One thing I still don't get. How can a dollar "crisis" be measured/exposed in dxy when it's a basket of shit? Why can't we have a fiat currency crisis w/out the dollar depreciating against the Euro?
I really believe if traders would just bypass this one trade they would increase their winning percentage 10-15% over their trading career. Can you imagine how much that would add up to over a 30 year period?
annual rate of 7 percent is still a ripoff, what with the Fed fund rate at zero. Like the crooks who run the credit card companies: interest rates in the teens with a zero fed fund rate and interest rates on cash advances over 20 percent. Those guys are thieves pure and simple.
If you have a fairly large acocunt yo should be able to cut that rate almost in half. Even if you don't it never hurts to make a phone call and threaten to leave if they don't lower your rate.
And it's hard for me to call them thieves when it's completely voluntary. It's funny how sometimes it's "Let the free market decide" and other times it's "How can they charge that much?"
The credit card companies don't "steal" from me via fees -- I haven't paid a dime in well over ten years -- but they charge exorbitant fees to the retailers where people use their cards, and even if I pay cash, I pay 2 to 3% to those vultures. It's a great scam -- if you opt out, you still pay; hence, basic laziness takes over and everybody capitulates.
Gary: minor but just FYI: the "remember me" feature does not work for me. I need to click "log on" each time I go to the site, and didn't need to in the past. Again, just FYI. The site is worth an extra click as far as I'm concerned!
It never ceases to amaze me that people see a huge up day as an opportunity to short.
What makes you think it won't consolidate and then move higher again?
At this point I wouldn't touch the short side until another SoS day and a swing high.
Of course I won't be shorting till I think the 3 year cycle in the dollar has bottomed. I like to have as many odds in my favor as possible on the short side.
It's too hard to make money on shorts as it is, I want every advantage I can get.
It is easy for people to make contrary statements to others strategy in finance. But it is a false discussion, because that same person will often not reveal whether they are actuall BETTING on their statement - which is the ONLY THING THAT MATTERS.
See..there is a trick here. Lotta people throw out all kinds of contrary statements. "We dont' have inflation". "Precious metal longs should be worried", etc.
However what they don't do at the same time is say what their position is INSTEAD. And *IF* they are actually placing money on their statements instead of just making empty calls.
Therefore, in an honest and gentlemanly manner I would like to ask if you are actually short precious metals, long, or out. If you aren't even in them at all, what positions do you have.
See..the difference with this answer vs what you have just said is that the only thing that counts here is results and money. If you want to play in THAT sandbox, then ante up and let us know where your pocket of cash is sitting instead of just contrarily objecting to our play without revealing yours.
I'm heavily long precious metals so you know where I stand. But we dont know where YOU stand other than *seemingly* trying to prognosticate metals going down. However I'd bet pretty strongly your money isn't where your comments are. No insult intended.
MLMT: You post stuff but never your reasoning. Why should the PM holders be bothered by today? Does your bunion hurt? This blog usually has good dialogue, which can be both interesting and educational. But "PM's are going down. Just watch." is neither (is it?) I'd love to hear why you think today's' action shows coming weakness.
In another manner of speaking, someones comments or projections mean NOTHING if they don't then say "I'm putting MONEY on it". You aren't (so far). Even if gold goes down and your comment is right I won't assign it anymore than vague ramblings if you don't actually have money on that call.
Just my view of the matter. In almost any market situation, I myself have MULTIPLE angles I can see happening - however I HAVE TO PICK ONE, and **THAT** is where the real call sits.
TZ: I would also be interested in real evidence even if the person has not bet on it. There are lots of times when I have an opinion that is forming but the tape does not support it (yet), or we haven't gotten a trigger of some sort. But even if out, the reasoning is still valid. If MLMT's reasoning is sound but he is afraid to pull the trigger, the reasoning is just as sound, and can be useful.
Surprisingly, since aug, most stuff like the stock market, commodities and such have rallied about as much as gold. Gold isn't outperforming on this wave yet, it's still Bob Hoye's "Everything ralling" market.
>If MLMT's reasoning is sound but he is afraid to pull the trigger, the reasoning is just as sound, and can be useful.
Yes, but the intent appears more to make a jab statement. Let it sit. And then if true days later say "I told you" without every actually commiting to the statement so if he's wrong he clearly loses. We don't need gadflys that simply want to state a contrary view to get posts and stir things up.
If he has a REASON we are glad to hear it. And if he says he's got (serious) MONEY on it, then I know personally I'll take it with much more consideration.
Since retailers have to raise their prices to cover the fees that credit card companies charge them, and there aren't different prices for using cash vs. credit, then we all pay more and that money goes to the credit card companies.
So those that pay cash are paying the same elevated prices without getting any benefit from them (e.g. convenience). The best result is to use a credit card that gives some kind of rewards credit to partially offset that higher price. As long as you don't carry a balance or pay an annual fee, you come out better than a cash payer. Those who protest on principle and refuse to use plastic are just hurting themselves.
The credit card companies have been able to hold a gun to retailers' heads for a long time now, prohibiting them from charging different prices for cash vs. credit card purchases. Unless they wanted to lose a lot of business by not taking credit cards, they were stuck with it.
I believe that has changed with the recent financial legislation. But of course doing that greatly complicates a retailer's life and probably isn't worth the effort. And since the large majority of people want to use some kind of plastic money for convenience I don't know if this will change things. But who knows, some kind of cash pricing, and resultant shift away from plastic use, may just catch on.
Clearly there's some value in the concept of "plastic money" that's probably worth paying some small fee for. But the question is what's the "right" price, and whether we're being raped by the financial sector who's outsized influence on our economy continues to suck the life out of it.
Onlooker: Why isn't the "right" price the market price? If the credit card companies are making such a fortune someone else will go into the business, or one of them (Amex? Discover?) will lower their fees to compete. To be fair, I don't know much about that particular industry, but the free market---if monopolies and gov't interference are kept out---ought to work, no? "Raped" is a bit strong for a $2 price increase on a $100 item. And it's even less since that fee is spread amongst all customers, as you have pointed out.
I know a little bit about the CC processing business. I own a small book of business with credit card processing.
V,MC are owned by the banks and they always raise their prices (2 x a year).
They hit merchants with a rate and a swipe fee, customer service fee, annual fee, internet fee, charge back fee, avs fee.
V,MC take no risk in the transaction and put all of it on the merchant.
There really isnt a free market when it comes to credit cards. That is why the DOJ got involved on the debit cards because V, MC were over stepping on the fees and rules.
They even charge a PCI fee (have no idea what this really does for any merchant other than make money for the processors)
DG, that's easy for you to say (about credit card interest being voluntary) because you don't carry any credit card debt. Neither do I.
However, the things that piss me off about those high rates are:
1) Where is the free market? Why is there no competition? Couldn't a credit card company make a lot of money by charging 8 percent interest instead of 18? If so, where are those credit card companies?
2) The people who get hurt by this are the lower middle class and the poor because as a group they run credit card balances. Like the payday loan businesses which feed off the poor. It was a sad day for America when you saw those popping up everywhere. Third world here we come.
Good points TZ. I for one enjoy seeing all the people that are negative on PM's and PM stocks, and also trying to pick tops on this market. All I know is my basket of PM stocks is up over 170k in the last quarter, and up over 40k in the last few weeks (186.57% since the last quarter of 08). At this point I don't even think I'll take profits in a down "D" wave.
Pima: It is sad that there are poor and disadvantaged, but no legislation will ever fix that. People do dumb things and learn (hopefully). I am all for protecting the weak from tyranny, but a voluntary system where people borrow money from payday loan places (for example) is not extortion. Surely there are lots of truly disadvantaged, but I bet most people who borrow that way have cell phones and cable TV. The gov't has tried to protect people from themselves for decades and it has resulted in...well... this, IMO
You make a very big assumption if you think that this is a free market with level competition and true price discovery. I think you know that. So my reference to the "right" price was just an acknowledgment that we don't really know where a true free market would set that price.
And yes, raping is strong when referring to this particular fee set, I suppose, but not when referring to the totality of what our financial sector is doing to our economy on the whole; IMO.
Like the new site. Hope it makes your life more simple and you can get back to the things you love doing.
Happy New Year and may I trust you and myself more in 2011. You have been a wise sage and as a young trader, I've gotten too cute and need to listen to my elders in the trading world!
DG, I would argue that it's not government involvement that has resulted in "this", but rather lack of it AND lack of real competition in the banking sector. 30 years of deregulation of the financial sector led to the biggest financial meltdown since the Depression AND the biggest windfall for banks and financial companies.
The recent financial regulation bill that came out of Congress is a joke, the bankers are likely laughing all the way to the... um... bank.
Jayhawk: I was not yet a subscriber for the "mistakes of last year." Can you briefly describe what happened? I can pour through the archives, I guess, but I'd appreciate a brief summary if you have a minute.
Took another look at the gold chart. Pretty strong upward wedge in the last week. Typically bearish cause they more often than not break to the downside. However lately up wedges for gold seem to break higher which I suspect is due to supression efforts (The wedge being caused by selling everytime gold ticks higher, but since the buying is legit it still mananges to break to the upside instead of down.)
Not sure. I'm long with my stops and will just see what happens, but I'm mindful of this alternate outcome.
