The consensus seems to be that the market will hang in till the end of the month. It may, but I tend to think we've probably seen about all the upside we are going to see at this point.
The leading tech sector is pushing up against a major resistance level. I doubt this level is going to be penetrated on the first try.
It's time for RSI to make a trip back down to the oversold levels. (Daily cycle bottoms almost always push the 5 day RSI into oversold levels.)
Starting sometime next week the market should begin a minor profit taking correction to ease overbought technical and sentiment levels.
I expect this will rub off on the precious metals sector as well (it almost always does).
That should result in a 1-2-3 reversal process in the miners and gold.
The expectation is for both gold and miners to hold above the February lows and then move to higher highs as the market rallies out of the cycle bottom.
I wouldn't be surprised if markets bottom on the next employment report on Apr. 2nd. That would allow the market to ease the overbought conditions and set it up for a powerful rally through earnings season.
So I guess it's possible the market hangs on till the end of the month but I doubt it. I suspect we are going to start to see weakness next week.
Sounds good to me!
ReplyDeleteDawler movin' on up...
ReplyDeleteSold more yellow junk @ 1125...again
ReplyDeleteI understand that the fed money supporting this market will be less and less going forward. If the liquidity drys up then could we guess that volatility will come back?
ReplyDeleteI think we are kidding ourselves if we think the Fed is going to shrink liquidity. They may ease or stop QE but that's a long long way from withdrawing liquidity.
ReplyDeleteAnonyous how much gold are you selling each time? My guess 1 share of gld right ? And y do you keep posting here, are you so insecure in your trade that you need confirmation from people you think they are doing the wrong thing and have no clue of the markets? I know its useless to tell you to go away you wont, but more constructive posts would be nice. thx
ReplyDeleteALex
ps. call me an Idiot but using the word dawler is just plain stupid.
pps. good work garry looks like the prophecy fulfills itself.
alex
ReplyDeleteIt only matters if you are right or wrong...you decide...if there is one major point you are missing and will continue to is the fact that I make my own decisions based on experience and DD instead of being led around by a leash...that my friend is the difference...do you really think I am going to spew out my methods to anyone...haha...you my friend just don't get it...
Oh by the way...dawler higher and that yeller junk down...i'm winning for now...1075 next stop...
ReplyDeleteThe problem I've always found with trying to fight the secular trend isn't in timing a counter trend move. The problem is in anticipating when the bull or bear as the case may be, comes roaring back and your trade that was profitable yesterday all of a sudden is heavily in the red.
ReplyDeleteIn the case of gold it will often happen premarket so one never even has a chance to get out of the way of the train.
This is why ultimately one will end up losing money playing counter trend trades...probably a lot of money.
We should easily break below 1100 today as equities crater...
ReplyDeleteGO HEALTH CARE....
I have a feeling stocks are going to bounce back by the end of day. They almost always tend to end positive on a March expiration.
ReplyDeleteanon, < 1075 next stop >
ReplyDeleteI have a post-it note next to my screen, been there for about 6 months now and forgot who I read and noted it from,,, I noted: starting in August look for gold and PMs to correct down do $700-$850 area bottoming Feb-March 2011 time-frame.
I say this for general discussion as my wife would like for us to start buying physical gold and silver but I was gonna hold off until then.
I really doubt gold will drop back below $1000 for the duration of this bull market. Everyone and their cousin not to mention evvery central bank in the world is going to be buying at $1000.
ReplyDeleteTommy
ReplyDeleteIf you are in the short term deflation camp, like i am, this very well could happen...when reality sets in on the very unhealthy economic situation we are in things will get extremely ugly...i do like gold (yeller junk) for the long run...I do own physical and hold it...I do buy puts on the physical yeller junk ...my trading accounts are a whole different story...short term...on the backside of this impending contraction in the world economy there is going to be tremendous opportunity...
Gary...the fed can do whatever they want, but in the end we all really know what is coming and do not want to accept it...most are and will be in denial...reality sucks...
Gary
ReplyDeleteThose central banks and whoever will need cash...SELL yeller junk will be on the list...this could get ugly fast...just a thought...
Certainly I think most of us realize the Fed hasn't fixed anything and the secular bear is still alive. I just think there's plenty of time to play the short side after the market has already rolled over. Let's face it the percentage lost from 100 to 20 is 80%. While the percentage lost from 80 to 20 is still 75%.
