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Sunday, July 31, 2011


A portfolio update has been posted to the website.


  1. Bot some DIA calls on Friday close. Whatever happens they are gone on the open. Rather small trade.

    More interested in what DUST does.

  2. Gary,
    How long and how high will the dollar have to go before we can conclude it is not going to roll over?

  3. Gary===Your weekend report was one of the best I have seen in a long time. Your description of what most investors/traders go through is a classic!

  4. Gary,

    Market rallies for the meantime, dollar drops, gold will be going higher for a couple of days no?

  5. W2,
    You gonna short the world, Dawg?

  6. Zerohedge coverage of "the deal"


  7. 86d4life, I've switched to salmon. No more tuna. ;-) Had 2 big slabs last night - feel great today.

  8. Russell,
    If the dollar rallies violently then I think we can conclude we have an intermediate bottom.

  9. WW,
    Right now gold is down and the dollar is up.

  10. Gary, how about running another weekend (or some other such) special as a bone to get boneheads like me to subscribe?

  11. Bill,
    did you ever get a chance to try lake trout? Like in a tie for first place with mackeral for most omega 3, double salmon. I know a guy locally that get`s it from a fisherman up in Grand Marais for a dollar a pound for the whole fish, 15-20 lb fish. It was too late last fall when I heard about it, but this fall I`m going to back up the truck. Nothing beats smoked lake trout.

  12. Bill,

    The cost of the subscription is a wiggle on the daily chart.

    The cost of not subscribing, now that's a different matter . . .

    Good trading,
    Le Fou

  13. This comment has been removed by the author.

  14. Bill, YOU are wasting money, not subscribing.

  15. As i stated last week . Gold and Silver Rallied back up to another High ,at exactly 90 Degree's in Time ,on July 29. From the April High

    Silver Rallied Back to 50% of the Big Red Weekly Candle ,and Found Resistance.(as i thought would Happen )

    While Gold Rallied back up to a New High Exactly 90 Degree's in Time (April,29,2011 - July,29th,2011 )



    Of course there isn't any Confirmation of a Top Yet,But,I get a High in using Gann TA to help me figure out a Date for a Potential Pivot in Time,Where a Meaningful High (in this Case ) May Occur.and last week ,May have been a Pivot High.

    If this ends up being a Meaning Top,It should be Clear by the End of Next Week..

    Remember nothing is 100%.And Gold may Keep Running Up,but i shorted Silver last week at the High's and still Holding 1/4 of that Position.

    Good luck to All

  16. Wow, 3 beatings w/just 1 little post. It's working! OK, I'll subscribe.

    86, lakes here are polluted from acid rain filled w/lead and mercury from Chinese factories upwind. Sounds great where you are though.

  17. Bill,
    If you don`t subscribe, I`ll be forced to whip you with a polluted fish..........

  18. Gary,

    I know that...what I meant was if the market rallies tomorrow it will push the dollar lower, and gold higher...no?

  19. I need to subscribe and WW needs to back off the whey. ;-)

    WW are you a former Navy Seal or Green Beret?

  20. Honestly Bill,
    I signed up with Gary on Jan 20, in time for the ride up in silver and I am still amazed how far I have come in this amount of time. I never would have believed it.

  21. dollar looks confused and irradic.
    o wait maybe thats just me

  22. Bill,

    Im a former gangster... my wars were in the streets. Thats all in the rear view mirror now.

  23. Now I make beaver shorts with 86d4life, and woodchuck boxers. Ive come a long way...lol

  24. Bill,

    Funny you ask...I would most likely be a seal now if I had not lost my leg in an accident, my best friend went off to be a seal without me...it was rough.

  25. 86/everyone, I'm a subscriber now.

    You can all put your clubs down now and rest easy. Another one in the bag!

  26. You are really touched man.......

  27. Gary,
    I bagged another one!! Do I get a free week on my re-up????

  28. Bill,

    Welcome to the party my friend...did you know that Gary is always drunk when he writes the reports? Just kidding, just kidding!!!!!!!!!!!!!

