Most of the time this plays out in bearish fashion as a stock or index crawls or bumps along a rising 50 day moving average. Once the support breaks it's usually followed by an aggressive move down to test the 200 day moving average.
Recently we saw this pattern play out in the dollar index.
As you can see when support broke the dollar moved aggressively lower and may still have further to go as it still didn't move all the way back to the 200 DMA yet. I've also noted that the break down powered the rally in the stock market. As a matter of fact both legs down in the dollar powered strong rallies in stocks.
I'm pretty confident that if the rally is to continue Bernanke is going to have to keep pressure on the dollar.
Now we have this same pattern starting to develop on the S&P although in reverse form. If the market breaks above the 50 it should power a very aggressive move higher.
Gary please stop with the dollar index nonsense. That measure is done and gone! All currencies are now crap. The USD is the worst perhaps, but you can't keep talking dollar versus garabage. Unless you believe the Euro is stable, talking about the dollar index is futile. Please delete this blog and continue on with something that makes sense; as you usually you do. :)
ReplyDeleteSure, but then the SPX still would only have upside to 1110. Why make predictions for the next 5% in stocks, when you long the only remaining bull market which is GOLD?
ReplyDeleteGary_Uk here.
ReplyDeleteThis post made me laugh out loud....for 2 reasons.
Gary refers to a 'rally', yet the S&P is already down by 13% from it's peak, and is clearly trending down now, with lower lows and lower highs for 3 months (when will he wake up on this one!!).
Also, the S&P has been above it's 50 day MA many times in the past 10 days, and yet keeps getting hammered quickly down. it's not rocket science to see the weakness.
We may get a short, puny 3% pop, but it's as clear as day where we are headed, but not to tunnel-visioned goldbugs clearly!
Clam up, Gary_UK. We've already seen you lose 50% of your account (would've been only 10%, but you like options) in a little over a week.
ReplyDeleteYou know it's true! :)
I'm gonna pop equity shorts in the face today.
ReplyDeleteI agree with the host Gary that gold is going higher no matter what and the best be. I even agree with Gary_UK that stocks will eventually go lower (not higher, like SMT), but I am confident Gary_UK will lose money anyway.
ReplyDeleteGary_UK, What happened to your "trading without pain"? LOL!! You got smoked immediately, and haven't even figured out that buyers of options are just digging their own grave.
You've got British nerve coming around here to chastise the host. How convenient you forget your blowup. :)
This site kicks ass! We saw ukGary take it in the cheeks a few weeks ago with our own eyes. With his strategy, he'll be flipping burgers before the end of August.
ReplyDeleteTroll meter should be nearing 75%.
The assumption is that since we should have an intermediate cycle low in place That a break up out of the crawl would send the index much higher than just the 200 DMA even if this is just a bear marekt rally.
ReplyDeleteI do find it funny that the trolls insist that I'm bullish when in reality I've said over and over that I haven't made a decision yet.
All I'm saying is that we are due for a rally even if it is just a bear market rally.
If the market breaks above 1130 then the odds are we will test or break the highs.
If both the transports and industrials break the July 1st lows then I will be confident we are again locked in the secular bear trend.
I suppose that unwillingness to acknowledge what I've been saying might qualify to move the troll meter up again :)
July 22, 2010 5:07 AM
Speaking of options the ROBO ratio hit a multi year low recently.
ReplyDeleteThe ROBO measures the small retail trader (dumb money) buying to open calls to puts ratio.
Gary in UK has a lot of company buying puts.
Usually it's not a great idea to follow the dumb money as they almost always trade based on emotion and they all pile onto a trade right about the same time the trend reverses.
Gary, something completely different:
ReplyDeleteAre the comments on your old blog http://garyscommonsense.blogspot.com/ no longer available?
I wanted to recheck the sediments in 9-12/2008...
I did take the comments section down because the spam was piling up. I can turn the comments back on for a few hours if you would like to do some research.
ReplyDeleteANON 4:30
ReplyDeleteI hope you keep buying gold and drinking the kool-aid. You will be puking this crap out at 1000 at a 25% loss. Arrogant POS you are types always get their butts handed to them. I CAN'T wait.
Oh, I will be there covering my shorts when you sell to me.
At 24 weeks its probably way to late to expect gold to drop anywhere near 1000.
ReplyDeleteAnd like the ROBO ratio public sentiment on gold has dropped to lower levels than what we saw at the Feb. bottom.
The odds are very high that value investors are already accumulating gold from emotional dumb money traders. And those value investors will put a floor in gold.
But hey your irrate comments are adding to the troll tally :)
Sounds like somebody having sex.
ReplyDeleteGary-Uk again.
ReplyDeleteOh well, you goldbugs are getting snarky, I wonder why!!
Just watch the S&P over the next few weeks/months, all of my positions are just fine, I don't trade daily trends, but medium-term, and I'll cash in at S&P 880ish.
Wait and see. How far down will gold get taken this time? 800 or 900? Who knows?
I will give Gary uk credit he does have the balls to post even while the market is running over him.
ReplyDeleteMost trolls disappear back under the bridge as soon as the trend goes against them.
I suppose even Gary uk will soon crawl back into his cave if the rally continues though.
Who knows, indeed.
ReplyDeleteSPX isn't as clearly trending down as you suggest. Pull back a bit, and it appears to be rangebound from the middle of May, with a false breakout to 1130 and a false breakdown to 1010 both rather quickly contained. A chartist might even make a case for a diamond bottom forming. Who knows. :-)
It certainly could break down from here. The point being it's not a slam dunk, IMO.