ReplyDeleteIt's worth waiting till the market rolls over before jumping on the short side. One doesn't lose much potential profit by waiting and they also avoid the many false starts involved in trying to pick a top.
That's got to be the most ridiculous statement I've seen yet. If CB's need cash they print it. They don't need to sell gold.
ReplyDeleteGary:
ReplyDeleteThe "dawler" (sorry, couldn't resist) traded above 80.7. Doesn't that mean we still don't have a weekly swing high?
I would also like to note that you sound WAY too overconfident about the USD headed towards new bear market lows. I've noticed every time you're so sure of something... It's not a criticism, just an observation.
20% below 200 DMA, last summer's spike in miners [I'll never forget that one ;-) ] when you were so sure miners were going lower that you went on some kind of trip! are just examples.
I know you now have a defined cycle-based perspective here, more so than in the first 2 years you ran the blog and subscription service, but some time last year you noted that the Fed/Govt short-circuited one of your major cycles.
Who knows? There may be a reason lurking somewhere for a cycle to behave unexpectedly--again.
Thanks for your work as usual.
Gary@8:25
ReplyDeleteThen what were those central bank gold auctions all about back in the late 1990's?
I'm just basing it on the odds of left translated cycles moving below the previous low. Can that fail? Certainly, but I can't bet against the odds because most of the time I will lose.
ReplyDeleteNow if I thought we had some new emerging technology that was going to support the global economy then I would say yes the dollar has a valid reason for rising.
But I just don't see anything on the horizon yet that will do that.
As the US is falling deeper and deeper in debt the only realistic option we have to service that debt is with the printing press. That ultimately leads to a weaker currency.
Gary
ReplyDeletePlease please please...
"That's got to be the most ridiculous statement I've seen yet. If CB's need cash they print it. They don't need to sell gold."
Answer me this...
Who needs to buy gold?
The dollar would need to rise above 81.50 to negate the weekly swing.
ReplyDeleteCentral bank sales in the late ninties was a signal that the bear market in gold was over :)
I'm still short oil...
ReplyDeleteAnon:
ReplyDeleteAre you referring to the Central Bank Gold Agreements? If so, it was just renewed last year I believe. But it doesn't mean the Central Banks will sell. And I believe the purpose was to make up for the deficit in Gold production. With so much talk of SDR's with Gold component and the accumulation of Gold by Asian/Russian CB'S/ Gov'ts, don't count on CB's selling their Gold anytime soon. And the CB's were not selling their gold to raise cash. And of course Gary is correct, when Gov'ts want more money they sell debt (print money).....not assets. Now if you can show a Gov't that sold assets to raise cash for Gov't spending please inform us. please compare the value of all the gold sold by CB's in the last 10 years to all the debt printed by the same CB's over the last 10 years.
There will be a point when people will dump all asset classes including gold to raise money...We are in very very serious economic trouble...
ReplyDelete"Panic buying" in gold has ended?
ReplyDeletehttp://www.bloomberg.com/apps/news?pid=20602013&sid=alkB2RgF2eCI
If you look across the board the Max Pain predicted a drop in prices today. SPY is zeroing at max pain at 116. SLW needs to approach 15 or even lower, GDX at 145.
ReplyDeleteCentral bank sales in the late ninties was a signal that the bear market in gold was over :)
ReplyDeleteGary and Natanarchist:
That's why I worry about Central Banks buying Gold, if they are serious about it, and really doing it, as many people believe so...
If there is one dumb money indicator in my book, it's Central Bank gold sales and purchases... Look at the history. Quite a few of the nontraditional gold holding central banks bought at the top and sold at the bottom.
Now, the CBGA's can someone give me a clear idea of what those were about, because the world of bullion is so murky, that I can't profess to have a clue about it ;-)
Also, re panic buying of coins subsiding. No big deal, I think. The price of gold managed to shoot up just as retail buying crashed throughout 2008 and 2009. In the Indian subcontinent and middle east at least.
Insitutions like insurers have largely picked up the slack in retail.
We are hardly in economic straits anymore. The economy is improving. Our problems are not going to come from that area.
ReplyDeleteGranted we are going to continue to have high unemployment but anyone who has been to the mall or almost any restaurant can tell you they are full again. People are out and they are spending.
No our next problem is going to come from the one area that is experincing true excess...curencies.
