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Wednesday, February 23, 2011

THERE GOES THE FIRST SECTOR

Bear markets begin when something fundamental breaks. Usually the sector initially affected will roll over before the general market and tends to be a warning sign of what lies ahead.

The last bear market was triggered when the credit bubble created by Greenspan's foolish monetary policy burst. It was exacerbated by Bernanke's foolish attempt to debase the currency and reflate the bubble. All he succeeded in doing was to inflate oil to $147, which put the finishing touches on an already crumbling economy.

The market gave us a warning when the financials began to diverge from the rest of the market. Considering that the banks were one of the leading sectors during the `02-`07 bull the fact that they couldn't follow the rest of the market to new highs after the February `07 correction was a big red flag that the bull was on it's last legs.


I've been saying for more than a year now that the unintended consequences of QE would be to spike inflation, which in turn would poison the global economy. I knew all along that Ben was never going to create any jobs by printing money and of course he hasn't. 

So if inflation is going to sink the economy and kill the stock market we should see warning signs from the sectors most affected by rising inflationary pressures, just like the banks warned us in `07 that the fundamentals were broken. 

Sure enough I think we are starting to see those warning signs. 

Emerging markets have been the hit hard by food inflation. We are now seeing food riots in many third world countries. Emerging markets just like financials during the last bull were one of the leading sectors. EEM is now starting to diverge from the rest of the global stock markets. It's now on the verge of breaking back below the November cycle low.


The other sector that is extremely sensitive to inflation are the transports. When energy costs spike shipping companies profit margins are squeezed. The last two days have seen the Dow Transports fold under the pressure of surging oil prices. Keep in mind oil is only on the 17th day of it's intermediate cycle. That cycle lasts on average 50-70 days. I think we are going to see $5.00 gasoline by the time the dollar collapses into it's three year cycle low later this spring.



If the market can recover from the recent correction and make new highs I don't expect the transports will be able to follow. That will set up a Dow Theory non-confirmation and most bear markets begin with a Dow theory non-confirmation.

China is already in a bear market. I think most emerging markets have probably topped and I doubt the rest of the global markets have more than 2 or 3 months left before the next leg down in the secular bear market begins. 

I think the brief party created by Bernanke's printing press is about to come to an end.

403 comments:

  1. The transports have broken down in a fashion that suggests more downside to come. There is still a chance that the Transports rally back the next two days as aggressively as they have fallen in the past two, three days, but I very much doubt that will happen.
    With the leader in that entire rally acting like that I just won't touch any more stocks here.

    ReplyDelete
  2. Gary,

    You've recently predicted that there will be too much political outcry on The Ben Bernank for him to do QE3.

    But how can Bernanke NOT do a QE3? If oil and ag and the metals keep rising (thus making people fear inflation) then bonds will crater without more QE. In other words, who else is going to buy US Bonds but the Fed? And how else will the Fed buy those bonds but through additional QE?

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  3. p.s. -- interest rates started rising last November even with QE2 in full swing. The Fed has to know rates will become crazy high unless it steps in with QE3, right?

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  4. If gasoline is above $5 a gallon there's no way the Fed can keep printing, no matter how much they want to lie about inflation.

    The Fed will have to stop the presses or risk a complete melt down of the currency and when they do the deflationary forces will slam back down on the world.

    This is why the dollar will rally explosively out of the coming three year cycle low.

    There really is no free lunch in this world. And any attempt to get one just makes the problem that much larger.

    Ben is about to face the monstrous problem of a dollar melt down.

    ReplyDelete
  5. What I noticed yesterday was the fact that all stock market sectors jumped ship at the same time, which included the PM stocks. Today was a very different picture, of course. However, as much as I'd like to believe that PM stocks will go ballistic, even in the face of a hypothetical stock market decline, I just cannot convince myself that they will. Perhaps, there is a window of opportunity right now, but once there is a severe decline and some panic in the market, people tend to get rid of everything at once, regardless.
    Of course, I hope I'm wrong.

    ReplyDelete
  6. gary

    when the dollar rally out of the 3 year cycle low, will that be the begining of the d wave?

    ReplyDelete
  7. The Bernank is boxed in. Every action, including no action, will lead to massive negative outcomes. The elephant in the room is the federal government debt, both existing and yet-to-be created. Ultimately, he will print, because that's all he knows.

    The "crack-up boom" predicted by Ludwig von Mises is underway.

    ReplyDelete
  8. gary..

    hmm so could you buy the dollar futures index for the ride up?

    ReplyDelete
  9. i said index, i should have said contract

    ReplyDelete
  10. Probably a safe bet I would think.

