176 thoughts on “GOLD – SHORT CYCLE NOW IN PLAY

  1. Spanky

    Dow putting in another weak candle today.

    However, with the yen getting hammered like it is, it probably will make my top call last week look silly in time (big surprise). Maybe Trump’s tax plan sends the Dow to Uranus.

    I think the MACD on the daily is worth watching here.

    http://stockcharts.com/h-sc/ui?s=%24INDU&p=D&b=5&g=0&id=p87093736882&a=546938562&listNum=1

    Also. commodity complex (GCC) is breaking down slightly out of its triangle today FWIW. As long as the yen is under pressure, so will commodities. Someone let me know what the downside is for the Fed in this game–as long as they stay tighter than the BoJ, they will drive capital into US markets via yen carry and simultaneously pressure commodities. It’s the perfect storm for US equities I suppose. If the July low in commodities gets broken, it will probably lead to a short term spike lower. At that point the January 2016 low should come into focus. The Fed serially flooded the world with liquidity and is now tightening. Yet stocks appear poised to rise through it all. Heads I win, tails you lose.

  2. Gary Post author

    Now we will see traders jump in too early just like they did in July.

    They will end up panicking out at the bottom in October.

    Human nature never changes…. and no one ever listens to me at tops and bottoms.

  3. Gary Post author

    Whether or not gold bounces here will depend on if the yen bounces off that IC trend line.

    The larger intermediate trend is in place though and won’t bottom until the counter trend moves in currencies are finished.

  4. Spanky

    This gap and crap candle in GDX in early July has been hanging over this entire rally. Would not be shocked in the least if it is revisited. If GDX just knifes through the 100 and 200 dma, it will really just suggest that the rally out of July was just a headfake to generate some airspace for the traditional ridiculously overdone shakeout the sector is known for (think early January 2016).

    http://stockcharts.com/h-sc/ui?s=GDX&p=D&b=5&g=0&id=p96959353755&a=546942101&listNum=1

  5. JJHarmen

    I have a buy order in for GDX at 22.99 and they missed me by one penny. Before everyone gets down my neck for wanting to buy early, I am accumulating for down the road , not day trading.

  6. Gary Post author

    The yen is bouncing off that trend line today. This should give the metals a chance to bounce and suck in longs prematurely before starting the next leg down.

    For those willing to short. Let the yen bounce for a few days then get short the metals.

    1. Spanky

      No one is buying here except shorts possibly covering. Yen is below the 200 dma. Any slight bounce whatsoever will be sold. Same with gold now. You would need to get gold back above the 20 and 50 DMA to sucker longs in. Isn’t going to happen.

      1. Pedestrian

        I am a buyer Spanky. Gold and miners are going back up. We got the bounce-back on yen I was looking for and the setup is very nice but it may take a few days for the real launch to get going. Yen also breached the primary support I identified earlier today but its just a candle overshoot in my books. If you chart using the candle body then no problems at all. We will know by the end of the day where we stand there.

  7. roadrunner

    On the assumption that Gary is going to be be right about gold cycle being in an intermediate decline, it would be best to follow his advice. That is, unless you are buying for long term or only day trading both directions stay out of the metals until the IC bottoms. If you want some understanding of what happens if you ignore, we’ll go read the blog from Dec 25- 2009-Feb 5 2010, same dates for 2010-2011.
    Suffice it to say, you don’t want to be moving into Gary’s basement.

  8. Jimsee

    This is why I like Gary’s work on gold – I have OCT 9th (6-9 – weekend problem) as a key date that *happens* to line up with a moon cycle – sooo….Gary likes MID-LATE OCT – if we independently come to close cycle calls the odds are extremely good and a 2 week extension on options is nothing when u buy 3 months or so out to cover both cases.

    The payroll report is usually good for volatility and often turns as well – so hopefully we get a slap UP to suck in some…then lower the boom next week.

  9. Pedestrian

    So by now its pretty clear to all present that the dollar and euro will indeed reverse direction.

    If you subscribe to that idea you will no doubt want to consider what that means for gold since another cycle higher in the dollar (which seemed totally unlikely to some analysts just a short while ago) implies that precious metals will also trend down as the dollar moves up. It also warns that a multi-month decline is in the works that could take us all the way out to middle 2018 or later.

    So no January gold bounce in other words. No seasonal metals strength.

    This comment naturally refers to the very large patterns in play. The macro in other words as opposed to any short or medium term tradeable action. I need to make that clear since quite a number of people here are unable to discern between trends and trades or between forecasts and actual stock market bets.

