1. Gary Post author

      We’ll make it all back and then some. We just have to catch the bottom of the YCL.

      1. HomerJ

        On the last trade you said it has been hard to trade, what changed your mind to enter yesterday? I didn’t see anything out of the ordinary and haven’t got a clue if cycles work for this.

        1. Gary Post author

          Oil looked like it might try to bounce in that same $47 zone and energy stocks were green. Also the stop was close. Sentiment is getting extremely bearish. The 20 DMA is below 40% bulls.

          Plus I like to enter when I can use a close stop. We had a close stop at yesterdays intraday low.

          I’ll try again when we get the next setup. Oil may yet drop below $42. I think the Syrian mess just pushed that daily cycle higher than it would have normally gone making it look like a potential ICL.

  1. Gary Post author

    The next big trade will be energy. Again no one will want to buy at the bottom, and the only one bullish will be me.

    I’ll wait and see if oil can drop below $42 then I’ll try again.

    1. cazabrujas

      Hey Gary, what are you planning to use to trade the leg up in oil? XOP (GUSH) or USO (UWT)?

    2. z3r-0

      If oil dropped that far, that’s going to have a negative effect on PM’s right?

      1. Gary Post author

        They are two completely different markets. Why would oil effect gold or vise versa?

        1. z3r-0

          But i thought the reason the big banks stopped attacking gold, was because they needed oil prices to rise? Isn’t oil the major inflationary driver in the commodities market?

  2. Spanky

    Gold, silver and commodities need the BoJ to start tightening. Unfortunately, there is nothing on the $usdjpy monthly chart to suggest that is going to happen any time soon. $usdjpy looks to me like is in a new bull market after making a golden cross for the first time in at least 20 years on the monthly chart. Now, of course gold could outperform yen going forward, but that is little consolation if they are both going down. Also, no one can deny that gold, silver and commodities have been tied to the hip with $usdjpy from a directional standpoint since the mid 1990s (tops in $usdjpy correspond with bottoms in commodities).

    Until $usdjpy tops, there will be no bottom for commodities, gold and silver.

    Right now there is a giant cup and handle/inverse head and shoulders on the $usdjpy weekly chart (it has a diagonal neckline). The neckline is currenlty coming in around 116. When that neckline breaks, $usdjpy is going into the 130-140 range. From there based on the monthly chart I expect $usdjpy to hit 180 eventually. Needless to say, I think gold will likely be at or below $900 (its 200 month moving average) and silver to be in the single digits.

    1. jskauai

      IMO, understanding the $usdjpy relationship is one of the main way all markets are being controlled by the 800 pound gorilla. JPY is the gorilla’s little bitch!

  3. Gary Post author

    Ha, we’re already starting to see sub $1000 calls.

    Getting close to the cycle bottom. The bounce should give the bulls hope and suck traders back in too early and then roll over one more time to break everyones hearts as it finishes the ICL.

    That will be one heck of a buying opportunity. Traders will know the bottom as everyone will be bearish and I’ll be the only one urging people to buy 🙂

    1. Spanky

      Gary, I agree we will probably bounce here (the 100 dma), and maybe gold makes it all the way back to the 200 dma. But that sets up a nice head and shoulders on the gold daily chart. Once that neckline breaks its back down, hopefully no further than the lower rail of the triangle you have drawn.

      Answer this though, do you think $usdjpy is in a new bull market? If not, why? The monthly chart looks very bullish to me.

      Do you think commodities and gold will rise in the face of rising $usdjpy?

      1. Gary Post author

        I think the yen correlation is just a coincidence, and one that will eventually break down.

        1. Spanky

          It could be that $usdjpy will be ready to take a breather in June/July, which could set up a rally in gold.

          The directional correlation between $usdjpy and commodities has held up pretty well for 20+ years. The top of $usdjpy in 1998/99 corresponded almost exactly with the bottom of the $crb, while the bottom in $usdjpy in 2011 corresponded to a major top in $crb.

        2. Spanky

          $xjy and gld both approaching the 100 dma. Their daily charts look almost identical in terms of inflection dates and MAs.