K,
ReplyDeleteI can't think of one secular bull market in history that didn't end until the public panicked into what they considered a "sure thing".
We are still a long long way from that happening yet in the gold market.
Unless human nature has all of a sudden changed (very doubtful) there is no need to worry about the secular bull at this point.
In more detail for Natanarchist:
ReplyDeleteI just want to be clear that my point is I can't count on what Chinese, Russian, whatever, Central Banks do, being ultimately the correct, or smart, course of action.
If they decide to buy gold that won't mean anything to me.
People think the Fed is dumb. If that's honest to God true (and I'm not saying it's not true) then what the hell are these other central banks? They're definitely no smarter than the Fed.
Gary wrote:
ReplyDeleteWe are still a long long way from that happening yet in the gold market.
Hey, that's the ultimate idea behind my PM-related holdings.
i hear more and more folks say they are waiting for gold to come down to 1K, or 925 or 825 or whatever before they buy. And everyone talks about how they would love to buy...
Yes we are a long, long ways away...
Gary wrote:
ReplyDeleteWe are still a long long way from that happening yet in the gold market.
Hey, that's the ultimate idea behind my PM-related holdings.
i hear more and more folks say they are waiting for gold to come down to 1K, or 925 or 825 or whatever before they buy. And everyone talks about how they would love to buy...
Yes we are a long, long ways away...
Khalid;
ReplyDeletego here http://www.reserveasset.gold.org/
and you can read the CBGA. You can also search published information from many CB/Governments in Asia/Russia/ME have been acquiring Gold. We find out after the fact of course. And published reports (after the fact) show wealthy elites, particularly white elites, acquiring Gold and/or gold derivatives. And I suspect khalid, you know that a large part of the Asian/Middle east culture has always included acquiring Gold..coin/jewelry, as wealth. So the critics of Gold are only arrogant the white western brainwashed pretenders, who believe everything their told, while their masters steal every ounce of their wealth.
So...remember your dollars are nothing but a claim to the future produce of coming generations. One of these generations and it will be soon, if not happening already, will say no...not paying your debts. And thats when the fun really starts.
Excuse me if I am posting excessively today(I know there was a duplicated comment earlier)...
ReplyDeleteI just wanted to call attention to the Bloomberg headline US Stocks Decline on India's First Rate Boost Since July 2008
Yeah, right
LOL
I always find it funny when people say they are waiting for a pull back to buy. The thing is any pullback looks scary in real time and almost no one can actually buy into a serious decline.
ReplyDeleteI guarantee everyone who says they would buy at 850 would be more likely to short at that point than buy :)
Nat
ReplyDeletethanks for the website.
and yes, for Middle Eastern and Asian peoples, it will take decades before they let go of the idea of gold as a wealth preservation instrument.
Gold is still a symbol of wealth and whether gold goes much higher or much lower these cultures will still love gold.
Yeller junk goin' lower fellows...
ReplyDeleteGary
ReplyDeleteC'mon man... I WILL be 850 bid...are you kidding me...
Need I remind everyone of all the calls for buying lower gold in Nov. but then in Feb. everyone seemed to get cavities or cancer instead :)
ReplyDeleteHuge BoW numbers in everything except the SPYDER's so far today. I wonder if the market Gods can manage to close this positve by the end of day.
ReplyDeleteWanna wager on that...?
ReplyDeleteI'm just guessing. Most March options expirations do end positive so it wouldn't be out of the ordinary.
ReplyDeleteI certainly wouldn't take a long position at this point though.
Gary --
ReplyDeleteCurious on your take of the dollar action after creating the weekly swing low. The timing cycle must be getting close for an intermediate term bottom or did it already occur?
The timing cycle is getting close for a TOP not a bottom. That potentiall still has 10 more weeks to go yet.
ReplyDeleteGary
ReplyDeleteIts not "market Gods" it is 33 Liberty behind the curtain...
Tired of this day to day stuff. Although important. Just looking for a long-term perspective.
ReplyDeleteIn terms of direction, where do we see gold in a year, 5 years?
Sam
That's easy. Secular bull markets go up!
ReplyDeletewhen gary is too much confident then i m afraid
ReplyDeleteI really don't know in 5 years...but I do agree with the G-man you will see the dow/gold ratio 1:1 ...I believe this is a given...Long term bull on the yeller junk...