    So when I say “trending” this refers to the general direction of gold over a period of up to a year and is not something most people here could even trade if they wanted too. And this commentary also has nothing to do with my current trade which is bullish until we reach about 1400 dollars where I believe the decline will commence.

    Anyway,

    The dollar has now been in decline for most of the past 10 months. The rise that preceded it lasted for a similar length of nine months. So we should not be surprised at all if this next cycle-up takes as long or more to complete and that is going to feel like an eternity to anyone holding miners “Old Turkey” or anyone waiting for good entry points on gold.

    In fact, it will feel like exactly what it is which is a continuation of the bear market that began in 2011.

    This has been my assertion all along. Gold runs in 7 or 8 year cycles and so none of this is really a big surprise. It was entirely predictable all the way back in 2011 when gold peaked and indeed, I did make such a prediction back then.

    We did not enter a new gold bull market in 2016 as some keep claiming since that would have been far too early. And we did not break free of the bear market with that brief rise above the 7 year bear market channel this past month.

    Just keep this important idea in mind folks. Gold will have another bitter leg down if the dollar indeed goes into a cyclical rise that lasts anywhere near as long as its 10 month fall. I am not writing this to frustrate anyone here either. It is just what the objective conclusion will be should the dollar and euro reverse here as predicted. It is also what should be expected on a commodity cycle.

    So there are no tricks or sleight of hand involved in this forecast!

    This incidentally is a rather unusual topping pattern for the euro. If you will examine the daily chart you will notice that the first signal we got that price was stalling out came with a candle in early August that was unable to reach the top of the existing multi-month channel. That channel since January was little more than an oversized bear flag btw.

    That signal was almost two months ago. The failure of the euro to meet the channel was our warning that a top was going to be formed. I am sure nobody thought it would take this long to make itself known though.

    So this reversal we are now seeing confirmed actually began quite some time back and is very extended as far as consolidation tops go (two months in the making already). To me that is a warning that the rise that follows will either be steeper/stronger or longer lasting than most might imagine possible. Its significance should not be underestimated nor should the implications for how deeply precious metals fall in consequence.

    I won’t claim to know where the bottom is going to land since that just upsets people but it does look like we will lose a lot of ground with a dollar running up to 1.10 or higher. I just want to point out that big tops often mean big moves and the larger the patterns, the larger the conclusion to those patterns.

    So where we are at now is that this topping process could run for almost another month before the euro actually takes a bow and dives taking gold with it. During that time almost everyone will not understand what the hell is happening and might easily begin to doubt we will get the reversal at all!!

    I want to assure you though that it is coming. The euro is going down hard and dollars are still in an ongoing bull market which means by definition that gold’s long bear is not quite finished yet. So don’t get complacent while the consolidation completes or you will be unprepared when the fall arrives.

        1. Pedestrian

          Hit submit by accident! LOL

          Anyway, my bet is gold is going to rise here as already enumerated in several posts on the prior thread and that the rise will take us to at least 1400 dollars which is a number higher than golds peak in 2016.

          That will appear VERY bullish to gold investors and get almost everyone on the wrong side of the trade before prices head back down. So a trap in other words. I expect COT’s to meet or exceed their all time record extremes we saw during the summer of 2016 in the process.
          ————————————-

          The post above which has a much more bearish outlook is NOT A TRADE.

          It is a forecast based on an ongoing pattern I have been watching for several years already. The whole idea is just to know where the trending direction will take us based on other correlations such as the dollar. I cannot trade without an outline of my expectations in place and this one seems very likely to me.

          It warns we should not be taking long buy and hold positions in miners for most of the coming year as the dollar resumes its bull trend. The inverse relationship between gold and dollars is one of the longest standing correlations we use and has been reliable in offering forward guidance.

          That does not mean the correlation will not break. They can and do however all things being equal today this is what I see coming. My very long term forecast is for gold to fall all the way back to 950 for a final bottom although time is running out for that to happen anymore.

          At the moment the lowest price I can see is the low 1100’s as a final bear market bottom.

    1. Strike2

      Pedestrian,
      Thanks for your thoughtful comments. I find fascinating that your T/A predictive price path for PMs is the inverse of the cycle predictions we see here.
      Gary says we drop down further into the 1200s (maybe testing the July low) before resuming the bull move in earnest; you say we soon reverse back up to 1400 before possibly testing new bear market lows.
      As a long-time T/A user getting his feet wet with cycle theory, it doesn’t get any more interesting than this.