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  11. Gary, should we be worried about holding SLV or AGQ? From Turd Ferguson's blog tonight:

    "With all of us acutely aware of the supply problems of the Comex, we need to start preparing for the post-EE world. At some point in March or May or July of this year, the Comex will default. Whether or not its a de facto default is of no matter for this discussion. At some point soon, "paper" silver will cease to be a actual asset. Paper silver only has value because it is perceived to be backed by some measure of physical. A Comex failure will, inevitably, lead to a failure of all paper metal assets. Everything from futures and options on futures to ETFs, both the SLV kind and the AGQ format."

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  12. Gary,

    If Ben shuts down the presses because gas is $5, won't rates on Treasuries go through the roof? Where is the US Gov't going to get dollars to keep putting SS checks i the mail at that point?

    Who else but the fed will buy US Bonds once inflation takes off?

    ReplyDelete
  13. There's always talk of the comex defaulting as gold and silver move into a C-wave top.

    Eventually price moves high enough to bring more supply into the market. Just basic economics 101.

    ReplyDelete
  14. Gary,

    You mentioned you might add further leverage at the next daily cycle low.

    Would you consider adding instead if the dollar breaks the Feb and/or Nov lows?

    ReplyDelete
  15. Looking at other sectors that have gone down or sideways while the S&P charged up, isn't the most obvious one staring us right in the face Gary????????......PM Miners? Not to mention coal miners etc.

    ReplyDelete
  16. Based on the same analysis, why aren't you suggesting gold is set to undergo a bear market?

    http://stockcharts.com/freecharts/gallery.html?gld

    ReplyDelete
  17. Beanie,
    You just posted a chart of gold in an uptrend with the 50 DMA above the 200 and both still rising.

    Gold is only 4 weeks off it's intermediate cycle low. Gold is a hedge against inflation. The more money Ben prints the strong the fundamentals get in the precious metal sector.

    Why would that make me thing gold is about to enter a bear market?

    Some times I really wonder if you ever bother to look before you leap, or think before you speak :)

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  18. QS,
    Like I just pointed out to Beanie the fundamentals in the precious metal sector are not broken, they are improving.

    The recent correction was just a normal profit taking event that happens like clockwork about every 20-25 weeks.

    ReplyDelete
  19. I am talking about the miners not the PM themselves..... Just pointing out that like EEM, in your post 'there goes the first sector' GDX and GDXJ are both below tops put in a while back just like the sector you mention Emerging markets. Not saying it will stick. Just pointing it out like you were pointing out EEM diverged from SPY. So did Gdx and gdxj.

    ReplyDelete
  20. GDX and GDXJ are miners. They follow the price of gold. Gold was correcting into an intermediate cycle low.

    As gold resumes it's C-wave advance the miners will follow. They are already following. They may lag a bit because oil is spiking and compressing profit margins but the fact remains that the same thing that breaks the fundamentals in the stock market improves the fundamentals in the PM sector.

    Surely you understand this??

    ReplyDelete
  21. Isn't great to be alive in these times?




    James

    ReplyDelete
  22. Gary,

    Why the hurry on EEM collapse when there's nothing wrong with the chart? After all, the 50day isn't below the 200day.

    ReplyDelete
  23. Gary,

    Let´s suppose that the dollar does not break the November of 2009 low and starts rallying. Based on cycles, at what point would you stop looking for a 3 year cycle low below the November low? According to cycles and any other tool that you use, how soon would you abandon the idea that the 3 year cycle low is still ahead of us and that we´ve made a higher low (with regards to previous 3 year cycle low of 2009)?

    I was looking at previous 3 year cycle lows, and the dollar threw a major curve ball (according to cycle analysis) in 1992. In 1991 it made a 3 year cycle low and then the next cycle became extremely left translated because it topped in 5 months. By mid 1992 it had broken below the 1991 low, so one would have thought that we still had 2 years of the dollar going lower, since next 3 year cycle low was due in 1994. But as we now see, the dollar actually made a major low in 1992 (only 1 year after previous 3 year cycle low) and went on a 10 year rally. In real time, how would you have stopped looking for a lower dollar and realized 1992 was a major low?

    Anyway, sorry for the long questions, just trying to understand how soon, using cycle analysis, one can realize we´ve just been thrown a curve ball. We don´t want to wait for the dollar to rally above $89 to realize the 3 year cycle low has already been made.

    thanks

    ReplyDelete
  24. hi gary

    if the oil price is heading north, should we consider adding it to our pm portfolios?

    thanks in advance

    ReplyDelete
  25. David,
    If the dollar rises above the prior intermediate high then we would have to consider that we got an early 3 year cycle back in Nov.

    ReplyDelete
  26. As much as the dollar is tanking and oil rising
    There isn't alot of concern about recalculating the cycle yet is there?

    ReplyDelete
  27. Gary,

    Do you think Bernanke deserves the highest praise for the people in the middle east revolting and demanding basic human rights and freedoms?

    After all, his exporting inflation through money printing, causing problems paying for food, has worked better than economic sanctions or war, in causing the people to revolt against their own repressive leaders, rather than scapegoating the west or Israel.

