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Monday, June 20, 2011

GOLD'S INTERMEDIATE DECLINE

I've said it before, gold will do everything in its power to draw traders in at intermediate tops. Then it will kick them off at  intermediate bottoms.

There are a couple of dependable signals that almost always occur during an intermediate degree decline. The first one is a MACD crossover on the weekly charts. Second; gold almost always dips below the 10 week moving average (50 day moving average).


You can see in the above chart the divergence that is forming in weekly momentum. Gold is now starting to hug the 10 day moving average, possibly in preparation for a move down into the next intermediate cycle low. As the current cycle is now 21 weeks old gold is due, actually overdue, for an intermediate degree corrective move.

Another tell that occurs is a break of the intermediate trend line. That also has yet to occur.



Until we have confirmation that gold has completed its intermediate decline we will remain on the sidelines.

190 comments:

  1. Subs are very restless, is that another sign, Gary?

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  2. At Ease,
    No doubt. Does snapping of teeth and foaming at the mouth count? Damn, why won`t it just die already?!?!

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  3. 84,
    As Gary says, it will wear us down and just when we believe it isn't going to drop and we buy in at the top... then down she goes!

    Sure glad we got Gary to remind us to just sit and wait it out.

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  4. It `s kind of neat in a way, getting to recognize this feeling. The edgy, nervous somethings about to happen feeling.

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  5. I dont understand why some are getting so restless already, just take a look at the weekly chart, look at the last few intermediate cycles where they broke down and you'll see that we are right about there...who the hell am I kidding my nerves are shot :)

    Patience my friends...lol

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  6. Traderlady -

    What part of Maine would you be in in Sept? I am in the Boston area...is it Southern Maine?

    Jeff, rentals cheaper in Sept huh? So far the vote is we go in July, and go again in the Fall if we need to , but thx for the tip.

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  7. You guys crack me up trying to help Eamonn. It makes me want to help out. *

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  8. So......gold to correct....equities to dump....swissy at highs....yen at highs...and EUR in shambles

    It would appear that the ol USD should really take off here as the only game in town.

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  9. Sitting patiently in cash...oh yeah and some SLV puts. If it doesn't hit, oh well, no sweat. If my H&S plays out, SLV will find support around 22, and it will pay out around 10 fold.

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  10. Gary,

    Thanks for the post.

    you mentioned some time back that you expected this dollar rally to last about 9 months in total.. would that be two complete intermediate cycles?

    Thx

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  11. Michael,
    That has been the pattern in the past.

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  12. Wav ridah
    what expiration do you have on those SLV puts?

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  13. Interestingly some are not aside but on the contrary are long on Silver, at least for the next 3-5 weeks:

    Ross Clark: Good news for silver
    http://talkdigitalnetwork.com/2011/06/oversold/
    Ross had launched on April 14 a silver exhaustion alert.

    Also Purple Crayon: Buy Silver, http://finance.yahoo.com/blogs/breakout/purple-crayon-buy-silver-175508540.html?sec=topStories&pos=8&asset=&ccode

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  14. I'll let others take that trade. 21 weeks into an intermediate rally that hasn't corrected yet is not the time, in my opinion, to be jumping on the gold bandwagon.

    And if gold hasn't corrected yet I certainly don't want to jump on silver's broken parabola.

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  15. Gary, what do you have to say about the silver miners looking not only very oversold but also very bottomy; like SLW PAAS CDE HL SSRI SIL ?

    If the metal follows the miners, both silver & silver miners may be in for a tradable bounce... I know it ain't your cup'o tea; just curious about your thoughts about such a trade?

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  16. Well I'm not sure how one determines something is looking bottomy. The miners are definitely oversold, but then they have been oversold for the better part of two months.

    Generally speaking when I start to ignore cycles and trust charts I lose money.

    At 21 weeks into an intermediate cycle I will not be trying to catch a counter trend bounce. Even if one was lucky enough to catch the bottom the odds of catching the top aren't good.

    Where would you be if you jump on the long side and then get caught in a gap down open as the trend continues? I'll tell you where you would be, you would just be needlessly whittling away at your capital. Capital that will be better served at an intermediate bottom.

    Patience is a tough trait for most traders to cultivate. Yet it is the one that will make you the most money, and save you from most losses.

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  17. Gary-
    If this in fact the mid-cycle SPX rally (day 19), are you surprised that it bottomed before breaking the March cycle low? How does this effect your cycle work?

    Thanks

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  18. I covered that in last night's report.

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  19. Good morning all,

    We went to an out of state family function so I haven't been around since last Thursday.

    I understand Gary's opinion on the metals and miners, but still have my longs in SVM and EXK. I also added 25% more to each yesterday but am keeping my overall risk level at 1% of total assets.