          I imagine they will get some sort of bounce back up from the 100 dma. Probably all the way back to the 20 dma or maybe the 200 dma. That bounce will be shorted like crazy against the 20 or 200 dma. A move back down will then paint a giant head and shoulders pattern on both charts (both having diagonally sloping upwards necklines). Once those necklines break, it’s down we go. I think that head and shoulders on gld would actually project below Gary’s target, but maybe that lower rail of the triangle will be enough to create a large rally in both yen and gold.

  4. Pedestrian

    Where are those prissy little gold bugs today?

    Oh yeah, eating crow and cleaning egg off their faces while they try to swallow their heaping plates of humble pie.


    1. Gary Post author

      Yes they are laying low just like you did when your trade went against you.

      That’s enough gloating for now.

      1. Gary Post author

        I’m the only one that doesn’t get to disappear when a trade goes against me. Everyone else has the luxury of fading away until things turn back in their favor.

        1. Robert

          Do you think the next drop into ICL will be more powerful than this DCL or about the same? This daily cycle drop is powerful didnt expect miners to go down so much

          1. cazabrujas

            I think Gary explained that the ICL is going to be brutal, in order to make everyone panic and sell and then the big buying opportunity will come.

        2. Pedestrian

          I haven’t had a trade go against me recently. You need to read more carefully.

          1. dboz

            You think the miners have any more panic left? It’s been a blood bath for weeks already. All miners are in severe bear market territory. All have given up huge losses. Most are in severe oversold conditions. Some are worse now than the 2015 lows. The low is NEVER low enough, must go down more. More pain.

          2. Don

            Ped: The few day trades that you have posted are meaningless and certainly do not qualify you to be an expert on the long term direction of gold or anything else.

        3. Pedestrian

          Apparently nobody took your advice to sell at a loss and live to see another day.

          1. dboz

            I think I will live regardless of how much money I make or lose. After all, it is only money.

            I suppose the metals and miners will go straight down forever at this point.

            I can wait the next 5-10 years to get back to even. Time is on my side.

      2. Don

        It’s not fair to suggest that Pedestrian is gloating. He has called gold both ways and been wrong at key turning points. There is no reason for him to gloat.

        1. Pedestrian

          Sorry to say but you are wrong. I did think it was possible gold could break out above resistance but I had enough doubt I sat on the sidelines. I never made a cent during this decline and just stayed away from bothering with gold all week.

          I never lost a penny either. That’s a win in itself around here.

          1. Pedestrian

            BTW, I see all your trades went in the dumpster (again). More money than brains I suppose. Fourty years of experience and you never learned a thing yet. Sad.

    2. Spanky

      I am a gold bug, but I have to acknowledge that if $usdjpy continues to rise long term, its is going to be extremely difficult to stay a bull in terms of USD gold price. And its not just gold, the whole commodity complex will get hit.

      The monthly $usdjpy chart does not paint a bullish long term picture for commodities and gold and silver, IMO.

  5. Don

    I am buying a little more crude this morning as well as some Canadian juniors oils. These positions are not for short term trading. There is too much bearishness by the MSM towards energy and world demand is rising, not falling. Any disruption on the supply side will immediately send crude up.

  6. Spanky

    $xjy and gld both approaching the 100 dma. Their daily charts look almost identical in terms of inflection dates and MAs.

    I imagine they will get some sort of bounce back up from the 100 dma. Probably all the way back to the 20 dma or maybe the 200 dma. That bounce will be shorted like crazy against the 20 or 200 dma. A move back down will then paint a giant head and shoulders pattern on both charts (both having diagonally sloping upwards necklines). Once those necklines break, it’s down we go. I think that head and shoulders on gld would actually project below Gary’s target, but maybe that lower rail of the triangle will be enough to create a large rally in both yen and gold.

  7. Spanky

    GDX monthly stochastics are now below 50 and headed lower but not yet oversold. The odds of them avoiding oversold levels and flipping back now up are slim and none. That means this month is definitely going to close red on the month and at best we get sideways consolidation in the 1-2 months thereafter. Those stochastics will hit oversold levels, one way or the other.

    Gary’s 17 target for GDX seems pretty realistic to me.