    Bernanke has spread the desire for democracy far better than the foreign intrigue/meddling, bullets and blood, formerly tried by US secret services and administrations.

    ReplyDelete
  28. Mr Market, It's "show me the money" day!

    What ya got?

    ReplyDelete
  29. Bruce:

    I'd say it's naieve to think the protests are all "pro-democracy". With the muslim brotherhood and other jihadist-leaning organizations involved--not to mention the military themselves, I believe it is simplistic and foolish to assume something "better" will come out of this.
    Case in point: Iran.

    The Bernank and the entire US gov't crew has failed miserably. I think we are seeing the first waves of this onslaught. There will be plenty more to come. Will things eventually get "better"? Who knows. They will certainly be different than today.

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  30. I've questioned a couple of times what happens to AGQ and SLV in the event of a COMEX contract/delivery imbalance. For those interested in the potential impacts, here's an article that lays out what it might look like.

    http://seekingalpha.com/article/111852-will-comex-default-on-gold-and-silver

    The cliff note version- JPM is initially on the hook, and then the Exchange. Likely huge short squeeze as JPM/Exchange try to find the metal on world markets. Would likely end in a cash settlement at the higher 'squeezed' price. Of course, if JPM needs more $ to handle this sort of thing, it can get them from Uncle Bennie...

    I could have saved myself angst and time by simply listening to Gary about it...but I can be hardheaded in that way.

    ReplyDelete
  31. Gary:

    I concur with some of the other comments regarding PMs & miners. Particularly with memories of the 2008 meltdown. The Hedges, etc. dumped all assets.. If we start seeing that again I do agree it'd be prudent to trim positions to protect against downside.

    And to the other folks; as much as I'd like to be in Oil, the current situation is due mostly to political instability in the region. That can change on a dime, and like we saw a couple years ago, that market can collapse even faster than the rise.

    ReplyDelete
  32. DG,

    How long will you hold your Q's?

    Thank you.

    S

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  33. $5 gasoline is approximately $170 oil I believe. Gary, does that sound about right to you? Oil at $170 isn't a crazy idea with the combined forces of mad dog mid east dramas and mad dog Bernanke bucks. In fact, couldn't we go higher??

    ReplyDelete
  34. My take on equities is that if the S&P can get to 1270 before retracing as much as 20 points or so, that will signal a major change in trend.

    Until that happens, I think we are still in safe territory.

    ReplyDelete
  35. Racerx,
    That was only during a once in a generation selling climax where any and everything was dumped to meet margin calls. It also happened to be an 8 year cycle low for gold. The next one isn't due till 2016.

    There's no way in hell I'm going to dump any of my PM positions right as the final leg up in this huge C-wave is getting started.

    I may not be the smartest guy in the room but even I'm not dumb enough to make that kind of colossal error.

    ReplyDelete
  36. On the hourly chart, gold is making higher highs and higher lows.

    Silver is diverging.

    Just wondering, could silver be ready to lead gold into the daily cycle low?

    ReplyDelete
  37. Gary,

    USD made a low of 77.01, is that the second confirmation we are waiting for.

    V

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  38. I think the $ would have to drop below the 76.88 level.

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  39. TV,
    It has to go a little under 77. 76.85 should do it.

    PVM,
    your probably wasting your time watching intraday charts of the metals. they are too volatile for intraday to have any meaning. But I tend to think silver is just consolidating the big move, with probably one more push higher before the daily cycle correction begins.

    ReplyDelete
  40. Looking back historically at gold from the 70's, there was only one major correction in 1975/76 so I also doubt we will have another major crash as we likely have put in our major correction in 2008.However, the jury is still out right now whether this gold bull continues as Gary expects till 2016 or tops 3 years after the major bottom as in 1979/1980. The 3 year mark for us will be late this year.

    ReplyDelete
  41. Gary,

    As a forex trader I also enjoy reading your take on equities and gold - thanks.

    A good question for you and your readers.

    As outlined in your posts and general view of the future in markets..if/when the U.S dollar "collapses" - and stocks go "bear"...where do you envision the money going?

    The troubled system of the EUR or GBP? - i think not.

    Yen? - ya that looks like a great economy/currency.

    AUD / NZD ? CAD ?? - the "risk related currencies"...ummmmmmm no I don't think so.

    See what I'm getting at?

    ReplyDelete
  42. A secular bull market that tops with only a 400% gain?

    A secular bull market that tops before even making new all time highs? (In inflation adjusted terms gold would need to rise well above $2000 to just match the 1980 high.)

    A secular bull market that tops before the public piles in a creates a bubble?

    That doesn't sound like any secular bull market I've ever heard of.

    ReplyDelete
  43. E,
    The dollar will soar again just like it did in 08 & 09.

