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Thursday, May 5, 2011

NEARING THE BUY ZONE

Gold is on day 4 of the decline into it's daily cycle low. On average gold puts in a cycle trough about every 20-30 days. This one has stretched slightly long, no doubt driven by QE2. As a matter of fact almost all cycles have been stretched the last two years by the Fed's printing activities. Consequently all markets have been swinging wildly between bullish and bearish extremes.

Think of it as a rubber band. The further you stretch it the harder it snaps back once the pressure is released. Gold and especially silver were stretched extremely tight during the last couple of months. Now that the profit taking event is here it is understandably severe simply because the upside was so powerful.

However QE hasn't ended. So once the correction runs it's course we should see another massive swing to the upside, again driven by free money and the extremes to which gold moves to the downside. The further the correction goes the more powerful the rebound will be once selling pressure exhausts.

It will also be driven by the many investors and traders that got thrown from the bull during the correction chasing as the metals surge higher out of the cycle bottom.

I've noted in the subscriber reports that gold will usually reach certain short term oversold conditions at daily cycle bottoms. We are now getting close to those conditions with this mornings move.

As you can see a daily cycle correction will almost always drive the 5 day RSI into oversold levels before bottoming. We also usually see a tag or penetration of the lower Bollinger band at daily cycle lows. As I write gold is about $1499/$1500. The lower Bollinger band will rise to about $1493 today.



Someone trying to pick a bottom should be fairly close if they buy on a touch of the lower Bollinger band.

Stocks and oil are also moving down into daily cycle lows. Oil especially is very deep in it's cycle and due for a bottom soon. I would guess it will bottom within a day either way of gold. Oil is slightly ahead of gold and has already moved to short term oversold levels deep enough to form a cycle bottom. I doubt it will drop too much further than $105 and I certainly think buyers will step in at $100.

There is a possibility that gold, stocks and oil will all form a bottom sometime tomorrow on the May jobs report. If the report is weak (which is a strong possibility) we could see a gap down open. If the gap is recovered by the close and especially if the market can close positive we will probably have our cycle low in place.

We would then need to see a swing low on Monday to get the first confirmation that the correction has run it's course.

461 comments:

  1. Great post Gary,
    As a new subscriber, could you comment again on the timing of the end of a C wave, length of a D wave and what to expect timing and length of an A wave. I'm thinking of GLD options with a long expiration as a conservative play.
    Russ

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  2. so more down side to come for AGQ?

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  3. Bought gold and silver futures here for a BOUNCE. This is NOT a 'long' trade and I will be exiting at a target profit shortly.

    I'm still in the "back to core" camp and not playing this (for now) as a contining C.

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  4. Gary,

    With all the weakness in the markets even I'm surprised the dollar hasn't risen more? I guess there is major underlying weakness in it.

    If this is a coil and we get a fakeout bounce up to say the 20dma(74.10) how long might that last and will it push metals even lower?

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  5. Gary: I don;t want to beat a dead horse here, but i believe this is important and this is my first response to what you have written. And you said you like a good debate :-)

    You wrote last night---
    "In hindsight one can say I should have got out at $49. It was so obvious. But in real time that's pure nonsense. In real time one doesn't know whether the top is going to occur at $49, $48, $47 or $45"
    If it is that random why did a bunch of us sell between 48.5 and 49.5? Just a lucky coincidence? The answer is because there was an exhaustion candle overnight; the clear sign of a top after a frantic run. Silver blew out up 7% overnight on the China news. The flaw in your statement is that you don't have to know AHEAD OF TIME whether the top will be 45, 47, or 49, but you have to stay awake and spot a blow out when it occurs. All this "crystal ball" stuff of yours is a red herring. If you reread your statement you'll see that you changed tenses: "Real time" and "top is going to occur" has one in the present and one in the future. In REAL TIME silver reversed so we sold; no prediction price was ever necessary--no "crystal ball". You yourself said an exhaustion candle would probably mark the top, yet you rejected it because the bulk of it didn't happen during NYSE hours. Fine, but saying a group of us cutting back or getting out at the high is a just a big coincidence seems a bit silly to me. Maybe we saw something (?) You picked 50, we picked something else. If 50 had worked would it have been because you had a crystal ball? We each picked intelligent strategies and ours worked; yours didn't. That makes us "lucky?" You had planned to get out Monday. Why? Was that your crystal ball? How could you know the future? You saw something that spooked you. Well, others can see things as well without being emotional or psychic.

    I think what I am saying is totally clear and compelling and if not persuasive, well, I don't know what to say. We all have stuff to look at and learn every bad result. Your experience from 2006 changed some tactics of yours. Maybe this will too. You are a great trader and I have no desire whatsoever to bust your chops but, as I said, I think this is too important to let peter out too easily.

    Welcome home, Gary.

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  6. Silver still doesn't look broken to me. I know Gary doesn't rely on trendlines, but it still looks like simple (and healthy) backtesting. A year-long trendline incorporating the May 2010 and January 2011 high shows the March cycle low as one backtest on the way up, and this as another.

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  7. If someone can clarify: IF the jobs report is down, as expected, this will drive the dollar up, and the everything else (PM, oil, S&P) down?

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  8. Gary,

    Clear post as usual, for which, thanks. Thanks too to the wonderful community that is the SMT blog. As a very recent newbie sub I have learnt a lot since first investing April 12th. I have also laughed so hard my head has fallen off my shoulders. Being so recent there was no way I was going to hold through any drawdown, so I exited early. I am 100% cash, well up since I started, and following in your footsteps, waiting for the cycle low.

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  9. Bought some silver options (the only way Id play silver). And added the last batch to my gold.
    I am officially done.

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  10. @dg ... i guess your gut indicator isn't working this time?

    having sais that, and based on history, i think we'll be lucky if silver can reclaim 50, but i think it's dangerous to assume that we will see 60 or 70 silver...

    well i do have you to thank as you helped inspire me to switch 70% of my agq to dgp before the crash, something i was mulling doing but your post cemented my decision.

