94 thoughts on “USE THE MANIPULATION TO YOUR ADVANTAGE

  1. Steffmeister

    JNUG at 4.22 holy sweet mother it will end up at sub 1dollar if this trend continues …

    This is going to be brutal … it already is!

  2. Gary Post author

    I think we are now in a first daily cycle and the rest of the markets will follow the breakout in the Nasdaq.

    I’ll say it again: The magnitude of that 15 year breakout in the Nasdaq is going to drive a huge rally. 10,000 will be a piece of cake. 20,000 isn’t out of the question.

    We need to get that out of the way before gold is ready to generate the final leg up in its bull market. And nothing has changed. The next leg up in gold will be the biggest bull market any of us will ever see in our lifetime. $5000 is easy and $10,000 is certainly possible. JNUG will be over $500 (split adjusted).

    I know it doesn’t seem like it right now but we are setting the stage for those moves. The longer the base takes the bigger the rocket launch once it’s ready to move.

    1. primetime

      Gary,

      I can understand the exuberance of your call, you did get it right as we write. However, if you were so confident why did you leave 20% on the table in your DUST trade to date and probably a lot more if you continue to be right. Regardless of any news event, it will not matter over time as you say. I listen to your words but actions speak otherwise.

      1. Gary Post author

        It’s called real time trading.

        I traded DUST exactly how it should have been traded. We had an unknown in the form of the French election that could have taken all our profits away on Monday morning. No way I was going to expose myself to that.

        By the close on Monday sentiment was already too bearish for me to chase. There will be a bounce and plenty more opportunities to re enter shorts if one is so inclined.

        Personally I wouldn’t even bother with shorting. There’s easy money to be made long stocks. And the big money will be made long metals once we get the bottom in June.

    1. Gary Post author

      And most people never make any money.

      I try to show people how to be a contrarian investor but most will just be emotionally unable to ever make the leap. In any endeavor in life there are a few people that excel, but the vast majority will be average or below average. Most people’s brains just can’t do what is required to enter the top 10%.

      1. Pedestrian

        Absolutely agree Gary. The type here who spend all their time criticizing and none of their time working on trading skill or finding opportunities are among the crowd who will never excel at this activity. That is the majority (fortunately). πŸ™‚

  3. jacob2

    Bought the Jan 17th undercut low. Now tend to think we are going to get a double bottom ie: 13.14,15 on the GDX June/July. Once a correction goes so far there almost seems be a magnet drawing these things back to where they started from. I hope so as I’ll be ready come… July.

  4. jhmoffett

    Gary — with the massive stock rally the past two days, is it time to trim and take some profits in the leveraged stock ETFs?

    1. Gary Post author

      This looks like a first daily cycle to me. If I use the SPX then the cycle count is day 20. The Dow, it’s day 4.

      We’ve got a breakout on the Nasdaq and a potential bigger one brewing on the Russell.

      I think one has to be careful not to get kicked off too soon during a bubble phase. I don’t think this is a day traders market. If you want to add use pullbacks to buy, but I think it’s likely to be a mistake to try and dodge wiggles at this point. We’re probably starting the final year of the bubble phase.

  5. Robert

    OK Gary so it looks like the strength today has convinced you that we will hit March lows on this daily cycle. Then the next DCL will probably run the stops. I dunno I think miners will likely bounce sooner rather than later. 8 days red on gdxj it has to bounce nothing goes down in a straight line

    1. Gary Post author

      Bounce? Yes.

      Daily cycle low?
      Not till the FOMC meeting or employment report next week.

      The banks are going to run those stops below the March lows before this daily cycle bottoms.

      1. Pedestrian

        That makes sense to me Gary. It’s time and price. So gold could carve out a bottom between now and the FOMC press release on May 3rd which is just 5 trading days from now. Probably best to just watch from the sidelines for a bit. I am not trading at the moment. Just watching and waiting since I don’t think the bottom is here quite yet.

    2. Pedestrian

      Might be right Robert. There is an outside reversal posting on todays daily silver chart. Gold may also be posting an outside reversal depending on how one reads it. So a change in direction could soon be at hand. Within a a few days at least.

      1. Pedestrian

        For example, JNUG has now retraced almost all the way back to its lows of December 2016. I am expecting it to overshoot to the downside. It does have decay built in after all so that is to be expected.

  6. Bill in Tokyo

    Hi folks – we’ll, I’m still alive out here in Asia, so it looks like the N Korea thing was a dud.

    I see that so far Gary’s been right – GLD and GDX headed down, SPY and QQQ breaking out.

    I need some help here – I can see on the daily chart how SPY broke out – but on the 2 and 1 hr charts, the RSI(14) is already overbought. That is one of the things that keeps me from going long. because I believe that probably tomorrow they’ll go down. So I get caught up in the web of hourly charts, even though the daily chart clearly shows a breakout. Any ideas how to overcome this (besides quit trading!)? Thanks.

    1. Gary Post author

      Almost any breakout will be overbought. look at previous intermediate cycle lows. They stay overbought for considerable periods of time.

      I’m going to stress that the correct way to trade our modern markets is to buy into oversold conditions at cycle bottoms when your stop is close.

