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Thursday, June 2, 2011

Portfolio change

A portfolio change has been made to the model portfolio.

759 comments:

  1. Anyone out there that subscribes to aggressive portfolio that would like to communicate offline and connect, please e-mail me rjweinstein@gmail.com

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  2. Gary, in terms of a failed cycle, are you referring to breaking the low of the 25th? If so, I assume then you are using the US market low and not the futures low of 1303, which actually occured the previous night at 1 AM GMT (8 EST I think).

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  3. PM stocks holding up pretty well today...

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  4. My question may be moot soon anyway...

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  5. Ain't nothin but a gangster party!

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  6. SI need to break 36.30 for me

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  7. Bought my first ounce of super nova dust.

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  8. I like your style Squirrel.

    BTW, where is Jayhawk?

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  9. What's the best way to get real time quotes on the iPhone? I have the kitco app but the spread on silver is constatly 20 cents? While the CME app quotes are delayed. I use stockcharts.com to get real time quotes for indices.

    Any sites, ideas?

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  10. I would not salivate and jump head first into big short positions. Work them in and set your expectations further down the road.
    We've had some heavy selling this past 4 weeks and we're due for some strength and resistance to any downside. Plus any long term trend change takes time to develop, so don't be surprised to see 1,345 test again, enough of a rally to buck all of you giddy shorts.

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  11. Very well said Poly. Anbody going short has to be mentally ready that they will not sell unless 1345 is violated. That would mean a possible 2 % drawdown from today's prices.

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  12. Gary,

    Not to second guess but could it be stock are still putting there daily cycle low?

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  13. Gary, out of curiosity, why do we go by the intraday S&P lows and not the ES futures contract?

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  14. LOL, James Altucher predicting DOW 20,000 this morning.

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  15. well said Poly!
    I will wait for the employment number to jump ship

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  16. Gregg,
    It's always a possibility but not a good one now that the down trend line has been broken.

    And yes usually what happens with shorts is a pivot is broken then the market bounces, rolls over makes another marginal break. Repeat.

    It's not going to be easy to hold on to these and it's not going to be easy to spot the top of the counter trend rallies.

    Successful shorting is tough. That's why I said in the portfolio change that everyone should consider whether they really want to mess with this.

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  17. Harry,
    I just go off the print on stockcharts. If one happens the other will almost certainly happen.

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  18. Gary,
    Both you and Doc stated that 1311 was violated therefore failed cycle. As a cycle newbie,do you consider intraday moves rather than just closing price?

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  19. keeping the SPX 1314 in check..

    i'm alone in this buy today? c'mon guys i need you guys to buy with me.

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  20. Russll,
    Because cycles are only concerned with the lowest print. If the market breaks below a pivot then the previous pivot can't be a cycle low even if it doesn't close at that level.

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  21. I think we are now in bear market conditions. In bear markets one sells rallies not buy dips.

    Once that 1311 level was broken one's entire mindset has to flip.

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  22. And at the very least one should step aside if they aren't prepared to sell rallies or need further confirmation.

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  23. Gary,

    What are your thoughts on the reported plummetting Silver inventories? The falling supply has to resolve in either a huge drop in demand (from market crash I suppose) or a huge increase in price, as I see it... This resolution looks to be right around the corner IMHO.

    Thanks.

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  24. We have the swing in gold.

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  25. no direction today in the stock market... hmm

    someone took a dump on gold just now.

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  26. All trend lines have officially been broken so it appears the bounce we've had the past couple weeks is over.

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  27. " Gary said...
    We have the swing in gold.
    "

    buying some DUST..

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  28. Peter,
    I don't know that there is a shortage of silver. A month ago all we heard was stories about housewife's dumping silverware into the market. I was very confident that $50 silver would bring an avalanche of supply back into the market. I think it did.

    I've checked a few of the coin dealers and I don't see silver out of stock. If there was a shortage I would expect to see the dealers completely out of stock.

    Don't forget this is going to be another deflationary scenario the same as 08, although not as severe. In 08 margin selling took gold and silver down relentlessly even though supply had effectively gone to 0.

    Don't underestimate the power of human emotions to override fundamentals.

    The bottom line is that it's time for gold to move down into an intermediate low. That is going to happen regardless of fundamentals.

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  29. I haven't yet gotten my signal to short, but it's been close twice in the last two weeks.

    Equities are in transition from a buy the dip mentality to selling rallies.

    Waiting patiently.

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  30. We've officially broken down out of the bear flag on the HUI.

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  31. Gary

    will the intermediate low in gold be the conclusion of the D wave, or do you expect the D wave to happen later?

    not

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  32. I think I'm going to go down to IHOP and have me some blueberry pancakes :)

    Back in a bit.

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  33. I think the intermediate bottom will be it.

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  34. Dan,

    Try the options express iPhone app, u need a free account and don't need to fund it.

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  35. Cory,

    Props on your SLV put timings.

    Good work.

