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Friday, July 29, 2011

PORTFOLIO UPDATE

I have updated the model portfolio this morning.

552 comments:

  1. People we can discount the divergence in the miners if you want. But we made that same mistake in April and look what happened at the beginning of May.

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  2. Silver is also not confirming the new highs in Gold.

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  3. Sasa,

    lol...good for you. But good luck going long right now, your a brave soul.

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  4. Gary, thanks for the update. Will you deploy capital at the DCL? Still seems like a decent play from a risk/reward standpoint.

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  5. I agree on your new post. The only caveat is that once the debt ceiling is raised then it's the Euro crises again....

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  6. WW,

    oh no, not going long, it was meant to be a quick intraday trade as i saw clear entry with tight risk stop. It seems to have played out exactly as i expected. But without me on board :)

    For the rest of my portfolio, this week i shifted gld call options from august to sept and halved my positions. So very defensive.

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  7. Sasa,

    :) Happy to hear you made the $300+ on that mistake.

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  8. I wonder if the emergency primary dealer meeting in NY is about Bank of America going down. The timing and irony of that is incredible.

    The market is all about bank liquidity, if that goes, everything goes with it, no matter the fundamentals.

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  9. Sasa,

    Maybe you should just start trading GC contracts instead of the micros...bit of an upgrade...lol? :)

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  10. The $VIX got above the June highs as well, some serious fear creeping into the market. Nothing compared to the flash crash or 8 year low, but risk is going up.

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  11. ALEX, Are you still in REE? I know you are a 3 day trader:) I am.

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  12. SOS list is lit up with precious metals, also inverse market funds.

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  13. TRIN does not show fear in Broad market!

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  14. Pull up a weekly chart of the HUI and it is glaringly apparent that something is wrong.

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  15. Miners went down with the market but aren't following it back up. Ominous...

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  16. Gary,

    At this point then, which way do the miners pull...with changes in the equities or changes in gold? Or does it follow whichever is declining without regard?

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  17. I hate to say it, but I like the change to the model portfolio. I think the best risk/reward right now is cash and wait. By tuesday this market is going to blow in either direction...the way gold is acting, it seems that the deal is just the timing or the excuse gold needs to do what it wants to do...looking at miners and silver too, they are telling us we want to fall, but we need to wait until the debt issue vote.

    I as an opinion, and could be wrong, don't think this will be a nice mild correction...if i am wrong so be it.

    We may see silver finish it's parabolic dive down...

    I will say again...I HATE GOLD...bloody worse investment possible...not that I ain't a gold bull, just that I hate being one!

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  18. Personally i'm still not convinced of C wave blowoff scenario ahead of us. Havent been not for one day ever since 4th of july no matter the amazing rally.


    There's just so much headwind gold would have to go against to go to $1750+.

    And i dont think gold is ready to act as a true safe-haven bid yet, even though it's being mentioned alot.



    But i have an open mind. Hard to judge character right now with all the debt limit 'panic' anyway. Hence very defensive.

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  19. Small position in SLV sept puts.

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  20. WW,

    Why buy 1 GC if you can buy 10 MGC - more for the same money! ;)

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  21. WMP,
    The fact that the miners are threatening to lose the 200 day moving average again even as gold is making all time highs is a very very serious warning sign.

    We know that Gold is due for a move down into a daily cycle low. The miners are already taking a beating. Once gold starts to move down also the odds are very high that the miners are going to move to new lows.

    Keep in mind we don't have confirmation of this yet, but this is how bear markets begin. You get an initial move below the 200 day moving average. A recovery and then a failed rally that moves back below the 200 day moving average.

    Folks I think you better pay attention to what's happening in the miners. Something is seriously wrong.

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  22. Given that trend lines can be drawn different ways, by my drawing the assending long term /GC trendline was tagged this morning.

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  23. Sasa,

    Both contracts (1 GC or 10 MGC) are for 100 0z gold.

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  24. Double top reversal on the hourly works for me

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  25. >Pull up a weekly chart of the HUI and it is glaringly apparent that something is wrong.

    Yes. Since 2004.

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  26. What would be the actual logic behind miners (traders trading miners) having a sort of fore-knowledge of future gold price?

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  27. WW,

    hence more for the same money. 10 contracts vs 1.

    Was just joking :)

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  28. I benefited from exiting miners when they diverged from the metals before the silver collapse, and recall vividly what happened. The difference between now and then is that not only was silver rocketing higher (several %/day), but so was the general stock market, which made the miners a stand alone indicator.

    This time we have stocks off close to 4% in one week, and miners will be affected by this we all agree. Where I feel diverge from others here is that miners will be influenced by the metals prices even more than stocks going lower. Not every day, of course, but over time the miners will have to choose a direction, and my bet is the fundamentals win out (higher metals=more profits as well as more value in the ground), eventually shedding their link with the general market.

    Somebody here pointed out the low correlation between miners and stocks over time, although I agree that on any day or week they can be linked.

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  29. So the current cycle's high is in fact the top of the current intermediate cycle - July low was a head-fake and gold may still drop to the 150 DMA? Is this our latest interpretation?

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  30. Sasa,

    Whats the commission on the MGC contracts?

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  31. In short, this is not the same situation as before the margin hikes in silver, which miners foretold.

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  32. All I can say is staying with DUST.

    And can not believe lack of fear in Broad market.

