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Tuesday, February 15, 2011

PORTFOLIO CHANGE

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397 comments:

  1. Let's hope New York follows through with momemtum...


    Good luck everyone!

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  2. Gary, you mentioned an idea of perhaps going partially in and waiting for the daily cycle correction to complete our position ... would this still be a recommendation?
    Is there a good chance the correction will drop lower then 1370?

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  3. Gary,

    If the market gaps higher this morning are you going to wait and see if it fills or buy at the open?


    James

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  4. Avann,
    If you are nervous about a further pullback then that would be your best strategy. Just add to your core today and add the rest at the next daily cycle bottom.

    My thought last night was that if the breakout came today or tomorrow that it would still be early enough in the daily cycle that we could see another week or two of rising prices before the next correction and one might want to enter full positions at the open based on that.

    Without a crystal ball I can't tell you for sure which strategy is the best. If you enter now you might catch a nice ride higher over the next two weeks and the next daily cycle correction could be very mild halting considerably above today's price.

    On the other hand if you wait for the next daily cycle low and it holds above $1307 the odds go up huge that we are now in the final leg up in this C-wave and your chance of a draw down are greatly reduced even though you might have to enter the rest of your positions at higher prices.

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  5. James,
    Tough question. If one waits they run the risk of getting left behind by a strong trend day.

    I suppose I will just enter and be done with it.

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  6. Mmmm...tasty profits for breakfast
    :-)

    These gains in the metals since the bottom continue to be controlled rises. The fed/morgan are fighting things and only letting gold inch up about $20 every 3-4 days.

    So far I have not seen the sort of move which makes me think any buyers of that move are at risk of a correction. This means I do not believe we have rallied past a point whereby the next correction in the future will return to - although I think that point is close.

    These moves up simply don't consist of wild or capitulation buying yet which would indicate weak hands.

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  7. TZ,At 7x leverage, maybe you can pay for the next Hawaiian outing for all of us?:)

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  8. gary

    if i wanted to get away from comex silver. what would be my other choices?

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  9. Jeff,
    I'm not really sure what you mean but you can buy SLV which should track the percentage move in silver. Or Agq which will give roughly double the move in silver. SIL and SLW should be about 1 1/2 times the percentage move in silver.

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  10. Gary,

    Could resistance in Silver at 31 level halt the rally in PMs since silver has been the leader out of IT bottom.

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  11. Sandy,
    I tend to think the sector was waiting to see if gold could break through resistance although I do expect silver to probably back off from that resistance level at least initially before pushing through.

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  12. A post by me just to get the e-mails today. A glittering morning to all.

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  13. Gary: With GDX so close to the trade trigger, does it pay to jump the gun? Looks like you would be waiting for a 1% move after GDX's current pre-market price. Gold breaking out without the miners is a bit odd, no? Seems like 543 would be a stronger confirmation of no re-test of the lows than gold over $1372...?

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  14. Inflation raging across the world and growing rapidly.

    Mideast, India, China, UK...on and on.

    The masses are slooowly starting to understand the game - if for no other reason than they can't eat or pay their bills.

    Gold and silver are the answers and more and more people are realizing that. Hang on, we got some catching up to do.

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  15. TZ: Nicely done---a man after my own heart: nice fat position with no initial drawdown. For me, that's what the game is all about. Now you can just sit and smile. Way to hang on with all the "dip coming" talk here.

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  16. Hello everyone,

    I sure wish the 20 day moving average would punch through the 50 day SMA. That would be like old times back in July/August 2010. That would make me sleep better at night...

    Tom

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  17. Welcome back boys :) We left plenty of cold ones in the fridge for you.

    I would NOT wait for the daily cycle low. If you look at the first daily coming out of the last Aug 2010 Int low, it made up ALL of the losses in one full cycle. With 2 weeks or so left, it's conceivable to see gold test the $1,420's again before rolling. Of course past performance is just a guide.

    IMO, Silver will test the $31.21 30 year high's today. When it eventually breaks through its going to be one very impressive display.

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  18. Sorry Gary. My question was not about perfection nor about what things will look like 3 months from now. It was precisely whether 543 being broken through was better confirmation that no re-test was imminent (in your best-guess mode) than gold's breaking through 1372. I suspect yes. I honestly get that there is no "perfection" in entry points in this game, but it seems useful to estimate likelihoods of various scenarios, no?

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  19. DG,
    Of course as we all know there is no perfect way to enter. I tend to think now that gold has broken through resistance the miners will follow even if they don't gap through that level on the open.

    But if one wants to sit tight for the final confirmation it isn't really going to make that much difference in the end. Just like waiting for confirmation isn't going to make any difference 3 months from now.

    If AGQ goes to $350 will anybody really be beating themselves up at that point because they missed 10 points waiting for confirmation?

    I doubt it:)

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  20. DG,
    I think 543 would be the last confirmation.

    If gold then dropped back down to another lower low we would just have to chalk it up as one of those curve balls that are just impossible to hit.

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  21. Thank you, Gary. Yes, at 350 I surely wont even remember. Thanks for your patience with my "low drawdown desire" syndrome.

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  22. Hi Gary,

    Gold @ 1372 now...are you still buying @ open?

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  23. NOTE #3 AND #4 STILL APPLY AND PRETTY MUCH SAID IT ALL ...

    http://www.screencast.com/t/rVlgrk1L5

    :)

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  24. Yes I'm going to go ahead and buy.

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  25. The exiting of AGQ and SLW (on the morn of 10th) based on belief that the intermediate low might not have been in and the subsequent re-entry this morning at opening prices results in a lost gain of approximately the following:

    AGC: 146->154.80 = 6%
    SLW: 34->36.20 = 6.5%

    This is for discussion purposes only and NOT a critique of Gary's call which had clear validity among many opinions.

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  26. The differences for these two as well:

    GDXJ: 36.60->38 = 3.8%
    SIL: 23.45->24.5 = 4.5%

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  27. What are you doing for a safety net?

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  28. The safety net is that it's a secular bull market.

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  29. TZ: Yes of course it's better to hold something that does not retrace it's recent gains. What's the discussion? It's a game of expectancies. If it is 75% likely we will drop 8%, then... You just do the math and place your bets. If it comes up three tails in a row, you lose. Doesn't mean in any way the bet was wrong. Not sure what the discussion would be...? "Never sell something that is about to rally" is certainly a good rule of thumb!