    I might add another 25% today. Keep in mind that any bet can be taken as long as it has positive expectancy AND total risk is kept in check. So I'm long here, but if I thought we were at the end of the D-wave I could buy a whole lot more with much more confidence.

    In short, I expect to make money on this round, but not much as I don't have huge positions.

    Good luck!

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  20. What worries me the most, is that we haven't had a monthly MACD cross over since June 2009. 2 years without such an event is extremely rare. When they do finally occur, the outcomes are not pleasant. If true deflationary expectations set in gain, gold will not escape the onslaught, initially....

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  21. FOMC and the Bernanke Q&A session is the perfect catalyst for gold to begin its 4-6 week trek down the IT cycle slope and into a bottom.

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  22. SB, not necessarily picking on you, but why bother entering a position with 1% of capital, trading against a headwind.

    I see people post this type of logic alot, and I have trouble seeing the reward/risk to the trade.

    Using options I can see, but not equities unless you are building something bigger overt time.(Whick might be what you are doing SB)

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  23. Bob,

    I don't have 1% of capital invested, that is the amount of total capital I'm willing to lose with a predetermined stop based on the average true range.

    If looking at amount of capital invested, I'm at around 12%.

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  24. Gary, would you approve of buying ZSL now to hedge a core gold bullion position?

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  25. thanks Gary .. appreciate your input

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  26. Small retail traders have no need to hedge. If you're worried about gold moving to an intermediate cycle low than just sell.

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  27. Most around here only refer to what they have invested, or how much they can buy, but that ignores the expected volatility of the specific vehicle. I focus on overall portfolio risk.

    There is a big difference being fully invested in something that only moves 1%/month vs miners, many of which are down 40-50% in the last 2 months. :)

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  28. I have a naive question. What will happen to the bond market during an acute deflationary environment like we foresee coming?

    I have a younger friend who asked me about his 401K portfolio going forward. He is inappropriately heavy in bonds I thought (25% for a 35yo). I told him to get out of his equity holdings this week, but I am bond ignorant. Would they go up as interest rates stay low?

    Thank guys.

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  29. Bonds generally tend to lead the stock market. They started to rally in July of 07 prior to stocks topping. And they started to rally in February of this year in preparation for the summer yearly cycle low.

    If the market is entering another leg down in the secular bear bonds should rally.

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  30. Some one posted a few days ago asking why I sold my DUG and gave up strong hand status. There are lots of ways to play this game, but you need to know yourself and how you want to play it. I was pretty sure we were going to get a rally and I am pretty sure I will reshort oil at a higher price than where I covered it. If you freeze or hesitate to pull the trigger it is better to just sit because you will lose your position and never get back in. Know your own style and based on your emotional make up then stick with it and work to perfect it.

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  31. "Acute deflationary environment"?

    Deflation is a monetary phenomenon -- not credit contraction or asset price decreases.

    You need to look at the Austrian money supply measures, not M2, credit, or asset prices.

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  32. I agree with SB. Some people are "100%" invested with TZA (a 3X small cap inverse fund). Others are "100" invested with GLD. Huge difference. Percentage invested is meaningless, IMO. All that matters is risk/reward in % or dollars

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  33. Haggerty,
    July but I plan on rolling it into August. I'm buying more too before OE on friday. Hopefully we can get a strong day before then. GL

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  34. If you folks are shorting stocks now, I think ya gonna be in for one rude awakening. Go long and go strong.

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  35. Darn, I was hoping this rally had a bit more legs. But our favorite indicator just showed up. OK guys, time to start scaling out of longs, if you had any. Thanks again Beanie!

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  36. 10Min SPY Possibly at short term Resistance level, watch Gapfill as well:

    http://screencast.com/t/uchSbArw

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  37. Beanie,
    We already shorted stocks, booked our profits, and are now sitting in cash.

    You on the other hand have weathered a 10% correction in your precious tech stocks. 20% in semi's. And if my cycle count is correct, and the world is again rolling over into recession you are about to get caught in another bear market.

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  38. Gary,

    Don't be silly. You can book profits, yet I cannot?

    As far as the market is concerned, you folks ain't seen nothing yet. I highly recommend taking that secular bear market out of your heads....soon.

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  39. Tell me do you seriously think world can't go back into recession?

    Almost all leading indicators are rolling over already.

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  40. Wav
    I am getting murdered on July's, Left 25% of my July's rolled the rest to August already.

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  41. beanie,
    you really need to read "This time is different" by Reinhart & Rogoff so you can understand what is happening.

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  42. Gary,

    Have you modified your ideas about the magnitude of depth silver is likely to plumb during a gold ITC?

    Thanks!

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  43. Beanie,

    On what grounds do you base your bullish view? No need for a book, just some bullet points. You offer an opposing view, which is fine, we're listening. The floor is yours.