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  33. Sasa,
    Sure, many of the traders in the mining stocks are people in the industry. I would have to think they know more about gold and where it's headed than anybody else.

    Obviously insiders were selling in May ahead of the crash and that's why the miners were diverging.

    The divergence now in mining stocks is screaming loud and clear that another hard correction is coming. Maybe this time it would be best to listen.

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  34. Gary,

    So when we gonna call this sumbitch a D-wave? :)

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  35. SB...hilarious. Thanks for the laugh.

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  36. Gary you said
    "Keep in mind we don't have confirmation of this yet, but this is how bear markets begin. You get an initial move below the 200 day moving average. A recovery and then a failed rally that moves back below the 200 day moving average."

    Are you implying a a potential scenerio that gold goes bear here?

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  37. Gary

    can you comment on the BB crash trade on the miners? we were suppose to enter this morning, and wait until the first profitable day?

    or are you worried about the health of the miners, and will not wait for 15 days to pass?

    not

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  38. Gold is almost as stretched above the 200 day moving average as it was at the May peak. It's 19 days into a daily cycle that usually lasts 20 to 25 days.

    Once the debt deal gets done money is going to flee the gold market.

    This late in the cycle is it really worth playing chicken with the politicians? We found out three months ago that it wasn't worth playing chicken with the $50 level in silver.

    Do you really want to make the same mistake twice?

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  39. Im fully out...however, with everyone out, wouldnt it be funny if gold just keeps storming higher? :)

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  40. "Gold is almost as stretched above the 200 day moving average as it was at the May peak."-Gary

    That's a great point, and the thing that has me most concerned of all.

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  41. Sold DUST in one account--Still hold in another account. Differend objective. DUST nice ride over 3 days.

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  42. If you pull up a daily chart for gold and take a look at this entire C-wave, you see that gold is acting perfectly normal, the only deviation was the intermediate bottom being early (obviously causing a massive rally out of that low)..and I made the case for why that occured in an earlier post. If the 20sma acts as short term support during this daily cycle correction, the 50sma will most likely holdup and get a bounce higher from there. We may not see a parabolic intermediate cycle because of a rallying dollar, just a normal intermediate cycle like the last 5. Then the D-wave?

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  43. Bonds are certainly hinting at deflation around the corner.

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  44. TRADERLADY! How are you!

    I am of a different opinion than many here (until I see proof).

    I am in my Miners (yes to REE) and I see todays sell off retesting yesterdays lows (SO FAR).

    So I posted this range earlier, we are at the 50% point-half way- and until I see a breakdown in Miners ,

    We could still break UP :)

    http://www.screencast.com/t/XwnpVh48WgHM

    I feel MINERS led the way UP in MID JUNE , Some of my picks gained 40 to 60%...thats not "ugly" ...now they are 50% of those moves 'highs'...that is "normal" to me. So far I am in Miners, until my chart says we will revisit the bottom. Then I would sell and reload later.

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  45. Gary,
    OK, selling GLD, but uncomfortable with so many USD. Would you recommend a position in another currency?

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  46. sasa,

    I've made mistakes entering my orders. Most recently, I bought some slv puts, and after the price went up, I wanted to set a trigger to sell them before the price got back to my purchase price. As it happened, I omitted a decimal point when I set the trigger price. Boom! the trade executed immediately, fortunately for a profit. I try to be careful, but

    I am,
    Le Fou

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  47. As someone who watches wiggles, it seemed that Londons close was associated with a sell off. I have a feeling that the same thing is going to happen between 3 and 4pm today.

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  48. SB,
    We can't have a D-wave until we have a parabolic move.

    This all depends on the dollar. If it moves below the May bottom then we will get our parabolic finish and then our D-wave.

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  49. WW,

    comission on IB for MGC is $1,07 and for GC is $2,32

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  50. Not greed,
    If you are going to take the BB trade then you have to follow the rules exactly or the positive expectancy collapses.

    You would have to have bought this morning and be willing to hold 15 days or on the first profitable close which ever comes first.

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  51. Hi ALEX, I understand both you and SB
    still being in the miners and you both
    picked them up at nice low levels. I do not have that "wood" so I am on the sidelines. I have picked up a few great companies like CMI and CAT.
    Hopefully a nice bounce for REE too!
    Stay cool!

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  52. This comment has been removed by the author.

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  53. Sasa,

    So for 10 MGC your paying over $10 and 1 GC $2.32? Why not buy 1 GC then?

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  54. Alex,

    I think the miners will bottom before gold as they have done before. Its not unusual to see the miners well below the 150sma during Daily Cycle corrections.

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  55. >Once the debt deal gets done money is going to flee the gold market.

    The recent events have shown something to the idiot masses that they never conceived of for the last decade of the gold bull.

    That SUPERMAN IS VULNERABLE and can (and will) be TAKEN DOWN eventually.

    You can't put that back in a bottle just cause a budget 'deal' (used loosely) is made in a week or so by the guys driving this train wreck.

    The realization has now spread and some clueless people are waking up to where we are headed - BK's all around the dance floor. Defaults for everybody as parting gifts.

    Long 4x and holding. If wrong I have my stop as described earlier, but I think the difficulty and resistance to fixing our finances has changed things fundamentally for the world as this point. Yes, it can shift temporarily back to europe, but people will now not forget that the US is next in line and has just as few answers as greece, spain, and the rest of the clown crew.