      More often than not it’s a mistake to buy once a rally has begun and your emotions give you the all clear. You risk buying into a short term top and your stop ends up being a long ways away.

      Buy when you’re scared.
      Sell when you’re happy.

      If gold bugs could do those two things they would make money. But as we’ve seen most are way too emotional at tops and bottoms to follow that simple formula.

      1. Bill in Tokyo

        Problem is, I’m scared all the time.

        If I try to buy oversold, then I worry price will break down. So I wait for the breakout, but that’s too late. So alls I can figure out to do is, wait for the breakout, and then the subsequent pullback to a higher low, and buy that. Problem there is what you said, that sometimes breakouts stay overbought and don’t pull back.

        I can see how cycles and sentiment give one add’l confidence to buy an oversold condition.

        I’ll keep watching and learning. Carry on. Thanks.

        1. Christian

          Keep in mind Bill.. It doesn’t have to be an ‘all or nothing’ type of strategy. You could also position yourself with a smaller percentage to start with.. Once you’re confident, then you can invest the other half and rest easy.

          If the trade goes against you.. You can either stop out or buy more. That’s how I do it and it works really well, especially when you’re trading in the direction of the trend πŸ™‚ That’s key.

          1. Bill in Tokyo

            Thanks Christian.

            Yea, my wife said the same thing – start w/a smaller position.

            I think the one big thing for me (besides not following cycles and sentiment like Gary) is that I’m out of the timezone. When I get up at 3 am, the market has already been open for 4 1/2 hrs, w/only 2 hrs left.

            I tried a stop once in GDX, but price gapped/hopped right over it and continued down (I was using SELL STOP LIMIT, and not SELL STOP is why). I was following Gary then, and he sold in the NY morning, and actually eeked out a profit. By the time I got up I was down like 5%, and it was clear the setup had failed, so I correctly sold.

            Thanks for your help.

            If anyone has other ideas like Christian’s and Gary’s, or is also trading outside the timezone, I’d appreciate your help.

          2. Pedestrian

            So 10pm Tokyo time is 9 am in New York. That sounds like an advantage to me because you are ahead of the US time-wise and would have been awake during all the premarket hours which is where each day begins. In other words you get to start trading in the two hours before your bedtime which is when most of the action happens anyway. Hell, all you need is the first 30 minutes of the day most of the time since the rest is often just rinse and repeat of the morning session. So go to bed at 11pm and all you need to do is set your clock for 4:30am Tokyo time and be there for the close just in case….

  7. Christian

    I’ll be watching for this tomorrow and the next…

    DUST could break down from here but [as previously mentioned] a ‘triangular consolidation’ usually breaks in the direction of the trend, which means that one more pop up before a correction could be in the cards. This would also create divergence with the RSI/TSI. Those are my favourite types of patterns to trade as far as risk/reward.

    I’ll be looking to buy more DUST around 29/30 for the next leg up! The slaughter is not over yet πŸ™‚

    https://www.tradingview.com/x/QO9dMrkR/

    1. Pedestrian

      DUST could tag the 200 SMA near 37 too. There is no knowing for sure but its possible.

      1. Christian

        Maybe. But Sentiment is already pretty bearish. I see a small correction of some sort first before this DCL bottoms around the FOMC.

  8. Pedestrian

    OK people listen up. We have a big red flag on markets right now if the story I just read is correct. According to Zerohedge, short positioning on the SPY is now at its lowest level since 2007 meaning this is a market of all bulls and nobody else. The VIX is again collapsing back to the 12 handle today and now, after 8 long years of the US markets grinding relentlessly higher the bears have finally capitulated and joined the bull party. And that means conditions are finally ripe for everyone to be wrong which is the only way markets properly function.

    ——————————–
    “Throwing In The Towel” – US Stock Market Shorts Hit 10-Year Low .. ZeroHedge
    http://www.zerohedge.com/news/2017-04-25/throwing-towel-us-stock-market-shorts-hit-10-year-low
    ——————————-

    In other words, we can finally have a decent correction that won’t be repulsed by the usual short-covering rally (since there are not enough shorts to power the market back up should it go down). And that means that my cross-indices indicator may indeed be valid.

    As a side note, the MSCI all-world index of stock markets (kind of the index for the whole planet) has just barely eked out a new high which is another way of saying it could be about to form a left translated double top. The Wilshire 5000 meanwhile looks like it is about to roll over and take a sorry face-plant into the pavement (but these things are rather subjective so look it up yourself).

    One wonders what is about to happen in the next while that might suddenly propel gold higher even as global stock markets take a long overdue plunge. As mentioned yesterday, a number of European indices are currently right at their resistance levels and the Nikkei is rapidly climbing back towards 20,000. I think the DAX and EuroStoxx will make a slight overshoot which will draw even more bullish bets to the markets before they start a correction.

    So what is about to happen is that bulls will become even more bullish as the prior highs are exceeded but that is actually the point at which we should be most guarded. When everyone is on the same side of the boat it almost always rolls over and capsizes.

    So stay alert everyone and if you have doubts then take a few dollars off the table until the coast is clear.

    Because I think we could be very near the moment of truth.