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  36. Silver has Fallen Nicely in 24 Hours,,Lets see if 50% Fib Level and Gap window ,,Supports short Term for a Little Consolidation ...or does it Slice right Past?


    http://screencast.com/t/3dFDin9nVb1b

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  37. Gary

    Would Proshares PSQ and REK be a reasonable way to short QQQ and IYR?

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  38. sure is nice to see some green in my account again. stayed in cash after the silver implosion. i learned a lot from that fallout. still swilling it around in my head making sure learn as much as i can from it

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  39. And the breakdown continues with the BKX. The signs were there all month for this smack down in this market.

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  40. Docjohn,
    REK has little volume. SRS is a x2 with a lot more volume. Worth a look.

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  41. don't be surprised to see green today.

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  42. Beanie must be on lunch break. I am sure he is having one heck of a day lobbying at the fed.

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  43. Gann,

    Good charts. That 36.32 level looks good (if we get there again) for a bounce top. It's the low bounce from yesterday and May 26th.

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  44. The last thing we need is Beanie to come by now and say to short silver.

    Beanie, can you come back and say silver is going to turn on a dime?

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  45. lets see if the monthly jobs will change the dollar trend
    like the do last months

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  46. If it doesn't then it will almost certainly reverse on Monday as it's too late in the daily cycle to have much more downside potential.

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  47. Gary,
    You don't mind REK low volume? 12,000 shares so far.

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  48. I didn't notice that. Probably best just to sell short.

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  49. Gary, are we still in the timing band for a cycle low on the SnP?

    Have gotten burnt before in Jan to jump in a trade too soon only to realise we had to rephase the cycles...thanks

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  50. Tradingez,

    The million dollar question is "what is the current USD trend?"

    Are we in an uptrend into a new cycle (trying to form a swing low ending the prior cycle) or are we in a downtrend still forming the cycle low?

    IMO, the winner by a nose (right now) is that we are in an uptrend into a new cycle. So, does this mean that we reverse back down on the jobs report?

    I'm confused.

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  51. Well, silver is clearly back to overbought level on the RSI 10 bar 5 min chart. Looking back at the past few days, any time you could have shorted and done well (stating obvious).

    This is the hardest part of trading for me....

    Is the trend our friend and another downdraft on the horizon? Or is this the turning point where I add more shorts and it grinds higher for a potential better entry.

    From the last seconds action before I post it does look like a rollover is coming again.

    Damn, trading bears is a bear.

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  52. Like Gary has said, puts are better than shorting because your risk is defined ahead of time. It also gives you the luxury of holding a few extra days instead of getting stopped out. I added to my position yesterday on the favorable candle, volume, and cycle timing. Just waiting for the dollar to pop. Looking to go long junior miners when gold reaches within 10% of it's last intermediate low as a preliminary target. Will be a bumpy ride. I lost 12% from the silver top, and am now higher than then, Gary has kept me cool through this D wave. I still prefer silver because it cycles with gold but gets dragged down with equities due to it's industrial uses. The volatility let's me get stopped out and still catch big moves if I'm wrong. If I can get to the A wave with equal or better reserves than the top of the C wave it will be a success.

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  53. Hotrod,
    The dollar is too deep in it's daily cycle to continue down for much longer. It certainly has almost no hope of making a new low at this point.

    We clearly have an intermediate bottom and stocks are telling us that a recession is coming. That means deflation and that means a higher dollar.

    At the moment everything is tethered to the dollar. Every little wiggle is transferred to risk assets.

    Once the dollar cycle bottoms and starts to rally for real everything should get crushed.

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  54. Gary,
    Ever consider playing this dollar rally with UUP leap options? Yes, it's a slow mover but premium is so little on this thing.

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  55. IMO trading bears is not much different than trading bulls (except the math as Gary points out; that is you cannot triple your money short a stock). There are violent rallies to be sure, but there are violent declines in a bull. You can "Old Turkey" in a bear market on the short side and not let the rallies bother you. You use them to add to shorts just like you add to longs on dips in a bull market. Once the sentiment gets overwhelmingly bearish you look for the exit, just like when it gets to bullish you do that in a bull.

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  56. Gary,

    So, it could be possible that we get a frenzy USD selloff tomorrow early, which might be the last possible downdraft before a huge surge higher.

    THis is what I am worried about before placing any more shorts today.

    What would you say is a higher probability:

    a) Big USD selloff followed by immediate spike higher
    b) Immediate USD spike with sustained move higher

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  57. I'm not sure sentiment is going to help us much during this bear. It's already too bearish and the daily cycle has only just rolled over.

    Sentiment didn't work very well during the last bear either.

    We are in a period of time that's only comparable to the 30's.

    What worked for the last 70 years isn't going to work now. The only thing I really have any faith in is cycles at this point.

    BTW I really hate trading bear markets.

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  58. Good points DG. And because sentiment in the stock market has not reached that euphoric, overwhelmingly bullish stage, the top is not in on this bull.

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  59. Gary
    In the portfolio when you say short 15% in each of those things, do you mean buy puts or what? cause I am pretty sure you are not suggesting 30% of a put position are you?

