107 thoughts on “STOCK MARKET CORRECTION: GOLD BOUNCE

  1. Christian

    Gary — We keep waiting for a sizeable correction in Stocks and it’s just not happening.. Not only that, but once the bubble phase kicks in, cycle analysis will become irrelevant. The only strategy one should employ at this point is “old turkey”. The FED will continue to have your back no matter what 🙂

    1. Gary Post author

      Yes I’m very close to just going Old Turkey in stocks. I’m hoping we get some kind of pullback next week. After that I’ll probably just convert to Old Turkey.

  2. Emptyness

    @gary
    I like your analysis of gold. Typically gold rises after rate hikes. So the cycle low should be around middle or end of june, after the FOMC meeting. Do you agree ?
    Furthermore you expect higher gold prices in the second half of 2017. At the same time you expect a bubble in the stock market. But you also said the bubble has to burst, before gold is able to rallye. Sounds like a contradiction ?
    Greetings from germany !

    1. Gary Post author

      What tends to happen is smart money will recognize the bubble forming in stocks, They will start to buy protection for the time when it does pop. That will put a floor under gold, but won’t necessarily produce a big rally as most of the capital will still be flowing into the stock market. But some of it will flow into gold as an early preparation for the hard times that will follow when the stock bubble pops.

  3. Christian

    Also worth mentioning: If any of you were thinking about buying some Silver bullion, now is the time. Current Gold/Silver ratio is at 75:1 — It don’t get any better than this 🙂

  4. Robert

    This is a very strong bounce for gold miners. Gary it looks like your analysis could be wrong. If this was just a dead cat bounce miners should not be running so strong

    1. Gary Post author

      People keep telling me I’m wrong, but in the end I keep being proven correct.

      I warned this would happen. The metals would bounce and eveyone would buy into it.

      The market is doing exactly what I told you it was going to do… and you are behaving exactly as I predicted you would behave. 🙂

    2. Christian

      Calm down Robert! Miners showing a bit of panache does not mean Gary’s Analysis is wrong. Everything is playing out as expected 😉

      Lean back, close your eyes and let it happen big boy. You won’t be disappointed.

  5. primetime

    Gary and Christian,

    Wait a minute. You seem to be getting impatient. You were expecting a SM pullback, but it is not happening? You HOPE it will, or you will just go old turkey. HUH What about your charts and all the other technicals, sentiment etc?

    Why the impatience and desperation…if the nasdaq is going to 10,000-20,000 you will not miss out. There will be plenty of time to catch the run. Something seems off here with this logic. Metal FOMO, nervousness, what is it?

      1. Christian

        I live just outside Gary’s house in a tent 🙂

        And yes, for the most part my analysis is very much in line with his, but I’m a lot more proficient at timing my trades.

    1. Gary Post author

      Let’s assume I’m right about the Nasdaq going to 10,000 or higher (I am). What’s the worst thing that can happen?

      That’s right, you can miss the whole move because one sits on the sidelines waiting for a correction that never comes. It’s not the gold market that we have to worry about getting left behind at the train station, it’s the stock market.

      So at some point it’s better to just get in and quit worrying about a correction. If it happens right after you jump in, so what? Does it make any difference really? The market is still going to 10,000 so any correction will be short lived. You’ve traded the risk of having to endure a short term drawdown for the protection of not missing any more of the rally to 10,000.

      At some point I think one has to make this decision to just not miss any more of the rally and quit worrying about pullbacks.

      1. primetime

        I have said that for months with the metals about having a long term big picture. You will take that approach now with the SM, but not PM. Like the book says, buy right at the top of the SM and never pull the trigger at the low point of PM. That is why most will not make money off this bull.

        1. Gary Post author

          No question it’s a bull, but metals aren’t at the low of the correction yet. That won’t come until June.

          As you can see sentiment is nothing like what we saw back in Dec. That’s what an ICL should feel like. Right now everyone is quick to jump on the rally. We’re hearing all kinds of nonsense about being left at the station. Or going to the moon.

          That’s not the kind of sentiment that happens at ICL’s.

          At ICL’s traders are terrified. They can’t pull the trigger. They expect lower prices, not getting left at the station.