ReplyDeleteSo shouldn't we be more concerned with proving or disproving the secular bull. Too much talk about next week, IMO. Probably what people want to hear, but we aren't going to make big bucks from next week.
ReplyDeleteI mean signs of the bull ending would be MUCH more important to disucss, if they existed. No? :)
Not putting down trading here, just think we need more big picture.
Sam
Sam,
ReplyDeleteIf you want the big picture just pull up a 10 year chart of gold. It will tell you everything you need to know.
What is the average timing between a a daily cycle top and it bottoming and topping out again assuming the downtrend is in tact.
ReplyDeleteThanks
There is no average. Some are left translated and some are right. All we have is an average timing band trough to trough. When it gets late in the cycle it becomes dangerous to push the long side.
ReplyDeleteThat's where we are at in the dollar cycle.
Natanarchist@8:45
ReplyDeleteArgentina, 1998.
Gary@9:06
Anecdotal spending, there was plenty in the last deflation. It's trivial.
Gary@9:22
Wholeheartedly agree.
"I guarantee everyone who says they would buy at 850 would be more likely to short at that point than buy :)"
ReplyDeleteEveryone? That's definitely not true. Any Old Turkeys out there that are not 100% committed to the secular bull might be quite ready to buy more. They certainly wouldn't be looking to short, LOL.
Let me rephrase it then. Anyone who is in cash might be able to buy. Anyone who mistimed their entry and rode a correction all the back to $850 will be unlikely to buy as we saw during the pullback in Feb.
ReplyDeleteNatanarchist@8:45
ReplyDeleteThinking on it some more, both BOE and the Bundesbank were selling gold for the money. It was a politically painless way to get more money for politicians to spend...until Goldfields started buying in the case of BOE and until the German conservative faction put a halt to the socialist idiocy in the case of Germany.
People that think the western "democracies" will bankrupt themselves (by printing) to satisfy their spending needs are drawing false inferences from what pisspot nations like Argentina, etc have done.
When given no option between default (depression, social unrest, not getting re-elected) and print (inflation, kick the can down the road, apppearance of fighting the problem & another term) I'm confident human nature won't let me down. The politicians WILL print when left with no toher option.
ReplyDelete“Let me rephrase it then. Anyone who is in cash might be able to buy. Anyone who mistimed their entry and rode a correction all the back to $850 will be unlikely to buy as we saw during the pullback in Feb.”
ReplyDeleteIt’s wise never to be 100% invested unless you’re 100% sure. Any wise folks out there should therefore have cash available and should be ready to use it if opportunity presents.
As for mistiming, you’re right, most traders can’t pull the trigger on a pullback of any significance. That’s one of the reasons trading gets them in the long run. Another is that the pullback morphs into something they didn't expect.
Old Turkey is undoubtedly a terrible timer, but since he doesn't trade in and out, it doesn't whittle away at his equity. All he has to do is be right about the long term chart continuing (if he uses a chart at all).
Gary@12:23
ReplyDelete"when left with no other option"
That is the key point, and eventually, you will likely be correct. However, they have another option at this time. It's called the increased tax option and it is why I put the word "democracies" in quotes. The State WILL protect itself and its power by means of confiscatory taxation. They are gearing up for as I type.
Increasing taxes is one of the least savory options for politicians. They know it will cost them votes.
ReplyDeleteActually inflating the money supply is a hidden tax on the population that none of us vote for and that the powers that be can squeeze through without it ever being brought up in front of congress.
They have been sticking us with this tax since 2001.
BOW numbers are huge today. Gary what do you make of this? I have been watching them for the past 7 months. Pretty big today.
ReplyDeleteSPY finished smack at 116. Max pain.
ReplyDeleteNo SPYDERS so no significance. I thought maybe the marekt would try to push back to positive by the end of day but apparently not.
ReplyDeleteGary if we are indeed in D-wave for Gold, does it have to break the Feb lows and then come back to form the C-wave. Or can it hold the lows and still form a C-wave.
ReplyDeleteThe reason I ask is because, this range between 1060-1140 may last for years, who knows. Looking for the signs of a C-wave blast off.
The most any cnsolidation has lasted is about a year and a half. What makes you think this is going to last for years?
ReplyDeleteFrankie
ReplyDeletePlease tell us where it will close next friday...TIA...