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  30. NUGT has all the juice of the smaller miners, without the company specific risk. Thanks for pointing it out, G.

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  31. Welcome back to the Turkey Farm Gary!

    Let's all take a 2 month vacation now.


    SB-I'd be interested in how that one does vs. GDXJ.

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  32. Do I dare say ...

    "Fund managers chase!"

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  33. Alex,

    Thanks for the chart. I like the annotations. Very useful.

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  34. $$$ rallying now and silver goes red

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  35. HUGE selling coming through now on Silver here

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  36. For those waiting for more confirmation: As well as the the previous high on $HUI being at 543, the declining 50 day line is at 542. Getting through both for more than an hour really would be good indication, I believe.

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  37. Caution is warranted for those entering at these levels. I think we'll get the retest at $1350s gold, which maybe $28-29 on silver. I've been whipsawed so many times by this bull, we'll see if I'm reading this right.

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  38. How about this for the IT headfake we've been expecting: gold breaks above consolidation area as it has done, HUI tags 542, silver tags 41, and then the daily cycle rolls over and gold goes all the way down to retest the 1308 low. silver? I don't know. Maybe it drops to only 28, maybe all the way to its recent low of 26

    Possible? Yeah. Probable? I have no idea.

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  39. correction: silver tags 31, not 41

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  40. Would love to know from those who had sold earlier as to what strategy they are using to get back to full positions.

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  41. fergie,
    nobody really knows what will happen, risk management is the key..

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  42. Agreed. Portfolio management is the key so one doesn't have to needlessly take a loss. However, some folks seem to go all in and can't stomach the swings when they do happen.

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  43. Wiggle, Wiggle Wiggle.

    All hypothetical, just get invested, stay invested, stop refreshing Kitco and go for the ride. If it breaks down, you stop out, simple.

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  44. 1385-1396 - watch out once we get into that range.

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  45. MLMT, Wasn't it the same at the end of world gap in silver?

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  46. POLY,

    >HUGE selling coming through now on Silver here

    http://www.youtube.com/watch?v=zDAmPIq29ro
    :-)

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  47. We are about to have the mother of all short squeezes in silver. Hahaha I love it.

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  48. I think at this point one can probably put a stop under 518 on the HUI and use it as a trade trigger to stop out of positions.

    That is clearly a major pivot and shouldn't get violated unless gold's daily cycle is going to move below $1307.

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  49. Poly,

    You said if it goes down you stop out. Do you have stops in place for your PM positions? If so, where are those stops?

    Thanks!

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  50. And don't forget, "Everything is OK".

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  51. Poly,

    You said "stop refreshing kitco"...

    I downloaded the kitco app that puts real time gold and silver prices on your taskbar. It's great--you don't have to dedicate a window to kitco, it just displays the prices right there at the bottom right of your screen.

    It's also nice to run if I want to take a look at what gold and silver are doing in AH trading and I don't want to open up the TOS app (which takes a while to open, and another while to close).

    I forget who posted the link to that little tool. Whoever it was: Thanks!

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  52. Based on the price action, it appears that people who bought at the current price level and held through the recent PM correction are now screaming for the door at the beginning of the next leg up.

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  53. Remember, at SOME level of printing everything will just turn up and never look back:

    http://www.zerohedge.com/article/one-chart-von-bernankestein-will-never-see

    first chart; AMS money supply (a much better measure than any M's);
    Note AMS slope in the years before 2008.

    Massive inflation sprouting worldwide

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  54. Pima, I'm really not qualified and I'm mainly in SLV Calls, some AGQ and a little SIL. I have a stop using SLV @ $27.55 to sell AGQ and SIL. The calls I unwind manually.

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  55. FED 'adjusted base' money supply resuming vertical climb

    http://research.stlouisfed.org/fred2/series/BASE

    (don't forget all the other countries in the world are printing too)

    Take a look at drudge, or zerohedge, or dozens of other sites to see the now rolling in batch of stories about shooting inflation.

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  56. Nike re UNG: Nope--no change in opinion. I'm a little disappointed it hasn't rallied yet today after bouncing on cue yesterday, but I see nothing to change my mind. I will post if I do. It really moves in it's own rhythm and not with SPX or other commodities, so no clues there.

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  57. Gary,

    Thanks for the excellent cycle analysis. Following it I have finally found myself on the right side of the trend.

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  58. DG,

    UNG's just marking time... Are you still in the trade?

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  59. DG,

    UNG could be tracing out a ascending triangle. If so, we would expect it to break to the downside, probably make a new low, and then take off to the upside from there.

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  60. thanks, Poly.

    I have a few stops in on some of my positions that are green, wide enough that they shouldn't get hit unless the PM's are headed significantly lower. I use channels a lot and sometimes put a stop well below the lower channel, gradually moving it up every day or two as the channel rises.

    As a result of your comment about the deep in the money SLV calls, I'm starting to nibble at those. Also buying some deep in the money GLD calls. Seems like a great way to use leverage without having to borrow from your broker. I can lever up that way, effectively be fully invested (or even beyond that) and STILL have uncommitted funds available in my account.

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  61. @Brian I accepted I was wrong. What more do you want me to do?

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  62. MLMT-

    Don't be dissuaded by those that brook no alternative points of view - keep posting your thoughts (with analyses). There are no absolutes in the markets, and any well-supported point of view is, in my book, most welcome.

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  63. I agree Pima and the pools are deep enough and tight.

    For those wanting to punt a little, some of the SLV $35-$40 OTM calls are priced well, IMO, and will really pay off if Gary is even remotely correct about this coming intermediate cycle.

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  64. "Based on the price action, it appears that people who bought at the current price level and held through the recent PM correction are now screaming for the door at the beginning of the next leg up."

    I used that drop to add more on slw, agq, gdxj

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  65. I was wrong in my analysis of silver.

    Further analysis of gold and silver charts has revealed to me (what was probably know to most of you) was that one needs to look at levels in gold to decide WHEN the tops/bottoms will form. The levels in silver are usually not good for that purpose.. Silver will often overshoot or undershoot the objective price level... This is why even though gold put a lower high in Dec, silver ended up putting in a higher high.