    O

    1. Pedestrian

      Wilshire 5000 total market index (US) is double-topping TODAY
      https://www.google.com/search?q=w5000+chart&ie=utf-8&oe=utf-8&client=firefox-b-ab

      I guess you guys are all NASDAQ bulls now since nobody responds to any of these kind of posts. But it matters because its potentially very bullish for gold so you probably should pay attention. And the fact that gold may be putting in a YCL right about the time of the next FOMC is kind of interesting as that is likely enough going to be our trigger date if anything does happen.

      Whatever.

    2. Gary Post author

      Actually small trader put buying has been elevated ever since the 7 YCL last Feb. The retail trader still can’t forget 2009 and they are aren’t even vaguely close to the kind of euphoria that existed at the bubble top in 2000, or even at the top in 2007 which wasn’t even a bubble.

      Sentiment is going to be bullish anytime a market breaks out to new highs. That’s human nature. It’s when it gets excessive that we need to worry.

      Right now retail trader confidence is dead neutral at 50% bulls. That’s not what I would expect to force even an intermediate top and certainly not a final top.

      I’ll say it again. The sheer magnitude of that 15 year breakout in the Nasdaq is going to drive an incredible rally. 10,000 will be a piece of cake, and 20,000 isn’t out of the question.

      1. Pedestrian

        That breakout in the NASDAQ is marking out the top of an expanding wedge. It is extremely negative. Be very careful here Gary. If you are buying that breakout you are making a mistake in my chart books.

          1. Pedestrian

            I was referencing the discussion we had a few days ago and the megaphone pattern breakout.

          2. Pedestrian

            Anyway, be my guest. Go ahead and buy it to your hearts content. We will know in a week or two if you were right or wrong. Lets say by May 5th at the latest.

    1. Gary Post author

      I think current trends will remain in force at least until the FOMC meeting. And if the market likes Trumps tax plan not only should stocks continue higher, but if he gets it through congress it will be a huge boost to the economy.

  9. cazabrujas

    Zerohedge has been calling for a market crash for years. I would take everything they post with a grain of salt.

    1. Gary Post author

      Exactly. One statistic doesn’t mean much. You need to correlate with many different sentiment indicators to get a real feel for what is going on.

      1. Pedestrian

        Go ahead then Gary. Lead the sheep to slaughter. I just told you SPY short positioning is at a ten year low and that is a sentiment reading so it should be up your ally. There are not enough bearish bets to cause another short-cover rally in markets. So that means it is only new money that can push prices higher on volume and that ain’t going to happen. Ten to one odds I will be correct on this call and you will lose money.

        1. Gary Post author

          We bought several days ago when sentiment was bearish and our stop was close. We’ve already added 10% to the stock portfolio and have a big cushion on the position.

          The next trigger event is likely going to be the FOMC meeting. I’ll probably take some off the table before that event and then see if we get a pullback.

          But this bull market isn’t over. Just a little commonsense should tell you that 7 years of global QE has to end in a bubble somewhere and clearly we don’t have a bubble in stocks yet.

    2. Pedestrian

      Everyone has been calling a market top for years. That is not evidence of anything since all of them have been wrong. In any case ZH is not calling a top here. I am and this is my first and only top call for the markets. I also think it will be correct. As far as I know, I am the only one making this case as cross-indice technicals are not really a very well known method. But this is strictly by the book. When ever you hit upside resistance levels its time to analyze if there is enough juice to push prices higher. We don’t have a single indice in the US that is not already at all-time highs. the ONLY way to do this assessment is by looking at markets in other countries where there are prior highs visible on the charts. The approach has validity since all major markets trade together and so that forms the basis of my argument that now is the time to exercise some caution.

        1. Pedestrian

          Sign me up Jake. Depending on what unfolds in the next few days I will probably be going short US markets.

  10. Gary Post author

    All markets do not trade together. I’ve been hearing this for years. Watch the Nikkei people say, it leads the other markets. The Nikkei is driven by the yen.

    As you can see the US market is clearly leading other global markets. Nothing mysterious there. Capital is flowing to the US as our economy and banking system is stronger than the rest of the world. Some markets like the French and Chinese are nowhere near their all time highs. Germany has a strong economy and in the event the euro collapses money will flow back into Germany. It’s already starting.

    About the only asset the UK has is oil and since it is stuck in a bear market it’s not surprising the FTSE is mostly stuck in a trading range for 20 years.

    Japan is dead in the water and it’s market is just being driven by the devaluation of the yen.

    So clearly all markets do not trade in tandem.

    1. Pedestrian

      Gary, if you cannot see the similarity in chart pattern on most of those indices then you might need glasses. In any event, I was not saying all markets trade exactly the same or even through all time. But right now, most developed market indices are indeed trading together. So old history is not helpful. We need to trade what is on the charts right now.

      1. Gary Post author

        Well no matter how hard I squint I can’t see a megaphone pattern on the Nasdaq chart. Chart patterns are probably my last tool that I look at. First is cycle counts. Then I check to see where sentiment is, and then I look at the charts and indicators.