          Trust me when the ICL comes I will be the only one interested in going long and everyone else will think I’m an idiot. No one will be worried about getting left at the station.

          FWIW we are seeing ICL type sentiment in energy right now. No one wants to buy. Everyone expects lower and lower prices. If you want to buy at a bottom this is the sector you should be looking at right now.

          1. primetime

            As we have discussed previously on this blog, I am already long in energy with several different, moderately sized positions. I do appreciate your info, or why would I waste my time here?

          2. Gary Post author

            We still have to produce a failed daily cycle and at least an ABC correction.

            We aren’t done yet.

            I have to wonder how many times we have to go through this. At every turning point the crowd tells me I’m wrong and almost without fail I’m proven right in the end.

            At the top 3 weeks ago everyone said I was wrong. Well we know how that worked out.

            I’ve prepared eveyone for this bounce, and yet every one is still going to do exactly what I predicted they would do and get suckered in too early.

            This is how markets work. 90% always have to be on the wrong side of the market.

            I suspect even if traders had a crystal ball and knew what the future would be they would still give in to their emotions and rationalize that the crystal ball is probably broken. 🙂

            I’m your crystal ball. 🙂

  6. Ed

    Looks like we have a seriously troubled president. Trump like a lion in cage while these MSN Hyenas circling around the cage. It is like if you throw so many mud balls one of them will stick. What is he talking about “tapes” this morning? Now all his domestic agenda took backseat how can S&P keep going up? And what’s deal with bit coins?

  7. Robert

    Ok, Gary you just sound too confident. Anyone who usually is overconfident ends up being wrong but I will wait till June/July to buy miners

    1. Gary Post author

      I sounded confident at the Dec bottom. Was I wrong?

      I sounded confident at the top 3 weeks ago. Was I wrong?

      What I am is a contrarian. That means at turning points I will always be on the other side of the market from everyone else. Right now how are 90% of the people here positioned? Long and questioning my call that this has further to go yet.

      They are doing exactly what I said they would do.

      I’ve laid it out for you in the video. Stocks need to correct for a few days and gold should bounce. Then you need to buy with both hands, not in metals, but in stocks (or energy).

      This time try being a contrarian instead of following the crowd. You will make more money.

  8. Gary Post author

    After today short term sentiment should be excessively bullish on miners. That should trigger at least a day or two pullback early next week before a final pop into the cycle top. Then look out below once the stock market breaks out of the consolidation. The metals will roll over and finish the ICL correction as money floods back into stocks.

    1. Gary Post author

      No idea if this will play out, but as of right now GDX has formed a narrow range potential exhaustion candle with the 5 day RSI overbought. GLD is also forming a potential exhaustion candle.
      If stocks fail to produce a correction and instead breakout then we could get scenario #2 where gold continues down and breaks the March low in a stretched daily cycle. In that scenario we could get the final ICL by the end of May. Otherwise it will require another daily cycle with the final ICL coming in June.

      Just something to keep tabs on as sentiment was getting pretty bullish on miners today and the 5 day RSI reached overbought. Both of those are bad during the declining phase of an intermediate cycle.

  9. Don

    So far today, the advance decline ratio is once again skewed in favor of the declining stocks. The market is correcting internally but the big five are obfuscating what investors are seeing via the S&P index. Apple is up 1.5% and Amazon 1.18% this morning. Crazy. Without those two, the markets would be down much more today. The bubble is taking place with just a very few stocks Alphabet, Apple and Amazon accelerating upward.

  10. matrix

    gold is in ABC down correction. So only wave B up will go to a certain level (say 1460)…….How ca you say its a bull mkt….There will be a WAVE C down….!!!!!to further lows below December lows….that Wave C will be devastating. We are only going to bottom WAVE A ……in June….!!!!

    1. Gary Post author

      The intermediate cycle is right translated. There is very little chance of gold moving below the December low. My working hypothesis is that gold is forming a triangle consolidation and so far nothing has happened to change my thinking.

  11. dboz

    Once again, the market set up a gold run today and it did not happen. 10 year creamed, dollar smashed, USDJPY plummets, gold barely flinched. Looking more and more likely we are in a bear market. If all that can’t spark more than a $5 rise a big drop is much more likely. If you can’t go up you go down.