    I had stayed away from silver for most part.. Just once I tried when I was looking at that gap down in early January to get tested from below.. Turns out it was a bad idea.. and my thesis was wrong...

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  66. In order for Gary to be right (and I am agreeing with him here), the dollar needs to start tanking...something that it has yet to do...
    Im waiting patiently...

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  67. MLMT-

    I've tried to use very TA trick on the book on gold and silver these past three years and most of them are meaningless. These 2 markets are wild beasts that do whatever they want to do. They only thing I've seen close to being effective is the cycles tools. Getting in a close to the intermediate bottom as you can and holding on for the ride. I think we got a pretty good entry point a few weeks back with gold hitting the 144 and the HUI/GDX index hitting oversold levels deep under 30 on the RSI(7) WEEKLY for only the 2nd time in the past 2 plus years. Those have typically been the best entry points and we should have our bottom, although shake outs, freak outs, double bottoms are all possible. If we are wrong, the cycles will be our guides and most here will get out before any significant blood bath occurs.

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  68. I'm always amazed at how SIL, AGQ, etc. on an intra-day basis grind higher over a period of time, than plunge lower erasing the gains in a matter of seconds. Talk about volatility!

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  69. Jayhawk,

    Can you please post the weekly chart of $HUI/GDX with RSI(7). Thanks. I always look at the charts you post. They are helpful.

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  70. Pima: On something like UNG I buy when the rubber band gets so stretched to the downside it "can't" go lower. Whether it makes a triangle and breaks down later, I don't know. I try to place trades that go quickly in the black and then put in a break even mental stop, so it's heads I win tails I break even. UNG should have a sharp up day soon, and then we'll see (new recovery high in it as I am typing this by the way.

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  71. Everyone--
    Do your brokers allow margin on AGQ, or any other leveraged ETF?
    Curious??

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  72. MLMT, The problem is you always come on here and give a beware this level and leave. No thoughts or analysis. Just a beware of darkness. It is really meaningless without some substance.

    As Jay said, most here are buying the cycle lows as best as we can identify them and strapping in. Gary has proven to be a master at this. You create only noise if you have no substance. Few here worry about daily squiggles.

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  73. Rebecca-

    This was my "loose" channel on the weekly chart. I liked how GDX pulled itself together after the crash and has been in a pretty solid channel since then. Yes, the weekly RSI only dipped down 2 times since the crash and those were the yearly lows to go long. Of course this could all change this year, who knows? I like the 50 WMA too right there and the volume spikes at those levels. (Less volume than last year, but the options for precious metals longs (GDXJ, SIL, etc) is ever increasing. Many seem to have moved away from GDX)

    Also, gaining the 25 weekly MA would be a very good thing if we can do so this week.

    GDX Weekly


    I'm watching these levels on the HUI. I saw the 430 zone as being a key...We also still have the new daily trend line in place with the 10DMA now rising towards that 430 level. I think 430 support should be good now. Then, there's the down sloping trend line from the December highs to overcome. Maybe this daily cycle will peak around there and consolidate around the 430-450 area before exploding though in the next daily cycle into 600 and beyond. Fun to dream...

    HUI Daily

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  74. Thanks, DG.

    I went out for a run. Came back to find your post and the chart of UNG that shows my triangle scenario is off the table. Good!

    I will put a stop on that trade at B/E once we get a little breathing room.

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  75. Thanks, Jayhawk. I use Full Sto (5,3,3) on the weekly charts. It is pretty raliable most of the time, but you do get whipsaws once in a while. That is when Gary's cycle analysis come in handy.

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  76. Brian: I agree with much of what you have said about MLMT, but if he is right and we drop to $1160, that's not a "daily squiggle" at least to me. I doubt we will see that level, but that at least is his claim and not an insignificant one.

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  77. SLV on SoS list today. -24 mill, with -29 mill in block trades.

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  78. DG, Quite frankly I find most of what he does sensationalism. It always seems to come on a day or close to a day, that G has made an important call.

    Probably scares people that haven't been here long enough to have their hands around the program.

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  79. Where are these MLMT posts you all talk about?

    In any event, for gold to drop anywhere near $1,170, it would need to touch the very bottom of the 10 year bull market rising channel. The channel only reaches that low due to the extreme effect the 2008 financial crises had on gold. For gold to see $1,170 again, another massive worldwide event/collapse would be required, coupled with a major dollar rally, IMO.

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  80. On Jeopardy, a 3-day winner of over $33,000 commented that he had always wanted to enter a $10,000 poker tournament. Now that he has come into some money, he could afford such an extravagance. He deserves to fulfil a life-long dream. To which Alex Terbek retorted, “You and 5,000 others; or 6,000 others; or 7,000 others. Alex was hinting that the odds of winning are becoming microscopically small as everyone becomes a professional poker player as their main source of employment.

    Many of us are in the same boat with our retirement saving In the eyes of emerging marketeers, we have all become old-world royals. The prospects for our economies continue to dim. We dream of the day when we can just chuck the stock market, have enough money to stock up on bonds, and live off our interest.

    Many of us, more and more all the time, a nation of traders, everyone who can is trying to make a living off the stock market’s wealth effects. Trading keeps getting more sophisticated all the time.

    SO, WE JUMPED-THE-GUN ON THE 543 HUI CONFIRMATION. All you have to do is wait another day or two if you want to play it safe.

    “Democracy is the worst form of government except for all those others that have been tried." ~ Winston Churchill. Gary is the only advisor I have ever found who’s advice actually works, and I have looked for decades. Carl Swelin of Decision Point is second best, but all he does is trade the 50/200 EMA. Those are the only two I have ever found that work. Since the Marty Zweig, Winning on Wall Street/Fed watching days, anyways.

    Gary talks about how hard it is for investors to change their minds. EW guys talk about how they do their own counts, so they know when they are wrong. I was doing some plumbing recently, and kept getting leaks. I would try something else, and still it kept leaking. I would wait a day or so, figure out what surely must be the problem, and to my surprise I still had the tram leak. Finally, it hit me why the EW guy wanted to know he was wrong.