    Bill that is the best decision you ever made!

  29. Now W2 is gonna come over with his rattle, screaming, that he wants a week too.............

  30. 86,

    All you did was talk food with Bill, you hungry hippo....lol

  31. 86,

    LOLLLLL...you know me well my friend!!!

  32. Gary,

    If 86 gets a free month I deserve a free year of the aggressive!!

  33. Well yeah, see I schmoosed my way in and then I dropped the polluted fish bomb on his ass. Psychology, Bro.........

  34. Man, I can see already it`s going to be a long week!

  35. Bill,

    I cycle too, only for cardio on my exercise bike, do about 35 miles a day...its probably not like real cycling though...although I do the cardio setting which is up and down hills.

  36. Bill,

    Do you supplement anything...my whey protein has 5 grams of creatine in it and a big dose of a full spectrum of amino acids also?

  37. WW, riding on a trainer indoors is actually excellent for cardio, and very hard as you know. There is no one to draft behind, and you are spinning at 100-120 rpm w/no pause, which is an incredible workout.

    Last year I had a crash and broke my collarbone. I spent 3 months on a trainer trying to keep my legs, and man I couldn't believe how hard it was. I did 1 hr/day at 120 rpm. Sweat like a pig.

  38. 86 runs from bears all day in the woods while he traps beavers at the same time...the man is amazing!

  39. Bill,
    I will turn the 15 month special back on for a couple of hours.

  40. I hope no one minds a post that actually has something to do with precious metals. Apparently there's a new increase in the margin requirement for silver:


  41. This comment has been removed by the author.

  42. Wow I thought cycling outdoors was harder...I mean yeah I do sweat like a pig, and its hard as hell when your trying to maintain 160 beats per minute heart rate, but I always thought cycling outdoors was harder for some reason, I forgot that you guys drift like a flock of geese!

  43. hamvestor,

    I have an account with IB and was not notified yet.

  44. No sweat Hammy. Bill will glad to tell you all about lead and mercury in his tuna.........

  45. W2,
    where do you come up with this stuff, `drifting along like a flock of geese`? For cryin` out loud!!

  46. 86,

    Bro thats what they do no? You ever see geese flock, they fly in a V shape because they are drafting, makes it easier for them to fly long distances...you have to apply that to trading also...lol

    I mean c'mon now, you out of all people, the wild beaver trapper (I never even knew beavers could be trapped!) didnt know this???

  47. excuse the off-topic, but has anyone here any experience with Doberman pincher dogs?

  48. Gary,

    Not sure if you responded to this question I asked earlier...do you think you will be setting up an "East Coast Tracker" get together on this trip to the Gunks?

  49. Eamonn,

    Yeah...my experience with them was getting bit on the skull and having to get rid of the damn dog!

  50. Gary, nice report (I can also now say ;-)

    On the $GOLD chart showing the intermediate corrections ... the July 1 low sure looks like an intermediate correction low.

    So it's just the $HUI divergence that's causing you to step back? I mean, if the $HUI weren't divergent, would you be questioning $GOLD, correct? But it is, so good call.

    Do you have like a 10 yr chart that shows gold's intermediate and long term cycles somewhere? Same for the $SPX?


  51. You think those geese aren`t up there working there ass off?? Look at the mallards that leave the prairie/pot hole in N.&S. dakota. when they leave for good, most won`t touch down again until they hit arkansas. Try that on your bike.

  52. WW, tell me more. Was it your own dog? How would you describe their temperament?

  53. 86, WW's right that drafting saves huge energy - estimates are 30-50%, depending on the grade. Stick to beavers. ;-)

    Gary, sorry I just read earlier posts and now also see that sentiment is also a concern, not just the HUI/gold divergence. Forget my earlier question.

    I'll be offline now reading.

  54. Eamonn,

    Yeah it was my dog...The dog bit me on the head... I had to get rid of the dog...doesnt that describe its temperment!!