Save the troll foundation.
ReplyDeleteTrolls are animals too. Please contribute kindly to the following site. We need the money, and are currently finding it difficult to support the endangered species of the US troll. Save A Troll Foundation. Please give everything you can, you will make a difference.
The many posts antagonizing the great US troll saddens me. He has a fragile ego and needs lots of support. We are in the process of making it illegal to hunt trolls, or in anyway attack a troll without their prior consent. In such an advanced world it is a wonder that such racist acts are still upon us. Don’t worry troll onlookers stay strong, and keep the fight.
Don't give Gary-Uk too much credit. He disappeared exactly the same time stocks trounced him for around 10%.
ReplyDeleteHe'll be slinging fish 'n chips by late August, if it takes that long. :)
Thanks to Gary, I'm up 19.5% at this very moment.
ReplyDeleteThe troll thinks I'll puke up my gold at $1000? He's even dumber than he trades.
How about posting your entry price, when you take the trade, and then the exact exit price (at the time, not 3 days later), so everybody can see what I already know...that you lose money, and are remarkably consistent at it. :)
Geez, short stocks is about the worst trade on the board right now. It hurts just watching trolls get basted.
ReplyDeletePicking tops or picking bottoms, you might as well pick your behind.
ReplyDeleteWhen will you slaves realize we own you? Now get back to work!
@anon 6:47
ReplyDelete20%?! That's a lot of fish 'n chips! LOL!!!!
"suprises to the upside" :)
ReplyDeleteG,
ReplyDeleteHow the hell did you time that perfectly?
The S&P is breaking above the 50 as we speak and gold is going nuts.
Big Kudos!
As short term traders, when do the trolls finally bite the bullet and stop the bleeding? Lack of risk control is the single most common reason for failure in this business.
ReplyDeleteStill, we should be thankful they exist. Who else are we going to take money from?
Troll babies where are you????
ReplyDelete(sound of leaves rustling in the wind)
Well said, Jesse!
ReplyDeleteGary-
ReplyDeleteIf we closed here and stayed for the week would we have the important weekly swing low you are looking for?
Seems like indeed we would!
No since we made a lower low this week the swing can't come until next week and it won't be official until next Friday.
ReplyDeleteBut that doesn't mean one can't jump the gun if they are brave.
The length of the cycle and extreme level of bearish sentiment put the odds very high that this is either the low or it's only a few days off and only slighty lower than the recent lows.
Traders move based on lines on a chart. Value investors move based on their definition of value.
In a secular bull market bottoms are formed when value investors step in. The traders just don't understand that, they want the market to go to some specific level based on a chart.
That level may or may not correspond to where the value investors find value.
I think there is a decent chance the value investors found value at the 1175 level and gold has gone as low as it's going to go.
Hmm the HUI is right back above 450.
ReplyDeleteI wonder if the trolls realize gold is going the wrong way if it's to reach $1000?
ReplyDeleteI'll be puking out my shares, alright, around $5000+/oz and to some newly impoverished troll baby.
ReplyDeleteLong live Gary!
I learned these lessons a long time ago.
ReplyDeleteRule number one. Never, never, never, never trade against a bull market.
Rule number two. When a bull market is suffering through a correction see rule number one.
Today's mkt action is indicative of a squeeze. There are no dips for the shorts to get out. At some point they will bail, further fueling the rally. Typical trend day. Break of SPX 1100 will confirm what Gary has been saying all along. Not that I'm bullish.
ReplyDeleteAlthough seeing the correlation b/n miners and the mkt going higher recently makes me wonder if we need a big mkt rally for the HUI to go up.
Gary so we go up from here, or do you think today won't hold?
ReplyDeleteI think you're right, and trolls can expect another stooge-slap tomorrow if this holds up today.
ReplyDeleteLest we forget, they kept adding to positions yesterday with terms like "bloated pig". Getting crammed with 3x your initial position is the fastest way to the poorhouse.
Hey Anon :).
ReplyDeleteSoon it will be :(
I don't know what drug you are on, but you are headed right off the cliff.
Shorted more at 1196 and 1199. Easy sales.
There's no bravado like anonymous bravado.
ReplyDeleteWeak shorts will bail. These are great entry point for us shorties.
ReplyDeleteHow many of you bagholders bot more in the last few days? That would be a big fat ZERO. No one posted any buys at all that I could see.
Anon,
ReplyDeleteI have no idea I just go with the odds.
The odds say we put in an intermediate cycle low on July 1st. Even in bear markets those tend to rally from 4 to 8 weeks before rolling over.
If this isn't a bear market rally but instead the cyclcial bull still has some kick left then we will make new highs.
All I know is that shorting at this point is not only fighting the short and medium term trend ... something the traders claim they don't do, but history suggests isn't a very high probablity trade.
The quickest way to the poor house is to repeatedly take low probability trades. Every once in a while one will pay off but over time you will lose all your money with this strategy.
I did suggest brave subs could buy yesterday as the swing low on gold had a chance of marking the daily and intermediate cycle bottom.
ReplyDeleteBut most subs are investors and never sold in the first place.
Gary, we are trading above the 50 day moving average right now, do you think it will hold into the closing bell?
ReplyDeleteSee my comment two posts up.
ReplyDeleteI didn't know that his middle name is Shalom. That's too funny.
ReplyDeleteHere are some fun forecasts by Bernanke:
http://www.youtube.com/watch?v=HQ79Pt2GNJo&NR=1
We tell the truth around here, and no, I didn't buy more into the dip simply because my buy limit was not reached. It's still in there, and if it never gets filled, I'll still make some serious candy unlike the trolls who keep lining up for beatings.