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  56. Thanks Gary for explanation regarding miner traders.

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  57. Repeating, like I said I think that triangle arround 1600 (1580) holds and we don't go below it. A $35 dollar drop from here or so doesn't change or break that and I will be adding at least once with my assumptions in place.

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  58. I'm NOT adding here and I AM aware of some good chance of gold decline on a 'deal', but I'm saying I don't think it is going to be nightmareish, won't break 1580, and will hold/recover faster than in past or as some people think because the reality of the US and world is starting to hit home.

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  59. I'm holding my , now, 15% in miners. I think at major inflection points TA is a going to be increasingly a contrary indicator

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  60. TZ,

    Im looking at the 30sma. Will add on a pullback with a stop below the 50sma.

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  61. So on the BB Crash trade, you sell your miners positions on the next day after today that miners would be profitable. So we would sell on any bounce or wait 15 days? That would be a good time to exit out of miners if you had been holding a position and wanted to exit, correct?

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  62. I got on the sideline 100% yesterday. With all the politicing and trouble with the Euro countries I see August 2008 repeat -- where the dollar climbed up near .90. If the Euro gets in trouble, I feel,the people will run for the dollar as last man standing...
    Sidelines is my comfort zone for now. with maybe a partial day shorting if I see it coming.
    Mostly wait for Gary to see some clear signs on the road ahead...

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  63. TZ,

    Agree with you though, definitely going to see a bounce off the 20sma around 1580 level, think we will head lower though after a short bounce.

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  64. This comment has been removed by the author.

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  65. TRADERLADY

    Sidelines is the perfect place to be right now. If Miners drop to the lower level of that teading range on my GDX chart, you can scoop them up and we probably rally in the fall.

    Even if they ran up now they may only retest that top then fall away.

    I too , have traded other stocks with various set ups ( and talked to DG and NIKE BOY if one needed verification) like JVA , RENN,FEED, GLNG, etc

    recently I sold some miners when we reached the top of that range...sold my AG to trade other set ups too.

    I am MAYBE looking to lighten up today on this bounce and see how this plays out 'from the sidelines'. I feel so 50/50 right now,

    You stay cooool ,go to Siesta Key!! I enjoyed it there quite a bit! :)

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  66. TommyD,

    What are your reasons...been clear on my own...but interested in your reasoning.

    Cheers

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  67. William said,

    "I think the miners will bottom before gold as they have done before. "

    I agree, and if it happens to be in a week or two and we hit the bottom of that trading range on GDX,

    I wouldnt mind buying again a bit lower :)

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  68. Newmont Mining just posted earnings and missed the street expectations.

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  69. NEM delivered $1.04 vs $0.99 street expectations on continuing ops basis. They beat the number, but sold off anyway. Sentiment ain't bullish on the miners.

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  70. For anyone playing the downside in this DCL, as this daily cycle continues to stretch it becomes easier and easier to buy puts as you know the correction is nigh. I have taken a small position in GLD and SLV puts this morning and will add more at the end of the day if we are still at these levels. On Monday I think I will probably add a little more and possibly take some calls on the S&P for bounce that is a reasonable probability once the debt deal is announced. These will be small positions, as there is some risk that the politicians completely blow this and can't reach an agreement, but I continue to believe that the build up to the 2nd has been all for show and the politicians will come to an agreement on Monday night, equities will rally and PMs will fall. Not looking to hold these long, will most likely be out by the end of next week.

    Willy Walls still holding your puts? Adding any here?

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  71. To ANYBODY holding miners I throw down the following challenge. Go to stockcharts and create a weekly chart of $hui:cef starting from 2001 to present. (Cef is essentially 50/50 gold and silver. "straight metal")

    After you do that post it here and tell us your thoughts.

    If you still want to hold miners I will question your reasoning ability in face of inarguable facts. ("Eventually" something will happen is not a valid reason in investing AS LONG AS whenever that "Eventualy" happens it will encompass a long shift which is easily detected and caught without missing much upside).

    If you hold miners and aren't even willing to spend $10 to see such a chart on stockcharts then you deserve what you get.

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  72. Billy Willy,

    Yeah still holding my GLD puts, may add today at close.

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  73. stockcharts is now $15/mo; my mistake; (I have no interest in the company, I'm simply not aware of another ratio charting service.)

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  74. TZ,

    Why dont you post that chart? If you can email it to me: FromRips2Returns@aol.com I would like to take a look at it...as you know if reading my earlier posts that I sold my miners 2 weeks ago and went strong metal.

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  75. Cause:
    1) I don't have a stockcharts subscription.
    2) I already know the answer and posted it last year when I did. Nothing has changed.

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  76. TZ,
    An analysis from '01 until now only applies if you bought and held for that time period.

    Since I bought in June, that is what I use to measure, and my miners have far outperformed my gold. Don't need stockcharts to tell me that. :)

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  77. Shalom,

    That's BS.
    The analysis shows continued underperformance since the middle of LAST DECADE with NO EVIDENCE OF A CHANGE. Prove me wrong.

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  78. dude,
    The exact rules of the Bollinger band crash trade are in the terminology document.

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  79. William,
    Actually most of the time miners bottom at the same time as gold. The most recent bottom was the exception not the rule.

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  80. Gary,

    So are we trading around the daily cycle on GLD? Or do you think this intermediate cycle is topping along with the daily cycle?