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  60. HotRod,
    It's pretty obvious we have a deflationary period approaching. It would take some kind of special news in my opinion to force a hard sell off on the dollar at this point.

    Besides do you really think you are going to time a perfect short side entry?

    I don't even try. The bear side is just too volatile. Just take your position with the plan to hold it into the intermediate correction and then forget about it. That's about the only consistent way I've found to make money on the short side.

    Trying to time a perfect entry will almost certainly guarantee you get whipsawed to death.

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  61. Haggerty,
    Short QQQ means short QQQ.

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  62. Torreo,
    I would think that myself but if the economy is headed back down into another recession, and it looks very much like it is, then nothing else matters.

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  63. "BTW I really hate trading bear markets"

    Why not trading DOLLAR, now that we in the timing band for cycle low?

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  64. I have a question if anyone can answer it. Say we have another recession and it get pretty bad. And the Fed launches QEIII, and it fails, again. What would likely happen then? What would be the likely government and Fed policy in this situation?

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  65. oa92000,

    Are you long stocks ? Man you're brave ! Even though dollar's down today, everything's red, so if dollar turns up, things will be toast. I bought GLD puts myself today.

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  66. QE2 didn't fail. It juiced the stock market and relieved a lot of the political pressure on the Fed. Trust me, there will be QE3, QE4, and then permanent QE.

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  67. Gary: What are your thoughts on having a position in CHF and possibly other currencies? I'm thinking of having a % just as a USD hedge..

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  68. David, QE-whatever failed (will fail) because it will lead to a worse economic outcome. Yes, there were certain short term gains; but there will be bigger long term consequences.

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  69. Nice afternoon bounce, now sell into the close or will we get an intraday reversal?

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  70. agree with Poly regarding loading up shorts here. Big down day yesterday, continued down this morning. Moreover, SPX just bottomed at the bottom of the channel drawn off the early May high AND the much longer term TL drawn off the March 09 low and the 8/27/10 low.

    I plan to start scaling in shorts in small size on a partial retracement of yesterday's and today's move down.

    IF Gary is correct regarding where we are in the cycles, then we should not see a move back above the 5/31 high. Unfortunately cycle analysis is not an exact science, so the market can always throw us a curve ball.

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  71. Note: I use a log scale for my charts. It makes a difference on very long term TL's like the one going back to the 666 low.

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  72. QUY,
    yes,I am currently long atml,cy, rvbd, nvda ..expecting ( or hoping) an oversold bounce.

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  73. Note to those trading in IRA accounts: You can't short in those accounts because shorting requires margin.

    So do this instead:

    short QQQ = PSQ (short etf, tracks inverse of QQQ0
    short SPY = SH (short etf that tracks inverse of SPX index)

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  74. Well, they just agreed on a 3 year plan for Greece. Let's see how long this bounce last.

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  75. The full ETF short list:

    SH = short SPX
    PSQ = short Nasdaq
    RWM = short Russell 2000
    DOG = short DOW

    Note: These are NOT leveraged (as in the double and triple shorts) so you should not see decay in these when market goes sideways like you do in the leveraged funds.

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  76. Regarding the jobs report usually being connected with a trend change, considering we've been heading down for the past week or so, including today, it should result in the dollar heading upward.

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  77. Something to consider if you want to short this market...

    The next 6 trading day/calendar day ranks (based on 50 years of S&P data). A higher rank is more bullish.

    June 2nd: Neutral
    149 out of 363 on calendar day avg return
    104 out of 363 on calendar day % positive
    113 out of 261 on trading day avg return
    32 out of 261 on trading day % positive

    June 3rd: Neutral
    166 out of 363 on calendar day avg return
    231 out of 363 on calendar day % positive
    94 out of 261 on trading day avg return
    121 out of 261 on trading day % positive

    June 6th: Somewhat Bullish
    80 out of 363 on calendar day avg return
    158 out of 363 on calendar day % positive
    64 out of 261 on trading day avg return
    72 out of 261 on trading day % positive

    June 7th: Bearish
    249 out of 363 on calendar day avg return
    271 out of 363 on calendar day % positive
    181 out of 261 on trading day avg return
    169 out of 261 on trading day % positive

    June 8th: Very Bearish
    296 out of 363 on calendar day avg return
    285 out of 363 on calendar day % positive
    240 out of 261 on trading day avg return
    202 out of 261 on trading day % positive

    June 9th: Very Very Bearish
    353 out of 363 on calendar day avg return
    353 out of 363 on calendar day % positive
    237 out of 261 on trading day avg return
    246 out of 261 on trading day % positive

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  78. Here's an excellent link with all ETF's searchable and categorized:

    http://www.etftips.com/

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  79. Lower low in the USD today, no potential swing (today)...

    We're lining up real nice for a real doozy tomorrow.