ReplyDeleteLOL!
So troll boy now has 5x his original position, and what would his average price be? Stop-out level? Profit target?
ReplyDeleteIt'll be hard to get the facts out of him, as he has difficulty admitting he's a loser in the markets.
How about some numbers, and sizes so the others can watch your blow-up in real time. Forget me, I already have you pegged.
Frank,
ReplyDeleteMy people are only 2% of the US population, but control the banks, all of the FED, all media, and 33% of the Supreme Ct after Kagan is approved.
We now control just about everything, and I'm proud to say the above #'s are facts. We finally even managed to put a menorah on the White House lawn last year! :)
Gary, do you think that the commodities bull market was interupted by the credit blowup in 2008? Will pm, oil, agriculture and industrial metals continue to go up despite what goes on in the stock market in the future?
ReplyDeleteGary,
ReplyDeleteYou have often referred to fundamental buyers or people who buy off lines on a chart. I am neither. I use charts a little (as do you: triangles, T1, crawl), but I mostly trade off price/volume statistics and sentiment. I shorted the day before the 261 point drop because we got WAY overdone on the upside, covered the next day (went flat because the extremes were gone), and am now modestly long. I use ROBO, various oscillators, etc. You are right that the charts look lousy at the bottom, but, for example when 5% of the SPX stocks are above their 50-day line, it is time to buy. That is technical non-chart data that works. Please don;t confuse "technician" with "chartist." I agree that head-and-shoulders" and many other patterns simply do not work. By the way, I am up about 3.5% for the year on my sizable account, which in a 0% world is just fine with me.
I think just like Jim Rogers does. If the economy strengthens demand will come back and commodities will benefit because of supply constrictions.
ReplyDeleteIf economies don't improve most commodities will still outperform because governments will continue to print money.
The only sector that has all the fundamentals in it's favor are precious metals, which are seeing increased demand, which doesn't wain as price rises like oil BTW. The metals will of course also benefit from currency debasement.
So yes to comodities in general even if demand remains subdued and yes to precious metals no matter what happens to the economy.
Agriculture has been on a tear lately, speaking of other commods.
ReplyDeleteYes DBA had one of the largest divergences as the stock market was making lower lows.
ReplyDeleteWhen will you fools ever learn?
ReplyDeleteNever trade against the G-man. I've watched this blog for years and he always ends up being right.
Considering agri has dropped so low, a rebound or tear is not unexpected. The key is will they go up more. Have u seen pics in china? Worst flood in 100 yrs.
ReplyDeleteI'm sticking with gold over any of the other commods, but agri would be my second choice, and only into pullbacks.
ReplyDeleteGold rules the day.
To be honest, DG, comparing your returns to a no-maintenance, no need to watch SPX return is probably not the best yardstick for a person who does this full time, no?
ReplyDeleteAt least you've come around to the G-man's side, which is more than can be said for trolls that continually get spanked in the markets.
Gary, that's what they all said about commodities in the 70's, good in both good and bad economy?
ReplyDeleteIt really just has to do with human nature. Politicians are going to take the path of avoiding short term pain. That leads to money printing and that leads to support for commodity prices even if the demand side of the fundamentals is impaired.
ReplyDeleteUntil human nature changes I think we are safe betting on it.
One man's "sizable account" is another man's pittance.
ReplyDeleteIf one man makes 3.9% on a "sizable account", implying it's BIG money, then he loses BIG money when he's down 3.9%..it's just a form of mental masturbation, and a sign that the trader is counting his dollars more than his percentages.
3.9% is 3.9% regardless of the number of dollars it equates to, which ain't all that good. One trade away from a negative year.
"Gary, that's what they all said about commodities in the 70's, good in both good and bad economy?"
ReplyDeleteJuly 22, 2010 9:55 AM
That's true, but we're in a situation more reminiscent of the 1930's than the 70's.
Yes we are and we are debasing the currency which is exactly what Roosevelt did in the 30's that halted deflation. Also if you will remember gold and miners were the only thing that went up and went up big in the early 30's.
ReplyDeleteThis action is absolutely terrible for the equity shorts. I'm pleading with them to cover before the S&P gaps to 1110 tomorrow morning.
ReplyDeleteThey've been warned.
Timmay Knight is 100% short as of last night. Good Knight Sweet Prince!
ReplyDeleteLMFAO!
This guy is running a hedge fund too, trading other folks hard earned money. Brutal.
Dr. Copper might be worth paying attention to today.
ReplyDeleteAfter a brief foray into the light the ever nervous troll population has again been beaten back into submission by the market gods.
ReplyDeleteI see beadly little troll eyes peaking out from under every rock just waiting for a down day to burst forth and let us know that everything is "crashing"
LMAO
Remember that head and shoulders bottom I mentioned a while back?
ReplyDeleteBoys, boys calm down, you'll give yourselves heart attacks, or choke on your venom!!
ReplyDeleteHere's the deal...if I am wrong, I have a stop in place at SPY1137, I will lose £450kish, I can live with that. Won't change mu lifestyle, and I earn a good living. No hiding from me you'll note.
If I am right though, and SPY goes to 880ish, I will bank £1m, and I may hold for 630, we'll see.
I am amused by the level of excitement my post generated, you gold bugs are funny guys, I love you all.
Let's see who is right over the next few weeks/months shall we?
I'm happy to post copies of my trading statements if I make a huge gain, via Gary our host if need be, as I'm sure you'l all doubt my words.