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  44. Russell Update from last weeks Chart:

    http://screencast.com/t/xaYx2EK91

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  45. Pretty much EVERYONE (bulls and bears) was calling for a return to recession/depression since the Fall of 2009. Many even staked their reputation on it. They blogged till they mentally bleeded, like P......, warning, screaming, telling everyone America is absolutely done for. As if playing a cruel joke, the market rolled them over like mashed tuna.

    Those with still a breath, continued on calling for collapse all throughout 2010. They too got rolled over.

    Then 2011 came along, this is when the gold and silver bugs really joined the chorus of destruction. They got rolled over all through May. Now we had a month long correction and more came out of the woods, again saying we're gonna roll over.

    I see a pattern, and that is the market will continue to play cruel jokes on bears...until nobody calls for rollovers and the last of the bears finally join the rally. They'll probably come in a few years later, then we get 1-3 years left before the whole thing collapses. Clockwork. Just like every single bull/bear cycle.

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  46. Adam,

    The time tested "Don't fight the fed" still applies. Back in the early 1990's the fed didn't even print that much money, and we got the internet boom.

    Guess how big this coming bull market is gonna be, considering the magnitude of the money printed?

    Well, at least we got the internet established in 1990's. This decade we gonna get mobile internet fully established and (hopefully) get green energy at a respectable level.

    The writing is already on the wall. All the money that was printed will find their way back into the market. Trillions of dollars don't just go into people's mattresses.

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  47. Gann360 , Nice chart..

    900 or 800 for $rut

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  48. $HUI Gold Bug Weekly Chart:


    http://screencast.com/t/jJVHlvmH8

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  49. Closed that AAPL Call trade posted at yesterday close for @13.50, a nice one day 36% gain.

    IMO, like posted before, there is a strong chance the $1,550 level will provide strong resistance to gold and has a great chance of marking the cycle top. Looking to pick up some more SLV puts when gold tags $1,550.

    http://tinypic.com/r/birygg/7

    Good luck.

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  50. We got that swing on gold today.

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  51. So what do you base this bull on besides sentiment?

    The SPXEW has actually exceeded its '07 peak. I take it you believe the retracement we've seen is merely a pullback before we break thru that level in earnest?

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  52. Beanie,
    I haven't been short this market until three weeks ago. And I won't be short again until the S&P breaks below 1249. That is the intermediate cycle low. And that level should not be broken in a healthy bull market.

    If it is then the odds escalate that the cyclical bull is finished and the secular bear trend is resuming.

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  53. Felix,
    Gold hasn't even moved down into an intermediate decline yet. Until it does how could one have any idea where silver will go to.

    Gold is the driver of the sector. When gold decides to drop into an intermediate low silver will follow and magnify the move.

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  54. William,
    No swing high on gold today.

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  55. Transports Daily Chart:

    http://screencast.com/t/tCmJUu29ZR

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  56. gold support at 1525..

    i would be cautious at this time because it's due for a correction anyday now. it will need a couple of weeks to wind down and reset before going up again for the 4th of July fireworks! that is what I'm guessing :)

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  57. alright good S&P is bouncing back with authority.

    saw all the shorts are scrambling now. lol

    buy this market up!

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  58. Speculators Cut Bullish Gold, Silver Positions – CFTC Data

    http://www.kitco.com/reports/KitcoNews20110620DeC_focus.html

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  59. The shorts are covering in front of the Fed meeting in case of a Bernanke surprise.

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  60. Beanie indicator flashing SELL today.

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  61. This comment has been removed by the author.

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  62. So if Greece doesn't default today, is their default going to come in the Fall or will it be prolonged until 2012 or maybe even 2013 or 14'?

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  63. Gary,

    Yeah, I guess we wont be getting that swing high today. Maybe tomorrow.

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  64. Or is Greece going to get bailed out and it's going to be one of Ireland, Portugal or Spain that defaults in the coming months or in 2012? Your thoughts?

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  65. Gary,

    We have a swing low in the HUI, correct? What do make of that, just a bounce?

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  66. William,

    If you're not in the timing band for a swing low, don't call a morning star a swing low. Call it noise.

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  67. Excellent AAPL trade Poly! Timing spot on!!

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  68. A few low volume up days in the s&p and the perma-bulls are out bragging like little children saying "see I told ya so!" I'm not sure where people see "super bearish" sentiment out there either. I've been seeing mostly a bunch of bottom-calling with absolutely no acknowledgement that anything has changed. There also seems to be this sentiment that Fed is going to start or atleast announce another form of easing before this one is even over with! It better materialize and fast for the sake of the bulls.

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  69. Adam,

    Can a swing not occur out of the timing band?

    Still trying to figure this all out.

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  70. This comment has been removed by the author.