        Short term yes stocks are going to be due for a pullback for a day or two. Miners will be due for a bounce for a day or two. But I’m not expecting any major trend reversals until the FOMC meeting and the bull market isn’t going to top until we get our QE bubble and everyone piles in like they did with tech stocks and real estate.

        1. Gary Post author

          FWIW the yen is moving down into a cycle low. That means risk on for the market. Depending on how deep the yen drops it could signal an intermediate top has formed. That would probably indicator an intermediate top in gold and the beginning of an intermediate rally in stocks.

          I’ve been saying for some time that gold and stocks will trade inversely. If stocks are going up there isn’t a lot of motivation to buy gold.

          Since I think gold formed an intermediate top a few days ago I think that means stocks probably formed an intermediate bottom.

          Yes gold will find a DCL probably next week and bounce (I covered this in the last video). During that time I would expect stocks to pullback. But then gold should produce at least one left translated daily cycle into it’s yearly cycle low.

          1. Pedestrian

            I guess that’s where we differ. I think gold is approaching a tradeable bottom and stock markets are going to pull back.

          2. Gary Post author

            Yes I covered that in the video. I’m going to be looking for a DCL in gold probably next week on or close to the FOMC meeting. But it would only be a short term trade as that daily cycle should be left translated and ultimately produce the YCL in late May or June.

  11. zkotpen

    Ped, Bill in Tokyo,

    “That sounds like an advantage to me because you are ahead of the US time-wise and would have been awake during all the premarket hours which is where each day begins.”

    Maybe an advantage in concept, but only an advantage for night owls — If you love the graveyard shift, then you’ll love it & can use it to your advantage, I guess. Bill is married, if I’m not mistaken — a further possibility for mayhem and discord.

    I’ve lived it for most of the time since the end of 2012. I guarantee, it is hell. Screws up my biorhythm. Saturday is wasted just trying to recover from insomnia. Thinking is utterly cloudy at that time. Bad decisions are made, that only become clear the following morning, drinking coffee, bright & chipper. Chipper, that is, until I realize what the hell I got myself into at 3:30 a.m.!!!! Hairline recedes faster than ever as the natural color disappears, complemented by the thick black rings below the eyes. Face begins to look like a raisin.

    The single most important factor in happiness is simply getting a good night’s sleep.

  12. Steffmeister

    I must agree with Pedestrian here, a Big WARNING sign for stockmarkets. I’ve pulled out 75% of my common stock, there is not that much of an upside left. Better to prepare a big trade in Gold&Silver this summer.

    A big swing coming at summer solstice and on wards into Q3.

    For the next month, yeah go ahead and buy some common stock, after that be very careful imo.

    1. Pedestrian

      Thanks Steff. Another contrarian in the crowd is always welcome. When the herd is all going the same direction its usually the time to start wondering if they are about to go off the same cliff at once. That lack of short positioning should be setting off alarm bells but (not so) incredibly most people will doubt the risk because the market is just so good at getting everyone onboard before the turns. I am not the least bit surprised Gary doesn’t agree with me. Most here don’t judging by the lack of response to this set-up. Stepping back for a few weeks is hardly going to be the end of the world. It’s not as though the NASDAQ will double in that time but there are excellent odds it will lose 5 to 10%.

      1. Gary Post author

        Actually we bought at the open on Apr. 20th. Almost the exact bottom of an almost two month correction in the market. Again no one wanted to buy when I gave the signal. No different than the buy on metals in Dec. Now after only 4 days you want to sell short based on one sentiment indicator pushed by zero hedge. Seriously man you need to buy a subscription to sentimentrader so you can get real sentiment date.

        Once you do take a look at the robo ratio and compare it to the last two bull market tops. Or look at the current dumb money confidence level. It’s dead neutral. Or the intermediate term optimism index. Also dead neutral at 48% bulls. When sentiment gets excessively bullish I’ll call attention to it. That will be the time when no one wants to sell. Just like they thought I was crazy to not buy miners last week.

        Retail traders aren’t even close to being all in yet. They still remember 2009 too vividly.

        1. Pedestrian

          We shall see Gary.

          In any case I don’t know what you bought April 20th since I am not a subscriber so I can’t comment on you assertion nobody wanted to buy when you gave the signal. If you are talking the NASDAQ then good luck with that in the next while. I won’t claim to know where the peak is exactly but that chart is one I would start avoiding.

      2. Christian

        The thing is.. Gary already forewarned [Post: Counter Trend Moves Setting Up] of a deeper correction in the stock market once we got past the FOMC meeting, so this is really nothing new.

        A correction heading into an FOMC meeting is unlikely. It’s political.

        1. Pedestrian

          So you are saying he actually agrees with me post FOMC?

          You would never know it given the back and forth today.

          1. Christian

            I could be wrong but I think your time frame and his are perhaps getting lost in translation.

        2. Gary Post author

          I don’t like to chase trends. In our modern markets it rarely pans out. Adding tranches rarely pans out.

          IMO the correct way to trade our modern markets is to try to buy at a cycle low when your stop is close and go in 100%.

          That’s what we did on Apr. 20th. We bought full positions in UDOW and TQQQ. Our stop was the intraday low of Apr. 19th on the Dow. So we weren’t risking much and if we got stopped out we would just try again.