    $.50 upmove in USDJPY tank gold $20, a $.50 down move lifts gold a few bucks. Once again, the stench smell is in the air. Debating using stops here, Gary is looking to be right on top of this one. He smelled the rat.

  12. Bigdaddy

    I held SQQQ overnight and now I am getting kicked in the teeth. Why is Apple up so much? I don’t get it. I will sell at the end of the day and take a loss unless the Nasdaq close down.

    1. Gary Post author

      For heavens sake quit trying to short the bubble phase in stocks. That has to be the single most dangerous strategy in the world.

      I’ll say it again. If you want to make some good money just buy energy stocks, don’t worry about trying to time a perfect entry, and just hang on for 2-3 months.

        1. Gary Post author

          I’m going to be correct on energy just like I have been on everything else. While most people are worried about perfect timing I just get in and then hang on until the move I’m looking for is complete. At the end of the day I end up making a lot more money than all of you short term traders trying to time every move perfectly.

          1. Gary Post author

            Currencies have done exactly what I predicted. They just took longer than I thought to do it. Bonds are forming a bear flag and I predict they will break down sometime this year. Again doing what I expected but taking longer than I thought.

            Energy has been a tough one, but I think we’re about ready to turn the corner on that one.

        1. Gary Post author

          That’s what I’m talking about. You guys constantly fret over trying to time a perfect entry. Meanwhile I just get in and by the time the intermediate top has formed I massively outperform all of you.

  13. Don

    BD: I hope you understand that the QQQ tracks the Nasdaq 100 which is basically a technology index and that Apple alone comprises over 12% of that index. Apple, Microsoft, Amazon, Facebook and Alphabet which together make up almost 42% of the QQQ ETF.

    With SQQQ, you are essentially making a triple leveraged bet against the big five and they have been very hot. Good luck.

    1. Bigdaddy

      Holy sheep shit! I thought I was shorting the stock market with SQQQ and now I find out I was shorting the best companies in the US. Don, thanks for the enlightenment but aren’t those big companies ready for a dive if they are so over-bought? Maybe I should buy more SQQQ.

      1. HomerJ

        Nah,that does it, I don’t buy that you are being serious, there isn’t anyone in the world who’s retarded enough to not know this shit. Bigdaddy, you are just being funny, so unless you post a trading summary from your account (screencap), no way this can be real.

        And if by some chance it is, then you are utterly retarded and should just give your money to a dog shelter and disappear forever in your basement.

        1. Bigdaddy

          Piss off Homer . I will do what I want with my money. I am trying a new day trading technique and not holding a position on am ETF that is down on the day is part of the plan. I have just not hit a winning streak yet but I will and it will be one big win that will make up for a bunch of small losses. Again, I say piss off.

        2. Gary Post author

          A warning. If you are day trading then you are never going to have a huge win that makes up for all your losses. You can only score small wins. If you intend on holding long enough to produce a big win then that also means you could end up holding long enough to produce a monstrous loss.

  14. Don

    If Gary is correct about an upcoming dramatic rise in the SM, it may have already started. Look at the Nasdaq composite chart and the Nasdaq 100 chart and you can see they appear to have broken out almost three weeks ago. I think it’s just a blow off that will end soon but that is just my opinion and I am biased as a bear.

  15. Don

    LOL. If gold drops as he is predicting, he will be back with a vengeance. If it goes up, well, he will say he said that could happen and right again.

  16. Robert

    Miners still looking very strong. Very strong for just a dead cat bounce and gold hasnt even really bounced yet. GDX could gain back more than half of its losses which is what is making me doubt any major new low as Gary has been saying. Maybe slightly lower than 21

    1. Gary Post author

      LOL and three weeks ago everyone was saying that any correction would be mild. Right after that miners lost 16% and briefly dipped below the March low.

      I’m trying again to prepare traders for what is coming. Once this dead cat bounce is over and everyone has been suckered into the long side prematurely the miners are going to roll over and they will be driven below the December low.

      Either prepare for it or get caught in it. And for those of you that got caught and ignored me at the top 3 weeks ago this is your chance to get out with minimal losses.