    Is this the place for the ex-smoker rants? Tram, this is so much more fun than quitnet. I want to get back into shape and …

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  81. Nice comment Dumb ... thanks :)

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  82. And BTW ... I only partially jumped ... I'll wait for full confirmation or a daily swing low to completely load up.
    I went from 100% down to 25% up to 60% ... and I guess hopefully ultimately 100% again.
    I know I know I lost some profit but as they say ... hind sight ... and I sleep better and don't have to wake up in the middle of the night to check the price of gold :)

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  83. Partial jump here too. will jump some more once HUI 543 taken out.

    HUI is at mid-channel (channel drawn of 1/25 low), so more room on the upside before upper channel line gets hit. Maybe that will mark a daily cycle high. Tomorrow that line will be at 555, next Monday at 563.

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  84. DG,

    Do you know the day of the month when UNG gets hit with a contango adjustment? Or is it spread over several days?

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  85. Just call me Old Turkey. I have held 100% the entire draw down. I would never have had the courage without someone encouraging me that PMs are in vogue. I thought fundumentals went out with the stock markets PEs. Someone noted that foreign currencies still respond to relative fundumentals. Now PMs, silver, etc. It's still a fundumetal world. Hard to imagine the dollar amounts that positions can grow to.

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  86. Pima: I never watch that sort of stuff. For me the charts, sentiment, and "reversion to mean" covers everything. If contango is going to make UNG go up it'll show up in my indicators because someone smarter then me knows it and their footprints have to show up first. BTW---new high for the day as I type this.

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  87. Daniel,
    Most brokers won't let you borrow as much on margin for an ultra fund like AGQ as say they would SLW. But for our purposes you will be able to get more than enough.

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  88. Today is the 2nd down day in a row for the DJIA. Is that legal? Where's the PPT! Emergency! (o.k. the SPX was up yesterday, but still...)

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  89. DG,
    Wait till the end of the day :)

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  90. Brother, we are like 1.27 away from confirmation on the HUI. Let's go!

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  91. Actually about .40 on the HUI and GDX already confirmed.

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  92. Put in a couple more orders Gary and push the HUI over the top. :)

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  93. If anyone cares: I am buying NLY here. I have traded it for years. People sell it off on these secondary announcements and it's a mistake. NLY simply reinvests the money and makes a return on the spread so there's no dilution, though people sell it off as if it were a normal equity floating new stock. Mike Farrell is the best mortgage bond manager in the world and is always worth backing. 15% yield isn't bad either. Nice IRA holding.

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  94. Metals/miners acted quite nicely today considering the USD didn't even drop.

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  95. Were is the 3pm cavalry?

    What we have not seen in 3 months is a closing at the lows of the day, that would be a possible clue.

    Almost every final hour has been bought to some extent, let's see what the final 20 minutes bring.

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  96. Rumors of another margin increase on silver-

    http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_J/threadview?m=te&bn=10073&tid=386740&mid=386740&tof=1&frt=2#386740

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  97. So, it's come down to this: Gary's cycle magic, vs. my own humble proprietary system. ;-)

    I'm not buying today folks. I think SLV leads GLD now, and SLV is not confirming today's action in GLD. SLV has neg divergence on the 60 min chart. SIL is also weak.

    I believe that over the next 1-2 days we'll see lower prices in the PM's ... but I don't know if this correction is over yet or not.

    I also keep thinking of what Marc Faber said the other day.

    So, the net is, for me it's still too early to commit.

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  98. William: It's not really one versus the other because Gary makes no claim to time 1-2 day wiggles. He just wants to commit once it seems the IT decline is over---wiggles be damned.

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  99. DG- NLY's share issuance is actually accretive to book value which is how alot of investors look at the mtg reits. NLY is the best one out there but remember it is a fixed income portfolio so as rates go up the value of their bonds go down. And they have negative duration so they go down more than similar treasury bonds. As long as the px of the stock remains abv book value they will continue to issue shares. And the managers get paid on the size of their portfolio. But as you said they are best in class by far.

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  100. DG, this is only a battle in my mind is all. I can see that Gary is an excellent trader and very successful. Better put, it's a battle (again, in my mind) between cycles and my own system. So far it's cycles -3 (if today proves false), my system 0.

    A small rudder controls a huge ship. A mans small mouth can start a war. Paying attention to small wiggles may not be as insane as one thinks.

    Or maybe it is!

    Another koan from Japan for ya.

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  101. good couple of days, but we are in option expiration week, let's see how it plays out against miners earnings. I am curious about PAAS earnings tonight

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  102. Wing: As rates go up so does their spread which offsets the drop in values. Their yield goes up as the portfolio value goes down. It is, after all, a yield curve/spread play and with the Fed announcing low rates forever on the short end, NLY seems great to me. As well, the other risk is refi's, but that's not easy to do these days so they don't have to worry about prepays. I view these drops as opportunities. I welcome your thoughts, though, as this is not a world i am completely knowledgeable about. Thanks.

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  103. Thank you for heads up on NLY...might add some

    Also, looks like UNG is up a few cents from yesterday...thank you

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  104. maybe I'm reading the chart wrong, but from what I know, it looks like we have a swing high on the USD

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  105. DG,

    Contango is what has taken place in the NG futures markets for some time and the net result is that it causes UNG to erode over time. If NG price stayed the same and contango continued in the futures contracts, I believe UNG would eventually erode to near zero.

    I have not researched what kind of effect it has on the UNG price and whether that effect hits UNG at one particular day each month, whether it's spread out over several days, or whether it's spread out over the entire month.

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  106. Nike,
    Close but not quite there yet. Maybe tomorrow.

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  107. From wikipedia:

    Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve). Such a forward curve is said to be "in contango" (or sometimes "contangoed").

    Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery. This is a normal situation for equity markets.[1]

    The opposite market condition to contango is known as backwardation.

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  108. Yeah, I guess the $4 Silver move in just 3 weeks is weak :) and if that's not conforming then what is? If you're looking for it to exceed gold for every 8 hour block, then you will have problems buying this market.

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  109. Hi gary,

    Thank you...can you please explain?

    I thought a swing high is formed when the price drops below yesterday's low and doesn't exceed yesterday's high?

    I am also basing this of the UUP chart..

    maybe I should look the USD chart instead?

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  110. yes look at the dollar chart. It needs to go below 78.29. It got to 78.31 today.