Overall market was not correcting, much like today...Rally kept on chugging. We were looking for our intermediate bottom in the PMs & the market. Gold ended up forming a swing low so we went 100% back into our positions. (I think by late Jan). Then the intermediate correction swept down everything in Feb including PM's pretty hard. I can't recall exactly when, but somewhere in the middle of the blood bath, Gary scaled back to a core position. We had SLW calls in June and he recommended selling for a loss. Basically a bull trap went down. Of course, old turkey would have prevailed against all timing mistakes and Gary was diligent at the time to point all this out.
This year we have the three year cycle low in the dollar in front of us, so I'm not as worried honestly.
Thanks, Jayhawk. I appreciate the history lesson. I was wondering about that myself as we are WAY overdue for a correction in the SPX. After a trend like this, when it finally comes, it's nasty, and the miner's tend to break as well.
If the dollar drops below 78.75 I have conditional orders to up my ante.
I lightened up at the end of December from 85% exposure to the metals down to 15%. It felt great lightening up, and I still believe it was the right move given the circumstances...late in the intermediate cycle, sentiment very bullish, parabolic rise in silver etc...
I'm currently at appx 45%. Looking to go to 70% with the dollar taking out its low of last week. I will also likely initiate a position in DIG to get some exposure to the energy complex.
Thanks. But all I really did was nail (or close to it) the bottom in 08, and make the decision to hold on like a Buffet or old turkey. Getting out near the top is my life ambition. lol
Gary, You have said that you plan to exit PM stocks whn gold tops or is streached so far above the 200 MA. But I have read that PM stocks during the depression didn't top for 6 months after gold did. Do you think using gold as a proxy for PM stocks might mot be the best timing tool?
Mr. Mom, you pay a share of the overall fees paid to the bank. e.g. your grocery store doesn't absorb them, they pass them along. If the overall percentage of credit card sales is 75% of total sales (it's probably higher), then if the average fee is 3%, the overall bank skim is 75% of 3%, or say 2%. Therefore, the retailer must charge 2% more for everything in order to pass along this cost. If you pay cash, you therefore pay 2% more even though you don't cause that bank cost to occur.
The only big business I can recall which accounted for this was Arco which gave a discount for gas purchases.
Some businesses ding the consumer for the credit card fee, including my King County property tax and also tuition at my kids' universities also require the payer to pay the fee. So not everybody penalizes cash customers for the other credit customer's transaction fees.
The stock market technical indicators I follow have a rated total score that maps out to a rating from 1 to 6. We are currently at a 4 with 6 being most bearish.
A rating this low has inevitably lead to a correction, although I have no way of knowing the depth or length of the correction ahead of time.
Although we have been at a 4 rating since November 15, in looking back at my records, I see that it usually is 5 to 6 weeks after the 4 level is triggered before the top of the move.
So, we are getting long in the tooth. I bring this up because I'm still contemplating a "lottery ticket" put purchase soon.
Wes: How "inevitably" is inevitably? Do you have any stats that track its accuracy? Does it give false signals (like SoS)? The way you write, it sound like it's been quite accurate. Why wouldn't you buy a "lottery ticket" 4 weeks after a 4 rating?
As we all know the market is due for a daily cycle low sometime in the next 9-14 days, but that should be a minor cycle low like the Nov. correction. I'm not convinced it will be the beginning of an intermediate correction yet.
Tops are just too tough to call in real time. A good reason not to short bull markets. It's easy to miss 3,4,5 or more times before you catch it and even then a test of the highs can kick you back out for another loss.
Shorting bull markets is mostly a great way to whittle away at one's account.
As you probably know, I don't short bull markets. But I do buy puts to keep me interested.
So far, assuming the puts I currently own expire worthless, I will have wasted about 0.2% on puts on this top.
I use the 4 level as a signal to exit longs, rather than enter shorts.
As for inevitability of corrections, of course they will happen. But my records show a great spread in time, and timing is everything in buying OTM puts.
However, if this market continues to climb, I will get a 5 level, (we're at a high 4 now) and that will probably cause me to act.
@DG..re last year. I think jay was refering to last december, between Christmas and New Years. Most of us subs took profits end Nov, early Dec. then at the end of Dec, I think Gold formed a swing low, so gary gave the all clear. Many jumped back in and usd leverage and Gold proceded to drop early in jan right through early feb.
during that month decline some folks were freaking out. The blog was full of nasty comments, although some were funny. people wanted to move into Gary's basement, go to Vegas and track him down or they got toothaches. This went on for the whole month. I personally got lucky as I was out of town so by the time I got back in early Jan, gold was already dropping. I added back in almost near the low in Feb.
So this year, between christmas and Jan 1 Gary made the same call. I have no doubt some folks still remember last year and have not added back full positions. I would be one of those people. I am still about 50% invested so I am not too worried if I misss a few dollars higher. I had a really really good year in 2010. i am going to watch the action this week and see. Might committ 25% more this week and then if thngs still looking good add again on next cycle low.
Thanks, Nat. I sure don't want a toothache if this is the start of a drop! This is a tough game. As soon as you think you can read it like a book they revoke your library card. I'm glad Gary is posting a stop put point ($1361) so Old Turkey never turns into Cooked Goose. There's no way riding a large wave down won;t mess with one's mind and/or make one too gun-shy to get back in at the right time. $1361 would be nasty but no killer.
Slumdog: MLMT posts lots of random calls and sometimes they work for a little while. He didn't respond to either my or TZ's request for any reasoning behind his post. Eventually he winds up right about something, but without analysis to back it up, what good is it? To me there's a world of difference between "prescient" and "a guess that turns out to be right." It may have even been prescient, but we'll never know.
$1361 just means that we should be able to get in lower.
In a bull market the only reason to exit would be if you are confident you will get a better entry. A move below $1361 would signal an intermediate decline has probably begun. If that's the case then we should get a better entry.
Exiting simply because one is "nervous" is the recipe for buying high and selling low. And that is the only way to lose money on the long side in a bull market.
It's starting to feel like deja vu all over again.
Now that I'm on board, we can get this intermediate correction underway...Seriously. For some reason, I pick the wrong entries and then miss ones that you guys all take.
Nasty action end of the day on SSRI,AEM,SLW, etc.
I can here Gary telling us to turn our computers off and endure down draws any day now. ;)
Jay, You don't need to turn off your computer. You just need to place your stop.
Let's look at what happened last year. We got in too early. What do I always say? The bull will correct any timing mistakes.
What did the bull do last year?
If $1361 is hit it just means we will get a better entry. And that's exactly what we will do. We will go back to a core position and wait for that better entry. And then by the time the year is over the same thing will happen as last year. We will have huge profits.
The reality is that no one can see the future so M is just guessing like anyone else.
Ask yourself this are you nervous becuase gold dropped $6, which looks like nothing on the daily chart or are you nervous because someone made a comment about an engulfing candle?
And does an engulfing candle really mean anything? I can assure you I can find tons of them that didn't mean anything.
Gary: It just isn't that simple. I know that gold bulls "always" end with a mania. What if this one just doesn't? The markets can do ANYTHING and saying they just can't is just wrong. We have had a bunch of things happen in the past few years that have simply never happened before. God did not come down from the mountain and declare this a bull market. I am not in the slightest saying it isn't and you do have a stop ion at $1361, but if you were wrong even once with this approach, you and all the subs would be toast. It;s not easy to recover from down 80%. Yes, "in a bull market" gold always comes back, but not necessarily "when I say it's a bull market." If you assume we are still in a bull, by definition we make new highs, but if we aren't then...?
DG, One would have to assume human nature has changed. Do you think human nature has changed?
I don't. I think the one bad exprience you had early in your career really put a stamp on you that you can't erase.
It did come on the short side if I remember right. Most big losses probably do and are mostly due to leverage.
BTW we will never ride an 80% correction. We will never ride a 20% correction because as soon as a daily cycle low is broken we will go back to core. And if an intermediate cycle low is broken we will exit everything.
Hi Gary, Based on the extreme bullish sentiment in both Gold and SPX, they are due for a major correction. If US$ is continue on its decline, it will provide support. Which force is stronger and win the fight? Can Gold and SPX stay on extreme bullishless for extended period of time? I think if US$ consolidates rather than falls in the next few weeks, then there is likely a major correction in both Gold and SPX. Please comment.
I remember that on Friday, when someone asked about your leveraged position, you responded that there will be a better entry point on Monday (today)...It was like you knew that today would be a down day??
I do not have to assume whatsoever that human nature has changed. How so? And this has nothing to do with my blowing the bottom in 1983. Joe Granville (maybe before your time) was incredibly right for a decade. Until he wasn't, and his followers got tooled. Why would the bull in gold being over mean human nature has changed? It may mean that your analysis of human nature is wrong. There is an intermediary between reality and investing, and it's you. Nature does not change but you can be wrong and your measuring and perception of what is happening can be wrong. You are right, though, if you cut back to 50% you only lose 50% of your money (80% of the 50% plus what you lose before the stop is triggered).
My error in that I missed your comment that you'd sell everything on an intermediate low being broken. That does make a huge loss most unlikely. I had thought you'd hold core until a mania set in, and if it didn't, well, bye bye account. That makes a big difference to me.
Just be aware that a $1,361 stop on gold would easily hit us for a 20% total loss.