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  71. William,

    If it is, in fact, a swing low then we will need to rephase. However, we wouldn't do that after just a couple days of action.

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  72. PPI is vastly outpacing CPI. That means margins are getting squeezed and corporations can't pass thru their costs to the consumer. Forward estimates will need to be revised down and the feedback loop is going to drive stocks lower. The Fed can't run another QE program without exacerbating this further.

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  73. Time to short is pretty near....Beanie is Bullish....again

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  74. Beanie's been bullish for as long as I've "known" him. That means he's been right half the time. lol

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  75. Oil dont want anything of this rally..Interesting..

    Gary cant this be some kind of half cycle low rally? You said that you dont want anything to do with the stockmarket until we break 1249?

    If this is the half cycle low then we will soon rollover again..

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  76. The dollar continues its move down to its 3-year-cycle low by, most likely, the end of July - August time period.

    The dollar (UUP) DAILY chart opened today at the 50 MA and the 20 MA (the middle line in the Bollinger Band) AND HAS MOVED DOWN FROM THERE.

    According to the ADX (13,8), price action in the dollar is now NONTRENDING -- which means pay more attention to stochastics rather than to MACD. STOCHASTICS ARE AT THE TOP AND HAVE PUT IN A STONG CROSS DOWNWARD.

    The ADX also indicates that the dollar (UUP) will start a TRENDING move soon (which means pay more attention to MACD than to stochastics). And I'd guess the chances are roughly 95% that that trending move will be DOWN. Both MACD lines ARE NEGATIVE (under 0), and that's bad for the dollar. And the fast line is above the slow line and curving downwards to put in a DOWNWARD CROSS OF THE SLOW LINE. That will probably happen in a couple of days.

    At that time the dollar will start a TRENDING MOVE DOWN, eventually breaking through its recent daily cycle low, and then the supposed 3-year-cycle low, and then will most likely break through 70 and end up putting in its 3-year-cycle low somewhere in the high 60s.

    I'm long DGP and NUGT, and plan to ride them into the C-wave top, which will happen at the same time the dollar puts in its 3-year-cycle low.

    Good luck, all. Gotta run.

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  77. If Bernanke dont say anything about some som stimulus tomorrow..This market is doomed..

    And about the oil..Maybe the oil can feel the smell of the deflation coming closer?

    Still got half of my oil left and ofc long dollar..

    Was shorting silver but I dont want to sit with short position in silver right now with the greece mess..Some voting tonight also..

    Oki I probably did sell at the top but I also bought it at 37,50..But it is really scary to shorting gold and silver..Will try again later on..Maybe..:-)

    :-) Take care guys!

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  78. Gary

    You dont have to answer the question about shorting..Was in the report..sry

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  79. A counter-trend rally in the dollar will by its very nature begin with a negative MACD indicator since that is a trend following tool.

    At a three year cycle low, stochastics are going to whipsaw traders as the market frustrates trend-followers as they realize the intermediate term trend is changing. I use stochastics almost exclusively for spotting trend divergences, very rarely anything more. And I put VERY little faith in any crossovers as the indicator will get "stuck" at the top or bottom in a trending market.

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  80. gary, hi. nice to meet you in monrovia. I was wondering what you think about the price action in the dollar... I would have thought that it would be blasting off but obviously it isn't. that usually means negative things. what do you think? take care greg

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  81. hi gary, nice to meet you in monrovia. I was rather disappointed by the price action in the dollar. I thought it should blast off but it didn't. usually that means bad things. what do you think? thanks take care, greg

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  82. Anyone have luck accessing Doc's site?

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  83. Gary,

    Doesn't shorting the S&P on a break below 1249 carry the risk of getting caught in a false breakdown?

    This happened in 2010. In Feb. the S&P dropped to 1044. Then in May it broke below that to 1040.78. But this was followed by a 9% rally before rolling over again.

    Wouldn't it make more sense to short when the market is overbought providing it coincides with your timing band for a cycle top? That seems a far less risky strategy to me.

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  84. More money coming out of SPY and SLV.

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  85. Let's see what the after-lunch mood is out east.

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  86. Big down-tick in GDX. Things are starting to point towards a retreat in everything. That would exclude the dollar then.

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  87. Albert

    True about the false breakdown..

    I know Gary wrote that in the report but sometimes the market tell him something else and he can change his mind..:-)

    We will se what the market gives us..

    For now I focus on the dollar and the deflation scenario..For now the dollar might hold 75 and turn back up..

    And maybe the oil price try to tell us something? Or maybe its just daily wiggles..?

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  88. Second Greek bail-out could push eurozone bill to €1450 per household‎

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  89. Not sure about the downtick in GDX ... miners, particularly silvers, quite strong thus far and holding their gains. As is usually the case, the close will be interesting.