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  81. TZ,

    I didn't say miners outperformed the last decade, I'm only referring to this round, and my miners have spanked the metal. You go look at stockcharts if you don't believe me, but Alex's analysis is correct.

    Miners surged while gold crept. I never said they will always outperform, I'm only interested in the outperformance when I'm in them.

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  82. This comment has been removed by the author.

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  83. Gold popped I believe (actually I know for sure because I watched it happen in real time) solely on news on the 25th and today..you can see this in taking a look at both candles, both have long selling wicks that occur after the news..I notice that this obviously spawns some residual buying that carried into the next day. I think that if gold didnt pop on the news both of those days that we would have already been well below the 10sma and into the decline, a shorter daily cycle, and sentiment wouldnt be so extreme as this just added to it.

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  84. Shalom, please note that I carefully made my arguement.

    You said "MY miners have outperformed GOLD".

    I said CEF (50/50 gold silver...which ostensibly is a safer bet for various reasons.)

    I also said HUI and not "YOUR miners". I have NO idea what YOU picked for miners and have already addressed this issue in the past.

    The act of picking is FRAUGHT with numerous problems including the need to diversify (which kills the outperformance of a single stock) and, of course, the OBVIOUS problem that each person ends up with a different pick. Thus the only valid discussion is to use an index in this case since the picking of stocks is clearly not an act of continual outperformance by the masses as a whole.

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  85. TZ,

    You don't know what you're talking about. Just plug in three big miners, the first three I plugged in vs. CEF since 2000 are all up minimum TRIPLE what CEF is up. I plugged in GG, AEM, and SLW.

    CEF may outperform other similar FUNDS because of it's Canadian status. We all know the Canadian dollar has been one of the best performing currencies the last decade.

    I agree with Wav Ridah, that this fall will be the best buying opp. for miners for the rest of the bull. As for now I wouldn't touch the miners with a 10' pole.

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  86. TZ,
    The HUI:CEF ratio bottomed at 18.50 in 2001, peaked at 48x in 2003, in 2004, 43x in 2005, 43x in 2006, 41x in 2007 and 41x in 2008 before a plunge to 19x later that year. We are at 23x today. All this tell me is gold, silver stocks were cheap vs metal in 2001, 2008 and today.

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  87. Gary,

    I know your right, they usually do follow gold perfectly...but like you said there was this last exception, and I believe this drop ahead of gold and bottoming before will be another exception.

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  88. TZ,

    Since we can't buy HUI, look at GDX vs GLD then.

    I did not buy GDX, but it's a reasonable substitute for HUI, and it's up roughly 16.5% from the date I bought miners (not GDX), while gold is up 7.25% in the same time. What don't you get about it?

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  89. Mikey,
    I am not trying to trade around a daily cycle low. I am trying to avoid a possible intermediate cycle top.

    Despite what some would like to believe a parabolic C-wave rally is totally dependent on the dollar continuing down into a three-year cycle low this fall. If May marked the three-year cycle low then we are going to see gold move down into an intermediate degree correction soon to clear the extreme bullish sentiment.

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  90. I still agree with you right now that if you're PM bullish, avoid miners, as their actions speak for themselves.

    That said the setup for the PMs right now is not very clean, and I prefer just to sit in cleaner setups right now.

    The upside in the dollar is maybe 8 points in a few short months, with a stop only what a percentage or so below. Pretty good risk/reward.

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  91. Billy,

    I will only add today to my GLD puts if my options Sensei Miyagi wakes up and tells me its ok to do so...lol

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  92. Gary,

    If we are still in an intermediate cycle, is it not extremely long?

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  93. ROBERT,

    You are looking at COMPARISON charts, not RATIO charts. Try it again.

    SHALOM,

    I use the $hui in my comments since GDX doesn't go back that far. Would if I could.

    Also, I'm not going to argue a outperformance of a month or two here or there. I would think that would be self evidently meaningless in the scheme of things.

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  94. The simple fact is that the miners exaggerate the moves in gold similar to silver.

    For some reason they have failed to participate in the last $200 point rally in gold. I now think that is a strong warning sign.

    I'll say it again. For the parabolic phase to unfold the dollar has to have another move down. I think we need to see QE3 announced before we can be confident of that.

    No QE3 and deflation takes hold again. Last year the brief deflationary period knocked gold down $150. In 08 it took gold down over 30%.

    If we are about to suffer another deflationary period because QE2 has ended then gold is going to take a hit. Add to that the stretched condition above the 200 DMA, extreme bullish sentiment, late in the daily cycle, severe divergence in mining stocks and you have the conditions in place for gold bugs to get the crap kicked out of them.

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  95. I'm awake WW, my wife was making a racket at breakfast this morning.
    I'm not sure about adding, sometimes it's best to limit exposure. See what happens closer to the end of day, I still believe that the debt solution may creep up in an overnight setting.

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  96. Robert,

    A COMPARISON chart will show you outperformance of something over the entire period. A RATIO chart will show you that ALL the outperformance was in 2001-2004 and NONE of it since.

    I would think that distinction would mean something.

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  97. WW,
    Yes this would be a stretched cycle. It happens from time to time.

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  98. TZ,

    What is meaningless is applying a 10 yr chart to an expected hold time of around 2 months, give or take.