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  11. Not: We'll see It got the bounce yesterday and there is sometimes a marginal new low. It would be it's first clear miss if we didn't bottom by tomorrow. I would have to figure out an appropriate punishment then (stop feeding it?)

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  12. wmp-

    Yes, due to expectation of lower inflation.

    Of course at some point, a poor economy increases the expectation of opening the $ spigot to stimulate economic activity (QE3), meaning higher PM prices.

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  13. DG, are you buying anytime soon?

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  15. eamonn: I bought a little DGP last night and will probably buy more by Monday. No silver until I am convinced a bottom is at hand. I am getting to where I want to be in terms of % invested. Not quite there yet.

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  16. Sophia, if you held that short on the Euro... Nice trade ;)
    I've covered.

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  17. $50 Silver was a target everyone was looking for and when that situation happens I always front run the number thus why I sold in the upper $40's.No one ever went broke taking a profit.Nuff Said

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  18. OK, thank you DG. Great to have you on this blog

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  19. Gary may disagree with this, but I can't help posting a quote from Ted Butler (one of the figureheads for the PM manipulation theorists). It comes from a completely different analysis than Gary's but arrives at the same projection of the coming C-wave finale.

    "Long-time readers may remember a pet theory of mine that I had kind of forgotten about until this week. My theory was that before we get the real blast to the upside, amid the termination of the manipulation or a physical shortage, we would get an unbelievable shakeout to the downside. After that downside shock...and after the last speculator that could be tricked and frightened into selling did sell, the commercial would just put their hands in their pockets and not sell on the upturn. That selling void would create the conditions for the final blast-off. This sell-off sure feels like the big one to me."

    - Silver analyst Ted Butler, 04 May 2011

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  20. Next week the political theater of raising the debt ceiling will begin again (It'll definitely be raised)

    Also next week we might get the flood of the century in mississippi

    http://www.google.com/search?q=mississippi+river+flood&tbm=nws

    anyone care to guess how it'll effect gold?

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  21. DG,
    There was an exhaustion candle on March 11, 23 and April 11 and 25th.

    If you can tell me how one decides in real time which one to believe and which one not to believe I'm all ears.

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  22. Aaron,

    Just came back from lunch and thought of you! Well done..I covered earlier, made a bit of money, but not as much as you must have done :-)
    Happy though to be right on this one, ah ah ah

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  23. DG, will sell my DUG and ERY first half hour of the open as I need to go out afterwards...

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  24. So Trichet decides to not raise rates, and sounds more dovish in some time. Jobless claims 474,000, much higher than expected. QE3 looking like a done deal.

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  25. Ah finaly dx moves up.. was about time. only needed some heart warming words from jean claude

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  26. Damn

    That's some bounce on the dollar. I really wish I had more dry powder.

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  27. I should also point out again that i was set to convert on Monday but the decline came premarket so I never had a chance. By the time the market opened I was already caught.

    Now If I could have foreseen the damage that would be done over the next week I would have went ahead and sold anyway but Like I said my crystal ball is still broken.

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  28. So fairly big misses on the employment and up the dollar goes. Any opinions on the logic of that?

    I would rather say that bad economy -> need for more stimulus -> QE3 -> lower dollar

    But when did logic enter into this?

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  29. Jonas, $ up on Trichet news.

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  30. I'm stuck in the Redmond, OR airport for two hours. When I made my reservations online I mistakenly hit May 21st instead of May 5th.

    Imagine my surprise when I went to check in and they told me I didn't have a reservation.

    What's even worse, the airport is so small there isn't even any place open to get breakfast.

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  31. I can now see how a parabolic day after day grind up will work. Nobody is going to believe it after this drubbing, then recognition.

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  32. Jonas,
    The dollar bounce has nothing to do with any economic news. It just needs to put in a cycle low.

    Remember I've pointed out that the dollar cycle tends to turn on or within a day of the employment report.

    Well the report is tomorrow.

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  33. Gary,

    AGQ is back to where it was last month. I am quite tempted ( I am NOT long of it) to try a small long at 215 as it was a level that found support last time. Do you have any pro-con view on it, or should I just wait for Monday morning and lift whatever price?
    Thanks for your input, you are the first research I read in the morning and bring me peace and quiet in my trading approach

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  34. Easy, Gary. Those exhaustion candles did not come AFTER parabolic runs (except 4/25---see below).

    Why were you set to sell Monday? Crystal ball? What reasons?

    re 4/25: That candle could have been sold except: the timing was wrong given the cycles (too early) AND more importantly, had you sold then you'd be smiling now! That was the first clue this was getting late, in fact. Sellers of AGQ at 342 did not do too badly, eh? Selling there would have been fine.

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  35. Well, I just got notice that my 401k funds have been rolled into my IRA. Should have them tomorrow or Monday. Should I put it all in ZSL?

    I kid, I kid.

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  36. Actually I am confused...If Employement report is a turning point for the $, that means more sufferance for the PMs. Unless it is a dead cat bounce only, right?

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  37. Sophia: the dollar is rallying now. It may gap up on the report, finishing its little bounce, and then reverse down starting its final decline into the 3 year bottom.

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  38. Gary, really the portfolio is down 40% from the high and you rode down a 200% (leverage) position in Silver. I know you dont have a crystal ball, that you were caught, that you planned on switching and that you don't like selling into any cycle low.

    But with all due respect, this denial is seriously underwhelming. If you can not come out of this without being able to say I learned or would do at least one thing differently the next time, you're not being true to yourself or this board.

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  39. good, we have a USD bounce

    bad, there are more gaps at 36.5, 34.25 and 33.5 in SLV

    on another thought, the HFs can will all the gaps up to 25 cents while they are at it and then there will be reverse split and then HFs can short it to 25 cents again

    sorry for my morning rant...this is total BS

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  40. I wish everyone would get off Gary's back. Its like everyone expects him to tell you when to exactly sell and exactly buy. Last week, I told everyone on here that it was exhaustion buying and was ignored. I knew it was time to sell at that point. Now is the time to buy and close your eyes if you have the money. You will never time it right. If you bought in the last month, you can either sell at a loss or wait for the bounce and unload some. We have only tagged the 50dma so its not like the chart is broken.