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  90. SPY experiencing major down-ticks now, GLD and GDX a few upticks as of late. Looks like we have a few more weeks of falling asset prices. Out for the day, GLTA.

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  91. Gary; What would the PM landscape look like if we enter into a period of stagflation?

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  92. Moneyman,

    I suspect the dollar will find a higher low in the 74 area. I don't watch oil too much but maybe crude will rally into a resistance at higher levels, maybe the mid-90's?

    But I think if the S&P gets to the 1320's it will be overbought (together with the euro) and that would be the time to short, not to wait until a decline to 1249, by which time you might have missed half of the decline.

    But as you say, we'll see what the market gives us.

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  93. Gary,
    When PM stocks were not confirming golds advance by going down, are they now confirming a move up in gold by cracking higher?

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  94. I suspect the entire metals space are now all just being drawn in for the final sucker punch.

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  95. Poly, LOL.
    That would about do it, wouldn`t it? Thanks for the reality check.

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  96. I am a many month subscriber; however, this is my first comment.

    I find it interesting that SPY tops the sell on strength list today.

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  97. I'm at the point of thinking that it might be a good idea to buy some miners or GLD/SLV as it keps going up.
    I guess that means it will go down?

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  98. Long GDXJ 70%-, EUO 13%
    Short SLV 8%
    Cash 9%

    -reduced position

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  99. Poly,
    If I am getting sucker punched by my PM's today, I hope I get punched several more times :)

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  100. Only question is whether or not there are any surprises with the fed tomorrow. If not then I would expect a big sell off. On the other hand if gold breaks above 1550 and silver out of it's pendant then who knows where we go from here...

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  101. Test, you sure do have a tough constitution to weather that storm... hope you are doing ok?

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  102. Poly,

    Have you been through this before?

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  103. Gold Lion,

    I said the action, referring to it's strength as you point out, is drawing them in. The punch comes later ;)

    Troy,

    That's a significant SPY SOS with significant block trade volume.

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  104. There's certainly no guarantee that the PM move isn't for real. I was noticing yesterday a near uniformity of thinking here, all totally sold on the idea of a smashdown coming soon. I'm never comfortable with everyone being on the same side of the boat, although a couple showed up today on the other side. A couple miners I follow closely are already well above their lows from last week, one touching it's low three times before snapping back.

    That, and isn't the dollar cycle left translated, a negative? Is there much correlation between left/right translated and up/down trends for the dollar?

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  105. Adam said...
    William,

    "If it is, in fact, a swing low then we will need to rephase. However, we wouldn't do that after just a couple days of action"

    I don't understand here. A swing low (or swing high) marks a trend change. It does not have to be the cycle low nor require a re-phasing of the current cycle count. One can have multiple swings, high and low, within any given cycle. When a swing low is significant (can see it across the room, breaks the trend line,etc) AND falls within the proper timing band for a cycle low, THEN we print it as the low. Swings themselves don't have a timing band. Yes? No? Gary, help me out here.

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  106. Ben,
    I was thinking along those lines as well, everyone expected silver to go past 50$, now most everyone is expecting it to go to 30$.
    I must say that I'm on board with 30$ here although 33$ will do.
    But as Gary has said many times, this may string along the last on board and drop.

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  107. The near uniformity in opinion here is due only to this subset following Gary's cycles analysis, which support a high probability of a coming IT low.

    As for the dollar cycle, it's relatively young still and unless it fails, it's translation will remain unknown until the end.

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  108. Sleeper,


    Thats what I thought also, I was under the impression that swings high and low marked trend change and didnt have to necessarily occur at cycle tops and bottoms. Gary hasn't responded to me on that yet, only Adam.

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  109. SLV Silver Daily Chart: http://screencast.com/t/hvfkk9cIXw

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  110. Sorry, guys. I was under the impression you were asking about a swing low that would mark the end of the daily cycle and the start of a new one.

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  111. Poly,
    It's not just here, this thinking is on other boards as well however, in Kitco's forums' case, it is waning and swinging again towards uptrend.
    Same with Turd's blog, it was down expectation last week or two and now swinging up.
    Of course, this doesn't mean much, I can wish all I want but the price will go where the MONEY takes it.

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  112. Ah, there's Mr Gann with his great charting!

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  113. Ben. I agree with you. I think it is insane to close your entire PM position. It's very difficult psychological to re-establish. I follow a strategy of selling a bit into strength and buying a bit into weakness; never "fully invested". I also hedge my PM position at times by buying puts.

    The last time I took major new positions was in early February 2010. All other miners are from late 2008. Hold GLD since its inception. The cycle analysis was not panning out in Jan-Feb 2010 then either with calls for a D wave etc.

    Last week I purchased NGD at 8.76. Now it's at 9.85. This is for a trade so I am going to sell now. NGD is one of my largest holdings.