  8. Bigdaddy

    I just sold all my oil stocks. My contacts in the oil industry are now telling me that things are looking bad for crude. That’s not what they were saying a few weeks ago so I don’t know what has changed but I am out. Don, you are going to get slaughtered buying oil anything.

  9. Spanky

    Going into the June 14 FOMC meeting, any rally in gold or yen will be purely technical, to relieve oversold conditions. People are going to be shorting the ever loving crap out of both on any touch of a significant moving average.

  10. Don

    The dollar is down .4% today and commodities are continuing to be very weak. The inverse correlation between the dollar and commodities has broken down over the past few weeks which I think demonstrates that the dollar is not the primary driver of commodity prices.

    1. Gary Post author

      I’ve been saying for awhile that I think stocks are driving gold. As long as stocks are rising there isn’t going to be a lot of motivation to buy gold until the stock bubble is ready to pop.

      1. Pedestrian

        Well then if the stock bubble is going on for another two years that pretty much is an admission we are not in a bull market for metals. And its true. We are not in a bull market for precious metals. HUI has broken down from its triangle. For that matter, triangles are broken all over the place this week. It is a complete slaughter of the dream such that even a bounce when it comes will be suspect. I’m getting ready to buy anyway since you are correct we are almost there. Ass always though, these are not trades to marry. The bear is in control.

        1. Gary Post author

          Gold isn’t even close to breaking its triangle trend line. It will consolidate while the stock market finishes it’s bubble (maybe another 12 months). As the bubble becomes more and more obvious money will start to leak into gold and commodities as a hedge for when the bubble pops. The same as it did in 2000.

    2. Spanky

      Uh, forget about DXY/$usd/uup. It is not precise at all in guaging gold and commodities.

      Gold and commodities are driven by $usdjpy almost exclusively. Just look at the inflection points to see that this is true. Compare $xjy’s daily chart and $gold. The inflection dates are almost identical.

  11. Christian

    I’m a Gold Bug making moola trading DUST — no complaints here 🙂

    Folks, momentum will always be your friend and it’s important to be nimble.

  12. JJHarmen

    Can someone explain why all the major stock markets are at or near all time highs when the economy is no where near being as strong as it was at previous market tops? I do not understand what is going on.

      1. Christian

        It’s called ‘printing money out of thin air’, courtesy of the FED.
        It’s got nothing to do with Japan.

        1. Spanky

          lol, ok whatever bud. If the BoJ were to tighten dramatically, the US stock market is going to crash. Of course they will never do that.

          I expect at some point the BoJ will have to tighten, but that will coincide with the Fed loosening–these events will happen virtually simultaneously. Just watch.

      2. jskauai

        Spanky I agree it is that big gorilla monkeying with the use/jpy and using it to influence ALL!!!! markets with it.

    1. Gary Post author

      That one is easy. The stock market has very little to do with the economy. Plus the stock market is looking forward at the possibility of tax cuts which would be a huge bonus to the economy. I noted before that the GDP number is a backwards looking number and is meaningless. the market is looking forward. Then throw in 7 years of QE and you have the fundamental reason for why the stock market is going up.

  13. Kruzoe

    Some people on this board serve as my sentiment confirmation :-). No need to peruse the chart. You know who they are.

  14. Spanky

    As long as the Fed is tightening relative to the BoJ, the US stock market will continue to grind higher and higher and commodities will continue to grind lower and lower.

    Yes, corrections in the yen like in 2016 can lead to major rallies in gold and commodities, but that’s all it was, a major correction in an ongoing bear market in commodities and bull market in $usdjpy.

    If the BoJ were to start tightening, the commodity bull will come back. Based on the monthly $usdjpy chart, that seems highly unlikely.

  15. dboz

    Third time I am going to say this about oil. It will never again get above $70. It costs too much to extract relative to price and there is no money to be made. Very little GDP growth comes from oil any longer. Fracking has ruined the market. The price is stuck and likely to only go down. For the OPEC nations they need to pump more to balance the lower prices. When they pump more the price drops further so they are stuck. So they say they are cutting back and then price rises, then the FRACKERS can jump in again which leads to a glut again. The cycle is not going to change.