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  80. Gary: you wrote:

    "I'm not sure sentiment is going to help us much during this bear. It's already too bearish and the daily cycle has only just rolled over. Sentiment didn't work very well during the last bear either.
    We are in a period of time that's only comparable to the 30's. What worked for the last 70 years isn't going to work now. The only thing I really have any faith in is cycles at this point."

    All true, but look at it this way: If sentiment gets hugely bearish and you cover early because of that, you will have made a pile. I agree if we have a serious collapse we will reach new sentiment extremes and that will make it hard to play, but give me a 50% head start on my account and I will suffer through figuring out when to cover ;-)

    And it is not like I would be ignoring cycles.

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  81. A forex question for the group; If you wanted to go long the dollar, which currency would you pair it against?

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  82. I'd pair the dollar against the euro. I believe those guys are toast over there.

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  83. DG,
    When will you be initiating shorts and what's on your short list? I've never been good shorting and I would much rather just buy a 1x short ETF.

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  84. Deflation is a monetary phenomenon, not a credit phenomenon.

    And now gold is back to where it was on May 31.

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  85. Racer,
    I don't have any experience trading currencies so can't help you there.

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  86. Dan,
    welcome to trading the bear side. Markets go down differently than they go up. Maybe DG can trade these things. But I've always found it pretty tough to make money on the short side.

    I think you almost just have to hold your nose and jump.

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  87. I don't like the sound of that Gary!

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  88. As far as trading the short side, I treat it just like the long side. It's just a matter of taking my systems' signals. (Maybe like DG.)

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  89. Racer,
    EUR:CHF on a very long-term view is a great indicator and sentiment gauge.

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  90. Just to play devil's advocate ... consider the possibility that April 18 marked a shortened daily cycle for SPX. While short, it certainly meets your see-it-from-across-the-room test, Gary. If so, the following cycle could still be underway and within a normal timing band for a low, and with sentiment more typical of lows to boot.

    It's not a suggestion to load up the boat with longs, but perhaps to be careful shorting. Personally, I think cash is a better play at the moment than shorts.

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  91. Gary,

    Trading the bear side is even more challenging when there is absolutely no, zero, nada confirmation the market has even entered a bear. We are still a whopping 4% off the recent highs. Way too early to think about shorting anything beyond a day trade IMO.

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  92. Less is more,

    Interesting, thanks for that.

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  93. I wouldn't consider the April bottom as a daily cycle low. It came in the timing band for a half cycle plus we now have a bottom that is in the normal timing band and has broken the down trend line.

    Whenever I have a move that fits within the normal cycle parameters I don't usually look for reasons to invalidate it.

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  94. The only bull market out there treasuries? They moved strongly higher before QE1 and QE2.

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  95. T,
    But there is a very big confirmation. A daily cycle low has been violated in only 4 trading days. That also forces the intermediate cycle into a left translated orientation. An intermediate cycle that topped in only 7 weeks will almost certainly violate the prior intermediate low (a Dow Theory sell signal).

    That shouldn't occur in a bull market.

    This is why I use cycles instead of charts or pure statistics as you seem to be doing. They allow me to spot early when something is terribly amiss, and today's move is saying something is wrong.

    Besides one would have to assume that we aren't drifting back into recession to be long. It's becoming painfully obvious we are. Why would you want to be long the market when you know the economy is tanking?

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  96. Either way, you have to have a cycle outside normal parameters, yes? The current labeling for the daily cycle just ended ran 49 days, so the choice is between a shorter than normal cycle in April or an extended one at the end of May.

    My point, in any event, is not to push a bullish thesis, only to suggest shorting here might be less than optimal.

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  97. Well ever since QE was initiated the "normal" duration for the stock market cycles has stretched to 40-60 days.

    49 is right in the middle of the timing band.

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  98. Ryan: I have already started shorting. Just don't do too much to start and short gap up opening rallies (there will be some and they will fade by 10:30 a.m.) Add to winners but less than your original amount. There will be sharp meaningless rallies, but allow profits to shrink during them and hold fast. Cover some every time it seems like a there's a mini-panic has hit. Lots of people prefer puts because they don't get scared out that way. Right now I like shorting oil (lots of ways to do that) and buying EUO to short the euro. Don't try to shoot the lights out; just try for a decent return. And of course cover and go flat when the timing band for a bottom hits.

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  99. R,
    You are trying to time an exact entry into the bear. I have never had much success with that. If the market bounces then so be it the model portfolio will just continue to hold positions until the intermediate cycle bottom.

    If this tanks into the close or gaps down big tomorrow then you will be forced to make a decision whether you want to chase or not.

    There is no right or wrong here because we can't see the future.

    So for me the signal has been given. The daily cycle has been violated. A perfect entry isn't necessary.

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  100. Thanks DG, I might try that just start off small and see how it goes.

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  101. Gary,

    If one were to short gold here, at what price would you put your stop? A move above 1552?

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  102. Gary,
    I have a variety of time-tested tools in my toolbox that I use to enter and exit my swing positions. In full disclosure, I am mostly cash and have been for weeks. I am mostly day trading until the market signals that the correction is over. We are now in the 3rd year of the bull and this market will become more difficult to trade. A trader can never have enough tools, so I keep tabs on your cycle work. Let's see how this plays out over the next few months and then we can see who made the right call.