But I'll also post at 1137 when I close out with a £450k loss. It is only money!!
Have a great day.
Oh, I'm no gold expert, but how comes it's only up by barely 1% today, when stocks are flying up by 2.5%. Odd no.
Maybe it's because gold knows deflationary forces are winning the battle, and so is feeling very heavy....I don't know, but I'd be worried if I was a gold bug, maybe another 30% correction like in 2008 will shake out all the weak hands.
Let's see, who has the courage of their convictions eh?
Gary_UK-
ReplyDeleteYou tell it to them!!!
:-)
I never understood why "anonymouses" have to rag on people (with handles) trading the other side...
LOL
This trading is hard work! I just woke up from a 2 hour siesta, and see no letup to the drubbing bears are taking.
ReplyDeleteIf these dummies would only follow the real Gary's advice. :)
Well, well, mr billionaire "i make a good living", that IS a lot of fish and chips! LOL! You already blew out last week immediately after just such a statement as you made above.
You can do it the hard way, or take long afternoon naps like me. What's it gonna be? Don't confuse stress and hard work with making money. :)
He's (ukgary) definitely stressing over his position and working too hard if he's still on this blog. He's in the Greenwich time zone and should be sleeping already. Now that's a long day!
ReplyDeleteBefore the champagne corks go off, it would be nice to see GDX diverge positively from SPX, instead of the mild negative in place since the first half-hour. Volume isn't showing new buyers on board just yet, either.
ReplyDeleteSLW is showing its pedigree, it must be said.
And also don't convince yourself you're brave for having a handle. You could easily be the same clown that blows up and comes back with a different handle repeating the process again and again, week after week.
ReplyDeleteI see how you trade, braveheart. P+L is all that matters, baby, and you have an "L".
I hope Gary's call for a lower low in gold next week comes true - I'm itching to increase my INVESTMENT when it pukes down to the 200dma. I think today's pop is weak - we sold off pretty good at the top and there's no accumulation volume to speak of. Don't much care about the market - got out of that a couple of years ago and haven't looked back.
ReplyDelete"Oh, I'm no gold expert, but how comes it's only up by barely 1% today, when stocks are flying up by 2.5%. Odd no."- Gary UK
ReplyDeleteOh yeah, how come you're down 3+% today, and my account is only up 2%? You must know something I don't! LMAO!!!
Rather than obsess about the unverifiable profits and losses of complete strangers, it might be more profitable to keep an eye on the market and one's own investments. If you come out on top, consider that reward enough.
ReplyDeleteJust my $0.02.
On a more serious note, troll-bashing aside, I agree 100% with Low Tax and would prefer another, or deeper pullback rather than this action today.
ReplyDeleteGold has some work to do after it's weakening the last few weeks. The trolls are just too easy to have fun with. I am serious though, when I tell them they better cover before the close. tomorrow is not a high percentage setup for bears, even if their positions work out.
Interesting how the character of the market has changed since April. How many 3% up days have we had since the flash crash? Typically that is bear market behavior having so many multiple percentage point up days. This market has really just been a chopfest.
ReplyDeleteAnother interesting note, why are there so many posters on this board when you are all supposedly long term investors? You should probably be checking this board on a quarterly basis if that is the case, or maybe monthly at the most. Otherwise you are just wasting your time if that's really the investment approach you are taking.
Does taking a nap count as wasting my time? cuz that's where I was. (see above)
ReplyDeleteLong term holders still need to buy more GOLD into pullbacks, so that's why I get online. It's nice to hear what others are saying as well.
ReplyDeleteWhy work so hard trading, fighting all day just to lose 3% (plus commissions, and spreads) when you could nap a couple hours in the afternoon and make 2%?
ReplyDeleteAlso, if one is a short term trader and trend fader, why would he come here at all?
I trade for the money and because I love to. It's a fantastic game (I play chess, bridge, backgammon, poker, etc. and they don;t pay me!). I come to the site because I like to know where the major moves are going to be and Gary says some useful things. I am happy to hold a position if it seems right (was short Euro and China from january to June). I don't go in assuming I will trade, but do what the market makes me do (actually I go in expecting to trade if I am going counter major trend, like my recent short. I agree with gary that the intermediate low is in. But my indicators were just screaming overdone so i had to short for a quick drop). There are lots of ways to do this game, but you need to do your way of choice well. There's also no need to insult people who do it differently. I am surprised at the ego and testosterone sloshing around this site (not you, Gary) Really, people, relax. If someone really is ignorant feel sorry for the guy; don;t insult him. You were probably ignorant once too.
ReplyDeleteANON :)
ReplyDeleteYou know who you are.
I hope you enjoyed the little pop today cause it will be brief for you. I shorted into this pump job and equities too. i noticed you have not bot anything. No faith or no money. I think it is the latter. And you will have less in the coming weeks.
GL
Troller
GLD closed under that nagging 450 point thar G-man said would never go below. You boyz just had and opportunity to sell above 1200. Down from here.
ReplyDeleteTroll
How ominous.
ReplyDeleteYou know the truly successful traders ... they always talk with absolute certainty about what will happen a few days/weeks/months down the road.
It's an honor to have the benefits of such insight on a modest, free, anonymous message board. You usually never see that.
LMAO! All the way around.
ReplyDeleteI'll be a buyer (add) at $1150, then again at $1080, and not before. The troll keeps shouting out his best guess on the next 1% move, as if it matters, and has remarkable consistency in having large size AND on the wrong side each turn.