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  111. Pima: Yeah, I know what contango is and how it kills UNG over time. Thanks. I really just mean that such things do not play into my analysis. It "told" me it was going up right away and is up about 2% in two days. It's a trade not an investment so I don't care about the erosion. If it clears 5.42 or so tomorrow it would be appropriate to put that break-even stop in, IMO.

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  112. Pima: Yeah, I know what contango is and how it kills UNG over time. Thanks. I really just mean that such things do not play into my analysis. It "told" me it was going up right away and is up about 2% in two days. It's a trade not an investment so I don't care about the erosion. If it clears 5.42 or so tomorrow it would be appropriate to put that break-even stop in, IMO.

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  113. Interesting SoS numbers on SLV and GLD today:

    SLV -25 mill; block trades -29 mill
    GLD -mill: block trade +.09 mill

    The block trade numbers are the ones that stand out. Looks to me like large traders were selling SLV today, but not selling GLD... ??

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  114. Thanks, DG, for the stop "heads up".

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  115. Poly, I meant today. Of course the $4 move in $SILVER over the last month was super strong.

    Does not today's move in silver not concern anyone?

    Silver looks like it's topping here now. I could be wrong, of course.

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  116. DG, you are absolutely right. I've managed a mtg bond portfolio so I just want to pass on the risks of the trade (that I've definitely experienced). One thing I'd comment on your analysis is, only the new money they raise in secondary offerings is put to work at the now higher yield. The legacy portfolio stays at it's historical purchase yield. But you are absolutely right on your analysis this secondary will increase the wtd ave yld of the portfolio & short term rates haven't moved - so the spread should get wider (depends on their hedging though). I don't currently own NLY but have in the past. I've actually been thinking about the trade again though so thanks for the heads up on the drop. You should also look at CMO and MFA. CMO, if I remember correctly has alot more floating rate assets - so less sensitivity to raising rates. And MFA has a large credit component to it that has been a monster winner over the past two years (and I'm not sure that's reflected in the book value).

    Cheers.

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  117. Silver was up .55%, gold up .85% and silver $0.43 from a 30 yr high, what is concerning about it?

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  118. I think it was just bumping into some resistance here William. I'll feel much better once we get a few daily closes above this level.

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/8e1016fd-c56b-4bc3-bb68-7fc3d734f259

    SLW broke out nicely. Most of the PMs have this pattern and SLW leads the way to higher prices.

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/d9385763-a913-4e9d-a194-01af5afdbd58

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  119. Can we please not have any talk of a triple top on silver? Specially since there is no such thing as a 'triple' top! except in manipulated markets ofcourse :)

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  120. A lot of the mining stocks have decent gaps under them today - and most of them tend to fill their gaps. I think the trend is upward so tomorrow would be a good day to add if the gaps get filled.

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  121. I only added another 5% of capital today into the late morning dip, as I really don't like buying into several up days. I had orders to add 10% but was only filled on roughly half.

    At 67% of capital invested, I'm not concerned about the next day or two like William. I just want to have a size I can sleep with and hold through the anticipated move the next several weeks/months.

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  122. This comment has been removed by the author.

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  123. Long post - sorry - my last post for a while.

    Like Gary said, this trading thing is hard. And my writing at 5 am over here in Japan in the freezing cold isn't so great/accurate, so sorry that I didn't write/express well earlier. There are so many things to consider; everyones comments on specifics of this and that are all valid. In the end each one of us has to decide where the risk-reward ratio prompts one to place their own after-tax money. For me, I am always cautious, as I worked too hard to get where I am today. I've been following gold since 640.

    FYI I am not a day trader; I'm a swing trader, using daily charts 90% of the time. I sometimes glance at 60 min charts, and sometimes weeklies and monthlies, zooming in and out to help me see straight up on the daily charts. My background is astrophysics, so for me I'm quite comfortable zooming into the quantum/paticle level, and to then zooming out to the macro/relative level, as these are all valid views that need to be considered.

    I get that cycles now favor PM's, but for me cycles aren't precise enough, yet. And price shows a breakout in GLD and SLW today. But on the daily charts, I can also see $GOLD backtesting the breakdown at 1380 (+/-10) or so, and I also think that $SILVER could be double-topping here, this being a B wave up in an ABC EW-type correction. I also believe that $GOLD needs to backtest 1260, as it has behaved this way (big runups, then backtests) for the last 10 yrs. A daily 10 yr line chart shows this. This despite fundamentals calling for higher prices. That's where Faber comes into play, as I'm a long time follower of his.

    Like I said, I might be totally wrong. I sort of hope I am as I'd like to believe in cycles if they are real.

    I read this blog quite carefully, and so far if I'm not mistaken, this is the 1st day silver didn't show relative strength, and also we do not have a breakout in the $HUI. That's the only yellow flag I wanted to raise today.

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  124. William,
    Here are the positives.
    Silver has been showing relative strength.

    Silver had a large move yesterday. It is rare that a large move is followed by another large move immediately. Some kind of consolidation usually has to take place so today's flat day isn't really an underperformance in my opinion it's just a normal consolidation after a big move.

    The XAU and GDX both made higher highs and the HUI only missed by .47 points.

    Gold broke through a significant resistance level.

    If the dollar forms a swing high tomorrow or Thursday there will be good odds that another daily cycle is going to be left translated and the move down into the final three year cycle low has begun.

    Those are the positives as I see them.

    One could always wait for silver to break out to a new high at this point. To do so this early in an intermediate cycle would be incredibly bullish. Sure you will miss a little profit but in the big scheme you will still probably make 100% or more (if you buy AGQ) by the time the C-wave is over.

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  125. I found today's gold action very telling. We broke through 50dma and it's small 5 day pennant. Very similar to the Aug move too. I noted the below chart with this action.

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=0&mn=3&dy=0&id=p10490885073&a=224916996

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  126. Beanie: Another brilliant guy to write-off (like Grantham) Here's a quote from Hussman:

    "Last week, the S&P 500 Index ascended to a Shiller P/E in excess of 24 (this "cyclically-adjusted P/E" or CAPE represents the ratio of the S&P 500 to 10-year average earnings, adjusted for inflation).