      1. Pedestrian

        We can only wait and see what happens next. I am onboard for gold to rise at this juncture. Not sure if Gary is staying out, staying long or going short but I am short term bullish. If I am correct though and gold does rise into the 1400 region I would urge everyone here to consider their options since the move that follows will take us back down at least 300 dollar from that top by my estimate.

  10. Lenapowich

    I guess I should be worried about GDX being down but I think the US dollar is getting ready for more downside and that should help gold so no worries. In fact, I hope GDX does drop to below $22 because that’s where I will load up.

  11. Goild

    Are we early to get into the metals/miners?

    That is not so important.
    What counts is to have a plan, and execute it.
    The premise is that the miners/metals will deliver their riches in 1-3 years.
    I got 1K GDX shares at $23.1, just a small bite to be in.
    If GDX dives to $22, then add one more 1K GDX shares.
    If GDX dives to $21, sell 1K shares of GDX and buy 1K Shares of JNUG, or more.
    If GDX goes to $23.5 add 1K shares of GDX.
    Keep adding GDX shares as it rises.
    It is more of a psychological plan to not end up missing a likely rocket someday.
    I would appreciate comments to fine tune this plan. Please.

  12. Jimsee

    pedestrian – some of us expect that the usdx-gold correlation will be continually eroding – blunting the effect of one paper dominating another paper product. See the higher high on usdx ~103 compared to the higher low in gold ~1124 – an 8%+ reduction in reactivity is quite a first volley if this process has begun. Of course, buy puts on gold/gdx at sentiment extremes at all times – if u r correct on gold below 1000 I expect to make a large amount of green paper on that – but a FIRM forecast YEARS in advance is silly at this point imo. in 2013, gold was broken by manipulation, in 2015 SYRIA broke the empire. Which one is more important in the end?

    1. Pedestrian

      That’s pretty funny actually. I was arguing with Gary during 2012 that gold’s goose was cooked and it was going to see 1000 before it ever exceeded its bull market highs again. Those days were a riot of online arguments about golds future. In the end I came within 40 dollars of my prediction and its still not over. My point though is that was a prediction made almost 5 years before the fact. Its was baked into the chart as far as I could tell so I never understood why so many people fought me about it. And knowing the length of gold cycles certainly helps. We don’t need to be perfect with such predictions. Coming close is good enough that many years in advance.

  13. Spanky

    SLV 2 hour chart is also showing positive divergence with the RSI over the last couple of weeks (price making lower lows while 14 period RSI making higher lows). It is poised for a bounce.

  14. allthatglitters

    PED, I love your independent thinking which you’ve demonstrated through thick and thin. Everything you’re saying makes sense to me, except why the belief that gold will head back up to $1400 in the near term? I could see it being due for a bounce but that seems pretty high with sentiment eroding. Thank you!

  15. Duuuuuude

    Sassy Babe, this link will show you how I set up a successful trade using leverage. Its pretty simple and works well unless there is extreme volatility like there was last month. Its just waiting for cycle lows and half cycle lows to make entries with stops in place. I apply more leverage at ICL’s and less in daily cycles late in an ICL. Probably requires more patience than intelligence which is why it works well form me.

    https://www.screencast.com/t/9IiRawJ8O

      1. Lenapowich

        That is correct Nada. Job resumes are out for Texas which is where I was born. It is a bloody shame to see what decades of Democrat leadership has done to Chicago and the state and it’s getting worse by the day. Lots of my friends want out also.

  16. JJHarmen

    I have to ask myself why I am dicking around with the metals when there is so much money being made else where. The so called “baby bull” in gold that started in January 2016 has been a huge disappointment. Mean while, the real bull market has been in tech stocks, just like back in 2000. History does repeat.

  17. Pedestrian

    I just realized something. My target for gold to bottom has been hit almost exactly where I identified it. I had written a post to Vin on the 22nd this month explaining that I was using a pivot point found in June as my target for gold to stop falling. But I wrote in that post the number was 1280 which was close but not correct. The pivot is actually closer to 1285 now that I examine the chart more closely and it has indeed been hit and was the expected support. Not sure why I said 1280 unless I was just eyeballing it but no matter. We are here and gold is a buy so the program is working well.
    —————————————————————————

    Pedestrian
    September 22, 2017 at 5:46 pm

    Vin…I am looking for gold to bottom out pretty darn close to 1280. The pivot point I am using as a target is a little harder to spot but if you are curious about my method I will explain it anyway. Using the same daily chart of gold I already linked, what you want to locate is a single green candle (spike high) on the tenth trading day of June. So just count the June bars until you hit that little green candle and that’s my target low for early next week.