That's because we are invested 105% being in Silver related stock. We know these are moving at 2-2.5 times the rate of change in Silver, which is probably itself moving at 1.5-2.0 times the rate of change in gold.
In addition the 30% of additional margin will amply the loss.
Hey it is what it is and shows you how easily it could turn nasty even without a seemingly nice and tight stop like $1,361.
BTW For this bull to end Ben would have to reverse course, drain liquidity, and put the economy into the worst depression in history. Oh and the USA would have to default on it's debt.
What does one think the odds of any of that happening are?
In fact, Gary, the whole question of human nature can be bypassed. Just ride the bull with two levels of stops. At $1361 sell half; if the intermediate cycle low is hit sell the rest. Simple. There's no need to argue about the odds of the bull being over. In the extremely unlikely event that it is, you've got your stops in place. Very straightforward.
DG, yes those stops will prevent one from getting caught in a D-wave. But until something fundamental changes or I see signs of a bubble one will want to continue to buy at D-wave bottoms.
I get it now Gary. Sorry for the fracas. I was just concerned about no final stop at all, as being wrong once in a career is a disaster (once you're over 40 at least!) By the way, the best trade I ever had was in Gold, After the Hunt silver bubble popped I bought 100 puts on Homestake Mining for $2 and sold them a week later for $6! Those were the days...but unfortunately that cowboy attitude cost me later. Ah to be young again (but maybe with brains this time).
@ Gary: "It's probably too early for a cycle bottom though"
Not in the alternative count in which the first daily cycle after the intermediate bottom on November 04 occurred after 20 days, on December 3. Which would leave us with a non-translated, failed cycle (lower high), but which nevertheless succeeded to mark only a marginally lower low, having been completed on December 31 (20 days).
In this count, today was the first day of a new daily cycle which, with the swing low of today, stands a good chance to go up. This would be consistent with my earlier considerations on the euro's impact on the DXY. I would appreciate, Gary, if you would assess the consistency of this alternative count with the general cycle theory. If correct in principle, I would appreciate if you specify the criteria for preferring the current count to the alternative one. Thanks.
Question re the next intermediate term low in gold: Are you expecting an intermediate low, followed by continuation of the current C wave to its top, followed by the D wave?
--OR-- Are you expecting the D wave to already be underway when gold drops to the intermediate term low, such that the IT low is just the first wave down of this new D wave?
The reason I ask has to do with stops. If we get a rally out of the IT low to higher highs in this C wave, then why would we want to stop ourselves out and have to get back in later, possibly at higher prices?
Gary:"Do you know of any big secular bull markets that ever ended in a whimper? I don't :)
This one will end like they all eend with a spectacular parabolic rally like nothing any of us have ever seen before."
The 10 yr gold chart is a huge parabola. Using ye' olde french curve it ends in 2014-15. Trader Dan suggests it ends in 2012 from his chart yesterday at Jim Sinclair's. The move up, based on normal parabolic stretch, at around 4000-5000. That's to me the most reliable indicator of the probability of this secular gold rise. It's visible at Kitco's gold chart page, at the bottom right. http://www.kitco.com/charts/livegold.html
@ Gary: "Dec. 3rd could not be a cycle low because the 14th moved below that level"
Correct. But, December 14th was itself over-ridden by the lower low on December 31st. It seems to me that this is a perfect case of cycle rephasing: the lower low of December 31 invalidated December 14 as the daily cycle low, obliging us the rephase the previous daily cycle (which was anyway too long at 27 days).
Perhaps I do not understand cycle rephasing, please have me corrected if I am wrong.
I've been thinking, that move last week in the dollar below 78.82 was set up to sucker in the bulls. The only thing is it didn't stay there very long. Am i over thinking it?
@alphacom0 & @gary re. $BPGDM: alphacom0 saild... Sorry, I mean extreme Gold miners bullish sentiment form $BPGDM on stockchart.com. Gary said... The BP was higher in sept. 07 and gold rallied for another 3 months"
In all likelyhood, $BPGDM did not exist in 2007. This, at least, according to TheDOCument (http://www.thedocument.com/stock_market_blog/2010/20101230_market_correction_past_due.cfm) to which corroborates John Towsend (http://thetsitrader.blogspot.com/2010/07/ok-so-if-it-looks-too-good-to-be-true-i.html). Additional research on the index in 2007 did not bring anything. TheDOCument's piece is worth reading.
Gary said... You are not understandng cycle phasing.
Then I should certainly appreciate enlightenment, especially that the terminology document contains only an indirect reference to it. My analysis seems consistent with what you show on the respective chart and, equally, with an older posting of yours (http://seekingalpha.com/instablog/591301-garysavage/56974-the-four-keys). Thanks.
Gary said... You are not understandng cycle phasing. The 3rd could not be a cycle low when the 14th moved below it.
Then I should certainly appreciate enlightenment, especially that the terminology document contains only an indirect reference to rephasing. I tried to apply what can be inferred from there, as well as from this older posting of yours http://seekingalpha.com/instablog/591301-garysavage/56974-the-four-keys (last chart). So, perhaps you will want to introduce a section about cycle phasing in the terminology file. Thanks.
I'm of the opinion that today was like a Fed day. By that I mean that usually the results of fed actions and the subsequent direction and reaction of a market are NOT clear on the day of the announcement. In fact that day tends to do more confusing and faking out of people than not.
Commonly, it is the day AFTER the fed where things start to clarify. I have such a feeling about monday. Dollar, gold, silver, market, etc. I think there was more confusion today than real moves.
So...I wait (still long metal futures) for tomorrow and some clarity. I'm open to metals going lower, (but my MONEY is currently bet the other way.) If they do, I've already got plans In place.
I noticed that you have increased your allocation to AGQ this time round. If the gold stop at 1361 is hit, would you sell all your AGQ and revert back to SLV again like you did the last time?
contulmmiv. @$BPGDM did not exist in 2007. Very interesting. I am not a member of Stockchart.com, so I am unable to access anything more than 3 years old. Generally, when $BPGDM is around 80, gold miners are in overbought teritory, and price will eventually fall along with the index. During the past 2 years, it had never stayed that high for more than a month. It tends to turn down and then up and down.
Slumdog, You claim you are in Asia, but you post regularly on this site like you are on East Coast time. Are you perhaps awake 24/7? Just a sniff test.
Sorry boys and girls, but I will not be entering the 0% game. Simply put the US is doomed, and so is the rest of the world. Why would I ever want to trade out of my PM's? I may be the only old turkey left on this blog apparently, but trading out even with cycles seems silly. 1361 might as well be 761, I don't care; price action doesn't matter. I have made money off of the cycles with leverage, with Gary’s advice, but I will never make real money mucking around with the big picture. Sorry, not even going to guess at that one…..But then again, I am mostly in metals, and only partially in miners….the bull after all is in gold; silver, miners, and like are only a follower to the gold bull. Either way, happy to buy at 1200 or to buy at 1500…whatever happens….. I will be the extreme on this board I guess.
Jayhawk, I remember last year vividly. I remember your posts like it was yesterday. I hope there is some way you can pull them up. I hope you aren't becoming a contrarian indicator.....
Fellow SMT'ers, it was not just a swing low last year, it was a weekly swing low. After that low reversed, I held most of my positions, as we were well into the correction at that point. The fact is that anybody who just held on is up huge. I'm convinced that Old Turkey is the best way here (barring another total meltdown). Everybody has to realize that as the bull runs higher, the ranges are going to become huge as he tries to buck you off.
Gary: you said the BP was higher in 2007 and gold rallied for 3 months. I AM a member of stockcharts.com and they don't have that stat before 2008. Where are you getting it? It seems to be quite accurate since they started using it in 2008.
DG, I have a question for you. Most successful traders I have read about trade markets that have ranges they can get an edge in, but invest in bulls. Your comments have lead me to believe you want to trade this bull. Why is that?
Sorry I meant 09. As the rally broke out in Sept. The BPGDM got overbought. Gold went through the normal daily cycle correction to work off overbought levels but as we all know it ended up rising to over $1200 even though the BPGDM first got overbought in Sept.
Dollar tonight (and last day or so) appears to be triangling/congesting in preparation for continuing lower. There isn't much space left and a break down would put a floor and resumed uptrend in the metals.
It's looking likely to me. I'm still betting heavily long.
UNLESS the dollar somehow bottomed on that move down on the 31st and we are now congesting on the way HIGHER. The read of people (gary,etc) seems to be otherwise however.
It comes down to whether one believes the dollar will move down into a three year cycle low and if so then the weekly swing high is a sign of that beginning.
Then of course there is the weekly swing low in gold. That should not be happening this late in a weekly cycle if gold was going to correct.
Folks one can drive themselves crazy with what if scenarios... and more importantly prevent themselves from riding the bull.
Just let your stops do their job and otherwise sit still and let the bull do what bulls do.
Gary, When $BPGDM was above 80 in Sep, Oct and Dec 09. They all corrected down below 70, and GDX had all been corrected by more than 15%. After it peaked it Dec 09, $BPGDM began a 4 months drop to 20 in Feb 10, and GDX had lost 35% from its peak.It then spent the next 4 months climbing back to 77 in May, and GDX recovered all of its losses. So the index has been quite reliable in its short history.