    I focus on the best risk/reward at the time I take the trade, and for my expected hold time. Still, I bought gold, but the miners outperformed. That's the fact.

    Anyway, to each his own. Good luck.

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  99. TZ,

    All the ratios are doing right now is hinting at deflation.

    Also we know the hedges since 2008 have gone long the metal and short miners. They will probably ride this into the fall (at least the short miner part).

    I wouldn't completely ignore miners for the rest of the bull- that could be one of your greatest regrets.

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  100. >I wouldn't completely ignore miners for the rest of the bull- that could be one of your greatest regrets.

    I won't. As soon as they start outperforming.

    You have chosen to guess and hope along with everyone else since 2004. I will wait for the $15 chart to simply show me the money.

    And if it never happens then what becomes of your plan?

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  101. TZ,
    The HUI:CEF ratio also tells you that, if HUI falls another 10% from here, it reached the same relative valuation vs gold and silver at the 2 best time to buy the PM stocks, namely 2001 and 2008. Something worth paying attention to.

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  102. I'll stop now and need to do other things. If someone actually cares and posts the 2001-present $hui:cef chart then I will comment further.

    We'll see what happens.

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  103. Miyagi,

    Yes Sensei (is that how you spell it?) I mentioned earlier to Billy, if adding I will wait to close. See I am a well trained student of Miyagido options school...maybe options tournament soon? :)

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  104. Looking at the cycle count chart, why is it that some intermediate cycles for gold contain 4 daily cycles and some contain 5? Or is this just normal?

    What I'm wondering is this: Is it possible that the low we had July 5was just a daily cycle and this cycle we're in now is the 5th one and now we might be moving into the the true intermediate low?

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  105. TZ,
    The miners should not be played as a long term hold. They should be bought at intermediate bottoms and sold at intermediate tops. During these periods they will outperform gold.

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  106. And if they never return and outperform what happens to your plan brian?

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  107. TZ,

    I'm' not an idiot I do know the correspondence of comparisons to ratios. A 3yo can conceptualize that.

    Anyways, I'd be careful of getting too confident in this current "metals outperform miners" trend, for that I guarantee this will reverse within a year or so.

    What you should look for before you get in miners if you were to wait for CONFIRMATION is a ratio greater than .44 for $HUI/$GOLD weekly. I will be getting in much earlier though.

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  108. Miyagi, we convincingly break 1615 and im going in..ok?

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  109. Cool,
    Because some intermediate cycles run short and some run long. An intermediate cycle has to go up long enough and far enough to turn sentiment extremely bullish and stretch gold far enough above the mean to trigger a profit taking event.

    Sometimes that occurs in only 4 daily cycles and sometimes it take 6.

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  110. >The miners should not be played as a long term hold. They should be bought at intermediate bottoms and sold at intermediate tops. During these periods they will outperform gold.

    I would think the logic and problems with this statement are clear to those who think it through.

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  111. Gary,

    So another "normal" intermediate cycle (not a parabolic move) is out of the question unless the dollar breaks below may low?

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  112. WW,
    Haiii... sniff out the news although a downward trend like that would be a good start.
    If you don't add and it keeps going down, you just won't make as much. If it goes up, you won't lose as much. Even staying put is not a bad place.
    Is that you in your profile?

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  113. My plan stays the same. All I am saying is that the pm stocks are approaching similar valuations vs gold and silver as they did in 2001 and 2008, assuming pm's dont take a bath here. If Gary is right, the stocks are heading lower also, but at the next good low in Gold, PM stocks might set up very nicely for a trade.

    Incidently, I have the chart, but through another service so I cant / dont know how to post here for everyone to see.

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  114. TZ,

    John Doody became a millionaire doing just that (buying and holding certain miners)...did he not?

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  115. lifted from somewhere else, HUI to Gold ratio for the past 10 years, and apparently free:

    http://stockcharts.com/c-sc/sc?s=$HUI:$GOLD&p=M&yr=11&mn=0&dy=0&i=p71745930056&a=239689808&r=9208

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  116. WW,
    That is exactly what should play out if we don't get another leg down in the dollar.

    We see gold suffer through a normal intermediate correction and then another leg up.

    We can't get a D-wave until we get a parabolic move. One triggers the other.

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  117. This is make it or break it time for the dollar. Next week should be very insightful. Odds lean to dollar upside IMO.

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  118. Gary,

    Yes, thats exactly what I have been saying...no?

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  119. Gary, what did your Old Turkey guy hold -- just the metals, or derivatives of the metals at least?

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  120. This comment has been removed by the author.

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  121. Robert,
    Yes I have been saying all along that the dollar will put in a cycle low either on a resolution of the debt ceiling or on the employment report.

    This is another reason why I think any rally in stocks is doomed to fail. It will have to fight a rising dollar. This late in a cyclical bull market with economic indicators starting to roll over I don't believe the market can do that for more than a couple of days.

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  122. RE: Stock Market

    "We've had a big move, and government resolution is likely to come, but it feels like that is a crowded trade. No one seems really afraid, and everyone seems to expect a bounce. Just because everyone expects it, doesn't make it wrong, but I'm concerned that all the longs will pop out of their holes the second a deal is announced. They will look around for someone to panic and take them out of their positions on the debt ceiling news. Then they will look some more, and then realize that no one is caught short or surprised and they will scurry to get out of their positions. Well, I just convinced myself to go back to putting on a small short."

    http://www.zerohedge.com/news/guest-post-whack-mole

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  123. The original story was about a stock operator in a bull market. It never said what kind of bull market, although I assume it was in stocks.

