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Thursday, June 30, 2011

STRIKING SIMILARITIES

It appears that the approval of Greece's austerity measures has finally halted the correction in the stock market. But has it really?

I would suggest that this correction has never been about Greece. The market has known for over a year that Greece would be back looking for more money. Let's face it no one is under any delusions that Greece is going to be able to solve their problems. Greece is going to default, there's no avoiding that. What the EU is trying to avoid is a domino effect of cascading sovereign debt crises.

Last summer the crisis was solely centered around Greece. Does anyone really believe that this is going to stop with Greece this year? I doubt it. I suspect in the next week or two were going to see bond yields spike in Spain or Italy or Portugal, or maybe in all of the PIIGS. 

What started as a financial crisis in `08 has now infected sovereign debt as countries around the world have acted to bail out the banking system. I really doubt that this is going to start, and stop, with Greece again this year. As we found out during the real estate bust, there is never only one cockroach.

Striking similarities to last years correction are now starting to pop up. In May of last year the market put in what looked like a final intermediate low. It was followed by a higher low and higher high. The only problem was that the daily cycle was too short for the May bottom to be a final cycle trough as the bottom had occurred on day 13 and a normal daily cycle runs 35 to 45 days.


I also noted on the chart that we saw a large selling on strength day (smart money distribution day) one week from the top. The market then proceeded to move down into a final intermediate low in the normal timing band. I can tell you that many technicians got caught during the May bounce.

Now take a look at the current chart.


This time the market appears to have bottomed on the 15th day of its daily cycle. Again we have a pattern of higher lows and higher highs, convincing technicians that the bottom is in. Also note that we have another large distribution day just like we saw last year.

We have been expecting some kind of counter trend rally all along because sentiment had become too bearish by the middle of June. In order for the market to continue lower we were going to have to see some kind of relief rally to work off the oversold technical and sentiment conditions. The question is, is the rally for real or is it a counter trend move to be followed by another leg down. In bear markets the counter trend moves are very convincing.

I tend to think that this is probably not over yet. If the daily cycle runs a normal duration then we should look for a final bottom somewhere around July 22. However Congress is going to vote on the debt ceiling August 2. It's possible that this daily cycle could stretch just a bit long and bottom on that vote.


Traders should probably be careful about placing too much trust in charts right now. Last year trading the charts suckered investors into the counter trend rally only to drag them down into a final intermediate bottom.


One final note. The market is now nearing the 50% retracement level. This is the same level that turned back the market last year.



512 comments:

  1. Gary-

    Nice summary.

    I've been wrestling for a few days with S&P daily cycle counts. As I look at the charts, it makes more sense to me (visually) that the April 18 half cycle low is actually a shortened (22 days) daily cycle low. That would leave the recent low (June 16) as the bottom of a 41 day left translated cycle, meaning we would be 9 days into the current cycle.

    Is rephasing the cycles like this in violation of any cycle count guidelines (I'm thinking in particular about the potential 22 day cycle from April 18)?

    The primary impact would be current cycle count.

    Thanks.

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  2. The April 18 low would actually be 23 days...:). Oops.

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  3. Gary,

    You always seem to be predicting six sigma events. Gold should have melted up, the dollar should have collapsed, countries will implode, there will be hyperinflation, etc...

    This is the same marketing strategy that Bob Prechter uses. Sensationalism.

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  4. Gary,
    thanks for the post.
    It's funny to see how fundamentals or big news tend to align with corresponding cycle lows or highs. One chapter in Elliot's Nature's Law states just this; that news are no more than buzz and that the cycles are always right. Bit extreme of course, but this was in the mid 40s, yet I do think it resonates quite true today as well!
    Maybe it is as always the mainstream who wishes to keep the public stupid and unaware of the great cyclic nature of our existence and therefore tags a news event to all highs and lows as an explanation! Hmm...

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  5. I'm not sure what is sensational about this post. I'm just showing where the cycle low should come in at.

    BTW gold and especially silver did melt up. Gold was about $50 shy of my target but close enough.

    The dollar has quite clearly collapsed since 2001 and when priced in gold the collapse has continued this past year even though the dollar index hasn't as it is measured against other worthless currencies.

    Iceland & Latvia have already imploded. Greece is imploding. Ireland, Portugal, Italy and Spain are knocking at the door.