Don't get me wrong. I am a gold bull and a subscriber of your site. I found your analysis very helpful. That is why I ask the question. I am still long on gold miners. (although down from 95% to 20% core holding). But in order to protect my hard earned profit, I need to consider "what if" . After enduring two painful 50% correction in the past 2 years. I learnt to have some fear. No doubt I will sell down more if gold fall below $1360 as per your recommendation.
Gary, this is Bill here in Tokyo. You're up late! I like your logic about riding the bull w/stops. I myself don't like leverage, nor do I understand cycles, but I do get your point about riding the bull w/stops.
My question is, what day did you get into GDXJ/SLW (or whatever), and what exactly was your buy signal? Was it something you saw in $GOLD, or $USD, or in GDXJ/SLW, or what?
Thanks for sharing. It would help me a lot. I have problems with a trigger. Some days I think any purchase above the 50d EMA works good enough, for instance.
Gary, You are one hell of a man. This whole thing of going from hero to goat and back again once or twice a year and keeping your cool amazes me! Truly super coaches are a special breed.
I don't have your experience in trading, but to me, it was the 28th pop up that signaled gold going higher. Since then I've been waiting for a backtest, which hasn't happened yet, and may not happen. Am wondering how to get on the bull. Buying here/now w/a stop sounds good to me - risk is only 3% to the last pivot low you spoke of.
Brian: I do invest and not trade bulls (around a core kind of like Gary does). I also "invest" in bears and hold shorts until there is a panic. I get out and/or switch directions when sentiment gets truly extreme. So I am long (sometimes for over a year), then out, then short. The market, to me, has been very odd the last two years, I suspect because of the Fed meddling. Overbought has not responded as it normally does. You also have to be careful shorting off a compression bottom as they get overbought and keep going. I would never consider "investing" in a bull when the whole universe is already bullish.
Yes, I leave that kind of impression on people. They alway recall my lameness. :)
That being said, I did go down almost 18% in my miners within a month, which as a newbie and very heavily invested was a bit of baptism by fire (first ever time I listened to Gary was that call)...It affected my mental approach and I was not able to fully get on after the intermediate cycle bottomed in the Summer. I don't intend to mess this year up, so if this call is not on the money, I will t-up the next one.
I also have taken on a core and built it by dollar cost averaging and like Keys, will be Old Turkey for a long, long time...When governments can be trusted for some reason, when the DOW/Gold ratio hits 1/1.
Funny...that correction last Winter would had us sitting on a low in SLW from 17 to like 15. OH THE HUMANITY!
Out my long metal futures (from last week) with a small profit (much less than fri's close).
We went below my stop levels and I think the odds of an intermediate low coming have now increased. Will let this play out a bit and regroup my thoughts after watching a bit.
Lotta volume on the gold futures contract with this move down. There wasn't really much excessive volume on monday. THIS is the first indication of large numbers of positions being taken, exchanged, or blown out. As I mentioned before, yesterday didn't seem legit to me. The volume this morning is waking people up. (Note the volume on this drop could indicate a bottom, but I'm not going to bet that way yet.)
We *are* still in the triangle/congestion pattern of gold (daily chart) with a flat top approx 1425 and an upsloping trendline near 1383 today. If that trendline breaks, then more selling will pile in and the INT low would be likely coming, I think.
Of course, we are still in that triangle, so up and away possible too.
Do you think the SPY may want to be on its way to fill the approximate 1200 gap, SLV (hard to believe) the $26 gap (or is the only gap on SLV 28.5?)?
I don't know too much about gap filling but they seem to me to happen more often than not. Previously you pointed out months ago SLW filling a gap, which it did end up doing.
New site Looks very smart.:)
ReplyDeleteSilver just hit 30.975 matching Fri high, but gold is still 1.5 below its Fri high.
ReplyDeleteInteresting night here in PDST.
Someone's forgotten to tell my gold horse it's supposed to gallop along with the rest of the ponies.
ReplyDeleteSilver's at a new high, 31.02 and gold is still at 1420.5, down for the day. :-(
Come on horsey.
William, gas is subsidized in much of Asia, I think you know that.
ReplyDeleteGreat job on the new website! Looks awesome.
ReplyDeleteOne thing I still don't get. How can a dollar "crisis" be measured/exposed in dxy when it's a basket of shit? Why can't we have a fiat currency crisis w/out the dollar depreciating against the Euro?
ReplyDeleteCongratulations on the new site. It looks good and the transition was easy!
ReplyDeleteGary
ReplyDeleteI still don't have password info for the website.
JD,
ReplyDeleteSome shit just smells better than others!
Red,
ReplyDeleteI can't do anything on the blog. You have to send me an email. garysavage@cox.net
Gary: Gr8 job with the new site...Congratulations!
ReplyDeleteAs far as the SPX, i know it is still early...but maybe a false break up and over the coil?
Now you see why I don't short bull markets. It's too hard to spot the top.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI really believe if traders would just bypass this one trade they would increase their winning percentage 10-15% over their trading career. Can you imagine how much that would add up to over a 30 year period?
ReplyDeleteI got stopped out of my TF (Russell Futures) this morning at 782.60.
ReplyDeleteTook a 3 point lost.
I'll let this thing run for a bit.
Q's at new high. If they close there I'm probably out, with about a 1% loss on the trade.
ReplyDelete"I really believe if traders would just bypass this one trade they would increase their winning percentage 10-15% over their trading career."
ReplyDeleteAre you talking about shorting the primary trend?
yes.
ReplyDeleteThere is plenty of time to short once a bear market is confirmed. There's no need to do it now.
Snowing in Vegas!
ReplyDeletereally? unbelievable!!!
ReplyDeleteHell freezing over? ;-)
ReplyDeleteanybody use margin here? I don't like to use margin at all, fidelity margin daily interest rate is 7%.
ReplyDeleteThat's an annual rate not a daily.
ReplyDeletegary, you are right.
ReplyDeleteannual rate of 7 percent is still a ripoff, what with the Fed fund rate at zero. Like the crooks who run the credit card companies: interest rates in the teens with a zero fed fund rate and interest rates on cash advances over 20 percent. Those guys are thieves pure and simple.
ReplyDeleteIf you have a fairly large acocunt yo should be able to cut that rate almost in half. Even if you don't it never hurts to make a phone call and threaten to leave if they don't lower your rate.
ReplyDeleteAnd it's hard for me to call them thieves when it's completely voluntary. It's funny how sometimes it's "Let the free market decide" and other times it's "How can they charge that much?"
ReplyDeleteTZA holders enjoying getting raped today? Glad I only have a little but dang.
ReplyDeleteThe credit card companies don't "steal" from me via fees -- I haven't paid a dime in well over ten years -- but they charge exorbitant fees to the retailers where people use their cards, and even if I pay cash, I pay 2 to 3% to those vultures. It's a great scam -- if you opt out, you still pay; hence, basic laziness takes over and everybody capitulates.
ReplyDeleteGary: minor but just FYI: the "remember me" feature does not work for me. I need to click "log on" each time I go to the site, and didn't need to in the past. Again, just FYI. The site is worth an extra click as far as I'm concerned!
ReplyDelete" Jayhawk91 said...
ReplyDeleteTZA holders enjoying getting raped today? Glad I only have a little but dang"
like gary said, never short a bull market, but now i am kind of feeling like to tip toe in tza.
It never ceases to amaze me that people see a huge up day as an opportunity to short.
ReplyDeleteWhat makes you think it won't consolidate and then move higher again?
At this point I wouldn't touch the short side until another SoS day and a swing high.
Of course I won't be shorting till I think the 3 year cycle in the dollar has bottomed. I like to have as many odds in my favor as possible on the short side.
It's too hard to make money on shorts as it is, I want every advantage I can get.
Gary, your take on the dollar today? A test of the break down from last week? SPY coil looks like it broke higher, fake out break out?
ReplyDeleteThe action in PMs today should make those who are long the shiny metal worried IMO.
ReplyDeleteI know I am going to get flamed now. But we will see a week from now :-)
MLMT, why would say that? Silver is up with the dollar. Is that bearish to you?
ReplyDeleteGold always goes nowhere when the market is up big. Just wiggles. Ignore them.
ReplyDeleteBen why would you pay 2-3% if you pay cash? I understand the store has overall higher prices but why would you pay to the cc company?
ReplyDeleteMLMT,
ReplyDeleteIt is easy for people to make contrary statements to others strategy in finance. But it is a false discussion, because that same person will often not reveal whether they are actuall BETTING on their statement - which is the ONLY THING THAT MATTERS.
See..there is a trick here. Lotta people throw out all kinds of contrary statements. "We dont' have inflation". "Precious metal longs should be worried", etc.
However what they don't do at the same time is say what their position is INSTEAD. And *IF* they are actually placing money on their statements instead of just making empty calls.
Therefore, in an honest and gentlemanly manner I would like to ask if you are actually short precious metals, long, or out. If you aren't even in them at all, what positions do you have.
See..the difference with this answer vs what you have just said is that the only thing that counts here is results and money. If you want to play in THAT sandbox, then ante up and let us know where your pocket of cash is sitting instead of just contrarily objecting to our play without revealing yours.
I'm heavily long precious metals so you know where I stand. But we dont know where YOU stand other than *seemingly* trying to prognosticate metals going down. However I'd bet pretty strongly your money isn't where your comments are. No insult intended.