    You have to understand how the law of action and reaction works. The process of collapsing down into the three year cycle low will stretch the dollar extremely far below the mean. All assets eventually regress to the mean. On both the upside and downside.

    It will be the explosive rally out of the three year cycle low that will drive another brief deflationary period.

    Well until Bernanke starts printing all over again. Next time instead of trillions it will be 100's of trillions. The man is incapable of learning from his mistakes.

    ReplyDelete
  44. Gary, a hypothetical question. If gold makes a massive run this fall and doubles or more in a relatively short amount of time would you re-evaluate and say we may have made a long term top?

    ReplyDelete
  45. Silverman: If you have been reading my posts, you might have guessed that got out the same day and lost 15¢ on the 1000 shares. I play with tight stops and have been wanting to short this market, so there was no way I was going to "tough it out." This was not a big-picture buy, because I believe the next move of consequence is down. It was a stab at a bottom so as soon as it failed I was out. Apologies for not posing the exit, but as I always play with very tight stops in such situations I figured it was clear.

    ReplyDelete
  46. V,
    I do expect an A-wave this fall. But for me to think a final top has formed I would need to see gold at $4000-$7000.

    I would have to see everyone and their cousin buying gold. That process usually lasts about a year to a year and a half.

    So there really isn't time for the final bubble to form by this fall.

    Trust me we'll know it when gold enters the final bubble stage. At the moment we aren't even close.

    ReplyDelete
  47. Silver lease rates have spiked over the past month...

    http://marketwatching.freeforums.org/post32470.html#p32470

    ReplyDelete
  48. I agree with you Gary. I do think the final top will be obvious whether it's sooner or later but will be extremely hard to sell into as the economic/political situation will be in turmoil.

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  49. I had no trouble selling my real estate when it became obvious it was in a bubble.

    I doubt I will have any trouble selling my PM either.

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  50. Some one here mentioned a double oil etf the other day. what was the symbol again? Thx

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  51. Basil, UCO is one of the instruments for 2x oil

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  52. Looks like HUI index is setting up a bull flag.

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  53. Here's a great wbesite with all ETF's categorized and searchable (just type in "oil" or "wheat" or anything else.)

    http://www.etftips.com/

    ReplyDelete
  54. Basil

    Another double long oil is DIG (ProShares Ultra Oil & Gas). The opposite (double short) is DUG. Easy to remember.

    I'm toying with the idea of buying a small amount of the latter when the oil spike reverses at some point.

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  55. Thank you, Mamaloshen. Will take a look at it!

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  56. Early heads up: If the Dow closes down today I will very likely get a buy signal. This is a solid system buy, so 80%+ likely to give us a sharp rally within 5 days, with virtually no drawdown. Given the past few days it makes sense and I will play it in size. I'll post later and near the bell. As usual, if we really fall apart later it will abort.

    DG

    ReplyDelete
  57. DG,

    No problem. I thought that might be the case. I took a small position which is currently about even. Will probably sell today before the close.

    Thank you for responding.

    ReplyDelete
  58. DG,

    Just saw your last post. Maybe I won't sell today :-)

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  59. I forgot to mention in last night's report there is a VTO trade signal on all markets. You find the rules in the terminology document.

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  60. Gary's VTO signal fits perfectly with my buy signal. Let's hope we get that down close! If we get the dollar collapse he expects we might put on another SPX left. I will buy and hold if we get the buy today.

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  61. If gold can end the day higher it will match the longest streaks of the fall rally.

    This is the kind of strength I was expecting during a final C-wave advance.

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  62. oops---typo---I meant "we might put on another SPX LEG." (of the bull, to perhaps top out when the dollar bottoms).

    ReplyDelete
  63. Anyone else notice the volume on SIL is lower than many of these junior miners? It trades like a freaking pink sheet.


    Gary-
    How does a D-wave fit in with the yearly low on gold? I'm assuming the timing band on a yearly low has come and gone so we've technically already printed it at 1307?

    D-wave if we hit 1600 could take us back to 1250 if we get a 50% retrace.

    TZ-I did dump my inlaws GDXJ. thanks for the feedback

    ReplyDelete
  64. http://apeakunderthehood.blogspot.com/


    Smoking Crack(s) in China (Real Estate)

    Hope you enjoy

    ReplyDelete
  65. Silver miners puking a bit here...AG stands out.

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  66. SIL is down 1.5%. Hardly a puke, especially after a 26% rally.

    ReplyDelete
  67. Alex: O.K., I bought some more GPL and will start building a modest position in it. Just tell me it won't open at 1.50 one day because they find out the CEO is Mubarak's cousin or something. I can manage positions---it's the gaps that scare me.

    ReplyDelete
  68. C'mon Gary! I remember perfectly well the post where you said silver would never have another down day!

    (That's not a poke at you Jayhawk. I know I sure the hell have gotten spoiled!)

