I can tell you that during one of these moves you can just throw out virtually every tool as they all become pretty much useless.
Sentiment didn't work during this period. Cycles stretched to absurd lengths. The COT failed miserably. Technicals were worthless. Overbought was meaningless.
There are two signs to watch for as a clue to an impending top. Needless to say we don't have either at this point and there's no telling how long this could last if it does indeed turn into a runaway rally. The 06/07 move lasted almost 7 months. This one is already 2 months old.
Virtually all markets have now broken through any and all logical resistance levels. 1200 S&P, 11,000 Dow & 2000 NDX just to name a few.
I don't actually expect the move to continue at the same pace as the last two months but it is showing all the signs of an impending runaway rally.
Needless to say shorting something like this is suicide, although I think by now we've all learned our lesson about shorting this cyclical bull.
SPX 1600 next week! Let's GO G-A-R-Y!!!!!
ReplyDeletegary-
ReplyDeleteIf you were to venture on a guess, relative to 2006/2007 where are we now? I assume since the rebound has been shorter and more powerful, the cyclical move will be over before the 06/07 7 month extension playbook. Thanks
This along with every other blog post was written after the aapl release and future jam up.... no offense to Gary or anyone but I think at that very moment, everyone on the planet including me, has/had concluded the market will keep going up (and still thinks the same).
ReplyDeleteActually big AAPL gaps have consistently marked short term tops. So the AAPL news is more of a negative than a positive.
ReplyDeleteDon't forget we need to see the market to move to new highs here before we start planning on a runaway move. That hasn't happened yet.
There really is no way to guess how far a runaway move will travel. I did go over two signs to look for in last nights update that usually signal a top.
Do you ever consider political risks when you make market decisions? The stock market is more related to political rather than fundamentals or technicals these days it seems.
ReplyDeleteA runaway move definitely seems viable, especially right through the elections in November.
ReplyDeleteI'm neither Dem or Rep, but it seems to me that Dems are dead in November, with NO hopes of resuscitation. People are pissed. I went to a Tea Party to check it out, and I've never seen so many upset people in my life, even angry at the media which seems not to cover what is really going on.
Amazing times, that's for sure!
What kind of political risks were you refering to?
ReplyDeletePerhaps anon is referring to the political risk that Ron Paul gets elected and disbands the criminal Fed? Or that we go further down the road to Communism at the hands of the NKVD?
ReplyDeleteJust guessing. I'm not trying to put words in the mouths of others.
Gary, I have reading your blog for over a year and I think it is better that you focus on the long term secular trend than trying to time the market. Your option trade on natural gas was a disaster and getting in and out of your pm just incurred yourself a big tax bill, not to mention getting out of pm a couple weeks ago and now you want to get back in when it is moving higher. Sorry, your timing is way off.
ReplyDeleteLOL I have news for you. No one is going to time the market successfully all the time.
ReplyDeleteI exited some of my positions because we were potentially in a D-wave and I wanted to take some profits out of the previous C-wave.
Now that gold has reversed the trend of lower lows and highs I want to start building positions for a potential C-wave continuation or if I have to hold thru another A-B consolidation I will.
It's easy in hind sight to say one should do this or that but in real time I did exactly what I had to do to lock in profits from the C-wave.
If the D-wave had continued down another 100 points or more we wouldn't be having this conversation. Of course at this point we know gold wasn't going down another hundred but in real time there is no way to know that.
Now if one doesn't mind riding a D-wave they can just hold. But I can virtually guarantee that anyone who claims to be able to hold thru a D-wave is fooling themselves.
The reality is that almost everyone freaked out about holding thru an 18% correction.
Gary,
ReplyDeleteI'd like to point out that even in a D-Wave gold was able to make higher highs and higher lows in 2008 (look to 07/2008). Ultimately we broke to new lows around 700. I understand 2008 could be an anomaly, but we just have to take price action for what it is and disregard outside events.
Well 2008 was an 8 year cycle low and a once in a generation credit market implosion so maybe we should throw that one out.