MLMT: You post stuff but never your reasoning. Why should the PM holders be bothered by today? Does your bunion hurt? This blog usually has good dialogue, which can be both interesting and educational. But "PM's are going down. Just watch." is neither (is it?) I'd love to hear why you think today's' action shows coming weakness.
ReplyDeleteMLMT,
ReplyDeleteIn another manner of speaking, someones comments or projections mean NOTHING if they don't then say "I'm putting MONEY on it". You aren't (so far). Even if gold goes down and your comment is right I won't assign it anymore than vague ramblings if you don't actually have money on that call.
Just my view of the matter. In almost any market situation, I myself have MULTIPLE angles I can see happening - however I HAVE TO PICK ONE, and **THAT** is where the real call sits.
TZ: I would also be interested in real evidence even if the person has not bet on it. There are lots of times when I have an opinion that is forming but the tape does not support it (yet), or we haven't gotten a trigger of some sort. But even if out, the reasoning is still valid. If MLMT's reasoning is sound but he is afraid to pull the trigger, the reasoning is just as sound, and can be useful.
ReplyDelete>Gold always goes nowhere when the market is up big. Just wiggles. Ignore them.
ReplyDeleteGold has been matching the performance of the $spx almost completely since aug.
stockcharts.com/h-sc/ui?s=$GOLD:$SPX&p=W&yr=3&mn=0&dy=0&id=p04236374184
chart looks the same with $copper too;
Surprisingly, since aug, most stuff like the stock market, commodities and such have rallied about as much as gold. Gold isn't outperforming on this wave yet, it's still Bob Hoye's "Everything ralling" market.
DG,
ReplyDelete>If MLMT's reasoning is sound but he is afraid to pull the trigger, the reasoning is just as sound, and can be useful.
Yes, but the intent appears more to make a jab statement. Let it sit. And then if true days later say "I told you" without every actually commiting to the statement so if he's wrong he clearly loses. We don't need gadflys that simply want to state a contrary view to get posts and stir things up.
If he has a REASON we are glad to hear it. And if he says he's got (serious) MONEY on it, then I know personally I'll take it with much more consideration.
I'm talking about when the market has one of these 90% up days.
ReplyDeleteAll the volume goes into the market and the PM sector tends to underperform or decline.
The Bernank has ~600 billion to go...
ReplyDeleteMr. Mom
ReplyDeleteSince retailers have to raise their prices to cover the fees that credit card companies charge them, and there aren't different prices for using cash vs. credit, then we all pay more and that money goes to the credit card companies.
So those that pay cash are paying the same elevated prices without getting any benefit from them (e.g. convenience). The best result is to use a credit card that gives some kind of rewards credit to partially offset that higher price. As long as you don't carry a balance or pay an annual fee, you come out better than a cash payer. Those who protest on principle and refuse to use plastic are just hurting themselves.
The credit card companies have been able to hold a gun to retailers' heads for a long time now, prohibiting them from charging different prices for cash vs. credit card purchases. Unless they wanted to lose a lot of business by not taking credit cards, they were stuck with it.
I believe that has changed with the recent financial legislation. But of course doing that greatly complicates a retailer's life and probably isn't worth the effort. And since the large majority of people want to use some kind of plastic money for convenience I don't know if this will change things. But who knows, some kind of cash pricing, and resultant shift away from plastic use, may just catch on.
Clearly there's some value in the concept of "plastic money" that's probably worth paying some small fee for. But the question is what's the "right" price, and whether we're being raped by the financial sector who's outsized influence on our economy continues to suck the life out of it.
Onlooker: Why isn't the "right" price the market price? If the credit card companies are making such a fortune someone else will go into the business, or one of them (Amex? Discover?) will lower their fees to compete. To be fair, I don't know much about that particular industry, but the free market---if monopolies and gov't interference are kept out---ought to work, no? "Raped" is a bit strong for a $2 price increase on a $100 item. And it's even less since that fee is spread amongst all customers, as you have pointed out.
ReplyDeleteDG, Onlooker,
ReplyDeleteI know a little bit about the CC processing business. I own a small book of business with credit card processing.
V,MC are owned by the banks and they always raise their prices (2 x a year).
They hit merchants with a rate and a swipe fee, customer service fee, annual fee, internet fee, charge back fee, avs fee.
V,MC take no risk in the transaction and put all of it on the merchant.
There really isnt a free market when it comes to credit cards. That is why the DOJ got involved on the debit cards because V, MC were over stepping on the fees and rules.
They even charge a PCI fee (have no idea what this really does for any merchant other than make money for the processors)
The list goes on and on...
Many gas stations in the Detroit area offer a cash vs plastic price now, and it is fairly substantial. I think you will see more of that.
ReplyDeleteDG, that's easy for you to say (about credit card interest being voluntary) because you don't carry any credit card debt. Neither do I.
ReplyDeleteHowever, the things that piss me off about those high rates are:
1) Where is the free market? Why is there no competition? Couldn't a credit card company make a lot of money by charging 8 percent interest instead of 18? If so, where are those credit card companies?
2) The people who get hurt by this are the lower middle class and the poor because as a group they run credit card balances. Like the payday loan businesses which feed off the poor. It was a sad day for America when you saw those popping up everywhere. Third world here we come.
Gold is still bouncing along the underside of the uptrend line (daily; draw on lows mid nov to early dec). This is day 4 now.
ReplyDeleteI don't think it holds much longer and we go up.
Pima,
ReplyDeleteThere is no such thing as a credit card company.
V, MC is just an electronic platform that settles accounts.
The banks offer the cards and pay V, MC a fee to use the network. However the banks get the interchange fee on every transaction.
V and MC were non-profits but they were making so much money the banks let them go public.
The whole thing is run by the banks they just put different names on things to confuse merchants and consumers
Good points TZ. I for one enjoy seeing all the people that are negative on PM's and PM stocks, and also trying to pick tops on this market. All I know is my basket of PM stocks is up over 170k in the last quarter, and up over 40k in the last few weeks (186.57% since the last quarter of 08). At this point I don't even think I'll take profits in a down "D" wave.
ReplyDeletePima: It is sad that there are poor and disadvantaged, but no legislation will ever fix that. People do dumb things and learn (hopefully). I am all for protecting the weak from tyranny, but a voluntary system where people borrow money from payday loan places (for example) is not extortion. Surely there are lots of truly disadvantaged, but I bet most people who borrow that way have cell phones and cable TV. The gov't has tried to protect people from themselves for decades and it has resulted in...well... this, IMO
ReplyDeletegreq, good job.. SLW run from 30 (Nov 1st) to 42. that was my best holding.
ReplyDeleteDG
ReplyDeleteYou make a very big assumption if you think that this is a free market with level competition and true price discovery. I think you know that. So my reference to the "right" price was just an acknowledgment that we don't really know where a true free market would set that price.
And yes, raping is strong when referring to this particular fee set, I suppose, but not when referring to the totality of what our financial sector is doing to our economy on the whole; IMO.
I'm adding some today-was sick as a dog last week (the whole family has been since Christmas Eve with a nasty influenza type thing).
ReplyDeleteMostly adding SLW, SIL & GDXJ...some ind. picks like XRA, GBG, RBY. Not 100% in yet, but will keep adding.
Gary-What is our game plan so we don't have a repeat of last years mistake? A break of 1361, right?
PS-
ReplyDeleteLike the new site. Hope it makes your life more simple and you can get back to the things you love doing.
Happy New Year and may I trust you and myself more in 2011. You have been a wise sage and as a young trader, I've gotten too cute and need to listen to my elders in the trading world!
DG, I would argue that it's not government involvement that has resulted in "this", but rather lack of it AND lack of real competition in the banking sector. 30 years of deregulation of the financial sector led to the biggest financial meltdown since the Depression AND the biggest windfall for banks and financial companies.
ReplyDeleteThe recent financial regulation bill that came out of Congress is a joke, the bankers are likely laughing all the way to the... um... bank.
The financial sector is the most regulated industry in the world. How else would it be possible for the bankers to control the system?
ReplyDeleteJayhawk: I was not yet a subscriber for the "mistakes of last year." Can you briefly describe what happened? I can pour through the archives, I guess, but I'd appreciate a brief summary if you have a minute.
ReplyDeleteoa9200 - I negotiated 1.25% margin rates with Etrade fwiw.
ReplyDeleteTook another look at the gold chart. Pretty strong upward wedge in the last week. Typically bearish cause they more often than not break to the downside. However lately up wedges for gold seem to break higher which I suspect is due to supression efforts (The wedge being caused by selling everytime gold ticks higher, but since the buying is legit it still mananges to break to the upside instead of down.)
ReplyDeleteNot sure. I'm long with my stops and will just see what happens, but I'm mindful of this alternate outcome.
DG-
ReplyDeleteOverall market was not correcting, much like today...Rally kept on chugging. We were looking for our intermediate bottom in the PMs & the market. Gold ended up forming a swing low so we went 100% back into our positions. (I think by late Jan). Then the intermediate correction swept down everything in Feb including PM's pretty hard. I can't recall exactly when, but somewhere in the middle of the blood bath, Gary scaled back to a core position. We had SLW calls in June and he recommended selling for a loss. Basically a bull trap went down. Of course, old turkey would have prevailed against all timing mistakes and Gary was diligent at the time to point all this out.