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  103. Gary

    Thoughts on gold priced in francs or euros into this intermediate decline? Dollar rally should hit everything.

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  104. I'm sure I'm missing something when it comes to cycle analysis, but if a normal cycle can stretch to 60 days, what precludes the cycle begun in mid-March from still running?

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  105. GLD GOLD Daily chart: Crazy Ride!

    http://screencast.com/t/dJsIGqCLV


    Just incase we Consolidate or head back up . I sold my Silver short Via ( ZSL ) Off the Table for Now,
    Thank the Lord, Made a Good Buck !

    Will wait and see what happens , with todays close, Just didn't wanna give any Gains Back, Gold is still in a Uptrend, i wanted to see Gold really selloff today,and Not! Rally back and leave a Tail... Final Hour lets see how they will close.

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  106. Gann360,
    Can you do up a chart for LVS? For the heck of it..

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  107. Eric,
    If you were going to short gold you would do so with the intention of holding till you thought the intermediate decline was done. There would be no point in stopping out now on the 18th week of the cycle.

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  108. R,
    The fact that the market broke the down trend line suggests that this is a new cycle that bottomed 5 days ago.

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  109. MR M

    Here a quick chart on LVS
    Las Vegas Sands:

    http://screencast.com/t/JsmJvKsfcrs

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  110. The dollar is not done with it's cycle low, I think we'll test and possibly break the low shortly.

    That will impact price behavior in stocks and commodities to some upside, probably including silver and gold (why wouldn't it?).

    The markets are currently just acting confused because investors are yet unclear about in which direction the USD will resolve. I don't see any imminent downside risk with the dollar acting the way it does.

    Cash may very well be about the worst ting to hold for the coming weeks and months. If the USD dollar breaks the recent low it will probably tank another 10% right there and then. That's 10% up in smoke for every one holding USD at that time. Cash looks like a high risk position here.

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  111. Gary,

    I think what Rosabarba is getting at is this:

    Let's say today's low holds for a while, for a couple of days or longer.

    Why couldn't we label TODAY as the daily cycle low instead of the low that was put in last week?

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  112. DG, do you mind sharing any short specifics? Your specific calls, or more in line with the current model portfolio? Thanks!

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  113. Gann,
    Thank you very much for taking the time to do that.

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  114. I'm going to wait for the jobs numbers before making any moves.

    I believe a horrible number, like the ADP number, is already priced in. What is not priced in is any upside action, like a jobs number at or above expectations, say 150k and above. Market is beaten up and will look for an excuse to rally and blow off some steam.

    If we get a strong enough rally, I will look to place my first SPY short around early afternoon, buying puts on a strong up day is like shopping a Thanks Giving day sale

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  115. Basil,
    The dollar has run out of time to make a serious attempt at the lows.

    I'll bet a burrito we get a swing either tomorrow or on Monday.

    We almost certainly have the three year cycle low in place. The odds of that rolling over after only one daily cycle are very slim. Not to mention the current daily cycle is right translated.

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  116. At what point is the D wave confirmed?

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  117. It's amazing how every daily cycle low convinces people the trend has changed.

    I'm sure once gold really starts to head down into the next cycle low the same thing will happen. All those who gambled on the long side will become totally despondent. Then we will see enough of a bounce to turn sentiment bullish again...right before the next move down into the intermediate bottom.

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  118. No offense intended, but right here you're losing me with this whole cycle thing. I don't see any of it working, certainly none of it short term. There is always a lot of leeway in terms of time, seems to be a lot of confusion, a lot of back and forth. Since silver made it's high, nothing I read here seems to work anymore. Right now I'm not buying any of it. Hope it's ok to be so blunt :(
    The way I feel right now is that I need to block off some of the noise, including Gary's, in order to be able to make good investment decisions right here.
    I'm staying out of cash and in agriculture.

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  119. PC,
    Because the down trend line was broken by the rally Tuesday.

    That stacks the odds in favor of the cycle low coming last week not this week.

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  120. Gary,

    ok, I'll take that bet :)

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  121. Basil,

    What's not clear about the cycles with the current action?

    I know re-characterizing cycles gets a little messy sometimes where it makes you a little skeptical. But in this case the equity, dollar and gold cycles all look very neat and clean. If you're going to follow any part of them, they're giving some fairly clear signals.

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  122. Poly,
    The problem is it's very hard to sell into a rally. If one is trying to time a perfect entry they are not going to accomplish that by selling into a rising market.

    It's like all the people who claim they will back up the truck at an intermediate low. When an intermediate low actually arrives it doesn't look like a bottom. It looks like the end of the world.

    Buying into that is incredibly tough to do. Selling a rally is also incredibly hard to do especially if one is worried about trying to time a perfect entry.