      1. Gary Post author

        Sentiment is getting close to a yearly cycle low for oil. We’re going to go through this all over again. I’ll be the only one bullish and everyone will think I’m crazy and that’s when the Cycles will reverse and oil will go back up. Human nature never changes.

    1. Spanky

      Nah. Never say never. you sound like Gartman.

      I will agree though that as long as the BoJ keeps the yen spigot open, oil is going to have one hell of a headwind in addition to any overcapacity/debt concerns. Sure, it will rally from time to time, but some incredible new bull in energy is highly unlikely with the Fed and BoJ keeping current monetary policy in place.

      I do think that oil tends to lag the general commodity markets somewhat. For example, the massive drop coming into 2016 was nothing more than oil finally catching down to the broader commodity complex.

    2. jskauai

      Trump and his swamp team will make gasoline great(cheap) again! Ronnie Raygun had gas @59 t0 69 cents for awhile. Oh the good ole daze!

  16. Don

    JJ: With central banks (with unlimited funds) and corporate buybacks competing for the same stocks, the concept of true price discovery has gone out the window. I am only speculating but there may be power struggle going on for control of the world’s biggest corporations. The BOJ already owns a huge percentage of Japan’s biggest companies and has achieved that goal by simply creating what ever amount of money needed to do the job.

  17. Spanky

    Yen is bouncing back today, finally. Expect gold and silver to get some sort of relief here.

    Again, when this rally in yen is over, the rally in gold and silver will be over too.

        1. MegaMind

          thank you for that… I will watch it closely… I am expecting macron to win the elections and that would put a floor under euro… if euro rises could it take the yen with it?

          1. Spanky

            Its risk on risk off. I personally think the Euro has next to nothing to do in driving markets, at least the US stock market and commodities.

            Hard to say if a macron victory is baked in already to the yen.

            It could be that yen’s rally will be very short lived and will end with a Macron victory. However, I think any yen strength at this point is 100% purely technical in nature. The medium to longer term direction in yen is down, and that will continue to put a floor under the US stock market at worst and at best will drive it ever higher.

  18. MagnuM

    It’s so frustrating watching Bitcoin soar effortlessly. It seems to be doing what gold should have been doing all along…

    1. Don

      Bitcoin can be moved effortlessly to almost anywhere by anyone who wants to get out of a country (like China) and take their money with them. Gold is not so portable. That said, I wouldn’t be so sure that bitcoin will not one day just disappear, abruptly, by actions of governments.

    2. jskauai

      That is part of the mind control game. See you don’t want to buy physical stuff you need to buy that valuable digital stuff. What a clever gorilla!

  19. Don

    The one central bank that has stopped stimulating with printed money, is the FED, which is why I expect we will get a major correction in the S&P, sooner than later. The small cap stocks are not doing well compared to the heavy hitters like Google, Apple, etc. I think that may offer a clue as to where the market is headed.

    1. Gary Post author

      Stocks are starting their bubble phase. The major correction came in February of 2016 at the 7-year cycle low. Don’t expect another one like that until after the bubble pops.

      1. Robert

        It seems you have no fear whatsoever in holding onto your miner short position DUST even through the DCL. I guess you are confident that the bounce will be very feeble and wont affect DUST in any meaningful way

        1. cazabrujas

          What DCL? Gold just confirmed the break of the trend line today. At most it would tag the trend line briefly.

        2. Gary Post author

          I don’t think I can time the exit and re entry. So I won’t try. Once gold gets oversold on the weekly charts then I’ll start looking for a bottom.

    2. Spanky

      Again, the Fed tight with the BoJ loose will move $usdjpy higher and higher. As long as $usdjpy moves higher, so will the US stock market. Simply put, people are borrowing massive quantities of yen and buying US stocks.

      $usdjpy is due for a bit of a pullback/consolidation, so expect the US market to be under some pressure. If $usdjpy continues to move higher though, so will the US stock market.

    3. Christian

      Sorry but wrong! Don’t be so naive Don 🙂 The FED is very much in control of the situation and it’s got nothing to do with the ‘yen carry trade’ as suggested above by ‘spank the monkey’, or any other nonsense you might read up on some obscure blog, hiding in the darkest corners of the internet.