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  124. That linked chart is against gold.
    It still proves my point roughly, but I made my argument using 50/50 gold and silver which is a superior mix cause it keeps you in metal, but provides diversification for higher return, but less volatility.

    A chart against CEF is preferable and I still hope someone will post.

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  125. Gary, it's also possible the dollar entered a new cycle two days ago and now it is just meandering near the bottom.

    This could be the first cycle in a new intermediate cycle.

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  126. Robert,
    Not likely. I think the dollar is just doing what I've said all along, trying to find a bottom on either the debt deal or the employment report.

    I said in the nightly report the other day that the swing was early and that we could see one more move down before bottoming.

    The swing was just the Nervous Nellies getting out of the trade early.

    Ah if only we had been Nervous Nellies at the silver top ;~)

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  127. Gold could easily reach $1650 next week on a market decline. Recently it has been acting inversely to the markets.

    It could end up that today is day 1 of a new cycle and it enters a left translated cycle next week or the week after. We'll see soon enough.

    Silver not following as with the miners is telling us that significant declines in gold are probably shortly ahead IMO.

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  128. Gary,

    Would you wager a burrito on the dollar taking out the April lows in the next two weeks? :)

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  129. Three silver stocks putting in large H&S on the weekly charts.


    SSRI H&S target 12

    http://screencast.com/t/LGCaLefS1

    SLW low teens

    http://screencast.com/t/3YKhe1IF

    AXU 3

    http://screencast.com/t/rl5heZwbFW1

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  130. Robert,
    Gold has not put in a daily cycle correction yet. Of that there is no doubt. Every day it continues higher the closer it gets to that correction and the more it stretches above the 200 DMA the more severe the correction will be.

    Action and reaction. The rubber band theory.

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  131. Gary,

    The silver parabola collapse has made you like nervous nelly's father...what exactly happen, I wasn't here for that?

    What positions were you in.

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  132. Robert,
    I don't know about two weeks since it's due for a cycle low soon.

    I really have no idea whether it will take out the May low or not. Before it does that it has to put in a cycle bottom and then take out that cycle bottom.

    If it does, that will be our clue that the parabolic move is on.

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  133. I don't think it is a new cycle yet either Gary, but I think you have to leave open the possibility that it "could" be because of the brief cycle trend line break yesterday.

    Just trying to play devils advocate and keep cool heads here.

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  134. The only way gold can fight this kind of sentiment extreme is if the dollar is still moving down into a three year cycle low.

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  135. Robert,
    Gold would need to close below that trend line decisively. Now that gold has made a higher high we have to redraw the trend line.

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  136. I am just trying to add things up and with the looks of the miners, bonds, overall market, and dollars comparison to 08' things look optimistic for the dollar surging almost immediately.

    That's coupled with the expectation of a int. low in stocks, and a DCL upcoming in metals.

    I mean geez this seems to be a pretty clean setup!

    Add onto that the expectation of the bankers announcing QE3 in august at JH, would mean that the next few weeks should be harsh!

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  137. Anyways, only time will tell, but thanks for continuing to be dynamic Gary.

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  138. JAYHAWK!

    Nice charts...good to see you! Long time. :)

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  139. Yeah Gary your dynamics are great..

    Gary be nimble, Gary be swift, Toby eats burittos all day, and with Gary climbs cliffs.

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  140. jayhawk,

    Wow SLW low teens...thats a strong buy.

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  141. And I thought I didn`t get out much......... LOL!

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  142. Gary-
    So gold could be on week 27 of its intermediate cycle, which needs to work down into its low. So that low could run alongside the SPX intermediate cycle which isn't due for appox. 14 weeks. That would place golds intermediate cycle at 41 weeks, very stretched. I guess it could bottom before in the 30-33 week range.

    How about this scenario- the intermediate gold cycle is actually on week 12 as the previous cycle bottomed the week of 5/2. That would give us 14 weeks to run alongside SPX cycle, bottoming on week 30, stretched but not that far out the normal timing band.

    Appreciate your input

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  143. How much downside are we expecting for the miners if a decline starts here?

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  144. MBS,

    Or you could rephrase the SPX cycle.

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  145. A lot of equities are treading the line today but miners are below water.

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  146. Alex & jayhawk,

    Take a look at NGD also...H&S

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  147. MBS,
    Stocks are potentially in week 19 if we take away the phony manufactured rally at the end of June. They should have about three more weeks to bottom. In that scenario gold would put in a daily cycle low then violate it with one more daily cycle down into a final bottom.

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  148. 86,

    The problem is... your out too much!!!! LOL

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  149. Who knows William, those H&S don't seem to work too often. I'd love to be there ready to buy some if we do reach those lows! (Easier said than done as Gary will point out.)

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  150. MBS,

    The 5/2 bottom looks like nothing more than a regression to the 10 week moving average, being it was stretched far above it prior to that. Is it possible an intermediate cycle can bottom with no real correction?

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  151. 86,

    What are you eating today for lunch, Bear?

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  152. Anybody have enough confidence in $up to take on some EUO? It looks like the time to drive the dagger home. W2, this almost looks like a `Give me an option Friday` option.