This year we have the three year cycle low in the dollar in front of us, so I'm not as worried honestly.
Thanks, Jayhawk. I appreciate the history lesson. I was wondering about that myself as we are WAY overdue for a correction in the SPX. After a trend like this, when it finally comes, it's nasty, and the miner's tend to break as well.
ReplyDelete30.70 range is a good entry point, imo.
ReplyDeleteIf the dollar drops below 78.75 I have conditional orders to up my ante.
ReplyDeleteI lightened up at the end of December from 85% exposure to the metals down to 15%. It felt great lightening up, and I still believe it was the right move given the circumstances...late in the intermediate cycle, sentiment very bullish, parabolic rise in silver etc...
I'm currently at appx 45%. Looking to go to 70% with the dollar taking out its low of last week. I will also likely initiate a position in DIG to get some exposure to the energy complex.
The divergence between gold and silver has been consistent all day. I stepped out earlier after getting beaten around. Now, I'm in.
ReplyDeleteNot a really big number, but we do have GLD showing up on the BoW list today. 16 million, but only 9 of that was in block trades.
ReplyDeleteoa9200,
ReplyDeleteThanks. But all I really did was nail (or close to it) the bottom in 08, and make the decision to hold on like a Buffet or old turkey. Getting out near the top is my life ambition. lol
Gary,
You have said that you plan to exit PM stocks whn gold tops or is streached so far above the 200 MA. But I have read that PM stocks during the depression didn't top for 6 months after gold did. Do you think using gold as a proxy for PM stocks might mot be the best timing tool?
Canadian accounts are trapped if this gets ugly. Canadian stock exchange, TSX is closed today.
ReplyDeletethere is some sell volume in gold and silver in the last hour..
ReplyDeleteMr. Mom, you pay a share of the overall fees paid to the bank. e.g. your grocery store doesn't absorb them, they pass them along. If the overall percentage of credit card sales is 75% of total sales (it's probably higher), then if the average fee is 3%, the overall bank skim is 75% of 3%, or say 2%. Therefore, the retailer must charge 2% more for everything in order to pass along this cost. If you pay cash, you therefore pay 2% more even though you don't cause that bank cost to occur.
ReplyDeleteThe only big business I can recall which accounted for this was Arco which gave a discount for gas purchases.
Some businesses ding the consumer for the credit card fee, including my King County property tax and also tuition at my kids' universities also require the payer to pay the fee. So not everybody penalizes cash customers for the other credit customer's transaction fees.
Jay,
ReplyDeleteThe stop below $1361 will prevent us from riding an intermediate correction.
The stock market technical indicators I follow have a rated total score that maps out to a rating from 1 to 6. We are currently at a 4 with 6 being most bearish.
ReplyDeleteA rating this low has inevitably lead to a correction, although I have no way of knowing the depth or length of the correction ahead of time.
Although we have been at a 4 rating since November 15, in looking back at my records, I see that it usually is 5 to 6 weeks after the 4 level is triggered before the top of the move.
So, we are getting long in the tooth. I bring this up because I'm still contemplating a "lottery ticket" put purchase soon.
Wes: How "inevitably" is inevitably? Do you have any stats that track its accuracy? Does it give false signals (like SoS)? The way you write, it sound like it's been quite accurate. Why wouldn't you buy a "lottery ticket" 4 weeks after a 4 rating?
ReplyDeleteAs we all know the market is due for a daily cycle low sometime in the next 9-14 days, but that should be a minor cycle low like the Nov. correction. I'm not convinced it will be the beginning of an intermediate correction yet.
ReplyDeleteTops are just too tough to call in real time. A good reason not to short bull markets. It's easy to miss 3,4,5 or more times before you catch it and even then a test of the highs can kick you back out for another loss.
Shorting bull markets is mostly a great way to whittle away at one's account.
DG,
ReplyDeleteAs you probably know, I don't short bull markets. But I do buy puts to keep me interested.
So far, assuming the puts I currently own expire worthless, I will have wasted about 0.2% on puts on this top.
I use the 4 level as a signal to exit longs, rather than enter shorts.
As for inevitability of corrections, of course they will happen. But my records show a great spread in time, and timing is everything in buying OTM puts.
However, if this market continues to climb, I will get a 5 level, (we're at a high 4 now) and that will probably cause me to act.
@DG..re last year. I think jay was refering to last december, between Christmas and New Years. Most of us subs took profits end Nov, early Dec. then at the end of Dec, I think Gold formed a swing low, so gary gave the all clear. Many jumped back in and usd leverage and Gold proceded to drop early in
ReplyDeletejan right through early feb.
during that month decline some folks were freaking out. The blog was full of nasty comments, although some were funny. people wanted to move into Gary's basement, go to Vegas and track him down or they got toothaches. This went on for the whole month. I personally got lucky as I was out of town so by the time I got back in early Jan, gold was already dropping. I added back in almost near the low in Feb.
So this year, between christmas and Jan 1 Gary made the same call. I have no doubt some folks still remember last year and have not added back full positions. I would be one of those people. I am still about 50% invested so I am not too worried if I misss a few dollars higher. I had a really really good year in 2010. i am going to watch the action this week and see. Might committ 25% more this week and then if thngs still looking good add again on next cycle low.
Interesting Bearish Engulfing on GDX today. Someone forgot to invite gold to the party.
ReplyDeleteThanks, Nat. I sure don't want a toothache if this is the start of a drop! This is a tough game. As soon as you think you can read it like a book they revoke your library card. I'm glad Gary is posting a stop put point ($1361) so Old Turkey never turns into Cooked Goose. There's no way riding a large wave down won;t mess with one's mind and/or make one too gun-shy to get back in at the right time. $1361 would be nasty but no killer.
ReplyDeleteMLMT, that was a prescient call.
ReplyDeleteWill it still be prescient if the dollar starts dropping tomorrow into a daily cycle low and gold rallies?
ReplyDeleteSlumdog: MLMT posts lots of random calls and sometimes they work for a little while. He didn't respond to either my or TZ's request for any reasoning behind his post. Eventually he winds up right about something, but without analysis to back it up, what good is it? To me there's a world of difference between "prescient" and "a guess that turns out to be right." It may have even been prescient, but we'll never know.
ReplyDeleteGary:
ReplyDeleteAm assuming your stop below 1361 is for going back to core only and not taking the entire position off....correct?
"$1361 would be nasty but no killer."
ReplyDelete$1361 just means that we should be able to get in lower.
In a bull market the only reason to exit would be if you are confident you will get a better entry. A move below $1361 would signal an intermediate decline has probably begun. If that's the case then we should get a better entry.
Exiting simply because one is "nervous" is the recipe for buying high and selling low. And that is the only way to lose money on the long side in a bull market.
Nick,
ReplyDeletecorrect.
It's starting to feel like deja vu all over again.
ReplyDeleteNow that I'm on board, we can get this intermediate correction underway...Seriously. For some reason, I pick the wrong entries and then miss ones that you guys all take.
Nasty action end of the day on SSRI,AEM,SLW, etc.
I can here Gary telling us to turn our computers off and endure down draws any day now. ;)
Jay, I hear you. Feels just like last year. Of course, last year was also quite profitable! :)
ReplyDeleteThere is nothing pretty at all about the Dollar chart, looks like it's rolling over big time, IMO.
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=%24USD
Jay,
ReplyDeleteYou don't need to turn off your computer. You just need to place your stop.
Let's look at what happened last year. We got in too early. What do I always say? The bull will correct any timing mistakes.
What did the bull do last year?
If $1361 is hit it just means we will get a better entry. And that's exactly what we will do. We will go back to a core position and wait for that better entry. And then by the time the year is over the same thing will happen as last year. We will have huge profits.
Gary, does today's dollar move constitute a swing-low?
ReplyDeleteYes. It's probably too early for a cycle bottom though. The highest odds are for Friday or even into next week.
ReplyDeleteAt the close, I went long SI2H at 30.69... more.
ReplyDeleteI've read only one other call by MLMT, about 2 weeks ago. He nailed that one.
Whoever MLMT is, he's now hit two swoosh shots; but I'm reading the past blog comments slowly. I'll see his errors.
MLMT's call 2 weeks ago, approx, was quite accurate.
Of course, without validating it myself, I'm not handing over the checkbook. But MLMT is not a newbie. They know what they're talking about.
Unfortunately, I work. There's a small cadre of people and calls and projects; so I can't watch all the time, until an assistant gets on it.
Great learning day. A lot of rollercoaster fun, though it wasn't free on my part, at all; but what a wonderful day.
The reality is that no one can see the future so M is just guessing like anyone else.
ReplyDeleteAsk yourself this are you nervous becuase gold dropped $6, which looks like nothing on the daily chart or are you nervous because someone made a comment about an engulfing candle?
And does an engulfing candle really mean anything? I can assure you I can find tons of them that didn't mean anything.
Ignore the noise and let your stop do it's job.
Gary: It just isn't that simple. I know that gold bulls "always" end with a mania. What if this one just doesn't? The markets can do ANYTHING and saying they just can't is just wrong. We have had a bunch of things happen in the past few years that have simply never happened before. God did not come down from the mountain and declare this a bull market. I am not in the slightest saying it isn't and you do have a stop ion at $1361, but if you were wrong even once with this approach, you and all the subs would be toast. It;s not easy to recover from down 80%. Yes, "in a bull market" gold always comes back, but not necessarily "when I say it's a bull market." If you assume we are still in a bull, by definition we make new highs, but if we aren't then...?