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  69. yeah it's going to be tough to go back to the old days of two steps forward one step back once this C-wave is over.

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  70. Jay,

    I was just taking a peek at AG. What's up with their earnings? Are they profitable?

    Thanks in advance for saving me time to do the digging.

    ReplyDelete
  71. DG, I'm not sure of another leg higher. Did you see the news from Proctor and Gamble (PG) this AM? They are having to raise prices on many of the basic consumer goods most American's use every day. Let's just say their stock is not up today.

    If other goods producers use this as their signal to raise prices, I don't think it foreshadows a bull market in equities.

    ReplyDelete
  72. "DG,..I will buy and hold if we get the buy today"

    DO you mean you will buy SPX or PM?

    ReplyDelete
  73. oa92000: SPX. I won't add more PM's now until the daily cycle low. The buy signal would be for the mkt in general. We need to be down around 50 or less I am guessing in order for it to activate

    BTW the STP buy I posted yesterday at 9.54 is on fire! Thanks to whoever posted it a while ago. After it's good looking high-volume breakout I have been waiting for it to test the low 9.50's level, and it did yesterday morning. There will be more talk of alternative energy as oil goes higher I assume.

    ReplyDelete
  74. I see lots of ads in the paper now for people to SELL their gold.

    When the top comes, we will have seen ads for the public to BUY gold for at least a year. That's what happened in 1979-80. And I knew ordinary people trying to buy bullion. Today, I know... zero.

    "Can't you see what's happening? Potter's not selling. Potter's BUYING!"

    But he's going to sell.

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  75. Now we're starting to get some action!

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  76. Gary-yea, I said a bit...the higher flyers are getting hammered here. SVM, GPL, AG. They are stretched pretty far above their MA's.

    SB-

    SVM right on it's 10 DMA...You'd better get some!

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/ea3e9a11-4f10-486a-9f02-419fd7bf69e5

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  77. Jay,

    I've got my eyes on 'em, but it's still early. The big question today is if S&P's castrate bears once again with a late day rally or not?

    We're getting close to Gary's line in the samd determining if the runaway move is stocks is over.

    Did you see my question on AG earnings, or are you going to make me do the work? :)

    ReplyDelete
  78. Fed clown Bullard says NO to QE3. Perhaps this will be the catalyst for a selloff in miners (for a day or two), setting me up for my next buys?

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  79. Thanks Jawhawk, picked up a packet of SVM.

    Now riding SVM, GPL, EXK, AXU (bought them back)as my junior miner "pack".

    If they tank, this forum is coming after you and Alex :)

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  80. GDXJ is turning into a DOG. Gold up .2%, GDXJ DOWN 2.17%. What is up with that?

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  81. Another horrible day for UNG and I can say that I feel a lot better finally able to take the loss. I moved what was left over to add to my AGQ.

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  82. SB,

    Why is Bullard a clown for saying no to QE3?

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  83. NG has been stinkin it up too...when gold is up NG is down, when gold is down, NG is down even more...i'm thinking about dropping this one for AGQ

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  84. AG has gone from from 10.3 to 15.5..up 50%...profit taking here sees normal

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  85. SB

    Ag's earnings are pretty stellar. they are producers..they've increases profits quarter over quarter and yr over yr , they recently interviewed the C.E.O. and he is forecasting increased silver production quite a bit. I will look for that article..

    for now

    http://www.marketwatch.com/story/first-majestic-silver-corp-production-up-72-to-653-million-oz-ag-in-2010-exceeds-guidance-by-9-2011-01-11?newsid=1020041038&dist=bigchartssymb%3DAG&sid=2535547

    It looks to be trying to fill that gap @ $14.20. I'd buy more ;)

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  86. Ryan: We've all been there. Think about what you did. Burn it into your brain. If you can learn the lesson from it, what you lost will be saved many times over from here on. Don't ever let a loss get out of hand such that it gets to the point where you spend more time thinking about it than other trades or positions. It takes a little piece of your soul every day. Just get out. Glad it's now in AGQ...well maybe tomorrow we'll be glad ;-)

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  87. Look it up yo self lazy azz Bernanke!

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  88. I can't believe people still mess with (D)UNG.

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  89. Dg, nice buy on your STP,

    and your GPL will be good if you can hang on ;)

    I Sold 1/2 my EXK yesterday & bought more KOG yesterday, BRNC today-

    ( and looked at BQI ,TGC, and LEI for possible quick money, to add back to P.M.'s...but I dont think P.M.'s will languish low much ,really).

    Plan on selling KOG and BRNC for more P.M. ,but they look like good breakouts from here...so holding for now

    ReplyDelete
  90. Troops are mounting defenses @ 12,000 and 1,300 on the indices. VIX actually down. If this runaway is alive, a 3rd day afternoon rally would certainly fit the bill, especially at these levels.