    Sovereign debt crises are what precipitate hyperinflation's. The world is clearly headed down that path as we continue to bail out every crisis instead of letting the market cleanse. If we did that then hyperinflation could be avoided. Realistically what do you think the chances are of politicians doing the right, but very painful thing?

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  6. Gary, There is a typing mistake in the blog: a final bottom somewhere around June 22.

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  7. Re-posting from previous blog entry.

    Gary,
    I read from another source that QE2 is not ending until mid-July.
    "The Fed is scheduled to purchase around $4.5 billion worth of Treasury debt on June 30, and then there are a couple more $3 billion purchases on July 6 and 11."

    So actually there are a few more weeks of the Fed's injection of liquidity.

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  8. David Kafrick,
    do some study in economic history and see how many nations get away with debasement of their currency the way USA is doing now, and what the ECB will shortly start (who legally cannot do any printing by the way) with to continue these bailouts.

    If you find any please share it with us here. Until then, realize that the USD is doomed until the government cut some 1 trillion dollars per year in spendings and instead start to raise interest rates to more normal levels again.

    As for your other comments, well, just wait and see.
    Regards,
    Christian

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  9. TJ

    The current cycle on day 9 would really throw a spanner in the works.

    I understand what you are saying though. I'm trying to apply cycle counts to my local market and some of the counts are a bit of a struggle, even with the benefit of hind sight.

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  10. TJ,
    April 18 was a half cycle low not a full daily cycle low. The decline into the April 18 half cycle low defined the trend line for the current daily cycle.

    That trend line was broken in May signaling the move down into the daily cycle low had begun.

    The rally on May 31 broke the down trend line signaling the daily cycle bottom was in and a new cycle had begun.

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  11. Silverhound-

    I could be missing something, but I do not see a S&P Daily cycle rephasing as that big of a deal in terms of its impact. It might push the Intermediate cycle to the longer end of it's timing band, but that's about it.

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  12. Gary-

    Ok...thanks. So it's a trendline break thing- let me chew on that for a while.

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  13. You still wouldn't short SP500 at 1315?

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  14. TJ

    It could potentially change where you would be expecting a cycle low to occur?

    It was more of a tongue in cheek comment. I was mainly agreeing with your comment about coming to grips with interpereting cycle counts.

    Please accept my humble apology if it came across in another way.

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  15. Siverhound-

    Absolutely no apology needed...I thought your question/comment was on point, so I took it at face value. I've been trying to get my thoughts around impacts...but Gary's comment may make the discussion moot. :)

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  16. Gary, how does one measure Selling on Strength or Buying on Weakness? Thanks.

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  17. TJ

    The trendline break helps a lot in identifying the cycle lows. Doc shows this a lot on his charts if you're a sub there.

    I know the cycles aren't meant to work on individual stocks but I have a daily and weekly cycle count worked out for one of the junior gold miners that I trade. As the stock aproaches the timing band for a low I just use other TA to pick the low and a cycle trendline break as confirmation. It's helped me trade the counter trend rallies as the stock has trended down over the past few months.

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  18. skoje

    http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=topnav_2_3000

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  19. Silverhound-

    I am a Doc sub, and I am familiar with his use of cycles, but I had not considered them as definitive a tool as it appears I may need to.

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  20. FSR,
    I will not be shorting the S&P until we are in a confirmed bear market. Bear market rallies are just too tough to time the top and too easy to get whipsawed into losses.

    We are getting a first-hand example of how hard it is to make money on the short side, even though some seem to think it's easy. I daresay no one thinks this market is easy.

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  21. W the I,
    Hey Man, what do you think?

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  22. 86,

    You were missing in action yesterday. What do I think about what brother?

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  23. Allenupl,

    The additional purchases of treasuries in July is just the continuation of the Fed rolling over the proceeds from maturing bonds and prepaid MBS.

    Just to clarify one additional point, POMOs (Permanent Open Market Operations) are not just something that occurs during QE. POMOs are a monetary policy tool that the Fed has always used to control the money supply and implement their Federal Funds Rate target. Contrary to popular belief, the fed doesn’t set an absolute Fed Funds Rate but instead buys and sells treasuries through open market operations to manipulate the rate. This is why it’s always quoted as a target range (currently between 0-0.25), because they can’t control it precisely. So even after QE ends, you will still hear about open market operations and the purchases of treasuries. The formal $600B expansion of the balance sheet is coming to an end.

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  24. What do I think about you being a big brown, talking dog, surrounded by women?

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  25. This comment has been removed by the author.