          I used this same strategy to buy the bottom in December for metals. It took a couple of attempts before we caught the bottom. Once we did we rode the trade to the top.

          1. Pedestrian

            Have you forgotten about your gold triangle that has been forming since the peak in July 2016? To me it looks nearly at the end of its consolidation period and could be ready for a decision to break out in early May. if stocks and gold are going to run in opposite directions (and I agree with that idea) then the implication of a gold breakout is that stock markets are going to fall back.

  13. TraderPete

    I think we’re at or very close to the bottom in silver and gold, because Goldman Sachs has come out with their forecast that gold is headed for $1,200 very soon. Goldman Sachs is seldom correct in their predictions. It is a very good contrarian indicator.

  14. zkotpen

    Bill in Tokyo

    “Problem is, I’m scared all the time.”

    Happens after you sustain huge losses. That gets to market psychology.

    I found the audiobook, “Trading in the Zone”, by Mark Douglas, which addresses this — eyeball reading expends too much energy for me. I slowed down the audio by about 4% (narration is too fast) & listen to it, even in my sleep.

    One caveat: Instructional books, especially those written by North Americans, downplay smarts and anything that requires thoughtful consideration, as they try to play to “norms” of intelligence and ability. This book also downplays market analysis. I can easily gloss over those comments, because I do scientific research on market analysis, and step 1 of the scientific method is “define the problem”. Therefore, I attend to the spirit of his caveat, by not overdoing the market analysis, rather, only doing such analysis as it directly addresses the specific analytical problem that I’m working on — the one that’s calling for attention, the one that’s most relevant, as opposed to gathering mountains of data & having some team of “quants” crunch it out.

    You, on the other hand, DO need to put in the work in that area. Nobody cares what you think about Korea — except maybe the person on the other side of your trades — they love it that you waste your energy thinking about the news, while they have carefully planned to buy the shares you’re selling, or sell the shares you’re buying. They love it when more people waste time on trying to interpret the news into their trading decisions.

    I’ve mentioned before that my Econometrics professor was a Romanian man whose face and accent I remember well. We actually calculated market supply and demand using mathematical models. I hated all that crunching — the stuff that “quants” do. The one interesting thing he always came back to was one simple question: Does our forecasting model produce a more accurate prediction than a mere coin flip? Every single brain-squeezing quantitative methodical crunching and grinding session boiled down to that question, in the final analysis.

    If your analysis can’t beat a coin flip, you’re toast when you’re tossed into the heat of battle. The biggest enemy for any human is the fear of failure. The nerves hit you at your most vulnerable point. Ryan Tedder of One Republic put is succinctly and eloquently as it pertains to singing before a huge audience — one can generalize to all areas that require any level of performance, certainly putting your scarce resources are at risk:

    “Pitch goes out when you lose breath. When you lose control of your breath, it’s because of nerves. When you get nervous, it’s because you don’t have muscle memory. On a performance, it will come down to who conquered their nerves the most.”

    Good luck — and get to work on building your muscle memory!!!

  15. zkotpen

    Bill in Tokyo

    “Yea, my wife said the same thing – start w/a smaller position.”

    Don’t put another penny at risk until you’ve nailed down the following 3 things:

    1. Risk management — position size is part of that.

    2. Strategy — do you even have one?

    3. Probability assessment — not the silliness people blurt out, “oh, it’s about a coin flip” or “high probability it will go up [or down]” — you’d better have the math to back up your probabilistic claims — if not you are kaput!

    I once met a Forex trader who told me he trades coin flips. Says he knows when a move is imminent, but has no idea which direction. So he puts on the trades with very tight stop losses. He gets half of them right, half of them wrong. But the rights are about 3 times bigger than the wrongs, resulting in a substantial net profit. He’s no mathematician, but he’s got his probability assessment down cold. And risk management. And strategy. And muscle memory πŸ™‚

    1. zkotpen

      BTW — I asked this Forex trader — just some backpacker dude, most unassuming looking guy — what he would consider to be the probability of an “ideal trade setup”. He replied, without hesitation: 60%.

      And he meant it — he would consider himself in traders’ heaven, he elaborated, if he could get the directional calls correct on 6 out of every 10 trades he takes.

    1. Gary Post author

      Not old turkey yet. Gold is stuck in a basing pattern that could last another year.

      1. tulip

        Gary you change yr tune all the time…
        its like u can simply place the recording needle where u choose to…
        thats absurd.

        1. Gary Post author

          Changed my tune about what?

          For well over a year I’ve been saying that stocks are still in a bull market, while everyone else thought the drop into the 7 YCL was the beginning of a bear market. We have a bubble phase ahead of us. Same thing I’ve been saying for a couple of years.

          I’ve been adamant that gold started a new bull market in late 2015. Granted it’s stuck in a basing pattern, but gold isn’t going below the 2015 lows. It looks like gold is stuck in a triangle consolidation.

          When oil was at $26 everyone was saying oil was in oversupply and was going into the teens. I said oil would bottom because the 3 YCL was due. That’s another one I got right. And I doubt oil will trade back below $40 and if it does it would only be marginally and will recover quickly. So the same prognosis for oil as a year ago.