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  153. W2, did you break the blogger again?

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  154. 86,

    The Euro is going to stay where it is for years, maybe after we stop giving them money it will drop.

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  155. Just got the latest freebie, gold and currency;

    http://www.sunshineprofits.com/commentary/29-jul

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  156. 86,

    Oh yeah, today is 'GIVE ME AN OPTION' Friday...


    anyone got a lottery pick???

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  157. Gary-
    Thanks for the response. So if we are on week 19, that would indicate the last two intermediate cycles were 19 weeks and 17 weeks (or one long cycle that was 36 weeks). Would it make sense to have 3 cycles all of which are on the shorter end of the timing band?

    By my count, the dollar is on week 12 of its intermediate cycle so it has about 8-13 weeks to run as well. How does this line up?

    Thanks for clearing things up.

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  158. 86,

    Yeah!! Bro how do you know when I blowup the Blogger...lol?

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  159. Anyone going to play the SPX or QQQ's with puts?

    It seems this would be a great way to play the initial phase of the bear market cycle down to at least below the March low?

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  160. One of my mentors told me that the market moves in repeating ranges in TIME and PRICE. It's a Gann thing. I haven't seen anything that tells me different. Sometimes it's uncanny how the fundamentals coincide to make this so.

    The cycle tool helps us identify the repeating ranges in TIME. I use my "old faithful" gold chart below to try and track the repeating ranges in PRICE. You've all seen it before but I'm dragging it out again as we are near completion of the current price range.

    You can see that at the completion of each range, price has either corrected or moved into choppy sideways consolidation until the MACD has drifted back to the lows to work off over bought sentiment. If you zoom in on the tops you can see that price reversed bang on the tip of the arrow. A couple of times it went on to make a slightly higher high. This is seen more clearly on a weekly chart.

    Gold Ranges

    Spooky how this is occuring around the time we are expecting a daily cycle top. I'll be watching for a reversal/topping candle next week to see if the pattern repeats.

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  161. W2,
    Isn`t that it? The 2 dogs on the block are a married couple, they can spend their honeymoon in hell.

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  162. W2,
    Simple; I`m talking to myself. As usual.............

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  163. Mike,
    I have 20 weeks and 17 weeks. The second one is a little short. The last daily cycle in stocks was also very short. Perhaps we get a slightly long daily cycle here as the market bounces on the debt deal and then fades.

    If that happens it would probably take more than 10 days. (The market is now on day 30 of it's daily cycle.) 40-45 is about average for a daily cycle.

    Another three weeks would give us an intermediate bottom right in the normal timing band if we throw out the manufactured rally.

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  164. When one views gold soley trough a $US prism, one will or can only reflect (see) Gold through the dollars performance. In dollar demolished assets, this thought is often a safe bet.

    However the flaw is that it ignores the underlying demand for the asset. By saying gold can only go significantly higher with a collapsing dollar is to take the position that you can not have soaring bullion demand that greatly exceeds the drag a rising dollar has on that asset.
    The recent historical gold rally was on a rising dollar. You will also notice that Gold prices in all other major currencies are at all time highs, does that tell you this is a dollar inspired gold bull market? In fact gold recently broke to new highs in Euro's before it did in dollars. Dont discount Gold's late bull market status and it's ability to defy sentiment, cycles, TA etc for long periods for time. Mature bull markets evoke beasts! I still think believe major fireworks are ahead in 2011. Lastly, you're ignoring the possible QE3 type event. Would that be another "the Fed averted or stretched the 3rd dollar cycle" type event?

    All of this switching of sentiment and ideas on the current setup is similar to the emotional trading made at many past cycle highs that were not ideal. IMO a well defined and thought out trading plan was in place, which to date is still meeting expectations. Why not let the plan run it's course and let your risk Mgmt protect you in the event the plan was incorrect? Alternative theories at the cycle high juncture are prone to error. If you believe your original trade may break down due to a new scenario, why not tighten up the trade, but at least give it the benefit of the doubt.

    This has zero to so with being right or debating points. I like forumatling plans with their highest probability and executing. If they don't pan out, then there is a plan in place to handle that.
    Good luck. (iPhone typed)

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  165. Gary,

    I dont understand... how(or why)would two intermediate cycles that have both bottomed on the 150sma be combined, as Mike Stiller just mentioned??

    Is there any method to this cycle madness, or can anything just be combined, shortened, lengthened. etc....basically whatever we want to make it?

    In that case why not combine all the intermediate cycles of this c-wave into one and make it one big cycle, making the july bottom the beginning of a new huge cycle!

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  166. Poly,
    I'm not saying gold can't rise along with a rising dollar. What I'm saying is that gold can't put in a parabolic move along with a rising dollar.

    You are kidding yourself if you think gold is going to go to $1800 along with the dollar rallying hard.

    We absolutely must see the dollar take out the May pivot if our parabolic scenario is to play out.

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  167. William,
    We were talking about the stock market, not gold.

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  168. Boehner re-wrote the bill, might go through.

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  169. Thanks Gary. We could really see a replay of the last 3 year cycle low and have the dollar go sideways for a number of months. Although, that is what is playing out now and we are already on week 12.

    Honestly, right now, cycle work seem to be somewhat backward looking because we wont know how many weeks they will have run until the intermediate bottoms have ultimately been made. That is what makes this environment so tough to difficult to gauge.