      1. Don

        Christian, in America, QE has ended whereas in Europe and Japan, their versions of QE have been ramped up. The FED is tightening while the ECB and BOJ, are not. The FED may be “in control” but they are not directly buying into the American stock markets. And, please don’t give me any nonsense about the PPT keeping the markets propped up.

      2. jskauai

        “got nothing to do with the ‘yen carry trade” Oh really? had me it bit confused there glad you cleared that up.

      3. Spanky

        You are an absolute idiot. The Fed and BoJ coordinate monetary policy. The BoJ does the Fed’s bidding.

        In 2013, when the Fed announced QE3, gold and silver proceeded to tank.

        Why? because literally a day later, the BoJ announced a gargantuan QE that dwarfed the Fed’s. That sent $usdjpy skyward and gold and silver and commodities down. The Fed knew that. That was why they could confidently announce such a huge QE program without sending commodities up along with the US stock market. They know that if commodities start rising, input costs for US corporation with go up as well and kill profits.

        1. Gary Post author

          I doubt it had anything to do with BOJ QE. More currency equals more inflation. But I have argued that manipulation of gold during QE did prevent the rest of the commodity complex from soaring during QE3.

        2. Christian

          Calm your Tits down Spanky wanky 🙂

          What we’re seeing in today’s Market is the RESULT of QE. Once a freight train starts to gain momentum, it doesn’t just stop dead in its track because the FED said so.. QE will continue to reverberate across the Market until the bubble pops. Everything trying to explain this phenomena is what I call ‘window dressing’ for the average retail trader — that would be you Spanky.

          As for precious metals.. Gold and Silver were suppressed all these years to satisfy a political agenda. Stop listening to the bobbleheads.

  20. Jimsee

    yes , the feds/fed reserve can print until infinity, but everything is being degraded at an accelerating pace – even technology cannot keep up with the financial curve of destruction – so things like middling health care costs an entire family net worth/income. this will fall but will it kill all of us or our accounts first? making a billion dollars is meaningless if the end-game is some form of confiscation. So reveling in trading the markets well at this point is nearly meaningless unless you are focused on the end game.

  21. JJHarmen

    Guys, thanks for your responses! I appreciate the feedback. Your very different viewpoints are something to think about.

  22. Don

    Apple, Facebook, Microsoft and Amazon are all down today with only Google pushing higher. The the advance decline numbers are 2 to 1 in favor of the the decliners. The S&P is only down .03%. The whole picture is seriously out of whack.

  23. jake

    Wouldn’t consider oil long term until it retests at $31, just to unpredictable to trade.

  24. JJHarmen

    The S&P has been trading within a very tight range of only 14 points for the sixth day. That has to be the machines at work buying and selling precise amounts at precise times.

    1. Gary Post author

      Stocks are forming another coil ahead of the election. I have an idea how it will play out and I’ll cover it in the weekend report.

      1. HomerJ

        LePen has 39% of votes in latest estimates, but if she wins (remember, Brexit wasn’t going to happen.. right..) then expect markets to tank and VIX above 20.

  25. Spanky

    GCC (unweighted commodity index ETF) just hit its 61.8% retrace off of the January 2016 low. If commodities can’t bounce here…

    GCC was created to track the old $CCI index, which IMO is a better measure of the commodity complex since the commodities are equally weighted, unlike the CRB where oil given disproportionate weighting.

    Not saying we have hit a bottom in commodities by any means, but a bounce?


  26. theworldwithoutfacebook

    Nice work Gary, You’ve swayed me enough to stay out of miners during the downturn. I think 1175 level will be the spot to get long.

    1. Clarence

      I would like to echo those sentiments. Good job Gary. Money saved, is as good as money earned.

  27. jake

    “when gaps occur after an extended advance, they are called “exhaustion gaps,” and they can signal desperation among investors to chase the prevailing trend. For individual stocks, these gaps are sometimes just temporary areas of consolidation. For the overall market, however, they tend to have far more hostile outcomes, particularly when they are associated with record highs, rich valuations, lopsided bullish sentiment, and deterioration in the uniformity of market ”


  28. cazabrujas

    Gold sentiment is still at neutral after today’s action, so we haven’t really seen panic selling yet, at least according to sentimentrader.com

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