    "Prior to the mid-1990's market bubble, a multiple in excess of 24 for the CAPE was briefly seen only once, between August and early-October 1929."

    Doesn't sound like Dow 15,000 to me.

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  127. gary, a couple of novice questions please.

    As a sterling investor, how, if at all, should this affect my strategy. Im a novice investor(no shit) who follows your advice to the letter, rather than a day trading professional like most on this blog. Im worried that the $ will weaken versus the £ to such an extent that it erodes my profits. i suppose theres no real answer to this problem but any advice much appreciated

    Secondly,ive done very well from mimicking your calls tyvm, but this week i got a little flustered when we reduced to 35% then jumped back in +100% withing a couple of days. i know and understand your here to make money and appreciate your cyclical timing skills, but is there a less volatile route one can take riding this secular bull. ie averaging in over a period of time etc etc

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  128. Clark,
    As long as you aren't leveraged you can simply ride out any correction.

    The reason we got out (we actually just locked up some profits) was to wait for confirmation that the sector wasn't going to make another trip back down. In hindsight one could always say see we should have done this or done that.

    Unfortunately none of us gets the luxury of investing in hindsight so we have to play the game by the rules set for us.

    IMO the correct move, in real time, was to step aside and see if the miners would correct the divergence. They have so we now have the odds on our side that the intermediate bottom is in.

    We can now just hold Old Turkey for the rest of the intermediate cycle (with one protective stop which I will go over in tonight's report).

    In regards to an appreciating pound I suggest staying in silver and silver miners so the percentage gain stays ahead of currency appreciation. You definitely don't want to own GLD and probably not the major gold miners.

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  129. Clark, no need to worry. The pound is as crappy as the dollar. Over the last 2 years it has been bobbing between 1.40 and 1.70 to the $.

    I actually slightly disagree with Gary here because the $ index is 57% Euro, and that piece of sxxt is just as bad. So even if the $ goes down it will not go down all that much.

    Now, I earn USD and spend CAD. That really hurts. When I came to Canada the rate of exchange was 1.30 and now it is 0.98. That's some inflation....

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  130. Gary,

    I'm going to be amazed if the dollar collapses on schedule, because, as you well know, the only way that can happen is if the euro becomes quite strong.

    You and others on this thread have made the point repeatedly that the country is awash in dollars. But, the Europeans think that Europe is awash in euros, and of course gold is going up in euros as well as dollars.

    If everybody thinks their country prints like there is no tomorrow, how do you think this can ever be reflected in a dollar index ?

    Of course gold will do well in all currencies so long as millions of people believe what I've just outlined above. It doesn't even matter if it's true so long as millions believe it to be, which is why I'm comfortable in this trade. I'm still a non-believer.

    But the dollar index plunging ? I hope you won't get faked out if it doesn't happen.

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  131. Interesting to see the performance this past month (SLW, AGQ, HL, SVM, SIL)

    AGQ and SLW dead even at 15.5%, SVM leading the pack at 18% SIL only up 4.94%

    Silver

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  132. Wes,
    The dollar has been measured against the Euro for more than a decade. It didn't stop the last three year cycle from running it's course and I doubt it will this time either.

    Actually most of Europe is trying to institute austerity measures to get their debt under control so they don't have to destroy their currency. the US on the other hand is borrowing and printing at a staggering rate. The Fed is now the largest owner of treasuries in the world.

    How's that for monetizing debt? Does that sound like the recipe for a strong currency?

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  133. ok cheers. my portfolio is identical to yours so all good regarding the lack of gold

    apologies if i sounded like i was knocking your recent strategy, im not, your calls are remarkably astute.

    Its reassuring to know you can flippit your strategy at the drop of a hat and that your not married to a singular plan.

    Following you is pretty exciting heartpounding stuff, just not too good for old ticker mate lol

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  134. You guys are discussing the dollar index. And true, it is flawed by leaving out major currencies and weighting other currencies wrong.

    The Fed knows this (just like they know everything else for those of you who think they are stupid.)

    They quietly keep copies of their own TRADE WEIGHTED dollar index. This means the valuation is based DIRECTLY on what those dollars are used to buy and transact.

    http://research.stlouisfed.org/fred2/series/DTWEXM?cid=105

    Above is the "Major Currencies" index, I contains the main currencies, but unlike the flawed DX they are properly weighted based on actual trade.

    http://research.stlouisfed.org/fred2/series/DTWEXB?cid=105

    This is the BROAD index which includes almost *any significant currency* in the world. Look at the description. It doesn't get much more encompassing than that.

    The main page is here:
    http://research.stlouisfed.org/fred2/categories/105
    where you have other choices.

    For example, this is the major currencies index going back to 73.
    http://research.stlouisfed.org/fred2/series/DTWEXM?cid=105

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  135. DG,

    Shillers "adjusted" "10 year" PE thing is useless from my point of view. How can a 10yr average of anything really tell you something about accurate day to day values?

    How do you average in 2000, 2006, 2008 for example into some kind of useful metric. You don't in my opinion.

    Regular PE values based on an "as reported" (GAAP; to the IRS; where people don't LIE like on CNBC) and yearly basis is what to look at.

    http://www.decisionpoint.com/TAC/SWENLIN.html

    First chart. You can clearly review both the PE for 100yrs and the DIV % of the S&P 500.

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  136. In other words, use the common sense test. How in the world does adding up and averaging the earnings of the last 10yrs for ANY company make sense in valuing the stock market right now.

    Citibank for last 10yrs?!?
    AIG?!?
    Nokia (which looked wonderful until last year or two when it was clear they have completely *blown* the smartphone revolution)

    So we take 8yrs of Nokia earnings, add in 1 moderate year (last) and current year (falling off a cliff) and call it a pretty good valuation?

    Same with AIG? (those guys were flying for most of the 2000's)

    Or do we look at what these guys look like NOW, in the last YEAR?

    I think the answer is obvious. I'm sticking to last 12months "as reported" (i.e...not FAKE) earnings for PE rations.

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  137. WES makes a good point, but I would argue the the ECB is publicly deficit hawkish and "Austrian" poised, even though they have purchased gov debt. The FED in comparison is publicly willing to fire QEx at this.

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  138. TZ,
    The 10 year average isn't meant to be a timing tool for daily or even monthly stock entries.