    Tempted to take a S&P long with a tight stop just under 1,300.

    ReplyDelete
  91. Thanks Jay, I'll read whatever you have.

    Pima, Bullard is not a clown because he does not want QE3, he's a clown because he works at the Fed. It's important to realize all their statements are nothing but posturing to influence the subjects.

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  92. POLY

    You are safe with that packet of minors I.M.O. - good earnings and production, however--

    I dont know about Jayhawks , but I can still run pretty fast :)

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  93. It's a nice picture, but you're no spring chicken anymore.

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  94. Of course I'm up there with you... :)

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  95. Thanks DG, you're absolutely right. It was really eating me up a little at a time. I definitely learned from it and won't let losses get that out of hand again. I've also learned I will NEVER EVER touch natural gas with a 10 feet pole no matter how tempting the trade looks :)

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  96. I meant thanks to Alex, screw you Jay!

    ReplyDelete
  97. Another great post by reformed broker.

    Ingredients:

    1 Jesse Livermore quote

    3 PerfCharts, preferably from Stockcharts.com but Finviz will do in a pinch

    1/3 cups vague statements about position sizing

    1/3 cups ambivalent chatter about how we're in "a market of stocks"

    1 28 oz can poker metaphors (can substitute football metaphors if blogging in the fall)

    A punch of "risk management" platitudes

    A dash of "my discipline"

    Instructions:

    1. Preheat a conventional oven to 375° with CNBC on in the background

    2. Combine all ingredients in a skillet set on a medium flame, reserving poker metaphors to the side

    3. Stir with blatantly unnecessary Fibonacci fan

    4. Add snark to taste

    5. When content is browned, mix in poker metaphors, transfer to oven for 20 minutes

    6. Check traffic while baking, "can't believe Tadas didn't pick up that post yesterday"

    7. Remove from oven, let cool 5 minutes before cross-posting to Seeking Alpha

    8. Garnish with links to another post you wrote last week, serve via StockTwits

    A perfect description of TK's Slope of Hope

    ROFL

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  98. I totally agree with DG on losses. Its just as important to preserve your mental capital as it is to trading capital.

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  99. Anyone glance at ROYL or PDO today on maybe a 3 month chart? SHEESH

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  100. I was just looking at ROYL. I thought the mania in miners would do stuff like that one day...One can dream.

    Poly-you better not come at me, I'll sick my body guard on you. His name is Gary Savage and he can squat a Buick. He also wears a mean set of gold & silver knuckles. He breath smells like burritos too.

    SI 4 hour chart looks like a bull pennant. Target 37. :) (Long shot?)

    SI

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  101. For 'AG" ( first Majestic Silver)

    FMSC in this artcile is First Majestic Silver Corp-

    "FMSC is considered the purest silver company in the world and presently owns and operates three producing silver mines in Mexico, the La Parrilla Silver Mine, the San Martin Silver Mine and the La Encantada Silver Mine. It has grown from an development stage company into a world-class senior silver producer, producing 7,024,055 equivalent ounces of silver in 2010. Additional information about FMSC can be found at www.firstmajestic.com."

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  102. Thanks Alex, I'm going to dig up some research and quite possibly put it on my list of buy candidates.

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  103. Jay and Ryan: FWIW, I am glad to see how disgusted you and everyone else is with Nat Gas. I expect it to have a huge rally at some point given the fact that everyone believes it will never rally again. That is the stuff from which major bottoms are made. When I couple that with the fact that the smart-money commercial hedgers are long more than ever before in their history, I become interested. I believe Gary's "Blees rating" on gas would be 105 if it could ever cross 100! Waiting...waiting...I hope I get a bottom clue. Unfortunately, UNG is a wasting asset so you really need to time it right.

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  104. gary, what are your thoughts on investing in oil please

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  105. I like NG as a beaten down commodity that is a longer term investment option. I just hate the fund that is UNG.

    Anyone have any ideas on good stocks in the sector?

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  106. Jayhawk

    I used to trade GMXR. I made a LOT of money , and I lost the same with this one. It just tends to fool me ( it looks good breaking out sometimes , then if you dont take your profits , it grinds down and takes them back). Forewarned :)

    SB

    UR welcome, and its on my 'Buy more' list after I sell KOG and BRNC-it really moves well when it goes and is a fast growing producer w/ good result.

    Going for lunch-happy trading all!

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  107. Jahhawk,

    CHK as a NG bluechip and SD as an underdog.

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  108. Anyone buying TNA on the close today?

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  109. Yeah, CHK is the class of the field...it just doesn't move with NG because it's a stock (look at the last few months).

    By the way, my favorite is SJT. I have traded it many times and have virtually never lost on it and it has a big yield as a NG trust. I will post when i buy it next.

