Saturday, May 11, 2013
Wednesday, May 8, 2013
EUPHORIA PHASE TURNS INTO PARABOLIC PHASE
The euphoria phase of the bull market that I warned about months ago is now beginning its final parabolic phase.
I'm guessing we still have another month-month and a half before this runaway move finally ends. Depending on how far above the 200 day moving average it ends up stretching, I think there's a pretty good chance we will see the entire intermediate rally wiped out in a matter of days or even hours when this house of cards finally comes tumbling down.
That is how these runaway moves terminate. They crash! Parabolas always crash.
These things can go on and on for months and months with savvy investors becoming more and more nervous the longer the move persists. The longer the trend continues the more professional traders all position right next to the exit, until finally one day everybody tries to get out the door at the same time. It's that mass exodus to lock in profits that triggers the crash. The magnitude is determined by how far and how long the market stretches above the 200 day moving average.
Markets are no different than a pendulum. They oscillate back-and-forth above and below the median line, which in this case is the 200 day moving average. Bernanke is not doing anyone any favors by stretching the market unnaturally far to the upside. All it is going to do is guarantee an exceptionally violent move to the downside once the forces of regression to the mean break the parabola.
Again I would warn traders not to try and sell short as it's virtually impossible to determine when the parabola is going to fail. My best guess is late June or early July based upon the normal timing band for the dollar index to form its next intermediate degree bottom. As I expect the crash to correspond with a dollar rally that would seem to be as good a guess as any.
For savvy traders the play isn't to sell short, it's to go long once the crash has occurred as the Fed will almost certainly double down on QE in the attempt to reflate asset prices.
Of course the real play isn't going to be in the stock market. The stock market is in the topping phase of this cyclical bull market. Yes the Fed may be able to levitate stocks back to marginal new highs, but the real money is going to be in commodities as all that excess liquidity will inevitably make its way into the undervalued commodity markets where the potential return is many multiples greater than in a very mature cyclical bull market in stocks with a weakening global economy.
I'm guessing we still have another month-month and a half before this runaway move finally ends. Depending on how far above the 200 day moving average it ends up stretching, I think there's a pretty good chance we will see the entire intermediate rally wiped out in a matter of days or even hours when this house of cards finally comes tumbling down.
That is how these runaway moves terminate. They crash! Parabolas always crash.
These things can go on and on for months and months with savvy investors becoming more and more nervous the longer the move persists. The longer the trend continues the more professional traders all position right next to the exit, until finally one day everybody tries to get out the door at the same time. It's that mass exodus to lock in profits that triggers the crash. The magnitude is determined by how far and how long the market stretches above the 200 day moving average.
Markets are no different than a pendulum. They oscillate back-and-forth above and below the median line, which in this case is the 200 day moving average. Bernanke is not doing anyone any favors by stretching the market unnaturally far to the upside. All it is going to do is guarantee an exceptionally violent move to the downside once the forces of regression to the mean break the parabola.
Again I would warn traders not to try and sell short as it's virtually impossible to determine when the parabola is going to fail. My best guess is late June or early July based upon the normal timing band for the dollar index to form its next intermediate degree bottom. As I expect the crash to correspond with a dollar rally that would seem to be as good a guess as any.
For savvy traders the play isn't to sell short, it's to go long once the crash has occurred as the Fed will almost certainly double down on QE in the attempt to reflate asset prices.
Of course the real play isn't going to be in the stock market. The stock market is in the topping phase of this cyclical bull market. Yes the Fed may be able to levitate stocks back to marginal new highs, but the real money is going to be in commodities as all that excess liquidity will inevitably make its way into the undervalued commodity markets where the potential return is many multiples greater than in a very mature cyclical bull market in stocks with a weakening global economy.
Sunday, May 5, 2013
BUY ONE GET ONE FREE
I know a great many people have gotten discouraged during the last 6 months. Many have probably gotten knocked off the bull, and some may even buy into the end of the bull market nonsense that many analysts have been spouting lately.
I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.
Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.
These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.
A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.
As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.
For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.
Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.
OFFER EXPIRED
I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.
Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.
These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.
A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.
As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.
For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.
Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.
OFFER EXPIRED
Friday, May 3, 2013
STRETCHING, STRETCHING, STRETCHING
The runaway move in the stock market that we have been watching over the last few months continues to stretch higher and longer. Let me emphasize again, these things always end badly. Usually in some kind of crash, or semi crash.
I strongly advise traders not to chase this move. It's way too late and risk is extremely high. If you don't time the exit perfectly you risk getting caught in the crash.
The way to correctly trade a runaway move like this, is to wait patiently for the crash to unfold, and then buy long as the Fed doubles down on QE in the attempt to reflate asset prices.
The crash could happen at any time, but based on the intermediate dollar cycle, which is due to bottom in late June or early July, I'm expecting the stock market swoon to correspond with the dollar rallying out of that major bottom. So my best guess is in late June or early July we will see this artificial rally come crumbling down.
Let me emphasize that while I think the crash is going to occur later this summer, there is no guarantee it can't happen sooner.
On a side note: I heard a commercial yesterday in Las Vegas for a seminar on how to get rich flipping houses. Seriously? Are we really stupid enough to go down that road again?