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  41. Ok DG, I thought that we were done with the 3y low...so we have some hope to see that stupid Silver go back up, right?

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  42. Of course, Gary, I saw the initial and continuing claims number pop up on Finviz and somehow got that mixed up with the non-farm numbers due tomorrow.

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  43. If everybody else gives up on Gary, he can come trade right next to me anytime he decides, and give up the newsletter business entirely.

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  44. Gusto: You seem to be completely missing the point. No one is on Gary's back about the past, but if you don't learn from pain you just get pain again and again. You even contradicted yourself: "Last week, I told everyone on here that it was exhaustion buying," What---do you have a crystal ball? You'll never get it right exactly, so why did you post that? We should ignore someone who says he will never be right, no? Missing 150 points in one stock is not "exactly." Who asked for exactly?

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  45. gusto - this happens on each and every correction. The board always debates the merits of Gary's advice when they are losing money.

    It's another sentiment indicator that we will soon see a bottom.

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  46. Does this pop on the dollar help settle which dollar cycle count is correct?

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  47. "Gusto"

    Nobody is getting on his back, this is NOT personal or some attack! It's what traders do, they analyze their trades, thoughts and emotions.

    We're all trading with hard earned money, trying to learn, better the markets and prosper. Gary runs a professional paid subscription service that weathered a 40% decline. You've got to be kidding me if you think for a second that discussing the trade is off limits or some type of attack.

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  48. it's almost comical... the flip flop nature of those on here... he told you exactly what was going to happen for weeks...

    suck it up

    i've never been so confident in what he has said as I am right now... you all will be smiles and praises two weeks from now.

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  49. DG Poly

    If I can Chime in hear I think Gary as usual has the right approach.

    For example, Gary was expecting a correction at some point when AGQ was at roughly at the 275 level and then it rallied 90 points, I got out and thought I could get in lower. BUT as usual IN BULL MARKETS SURPRISES COME ON THE UPSIDE. I got totally burned and missed the move then got back in at the top. I didn't hear anyone questioning the calls by Gary then.
    Your statements are with the benefit of hindsight. If he would have advised to get out at 45 on silver then the thing rallied to 60 you guys would have been beside yourselves.

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  50. SB and others: C'mon guys. Who said a thing about giving up on Gary! Can't he learn and change without being worth giving up on? Is the world all or none? Ridiculous! He changed after his 2006 experience (according to him) so why not after this one? This is weird how people are changing what has been said by me and Poly.

    Simple: You get crushed, you look to see whether you could have done something better/different. Period. EVERY decent trading book says the same thing. Most good traders keep a journal for just this reason. This is common knowledge in the top level of the trading world. Confusing the issue with red herrings (Exactly, Perfectly get the top, crystal ball) is just missing the point and changing the subject.

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  51. Hey guys,

    if Gary knew silver would drop to 36, don't you think, he would have sold?

    He was all set to sell and he missed by a day...tough lesson to learn for all of us, yes...now we all next time about parabolic moves

    I don't know anyone else who provides a better service than Gary

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  52. Keeping things real...perhaps as a strategy, it would be better to load up during C-wave bottoms...and when the obvious parabolic moves comes to begin scaling out.

    In this strategy, your money is made during the boring years, and you leave money on the table, but the returns are much safer.
    My exit in silver was only due to the fact that I got burnt before with parabolic moves...I know for one that I am disappointed in myself for getting out of this parabolic move with a too close to call miss. I need a better strategy going forward. When the bus barely misses you, you are just plain lucky....

    Now let's assume that Gary is correct, and this is profit taking event and silver soars at this point past $50...elastic band theory. Some here will take that trade, some will not...and there is nothing wrong with that. Some here are willing to risk 1/2 of their gains to obtain 2x their current gains...fine...this is a measure of risk. Not all of us here want that risk. Even if I knew silver would soar to 80, I would not want to follow silver down 40% first.

    The worst thing about going old turkey, are moments like these...the Achilles heel to the "Turkey"...let's say US gets its taxes in order while silver tanks 40%, now the bull won't rescue you as you are now stuck in the trade. Or say you are wrong about the final final c-wave surge, and your loses are forever.

    Going forward I think I will try to develop a better strategy, then selling on my "DG" fear index or gut feel. I am serious about that one too...we often excuse emotions as being irrational, I disagree sometimes our instincts perceive things in a way that our brains cannot process. We call this emotion, but sometimes it is instinct....I would rather have a system that doesn't rely on instinct however as a last resort.
    Learning from this mess, will provide us a great tool going forward into the next 5-10 years as this bull finally tops...take our lumps now, but learn and adapt. This bull isn't over, and I hope we do surge from here, so those with painful accounts can get a free education....

    I think our biggest problem were the exits (for those like myself)…we should have been at perhaps 25% during this last surge…not 100% and leverage....Layer out as the parabolic move comes in. Of course, that is my risk preference…some want to make money and quick dirty money, which of course is fine…So perhaps more than one strategy going forward.

    In terms of Gary…HE IS A GREAT COACH! …period…I have no desire to attack a man that puts his account in front of his words, is clear on his plan, and goes forward with it…I have no desire to criticize a man who’s plan has made many people here a lot of money…even if you lost 50% of you gains, who got you those gains to begin with? Anyways, once emotions and pain stops, we can concretely move forward, learn and adapt. Nobody says you need to follow Gary 100% either…we all own our own trades…..Look, how many guys let their subscribers live in their basements when things go off-plan anyways? That’s all heart baby!:)

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  53. SB,
    You said it!

    Good morning everyone.

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  54. DG,

    It isn't the exhaustion candle that troubled me on his decision, it was the subsequent action that followed. Silver came right back to 49.5 and 49 the next 2 days and then started to pullback fast.

    Obviously Gary didn't get his 50, but after the move to 49.5 and 49 attempts, he should have started to lighten up or at least took away the leverage when it made the swing high at 45.

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  55. Gary/All,

    A shining light that I have kind of hung on to and been peeking at are the silver lease rates. I noticed that a few days ago, they started rising again despite the liquidation.

    Does anyone give weight to lease rate direction?