Question from a newbie, does anyone know how I can go long the "dawler" with leverage? Is their an etf that caters for that?
ReplyDelete"What makes you think this is going to last for years?"
ReplyDeleteI don't know, that's why I am asking you about whether the Feb lows have to break in order to form a new C-wave.
can go long the "dawler" with leverage.
ReplyDeleteRelative to what currencies? Trading fiat currencies these days is like trading CDS and subprime mortgages in the 2003-2007.
If gold breaks the Feb. low that would be confirmation of a D-wave. The action then would be to get long when one thinks the A-wave has started.
ReplyDeleteGary there was a 5 year consolidation period from 98-2003. We were stuck 250-300 area before the eventual breakout.
ReplyDeleteThat was a secular bear market, not a consolidation in an ongoing bull market.
ReplyDeleteI am started to understand your theory. So if the Feb low holds we form a higher low then we could possibly blast off from there forming a C-wave?
ReplyDeleteWe might blast off on a continuation of the C-wave. This C-wave began in April of last year at 860. It may or may not have topped at $1225.
ReplyDeleteSold off a bunch of positions today, including several that were up since buying back in Feb. So I'm mostly in cash now. Still holding my June calls in GDX and SLW. Gary, you recommended selling those a few weeks back, but I decided not to. What would you do with those if you still had yours?
ReplyDeleteIt would depend on how much value they had. If not much I would just hold. If they still had at least 50% of their value I would sell. The correction is just getting started.
ReplyDeleteYes, about 50% still on those.
ReplyDeleteAll I was saying was that max pain would bring the market down today. Prices of most things were to high for the call writers. In the case of SPY it confirmed theory to the dot, finishing at 115.96.
ReplyDeleteGary- I know that the correction is just getting started, but if this is going to be a big move up n gold, i would think this correction would have to be brief...as in just a few days, giving us plenty of time for a move up. Given todays action, I have even more confidence that gold is going to stop around 1090 and then reverse to begin the move up. This would also make me think that the downside for miners is fairly limited from here. Maybe just 2-3% more before a reversal. The GDX/GLD ratio is still looking very good, so I think anyone holding June calls right now would be better off holding them, but that is just my opinion.
ReplyDeleteby the way, if this is going to end up being similar to the action we say in august, this is the exact point when i gave up on part of my position and ended up buying back at higher prices about a week later.
ReplyDeleteI think the S&P will probably test 1120. If you think miners and gold can hold up under that kind of selling pressure or don't mind holding through that kind of selling because you are confident gold will give us the final confirmation then go ahead and hold.
ReplyDeleteJust be prepared to hold for much longer in case this does turn out to be a D-wave.
i am actually in cash right now, as i play futures, just figured if i did have calls in miners i would probably hold through. Why are you so confident in a drop to around 1120 in the S&P? it doesn't really fit the cards for an explosive move. I figured we would probably just break the 1050 support line and then start moving up faster from there. Probably bottom the first couple of days next week. The dip buyer seems to be getting more confident.
ReplyDeleteThis isn't a half cycle we're working into this is a full daily cycle low. And these extreme momentum moves have a tendency to correct hard. I'm guessing a 40-50 point pullback which would be in line with our runaway scenario.
ReplyDeleteA runaway scenario would have gold topping several months from now instead of early May, don't you agree? Then what kind of wave would it be?
ReplyDeleteA very unusual C-wave
ReplyDeleteso i take it that you no longer expect an aggressive move up into may. you are now expecting an extended stair step type move up that will last 3 months or so?
ReplyDeleteIf this is still a C-wave. The parabolic move won't occur till the last cycle. Which should be in late May or early June.
ReplyDeleteHi Gary, Are you concerned about the bull flag looking weekly dollar chart? If the dollar hits new highs what kind of percentages would you put on a continuation of a C-wave?
ReplyDeletePropbably slim to none. If the dollar has another leg up we can pretty much bet this is going to turn out to be a D-wave.
ReplyDeleteThanks for answering my question, Gary.
ReplyDeleteGary
ReplyDeleteDo you honestly think the economy has bottomed/improving and we are going to continue growth again?
No obviously it's just temporary from the massive infusion of liquidity. This secular bear is far from over but we are also obviously in much better shape than we were 9 months ago.
ReplyDeleteThe mistake the bears are making is in assuming the economy is rolling over already. It certainly will eventually, but it's not doing it yet.