I strongly advise traders not to chase this move. It's way too late and risk is extremely high. If you don't time the exit perfectly you risk getting caught in the crash.
The way to correctly trade a runaway move like this, is to wait patiently for the crash to unfold, and then buy long as the Fed doubles down on QE in the attempt to reflate asset prices.
The crash could happen at any time, but based on the intermediate dollar cycle, which is due to bottom in late June or early July, I'm expecting the stock market swoon to correspond with the dollar rallying out of that major bottom. So my best guess is in late June or early July we will see this artificial rally come crumbling down.
Let me emphasize that while I think the crash is going to occur later this summer, there is no guarantee it can't happen sooner.
On a side note: I heard a commercial yesterday in Las Vegas for a seminar on how to get rich flipping houses. Seriously? Are we really stupid enough to go down that road again?
Tuesday, April 30, 2013
DOLLAR COLLAPSE HAS BEGUN
I've been pointing out for several months now that the recent rally in the dollar was a mirage, an illusion generated by the yen, euro, pound, and Canadian dollar all dropping into yearly, or intermediate cycle lows together. This selling pressure in the four major currencies that make up the dollar index spawned what looked like a strong dollar.
With Bernanke printing 85 billion of them a month, there is no such thing as a "strong dollar". I've been saying for months that once these four currencies completed their bottoming cluster it would be the dollar's turn to crash. The recent collapse in the yen was 23%. The Pound 9%. I think the dollar will be somewhere in between with a loss of 9-12% as it drops down into it's yearly cycle low.
As this process starts to accelerate over the next couple of months the dollar bulls are going to get a rude awakening, as our currency shows it's true colors. The acceleration began today as the dollar has now completed a lower low and a lower high.
Once major support is breached at 78.50 there will be nothing to stop, what I think will be a waterfall decline, until the dollar reaches the 73-75 zone.
And don't forget this is just the beginning. The much larger degree, 3 year cycle low, isn't due until late next year.
It's time for the unintended consequences of QE infinity to come home to roost.
This should drive either another C-wave in gold. Or as I'm now starting to believe, gold may be in the initial stage of the bubble phase of the bull market. 2015 will be 15 years. That's about a normal duration for a secular bull run.
Let's face it, commonsense would tell most people that you can't just print 85 billion dollars a month and not have something bad happen. The last time the Fed embarked on this kind of insane policy it was during the real estate bubble implosion. Instead of rescuing the housing market the Fed drove oil to $150 a barrel and spiked food prices around the world, triggering riots and wars in many third world countries.
I expect the same game plan this time is going to reap the same results.
We have all the ingredients in place. Gold has probably completed it's yearly cycle low. The COT is showing a max bullish position by commercial traders. Before every bubble phase there is always a devastating correction that convinces everyone that the bull is over. I would say that describes pretty much what has happened over the last 6 months.
And to top it all off the recent manipulation to run the stops below $1523 has triggered massive shortages in the physical market, especially in silver.
Now add to that a collapsing dollar over the next year and a half and everything is in place for gold to generate at the very least another C-wave advance and in my opinion we probably have the conditions necessary for the bubble phase to begin.
With Bernanke printing 85 billion of them a month, there is no such thing as a "strong dollar". I've been saying for months that once these four currencies completed their bottoming cluster it would be the dollar's turn to crash. The recent collapse in the yen was 23%. The Pound 9%. I think the dollar will be somewhere in between with a loss of 9-12% as it drops down into it's yearly cycle low.
As this process starts to accelerate over the next couple of months the dollar bulls are going to get a rude awakening, as our currency shows it's true colors. The acceleration began today as the dollar has now completed a lower low and a lower high.
Once major support is breached at 78.50 there will be nothing to stop, what I think will be a waterfall decline, until the dollar reaches the 73-75 zone.
And don't forget this is just the beginning. The much larger degree, 3 year cycle low, isn't due until late next year.
It's time for the unintended consequences of QE infinity to come home to roost.
This should drive either another C-wave in gold. Or as I'm now starting to believe, gold may be in the initial stage of the bubble phase of the bull market. 2015 will be 15 years. That's about a normal duration for a secular bull run.
Let's face it, commonsense would tell most people that you can't just print 85 billion dollars a month and not have something bad happen. The last time the Fed embarked on this kind of insane policy it was during the real estate bubble implosion. Instead of rescuing the housing market the Fed drove oil to $150 a barrel and spiked food prices around the world, triggering riots and wars in many third world countries.
I expect the same game plan this time is going to reap the same results.
We have all the ingredients in place. Gold has probably completed it's yearly cycle low. The COT is showing a max bullish position by commercial traders. Before every bubble phase there is always a devastating correction that convinces everyone that the bull is over. I would say that describes pretty much what has happened over the last 6 months.
And to top it all off the recent manipulation to run the stops below $1523 has triggered massive shortages in the physical market, especially in silver.
Now add to that a collapsing dollar over the next year and a half and everything is in place for gold to generate at the very least another C-wave advance and in my opinion we probably have the conditions necessary for the bubble phase to begin.
Thursday, April 18, 2013
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