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  26. This whole scene. I think we`re There. I think the $ did what it needed to do and now it`s just sweeping the floor and heading out of town. Of course I`m probably wrong. Which means I`m probably right. A double double cross; like a swastika......

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  27. If the market continues to rally George Washington is going to die again.

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  28. You really are insane, lol.

    Tupac will come back from the dead over 1350, as will Princess Diana.

    If the market reaches 1350 hell, I'll be dead!

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  29. 86,

    I think I can say one thing with certainty (although nothing is certain here) Gold is still going to melt down, whether its going to be a normal correction or a D-wave is still to be seen when we near the 150sma

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  30. Eaten Silver,

    I thought Tupac was still alive??? lol

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  31. This counter trend rally has had me sweatin' ballz.

    I had to put myself in an induced coma yesterday just to bear it- pun intended!

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  32. I think the $ needed to hit about 74.5 and it was reall close overnight. did you check bb on spy? Popping it`s cork like a bartender at a mob wedding!

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  33. I'm out for the day and probably weekend, have a good 4th everyone!

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  34. Here is my post from last night. Lets see how things play out today.

    "Gold closed at the 60sma today, and tonight the futures are hitting resistance at this level. If we dont break the 60sma early morning or tomorrow gold will have begun a meltdown within 3 days of its bounce off the 75sma, which seems to be much quicker than previous intermediate declines, it looks like this only happens in D-waves. I said today that if the bounce off of the 75sma is short lived (1-2 days) I would begin to lean toward the D-wave side instead of a normal intermediate correction. Although gold is beating to its own drum right now I think the dollar would have to reverse tonight or tomorrow for gold not to break above the 60sma and continue its normal crawl along the 75sma for 4 or so days before heading to its next support at the 100sma. Lets see what happens."

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  35. 86,

    Speaking of the mob, I think they are running the market right now, their shaking down Bernank.

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  36. GARY, I appreciate your opinion on shorting and glad I closed them last Friday. I started yesterday a small EUO
    position as pocket change. Have a great 4th week-end and same to all the rest of the GANG:)

    PS: Big speedboat races here in Sarasota as a highlight.

    SB: Glad you are making the $$$

    ReplyDelete
  37. I read that this morning and I agree. It`s like it just figured it`s time to roll and forget the pleasnantries. spy looks like it wants to take out 38.2% fibo.

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  38. Traderlady,
    thanks, you too. the races sound really neat.

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  39. We still have that upper trendline on the S&P , still got some room to rally before we test it. S&P is in a wedge pattern now, if its going to break above that upper trendline it probably won't happen until we are 3/4 of the way down this channel, which is weeks from now.

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  40. This comment has been removed by the author.

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  41. S&P is smack up against that 50sma, this may be the last time I will consider shorting the market.

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  42. I think it`s starting to struggle to stay here.

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  43. Gary

    Interesting post. Isn't a bit academic is you expect S&P to bottom at 1250? (your expected low at july 22nd or Aug 2nd). On the off chance that the scenario doesnt play out a longer term oriented investor should buy at 1317 with a risk of 1250 low or 1400 (or perhaps the old high of 1500) on the upside. I assume you think gold will bottom at around the same time so buy now at 1500, with a risk to 1400 if you are right (and 2000 if we your scenario doesnt play out and we plough higher). Thanks

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  44. For one to believe that the market is going higher they would also have to believe that the dollar has not put in its three-year cycle low.

    We will find out very soon as the dollar is due to put in a cycle low any day. If the rally out of that low crashes the market then there will be very little doubt that we are in a cyclical bear market again.

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  45. White,
    We should be able to time our entry into gold a little better than that. The daily cycle usually runs 20 to 25 days and it's only on day 13 right now. Waiting at least another couple weeks would improve our chances of getting much closer to the bottom.

    I think it's a big mistake to assume that what is happening at the end of June with window dressing and the last day of QE2 is going to continue into July.

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  46. It's been mentioned many times before but if you look at Kitco's gold chart, it seems to be following along the dips and peaks of the past 2 days.

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  47. gary,

    is it forming from 6/27 a bull flag on USD index daily?
    thanks

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  48. Gold needs to start bleeding so we can turn this green candle to red on the weekly.

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  49. Thanks Gary,

    I assume then your low is 1250 for S&P July 22nd - Aug 2nd as per your chart. DXY is falling again as would expected with market rallying, would you expect peak DXY strength at your July 22nd - aug 2nd low, if so what would your target be? 80?