I come to a similar conclusion as you Gary, however i do think the correction could be quite a bit stronger as the one youre looking for. I wouldnt be surprised to see AUX drop to 970 in the next 3 to 4 weeks before the bull starts.
ReplyDeletePlease keep posting on this subject :)
It just does not make sense that the dollar is getting stronger with this happening:
ReplyDeleteThe U.S. Treasury's Bond Problem
http://seekingalpha.com/article/194404-the-u-s-treasury-s-bond-problem?source=email
Very unlikely that we trade below the last cycle low of 1044 after a right translated daily cycle.
ReplyDeleteBest ot just watch for the buying on weakness data and when institutions start coming back in join them.
Well, they are passing the healthcare idiocy, so that's enormously bullish for gold in the long term.
ReplyDeleteIt's gotten to the point where any bill will pass if you put enough pork in it. Hell they passed the bailouts.
ReplyDeleteGary,
ReplyDeleteIs your expectation of dollar possibly starting a new intermediate cycle in line with Tim Wood's cyclical analysis?
It seems unlikely that the dollar put in an intermediate low with only a very fractional weekly swing, not to mention the cycle would be short.
ReplyDeleteI tend to think we probably have a couple more weeks of strength followed by a move down into the intermediate cycle low in the normal timing band in May.
That would align much better with a final D-wave decline in gold and a move down into the daily cycle low for stocks.
Tim seems to be locked into the deflation camp so he tends to see everything with deflation glasses on. He's a big believer of the Kondratieff winter theory.
However when Kondratieff wrote his theory all currecnies were backed by gold. Now with all currencies entirely fiat any determined government can prevent deflation.
We just saw Bernanke halt the worst deflationary scare since the 30's in a mear 9 months by simply cranking up the printing presses.
Let's face it there is no debt large enough that the power of the printing press can't defeat it as long as the central bank doesn't care what happens to the currency.
"Tim seems to be locked into the deflation camp so he tends to see everything with deflation glasses on. He's a big believer of the Kondratieff winter theory."
ReplyDeleteTim's cycle analysis has nothing to do with deflationary or inflationary expectations. His cycle analysis stands on its own merit. One thing he always does is wait for confirmation before confirming cycle status,that's for sure.
Tim's expectations are rooted in his belief in
ReplyDeleteKondratieff winter.
The problem with trading purely by indicators is that during periods of consolidation one often gets whipsawed to death.
A classic example is gold. Tim was expecting another leg down into his 9 year cycle (although it actually lasts 8 years) and so he failed to ride virtually any of the move higher and in fact got whipsawed badly during the summer consolidation.
Like most traders Tim has his favorite tool and he uses it exclusively. Sometimes it works and sometimes it doesn't.
Personally I think cycles are a great tool but not one I would trust to the extent I would ignore everything else. The big picture fundamentals are the single most important consideration IMO. Then I give equal weighting to cycles, sentiment and money flows with technicals bringing up the rear.
Dawler up, gold down, equities down...Life is good!!!
ReplyDeleteAlmost forgot oil down...
we could possibly reach down to 1025 area in the current move down...
ReplyDeleteIf the dollar makes new highs then yes it almost virtually guarantees this is a D-wave with at least one more lower low.
ReplyDeleteAnd I agree. Big picture fundamentals is probably the most important, and why we're headed to Dow 36,000.
ReplyDeleteNo Dow 36,000 without the next "big thing". It's not possible to get there on a fundamental base of money printing. We have to have true productivity to support an expanding money supply, not to mention we have an ever expanding debt problem.
ReplyDeleteWe already tried to print and botrrow our way to prosperity during the last decade. The end result was the worst decade in history for stocks and the second worst bear market.
We aren't going to get any different result this time. All we will end up with will be another brief reprieve followed by another legendary collapse.
dollar just tested the highs and is on its way down. Gold is on its way up. I bought futures at 1093 this morning. If we trade below 1083, it will be a good indication to get out, in my opinion
ReplyDeleteI would be pretty leary about trying to call a bottom here with no stock market correction yet and gold looking like it's forming a failed daily cycle.
ReplyDeleteidentical to august. I know you don't agree with thsi Gary, but the similarities are uncanny.
ReplyDeleteThe COT action also matches up very well
ReplyDeleteThere hasn't been one time the miners or gold were able to resist a stock market decline in the last 12 months.