          1. JJHarmen

            Nada, you are such a funny guy with your jokes. You are always making jokes about other posters. You never insult, just make jokes.
            I didn’t ‘allude’ to doing anything. I was just stating a fact. Actually I think it would be very unwise to be going long the tech stocks at this stage of the game. They may go higher but I won’t be in them on the long side, that’s for sure.
            I cancelled my GDX buy because I have a 1000 shares already and it looks like lower numbers may be on the way so I will wait and see before adding more.
            Are you still losing your shirt in the options market?

          2. Nada

            @JJHarmen

            LOL, it could have been *anyone* and I would have applied the same joke. I have no idea if you were going to enter or not. Lighten up it was nothing against you.

            “Are you still losing your shirt in the options market?”

            You know what they say? When you are in trouble, you double! As I said, I entered with goal set at 1375 or lose it all.

  18. Kruzoe

    Goild, Unfortunately, I don’t have any insights, rules, etc, to share. My proprietary software uses volume and velocity, “V” and direction or price differential, “D” of groups of securities, such as Jnug/Nugt, Jdst/Dust to come up with a potential % profit on a particular time frame. I call it the VD system or Voo-Doo system πŸ™‚
    Note that I have a stop at 16.90 for my Jnug, limiting my loss to $2k.

      1. palobar

        @Hello Nada.
        Gold = On the short term, I would pay attention to the 10 and 20 October respectively. The latter is a very strong date and I am quite confident that it will offer an interesting trade. Wait until we take out again the high we saw in early September. In my view, that is where you could add leverage more safely. The important dates for September are behind us which means that any swing points here will be most likely temporary. Personally, I shorted Gold at $1355 and closed my position at $1297. I keep buying gold coins whenever I can. My focus for the past weeks has been on Wheat where I expect a substantial move to the upside.

        US Dollar = I am long (see my comments on the previous post) and looking forward to a significant move to the upside.

    1. Gary Post author

      I would agree with that. The dollar is now in the advancing phase of a new intermediate cycle. The first daily cycle will be right translated. So at least two more weeks before this cycle tops and there’s likely to be one more daily cycle after that before the final intermediate top

      1. Christian

        This coming from the same guy who thought the dollar would just crumble all the way back down to the lower 80’s once it broke major support, and I kept arguing that the dollar WOULD eventually bottom and deliver a very convincing bounce.

        Look at you now Gary ol’ boy, singing a very different tune — Where’s my Burrito?

        1. Gary Post author

          Have you not been watching the videos?

          I’ve been pointing out for several weeks that 120 resistance zone in the euro.

          You tried to call the bottom months ago. The dollar had another complete DC after that.

          No burrito for that one.

          1. Christian

            They say when you get to a certain age, the noggin don’t work so well anymore and so.. You should take a moment to re-visit your July 22, 2017 post, entitled:

            “LAST CHANCE FOR THE DOLLAR TO RALLY” — ba dum tss..!

            In there somewhere you’ll find words like “the abyss” Lol [great movie btw] and I quote:

            “The FOMC meeting, and the 200 WMA are the last support zone, and last potential event trigger to stop the collapse in the dollar. If these fail then I’d say it’s Katie bar the door time. The dollar is going into the abyss.”

            And in there you’ll also find MY post which was respectfully of course calling bullsh*t on the whole Dollar going down indefinitely scenario.

            “Not sure I agree with the whole *Dollar going down indefinitely scenario*. We will most definitely get a counter trend rally of some sort and I think it’s gonna happen right around the time the Euro tags its 200WMA @1.18

            Also β€” The 38% and 50% Fib is not sacrosanctΒ 

            In all the years I’ve been trading, I’ve seen more than my fair share of stocks and currencies bust through the 38%Fib like a hot knife through butter only to reverse and pull a fast one. That’s what Markets do folks.. behave irrationally so as to confuse the shit out of everyone! Yep, Gary included.”

            You now owe me TWO burritos for not having the balls to admit that your analysis was a bit – ooooh shall we say – from another universe?

            πŸ™‚

          2. Gary Post author

            We’ll have to agree to disagree on this one. You tried to call a bottom way too early and I found one more support zone at the megaphone trendline that could possibly stop the decline. I’ve been pointing it out for weeks now.

            And here’s the real key, I traded the move in real time and called the reversal in miners within pennies of the exact top.

            This is again where I urge you to enter the challenge and make real time trades so you can back up your claims.