      1. Christian

        Gary — Don’t you get it? You’re always kinda wrong. In fact, the only person that’s been on point and ahead of the herd is – yes you’ve guessed it – Pedo, our resident EXPERT on.. everything you can imagine, Lol 🙂 Everyone else is just clueless.

        In Ped we trust I say……

    1. dboz

      Amazon and Google are looking ripe to pull back now. Could time out well next week to get a little volatility in the SM and push the PM gas pedal a little.

  17. Goild

    Today has been a very slow day.
    Nevertheless I made twice lunch money.
    Just do not get emotional, play small, obey the candles all over, and enjoy the daily profit.

    But please do not miss then next big bottom and bounce.

    Oh, nothing speaks so loudly of the character of a person than when she/he is criticizing someone else.

    Good trading to all.

    1. JJHarmen

      Goild, I was wondering if you were still making lunch money everyday. You has gone quiet there for a while. Now you are back and making twice as much lunch money as before? It just keeps getting better.

  18. Goild

    JJ,

    I have been in introspection on my trading and understanding why I make mistakes here and there, and finding ways to effectively deal with them.

    Once one covers the basics, it is about nearly 100% psychology.
    The enemy is not the market by the dark oneself.

  19. Goild

    Jj,

    Oh, the last two weeks I have made lunch money every day, except last Thursday, last week, when I allowed myself to have a big loss. So I am recovering.

  20. Goild

    That Thursday I was holding like 15K JNUG shares, losing, $23K, and sold them at $13.75.
    I did not take the heat. This is the second time it happens. Last time was on the big drop on February 27th.
    It is mostly psychology.

  21. matrix

    COT REPORT……….Commercials net short 157K…..minus 43K……down from 200.Llarge Specs. 222K ….minus 48K…down from 270K. Futures + Options.

  22. matrix

    FYI…..going into December 2015 low in GLD at 100.23, we hag a COT report in November 2015 , NET SHORTS FROM COMMERCIALS…of 25K contracts…!!!!! today still 157K…way to go…!!!

  23. dboz

    Something to ponder. I think Don mentioned this before.

    In fact, the market cap of the S&P 500 has risen from $19.5 trillion to $21.3 trillion during the last 29 months. But just five NASDAQ stocks (“Big 5”) consisting of Microsoft plus the FAANGs (less Netflix) account for 56% of that $1.8 trillion gain.

    Stated differently, the combined market cap of the NASDAQ “Big 5” has soared from $1.9 trillion to nearly $3 trillion since early 2015, or by 55%. That compares to just a 4.5% gain in the aggregate market cap of the the other 495 S&P 500 stocks during that period.

    1. dboz

      Where are you surmising this from? Many miners are way cheaper now at much higher metal prices than when they epwere much higher at much lower metal prices. Not to mention thay are still the cheapest now that they have ever been in history.

  24. Steffmeister

    I am not so sure about the US Stockmarket. Here is a call from “The Bond King” Goundlach:

    It’s a bold call, to say the least…

    But Gundlach has a history of nailing calls like this.

    At last year’s Sohn Conference, he told investors to short the Utilities Select Sector SPDR Fund (XLU) and buy the iShares Mortgage Real Estate Capped ETF (REM).

    If you had taken Gundlach’s advice, you’d be up 40% on this trade today.

    Gundlach was also one of the few people to predict that Donald Trump would become president of the United States. In June, he told CNBC:

    People aren’t getting along, they’re not happy because of technology taking jobs, and sort of this long, slow grind of a new economy. And so they’re looking for change, and I think Trump is going to win on the basis of that.

    Gundlach doesn’t think you should get out of stocks completely. Instead, he thinks you should “go long” emerging markets.

    These are countries that are on their way to becoming “developed” countries like the United States. Brazil, Russia, India, and China (also known as the “BRICs”) are the largest emerging markets.

    On Monday, Gundlach told investors at the Sohn Conference to buy the iShares MSCI Emerging Markets ETF (EEM), which tracks over 800 emerging market stocks.

    It’s one of the safest and most diversified ways to play emerging markets. Of course, you would have already known that if you’ve been reading the Dispatch.