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  114. Gold sentiment has been fairly low:

    http://stockcharts.com/h-sc/ui?s=$BPGDM&p=D&st=2008-12-21&en=%28today%29&id=p20573799884

    But still much higher than the cycle between the 3-year lows, and far higher than the '08 cycle low (I don't show the minimum -- it his 0.00(!) but it messes up the chart.

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  115. WOW...miners EXPLODING higher today

    great day to be long miners

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  116. Shalom Bernanke,

    Can you elaborate please on how do you derive stops from ATR?

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  117. A swing outside of a timing band is useless. Swings occur often with general market action, their movement is not a trend change.
    During the timing band for a cycle low, the presence of a swing high is obviously a requirement for any more down into a cycle low. Of course the swing itself is no guarantee of a top. Once a cycle low is in place, a swing low will be required to confirm the new cycle, otherwise it would be an extension of the previous cycle lows move down.

    Miyagi,

    Honestly, I don't know about the miners at this point, clearly they have been oversold and could be reverting back some. I'm following gold and it's not crazy to think that maybe the miners resist any gold IT low. They certainly didn't move higher with this cycle.

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  118. NGD is one of the ones I closely watch, and unfortunately (perhaps) I'm still out. It has been my biggest position before. All my sells were between where it is today and about 10% higher. In bull markets, the great risk is being out, not in. For all of '11, the hysteresis inherent in the cycle trades has left an awful lot on the table. Will this be the episode that reverses that trend? Time will tell.

    The dollar's behavior though seems very weak for a strong counter-trend move.

    I continue to think, like Gary, that QE3 will not start until a significant decline, and perhaps all we're seeing is the delusional institutions who are so afraid of being caught out that they are buying early in anticipation of what will turn out to be a premature expectation of QE3.

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  119. Poly, I think the big money in the next move will be with the miners, not the metal, so the miners resisting a decline is not unreasonable to me. I do think if there is a significant decline (still hardly a sure thing) then the miners will still correct some more. But they are getting on more radars, and buying on weakness will become more common, not less like in the 90s.

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  120. Ben,

    That certainly is a fair argument and I could see that. I agree that miners should be explosive the next IT cycle, but when gold moves to an IT cycle low, i would expect miners to at least drop back to test their recent lows, likely hold them.

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  121. short is rushing to exit before the Fed & Greek tonight..

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  122. A flaw with this cycle theory is evident if you look at the very large standard deviation of these cycles. I don't have the energy, but someone should calculate the standard deviation of the cycle lengths on the associated graph. Look at the one in 2007-8. And also throw in the fact that there is interpretation bias in setting some of these troughs.

    And now the picture becomes even more murky given the recent disconnect between gold and miners.

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  123. I was reviewing my past material and found something that MAY indicate short term SPX direction ( up).

    This chart showed we broke DOWN out of a channel , I thought we'd retest the bottom ( called ''the KISS GOOD BYE')- and drop...we just Broke back into it. THAT usually calls for a retest of the top of the channel now.

    http://www.screencast.com/t/t2htRLRp

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  124. Pretty rare 6th straight up day in the gold pits.

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  125. Frank, it's not being sold as a magic wand, however it's ability to help traders improve odds, perform better and with confidence have clearly been proven.

    It's just another tool in the bag, you need the skill to wield it!

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  126. Alex,

    Looks like we may put in a head & Shoulders pattern in the spx, that would be a break back out of that channel

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  127. SB: Great for you on the miners!

    ALEX: I fly into So. ME but will be
    on the most part in Bar Harbor area. Beautiful huh? Hopefully then,heavy
    and riding the GOLD train.

    Thx on the chart!

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  128. All these risk on traders are going to be very disappointed if there are no surprises from the Fed tomorrow

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  129. Hi all,

    I thought I'd share this link to a movie called "Trader". It's an inside look at Paul Tudor Jones back in late 1986. Rumor was that when the movie came out PTJ bought up all the available copies b/c he felt it reavealed his trading strategies, so this movie is apparently very rare.

    At the time he was looking for a crash in early 1988 that would be similar to the crash in 1929. History will show that he was correct but it happened a little early than he was expecting. Nonetheless he was short into the '87 crash and made a killing.

    I think most of the people on this blog will find it interesting b/c it appears that he used cycles to determine his call for a crash in early '88. - Enjoy!

    http://www.tudou.com/programs/view/XH5W4vffBbY/

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  130. Poly. You need to apply statistics to determine its validity as a guide. Looking at the chart with the blue arrow troughs, I predict a very high standard deviation.

    And now with the disconnect between miners and gold it becomes even more difficult if your investment target is miners. And I think we all agree that miners were under-valued vs. gold even at their recent highs.