          3. Christian

            Oh baloney on that last one and you know it. This has nothing to do with calling tops or bottoms or making real time calls.. This is about recognizing that your analysis AT THE TIME was ONE SIDED (which is unlike you) and not at all open to other possibilities. Possibilities which are now playing out! Humble pie anyone?!

            I’ll tell you what.. I’ll enter the contest if I get to take over the family business once you retire πŸ™‚ Deal?

          4. Gary Post author

            If you want to take over the newsletter then you definitely better get your ass in the challenge and consider that your trades would be driving several thousand traders decisions. So exceptionally risky trades need to be weighed heavily before being taken.

            You should not treat the challenge as if you have nothing to lose and can swing for the fences on every pitch. You could be putting peoples retirement at risk. So make your trades with that thought in the back of your mind.

            If you can consistently make money over the course of several years I will seriously consider turning the newsletter over to you when I retire.

  19. zkotpen

    Adjusting my target for gold’s daily cycle low to the lower 1270s, based on this week’s price action.

    GDX — not sure. 22.79 is likely, and 22.43 would be the next target after that, if we’re talking DCL — which remains a big “if” for miners.

    I recently posted that GDX and gold are moving thru different corrective patterns since February. We may see a DCL in gold but not GDX. Gold may still have one more high in its yearly cycle, whereas GDX is not likely to exceed the September high, much less the one formed in February. I’m currently calling the September high in GDX possible or likely wave C of triangle, where wave A was February’s high. So current move down would be wave D, to be followed by wave E bounce, and then the yearly cycle decline proceeds from there, which should offer some good short trades.

    Trying to trade the entire daily cycle in GDX must have been most frustrating since February, and it would be excruciating right now. The best setups have been at the “half” cycle degree in conjunction with one “half” degree below that. Those moves can get tricky in miners — very difficult to time, especially during a complex correction such as the one we’ve had most of the year. I think it was Pedestrian or Christian who pointed out, there have only been a few big move days in miners all year.

    If the above sounds confusing, I agree — hence, I’m concentrating on USDJPY, which appears to have resumed its dead cat bounce off of Wednesday’s low as I type this. USDJPY also looks a bit odd at daily cycle and higher, but at the “half cycle” degree, as well as the primary degree one half step below that, the patterns look fairly predictable.

    And while nothing is ever certain, such patterns do appear to allow for very good entries — entries which offer better than acceptable risk:reward possibilities, so long as one adheres strictly to one’s risk:reward calculations without varying from them. Much better risk:reward than miners, at least so long as yearly volatility in GDX remains at its lowest level since just before the July, 2015, plunge.

    The low yearly volatility in miners will not continue forever, and when it breaks, the likely direction is down.

  20. Goild

    Kruzoe,

    Thank you for commenting.
    The Voo-Doo system…
    Your approach is quite unusual and interesting.

    You appear to have a pretty good trading business, for sure well deserved.
    Terryw who is a professional and who used to post here mentioned profits last year of $400K.
    I am unaware of other traders in the blog making plus $100K a year.
    Of course, Gary must be in the club.

    1. Gary Post author

      Profits are completely dependent on the size of ones portfolio.

      If one has a 10 million dollar account a $100,000 profit doesn’t amount to much.

      It’s all based on percentages over time. Anyone who can average 20% per year over a 10 year period would be in the camp with many of the best traders in history.

      The challenge is going to see who can make money over 1 year. Then we will repeat it next year and see who can do it twice.

    1. Gary Post author

      In a heartbeat.

      It’s extremely exhausting to me to try and keep novice emotional traders on course when they get so easily sidetracked by every little wiggle in the market. It’s one of the main reasons I raised the price to get rid of most of those people. The vast majority were never going to be able to make any money no matter what I did. They were just making it more difficult for the few that did have a chance. Best to just jettison them so the rest would have a chance.

  21. spectrum2105

    I wish all the half dozen or so loud mouth wind bags around here would just shut up already. The amount of brainless yammering is making even a free blog not worth the price.

    1. Pedestrian

      I am sorry Spectrum but I cannot accept your post because it has exceeded the 140 character Tweet size. Could you please rewrite your complaint with fewer words.

  22. Goild

    Gary,

    Thanks for commenting.
    Yes, portfolio size makes a big difference. Profit % and consistency are the ones that count. Big accounts also allow more freedom for trading mistakes.
    Moving say $500K-$1M presents some challenges as the slippage is substantial.
    I am surprised about your answer that you would retire in a heartbeat.
    I do not know of anyone else that dedicates more time to trading than you.
    You definitely have passion for trading.
    That is the only way one can put the amount of work you put here.