    Another comment regarding margin hikes. THe continued raising this past week in my opinion was purely done to get all small speculators out. THe big boys have the capital and it would affect them very little.

    It may be too late, but we will see some confirmation on this in the COT tomorrow and the real tell will be next Friday.

    What an opportunity for the big shorts to cover and go long.

    Gary - One other thing I can say is if you are right on this one and silver gets at least to the $50 range on this move and gold does hit $1650 range (let alone your newer outlined possible targets) it would be completely breathtaking.

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  56. Gary,

    You said you were caught when silver dropped so precipitously overnight. Will you convert to Gold at some point, or stay with silver?

    For those who switched before the drop in silver, would you recommend a switch back to silver when we get a swing in silver?

    Best,
    Le Fou

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  58. Poly---I guess if people don't get this we should drop it. It is disappointing, though. Funny how people are so personally involved with their trades that analyzing them after the fact feels like a personal attack. It explains why you were up more than anyone else on this board this year. I'm done with this as it cannot be made clearer. Apologies to those who were made uncomfortable by my trying to encourage Gary to figure out what went wrong.

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  59. I might have to start adding some physical soon, if they're going to give away.

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  60. DG

    Of course you always try to learn, and do things better. And I know you guys are not attacking Gary, But given everything you know to date, I think Gary's approach and decision making is really well thought out. Every time I have tried to get cute and go against what he advises it has alway's backfired on me.

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  61. Anyone know since this Silver bull started, when was the last time Silver had a 20% correction, closed below the 50 dma and then rallied to new highs the following 4-6 weeks?

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  62. DG,

    I think you made some really good points...people are just high on pain right now and are not at the point of and education yet...give it time...

    Thanks for Blogging!

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  63. These defensive posts of the trade make no sense, they are based on emotion and fear of upsetting. Nobody is infallible, that is part of the attraction

    I'm done for the day, good luck all.

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  64. Actually April 11th was exactly in the timing band for a cycle top. It was even a little late.

    As much as folks would like to claim that they can always sidestep a timing error the reality is that you can't.

    This is why I only trade bull markets. Because the bull will always correct my timing mistakes. I'm pretty confident he will correct this one too.

    I seem to remember hearing the same thing about holding a core position through the last two intermediate corrections.

    Now a year later both of those instances only cost me a little time value just like I expected.

    So was it wrong to hold a core through an intermediate correction? In pure a profit and loss sense it was meaningless.

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  65. Yes, Gary but April 11 was not after a parabolic rise. The others were and we are now well below both of them.

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  66. this is getting hilarious...silver down another 5% at open again..

    silver could do to single digits in 1 week

    silver down almost 33% in 4 days...

    is anyone left on the boat?

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  67. I have learned a lot from people here.
    DG you alway's keep a little dry powder for opportunities like this.
    Poly and SB have incredible patience and wait for numbers I can't believe are hit. I hope you guys took my points as just discussion points and not attacks.

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  68. Poly & DG
    You guys are absolutely right. Rehashing trading decisions and learning from them is trading 101. I learned that long ago. But many don't enjoy doing it since it's the hard part of trading. That and taking losses.

    Anyway for today, I'm watching the miners very closely.

    And for me I'll be scaling out of my remaining silver at around $45 (alot of trapped longs up there). And going to something with fresh air above it. Hopefully gold or large cap miners.

    Assuming $ isn't putting in IT low and trade is over (which i'm not).

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  69. Poly,

    Options question.

    I'm not willing to commit much more capital but at these prices it's hard to resist.

    I think you bought some June 160 GLD calls yesterday? What looks good this morning?

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  70. TJ,

    The family reunion is in Orkney
    Springs. My wife grew up in Alexandria. Her parents now live in Black Mountain, NC. Brothers still in VA.

    What part of VA are you in?

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  72. Too late for criticism after the fact. You know the outcome.
    Last week was the time, not this week.

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  73. Wow! Big spike up in the dollar. Let's hope it's a dead cat bounce that lasts only a couple of days.

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  74. Great piece today from Jeff Clark of growth stock wire on silver. He is great for investment ideas and sends out free emails daily while his subscription service is a few thousand dollars a year.

    http://www.growthstockwire.com/

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  75. Ok, just sold back DUG, ERY and ZSL...ZSL made me sweat as it is volatile and I bought well too early ( April ) but at the end it paid up.
    Added some calls on GOLD as I believe in Gary.

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  76. muttonfish,

    Good point about the silver backtest. Will it hold, though, that is the question.

    If it hits that TL and breaks right thru it, what would TA say about that?

    That channel that silver is approaching the top channel line as a backtest--that channel has its lower channel line way down around $24. Seems that if silver gets back inside the channel (by blowing thru the upper channel line instead of just touching it and bouncing off), that it could go all the way down to the lower channel line at 24.

    Another possibility is the steeper channel drawn off the August 2010 and January 2011 lows. The lower channel line for the channel is around 33.50.

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  77. wmp,

    If jobs report is bad, why would it drive the dollar up? Seems like a bad jobs report would portend more QE which would be bad for the dollar in the long run, no?

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  78. we should all be glad the USD the bouncing...when was the last time anything this market worked on logic?

    if this bounce lasts until tomorrow, this will be the best news for all of us because it means that USD will tank for another month after this :)

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  79. DG, Although we did get the spikes in Silver, we did not see any of that action in Gold that has marked all the previous tops. So far the correction in Gold looks orderly. I suppose we can second guess not taking AGQ profits, but it is a little late for that.

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  80. Poly & DG,
    You guys said EXACTLY what needed to be said. In real time, does anybody get through an entire move without making some kind of mistake? It would be hard to believe.

    Honestly, I think we just caught a pass, a freebie. This debate needed to come up right now because in a month we`re going to be in the exact same position except with no safety net to fall back on, just pure ugly below. Figure out your exit plans now because next time it`s going to be for real.

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  81. I wouldn't waste much time on silver trendlines and such. It's too thin of a market for those to be of any real use.

    Here's the question you have to ask yourself and how you answer will determine whether you should continue to hold silver or sell.