    Then again if the employment numbers confirm the ADP report we could get a hard sell off and you will have to decide whether you are willing to chase into oversold conditions. (The short term indicators have returned to neutral after today's choppy market so we aren't even actually short term oversold anymore.)

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  123. Basil,
    I'm not sure what you think isn't working. I said I would not trade gold because it's too late in the cycle. I said I doubted it would make new highs before rolling over. So far that is the case.

    I said the stock market was due for a cycle low. It did put in a cycle low. I expected more of a rally but that doesn't change the fact that I still expected the rally to fail. Cycles are worthless for calling tops as any cycle can be right or left translated.

    I said if the stock market broke the 1311 pivot we would be dealing with a failed cycle that topped in only 3 days. That is the case unless the market can reverse and make a higher high.

    There is always a small chance of that happening but the odds are too small to bet on it.

    So what is it about cycles that has failed for you? Were you expecting a perfect timing device that would allow you to day trade the market?

    Heck I only missed the top of the HUI rally by two days. Not perfect by pretty darn good wouldn't you say?

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  124. Poly,

    well, it's not clear to me. And btw, when I said 'you're losing me with the cycles' I didn't mean anyone specifically, also not Gary specifically. I guess I pretty much meant the whole blog. It might very well be my personal problem that at times I cannot follow the cycle logic. In no way I wanted to step on anybody's toes (like I did some times in the past).
    I actually would love to really get these cycles and use them as a tool at all times. I don't have the clarity about the cycles at this point. If you can lay it out for me in simple lay terms I'd be happy. I just see the cycle analysis say one thing one day, and the markets doing another thing the next.
    Again, no offense to anybody, I just have an 'Elliot Wave' moment with these cycles here... :)

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  125. Gary, those words ring true to me. I remember when the Dow plunged in '08 and the DOW bounced off 10500, and I said I'd be a huge buyer at 9000. Well, when 9000 came, it was frantic and it sliced through to 8600 that day and 7773 the next morning. I actually did buy a couple things, but it was just a Tonka Truck's worth. Good times... not!

    http://stockcharts.com/h-sc/ui?s=$INDU&p=D&st=2008-09-01&en=2008-10-31&id=p40712837794

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  126. basil, you stepped hard on my toes in the past. I'm still waiting for an apology

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  127. Human nature is on the way up you don't sell (greed) and on the way down you don't buy (fear).

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  128. Gary,

    I cannot say that you have been wrong with anything here, nor did I mean to say that. Btw, I have no interest in day trading, and usually no problem with buying at a low. Right now I am looking for an 'edge' as you some times call it; I just don't find it here right now, that's all. It's not your or anybody else's responsibility to find me an edge; it's my responsibility alone. I just think there's money to be made here (agriculture is one example, and I've been holding VNM for the past week until today); that's the edge I see, and I feel that generalizations on this blog (commodities are due for a big drop; the stock market will have a nasty drop) can lead me to second guess my positions; that's where I need to protect myself, and I guess voicing my 'contrarian' thoughts here, if you will, is one attempt to do that.
    That's all.
    So, for the reason and for others I happily take your burrito bet and say: The dollar will violate it's recent low within a month or two.

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  129. For me personally, it's important to think of cycles or any of the countless systems as fallible in real time!
    You get into trouble thinking you've found a system that works all the time, it just does not exist. Sure you can re-characterize cycles to fit the defined framework and state they are always right, but you can never be 100% (or anywhere near) in real time.

    Not to speak for Gary, but he often speaks in absolutes when describing a given cycle setup, which can be offsetting, when really what he is saying is that the best scenario with the highest probability is XYZ based on the cycle makeup.

    Once you understand the multitude of possible outcomes within a given cycle framework, it greatly assists the trader in defining probability of any given trade.

    The goal is to improve the accuracy of probability associated with each trading scenario/strategy.

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  130. I did buy Microsoft at the open in October 20th, 1987. No computer access back then, I had to call my broker 20 times before it rung through. Just 30 shares (about $1.5k) which grew to over $120k before my ex sold them in her IRA.

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  131. Gary,

    I think for most people, you're right, it's tough to sell into a rally, tough to buy into a falling market. Somehow, though, Poly manages to do it. I think it's because he uses options so often and has seen what a rally does to the put premiums and what a move down does to the call premiums. If you're playing options--any other options than very deep in the money--then buying puts when the market is rallying and buying calls when it's tanking gives you the best bang for you buck.

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  132. PS:

    Another thing is that I am still holding a physical silver position. I actually don't want to sell it. When I contemplate your price target of $21, or even what 77 wrote here two days ago (posted a good link to an article that predicted single digit silver with some impressive statistics to back it up) I should probably pick up the phone and sell my physical silver today. I guess what I am trying to say is that it's some times not easy to draw a line between one's own decision and all the noise out there that is potentially impacting you to a degree that it becomes impossible to make a decision and stick with it. In my view that's the whole problem with day trading, because I think day traders day trade simply because they cannot make up their mind; at least that's how I was when I tried day trading. It drove me nuts, because every day I saw some good reasons to reverse any trade I've made the previous day, etc. Long story short, I always enjoy reading your reports, yet I am not convinced that we are looking at the first leg of a sustainable dollar rally and I am not convinced that everything else is set to drop steeply.