    For the record am short EUR/USD but will change my mind if we break 1.485. S&P I am in your camo but will change my mind if we break 1320 ( then we go to 1400 plus)
    Gold looks good here at 1510 either way

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  50. Would someone please post a link to "Kitco's gold chart" that Mr. Miyagi is talking about, thanks.

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  51. 86,

    All but one intermediate cycle decline in this C-wave had red candles on the weekly until we bottomed. I should relax though, I didnt eat yet.

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  52. sorry that should read "ïn your camp"

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  53. White,

    Take a look at a weekly gold chart, you'll get a better look at the big picture.

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  54. WTI,
    yeah, put on some BBQ to warm. These exciting mornings burn fuel faster than normal. Did a couple briskets on the grill for about 25 hours. I bring the mesquite and pecan back from tx.

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  55. Mostly filled up now, zsl and dug. I`m usually early too.

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  56. I dont know much about bonds, maybe someone here can help me out with this question.

    My mother-in-law just took her savings out of an income mutual fund and put it into bonds, if the dollar rallies bonds will rally also, correct?

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  57. 86,

    Briskets with mesquite and pecan, I never tried any of that, I have no clue what mesquite even is! All I eat is chicken and vegetables, im going to grow feathers and a beak soon.

    I just told my wife I was hungry and need to eat, ya know what she tells me? "Again?" I told her dont worry I will wait till next week.

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  58. Well here we are at the top of the hill, if the cycle counts are correct, we should have a nice short SPY entry point (discussed couple of days ago) now on our plate, IMO.

    Much harder to do after a 4 day $5 SPY rally right? :)

    Popped above the 50dma, cleared extreme bearish sentiment, still in a failed daily cycle with quarter ending, QE ending, positive Euro news priced in and the dollar should find a low here.
    Entry here with a fairly tight stop has a great chance of working nicely with little risk. Small trades, just a thought.

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  59. S&P back above the 50 and also above the BB bands. This is not a market to be messing around with a short position.

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  60. 2 posts at the same time at opposite ends.

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  61. We are right up against that upper trendline on the SPX.

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  62. And heavily stretched past the 10ma.

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  63. Miyagi,

    this is michael, do you mind if a send you an email?

    Thx

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  64. WTI,
    Excellent as always! I`ve been watching spy and we`re just `that much short`!

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  65. Eric,
    Exactly, until a bear market is confirmed one is just guessing with shorts. If the bull isn't finished then you're going to get run over.

    As I said we will not be shorting again until we get complete confirmation that a bear market has begun.

    One needs to be sure that the cyclical trend is in their favor if you are going to be selling short. You need to be assured that the bear will correct your timing mistakes.

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  66. This will be the best week since November 2010. We all know what happened afterwards.

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  67. Like I said before, if anyone were considering shorting this market, now is the time.

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  68. Michael,
    Go ahead slantyagi@gmail.com

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  69. 86,

    Gary definitely dont agree with my last post...lol

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  70. Already past the trendline on the Qs, just short of fibo.

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  71. I've been watching Dr. Copper for the past month and it's refusal to join the bear party the past few weeks was a sign that this bull certainly isn't dead yet.

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  72. Copper above 4.2 is a good sign for the bulls.

    http://www.finviz.com/futures_charts.ashx?t=HG

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  73. WTI,
    And that`s what makes a market. And whos to say your both not right? Just when is the question.

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  74. William,
    The short answer is there isn’t necessarily a cause and effect relationship between the dollar and bonds (or stocks for that matter), and it all depends on why the dollar is rising. I don’t want to bore you with too much detail, but bond prices are typically a reflection of investor’s inflation expectations. If investors are anticipating inflation, the price of bonds will fall because it is expected that inflation will eat up the purchasing power of the bond’s future coupon payments (coupon payments are fixed over the life of the bond). The longer the duration of the bond the greater the impact inflation will have on the price of the security. Alternatively, if expectations are for deflation in the future, investors will in theory be willing to pay more for bonds. In this case, the purchasing power of the bond’s future coupon payments will increase relative to the declining price of goods in a deflationary environment.

    Now in the case of today’s market, you might expect that a rising dollar will be negative for stocks and therefore cause money to flow into bonds (flight to safety trade). However, this relationship doesn’t always hold up as stocks would do well in a rising dollar environment if it were due to a strengthening economy. To complicate matters, there are unfortunately more factors (Fed’s actions, manipulated yield curve, flight to quality trade, mechanics of QE or operation twist, etc) at work here affecting bond prices than just inflation expectations or the direction of the dollar. Therefore, as is often the case, the answer to your mother-in-law’s question becomes “it depends”.