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  131. Alex,

    Take a look at these charts.

    http://www.thetsitrader.blogspot.com/

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  132. More money coming out of Gold now. Whatever the news is tonight it looks like it will be dollar positive.

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  133. Return to Resistance,

    PTJ is the greatest trader/investor of all time, IMO. I´ve watched this documentay several times and I always reread his interview in the original Market Wizards book.

    But at the time of this documentary, he did not use cycles. He did use some concepts from Elliott Wave, and was doing work on correlation between the bull market of the 80´s and the bull market of the 20´s.

    It´s a great documentary.

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  134. Frank, the deviation in trough's are irrelevant. They fall within a wide band and when they come, the tools are there to identify them. You're assuming the deviation results in false positives and trading loses, but that is untrue. Even in cases where IT lows are not identified in real time, these events are mitigated with proper risk management and a trading plan tailored to IT cycle lows.

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  135. William,
    Thanks for that link, another point of view is always appreciated.

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  136. William, that is what it would look like, a perfect head and shoulders from the March lows on( with everyone going long at the wrong time )

    Traderlady

    Bar Harbor is gorgeous...good for you.
    By the way, you do know its really pronounced BAH HABAH and you have to get Fresh LOBSTA & STEAMAH's while there :)

    William, thx for the chart

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  137. I advise anyone long to run for the hills and gain shelter within the next 96 hours or less.

    ReplyDelete
  138. Big tech names posting some solid gains today, profit taking by the end of the week?
    Mebbe...

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  139. I think I posted on here that I went long SBH and was long FEED since May 27th-
    so I should also post that I sold everything today and am 100% cash now.

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  140. ALEX: That eastern Maine accent!!! Thank goodness I am from western Maine.
    More influence there from those MA people.LOL (Taxachusetts)

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  141. Those of you who watch the SOS and BOW numbers, how do you rate what's substantial, or not? Is it a result of ongoing praxis or are there concrete amounts that can be interpreted as meaningful?

    If this is too involved (or naive) of a question for the board, please disregard.

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  142. I want to meet in Maine. Spent nearly every summer in the Wells Beach/Ogunquit area growing up.

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  143. Poly. The reason that Gary, I presume you, and others are out of PMs now is because gold "must" undergo a major correction "very soon" based on this rather broad time frame of 4-6 months. And this one is going to signify a so-called D wave.

    I also see some inconsistencies in the troughs of this chart and the terminology page on the premium website. The one here omits a minor trough in late 2007, which suggests an eight month cycle. In July 2009 there was a small trough that also appears to be subject to interpretation and nothing to worry about in the grand scheme of things.

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  144. DK,

    You have a point; it wasn't cycles per se, but believing in and trading off the correlation between the 20's and the 80's was driven by the belief that history repeats/rhymes.

    The documentary is great and captures a genius in his element.

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  145. GDXJ (the HUI) is still at buy-and-forget levels, so no fear

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  146. Any buy or sell decision needs to be based on probability so statistics are essential in making that judgment based on this cycle theory.

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  147. Frank,

    It's how you trade these cycles that matters in the end, that's my statistic.
    For me, the money is made on the cycle low and during the first half of the cycle.
    trying to pick a top and waiting out the cycle bottom is an inexact science and the trading benefits are greatly reduced. A trader should not put much stock or risk into the latter part of the cycle.
    But as a predictor of cycle lows (major bottoming and turning points) it's predictability is very hard to question. Whether as you point out that occurs after 5 or 7 months from the last cycle low, finding that low which cycles provides and getting in when it does bottom is all that matters. Having to wait, like we are now, is just part of the process.

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  148. Vonda

    I'd answer you, but Bow & SOS not my specialty , but I was just going to add before I go that I have friends renting at York beach area...and it was really nice Last week! Near the lighthouse, if you re familiar with that area. And we walked that long trail along the rocky ledge over looking the ocean to a restaurant in Ogunquit, I think?

    Goodnight all.

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  149. Looks like the smart thing to do would have been to buy on the SnP 200ma bounce. Base on a failed attempt to move below 1250 in a bull market. Oh well, we'll get em next time :)

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  150. Even though some of the other markets did break their intermediate clcyle lows, the big Kahuna (SnP) did not.

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  151. My #1 leading indicator went crazy bearish this morning.

    yes, that insane urge to hop on the train before it leaves the station. I wasn't the only one.

    Two people I respect whom I track on silicon investor -- one is heavily bearish, expects a shaving of gold to around $1425; another is now 100% back in miners.

    Oy!

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  152. Poly. Having followed the cycle analysis, I don't find that picking these cycle lows has worked out too well in real time. Like in January-February 2010, it was a big mess with D wave calls followed by buying back near a temporary bounce back, etc.

    However, I don't consider myself a trader.