Btw, didn't your mom tell you not to go around counting other people's money? :)
GLD at $450? That might explain your poor results. You're not clicking on the right quotes!
ReplyDeleteGLD will indeed be at $450 one day, but it will require patience and a strong hand to still be in the trade.
A troll might make money if they could quit worrying about only the next 20 minutes. That approach gets them out of the winners of a lifetime far too early. We shouldn't confuse activity with profitability.
No doubt he meant the $HUI.
ReplyDeleteGary from the UK
ReplyDeletestop posting or change your fucking ID you douche
I come here to read the real "Gary" and I don't want to have to check your garbage posts each time while polluting my brain with your junk
thanks
Re our friend Gary from Blighty.
ReplyDeleteHis outlook reflects the gambling mentality prevalent in the UK as exemplified in spread betting in the financial markets. Really toxic stuff, but it's become extremely popular among retail investors and I am sure that 90% of them are taken to the cleaners.
Why people don't use options instead of spread betting to get leverage is beyond me. I guess it's because most of these people have experience from sports gambling.
Hi,
ReplyDeleteThis Gary and Gary duplicate nick is absolutely confusing.
Could I ask one of you to change your nick to a little different please?
Hey Anon :)
ReplyDeleteAgain, you know who you are.
Last night you had a great chance to sell above 1200. I know you didn't sell or buy but, I did shorted more.
troll
Gary-uk is pretty dense. His ego causes him all sorts of problems, so it's unlikely he'll change his name here.
ReplyDelete" I did shorted more. (gold)"-troll
ReplyDeleteLOL! Yeah, right. So your only "strategy" is to keep averaging into losers until they turn your way.
That works about 90% of the time, so good for you. Of course the 1 in 10 times it doesn't, you're out of business.
Looks like more pain for the trolls today, and this time with even more size. :0
How can you guys get up so early to troll around. I am impressed, but man do any of you sleep?
ReplyDeleteAveraging into a short position until it finally goes your way only works in a bear market.
ReplyDeleteIn a secular bull market that strategy will destroy ones account, espcially if they are averaging into shorts 24 weeks into a weekly cycle.
In secular bull markets one buys dips.
If you simply can't control your need to short then at least wait till gold gets extremely stretched above the 200 DMA. At least at that point you would have the law of regression to the mean in your favor.
Shorting this late in a cycle with gold and miners just barely above the mean is pure lunacy.
Gary, I agree that shorting the gold bull is typically a bad idea, but you can't just call it lunacy. It just has to be treated as a trade and not a long term position. The short term trend is down right now and as long as you have a stop in place that you obey and proper risk managent, then there is nothing wrong with shorting gold. Obviously averaging into a short position is a poor choice for gold, but I don't think you can just use a blanket approach and call shorting it lunacy right now.
ReplyDeleteYou picked a great time to add to your gold short, troll.
ReplyDeleteI especially like the deductive reasoning that gold's relative underperformance yesterday made it a great short going forward (for how long?). Haven't you learned relative strength trading has been out the window since 2005?
Nope. Instead your biggest position is on the wrong side of the strongest thing on the board!
You are THE textbook case of what NOT to do. LOL!!!
funny, there are as many trolls on this board long gold as there are short gold....hmmmm
ReplyDeleteAu contraire, Blake.
ReplyDeleteA monster bull will surprise occasionally, and it will more often than not be on the upside.
Those surprises will put you in the poorhouse, as you assume you'll get filled at the price you chose to stop out. One catastrophe is all it takes.
Isn't it simpler just to wait awhile and buy the eventual dips in gold?
ReplyDeleteEven the dumbass trolls didn't have the sense to buy the pullback, but instead have decided to short the rallies again. It's a mental block. :)
Using proper position sizing would never put you in the poor house regardless of whther you got stopped out at the right place or slightly higher
ReplyDeleteLet me share my two rules again. Rules I learned the hard way over many years.
ReplyDeleteRule number one. Never, never, never, never trade against a bull market.
Rule number two. When a bull market is suffering through a correction see rule number one.
Shorting secular bull markets will ultimately just end up costing you a lot of money even if it is only for short term trades. And if you average into this kind of trade it will eventually cost you your portfolio.
All we have in this business that separates this from gambling is the ability to wait till the odds are in our favor. If a trader can do that they will make money as long as they also control risk.
If one insists on taking trades where the odds are against them then they are basically gambling. If they take long shots, sure occasionally they will win now and then, but if they continue they will blow out their account.
I would consider averaging into a gold short on the 24th week of an intermediate cycle after it's already been down for 5 weeks a long shot.
It's just one of those trades that doesn't need to be taken. Either find a trade where the odds are in your favor or take some time off until one of those setups comes around.
Gary-
ReplyDeleteDid I somehow miss last nights publication?
That is true about sizing, Blake, so maybe you don't go entirely bust, but instead lose "only" 25% of capital. you get the point.
ReplyDeleteHow much potential for gain does shorting a bull have even if it works, when many are looking to buy the declines? This observation also makes you a weak holder of the short once it starts to profit, and leads to early profit taking.
Sooner or later all markets roll over, but guessing the end turn of the bull is a losers game, IMO.
Anon :)
ReplyDeleteYou know who you are!
Nice dump in gold heh!
I need say no more.
Oh btw I have been short since 1250 area and I know it was a bull market in gold but it seem as though we are headed down.