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  75. Small position? what is that, like wing tips vs. breasts and leg quarters? Lol. a little chicken humor there,,,,,,,,

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  76. Hey William

    Your Cup n Handle pattern on the SnP can't happen at the bottom of a down trend, it needs to have an up trend leading into the cup. You are just looking at a "rounded bottom".

    But you knew that didn't you ;-)

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  77. 86,

    LOLLL..yup. Im eating BBQ chicken right now.

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  78. PST,

    Thanks alot, very well put, I understand completely.

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  79. or is that Chicken Little; `The snp is falling the snp is falling!!!`

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  80. Silverhound,

    I knew that..I was just trying to create my own new cup and handle pattern!

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  81. I love these flag waving holidays, so predictable...

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  82. Gotta get to the other job fro a while. We`ll see what happens after lunch.

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  83. Gary: You posted a day or two ago, something like "Where did I say such-and-such?" when someone alleged you made some claim. I will ask you now, then: You posted: "We are getting a first-hand example of how hard it is to make money on the short side, even though some seem to think it's easy." Can you show me where someone said it was easy? Trading is never easy or everyone would be rich! It is not "easy' to be long during a bull market or you wouldn't need to encourage people so much through drawdowns. Weightlifting is not "easy" but you have worked at it anyway and become world-class at it. Actually, nothing worthwhile is easy. I am not sure why you keep saying it's not easy as if you are responding to someone when in fact you are responding to no one...? Please forgive me if this is a little strong, but you say it quite consistently and I am hoping an explanation will enable me to read it differently.

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  84. My money's still on the red days returning early next week to form the left shoulder of the HnS pattern.

    If this green does push on into next week though there's the possibility of a "Head test" before moving down to trigger the neckline.

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  85. hi DG,

    please post when you get a sell/buy signal or anything...

    with the market up 4 straight day, hopefully you'll get a sell signal soon

    thank you

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  86. Anyone know how to do those fibro trace lines in stockcharts as per Gary: http://2.bp.blogspot.com/-zifh9riOqCQ/TgxSo_-T9uI/AAAAAAAADcQ/gltglYAwUMU/s1600/retrace.png

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  87. DG,
    I find riding a bull market immensely easier than trying to short.

    For one thing bottoms are often an event, and cycle analysis is a decent tool for spotting bottoms.

    Tops on the other hand are often a long drawn out process with multiple whipsaw's.

    All in all I think most people will find it much harder to make money selling short than buying long.

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  88. SPX Daily Chart: http://screencast.com/t/dJdIjnyr4

    Are we close to A Resistance Level Here ?

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  89. This comment has been removed by the author.

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  90. Eamonn,

    Today we retraced above the 50% level.

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  91. the down trendline from 1370 also sits right around here...this might be a great place to short with a tight stop (risk/reward in our favor)

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  92. Eamonn,
    Right under the macd on your stock charts chart, it says annotate. Click on that and it will bring up a separate chart. That is where all the goodies are hidden.

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  93. 86d4life, i got it, thanks :o)

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  94. Gary;

    We are at the upper range of the downward trend line which I show as 1320. If the market breaks convincingly above this then I believe that we will go higher.

    Comments?

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  95. DG, I don't think Gary meant anybody in particular said it was easy -- just that a lot of people actually do think it's easy and ought to stay away from it.

    With the monetary inflation bias of perhaps 4% over the past lifetime, it's no wonder it ain't easy. Bears must go upstream against that bias, meaning any timing window is that much shorter.

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  96. inflation of 4% per year, that is, often much higher.

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  97. Gary. Easier to be long, for sure---I agree completely. Easy...hmmmm.

    Ben: I have never seen anyone in my entire trading life say "shorting is easy." Not once in 38 years. Saying "people say" and then countering what "they" say is usually a way to attempt to distinguish yourself from the crowd, but it just doesn't ring true for me...especially if no one ever says what it is alleged "they" say!

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  98. Hack,
    I think what happens today and tomorrow is basically meaningless. The real test is going to come next month as the dollar rallies out of its daily cycle low and QE2 comes to an end.

    Right now we are seeing window dressing and an attempt to create momentum before QE2 stops.