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  170. Gary, I disagree. We just did $150 in mere weeks on a rising dollar. You only need $175 for $1,800! That was on the back of little Greece, try a bank run on $3T of Spanish and Italian debt and you have he ingredients for a gold 2 handle.

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  171. Mike,
    Yes this is a very confusing period as the fundamentals battle with Fed interventions. It tends to short circuit all of our tools to some degree.

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  172. Regarding TZ's statement that metals have outperformed miners for years: I'm having trouble getting the ratio chart that he suggests.

    However, a simple glance at weekly charts of HUI and gold tells us this: HUI made a significant high in early 2008 at approx 520. Today it's trading at 545. That's 3 1/2 years to appreciate a whopping 5 percent!

    Gold, on the other hand, made a high in early 2008 of 1034. Today it's trading at 1628. That's an appreciation of 59 percent over the same 3 1/2 year period.

    So which do you want, a gain of 5 percent or a gain of 59 percent?

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  173. "I just calculated if we take an average gold price of say around $350 in the 1980s and then we compare that to the average monetary base in the 1980s and to the average US government debt in the 1980s… but if I compare this to the price of gold to these government debts and monetary base, then gold hasn't gone up at all. It's gone actually against these monetary aggregates and against debt it has actually gone down. So I could make the case that probably gold is today very inexpensive.'

    -Faber

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  174. Why is a debt deal bullish for the dollar and bearish for PMs? Doesn't it mean more confetti money flowing a la QE?

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  175. Poly,

    Without no daily cycle correction though?

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  176. Poly,
    Show me that rising dollar you're talking about.

    Gold went nowhere until the dollar started to drop. I'm sorry but your kidding yourself if you think gold is going to $1800 along with a rising dollar.

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  177. Mike

    You have to remember that the cycle tool is similar to a swing trading tool. It works a lot more clearly in a trending market. When we move into sideways consolidation it's a lot harder to clearly pick the swings until we break into a new trend.

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  178. WW, DC correction is just a ripple, we can't avoid them, were talking IT cycles, that's all that really matters in cycle analysis.

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  179. Looking at historical hui/gold ratio it seems pretty obvious that the direction reversed close to when GLD started up. It's just easier to invest in gold now than it was before gold etf's and that is probably why the miners have underperformed gold since 2004.

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  180. HUI:CEF
    http://stockcharts.com/h-sc/ui?s=$HUI:CEF&p=W&yr=10&mn=1&dy=0&id=p59735877573&a=240541833

    SVM:CEF
    http://stockcharts.com/h-sc/ui?s=SVM:CEF&p=W&yr=10&mn=1&dy=0&id=p59369290206&a=240541849

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  181. Gary, What's that? Why didn't you draw it from July 1st when it all started? and try using a 30 day daily.

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  182. This comment has been removed by the author.

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  183. Poly,

    I hear you, IT cycles are all that really matter. I was just asking being that early in the week it didnt seem that you thought one one (daily cycle correction) would even occur...I cant find one instance of gold putting in a $150 rally without the dollar dropping...can you point me to a date so I can find it on my charts?

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  184. Poly, you are right, fully 1/2 the current rise in gold came on the heels of a strongly rallying dollar.

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  185. This may have been mentioned before...but did anyone see this H&S on an S&P weekly?

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  186. You kids are bickering too much today.
    Time for me to go do electrical wiring downstairs,
    WW,
    Keep a close watch on the debt gabbing, I would say don't add any, just see what happens with what you have.

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  187. Poly,
    The entire period is there. It's clear that gold went into consolidation mode when the dollar went into consolidation mode. For us to have another run like we had last fall we have to have the dollar go into another decline like it did last fall.

    BTW sovereign defaults are not going to be bullish for gold. That would be a massive deflationary scenario the same 2008. If something like that were to happen it doesn't lead to buying... anything. It causes panic selling in everything.

    You better hope that we don't start seeing sovereign defaults. It would be much better for gold if we continue to see bailouts. Bailouts mean continued money printing.

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  188. This comment has been removed by the author.

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  189. Gary,
    It did happen in the 2005 -2006 Parabolic run...Both the Dollar and Gold and HUI rallied strongly together Sept through Nov.

    the beginning of Golds Parabolic run 2005 to 2006 began with $USD in Rally Mode

    DOLLAR 2005...SEPT - NOV = pretty much STRAIGHT UP

    http://www.screencast.com/t/2S2Mk6UGnhIn

    HUI (ESP. during SEPT 2005) Also UP

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

    and GOLD wkly, UP every week of SEPT too

    http://www.screencast.com/t/mRGqlcfl8O

    So I also was thinking that it could happen again. no?

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  190. WW,
    I hate to say this but because we're selling the house I'm going with 14/2 which is adequate.
    Had we decided to stick around, I would have put 14/2 on the regular wiring but fed a sub-panel to the audio/video setup with 8/3, branching out to 5 12/2 circuits, one each for the TV, main amps, surround amps & sub-woofer, preamp & surround decoder & satellite decoder , DVD player & turntable & active crossover. In the last house this is what I had done PLUS I had a 5KW isolation transformer before the sub-panel.

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  191. When one looks at a longer term chart the recent two-week dip just doesn't look like an intermediate correction.

    I think gold is about to throw us a major curveball. In order to hit this curve we are going to need help from the dollar.

    ReplyDelete

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