GLTA longs.
troll
Anon- I have been long gold for a long time now, I opened a short position yesterday to reduce my delta, in fact I have a negative delta right now so I am a bit short term bearish. When we start to see some real strength and not just bear flags on the gold chart, then I will gladly cover my short position and get back to riding the bull. Would you really consider a 25% loss on an account good position sizing? I would not consider that trading would you? If so then you should definitely not ever think about protecting your positions with shorts
ReplyDeleteGary
ReplyDeleteI want to know where to buy 1/2 oz gold pieces or coins with a relative low premium. Any suggestion would be appreciated.
TIA
Butch
ANON :(
ReplyDelete1187 lod..........
ut-ohhh!
troll
Ok Blake, perhaps you use razor thin stops to avoid drawdowns. But that will just stop you out many, many times, especially since the probabilities were not in you favor. So one big loss, or losing .5%-1% of capital 19/20 times, it's still detrimental to short a bull, even more so when it's the only bull.
ReplyDeleteyou didn't mention your long gold position, so I was only addressing a short side trade in gold. Sometimes they work, but still a poor bet!
www.goldtrader.com
ReplyDelete"ANON :(
ReplyDelete1187 lod..........
ut-ohhh!"-troll
I see that. And since I'm not the one with too large a position size, I'm still waiting patiently for pullbacks to add. This is fine by me, you ninny. :)
Thanks to Gary, I'm only up 18.6% as I type!
ReplyDeleteI published last nights report to the site.
ReplyDeleteHeavy selling on the Comex. More Paulson liquidations.
ReplyDeleteI doubt Paulson is dumping gold. Remember this is the man that held on to his short real estate position waiting for it to work for over a year.
ReplyDeleteThese kind of investors don't think the same way the average retail trader thinks. They take positions based on fundamentals and then they hold.
If they are selling it's to run stops and get weak hands to puke up their shares so they can accumulate large positions into heavy liquidity.
This is one of the reasons TA just doesn't work.
Why do you think tops and bottoms are often put in with a minimal break of a resistance or support level that immediately reverses?
Big money needing very liquid conditions to get into or out of positions will run those levels on purpose to create the conditions they need to take or exit large positions.
http://moneymorning.com/2010/07/20/gold-7/
ReplyDeleteI would be careful of any service that touts a small junior miner. These are almost always pump and dump schemes.
ReplyDeleteThe best strategy for juniors in my opinion is either GDXJ or a basket of 7-12 juniors.
A gold bull would like to see GDX positively diverge from GLD and SPY to signal further strength, as it seems to be doing at the moment (though the price movements are still to small and unsustained to impart much significance, imo). Something to watch closely.
ReplyDeleteI suspect the moves through the rest of the summer will be mild as we are still in the low demand season, even if we have seen the bottom for gold.
ReplyDeleteThe big powerful move will begin probably in September.
Blake --
ReplyDeleteThe mantra of this board is "long gold only" and "every other strategy is stupid" so it's kind of pointless arguing with some of the people on here. Most of them are just here to make sure those who disagree are properly put in there place and called "trolls", kind of like being in 4th grade and not being in with the cool kids.
Props to your strategy though I also still think gold is potentially set up for a fall, I think gold bulls are still too complacent after a long run.
Justin,
ReplyDeleteI don't think anyone would call you a troll. You are just debating your views. People can agree or disagree.
I think what many find irritating is when some Anon comes on to tell us that everything is "crashing" or that anyone riding the secular bull is a bagholder along with assorted vulgar language.
Those are trolls and invariablly they show up in force at market bottoms.
I was only half joking when I put up the troll meter. It is actually a pretty good sentiment indicator of an intermediate cycle bottom.
Just go back and read the posts at the Feb. bottom and you will see what I'm talking about.
But on a more scientific note the public opinion poll for gold is now at a lower level than it was at the February bottom.
That's a sign that we may run out of sellers at any time. And then who knows at what level the value investors are going to step in.
Maybe that level came at $1175, maybe it will come at $1155. There just isn't anyway to tell. That's why it's dangerous to short a bull market. One never knows at what level the fundamentalists will step into the fray.
So short gold, Justin. if you think it's due for a pullback, and you think shorting that pullback is the best way to trade it, then do it.
ReplyDeleteI agree it could pull back, but my trade is to buy that pullback, and stay long what I have in the meantime.
Don't expect others to pull the trigger for you.
Get ready folks. Mother of all short squeezes this afternoon awaits us all as the the indices prepare to tag their 200 day soon...very soon. Do not be short this weekend.
ReplyDeleteYou've been warned.
John
I second Gary's comment, Justin. There's a difference between a clearly articulated contrary view, as in your case and others, and the sort of gratuitous and childish taunting best suited to the YahooFinance message boards.
ReplyDeleteKeep posting your case against gold for as long as you see it, as far as I'm concerned.
STRESS TEST....oooohhhhhhh
ReplyDeleteIts all fixed. Stupid Amerikanz.
All banks pass stress test!!!!!! What a fuckin joke people.
ReplyDeleteHope you gents sold or shorted gold.
ReplyDeletetroll
Well of course they pass. They will be given as much fiat paper as they need at 0% interste rates.
ReplyDeleteDid you really think they wouldn't pass. Were you pinning all your bear hopes on the system allowing the banking sector to fail?
I will eventually but not when it's just barely above the 200 DMA are you crazy? That's when you accumulate not sell.
ReplyDelete@ lowtax and anyone else interested
ReplyDeleteLowtax, we were discussing Gold/silver coins (eagles, maple leafs, etc) a few weeks back and the possible tax implications. I ran across this article and thought I would include the link here in case you haven't seen it. Basically, the Den of Thieves (congress) and their owners have decided that any and all transactions in the economy over $600.00 will require the issuance of a 1099 tax form. This would include ALL gold/silver coins. Takes effect in 2012 so we have a few years to have this removed.This was part of the health care bill. Typical of Thieves.