    • After all, I’ve been pounding the table on emerging market stocks for months…

    In February, I outlined the bullish case for emerging markets. A month later, I told investors to “forget about US stocks” and consider emerging market stocks. I even recommended checking out EEM, just like Gundlach.

    Not only that, Gundlach likes emerging markets for the same reasons we do. I’ll share those with you in a moment. But let’s first look at why the “Bond King” thinks you should short the S&P 500.

    • US stocks are incredibly expensive…

    It compares the total market value of the S&P 500 with the annual economic output of the United States, as measured by gross domestic product (GDP).
    This key ratio is now at the highest level since the dot-com bubble.
    • US stocks aren’t just expensive from a historical perspective, either…
    They’re also much more expensive than emerging market stocks. Gundlach explained to CNBC on Monday:
    The valuation of emerging markets is half the valuation of the S&P 500 when you look at things like price to sales, price to book, [and] Dr. Shiller’s CAPE ratio.

    Dispatch readers know CAPE stands for cyclically adjusted price-to-earnings. It’s the cousin of the popular price-to-earnings (P/E) ratio. The only difference is that it uses 10 years’ worth of earnings instead of one. But just like the P/E ratio, a high CAPE ratio means stocks are expensive.

    You can see below that the CAPE ratio has surged to 29.5. That’s 76% higher than the S&P 500’s historical average. US stocks have only been this expensive two times in history: just before the Great Depression and during the dot-com bubble.

    Meanwhile, the CAPE ratio for EEM is floating around 14, meaning it’s 52% cheaper than SPY.
    • To be fair, emerging market stocks have been cheaper than US stocks for years…
    And they’ve still underperformed them.
    But that’s starting to change.
    It compares the performance of the S&P 500 with EEM. When this line is rising, it means US stocks are doing better than emerging market stocks.

    You can see that’s been the case for years. But this key ratio just broke a long-term upward trend line.
    This tells us that emerging market stocks should outperform US stocks for years to come.
    • If you haven’t already, I recommend you pick up some emerging market stocks today…
    The easiest way to do this is with EEM or another major emerging market fund.
    These funds will give you broad exposure to emerging markets.

    Once you build a core position in emerging markets, you could consider investing in individual emerging markets. Right now, three of our favorite emerging markets are Poland, Colombia, and India.
    As for US stocks, I wouldn’t encourage everyday investors to short the S&P 500 like Gundlach recommends. Instead, I suggest you be very selective about what US stocks you own.

    Avoid stocks trading at nosebleed valuations. Own companies with resilient business models and little debt.

  25. jacob2

    Emerging markets are like the SM on steroids and correlated. My biggest winners over the last year have been emerging market stocks: MMYT India, TCEHY China, MZOR Israel, BZUN, China. Will continue fishing in these waters.

    1. RTTPD

      I believe the blog belongs to Gary – so I dont see him leaving.

      I have to commend him too, for his level-headedness.

      I’ve watched people take shots at him daily….and never a bad word or an angry response back.

  26. dboz

    Silver looks ready to launch. It only needs to get to about $17.75 or so to break the long term down trend line off the 2011 highs.
    https://www.tradingview.com/x/3orBIK1D/

    This is setting up just like the GSR before the last launch. Spike higher out of the triangle and then silver takes off and brings the GSR down propelling both GOLD and SILVER to ALL TIME HIGHS.
    https://www.tradingview.com/x/0in3vg8K/

    Weekly on silver in Euros.
    https://www.tradingview.com/chart/SgNWm0XV/

    Weekly on silver in Rupees.
    https://www.tradingview.com/x/9F0nB9LR/

    Weekly silver in RAND.
    https://www.tradingview.com/x/xIIScq7c/

    COT report has looked at lot better after the last 3 weeks.

    I still see the scenario for a rejection one more time but the time is running out and a break down here will pretty much end any chance for a bullish scenario on any near or middle term time frame IMO.

    Couple that with this gold chart and possible channel formation and I think things are still looking very bullish near term.

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

    1. Gary Post author

      I warned you what was coming. You are going to get your chance to exit some of those losing positions next week. You can either take it or remain on the slope of hope and ride this all the way down into the bottom in June.

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