    But what if the cycle stretches into August, miners start catching up, etc. I know that it doesn't follow the seasonality, but things have been strange this year. I also believe that Gary would have argued for holding through a blip like July 2009. While this time it is the start of a D wave.... I dunno.

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  153. ALEX,

    If you're still lingering or reading later - thanks for the delish memory. I most certainly can recall. My Dad is York-born. I vividly remember the old jail there and, I'm sure now demolished, fabu old-style summer carnival in Ogunquit. OMG, salt water taffy; skinny, sunburned legs; endless nights in the arcade--no worries about the economy or metals more precious than game-tokens . . . I think I'm regressing. Must be solstice!

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  154. We could expect the cycle to end in Aug, that is only 6 weeks away and wouldn't stretch the IT cycle out. You're forgetting the its a gold cycle, so what the miners do or do not do in this context is not known. What is known is that the miners have a decent correlation to the bullion, but not a requirement to move with it.

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  155. Not Ogunquit -- Old Orchard . . .

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  156. Ben,
    What is this #1 indicator you speak of?

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  157. I would have to say that today confirms a breakout to the upside in the miners. SLW, ANV, EXK all looking good...

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  158. Mr. M,

    It's me! Me getting crazy with lust after the train leaving the station.

    Just me and my false flag impulses.

    It's in jest, but only partly. My best times to get in PM shares have been quiet times, like in late July and early August last year *before* the big moves happened, not during what may turn out to be yet another dead cat bounce.

    I'd say a decline is a sure thing, except operation twist, qe3, etc, all stuff from crazy men so one cannot use rational thinking to predict the where and when.

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  159. Ben,
    I hear what you're saying!
    I was sitting today thinking "heck, I should get on this S&P and PM ride cau'se I'm missing out", it's been a few days up now and in the past I would have jumped on it only to see it decline no less than two days later.
    So I stayed put, did a quick trade in CHK for a tiny gain and that's it.

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  160. I sold all my SPY's at 129.52. I bought them to hedge my EUO and EEM shorts and am now back to modestly net short again.

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  161. For a little humor since we all missed the summer train :-)

    http://imgur.com/XZ6NK

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  162. S&P hit the 20DMA today. Silver and GDX are between the 10&20DMAs, SLV hit the 10DMA but did not break, only Gold is above all the DMAs.

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  163. Thanks Gary, keep us on track. Shouldn't be too much longer. :)

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  164. Blog Posts - RNM said...

    So......gold to correct....equities to dump....swissy at highs....yen at highs...and EUR in shambles

    It would appear that the ol USD should really take off here as the only game in town.

    June 20, 2011 9:37 PM

    The only game in town is the RMB.
    This morning it was at 6.4620, the lowest it's been. So, it's rising relative to the USD, and relative to everything else, floods be damned, crappy merchandise be damned.

    If one applies Gary's thinking, their equity market is about to tank, big time.

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  165. LOL @ at ease "Shouldn't be too much longer. :)"
    Its like waiting for Santa to come. Would silver please just get the hell on with it and hit the floor!

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  166. Great report Gary, I am itching to short the S&P yet in your recent report you gave a new level break to look for before shorting, does that override what was previously discussed in earlier reports? Or are we looking for both..(not to give to much away)? I have always used charts and am trying to learn to incorporate the cycles which is great.

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  167. @Eamonn

    I am in your camp. I have been waiting for Silver to drop now for a while and the wait is killing me. I want to complete this trade already...

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  168. Marty,
    The S&P has to break 1249 to confirm a new bear market. Since this hasn't happened yet we cannot short into a rally. We now have to wait for the recent pivot at 1258 to be penetrated before reestablishing short positions.

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  169. Gary,

    In tonight's report you mentioned that you think Gold may make a maginal new high to 1555 or even 1575, what would Ben have to say to make gold rise $30 tomorrow?

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  170. Gary,

    What exactly does selling on strength indicate, profit taking?

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  171. William,
    The assumption is that big money is selling into the rally.

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  172. Gary,

    Does that usually indicate that there will be a reversal or continued strength?

    Thanks

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  173. Sometimes but not always. It's not a perfect timing device. Although the top of the intermediate cycle was marked by large selling on strength day.

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  174. Gary,

    The top of which intermediate cycle are you talking about, and what would be considered "large" selling on strength?

    Thanks again for your help gary.

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  175. I see there was large, or semi large selling on strength in GLD today.

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  176. In GLD Money flow in block trades was up but down in total money flow, why is that?

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  177. An interesting perspective I heard today..I think it was Richard Grandish on Jay Taylors radio show is that an easing of inflation (ie lower oil prices) will be very bullish for mining shares. Could mining shares and the DX go up together?

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  178. I think this is worth checking out;

    http://www.sunshineprofits.com/commentary/21-jun

    ReplyDelete

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