    Basically for the market to continue higher one has to believe that the dollar has not put in its three year cycle low yet. If that's the case then we will be sitting pretty at the bottom of the intermediate gold cycle ready to ride a massive rally into fall.

    If the dollar has put in its three year cycle low then the gold rally should just be an A-wave and stocks are going to falter once the dollar begins to rally again.

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  99. Gary,

    If the dollar has not put in its 3 yr cycle low yet, then when would that occur?

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  100. Nike: I usually post signals that I think are actionable. My all-market sells are not nearly as good as the buys, BTW. The individual ETF sells are quite good. I am just not seeing anything worthwhile at this point .

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  101. William,
    Presumably it would occur if the current intermediate cycle rolled over into a left translated orientation that would be due to bottom sometime between early September and early October.

    It doesn't fit very well considering the last two three-year cycle lows occurred very early in the year. But it is a remote possibility.

    A final C-wave top very early in the fall also doesn't line up well with gold's historic tendency to top late in the fall, and often in early December.

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  102. Sold my SPY long for +3.3%. Taking profits here...

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  103. Gary, how will you know when to get out of the A-wave? As you say, cycles are hopeless for spotting tops...Thanks

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  104. Hopefully I will be early this time like I usually am :)

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  105. Gary, ok, thank you :o) Would be nice to have QEIII to juice things up in gold :oD

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  106. Gary,
    I have to admit that I'm Old School bullish right now but have decided to save that bullishness for the cycle lows

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  107. Bought EUO at 16.71 since FXE is up against its trend-line. Allows for a nice tight stop. I have about a 30-50% position in it now waiting for the dollar bottom.

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  108. Funmike: No more ZSL, but I have SLV Aug puts, so same idea. Small position, though. I need to see something at this point in order to add.

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  109. Gary,

    I hope your early, you were way late on this C-Wave top.

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  110. Gary,
    Goldman is bullish on Gold now. Are they too early?

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  111. Although often not the final "price top", most Gold IT cycles 'technically top" much earlier in the IT cycle than you expect. Many of them "technically top" not far off the middle off the cycle, even in the ERT cycles. There are plenty of TA indicators that show this top and offer safe exit or scaling out points in the IT cycle.

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  112. GTI

    Way late on the c wave? Give the guy a break.

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  113. Here's something I found interesting

    http://fx5186.wordpress.com/

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  114. Anyone use Finviz.com...some great tools there.

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  115. Poly,

    I see that in the previous gold intermediate cycles.

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  116. Willy,

    You are the great tool

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  117. DG said...
    "Guys:My last post on this as I think the issue has been made clear--- It's not that hard. Don't "think" the bottom is in just because there's a rally. Wait for the timing band. The bottom is not "in" because there's a sharp up day..."

    "For those who feel it is hard to stay short: It is time to go Old Turkey..."

    "Just sitting is not that hard. Don't look at the dollar profit and you won't be tempted to take it..."

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  118. Adam,

    I hope your not calling me a Beanie indicator! lol

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  119. Gold looking very week in spite of an early long weekend vacation for the Greenback... All good signs supporting our working model

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  120. We need a close below 1497 today for gold, a close below the 75sma to put the 75sma bounce to a quick death.

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  121. Look for the 2:30 bounce in the dollar to bury the 75sma

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  122. Here here! Three cheers for a quick death, William! 1497 or bust

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  123. The Dollar might be fishing for a bottom here. Positive divergence on the hourly MACD...

    It also is in the target area for the H & S resolution I pointed out a couple days ago.

    2011-06-30_1127

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  124. haha nah Of course not. Just playin'.

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  125. I cant rememver if I posted this here, but in case I did-

    Bought XG 2 days ($11.70) ago as it bounced off of the 20sma ( it always seems to).

    Just Sold it since it is at a previous high on 1/2 the volume. Sold @ $12.75

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  126. DG,
    What would that stop level be on EUO?

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  127. Alex,

    Yeah you mentioned that, I think yesterday, said you were looking to sell at 13, nice trade my friend. How did you come across XG, have you been trading that for a while now?

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  128. William The Warrior

    XG was just one of the miners that was acting very well & I have traded it before. Even now, with Gold pullbacks and market dropping, it just hits the 20sma and goes back up.( SO FAR)

    So even though I'm not bullish Gold and shouldnt trade against the trend...the trend on XG was consistently up off of the 20sma.( Buy and TIGHT STOP) And you're right, I was targeting $13, but its volume is drying up, so take profits :)

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  129. DG, these may be some tough questions but here goes.