  23. Pedestrian

    Anyone notice where Bitcoin is really popular? It’s places like Nigeria, Zimbabwe, Venezuela and North Korea. So chances are it will never die off as long as there are countries in the world with serious problems and worthless currency. Even if its taxed in the West it will just migrate to Africa and the Third World. And I just read you can get an 85% premium on your Bitcoin in Zimbabwe. Wow, that would make for an awesome holiday bonus. So be sure to take a wallet full on your next Safari because each coin fetches more than 7200 dollars there now. With fractional bits you could probably even buy a tomato from a street vendor.

    Hyperbitcoinization? Bitcoin Trades At 85% Premium In Zimbabwe – Priced At $7,200 – Zerohedge
    http://www.zerohedge.com/news/2017-09-26/hyperbitcoinization-bitcoin-trades-85-premium-zimbabwe-priced-7200

  24. Pedestrian

    So gold has indeed come right down to 1280 this morning. Hoping it does not bust through support since that will give me a big bloody headache today. Now the watching and waiting begins. Making trades is a bit like having a baby isn’t it?

    1. Pedestrian

      Damn computer…anyway, the article above is worth a look. The chart is great as it shows how debt and Gov’t transfer payments have helped fill the gap of our collective declining disposable income. Is it any woder that 60% of the population does not have 400 dollars of savings? The country is going broke in stages and not much can be done about it. Just imagine how it will look with gold at 4 times todays prices and our living standards halved again or worse.

    1. Nada

      GDP at 7:30 am eastern, has the potential to destroy or make gold shine. Most likely destroy as the algos don’t seem to be reacting to .5 fib retracement.

      With no higher ICH or YCL, gold is simply not in bull market. I dunno, maybe since cycle was so stretched the hunt for DCL is stretched too.

      1. Pedestrian

        Good morning Nada. Looks like we are both awake with the birds today. Hopefully no destruction is in store for gold although we have been frustrated many times in the past when the charts looked to be lining up nicely. Yen may be working out a bottom as I write. As I often remark, I don’t pretend to know what will happen in the real world of gold but the guidance on the charts still looks favorable for a bounce.

  25. Pedestrian

    Canadian dollar sure has sold off a lot since USD began to rise in the first week of this month. But is it enough to signal that crude oil will finally take a break and fall back? Since crude generally falls versus a rising dollar its something to keep in mind. For that matter the entire commodity sector is going to be back under pressure again including base metals which had so recently looked like they were breaking out. A new cyclical rise in the dollar is good for one thing though. It means we have not missed the chance to buy resource stocks at bargain basement prices. It may also be time to consider lightening up on those stocks that have been profitable with thee goal to buy them back sometime in 2018 when this miserable gold bear market will finally breathe its last and final breathes.

  26. Gary Post author

    The yen is trying to generate a dead cat bounce off the intermediate trend line. But it will only be a very short term bounce as the cycle still has 3-4 weeks yet before it will be due to give us a more lasting intermediate bottom.

    If it can’t bounce and just breaks right through the trend line then gold is unlikely to give us a short term bounce either.

    Sorry to say folks but gold isn’t going back up to 1400. Not during this intermediate cycle. The larger intermediate cycle is now in decline. Just like it’s not safe to short the stock market it’s not safe to go long during the declining phase of an intermediate cycle. The surprises come to the downside (as we are seeing).

    If people would only listen to me about these simple rules they would end their trading career with a lot more money in their account than if they continue to ignore me.

    Rule #1: Never sell short during the advancing phase of an intermediate cycle. The surprises come to the upside. (oil is a perfect example)

    Rule #2: Never go long during the declining phase of an intermediate cycle. The surprises come to the downside. (As we are seeing in the metals right now).

    Rule #3: Never short the stock market. And especially don’t short during a bubble phase. The single most efficient way ever developed to lose money quickly is to short the bubble phase (and especially the vertical phase of a bubble).

    Use cycles and sentiment to determine when the declining phase is about over and it’s safe to begin trading against the trend. Technicals, as we’ve seen, are mostly worthless for timing tops and bottoms. Technicals are better used during the middle part of an advance or decline to keep one on the trend. Buy short term oversold conditions during an advance, and sell short term overbought conditions during the decline.

    It goes without saying, but so many of you seem incapable of breaking this behavior. If a particular strategy keeps failing over and over, then for heavens sake quit doing it.

    1. Gary Post author

      Both gold and miners are below their 10 WMA. We’ve now dropped for three weeks in a row. This should be viewed as a red flag that the intermediate cycle is now in decline and the metals are still stuck in the basing pattern.