ReplyDeleteSo unless you think the stock market will bypass the daily cycle trough, gold and mining positions are in jeopardy right now. Not to mention the weekly swing high on gold was again confirmed today with another lower low.
Keep in mind the stock market cycle is now 30 days old. It rarely lasts longer than 35 to 40 days plus we have to have time for it to drop into the low.
On top of that bullish sentiment has reached extremes. Always a sign that any further gains will be given back. And to top it off we've been getting numerous SoS days as institutions take money off the table.
Now if you don't mind holding through any correction any position is fine. But if any move against you is going to lead to margin calls and or a loss, I think there are better ways to play this by just being patient and let the stock market cycle run its course.
I'm still not convinced of a D-Wave just yet, but looking at the last two D-waves (2008 and 2006) the average correction was -28%. 2008 being the most severe we have seen and 2006 resolving in 2 months. If this is a D-wave, following the weakest C-wave, it will be interesting to see if the average pullback wins (28%) or if holds key monthly moving averages around 1020.
ReplyDeleteThe last D-wave was an anomaly caused by the collapse of the credit marketsa nd the decline into the 8 year cycle low. I doubt we will see anythng that severe this time. I would expect gold to hold the 75 nweek moving average.
ReplyDeleteYes, but as things get more public and retail, swings should be larger. I like using the 14-day monthly as a guide. 2008 blew right through that level, but 2006 held it nicely.
ReplyDeleteHey Gary,
ReplyDeletesome of the PM stocks look like they'd like to bottom here. To give an example, two of the PM stocks I own: CA:FNV and SSRI. This coincides with a big drop in the PM price today that let to an intraday turnaround once silver hit a spot price of 16.60. That isn't too far off from where your 1-2-3 chart seems to predict the bottom. It seems your chart sees it hit a low of 16.00 before reversing up. Quite close, and perhaps close enough to turn around here? When I saw silver drop last Friday after the market close and further pre market this morning I expected the PM stocks to correct much further. However, they seemed to be reluctant to go down very far. In my view that could be a sign that they want to bottom here and wait for the spot price to bottom too, even if silver would drop to your 1-2-3 chart target of 16. I would assume your 1-2-3 chart lines out the case for a C wave continuation. What's your down target for a D wave?
Thx
Gary,
ReplyDeleteWhen does the daily cycle bottom for the stock market - I have early April and April 13 as 2 significant turn dates.
Greg
I didn't actually mean for those charts to predict a target I was just drawing in a 1-2-3 reversal.
ReplyDeleteThe problem continues to be the stock market, the same as it was in Jauary. Everything from cycles, breadth, sentiment and money flows is saying we will have a correction soon. When that happens it is going to take down the precious metals sector with it.
I think it's hopeless to try and pick a bottom in the metals and miners without also factoring in the stock market.
Greg,
ReplyDeleteToday is the 30th day of the cycle and the cycle rarely lasts more than 35-40 days. So we should be ready to put in a top anytime if we haven't already.
Gary,
ReplyDeleteA while back you said that a resistance line breached does not always turn it into support (and vice versa).
Do I have this right and where did you get this idea?
Just look at the chart of the S&P since last July. You can see that almost every move to new highs ended up trading back below the old high.
ReplyDeleteIf sentiment wasn't getting so skewed to the bullish side I would feel better about this rally holding the highs.
We need some kind of profit taking event to reset sentiment. Once that happens the market should be set to go higher, maybe a lot higher.
Gary,
ReplyDeleteMarch to May 2009 lasted three months without any correction. After that, the minor corrections (not the larger ones) lasted some times a few days only. What makes you so sure that this time it can't last three months without correction i.e. that we have already seen a minor correction (last Thursday to Monday morning) following a steeper one in January. Looking at a SP500 chart this looks totally plausible. Not saying you're wrong, just playing devil's advocate.
I don't expect a major correction. Just a move down into the daily cycle low. Maybe 4-8 days is all. Just enough to ease some of the bullish sentiment and move the 3 or 5 day RSI back to oversold.
ReplyDeleteGary, I have talked to many of my friends in the investment business and all of them have very little like 5% in gold and pm. They did it because of client request and not of an active portfolio allocation. Remember the internet bubble. Wait till advisors start to jump into this with their clients.
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