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  110. For those looking to by uranium-oriented stuff: NLR just popped up on my buy screen. I bought some since the 50 DMA is just a little below here. Careful---it's thin.

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  111. Miners are getting drag down a bit..

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  112. Im surprised no one here has mentioned exploration companies much. Strictly miners.

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  113. it's starting to seem like the miners are following the stock market...

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  114. Gary--
    What would you call this SPX move down? Would it be a daily or intermediate cycle correction or just a pullback in a runaway move?

    Thanks

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  115. Gary said corrections so far have been limited to 20 to 35 points.
    Last Friday was the S&P 500 high at 1344. A 35-point correction should have stopped at 1309, and we blew through that today. The 60-point correction he identified as the "something more serious" level would take us to 1284. The line in the sand on the fractal charts I use should be at 1275, with a bottom coming between March 8 and March 22.

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  116. That miner will decouple from the overall market theory on shaky ground.

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  117. buyers showing up on the ES. Let´s see if it can put in a 20 point rally.

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  119. did the MMs just run the stops below 1300 and pushing it back up now...wonder how many ppl lost their positions

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  120. DG,
    Do you play QLD here instead of QQQQ?

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  121. light volume selling on gdx, sil

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  122. Ouch it kind of hurts. Anybody adding at these levels?

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  123. yep..buying on weakness..not going to freeze...gonna keep buying on every weakness

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  124. wow...that was like 45 cents off silver in like 5 mins

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  125. I still have some cash left but I think I'll wait for a daily swing low ... I need to have a stop that's not quite so far away.

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  126. I'm about to come to the conclusion that miners are a good way to lose a lot of money.

    GLD down .57%
    GDXJ down 3.50%

    SLV down 2.5%
    SVM down 5.59%

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  127. Yet another day where metals and the dollar go the same direction.

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  128. Although SVM routinely has 5%+/- days.

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  129. This comment has been removed by the author.

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  130. Another buying opportunity is heading our way. Anyone not yet at 100% needs to remember Gary's post about pulling the trigger.

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  131. I picked up SVM only because I didn't have any ... but I'll stand firm and patient now until the first cycle completes.

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  132. oa92000: Doesn't matter. I usually play the Q's for no good reason. Getting the buy right is the thing. I will buy Q's and SPY's if the Dow is down less than about 80. I'll post later.

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  133. Strellsy, at what price (gold and silver) will you pull the trigger to add?

    (My silver tank is pretty full, so I may not add there. But it would be nice to top off the gold tank.)

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  134. Avann,

    I haven't yet added, but definitely will hold everything. The only question during weakness is when to add, not whether to sell.

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  135. If we get weakness is metals and miners tomorrow morning I plan to do some buying.

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  136. I'm telling you I need to stop looking at those damn wiggles!

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  137. Why do we trade the most manipulated market in the history of the world? (silver & gold). This is seriously started to piss me off. I'm about to sell this crap and buy Beanies picks.

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  138. Ryan,

    I'm all in. There's nothing left for me but to hope that it won't crater too much.

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  139. The only thing I don't like right now is that our stops are far enough away to turn this into a losing venture.
    That's why I say bring on the correction now and the first complete cycle. Once my stop is in positive territory all the stress is gone.

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  140. seems like some large money kept it up to let some other sectors crater (energy), and now it's buying the other sectors and lets PMs crater.

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  141. Thanks Basil. My last big add to AGQ is now underwater so I'm going to be brave here and try to pull the trigger to add more. I HOPE that's a good sign that I'm scared?

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  142. Don't let 'em close up! This is the best SPX long side setup I've seen in months. Give me that buy signal!

    BTW: SPY $46mm BoW

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  143. Pima,

    that's what keep saying. They'll probably going to have their big moment in the sun, but who knows when?

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  144. If silver measured the cycles we would have a swing high today ... no such luck with gold. Maybe we can convince Gary to use silver ;)

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  145. Today is the first time I am having second thoughts, that possibly Larry Edelson over at Uncommon Wisdon is correct that gold will pull back to 1225-1265 support area. Anyone else getting that sinking feeling? LOL

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  146. Ryan,
    not necessarily ;) but there's no way around that feeling, unfortunately. Btw, I'm right there with you! I also added AGQ at about 182, and I'm not feeling so great about it now.

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  147. Silver about to tag 10 DMA ...

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  148. Gary, it seems like your subs require some hand holding here :)
    This rise is volatile, and those who are scared to add when we pull back just end up sitting out the ride up once it resumes.

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  149. Now's the time to add for those brave enough. Last cycle it never dropped below the 10 so it's a safe entry I would think.

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  150. I head you Jayhawk. Quite a day, giving back most of the past several days, all in the space of an hour or two.

    However, Gary warned us that this was not going to be easy. This bull will buck and buck hard, trying to throw us all off, so the big boys can pick up our positions and walk away with it all.