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  133. Poly,

    I guess it is exactly that 'multitude of possible outcomes' that makes it seem random some times, short term that is.

    Thank you for your explanation.

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  134. E,

    I made a general apology to everyone who I might have offended in the past. That included you and includes you. If I stepped on your toes, I was wrong.

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  135. I believe that's your problem, that you think it's being sold to you as something that will make your trading go auto-pilot. That it must behave a certain way.

    Cycles just help define and visualize those possible outcomes that give you the best probability of succeeding.
    It's just a numbers game, over time you will win more (trades) that will show up in the averages (account balance). You still need a personal framework to trade cycles with.

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  136. Poly,

    yes, exactly, because to me it seems a bit like EWs. You're never wrong with EWs, because you can shift and change and explain everything in hindsight. Looks to me like that's what happens with cycles too some times; so I haven't figured out yet how that can help me. Nevertheless, I saw the cycles work August to April. I have yet to see that wasn't just coincidence. The jury on how Gary's cycles will play out on commodities, stocks, and dollar is still out.

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  137. Basil - you may consider pairing some LEAP PUTs far from current spot price to protect your physical holdings for cheap. Not much downside either way the price moves...

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  138. That's not what I meant though. Gary is not trying to "fix" a broken system or cycle by redefining the cycles.
    Redefining cycles after the fact, is extremely important as it's required to set the framework for understanding future outcomes/setups.

    You have to lose the mentality that it's black or white because the cycles say so. There are always any given amount of trades/scenarios/outcomes to any setup, Gary likes to give you the most obvious or highest probability setup based on how it fits within the current cycles. It by no means should discredit Gary or Cycles if that outcomes did come through.

    I don't see why you would expect anything more than just better trading odds from any system.

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  139. "Nevertheless, I saw the cycles work August to April. I have yet to see that wasn't just coincidence."

    Last point people fail to grasp or what to learn. Cycles are LOW TO LOW points. They define that framework. What occur in between is up for debate, hard to predict and can vary greatly. Focus your trading style/system around the LOW end points and it will provide you with much more clarity.

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  140. Mr. T,

    thank you. Will look into that, even though I tend to shy away from using options. If you could explain what that specific one does exactly and how it could and should be traded, I'd appreciate it.
    Thanks

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  141. Every day you are on here with multiple multiple posts arguing and questioning everything. Critique is very valuable and welcomed by everyone i am sure but....

    Point taken! if the dollar goes down 10% in the next month or two you will be right.

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  142. Christian,
    The last daily cycle low occurred on May 25 at 1311. The move today violated that pivot.

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  143. Poly,

    that last point gives a good guide line; I think that's the right approach.

    However, the times for the lows can shift dramatically, e.g. four year cycles can change to two, three, or fives years. So even low to low can be questionable, in my view. But, if it is not already obvious, I have no deep insight into how cycles work and am interested to find out more. So far, I am only judging from the facts after the cycle analysis.
    And again, I am not blaming anyone and their work. I am just giving a feedback. No one knows is that four year cycle low in stocks for example in 2011, 2012, 2013. No one knows how low we'll go on that particular low. So what you are saying, if I understand correctly, is that we know it's going somewhat lower some time during the next three years and based on that we need to find the best odds for our trades?

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  144. Aklaunch,

    you are wrong. I am not posting every day by far, most days I am away from this site. If I post, there might be five, six posts on average. If that's too much for you, just skip reading them. As a reader of this blog and subscriber to Gary's newsletter, I like to voice my opinion just as you voice yours.

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  145. Basil,
    that is correct. We can't know ahead of time if a cycle will stretch or contract. All we can do is go with the average duration. That will get us close most of the time, but occasionally we will be way off on a stretched cycle.

    That is one of the limitations of cycles.

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  146. with today's gold/silver action, i am still surprised and part worried that we are not seeing a big drop that we were all hoping/wishing for? what do you guys think?

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  147. E,

    I am just a little concerned with all tails were seeing on all the charts today. Its the first day of the breakdown for silver, hui etc. and we have all these tails everywhere as if we were already bottoming.

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  148. Gary, Where do you see gold falling to during this current daily cycle?

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  149. meaning at the daily cycle bottom, which should be next week?

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  150. Gary, you said "The last daily cycle low occurred on May 25 at 1311. The move today violated that pivot."

    The low today for spot gold was 1518. Where did it violate 1311?

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  151. Sleeper, you deserve to be shot for asking that question

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  152. Sleeper

    1311 on spx not gold.

    Le Fou

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  153. E et al,

    How embaressing! My bad. I'm so tired I can't see straight...

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  154. Cool,
    I'll tell you in 5-8 days.

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  155. Sleeper, no big deal. You should see some of the garbage I ask on this blog

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  156. Dan,
    the sector was down despite an extremely weak dollar. What does that tell you?