      I did everything I could to get people off leverage and out of the sector at the top, but as always happens most people ignore me at tops and bottoms. Why? Because at tops and bottoms emotions are in control and most people can’t think logically. This is why it’s so important to use cycles as one of your trading tools and it’s absolutely critical every trader have a subscription to sentimentrader so they can monitor sentiment levels.

    2. Pedestrian

      Well yeah Gary, the primary condition that must be met for a gold to run back up is that the Yen MUST bounce off the primary support line. It’s lights out for gold otherwise. I think I put that in all cap’s last time I wrote the comment if I recall.

      Failure at support for Yen is the critical factor. Until that happens (or does not happen) neither you or I can declare it a done deal. Right now we are on day 15 of the decline which is not out of range for a reversal.

      Similar patterns are evident by just reviewing the daily gold chart where you can quickly see this decline is in the median of movement sizes so far but hardly an exception or outlier.
      https://finviz.com/futures_charts.ashx?p=d1&t=GC

      1. Pedestrian

        Also Gary, 1285 was pretty close to the 50% Fib so its not an unusual place for a reversal. Not sure why you seem so confident this can’t happen. I suppose we will see soon enough either way and perhaps not until Monday but other technicals such as Stochastics do favour a gold bounce.

        1. Gary Post author

          I’m not saygin there won’t be a bounce. I’m saying gold is in the declining phase of its intermediate cycle now. Trying to catch bounces is a poor strategy because the surprises are to the down side. Many have already lost money trying to anticipate a bounce.

          A better strategy at this point would be to sell any rallies if they happen.

          Wait for gold to get into the timing band for a larger ICL and sentiment to reach bearish extremes before flipping back to trying long trades in gold.

          That’s not likely until mid to late October when the yen will get into the timing band for a bottom. It’s still too early right now for the yen to produce anything other than just a short term bounce off the trend line. But before the yen can form an ICL it has to break that trend line and close below it. Usually price moves well below trend lines.

          I wouldn’t start looking for a more substantial bottom until the yen gets down around 85-86.

      1. zkotpen

        Actually, I suspect Goild may have been nervous about that overnight trade — not his usual day trade, and I think his point was, it disrupted his sleep by holding overnight.

        It was not a day trade.

        Much more important than day or overnight or length of time is:

        Goild: Did you calculate risk:reward before entering that trade?

        That dead cat bounce in gold & miners could have played out a lot of different ways, and your ROI was small. Obviously, if risk:reward indicated it was a go, then that’s all you need. But something made you disturb your sleep…

  27. earthkitten

    Gary. You have been spot on with your calls recently.
    Give credit where credit is due. The energy stocks
    are looking very stretched right now. Do see see
    energy rolling over any time soon?

    1. Gary Post author

      Oil is going to at least $60 during this intermediate cycle. Those that have tried to outsmart the advancing phase of this cycle have gotten left behind.

      I wouldn’t worry too much about a short term correction. Certainly at some point there will be one, but trying to anticipate it has caused almost everyone to miss most of this move in energy.

      Just hang on until oil gets to $60.

  28. zkotpen

    Somebody must have noticed that gold has declined nearly 6% and GDX only 10% from the September peak…???

    This is what I meant above about miners being in a different pattern than gold, until GDX commences its yearly decline, at which time both will go down in earnest. So this intermediate wave D in GDX drops below the 50 day SMA (similar to 10 week SMA Gary has posted)… then rises to test it in wave E, then down to the YCL.

  29. Goild

    Zkot,

    No risk calculation, there is no time to wonder about such things.
    You just know high probability candle formations.

    Here the point as to start training myself for swing trades.
    AT and Kruzoe show very good examples of trading systems and so I will try swing trading starting small.

    On vacation in Asia I ended with 24K JNUG shares at $18.5. It went to $17.75 to reverse to $26,
    Thus I know that JNUG $17.75 will see a lot of support, at least for the first time it hits it on this leg.
    That gave me confidence that the chances to lose on those 500 shares were quite slim.
    If JNUG hits $17.5 – $17.75 near the open I will load lots of JNUG shares. This support will not be broken at first try.

  30. zkotpen

    Goild,

    The calculation is “risk:reward” and it is not an object of wonder.

    It is paramount in risk management. You can get the reward, but always protect yourself from risk πŸ™‚

    That is why you lost sleep, not holding overnight. Perhaps it was your intuition that told you it was a risky trade, that you had better make sure all hell hadn’t broken loose. Luckily, miners have been in a tight range since yesterday — if you got in on the low side of that range, you’ve had plenty of opportunities to take a small profit.