    It tells one where we are in the big picture. When the 10 year average is above 17 long term returns tend to be rater poor. At the end of a secular bear market that average will drop to levels of extreme undervaluation.

    That is the time to buy in preparation for the next secular bull market.

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  139. TZ,

    But do you think the hedgies follow the conventional DXY or the Fed's version?

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  140. Gary,

    Marking Jan 28th as a cycle low remind me of comments you've made regarding Elliott Wave marking waves after the fact. You made it clear that decline does not qualify because a cycle needs to be clearly visible " from across the room". In cycle theory, is marking something a low required when it stretches beyond as reasonable cause?

    If that Jan 28 is a cycle low, then there are clearly cycle lows in that 07 runawy move. That should men that this runawy move really did start end of Aug and is now almost 6 months old. What do you think?

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  141. Please forgive typo's, using a mobile

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  142. If this is a runaway move and the magnitude of corrections is going to be 30 points then we can easily get a cycle low that isn't visible from across the room.

    A runaway move kind of makes a mess of cycle theory.

    Unless we see a 40-50 point correction real soon I'm going to assume this is in fact a runaway move.

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  143. BTW the Nov. correction was almost 60 points so it doesn't fit in the 30 point size limit. The runaway move would have to have started after the Nov. correction was completed.

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  144. In that 07 runaway move there were 3 x 30 point drops in 3 months, were they all new cycles?

    Why can't they just stay "very" stretched?

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  145. Thank you, BTW. I'm only asking to get better informed.

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  146. Exactly! Like I said a runaway move usually makes a mess of cycle theory.
    The next 30 point dip could come at any time. Then another can follow right on the heels of the last one. Then there can be a period where the market grinds higher for quite a while.

    Case in point there's no way to determine if the 20th or 28th marked a cycle low.

    So in the case of the stock market, unless we see an obvious move down into a cycle low soon, we can just put the cycle tool in the tool box for the time being.

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  147. CATBIRD,

    The Fed's dollar index isn't tradable. It's more accurate, but finance people will always follow something with a bid/ask price.

    The Fed's data would be more for a researcher or a person with a long historical time horizon.

    I just wanted to show it exists. Obviously DX is what we are using.

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  148. We are on the verge of another huge breakout ---SPX DJIA QQQQ . This one should destroy any left over shorters.

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  149. I doubt anyone here is wasting time and money shorting stocks.

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  150. AGQ - I had my accountant take a look at the prospectus and it says that a K-1 will be sent out for any income from the ETF. I understand income from other ETFs such that they may receive dividends, etc. and this may be taxed differently. But is there any income from this particular ETF or is it taxed just like an ordinary stock and at a taxpayer's regular short-term or long-term rates? Anyone know?

    Thx

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  151. I would think it would be taxed at the regular earned income rate since we won't be holding it for more than a year.

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  152. Hi all,

    Some of you may be using conditional/contingent orders for triggers.
    I had a bad experience with Etrade on Feb 14. I had a sell stop on GLD - the stop was triggered because the tape printed a low of 130.94 Feb 14! This low does no show up on stockcharts but it shows on eTrade's chart system.

    Good thing I noticed and got back my positions on Feb 15 - albeit I missed a bit of gains.

    Apparently this is the risk I take when I use these kinds of orders. They pointed me to the fine print after and made an inquiry.

    If anyone has anyting to share on how to mitigate and avoid such mishaps, I will be most grateful.

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  153. Ra,
    Give yourself a little leeway. Instead of triggering a stop at $55.22 make it $54.99

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  154. Gary.

    I was referring to GLD. My stop was set at the recent low of $132.

    You are right that I should have given myself some leeway. But even if I have a leeway of $1 and set the stop to $131, I would still have been stopped out as the intraday low for GLD on eTrade was $130.94! The intraday low for GLD that day on stockcharts is 132.7! A difference of $1.7!

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  155. Hmm that is a big discrepancy.

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  156. Yup it is! Etrade admitted it was "erroneous" due to execution timings and what not but it is a risk I take as outlined in the etrade fine print.
    They say they regret the inconvenience and warned me to be aware of these risks!

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  157. STEVEN,

    You were on the right track when you were asking about just trading silver futures earlier.

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  158. This comment has been removed by the author.

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  159. TZ,

    Lol! Actually I have both my hands up! :-)

    Are you saying that this is a quote form interactive brokers, or are you suggesting that I change to interactive brokers from etrade?

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  160. Interesting market tonight, dollar down nd S & P futures flying

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  161. load the boat long folks on pms....remember that no one is going to give you an all bells clear to take part of a wave C you have to pull the trigger yourself

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  162. RA: I saw that low print at stckcharts.com that day! They must have corrected it later, but it was too late for your E*Trade order not to get picked off. I use E*Trade but virtually never place an actual trigger or stop order as I can usually watch the tape if i need to, so have not had that experience, but I have often seen bad prints on both stockcharts and E*Trade. It happens more often than you'd like to think.

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  163. DG,

    Yikes, if what you say is true - that it happens more often than we think - maybe I should just use mental stops.

    I guess this would happen with any other broker.

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  164. Silver has now embedded itself and gold will shortly follow.

    You can now remove your seatbelts and are free to move about.

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  165. RA: I watch a lot of charts and use stockcharts constantly (I'm a member; I program their screens to find my short and long candidates) I'd say I see a 1-2 bad prints every week on one stock or another. Sometimes stockcharts corrects the charts (I guess if the data gets corrected) and other times they never do. They explain that their charts are only as good as the feeds they get. I would avoid placing stops/triggers if you reasonably can. As well if you place a stop for a large order (1,000 shares or more let's say) they may well try to pick you off. It's not the broker's fault.

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  166. DG,

    Thanks for your feedback - it is very useful.

    Yes I had more than 1000 shares for sure in AGQ and also in the miners. But even then I am just a small drop in the ocean. Why would they bother with me? Unless of course there were many others doing the same thing.

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  167. The specialists can see the clusters of stops. They wait for low volume (say over lunch) and then drive it down to pick them off whereupon the stock snaps right back. Seeing the order book tells them what their risk is (If there are huge buy orders just below they know they are safe being long as it limits their downside risk.) At least this is how it worked years ago; it's been a long time since I was in the business, but I have read persuasive articles about being careful placing stops through your broker.