    If you think the final C-wave blow-off stage for GOLD is still ahead of us and if you think gold is going at least to $1650ish or higher, do you really think silver will remain below $40 while gold rockets $150 to $300 points higher?

    Everyone already knows how I answer that question, but then my opinion is meaningless. You have to answer it for yourself.

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  82. Pima,

    I think the dollar rise is attributable to the euro fall; ECB had a meeeting and it looks like a sell the news type of event - no rate increase...

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  83. I am on board with Gold Silver Troll. I hope this turns out to be the dollar in the coil scenario. I have lost the better part of my last 3 years of savings so far. Not to scared though as i think this is a bull market and we will have a chance again if this does not work out.

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  84. A bad jobs report, in and of itself, should be dollar negative, but there are other factors at play here: a dovish trichet this morning, usd/jpy hitting pivotal $80, increased liklihood of additional future easing (one of Feds mandates is full employment), etc. Plus as Gary will add, we're in the timing band for a correction.

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  85. Pima,

    I'm thinking it will hold, IF this is in fact a daily cycle and not the big D. If it doesn't hold, I will sell and wait. Everybody's got to have their line in the sand, and that one is mine.

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  86. So this is the jobs report that Gary's been mentioning? Happened today, not Friday.

    Now can someone tell me why a bad jobs report causes the dollar to spike to the upside?

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  87. HHMM

    ZSL went from about $12.83 to over $20 later today in 4 trading days!

    I am thinking that I would've never shorted a bull mkt before, but THAT says a lot for the D-Wave expectations coming up.

    DG & POLY...I LOVE how Garys cycles have helped my 'timing'..its another tool of confidence in the trading toolbox!! butI agree with much of your first post...also simply going along with what POLY? was saying yesterday. I have been trading metals and mkts for many yrs and I think its IMPERATIVE to look back at past gains/losses and learn from them. I've made many errors, we all have.
    I just need to try to Learn & add a USEFUL tool to my toolbox if I see one. I still keep it simple, not getting bogged down with this indicator or that,but improvement takes time, study, and effort.

    EX: where I worked,they had a carpentry dept...and this young new 'kid'kept asking questions, buying 'new tools' all the time, and the 'old timers' always made fun of him, "What are you doing, trying to be a superstar? ha ha ha ".
    He is , BY FAR, THE most skilled carpenter there now 13 yrs later.

    He learned all he could from the old timers (they mostly got lazy and comfortable, ALWAYS SAYING there work was 'Good enough for govt work!" Ever hear that?? He has many tricks of the trade that he picked up and taught himself, by reviewing mistakes determined not to repeat them. He's a perfectionist. Never satisfied with... " its as good as Joes". He now also runs the compay "continuous improvement" meetings there for NADCAP and ISO

    In trading, We do the best with what we have and know...thats all we can do in the here and now, but if we can learn more...It pays dividends.


    JONAS

    your 1st post..

    Great quote that I wholeheartedly agree with :)

    ReplyDelete
  88. TBT - I hope nobody took that trade.

    http://screencast.com/t/AXIFtMpWs

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  89. Gary,

    I've found the trendlines to be helpful in the metals -- just one more tool in the toolkit. The market may be thin but the same psychology and rules of human behavior apply here as they do everywhere else. :)

    Hope you got some breakfast in your belleh.

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  90. Hi Pima,

    Great question about why the USD is up on bad jobs data

    to be honest, I'm just glad that it is up and I don't care why...i am not looking for a the reason as long as the USD rallies today and tomorrow

    if the USD tanked today, we may have top in 2 weeks

    this bounce buys us some time...

    on the other hand, I could be totally off and the USD just put in the 3 year low

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  91. Miners trying to go green on the day.

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  92. Sophia

    Just caught up to your post...those were some sweet trades (well, depends on when you bought, but they look good on charts :)

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  93. forget my last comment re the jobs report. It IS tomorrow.

    Still, I wonder why a bad unemployment report today causes the dollar to rise. And if we get a bad report tomorrow, will it rise even more?

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  94. I think Gary is dead on! This dollar is not done yet. After all this printing how can we believe that is it, and the dollar is off to the races again....? I think the dollar is in a rally because it is being true to it cycle.

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  95. From Ted Butler--A blind person could see the manipulation that has done on


    Silver analyst Ted Butler posted an essay to his paying subscribers yesterday...and I'm stealing this paragraph and a bit from it...
    "The decline in silver has been brutal and fear-inspiring. Let me try to dissect it and put it into the proper perspective.The current takedown has been a typical COMEX-generated production. In little more than ten minutes in the absolute least liquid trading time possible, light COMEX predatory trading took the market down almost 13%. That takedown resulted in the continuing follow-through to the downside. I'm told the CFTC is looking into that trading, but then again, they have been looking into the silver manipulation forever. (Note to CFTC: time to stop looking and start doing.) While extreme, this COMEX price smash is remarkably similar to previous silver smashes where the commercials sold small amounts of contracts in order to start an avalanche to the downside, so that the commercials could buy at distressed price levels afterward."

    "Also similar, is the general misunderstanding by the world at large of what actually occurred in these price smashes. That's because the world at large does not and cannot recognize that the silver market is manipulated. So when these price smashes occur, the world invents reasons for them other than the simple truth of a COMEX-induced manipulation

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  96. nice volume in UUP today again...scaring me a bit

    this is the only thing working against us now..

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  97. I have a stop on AGQ shares recently bought yesterday at 240, set for 210. If it gets hit, which is very possible I will be out and back in on the swing confirmation of gold. I just have to be prudent with the money I'm managing. I agree with Gary that gold will go much higher in step with silver.
    This is another good opportunity to practice emotional management. Buy the panic and sell the euphoria.

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  98. Dollar up 0.7 !!
    A turn next week has to look good for PMs

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  99. Earlier this week many were frustrated that the dollar wasn't rallying enough to set us up for the drop to the 3 yr cycle low.

    Well, 70.70, if I recall, was the 3-yr cycle low on the dollar from 2008.

    At 73.60 now, it has a long way to go to get down there. Heck, by the jobs number tomorrow, it could spike to 75.