    Currencies seem to be the trader's choice? true, false, not that easy to say?

    I have EURO on buy since about 6/17. What do you think the status of the buy is? In the sweet spot and will continue to roll, should make it up to next resistance still not to late to get in, or no idea just go with it until it flops?

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  130. Alex,

    I see that with XG, your a pro!

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  131. My bonds and treasuries are trending upward for the first time in a week...

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  132. The market lately reminds me of my little brother when we were kids. He would get on his bike, pedal so fast like he was being chased by a car, his foot would slip off the pedal, the pedal would slam him in the back of his shin and he would flip head first over the handle bars and the bike would come crashing down on his head putting his teeth in the pavement. Then he would be so mad he would get up, cracked tooth and all (nobody had more chipped teeth than him)pick up the bike and smash it on the pavement (I guess he thought maybe a tooth for a tooth?) After that he would get back on the bike, bent rims and all, and pedal away like a maniac same as before, and then the same damn thing would happen all over again!!!!

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  133. Ryan: On the EUO I just bought my stop is about 16.65, so super close. I'll have to decide about holding overnight, but suspect I will.

    Have a: Not sure what "trader's choice" means. I will hold what Euro I have now until the dollar cycle fails. If the dollar can show that the low was not the three year low I am out.

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  134. WTI,
    That sounds kind of insane!

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  135. wtif, you are taking insanity to never before reached levels. Time to sell? Parabolic?

    Insanity: doing the same thing over and over again and expecting different results.
    Albert Einstein, (attributed)
    US (German-born) physicist (1879 - 1955)

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  136. Ya were not very far from that low in the US Dollar around 73.7 and were currently sitting at 74.3 so we either reverse soon or we fail to make a higher low.

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  137. 86,

    It is insane, thank God he is alive still..crazy kid!

    haveaniceday,

    What are you talking about?

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  138. Anybody see any wisdom in a sell off tomorrow ahead of the long weekend?

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  139. Big BoW on GLD today, tops the list.

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  140. 86,

    I see wisdom in that call, but wisdom right now means crap!

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  141. They`re really throwing the wood to it now.

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  142. 86,
    It’s the start of a new month/quarter, QE2 is finished, traders don’t want to be long going into the weekend……I’m not predicting a selloff, but there are reasons why it could happen.


    William,
    It dawned on me that when I responded to your earlier post, I only addressed your question about the relationship between the dollar (and inflation) and bonds. I didn’t mention anything about the inverse relationship between interest rates and bonds prices because I just assumed that you were familiar with the old adage that bond prices rise when interest rates fall and vice versa. I won’t bore you with anymore bond crap here, but I just wanted to mention this in case that was an incorrect assumption.

    BTW, you may, in fact, be insane. God bless you.

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  143. Update on SPX 67TDay Cycle Pivot:

    http://screencast.com/t/p58G4Rml

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  144. Markets don't usually just go from a big up day to collapsing the next.

    Look for one or more narrow range days or a key reversal before expecting the market to turn south again.

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  145. Yeah, and tomorrow they'll burn it down.

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  146. LOL...there goes gary disagreeing with me again!

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  147. This is the second or third day in a row where there was an initial dip going into the end of the day that turned out to be a trap when it was followed by a surge into the closing bell. If tomorrow's ISM number is good SPX is going to surge well over the 50dma and the down trend line. The low volume does indicate lack of buying interest but that also means there's a lot of money on the sidelines that could come pouring back in not to mention a short squeeze. Then there are earnings reports mid-July that could be another upside catalyst. It's almost as if QE-2 is no longer ending next month and the economy is firing on all cylinders.

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  148. PST,
    They`re really good reasons and he may really be insane, though the diagnosis could be mistaken for chicken dimentia.

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  149. Gann,

    So your predicting the market makes new highs?

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  150. Gary,

    Why cant it happen again...We seen it happen on 6/1 though when SPX hit the upper trendline, today it hit again.

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  151. PST,

    Thanks for making that clear...and I dont mean me being insane!

    What makes you think I may be insane?

    God Bless you too my friend.

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  152. William,
    Yes that was a very unusual day to say the least. But we were already in a down trend at the time.

    I kind of doubt lightning is going to strike twice. But I do think once the dollar starts to rally July is going to turn out to be a tough month.