    Too much risk for me, because there’s a good probability that the move down in GDX and gold is not quite complete. Likewise for the move up in USDJPY.

    I have been considering setups in USDJPY the past 12 hours but have not taken any. Even the most recent one on the 8:30 a.m. economic data — reasonably predictable on those occasions when it hit very short term support and resistance areas, but risk:reward of about 1:1 made those trades impossible for me. So I’ll just keep waiting until the setup meets or exceeds my risk:reward criteria, and enter the trade with stop loss and take profit as calculated.

    Funny thing is, it has taken me a ton of effort to get to this point, but trying to manage trades manually has produced sub-optimum results. But when I entered responsibly calculated trades on my demo account, I performed much better.

  31. Nada

    Looks like yields are taking their toll on gold. USDJPY and Dixie down, yet gold can not catch a bid. The Yen looks in better shape. They managed to pop the SPX yet ticks have not been above 156 and $ADD is puking. I am surprised the markets are green.

    1. Gary Post author

      Just as I predicted people will keep trying to call a top all the way up.

      We should now be about ready to enter the slow grind higher phase. This is where the market takes one step up and a half step back. Nothing to exciting to push sentiment too bullish. Just a slow steady grind higher with lots of pullbacks that keep traders and analysts trying to call the top.

      Once the last perma bear gives up and converts that’s when the bubble will pop and down we will go.

  32. zkotpen

    Actually, looking at the intraday charts on gold, GDX, and USDJPY, all look like they’re consolidating to get intraday volatility back down to where it was prior to the Monday morning drama. Once that shorter term volatility squeezes, then comes the next short term move: Down in gold & GDX, up in USDJPY.

  33. Goild

    wifesaidnomoretrading

    I like UVXY, there is a lot of money to be made here.
    It seems that today is a strong day for SM and tomorrow being a pay day will end above breaking the 2500 barrier. I will wait to get in. Good idea but for my taste today appears early.

        1. Pedestrian

          Half a brain for a half moon seems about right for today πŸ™‚

          Anyway, all is well. JNUG moving up slowly but surely and hopefully catches its stride in the coming days. We never know for sure if our ideas will work out as planned but I am still bullish. We are getting the bounce I had in mind though at least. Hopefully it carries through.

  34. Pedestrian

    LABD face plant today. Down 4% to 4.65 and more room to fall. But its finally getting interesting and worth a look. I am watching the top form in LABU for an entry on LABD which could come anytime in the next week or so.

    1. primetime

      Ped,

      You made that call right on. You said buy it well under five. So much for the contrarian garbage. LOL

      Let me know when its time, I have some dry powder waiting to take a nice sized position.

  35. zkotpen

    Goild,

    Hope that helped. I get the impression that you have a sort of unconscious risk evaluation going on while you day trade — for example: What makes you bail out of a losing trade?

    Seems a lot of people get married to their trades. I know that has happened to may too many times in the past. Which is why I’m super strict about it now — ’cause I know better. Of course, there’s a difference between what one knows and how one acts. It requires quite the effort to close that gap… but it is possible.

    At any rate, you’ve long expressed interest in expanding your time frame to swing trading. I think that’s the number one factor holding you back: Risk. In conjunction with these nasty market gaps on markets that only trade 6.5 hours per day…

    What other issues might there be?

    Markets move the same way at the very small time frames as they do at every single other one. Charts look the same regardless of unit on the y-axis or time frame on the x. Primary degree cycles are more accurate for trading than intermediary ones — at any degree. I would abandon all intermediary cycles entirely, if not for the fact that they reveal a lot of useful information πŸ™‚

    Oh… looks like USDJPY is moving down toward my target area… good thing I didn’t jump the gun on that one 8 hours ago!

  36. jacob2

    OIL, analyst getting bullish on energy. They couldn’t be found this summer. Now oil is the bull market value choice. Pullback time. Bought the lows, long term bull, so I sit. Vindicated

  37. Goild

    Zkot,

    Thinking about it, it is sort of a pattern recognition task. After so many thousands of trades your brain automatically bids high probability setups. Though two problems arise, when one does not pay enough attention to detail, or when stubbornness/unfamiliarly/bad habits/impatience/overconfidence override the brain’s direction.
    As per getting out…
    Well, this is the what separates traders, the ability to early recognize one is wrong and to quickly get out.
    I am doing better in this regard.
    In part the fine are of trading is keeping the losses at a minimum.

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