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  157. OMG BEANIE!! Give us your prediction! Please tell us that stocks & commodities are heading UP UP UP!!!!

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  158. Gary, considering how very long this C wave was for gold, do you see the A and B as equally pronounced as the C or do you think they'll be of average duration?

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  159. Gary,

    Just want to go over worst case scenario for a sec.

    What happens if gold intraday tomorrow trades over 1551?

    This will negate the swing correct?

    If (big if) this happens, how would you typically explain it (hypothetically).

    Thanks

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  160. cool,
    I really have no idea.

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  161. hot,
    It would just mean the cycle hasn't topped yet. It will top, it always does.

    Right now the weak dollar is propping gold up. Once the dollar cycle bottoms gold should succumb to gravity.

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  162. gary ,
    get a rest & watch LBJ now!

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  163. Gary
    Let me ask you a question, on day 15 one could have said that gold had a swing high on that day right? But was then negated by day 16's rally. Now, being that we are on day 19 tomorrow 20, that makes this swing high more likely because of how far we are in it's timing band for this daily cycle right?

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  164. Yes the deeper we get into the cycle the more likely a swing will mark the top. The same applies for the dollar.

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  165. I think Gold is setting up for a serious fall here. One of the key buying interest as of late has been Europe buying gold in Euro because of the Greece debt issue. Well, they agreed on a 3 year plan (kicking the can down the road) today. As soon as USD gets it's footing, i think the next move up in the dollar is going to put a real smackdown in the gold market.

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  166. EricH, gold looks very sickly to me

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  167. I think I was one of the last gold c wavers. This morning when gold failed to stay positive I bailed and flipped into my D wave positions.

    Gold looks too much like silver did on the crash and partial retrace, I am thankful it did it during market hours.

    I am going to see if I can sit on these trades short as I sat on them long.

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  168. Bob,

    Your post was music to my ears an eyes.

    Tremendous news.

    Did you flip "all in" or are you starting with opening positions?

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  169. I dug up Beanie's blog from old posts. His post today was a JPM article with positive spin on the economy.

    And down goes Frasier.

    http://bettertrading.blogspot.com/

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  170. Poly:

    I really like your (re)interpretation of Gary's forecast. I would appreciate if you could do a few of those in the future, so that I can see both sides of the coin. I also would appreciate the expert on the Board to complement Gary's post with discussion of other factors that might also be coming up. For ex, for yesterday, with Gary's prediction on the turn of the dollar, coupled with employment number (which most knew was going to be bad), and the "sell in May" ..., I mean there are a host of things which I can only put together after the fact, but am hoping that the experience traders on the blog would see and consider discussing them, so hopefully we can come up with providing some more alternatives to Gary's.

    Thanks much for all the analysis and discussion.

    Basil, I think ak is being appreciative like me, not criticizing your posts...

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  171. Weird thing happening to me on Stockcharts.com. I'm not a subscriber. I just use free charts. But today, for some reason, I can't get candlesticks on my $USD, $GOLD & $SILVER charts. It says "candlesticks" but the chart is a line chart.

    Anyone else having this problem?

    Best,
    Le Fou

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  172. Bob, What are your some of the gold d-wave positions, appreciate if you can post.

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  173. Great report tonight, Gary! Wish I were in Switzerland... have a wonderful time!

    I took the long trade, and did not feel slighted about its failure. gary's explanation in the report makes good sense, and my expectations are pretty low anyway, at least until the A-wave.

    Now I have my short trades, and we shall see. Will add to them. Maybe.

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  174. Anybody feeling DUG, SDS/TWM or a gold short yet? The report was pretty explicit about where we sit... Anybody riding the D wave plays? Thanks!

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  175. KAL, I'm short SLV and Russell 2000

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  176. KAL, I bought OTM Put options on SLV and IWM.

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  177. Le Fou,
    I am having the same problem with Stockcharts. I submitted a problem report to them on their support page. Others should do the same if they are having a problem since that might elevate the priority for getting it fixed.

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  178. stockcharts said they no longer get open and closing data for commodities.

    Sounds like they just don't want to pay for the extra data.

    I told them I wasn't happy.

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  179. I bought some SLV july 25 puts this morning. That 100,000 buy the other day has me intrigued. Lets see how it plays out.

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  180. bamster,

    I believe the 100k order was (order to close)

    the OI has dropped considerably since then.

    Just a heads up

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  181. Interesting data point. From silver and gold prices blog.

    Gold/Silver ratio today gapped up to 42.32 (basis Comex close), above its 20 DMA at 41.99. Bear in mind that when a market crosses the 20 DMA that flashes our first signal or confirmation that the momentum is up. An upward ratio usually means falling SILVER and GOLD PRICES.

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  182. I shorted the three highest fliers; silver, oil, and the Russell 2000. Also a very small starter position in SPY puts. All July.

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  183. Thanks for the heads up Jerred.

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  184. Eamonn,
    Can I ask which slv puts you bought? Thanks.

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