ReplyDeleteDG,
ReplyDeleteOne would have to assume human nature has changed. Do you think human nature has changed?
I don't. I think the one bad exprience you had early in your career really put a stamp on you that you can't erase.
It did come on the short side if I remember right. Most big losses probably do and are mostly due to leverage.
BTW we will never ride an 80% correction. We will never ride a 20% correction because as soon as a daily cycle low is broken we will go back to core. And if an intermediate cycle low is broken we will exit everything.
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ReplyDeleteHi Gary,
ReplyDeleteBased on the extreme bullish sentiment in both Gold and SPX, they are due for a major correction. If US$ is continue on its decline, it will provide support. Which force is stronger and win the fight? Can Gold and SPX stay on extreme bullishless for extended period of time? I think if US$ consolidates rather than falls in the next few weeks, then there is likely a major correction in both Gold and SPX. Please comment.
Hi Gary,
ReplyDeleteI remember that on Friday, when someone asked about your leveraged position, you responded that there will be a better entry point on Monday (today)...It was like you knew that today would be a down day??
I do not have to assume whatsoever that human nature has changed. How so? And this has nothing to do with my blowing the bottom in 1983. Joe Granville (maybe before your time) was incredibly right for a decade. Until he wasn't, and his followers got tooled. Why would the bull in gold being over mean human nature has changed? It may mean that your analysis of human nature is wrong. There is an intermediary between reality and investing, and it's you. Nature does not change but you can be wrong and your measuring and perception of what is happening can be wrong. You are right, though, if you cut back to 50% you only lose 50% of your money (80% of the 50% plus what you lose before the stop is triggered).
ReplyDeleteMy error in that I missed your comment that you'd sell everything on an intermediate low being broken. That does make a huge loss most unlikely. I had thought you'd hold core until a mania set in, and if it didn't, well, bye bye account. That makes a big difference to me.
ReplyDeleteJust be aware that a $1,361 stop on gold would easily hit us for a 20% total loss.
ReplyDeleteThat's because we are invested 105% being in Silver related stock. We know these are moving at 2-2.5 times the rate of change in Silver, which is probably itself moving at 1.5-2.0 times the rate of change in gold.
In addition the 30% of additional margin will amply the loss.
Hey it is what it is and shows you how easily it could turn nasty even without a seemingly nice and tight stop like $1,361.
"Ignore the noise and let your stop do it's job."
ReplyDeleteI like gary's "keep it simple" strategy.
Gold sentiment is actually dead neutral.
ReplyDeleteDG,
ReplyDeleteDo you know of any big secular bull markets that ever ended in a whimper? I don't :)
This one will end like they all eend with a spectacular parabolic rally like nothing any of us have ever seen before.
BTW For this bull to end Ben would have to reverse course, drain liquidity, and put the economy into the worst depression in history. Oh and the USA would have to default on it's debt.
ReplyDeleteWhat does one think the odds of any of that happening are?
Sorry, I mean extreme Gold miners bullish sentiment form $BPGDM on stockchart.com.
ReplyDeleteIn fact, Gary, the whole question of human nature can be bypassed. Just ride the bull with two levels of stops. At $1361 sell half; if the intermediate cycle low is hit sell the rest. Simple. There's no need to argue about the odds of the bull being over. In the extremely unlikely event that it is, you've got your stops in place. Very straightforward.
ReplyDeleteThe BP was higher in sept. 07 and gold rallied for another 3 months.
ReplyDeleteDG,
ReplyDeleteyes those stops will prevent one from getting caught in a D-wave. But until something fundamental changes or I see signs of a bubble one will want to continue to buy at D-wave bottoms.
I get it now Gary. Sorry for the fracas. I was just concerned about no final stop at all, as being wrong once in a career is a disaster (once you're over 40 at least!)
ReplyDeleteBy the way, the best trade I ever had was in Gold, After the Hunt silver bubble popped I bought 100 puts on Homestake Mining for $2 and sold them a week later for $6! Those were the days...but unfortunately that cowboy attitude cost me later. Ah to be young again (but maybe with brains this time).
I'm hoping the next bull market (biotech) will allow me to accomplish exactly that :)
ReplyDelete@ Gary: "It's probably too early for a cycle bottom though"
ReplyDeleteNot in the alternative count in which the first daily cycle after the intermediate bottom on November 04 occurred after 20 days, on December 3. Which would leave us with a non-translated, failed cycle (lower high), but which nevertheless succeeded to mark only a marginally lower low, having been completed on December 31 (20 days).
http://www8.picfront.org/picture/ivBAODph/js/2011.01.03DXYAlternativeCycleCount.png
In this count, today was the first day of a new daily cycle which, with the swing low of today, stands a good chance to go up. This would be consistent with my earlier considerations on the euro's impact on the DXY.
I would appreciate, Gary, if you would assess the consistency of this alternative count with the general cycle theory. If correct in principle, I would appreciate if you specify the criteria for preferring the current count to the alternative one. Thanks.
Dec. 3rd could not be a cycle low because the 14th moved below that level.
ReplyDeleteGary,
ReplyDeleteNew site is great!
Question re the next intermediate term low in gold: Are you expecting an intermediate low, followed by continuation of the current C wave to its top, followed by the D wave?
--OR-- Are you expecting the D wave to already be underway when gold drops to the intermediate term low, such that the IT low is just the first wave down of this new D wave?
The reason I ask has to do with stops. If we get a rally out of the IT low to higher highs in this C wave, then why would we want to stop ourselves out and have to get back in later, possibly at higher prices?
Gary:"Do you know of any big secular bull markets that ever ended in a whimper? I don't :)
ReplyDeleteThis one will end like they all eend with a spectacular parabolic rally like nothing any of us have ever seen before."
The 10 yr gold chart is a huge parabola. Using ye' olde french curve it ends in 2014-15. Trader Dan suggests it ends in 2012 from his chart yesterday at Jim Sinclair's. The move up, based on normal parabolic stretch, at around 4000-5000. That's to me the most reliable indicator of the probability of this secular gold rise. It's visible at Kitco's gold chart page, at the bottom right.
http://www.kitco.com/charts/livegold.html
Slum,
ReplyDeleteNot even close. Wait till gold rallies 200-300% in a year. Then we can talk about parabolic.
Heck even the Nasdaq rallied 100% in it's final year.
@ Gary: "Dec. 3rd could not be a cycle low because the 14th moved below that level"
ReplyDeleteCorrect. But, December 14th was itself over-ridden by the lower low on December 31st.
It seems to me that this is a perfect case of cycle rephasing: the lower low of December 31 invalidated December 14 as the daily cycle low, obliging us the rephase the previous daily cycle (which was anyway too long at 27 days).
Perhaps I do not understand cycle rephasing, please have me corrected if I am wrong.
You are not understandng cycle phasing. The 3rd could not be a cycle low when the 14th moved below it.
ReplyDeleteGary,
ReplyDeleteI've been thinking, that move last week in the dollar below 78.82 was set up to sucker in the bulls. The only thing is it didn't stay there very long. Am i over thinking it?
@alphacom0 & @gary re. $BPGDM:
ReplyDeletealphacom0 saild... Sorry, I mean extreme Gold miners bullish sentiment form $BPGDM on stockchart.com.
Gary said... The BP was higher in sept. 07 and gold rallied for another 3 months"
In all likelyhood, $BPGDM did not exist in 2007. This, at least, according to TheDOCument (http://www.thedocument.com/stock_market_blog/2010/20101230_market_correction_past_due.cfm) to which corroborates John Towsend (http://thetsitrader.blogspot.com/2010/07/ok-so-if-it-looks-too-good-to-be-true-i.html). Additional research on the index in 2007 did not bring anything. TheDOCument's piece is worth reading.
Bam,
ReplyDeleteThat's not the way cycles work. A lower low is a lower low; That's the sign of a downtrending market.
Gary said... You are not understandng cycle phasing.
ReplyDeleteThen I should certainly appreciate enlightenment, especially that the terminology document contains only an indirect reference to it. My analysis seems consistent with what you show on the respective chart and, equally, with an older posting of yours (http://seekingalpha.com/instablog/591301-garysavage/56974-the-four-keys). Thanks.
Sorry i just don't have time to explain cycle theory right now. I'm putting out fires left and right with the site transfer
ReplyDeleteGary said... You are not understandng cycle phasing. The 3rd could not be a cycle low when the 14th moved below it.
ReplyDeleteThen I should certainly appreciate enlightenment, especially that the terminology document contains only an indirect reference to rephasing. I tried to apply what can be inferred from there, as well as from this older posting of yours http://seekingalpha.com/instablog/591301-garysavage/56974-the-four-keys (last chart). So, perhaps you will want to introduce a section about cycle phasing in the terminology file. Thanks.
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ReplyDeletethe $usd has turned red and I thought this was interesting.
ReplyDeletehttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/3_Is_the_Worlds_Richest_Man_Getting_Into_Silver.html
I'm of the opinion that today was like a Fed day. By that I mean that usually the results of fed actions and the subsequent direction and reaction of a market are NOT clear on the day of the announcement. In fact that day tends to do more confusing and faking out of people than not.