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  151. How about oil? Roller coaster ride today.

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  152. a lot of puking going on. yesterday up 5k today BE.
    no one said this was going to be easy.

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  153. The doc just posted. You might be interested in the read.


    http://www.thedocument.com/stock_market_blog/2011/20110224_dollar_crisis_to_send_stocks_lower.cfm

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  154. I should add ... but I have stomach cramps ... LOL ... I'll wait till the cycle is complete.

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  155. DOUBLED my silver futures position; Put stop a bit below the low just hit.

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  156. Well, I'm hoping we get down to around 31.50 to test the breakout. I will be buying with both hands then.

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  157. Wow what a drop in a matter or minutes. I'm definitely scared now. I added a big chunk and already down 5%. Now I'm wondering if I should add the rest... Very scary.

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  158. Good move TZ!
    May we both make a fortune!

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  159. Actually, it is more like 31.20.

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  160. Absolutely no buyers stepping in. This aint over.

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  161. In my opinion, I think people should take their pm profits and run run run.

    The fear trade is pretty much ova.

    The top was in when pm's rallied hard on Middle East, and they have nothing to do with the Middle East!

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  162. 1375 in gold seems like a decent area to add.

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  163. 1390 should hold for the next move up. 1480.

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  164. OK Beanie posted ... I added more.

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  165. $30 silver is only a 50 percent retrace of the move up from the 1/28 low. We haven't even hit the 38 percent retrace yet.

    In a strong uptrend, retracements are usually 38 percent or less. 38% would be about 31.23 on the May silver futures.

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  166. Wow, away for a 1.5 hour meeting and BAM.

    What's the word?

    Miners seem to be holding up relatively OK. SLV destroyed.

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  167. Beanie's here.

    So everyone can take a deep breath and relax, the correction is over.

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  168. Trader Dan sees very low volume on this big down move.

    If we hit 31.20 then I'm all in.

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  169. I'm sticking to my plan of buying into weakness tomorrow morning, should it present.

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  170. I sold the DAG I bought yesterday and added AGQ at 164.31 . No idea why.

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  172. I am not here to make fun of anyone. I am here just to say that if you are a gold bull, you want to see gold close BELOW 1396 today. Thats all.

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  173. I'm buying this too, but keeping dry powder in the keg.

    SB: I don't have your patience. . . but then you knew that already, right? :-)

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  174. MLMT,

    You still short gold and silver?

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  175. I think Gary is right, usd is doomed...

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  176. I have two levels on SI where I have intended to purchase.

    The hit we just made was the first, most agressive level so I'm gonna risk a position with a reasonable stop on it.

    Good chance it doesn't hold though and then I would be looking for something like 31 or so.

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  177. Hi guys, don't worry, all is fine, market closed at 1.30pm and this is after hours trading after all! :-)

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  178. SB,

    Why are you waiting till tomorrow to add?

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  179. The dollar holding on dear life all day...trying to stay above 77...should fail tomorrow or overnight

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  180. GLD closed the gap. SLW SoS decent. 10 day DMA touched on most miners and SLV. Couldn't ask for more.

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  181. Josh,

    I'd be lying if I said I wasn't tempted. In fact, I've put some orders a few % points below current prices in case they slide into the close.

    If tomorrow should stabilize I can always add then, too. Prices won't be as good, but I'll be confident in the short term direction. I DO love buying into pukeouts, but if I don't get one, I can buy the pullback off an up open as well.

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  182. Didn't vuvvy say yesterday that USERX was down and gold was up? Which means gold was going down today.

    Vuvvy,
    Does that indicator give the magnitude or only the direction? Or is it if you get the signal, the magnitude is a pretty big move.

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  183. MLMT,

    Gold market is already closed, so I don't understand your comment??

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  184. Well, this would be a definition of a "shake" to scare people holding the PMs. Hang tight guys!

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  185. Buy signal imminent. No near the close post for me...I will be busy. There are no guarantees in this business, but this feels like a money-in-the-bank one to me. Have to admit the market's been weird though...

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  186. Pima,

    Only because it's been my experience that sharp moves like this (especially the first one) have some follow through at some point the next day, meaning even if we get an up open I'll still be able to add.

    That said, anybody buying miners today will be fine as long as they stay the course. I just hope to do a little better, knowing it's likely I'll get an oppty tomorrow as well (even if it's getting in at slightly higher prices after morning pullback).

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  187. This is why I appreciate MLMT's contributions and don't understand the cat calling. He identified 1396 some time ago and it is a magnet!

    He could well be in the green on his shorts now and don't see him laughing and name calling.

    Anyhow, I didn't add today (or yesterday) and will wait to see what tomorrow brings. I am still green on my positions for this cycle (but just barely).

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  188. I'm off to climb some rocks...in central park.

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  189. Blammo, sorry, that is so very far from what he said.

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