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  168. I have read those articles about the risks of placing stops through brokers too. And on this blog, Gary and others talked about big boys running stops.

    But this is sneaky and different. The run is considered "erroneous". Never thought it would happen to me. Oh well live and learn! No major disaster - just some scrapes and bruises :-)

    Thanks again DG.

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  169. Ooops...correction:

    should have said "This is different from the big boys running the stops".

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  170. RA & DG,

    Interesting thing is that move down on GLD looks like a bad tick. It doesnt show up on GC. Never realized a bad tick could trigger a conditional order or stop as the stock never really traded down there did it? What if a stop market order gets triggered and filled at bottom of the bad tick. Ouch!

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  171. Otis,

    You said it. It is not like the usual run on stops because it was a bad tick - no trades occured at that value.

    The thing is this bad tick in GLD triggered the sale of my other holdings (I do not have GLD) which fortunately was up that day.

    Quite scary.

    So for those of us planning to use triggers say on GDX, just be cautious.

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  172. RA & Otis: To be fair, you'd have to be pretty incredibly unlucky to have a bad posted tick on that one stock (GDX) on a day when you had a trade trigger placed and in the direction that would trigger your order...but it can happen.

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  173. Then it looks like I must be mighty unlucky :-)

    I will issue an alert when I place a trigger stop next time.

    By the way I think we just had a swing high in the dollar - low of 78.22.

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  174. This comment has been removed by the author.

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  175. RA,

    I deleted my comment cause I can already see the ones who won't understand it.

    You didn't get 'unlucky'. There was a specific, correctable, avoidable reason you lost your position.

    It's too late and I don't want to go into it. How about I point you in the right direction? Self discovery is probably a better method anyway.
    ....

    Ask Etrade (or read up) on how a stop order is specifically implemented (hint: you pretty much already know. The problem is you aren't aware there are different/better alternatives!)

    Now go to interactivebrokers and read up on how *their* stop order is implemented. Look at the 'default' implementation for stocks.

    Is it the same as Etrade?
    :-)
    What would the result of both implementations have been **for the same stop price** on that day?

    Best wishes. I look forward to your results.

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  176. TZ,

    Aww, can't you tell me what you know and save me the legwork. :-)

    Not sure if I will understand what I read anyway.

    It sounds like IB is a better choice!

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  177. I trade with IB, but as anything there may be drawbacks with them too. IB actually has a division that does high frequency trading and I always wonder if they're able to "peek" at their customer's order flow.

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  178. Anybody else having difficulty with comment updates? (Not that I'm sure how I'll see answers... ;-)

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  179. Rebooted- must have been some glitch or, more likely, operator error.

    Interesting commentary by Harvey Organ from last night's update on the COMEX open interest:


    "The total silver comex open interest shook the bankers to no end as the reading today came in at 147,465 for a monstrous gain of 4965 contracts. If you exclude the non economic spreaders who basically left silver a while ago, we are now at record levels. In oz, the open interest represents 737 million oz of silver or greater than 103% of annual silver production. This is totally unheard of and this is presenting our commissioners with a dual headache. The high open interest in silver and the decline in volume in gold. It seems that players do not want to enter the gold market due to its rigged nature. On the other side we have many wish to take on the bankers in silver which is a lower market cap as compared to gold.

    The front options expiry month of February saw the open interest surprisingly rise from 86 to 121. It looks like more players are trying to get their hands on the last remaining oz of silver. All eyes are on the front month of March and to the shock of the bankers, the open interest ROSE by 483 contracts instead of falling or rolling over to the next delivery month. The open interest for the front delivery month remains resolute at 61,720 contracts. Midnight Oil night for our bankers tonight. Expect a raid again. Remember that options expiry for gold shares is this Friday night and they always raid going into options expiry!"

    And this nugget:

    "As I told you yesterday, the Chinese are massively buying GLD shares and tendering them in for gold"

    Take everything you read with a grain of salt, but the supposed battle around COMEX March contracts is at least entertaining.

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  180. vuvvy,

    Sure they peek at customer orders, all firms do. Nothing we can do about it other than to just trade at our levels. The desks won't work to pick off individuals by themselves, but it would be wise to set your trade levels away from where the other "small" traders keep theirs. It's when they see a many individuals in an area that it's worth their while to trade against.

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  181. T.J,

    The blog world is talking about a massive short squeeze about to unfold. The fact these contracts are not rolling over seems to indicate something is brewing.

    I pay little attention to the "blog world chatter", but when people like Turk come out and declare a massive short squeeze is upon us, it sure gets me excited.

    He is one guy throughout this bull market (although overly optimistic at times) who has made some amazing and accurate calls. Time will tell. Got to like this setup though, just need the dollar to roll over.

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  182. Gary,

    This guy posting on CIGA Erik McCurdy Prometheus Market Insight, says that there might be a short term cyle low on Feb 11, 2011. From the looks of his chart, some STCL coincide with your daily cycle lows. Any thoughts on this?

    http://jsmineset.com/

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  183. Poly-

    Agreed on Turk, and hopeful on the short squeeze. Full disclosure, I am a GoldMoney account holder.

    The other guys I think are worth listening to/reading are Eric Sprott, Jim Rickards, Harvey Organ and Ed Steers - although Steers is more an aggregator than someone with original analysis, but he does have occasional Casey Research stuff in his posts.

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  184. Pima/Nike: Disappointing on UNG after all that rally. I am holding for a day max and a little more downside (I am just ate BE now). If you look at previous bottoms you'll see that there is sometimes a sharp shakeout drop like this after the rally has started. I am prepared to lose up to 1 per cent. but that's just me. Selling at BE is fine. That's how my trades often work: BE or a decent gain.

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  185. Kind of a disappointing quarter for PAAS. Revenue up 24%, WTF.

    Taking a 6% bath this morning.

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  186. Miners and silver acting much worse than gold this morning, which is what spooked Gary in the first place. HUI never did make it through, though some of the others ticked through by a few cents. We'll see how this unfolds today...

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  187. 1/2 percent I don't have a problem with. If the HUI or XAU drop back down and make another lower low then I'll start pulling my hair out :)

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