          I think bonds have started a bear market. They’ve been in an extended bear flag for several months but the flag is going to breakdown and interest rates will continue higher. So no change there.

          The only thing that has confounded me is the dollar. I still haven’t seen anything that I can clearly identify as a 3 YCL yet.

          So I don’t know what the hell you’re talking about.

    1. Pedestrian

      That spike is already past tense. You might have missed that part. Anyway, my post referred specifically to SPY puts. At least stay on the same subject.

  16. ras

    Concern about SM topping? At some point it would. We are not there yet. IBM still unable to find its legs. At some point, laggards will start taking off. Now it is celebration time for financials, fast foods, heavy machinery, tupper ware, etc.

  17. Gary Post author

    During intermediate declines support zones give way. Trend lines and channels break.

    During intermediate rallies resistance zones get breached and new channels are established.

    Watch the Dow. If, or I should say when the long term channel breaks then we have transitioned into the full on bubble phase of the bull market.

  18. primetime

    I thought PED + Gary = Bromance
    Christian + Gary = Bromance for sure
    PED, I guess Gary wins this one! Talking about a pissing match.

    1. Christian

      You got it all wrong caveman. It’s…

      Gary + C–Love + PED ====D 3 White Soldiers.. which is bullish in every which way you can think of πŸ™‚

    1. Pedestrian

      So naturally I got to wondering just what a Neanderthal wife might look like.

      Is she hairy?

  19. dboz

    PED, I have followed what you have said. I have listened. You are the chart expert. Here you go. Break this down and give some analysis.

    https://www.tradingview.com/x/sSyZf95r/

    I realize all this tells you that gold is overpriced or silver is undervalued, either way, something will give. Thinking silver is about to do something soon to get back some value?

    https://www.tradingview.com/x/YoDmu9EF/

    Check out how long this trend channel is in XAU. It could break down, it could also break out?

    https://www.tradingview.com/x/dgQ5hMBk/

    Here is silver. Looks like it is hitting the bottom or getting very close?

    https://www.tradingview.com/x/X6YpvSgc/

    Here is gold. Could see a pullback to the 1245ish levels and then run, it could roll over and totally collapse?

    https://www.tradingview.com/x/dgQ5hMBk/

    The miners have been conditioned to see small runs and then get massively shorted and collapse. Everyone sells the rips. No one should be buying the dips (Bear market behavior as they just get deeper and deeper) Gary just repeated the same. Sell any rips he says. Repeated over and over and over. It’s been done and worked for over 6 years now.

    At some point, the tides might turn and we should get a run up which will get shorted, but it will run up some more and get shorted and then it will run up some more and then shorts are screwed as it just runs up forcing a squeeze from shorts and those waiting for the miners to crash back to the $.50 level will be left chasing. As there will be minimal to no pullbacks or buying opportunities with a long sustained run up. Fueled by massive short squeeze and chasers. That will be the fuel for the big leg up move (if or when it ever happens). Massive short squeeze and chasers piling on. I just don’t know when. Neither does anyone else. I am just a dumb ignorant emotional retailer. However, I am open to the possibility this may never happen and it could be many more years of down trend in the bear market.

    Miners could get blown up and be smashed into bits again like Gary is calling for. Heck, they basically already have. However, I don’t see how that path provides any fuel for any sort of big rally to make the next big leg up. The only way to get a BIG RUN is for a massive short squeeze and side liners left chasing as two of the three trades will be wrong (shorts and those side liners looking for the massive pullback and finally momentum chasing day traders). I can’t see how you get that off kissing the absolute bottom again. There would just not be any reason for sentiment or buying to occur at those levels as it will confirm a BEAR pattern of lower highs and lower lows for most of the last year for miners. Massive oversold conditions leaving it an easy trade for shorts to cover at basement levels and get long again does not really provide any upside fuel of any sustainability. We saw that in Dec-Feb of this year. Puny weak squeeze with no real urgency as the move was not believed as it did not break any real level to get interest. Flamed out quickly and completely rolled over into a blood bath into March. Until we get sustained upside momentum that brings on the attention from those other than bugs, this sector is not going anywhere.

    I understand Gary keeps hitting me over the head with it, that it is going down. I appreciate the video, Gary. It is my fault for my position, and mine alone. I know the risks. If it does collapse again, it just can’t be bullish nor have any reason to create any buying that would fuel any big leg up. And it may be true that now is just NOT the right time for this sector to get bullish.

    Look at gold this run up from December. Big move, no motivation in miners. Why? Because the miners have been beat over the head time and time again with no payoff for being long. So why go long? The ONLY reason you would is because there is a sudden and swift up move that catches everyone by surprise that no one was expecting and that causes FOMO and FEAR in the shorts due to the magnitude of the move. The longs have been scared to death over and over and over and punished for piling on at the top like Gary says. Bears, maybe got worried for about 5 months in early 2016. That’s it.

    Of course it could be manipulated and this is never going to be allowed to run. The only way to over come it is with a BIG influx of new money. Crashing the sector back to the ashes it has barely risen from is not going to bring in any new money. Why would anyone chase miners making lower highs and lower lows after they just got pulverized into dirt AGAIN? The only people who would are the shorts who just covered and are waiting to pray on the dumb gold bug longs who think MAYBE THIS TIME WILL BE THE TIME.