ReplyDeleteBut to your point just because gold makes a higher high certainly doesn't guarantee it couldn't reverse and make another low below $1044. The problem is how do we know that before hand? Although there are plenty of anons who are willing to come on and tell us what we should have done after the fact, in the real world we have to make our decisions in real time.
Now if anyone has indisputable evidence that gold is going back below $1044 I will gladly reverse my positions immediately and wait.
But barring, that we just have to take what we are given. Most of the time higher highs and higher lows is an indication of an uptrend. So I'm going with the odds in real time :)
Something is going on today. Significant reversal on the TBTFs. Is this selling on strength?
ReplyDeleteThat apple gap looks like it's calling out to be filled.
Could it be that 'they' took it past fundamental valuations, then took it past all the technician tools - resulting in market just going far enough to get all the shorts to cover and some new long money into the pot, before 'they' take it down....forcing the longs to cut losses...rinse, repeat.
ReplyDeleteWell there is no "they" Don't get caught up in the mindset that there is someone controlling the market. It ain't happening.
ReplyDeleteThe market is too big for anyone to control. Trust me everyone from you and me and the traders at GS are sitting here scratching our heads wondering how in the hell this market can just keep going up.
Ultimately it will do what it's going to do and everyone will either follow or fight what happens.
However even if it does correct it's very unlikely to be the end of the cyclcial bull. We haven't seen anything break in the currency markets yet. So even if the market throws us a curve ball short term the cyclical trend will still be up and any correction should be temporary.
Over at Slope of Hope there's a chart showing GDX in a clean diamond pattern.
ReplyDeletehttp://slopeofhope.com/2010/04/gdx-in-clean-diamond-pattern.html
I'm on the sidelines waiting for the gaps to fill.
LOL I don't think I've ever seen one of them predict anything. If I remember right the bears tried to make a case for a head and shoulders top recently also. How is that working out?
ReplyDeleteGold is in a secular bull market. That's all I need to know. Trying to predict short term moves is a losing strategy, especially ones that sucker you into short positions.
Tryng to short a secular bull market is probably the most efficient way ever developed to go broke. Heck even trying to short a cyclical bull market has turned out to be a fairly consistent strategy to lose money.
Einstein said that doing the same thing over and over expecting to get a different result is the definition of insanity.
ReplyDeleteI've got to say the markets do a good enough job of driving us nuts all by themselves. There really is no need for us to inflict needless punishment on ourselves by trying to fight the trend also.
Gary -
ReplyDeleteSorry, but I have to call you out on this one. You just said "Trying to predict short term moves is a losing strategy . . "
As a previous poster pointed out, you tried to do that (predict short term moves)and it didn't work so great did it? I didn't follow you but instead added when we pulled back and all my metals are strongly positive. Additionally, you are now back on your high horse saying you're going to hold on and ride the bull and this and that. IMO - you have little credibility after your calls/writings over the last months. You should admit to yourself that you are lost in your cycles and don't have a clue what comes next.
LOL no one has a clue what comes next. I'm just going with the odds. Now that gold has reversed the trend of lower lows and lower highs I'm prepared to build positions under the assumption the D-wave is over if that is what it was.
ReplyDeleteFunny that you would come on and claim after the fact, that you timed a perfect entry and of course do so anonymously so you don't have to prove anything.
Like I said it's easy for anyone to predict in hindsight one should have done this or that but unfortunately in the real world we have to make our decisions in real time. I did what I had to do to take profits out of the C-wave.
I'm now positioning for either a C-wave continuation or I will hold through another A-b consolidation if I must.
Perhaps you can tell us upfront where the market is going so we will know what to do with positions. It would be a lot more impressive and helpful if you would do that in real time instead of coming on and bragging about something after the fact.
LOL funny how these fleas come on and tell us what we should have done. Isn't hindsight just a wonderful trading tool? :)
ReplyDeleteThe runaway move will be the dollar and it will be up.
ReplyDeleterobo