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=11843
Sell to Kitco or other in Canada. Start shipping it to a Canadian saftey deposit box, and when its time to sell just hit the sell button.
ReplyDeleteANON :(
ReplyDeleteYou know who you are.
New lows in gold. Shorts are looking good. At least I post my trades not just bloviate.
troll
This will be the fifth week in a row lower. TA really looking bad for bulls.
ReplyDeletetroll
Where did all the bulls go? ahhh, all curled up in the fetal position hoping inflation kicks in.
ReplyDeleteIf troll keeps it up he will move the meter to 75% all by himself :)
ReplyDeleteStocks are killing you, though. Don't forget those. :)
ReplyDeleteBeen long DGP since $25.77 and SGOL since $107.76. Only those 2 positions, no miners, no silver thus far. Will be in gold for some time.
I think I'll take another afternoon nap. I sleep well with strong hand status. Good luck, and don't forget to post every time gold drops a nickel!
That's true. You don't *just* bloviate. :-)
ReplyDeleteGLD appears rangebound between 119 and 115 with a downward bias for now. Short term, I wouldn't bet against it, though the miners haven't confirmed the move lower in metal yet.
You *sure* you wouldn't be happier at Yahoo?
Happy scalping, my repetitive friend.
@troll who is shorting gold:
ReplyDeletehope you make some cash.
I would be one of those Gold/Silver longs. I have been buying coins since 1999, so I personally do not get to worried about daily price. Gold could drop $200 or more from here and I still would not have to worry. My last physical purchase was the summer of '09. For my trading, I have had 4 buys and 2 sells over the last year. I am waiting to add some more in the next week or two. just following the G mans advice and waiting for the swing weekly low. Just so you know, I will sell all trading positions when G man gives us subs the call that the C wave is done. And I don't care too much if it is an early call. I will have nice profits.
I guess your comments are only directed at daily/weekly traders of PM's, because they really mean nothing to those of us who are invested for the longer term bull market. ( I suspect that would be most of SMT subscribers)I have in the past and do currently trade the PM's (not my physical holdings) and have had some good winners and a couple of big losers as well. my losers came from being too leveraged/too large a position size. ok so I learned. The G man has kept me focused though for the last few years and I can confidently say I have not lost a dime since '08. But here is the best...I have been on vacation (ok I work for myself so I have the freedom to take that much time) for 3 of the last 4 weeks and am leaving again next week for another two weeks. All this was paid for from profits in the last year. Its freaking great to be a gold long especially with a good coach like Gary. Oh and my wife is heading to the UK in September. She will be selling 3 of the 4 Philharmonics she bought last year there and the profit will cover all her spending money while there. pretty awesome isn't it for a gold long.
good luck to all.
Nat, thanks for the link on the 1099 forms. I ran across that on Zerohedge a day or two ago - very annoying to say the least. Pretty amazing power grab by Congress to see where every bit of money goes. I don't think it's aimed at gold though - I've read that it's a prelude to a VAT tax. Regardless, I suppose this will push even more people to other countries and the black market to transact their PM purchases.
ReplyDeleteI agree lowtax, it is not aimed at gold, but every economic transaction and probably is just a precursor to VAT type tax.
ReplyDeleteI actually just closed my gold short for about 9 points of profit. I think this bear flag has one more move to the top, around 1205 or so before it breaks down to put in the final low. I am going to look for a move back to 1205 to put my short back on.
ReplyDeleteClosing out gold here very near the low of the day does not look good at all technically.
ReplyDeleteRUT-ROE!!!!!!
We will see where equities close.
I would not be long gold over the weekend.
troll
Longies must still be napping. I know they are hoping this is only a dream.......-73 bucks from the high. Really not a good sign.
Ouchie ouch!!!!!
ReplyDeleteBreaking below 1185......
Ugly week next week for longs.
troll
Strong finish for a strong week on the Russell. Higher high and higher low on all the major equity dailies.
ReplyDeleteMust be looking at a different gold chart. 1185 held, as it has for most of the day. Nice cover, Blake.
ReplyDeleteMaybe lower next week, who knows.
gold could move up to 1205 and still be in this bear flag. I bet if it closed 1 or 2 days above 1200 and stayed in the bear flag, it would be the perfect set up to draw in new longs to wipe out with one last big move down running stops to 1130-1150 or so. that would be a perfect set up to cover short position and go long. A close above 1215 or so would be a good indication that the bull was back. So if you short at 1205 with a $10 stop at 1215, a move down to 1155 is a 5R profit. Not bad in my book.
ReplyDeleteCould be. The first bear flag breakdown didn't fulfill its potential, perhaps the second one will. There are a lot of cross-currents at the moment. Momentum indicators on TLT are rolling over, and a double top might be in place (close below 98 would switch the trend). Equities appear to still be in rally mode. $USD's big bounce this week has been completely reversed. Etc. Etc.
ReplyDelete$GOLD above 1205 would put it above the 20dema for the first time since the July 1 breakdown, which is no guarantee it will stay there, of course. Above 1215-1220, I agree, is where the bulls want to be.
Diamond bottom on GDX? Time and price action will tell.
ReplyDeleteThoughtful article from Robert Prechter
ReplyDeleteGary claims to be some kind of expert. I think that compared to Prechter, he is merely a bipedal carbon-based life form. Let's hear some of Gary's scholarly refutation of Prechter's thoughts: in particular, the commodity index quandary and the non-confirmation by other precious metals.