    So I am all ears PED, as your scenario would bring some panic and new money into the sector and get the volume moving to show there is some upside action. Most miners trade at or below daily averages. Big down days drive up volume some but not overly excessive. There is no interest from anyone right now other than gold bugs and day trading shorters.

    Of course earnings for miners are going to be bad. Why would miners be rushing to unload gold and silver at these prices? They sell only what is necessary to keep things moving. Why invest money into producing more of any product that constantly revisits COST?

    No, I am not emotional even though I cry to Gary on here a few times a week. Yes, I may be dead wrong. Yes, we may totally crash into the oblivion. But if that is the projected scenario path, this sector is dead. There will be no reason to attempt to buy except like I said to get that few week squeeze off some bottom to only flame out as soon as the shorts pile right back on and drive it back to the dirt again.

    Until the shorts get punished like they do with the SM, the mining sector is going no where. Longs (investors not short term traders like we have here) have been ruthlessly punished for years. They got a brief and mild reward for a few months in early 2016 if you can call that bounce after a 90% beat down a reward. Most missed it as Gary said as it was a sudden and swift move to the upside that worked just like I described above.

  20. zkotpen

    Gary, Ped,

    Since posting my gold charts on Sunday, I’ve become more and more convinced that gold’s intermediate cycle has topped, and that the move up was corrective in nature — a bounce of intermediate degree off the 2016 low. This is much more apparent in GDX than gold, but I sense it may be true in both markets. Still working on this.

    As we head into the final turn before FOMC week, I’m more & more with Gary here. Sorry Ped πŸ™‚

    After posting those charts, it became increasingly clear to me that we are looking at 3 waves up in gold, and they are looking complete. That more bullish outlook, that the IC has not yet peaked, is not invalidated, but it looks less likely now. I should have a clearer picture coming out of the turn (the weekend before FOMC).

    1. Pedestrian

      No worries Zkot. We don’t need to agree. So you see gold trending lower? That may be the case however I think we are going to see 1284 before we go back down and it suggests a nice healthy bounce in bull trades is still in play.

  21. zkotpen

    Ped,

    You are making an assumption about primetime’s wife. She is probably human, as neanderthals are biologically & socially capable of mixing with the humans πŸ™‚

    Earth can barely sustain one species of the Homo genus, much less two. The reason the neanderthals bit the dust is they failed to specialize. You could say they lacked focus — everybody did a little of everything. The humans cro magnons invented “division of labor” — no more ladies carrying spears, as in the 2nd photo of Wilma…

    1. Pedestrian

      Of course. I was being generous believing primetime is actually married, never mind to a Neanderthal woman.

  22. Dday

    Gold bearish i’m in complete agreement, it has been bearish in the cycles(I think) and technicals, but I wouldn’t completely rule out a geo political shock to send it back up. I thought that gold would move sideways this year and punish inexperienced perma bulls and bears, just like oil did last year.

  23. dboz

    PED, I have followed what you have said. I have listened. You are the chart expert. Here you go. Break this down and give some analysis.

    https://www.tradingview.com/x/sSyZf95r/

    I realize all this tells you that gold is overpriced or silver is undervalued, either way, something will give. Thinking silver is about to do something soon to get back some value?

    https://www.tradingview.com/x/YoDmu9EF/

    Check out how long this trend channel is in XAU. It could break down, it could also break out?

    https://www.tradingview.com/x/dgQ5hMBk/

    Here is silver. Looks like it is hitting the bottom or getting very close?

    https://www.tradingview.com/x/X6YpvSgc/

    Here is gold. Could see a pullback to the 1245ish levels and then run, it could roll over and totally collapse?

    https://www.tradingview.com/x/dgQ5hMBk/

    The miners have been conditioned to see small runs and then get massively shorted and collapse. Everyone sells the rips. No one should be buying the dips (Bear market behavior as they just get deeper and deeper) Gary just repeated the same. Sell any rips he says. Repeated pattern over and over and over. It’s been done and worked for over 6 years now.

    At some point, the tides might turn and we should get a run up which will get shorted, but it will run up some more and get shorted and then it will run up some more and then shorts are screwed as it just runs up forcing a squeeze from shorts and those waiting for the miners to crash back to the $.50 level will be left chasing. As there will be minimal to no pullbacks or buying opportunities with a long sustained run up. Fueled by massive short squeeze and chasers. That will be the fuel for the big leg up move (if or when it ever happens). Massive short squeeze and chasers piling on. I just don’t know when. Neither does anyone else. I am just a dumb ignorant emotional retailer. However, I am open to the possibility this may never happen and it could be many more years of down trend in the bear market.

