you will have lost more money.

      Then you will look over and see that if you had taken my advice and bought some energy stocks and just held on you would have made a ton of money.

      1. Pedestrian

        Stop it Gary!

        YOU are a day trader at heart. Everyone wants to be able to go into the market and make money each day. That is a fantasy close to the hearts of every single person who has ever put money on a bet. Most don’t succeed though and I think its because they try to push the trades instead of letting them just set up in their own good time. Or they get anxious for a win so they go hunting through charts looking for easy kills but end up buying things they know nothing about.

        I say stick to you knitting and do nothing if you are unsure. Sharpen up the spear in the meantime.

        Our naked ancestors understood this perfectly. They knew the waiting was the biggest part of the hunt.

      2. Don

        Gary, didn’t you sell your ERX right at the bottom for a 10% loss? When did you get back in?

      3. jacob2

        Re energy. Energy stocks have not participated in any recent rallies despite strong seasonal tendencies. Been adding more oil and oil service stocks ( FTK) as it remains difficult for me to imagine energy not participating with everything else moving higher. Of course I could also be wrong?

  7. Don

    I am having a hard time buying into Gary’s prediction that the bankers are going to “manufacture” a drop of gold and it’s miners below the December lows. While the miners have certainly taken a beating, gold and silver are not significantly barely below their most recent highs. I am buying some silver this morning and remain unconcerned about my miner positions.

    1. Dday

      To be fair to Gary Don, he clearly said he doesn’t think the banks are manipulating/manufacturing a drop in gold, only the miners. Personally I would at least wait till gold touches $1240(trend line) even then i’ll be hesitant. $10 fall has equated to a 20% fall in NUGT so still quite a bit further to fall for the miners/etfs, no rush..

      1. Pedestrian

        Remember your first date? Kissing the girl on her porch after bringing her home from the big night. Sweet love. And then her Dad opens the door and kills the moment by telling you its getting late and you better go home?

        Well European elections do the same thing for my gold love.

        The ardour is gone (but there is always tomorrow).

  8. Steffmeister

    No, I think Garys chart needs some adjustments. There is a great risk/chance that gold would break the golden triangle to the downside. A classic EW a-b-c corrective move. Wave a down, b up and now we are in a c and if we set a=c we will break the triangle to the downside. Wave c usually consists of 5 waves. That makes sense according to the very week miners at the moment.

    JNUG sub$1 before midsummer? That instrument is a modern version of a guillotine.

    Maybe there is a much greater trade wrapped up in all of this. I am watching the OI carefully here …

  9. JJHarmen

    I am tempted to short the stock market. It is getting to be a very old bull market and it will crash at some point. I don’t know about gold. There doesn’t seem to be any reasoning behind what it does.

  10. 1970confused

    Steffmeister I respect your opinion, but for you to imply that we see sub 1$ in Jnug that would have to mean GDXJ to trade back into the low 20’s and probably Gold going sub 1000$…….right?

  11. Don

    The up coming reverses split for JNUG will put it back to the $20 range. This will be the fourth reverse split since December of 2014. If the miners continue their fall, it won’t be long before Direxion will want to do another split. Holding these ETFs beyond a few days, is inviting financial ruin.

  12. 1970confused

    Don last year Jnug and nugt both had 10 for one splits . Jnug went from 18$ to 330$ in 6 months, not bad if you ask me….

  13. Strike

    New proposed tax plan eliminates property tax deduction completely. Add to that Trump’s 20% tax on Canadian lumber imports and methinks we have a recipe for a big fall in US home prices.

  14. Christian

    Well.. I don’t have a crystal ball but DUST is doing exactly what I said it would in yesterday’s post ๐Ÿ™‚

  15. 1970confused

    Wow so the regular people who get a tax break from there property get screwed while the big corporation have there taxes reduced. A president for the people NOT!!!!! So again the rich get richer and the poor, well you know!

  16. 1970confused

    Wow so the regular people who get a tax break from there property get screwed while the big corporation have there taxes reduced. A president for the people NOT!!!!! So again the rich get richer and the poor, well you know!

  17. dboz

    I think you are reading that wrong CONFUSED. They no longer tax the first $24k of earnings and you get double the standard deduction. So even if you can’t itemize you get a bigger tax break.

  18. Kruzoe

    Why fret over Jnug or Nugt when there is Nug (Nulegacy Gold)? This one is for investing , not trading. Please do your own DD.

  19. Don

    I read today that AMZN, FB, MSFT, AAPL and GOOG now account for over 10% of the US stock market capitalization, a new record. These same five are responsible for 45% of the Nasdaq’s rise since January 6. There has obviously been some serious concentrated buying going on and no doubt it can be attributed to the direct buying of the ECB, BOJ and the Swiss Central bank. They have created an unprecedented one trillion dollars in the first quarter already. Too much money is chasing the same favored assets.

  20. GMoney

    Gary: I think we have been in a bubble for a while now. A equity bubble, a bond bubble, a housing bubble a fiat currency bubble. Look at a 30 year chart of the bond & stock markets. Do you not see a bubble?

    1. jeffd5584

      I’d agree GMoney. The notion that the bubble is “just beginning” seems a bit off to me. Look at the percentage moves of just about any stock index since Feb 2016. The last 3-4 months of this advance have been on the back of dollar/yen rigging, VIX rigging and crude oil ramps. It’s pretty damn clear that things are already in the later innings (plus retail accounts have been poring into the market since Q1).

  21. dboz

    Gary, why have you not been celebrating your call from months back about your call for a failed break out in the dollar? That was a great call you made when everyone was calling for the dollar to $120. It looks like the dollar is heading down to maybe test the $91 area over the next several months? Maybe give a recap of that scenario and ramifications.

  22. jake

    Added some miners at the dip today, don’t mind taking some gains early and wait for Gary’s plot to play out.

    1. Pedestrian

      I’m getting ready to do the same Jake. Just in the process of screening out some candidates. What have you seen worth buying right now/

      1. Pedestrian

        Here’s an example of the kind of thing I am looking at. There many similar charts so this one is not particularly special in any way and its not one I can say I will be buying for sure. Its just they all have the same look to them lately. That is, they have a very large triangle formation that suggests a breakout in the next two months.

        Pilot Gold
        http://www.netdania.com/Products/FullQuote/FullQuote.aspx?symbol=PLG.tt&provider=idc_dlc&ext=false&d=netdania_stocks

        1. Pedestrian

          Yeah, so that didn’t post the way I was looking at it. Plug in the weekly level to see what I meant.

      2. jake

        PAAS has been resilient and recovered nicely today. Silver plays have been best bang for the buck in the uptrends.

        1. Pedestrian

          The only reason I would avoid silver plays right now is they have a bad tendency to drop like rocks starting around this time of year. May, June and July seasonality is a bit of an issue. It’s no guaranteed of course but odds favour waiting for silver miners until later in the year. I am shopping around now for charts but probably won’t do much for a couple months.

  23. Rapunsel

    Pedestrian,
    I enjoyed your hunting analogy earlier. After so many years trading I think it is one of the most
    spot on thoughts about what trading really is.

    Sharpening the spear.

    Thanks.

      1. Pedestrian

        Its kind of funny actually that Gary calls me a day trader. Truth is I am only making one or two bets each week. It just seems to take that long for the charts to set up in a way I feel confident they will succeed. Or maybe its my mind that’s running its own cycle and it takes that many days to reset between trades. Not really sure but waiting does seem to be most of the game.

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