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  153. 86,

    I think we should tell everyone the truth....that your really a big brown dog (the one in your pic) and im a chicken (not sure who the guy in my picture is)

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  154. Looks like gold will close this week down too, despite the weakness in the USD. The downturn in gold into the IT low seems certain.

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  155. Lets all cheer on a close below 1497, the 75sma for gold, so we can get on with this party already...I cant take a crawl on the 75 its driving me insane.

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  156. No.

    i am Predicting that , come the next Pivot Cycle, if we Rally into it. i will short it, If we Selloff into it ,i will Buy It Long .

    So ,it all depends what we do here, and the direction going into the Pivot Cycle.

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  157. WTI,
    I'm just kidding with you.....although your stories are not exactly the ramblings of a sane man!

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  158. WTI,
    That is me shorting Nair and Schick. And watch closely as this heat and the fleas are driving me insane........

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  159. PST,

    86d4life named me William The Insane, he's the real nutcase, he is a talking dog for goodness sake!

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  160. 86,

    LOLLL...im shorting purdue and eating seeds!

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  161. Personally, I'd go with Alex's nickname of William the Warrior, but WTI also has a nice ring to it. How about William the Insane Warrior?

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  162. WTI,
    86 was kinda quiet, until you came along. Something clicked when you came on board and he hasn't been the same since. ;)

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  163. What do you guys think of WILLIAM THE CHICKEN WEASEL?

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  164. at ease,

    Thats because dogs aren't supposed to be talking and trading, and chickens either!!

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  165. How about William the Fantastic? That way, when you write one of your rambling posts, we can just write

    "WTF,WTF???"

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  166. This comment has been removed by the author.

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  167. PST,

    William The Fantastic is to flamboyant for me, thats like calling me William The Fabulous!!

    And dont get no ideas...William The Flamboyant is out of the question!

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  168. GLD..as a Bear I "rrreally" like the way GLD is ending the month and the Q2 http://bit.ly/mQ9l7m

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  169. WTI,
    Your call boss. I'll call you by whatever name appears by your picture.

    Alright, gotta hop. My 3 yr old son has his "graduation" party from Bouncing Buttercups today. On Tuesday he officially becomes a Froggy Friend. Ah....the joys of parenthood.

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  170. Whilst this is an interesting post for the bear low to be confirmed in the July 22nd/Aug 3rd window that Gary is suggesting you would need DXY/bonds to rally. This hasnt been the case. Further euro 2 year swaps have dipped below 60 bpts, and European crossover is below 400 bpts (which hasn't happened in a month). This also suggests to me that this is the real deal and we are headed higher, much higher. Gold for a $100 downside to $1400 or $2000? (upside) seems like a good trade here. SPX at now 1320 for 1250 downside (is this what the post is suggesting?) and 1450+ upside is a good trade here. DXY has not done anything since payrolls, so looks to me like rolling over (again). Again interesting work with cycles, I don't buy the month end window dressing either - I will change my mind if crossover or swap spreads gap out but so far its risk on.

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  171. silver holding much better than gold...weird..been such a long time since i've seen silver down 0.47% when gold is down 0.8%

    Also, miners have been and seem to be following the stock market more than gold - something to keep in mind at the intermediate bottom

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  172. How about good old fashion crazy wm?

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  173. Faber out with his newsletter - excellent title "never forget that only dead fish swim with the stream"

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  174. This fish has no desire to swim until gold reaches its intermediate bottom. The reality is that stocks have rallied 5% if you managed to catch the exact bottom, and the odds of them making a significant move above the old highs are slim.

    If we can catch the miners close to the bottom of the intermediate cycle we could make 5% in a day and 50% plus before the rally ends. That's the kind of percentage gain that gets me excited.

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  175. This just posted in TOS news "Fed's Bullard "QE stimulus to stay while fed collects data"...details to follow

    Anybody else see this?

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  176. Somebody help me out here. What are the BoW and SoS

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  177. Gary,
    Amen. Holding a short futures pos (on GC) I can only approve Your words, man.

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  178. Gary,
    Assuming we get in on the minors at or near Gold's intermediate cycle low, at what point would you be interested in selling them?
    Just curious.

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  179. I can't tell you that ahead of time I just have to play it in real time and see how the market unfolds.

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  180. BEEP BEEP Gary Savage & his blog & graphics is mentioned by Marc Faber in this month's Gloom, Boom, and Doom report BEEP BEEP

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  181. funmike-

    buying on weakness
    selling on strength

    http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html

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