    Miners could get blown up and be smashed into bits again like Gary is calling for. Heck, they basically already have. However, I don’t see how that path provides any fuel for any sort of big rally to make the next big leg up. The only way to get a BIG RUN is for a massive short squeeze and side liners left chasing as two of the three trades will be wrong (shorts and those side liners looking for the massive pullback and finally momentum chasing day traders). I can’t see how you get that off kissing the absolute bottom again. There would just not be any reason for sentiment or buying to occur at those levels as it will confirm a BEAR pattern of lower highs and lower lows for most of the last year for miners. Massive oversold conditions leaving it an easy trade for shorts to cover at basement levels and get long again does not really provide any upside fuel of any sustainability. We saw that in Dec-Feb of this year. Puny weak squeeze with no real urgency as the move was not believed as it did not break any real level to get interest. Flamed out quickly and completely rolled over into a blood bath into March. Until we get sustained upside momentum that brings on the attention from those other than bugs, this sector is not going anywhere.

    I understand Gary keeps hitting me over the head with it, that it is going down. I appreciate the video, Gary. It is my fault for my position, and mine alone. I know the risks. If it does collapse again, it just can’t be bullish nor have any reason to create any buying that would fuel any big leg up. And it may be true that now is just NOT the right time for this sector to get bullish. A year or two may be necessary.

    Look at gold this run up from December. Big move, no motivation in miners. Why? Because the miners have been beat over the head time and time again with no payoff for being long. So why go long? The ONLY reason you would is because there is a sudden and swift up move that catches everyone by surprise that no one was expecting and that causes FOMO and FEAR in the shorts due to the magnitude of the move. The longs have been scared to death over and over and over and punished for piling on at the top of any upside moves like Gary says. Bears, maybe got worried for about 5 months in early 2016. That’s it.

    Of course it could be manipulated and this is never going to be allowed to run. The only way to over come it is with a BIG influx of new money. Crashing the sector back to the ashes it has barely risen from is not going to bring in any new money. Why would anyone chase miners making lower highs and lower lows after they just got pulverized into dirt AGAIN? The only people who would are the shorts who just covered and are waiting to pray on the dumb gold bug longs who think MAYBE THIS TIME WILL BE THE TIME.

    So I am all ears PED, as your scenario would bring some panic and new money into the sector and get the volume moving to show there is some upside action. Most miners trade at or below daily averages. Big down days drive up volume some but not overly excessive. There is no interest from anyone right now other than gold bugs and day trading shorters.

    Of course earnings for miners are going to be bad. Why would miners be rushing to unload gold and silver at these prices? They sell only what is necessary to keep things moving. Why invest money into producing more of any product that constantly revisits COST?

    No, I am not emotional even though I cry to Gary on here a few times a week. Yes, I may be dead wrong. Yes, we may totally crash into the oblivion. But if that is the projected scenario path, this sector is dead. There will be no reason to attempt to buy except like I said to get that few week squeeze off some bottom to only flame out as soon as the shorts pile right back on and drive it back to the dirt again.

    Until the shorts get punished like they do with the SM, the mining sector is going no where. Longs (investors not short term traders like we have here) have been ruthlessly punished for years. They got a brief and mild reward for a few months in early 2016 if you can call that bounce after a 90% beat down a reward. Most missed it as Gary said as it was a sudden and swift move to the upside that worked just like I described above

    1. Pedestrian

      Sure thing. Well the triangle pattern Gary refers to has legitimacy in my view and if you asked me I would say its now my belief the breakout will be to the upside. I have a conflict in the really big picture though since I am a deflationist and deflation should have negative consequences for all commodities in spite of how they have already fallen. There are some very compelling charts that suggest gold is not going anywhere near as high as most seem to believe.

      Personally I have doubts we even see gold back at the 2011 highs in the coming decade meaning it will only meet the prior peak but not exceed it. But you probably don’t want to hear that. Anyway, I am a squiggles guy as Gary accuses since I don’t try trading above my ability to estimate gold or by making trade plans any longer than a week.

      If you want a different kind of answer I can point you to a weekly chart where you can readily see that every single peak of the last 6 years should have been sold (not held old turkey). And that is indeed what I have been doing all through the bear market since the top in 2011.

      The chart proves without equivocation that the trending direction is down and remains down to this day.
      http://finviz.com/futures_charts.ashx?t=GC&p=w1

      The 2016 peak made no difference whatsoever to the larger bear pattern as it never successfully broke above the falling downtrend line. and so this continues to be a bear market and should be respected as such until we get an unconditional all-clear that something more substantive is going to happen.

      In other words, this recent peak should also be sold (not acquired or held as some people are foolishly advising). because it is no different than any prior peak and will almost certainly end the same way. With the spilled blood of gold bugs who just cannot fathom why gold will not rise from the ashes and fly on two wings again.

      I have a better way to view gold that might be helpful to you.

      Stare long and hard at that weekly chart I linked and just try to take in the rise and fall of the price pattern across time. It’s almost like a clock the way it hits peaks and then drops into valleys. Tick-tock-tick-tock…….THAT is what you want to trade. Do yourself a favour and just forget the buy and hold idea for the time being. Focus instead on those peaks and valleys and try to make hay as the chart breathes in and out.

      You don’t need to be perfect to do it either. All you need to know is that until the chart turns bullish again you should keep selling positions at resistance or top channels and be prepared to buy again once price has fallen low enough. The chart itself is amazing mathematical in symmetry and you can see that easily by running channels across any given points of interest.

      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.

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