    The point is, it'll have plenty of dropping to do to get to the low, which should be good for PMs.

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  100. GOLD SILVER TROLL

    I hear ya,super high volume buying on UUP- but do this for confidence

    Pull it up on a 3 month chart , cover the past two weeks, and you see that on April 18...that up day was the highest, twice the avg volume, now uncover the next 2 wks...Sellers blew it away.

    It could be that way next week. :)

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  101. I added some this morning, and intend to do buy 1 more time in the next 20 minutes or so, if miners can pull in.

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  102. Alex,
    Thanks for your compliment, it helps the moral...Yes, sweet trades, better on DUG and Ery than ZSL that I bought in a matter of dispair when we started heading down..The main thing is that they are nicely profitable :-)

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  103. Anyone else getting kilt in their metal positions?

    We are down 15 to 20% in our collective accounts...

    Mr Savage is correct, do not sell your Au positions now..

    Any new Ag buys MUST have a stop with it..

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  104. Gary,

    I heard today the CME (which already raised silver margin requirements by 84% in recent weeks), is going to again raise requirements on Monday. Do you know anything about this, and if this does happen do you think this could hinder our expectations of a cycle bottom on Friday or Monday?

    Thanks

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  105. Bought right here, too.


    That's it for now.

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  106. They are beating it down with a stick...

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  107. This old turkey has not lost a single dollar as I have not sold. My account balance is down, but I expected it to be because of Gary's coaching.

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  108. Sorry Gary, I cant resist...when I read

    "Here's the question you have to ask yourself..."

    my mind immediately went to Clint.

    "..Do you feel lucky, Punk? Well do you?"

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  109. IMO, AGQ and similar 2X or 3X products should always be traded with the utmost of caution. Absolutely nothing wrong with taking profits early with these derivatives, even if you get left behind after doing so. Anybody who played with SKF in the credit collapse knows what I'm talking about. So when I see posts that AGQ should have support at 215 or at whatever price, it tells me you do not understand what you are trading and I strongly encourage you to at least consider trading the 1X products instead. Using charts, trend lines, fibs, etc. on 2X ETFS is dangerous and a waste of time. You absolutely MUST use the underlying for technical analysis.

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  110. I just capitulated on AGQ, so the bottom is probably in...
    Will jump back on with swing confirmation.

    Credit goes to those that can sit with the pain.

    Peace,

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  111. PC,
    I'll take a shot at your question. When looking at currencies, it's often a relative comparison vs. others including the pound, euro, yen, etc. It's not necessarily that the dollar is strengthening for any macro reasons, as much as it is that other currencies are weakening. I think the action today can be attributed to the following:
    1. Dovish ECB - many currency traders are expecting a rate hike out the ECB in June to combat inflation, but Trichet didn't even mention it in his comments this morning. A rate hike was likely already priced in, so you have euro selling this morning now that there is uncertainty that this will happen.
    2. The USD/JPY has fallen below the ~$80 level this morning. This has been the line in the sand where the Japanese central bank will intervene to weaken the Yen. Actually after the earthquake/tsunami there was a coordinated G7 intervention to defend the Yen at this level. Traders are likely anticipating an imminent intervention again to weaken the Yen against the dollar.

    ReplyDelete
  112. bought a few SILV JUN 39 calls here

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  113. Out my futures (was hoping for a bounce.)
    VERY small loss.
    I'm in BIG TURTLE mode and fully tucked in with only core.

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  114. LE FOU

    Didnt get an answer gold vs silver , did you?

    I will share my thoughts, just a hunch, something I will be watching as it plays out ( you can always change along the way :)

    ask: Do you (right here & now) believe gold is going to $2000+?
    Maybe not.
    Do you believe Silver could go back to at least $49 area? seems so.

    For that to happen...

    $37silver + 34% = $49.58

    $1500 gold = the same 34%=$2010

    SO, If I think silver WILL go to $49, but gold prob WONT go to $2000...

    THEN , I believe silver will still outperform Just returning to $49 , than if Gold even goes to $1900.

    So I would be inclined to stick to silver until I see differently -UNLESS gold bottoms and Silver drags around this low area...

    I am NOT saying that Gold wont clear $2000 , I am just saying IF Silver double tops, it seems to be higher % than my target for GOLD % at this point.

    ReplyDelete
  115. Pima-


    I live outside of Richmond in a town called Midlothian. Coincidentally, I went to high school in Alexandria.

    Orkney Springs is amazing in the summer - the Episcopal Dioceses of Virginia has a retreat up there (Shrinemont) that I've had the good fortune to visit a couple of times.

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  116. I forgot who asked but yes the last cme rate hike was 2 hikes not one. The last to be valid from monday may 5th.
    http://is.gd/ID27vc

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  117. Enjoying the conversation this morning. Especially that there is a disagreement being discussed with respect between DG, Gary, and Poly. Great modeling of behavior guys!

    Just want to add my tactic for this bottom. I have found Gary's cycles to be really accurate for timing bottoms. So, I'm waiting for a swing low to add to positions. Simple. No guessing needed. If the low happens on a strong bounce, I'm in at day 1 or 2. I've done this a few times now, and its a low risk entry.

    I will set stops on new positions below the presumed cycle low in case I'm wrong as i don't want to increase my risk at this point. If the stops are taken out, I'll do the same thing on the next cycle low. I know Gary would disagree with this tactic as it could result in selling into a bottom (we did this in January and it backfired), but I want to avoid a deeper decline in the pms at the risk of sacrificing some gains.

    That's my strategy from here. Still haven't added anything on this correction. Am 30% invested between DGP and GDXJ.

    f

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  118. Silver is crashing to earth.. hike in margin requirement exasperated the problem.

    it's below the run-away condition 37.2 and headed south

    I'll step into buy at 31 if it gets there.

    poor leveraged AGQ/HZu folks you're holdings are smashed

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  119. GLD-- Darn close to oversold on our RSI (5) indicator. We will soon know!! (fingers crossed)

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  120. Gold is showing strong strength via all other currencies, except for the yen. It is positive in Euro, and at par"ish" for the CAD and the Aussie.