Anon-
ReplyDeleteYour link to the Precter article takes one to a LOG IN page with no access!!
Prechter is not a carbon-based lifeform? News to me.
ReplyDeleteHowever his biology is arranged, he was wrong (or early, or late) in February '10:
http://blogs.wsj.com/source/2010/02/09/prechter-predicts-nowhere-will-be-safe/
At the same time, he was fabulously wrong being bearish on bonds (an odd call for a deflationist):
http://www.businessinsider.com/henry-blodget-prechter-its-the-end-of-the-world-2010-2
He was also wrong (or early, or late) in Nov. '09 (I seem to recall him recommending leveraged shorts this time around, though I can't find the citation)
http://finance.yahoo.com/tech-ticker/article/367008/Bob-Prechter:-Bear-Market-Rally-Is-Over,-Stocks-Headed-For-New-Lows
For my money, Prechter is at his most valuable when he sheds his permabear skin and calls a bottom (March '09). Otherwise, bear markets just happen to coincide with his predominant views, and reading them doesn't represent much in the way of a trading edge.
His views on gold have never shifted from bearish, so an actual decline in gold will vindicate him in a stopped-clock-being-right-twice-a-day sense.
Since he tend to get the most press when the market is down and the media are seeking bearish confirmation, he's a better fade than anything, though that's more a reflection on public sentiment than on Prechter.
FWIW.
Has Gary every claimed to be an expert? perhaps at weight lifting or climbing, which he probably is, but I have never read any post of his where he claims to be an expert..perhaps you could enlighten us.
ReplyDeleteYou're just upset because Gary has made many more correct calls than your boy Prechter. You are probably upset that you are not making any money with your boy Prechter while Gary's subs are doing quite well. Instead of having Gary debate the EW nonsense why don't you just trade/invest on Prechter's calls and see how much money you make. Or did Prechters info have you lose your trading account? You still short gold waiting for $600.00 to cover? LOL....maybe one day he will get something right that may make you some money.
good luck.
Since the Prechter article in inaccessible without a login, it's hard to know what he has to say about commodities and precious metals (fwiw, I agree silver has not yet confirmed further bullish action in gold).
ReplyDeleteBut the broader commodity space hasn't exactly screamed deflation, either.
To use a popular bellwether, copper appears to be basing rather than falling apart. The Sept. contract hit 2.74 on June 7 (a month before the SPX low). Since then, it has made a couple of higher lows and three higher highs (with a lower high mixed in).
http://www.commoditycharts.com/ccharts.asp?sym=HGU0&showcc=yes
The trolls clearly envy Gary to no end. You'd think a Prechter fan would just follow him, rather than try to badger Gary.
ReplyDeleteThese rubes should go ask Prechter about his failed calls since as far as I can remember.
Whether it pans out or not, only an idiot would have his main focus on shorting gold. Go to wrong-way TK's site if you want to pick tops and bottoms to long-standing trends.
Even with this huge rally, PM's hardly budged. Stupid investments I'd say.
ReplyDeleteI'd say you are just impatient :)
ReplyDeleteMy view shows a bear flag in Gold for the near term which allies with Gary's notion that gold will be bottoming in the week or so. Long term, I can't see anything that looks like a topping pattern and believe like most on this board that corrections are to be bought. I will be adding appx 15% exposure to the miners in my accounts. This will put my precious metals exposure to appx 70%.
ReplyDeleteMitch
I am saving some cash so I can play the eventual break in the treasury bubble.
ReplyDeleteGary, to me the treasury market offers excellent short opptys as an ETF like TBF can go up several hundred percent over the long term with a break in the treasury market. It is one place that being short can yield this type of return.
Mitch
Now that all indexes are back to making higher highs and higher lows I think there are a few trolls out there that owe me an apology for all the abuse they dished out :)
ReplyDeleteHa you know that will never happen G-man. They will just disappear till the next correction. Of course Gary_UK will be broke from option poisoning.
ReplyDeleteI guess he's not laughing so much now.
WTF are you talking about- higher highs and higher lows in the indexes. Unbelievable the crap that is spewed from this blog. Only fools pay for this kind of garbage. Only in Amerika. Hahaha
ReplyDeleteLooks like we have a troll in denial. You just keep shorting till you make it to the poorhouse troll baby. Gary_UK will be there waiting for you. LOL
ReplyDeleteSince we haven't seen any of the bears say they covered I have to assume they are continuing to hold their positions. In doing so they demonstrate why it is so hard to make money on the short side.
ReplyDeleteIf, and this is a big if, someone cauaght the exact top in Apr. and has held all the way through all the vicious counter trend rallies and the current rally they are up 9.8%. Two weeks ago they were up 17%. See how fast a counter trend rally can wipout gains on the short side?
More likely they got short somewhere around 1180. So they are now up 6.6%.
Of course what really happened was that each one of those vicious counter trend rallies knocked them out for either a very small gain or a loss. And in the process it conditioned them to hold on to their position so that now when they should be cutting their losses they are letting them grow.
This is what I mean when I say I have no desire to fight with a bear market. And if you think it's tough now just wait till the powers that be begin really intervening in the markets.
We will for sure see another round of QE (actually it's never stopped as the Fed's balance sheet continues to grow by 10 billion a week). There will be bans on short selling. There will be more bailouts.
One is just asking for a world of pain trying to navigate through a mess like that.
It's so much easier just taking a position in a bull market where you have a safety net under you and then going on vacation till sometime later this fall.