ReplyDeleteCommonly, it is the day AFTER the fed where things start to clarify. I have such a feeling about monday. Dollar, gold, silver, market, etc. I think there was more confusion today than real moves.
So...I wait (still long metal futures) for tomorrow and some clarity. I'm open to metals going lower, (but my MONEY is currently bet the other way.) If they do, I've already got plans In place.
Night all.
Gary,
ReplyDeleteI noticed that you have increased your allocation to AGQ this time round. If the gold stop at 1361 is hit, would you sell all your AGQ and revert back to SLV again like you did the last time?
contulmmiv. @$BPGDM did not exist in 2007.
ReplyDeleteVery interesting. I am not a member of Stockchart.com, so I am unable to access anything more than 3 years old. Generally, when $BPGDM is around 80, gold miners are in overbought teritory, and price will eventually fall along with the index. During the past 2 years, it had never stayed that high for more than a month. It tends to turn down and then up and down.
Slumdog, You claim you are in Asia, but you post regularly on this site like you are on East Coast time. Are you perhaps awake 24/7? Just a sniff test.
ReplyDeleteprobably yes.
ReplyDeleteSorry boys and girls, but I will not be entering the 0% game. Simply put the US is doomed, and so is the rest of the world. Why would I ever want to trade out of my PM's? I may be the only old turkey left on this blog apparently, but trading out even with cycles seems silly. 1361 might as well be 761, I don't care; price action doesn't matter. I have made money off of the cycles with leverage, with Gary’s advice, but I will never make real money mucking around with the big picture. Sorry, not even going to guess at that one…..But then again, I am mostly in metals, and only partially in miners….the bull after all is in gold; silver, miners, and like are only a follower to the gold bull. Either way, happy to buy at 1200 or to buy at 1500…whatever happens….. I will be the extreme on this board I guess.
ReplyDeleteJayhawk, I remember last year vividly. I remember your posts like it was yesterday. I hope there is some way you can pull them up. I hope you aren't becoming a contrarian indicator.....
ReplyDeleteFellow SMT'ers, it was not just a swing low last year, it was a weekly swing low. After that low reversed, I held most of my positions, as we were well into the correction at that point. The fact is that anybody who just held on is up huge. I'm convinced that Old Turkey is the best way here (barring another total meltdown). Everybody has to realize that as the bull runs higher, the ranges are going to become huge as he tries to buck you off.
Gary: you said the BP was higher in 2007 and gold rallied for 3 months. I AM a member of stockcharts.com and they don't have that stat before 2008. Where are you getting it? It seems to be quite accurate since they started using it in 2008.
ReplyDeleteDG, I have a question for you. Most successful traders I have read about trade markets that have ranges they can get an edge in, but invest in bulls. Your comments have lead me to believe you want to trade this bull. Why is that?
ReplyDeleteSorry I meant 09. As the rally broke out in Sept. The BPGDM got overbought. Gold went through the normal daily cycle correction to work off overbought levels but as we all know it ended up rising to over $1200 even though the BPGDM first got overbought in Sept.
ReplyDeleteDollar tonight (and last day or so) appears to be triangling/congesting in preparation for continuing lower. There isn't much space left and a break down would put a floor and resumed uptrend in the metals.
ReplyDeleteIt's looking likely to me. I'm still betting heavily long.
UNLESS the dollar somehow bottomed on that move down on the 31st and we are now congesting on the way HIGHER. The read of people (gary,etc) seems to be otherwise however.
ReplyDeleteIt comes down to whether one believes the dollar will move down into a three year cycle low and if so then the weekly swing high is a sign of that beginning.
ReplyDeleteThen of course there is the weekly swing low in gold. That should not be happening this late in a weekly cycle if gold was going to correct.
Folks one can drive themselves crazy with what if scenarios... and more importantly prevent themselves from riding the bull.
Just let your stops do their job and otherwise sit still and let the bull do what bulls do.
Gary,
ReplyDeleteWhen $BPGDM was above 80 in Sep, Oct and Dec 09. They all corrected down below 70, and GDX had all been corrected by more than 15%. After it peaked it Dec 09, $BPGDM began a 4 months drop to 20 in Feb 10, and GDX had lost 35% from its peak.It then spent the next 4 months climbing back to 77 in May, and GDX recovered all of its losses. So the index has been quite reliable in its short history.
Hey if you think the BPGDM is going to trump the dollar collapsing down into the three year cycle low then by all means step off the bull.
ReplyDeleteI will just follow the plan :)
Don't get me wrong. I am a gold bull and a subscriber of your site. I found your analysis very helpful. That is why I ask the question. I am still long on gold miners. (although down from 95% to 20% core holding). But in order to protect my hard earned profit, I need to consider "what if" . After enduring two painful 50% correction in the past 2 years. I learnt to have some fear. No doubt I will sell down more if gold fall below $1360 as per your recommendation.
ReplyDeleteGary, this is Bill here in Tokyo. You're up late! I like your logic about riding the bull w/stops. I myself don't like leverage, nor do I understand cycles, but I do get your point about riding the bull w/stops.
ReplyDeleteMy question is, what day did you get into GDXJ/SLW (or whatever), and what exactly was your buy signal? Was it something you saw in $GOLD, or $USD, or in GDXJ/SLW, or what?
Thanks for sharing. It would help me a lot. I have problems with a trigger. Some days I think any purchase above the 50d EMA works good enough, for instance.
The big up day on the 27th should not have happened if gold was going to drop down into an intermediate cycle low. That was the buy signal.
ReplyDeleteGary, You are one hell of a man. This whole thing of going from hero to goat and back again once or twice a year and keeping your cool amazes me! Truly super coaches are a special breed.
ReplyDeleteIndeed, it takes a unique personality to be able to trade as Gary does, and stay objective in responding to the "variety" of comments asked.
ReplyDeleteInteresting. Thanks Gary.
ReplyDeleteI don't have your experience in trading, but to me, it was the 28th pop up that signaled gold going higher. Since then I've been waiting for a backtest, which hasn't happened yet, and may not happen. Am wondering how to get on the bull. Buying here/now w/a stop sounds good to me - risk is only 3% to the last pivot low you spoke of.
Thanks.
Brian: I do invest and not trade bulls (around a core kind of like Gary does). I also "invest" in bears and hold shorts until there is a panic. I get out and/or switch directions when sentiment gets truly extreme. So I am long (sometimes for over a year), then out, then short. The market, to me, has been very odd the last two years, I suspect because of the Fed meddling. Overbought has not responded as it normally does. You also have to be careful shorting off a compression bottom as they get overbought and keep going. I would never consider "investing" in a bull when the whole universe is already bullish.
ReplyDeleteBrian-
ReplyDeleteYes, I leave that kind of impression on people. They alway recall my lameness. :)
That being said, I did go down almost 18% in my miners within a month, which as a newbie and very heavily invested was a bit of baptism by fire (first ever time I listened to Gary was that call)...It affected my mental approach and I was not able to fully get on after the intermediate cycle bottomed in the Summer. I don't intend to mess this year up, so if this call is not on the money, I will t-up the next one.
I also have taken on a core and built it by dollar cost averaging and like Keys, will be Old Turkey for a long, long time...When governments can be trusted for some reason, when the DOW/Gold ratio hits 1/1.
Funny...that correction last Winter would had us sitting on a low in SLW from 17 to like 15. OH THE HUMANITY!
Out my long metal futures (from last week) with a small profit (much less than fri's close).
ReplyDeleteWe went below my stop levels and I think the odds of an intermediate low coming have now increased. Will let this play out a bit and regroup my thoughts after watching a bit.
Yup,
ReplyDeleteGot suckered into buying last week. have to weather the drawdown now.
An alternate stop, but one that has a much greater chance of being whipsawed, would be to return to a core position if the HUI closes below 550.
ReplyDeleteThat has been support and if that gets broken we will have a pattern of lower highs and lower lows developing on miners.
Lotta volume on the gold futures contract with this move down. There wasn't really much excessive volume on monday. THIS is the first indication of large numbers of positions being taken, exchanged, or blown out. As I mentioned before, yesterday didn't seem legit to me. The volume this morning is waking people up. (Note the volume on this drop could indicate a bottom, but I'm not going to bet that way yet.)
ReplyDeleteI'd be surprised if the HUI (if it falls) doesn't bounce off of 550 - got the 50 DMA and Bottom Bollinger band to fight through to go lower.
ReplyDeleteAny way you looked at it, this week was going to be rough and tumble. Well...it's happening.
ReplyDeleteAt this point, it's still just a normal wiggle!
ReplyDeleteNew post
ReplyDeleteWe *are* still in the triangle/congestion pattern of gold (daily chart) with a flat top approx 1425 and an upsloping trendline near 1383 today. If that trendline breaks, then more selling will pile in and the INT low would be likely coming, I think.
ReplyDeleteOf course, we are still in that triangle, so up and away possible too.
test
ReplyDeleteGary,
ReplyDeleteGap filling.
Do you think the SPY may want to be on its way to fill the approximate 1200 gap, SLV (hard to believe) the $26 gap (or is the only gap on SLV 28.5?)?
I don't know too much about gap filling but they seem to me to happen more often than not. Previously you pointed out months ago SLW filling a gap, which it did end up doing.