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  121. The CME hikes are what they are...

    The only thing I don't like is that the huge hikes are forcing margin liquidations which provide increased volatility, thus justifying additional hikes, which force more liquidations, etc.

    Interesting also that margins on ES (S&P) contracts weren't raised during 2008-2009 during the extreme volatility of that period. And margins on food futures are only being nipped around the edges.

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  122. Jumping in. Buying GLD 150's.

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  123. tz - it's feels like last Spring when the market was going up in one direction and reversing to another. lots of fakeout counter rallies. best to be in turtle mode.

    correction is not over

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  124. AGQ coming up on 50% loss from peak. This will probably be a capitulation point for anybody who invested most of their account in it ON MARGIN (and holding and hoping as we drop.)

    50% on full margin means the account is about to get cleared out at these levels.

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  125. 30% down on silver is D wave territory already, regardless of whether you call it a D wave or a daily cycle correction. These are labels. % is fact.

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  126. Gary,

    I know you're very confident that this C wave has not topped yet. However, what if this time it is different and it has already topped?

    Do you have any indicators that will start to raise probabilities in your mind that maybe the C wave has already topped?

    For example, do you have a line in the sand that the dollar cannot go above? Or a price that gold cannot go below?

    The last daily cycle low is way down around 1380. We know that if gold drops below 1380, then we would have a failed daily cycle and that would imply that this intermediate cycle has topped (and very likely the C wave also).

    But that is still a big drop from here. Is there a gold price between where it's trading now and that daily cycle low price that would tell you that it's likely the C wave has already topped?

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  127. Call me insane, but I am buying AGQ at $200.

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  128. If there was panic selling yesterday...

    Then today people are jumping out the window!


    : O

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  129. THIS IS CARNAGE

    are we sure this is not the d-wave? I am serious

    in the d-wave, does silver do down 80% in 4 days?

    ReplyDelete
  130. Gary, Great post.

    Appreciate the analysis ..

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  131. Duuude,

    It has crossed my mind, but I felt there are better/safer ways to play the bounce we expect. After all, if silver can bounce, everything should go, but if silver doesn't, some things have shown relative strength (although not much, to be honest)

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  132. pimaCanyon- imho this downward 'pulse' can go to 1470

    it's not a buy yet. I hope for some support at 1515 bought some yesterday but once that was cracked.. we're going down.

    ReplyDelete
  133. Maybe it's not that it's so different this time, but that it is not the same. At least not the same as last time in the sense that it can never be exactly alike.

    ReplyDelete
  134. folks, about C and D wave, everythings you said about silver is meaningless.Is gold what does count, not silver.It's all depend on gold.And gold is in a daily cycle low.That's all.Gary told this many many times by now.Hoping for reentry on silver now.

    ReplyDelete
  135. TJ,

    Yes, my wife's brother and his wife are involved in the church there. Sounds like a cool place. I'm looking forward to it. It will be my first visit as my wife and I have been together for just a little over 3 years now and were married last November. (Even though we're newlyweds, we're not twenty-somethings... Nancy graduated from high school in Alexandria in 79.)

    ReplyDelete
  136. torero91 - I really disagree. AGQ gives very clear signals. I sold my AGQ, waited about a week, and bought DGP. A few days ago I posted that I sold 15% of the DGP to buy DITM AGQ options Friday or Monday, per Gary.
    I think I have had May 6 on my calendar for at least a month as Gary has said it is a likely day for a turn, plus or minus a day. It looks like it will be plus a day to me, but the market doesn't care what I think.
    So what I am looking for is a bounce in AGQ, and a retracement that holds. I buy my options on the retracement and set a stop just below the low (sorry, Gary, but I think stops USED AT MAJOR TURNING POINTS are useful).
    Silver has been whacked so hard I am thinking about selling another 15% of my DGP today and moving 30% into AGQ options on Friday or Monday. But that may be more volatility than I can stand - I'm actually pretty conservative, and don't have the testosterone issues some of you boys do ;-)
    Gary made a mistake, but as he endlessly repeats, bull markets bail out mistakes. Some of you sidestepped this one, others got caught. Next time, some will sidestep and others will get caught, except the faces will be different. Well, maybe not DG.
    (DG - Your book had a big impact on me and my husband. It's a life-changer.)

    ReplyDelete
  137. now currently a war is being fought at 1500

    once that goes, it will go down a few more points then maybe it will be ok to dip.

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  138. Today reminds me of the scene in Trading Places where Dan Aykroyd and Eddie Murphey play the market game.

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  139. GLD May 160 calls are looking like a gamble worth taking for those who like lotteries.

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  140. Mini 'Crashes' Hit Commodity Trade

    http://tinyurl.com/3gy55m6

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  141. Gave up AGQ at even, shall rebuy when it starts to make higher lows!

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  142. CMT..Hey bud was that you that told me I was scaring people yesterday..

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  143. Amazing! We won't see too many moves like this in a lifetime.

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  144. Mexico's central bank has purchased 100 tons of gold so far this year. Russia's central bank bought 19 tons in March, and Thailand's central bank bought 9 tons in March. (Bloomberg News) China has $3 trillion of foreign reserves, half of which is $ denominated. Less than 2% of China's foreign reserves are in gold. By contrast, Germany holds around 70% of their currency reserves in gold. China (and many other countries) are interested in diversifying more of their currency reserves into gold. (Richard Russell) There are buyers with deep pockets waiting in the wings.

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  145. Are we sure that this is about cycles/waves or might it be better attributed to the withdrawal of liquidity in advance of the completion of QE2 and the return of the deflation trade? The entire commodity complex is getting crushed.

    ReplyDelete
  146. DG - Could you mention your book again. I saved it earlier, but seem to have lost it. Thanks.

    ReplyDelete
  147. SB - up to now you hadn't but in the future you will.

    HFT guarantees it.

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  148. Wow, this move down in silver is a sight to behold! Someday I want to be on the right side of a trade like that! I can see why some traders start drooling when they see a parabolic blowoff, and why there was talk here about shorting the upcoming D wave. Classic waterfall decline, but the speed is breathtaking.

    It doesn't look done to me--the wave pattern doesn't look complete. Looks like we're in the middle of a massive 3rd wave down. But wave patterns have fooled me in the past, so I have no idea where this thing will stop. Silver is on the backtest TL right now, but looks like it's just breaking right thru it. Next stop is the channel line at $34.

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  149. Matthew, I don't think it was me. Why?

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  150. First time poster and subscriber. I like the miners here at these prices. They look ready to bust out. I'm long EXK, SLW, SIL, AAU, NGD, IAG and ANV...

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  151. If 1491 does not hold on gold, then this C wave is toast, right?

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  152. What are peoples plans for unloading their silver positions if this doesn't turn around? How far are we going to ride this down?

    These silver charts are just ugly and banking on a miracle C-wave finale to bail us out of these positions seems questionable.

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  153. Do I understand it correctly that if 1491 on gold is violated, this C wave is toast?

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  154. Gary,

    Are we sure silver will recover from this?

    Even a bounce to 40 seems improbable...

    how do we know the USD hasnt bottomed?

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  155. Poly, DG,

    I certainly don't want this discussion to end because some people and Gary might be offended. This is much bigger than that.

    We all know Gary's timing is great for spotting bottoms. His cycle numbering etc is also top notch for the most part.

    But...that doesn't mean he is perfect and always be right. He himself has said this many times. Yet, he is supremely confident in what he says, and defends it all the way. That is a mark of greatness when that person is right and is also the fall of the person when he is wrong.

    We all take these trades with our own volition, and are solely accountable for those. Its our responsibility to take care of our money.

    Now, having said that, we do act upon what Gary outlines. We also have this group psychology on this board and act on ideas that others express. Thats because we have some really good and experienced traders who have seen it all and learnt from the mistakes and the right decisions of the past.

    (will continue....)

    ReplyDelete
  156. I have a feeling that NOW Gary is feeling that game over...

    sell the bounce if there is one before silver goes to $5

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  157. hedgies are gone they are in bonds right now. They have been running the price up and moved capital over. We are the last ones holding the bag. This bottom buying waiting thinking this massive bounce to infinity C wave will get you hammered

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  158. Jmenoy: I have taken my personal stuff of the site since someone threatened to shoot me to death. Sorry. See if you can find it. Gary might respond to an email from you as he knows who I am.

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  159. Farm Girl,

    Could you be more specific on what "signals" AGQ gives that could not also be found on SLV?

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  160. I believe Gary is traveling today, on his way back to Vegas. So not sure he is feeling anything right now about what we are feeling/seeing.

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  161. PST - with any deflation, there is a time of inflationary spike.

    If this spike was the spike, uh oh

    you're on the wrong trade because PM imho don't work in this environment

    have your hedges in place.

    holdings in TIP and cash have been steady

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  162. Good to have some sort of protection, for all we know this could be march 2000 for silver, meaning it probably goes way down to $20 this year.

    ZSL.

    The scariest thing about this drop in silver continues to be the massive volume....the kind of volume one sees when a bubble pops.

    ReplyDelete
  163. Feel sry for a lot of people in here..Maybe the plan wasnt that good when it force people to sell.

    Its not about leverage anymore..AGQ from 380 to 200 or what?

    I also think a lot of guys bought high numbers..Like 300-350..


    Oki we will for sure bounce or go to 50 + or even 60..But some kind of risk management is needed..

    I dont think that we are at three year cycle low. But maybe we are..What then?

    How far must silver correct until we are forced to sell? Like 32?

    The good thing is that the sentiment is low now.

    This is really sad..

    But probably when a lot of people on this board are selling the bottom is near..

    How far will you guys keep silver..I havent sold anything yet but I feel sorry for a lot of people in here..

    You cant expect people to lose 40% and be cool with it.

    Do we have an alternative plan for this in case we are wrong?

    ReplyDelete
  164. Its a little concerning to me that SIL is awfully close to breaching the low it made in march and thereby making a lower low.

    ReplyDelete
  165. hey guys,

    a question on options. what does open interest mean?

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  166. SIL now at 24.82!


    This is insane!

    ReplyDelete
  167. some weak b o w on gld.


    Cant wait for this to end ..

    ReplyDelete
  168. AGQ's bounce going to be fast & furious

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  169. I've got 183 and 162 for potential targets on AGQ.


    This is a stunning chart from last summer's intermediate move. We are heading towards 50% retrace of the entire move (33's)

    http://screencast.com/t/FEYpm026K0m1

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  170. I bought in yesterday, thinking great bargain..


    Fook me!

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  171. this move will certainly convince people that the run is over. I still like Martin Armstrong's timing though. Gold broke through 1530 and the high should come in mid June. The problem is that the move will change the overall look to the move. That something more dire is occurring. To badly paraphrase him....

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  172. See if AGQ go to 180.. lose 200 points in 6 days

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  173. Gold at 1487 with rsi @ 27 we got it. lets buy!

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  174. I think that with this move, dollar is in day 3 in a new cycle.So at least 1-2 days more up (maybe 75) and then will turn down toward 3-year cycle low below 70.70.Meanwhile dollar bounce, silver can go down even to 30.Who know.

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  175. silver could easily drop to 31...next resistance level

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  176. Are there still lot of folks in substantial AGQ positions. Are we going to keep holding on.

    What if this is the bounce out of 3year dollar low.

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  177. there is no DOUBT anymore...3 year cycle low IN

    1) High volume in UUP for a week
    2) bad USD sentiment
    3) gold and silver tanking way before the USD bottoms (gold and silver smelling the bottom way before)
    4) All commodities getting hammered today

    GAME OVER FELLOWS

    the sky is falling...get out

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  178. Bill no 2,
    It reminds me more of that movie Apollo 13. We were on a rocket ride to the Moon at one point, now we're just trying stay alive in our crippled craft The AGQ.

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  179. Doc just commented on his site that this move is very suggestive of a 3 year cycle low in the dollar. If that is the case game over for this C-wave.

    ReplyDelete
  180. This is nuts. Buying AGQ, closing eyes, and turning off computer.

    ReplyDelete

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