    I had pitbulls that never even bit me, never even tried...and they are supposed to be killers, obviously all dogs of the same breed are not the same.

  55. Gann,
    I have no idea what the vibrations thing is but thanks for the chart, as usual.

    Your GLD puts should work out good, don't get greedy.

    I can see a few days of market rally here and PMs down. I originally thought that they would seal the deal Thursday night but I was off on the day but not the time of day! Of course it's after hours so people get stuck with positions and the politicos get overtime and meals.

  56. ps, US markets futures are up like quite a bit.

  57. Bill,

    86 knows the deal...he's just playing stupid as usual..for goodness sake he runs after beavers all day while getting chased by bears, if anyone knows about drafting it's him!

  58. Miyagi,

    I hope so...definitely won't get greedy..thanks for the reminder though, I welcome those reminders always so please never cease!

  59. WW, thanks. Guess thats that one off the list...

  60. Gary, really good stuff in your SMT premium. Very cool how you use several hard facts to draw conclusions. Am sure you're swamped, but perhaps someday you can add a traders log, as it's be really helpful for newbies like me to go back in history and follow your log on the charts. Anyways, well done.

  61. Bill,
    You notice that Gary turned the 15 month special on for you?

  62. I shorted VIX last week in preparation of the agreement. What a deal...

  63. Eamonn,
    the higher the intelligence of the animal(W2) the more widely varied are their personalities. Just like people. dobes are not known for sitting around doing long division.

  64. As said last week---A deal would be done. Those vacations, likely some on our $. Most of crap dog and pony show for the news media.

    All the problems worldwide are still there.

    My theory---The markets will do everything they can to prove the majority wrong. Usually does!

  65. Hi Miyagi-san, yes I did.

    Sorry Gary I didn't respond as I should have - I didn't know what to say because I had already signed up for the monthly before you made your post.

    I'm learning a lot here - about stuff that is well thought out and is actionable - for anyone who isn't a member I highly recommend you take a peek w/the 1 month sub.

  66. Hey guys, I had a 1 month sub last month. Looking to upgrade it.

    Website told me to cancel my current, so I did. Where is the link to resubscribe under a longer-term plan? And what is the 15-month special?

  67. Eamonn,

    86 made a very good point...that is precisely why he traps beavers, they are so intelligent and personalities so varied that from them he learns a great deal...when in the forest with them he truly believes that he's in Narnia!

  68. Jason,
    15 months for the 12 month price.
    I don't get a cut.

  69. WW,
    Is that you in your profile pic?

  70. GARY,

    >At some point we are going to see a correction that bounces on the 150 and then violates it.
    >That violation will cause traders to panic because they aren't expecting it.
    >I'm expecting it.

    Ironic because I was actually expecting the opposite: That a pullback would start and everybody who wanted to buy would get cute and wait for the 150dma "cause it always works" and then get radically left behind when it failed to hit one time.

    So far I think that is what has happened and not the reverse where it goes BELOW the 150 to fake people out. Yes....there was a fakeout, but I think it was the opposite of your view.

    I'm still 4x long gold futures. My stop has been raised to near 1585 in case I'm wrong, but I think we drop little from here and continue higher. I think the bloom is off the rose and the world is starting to realize this train is on crash speed.

  71. Yeah Miyagi thats me in DC at the Washington Monument. I was at the Restoring Honor rally.

  72. TZ,

    A daily cycle correction will take us below 1585... now im short 4X futures tonight at 1615 with a stop at 1622.

  73. TZ,
    Yes that is exactly what happened this time and everyone chasing is why we got a 10 day rally.

    But no way in hell the miners should be acting like this if gold was going to take off on a parabolic move.

    With sentiment where it's at and the divergence in miners and now we are on day 20 of the daily cycle I don't want any part of this until I either see that sentiment cleared or the dollar violates the next daily cycle low.

    Like I've said many times cycles are best for telling us when to step on the gas and when to back off. Now we have four things (sentiment, cycles, divergence in miners and stretch), actually five if you include the COT report, that are telling us to back off.

    I for one am going to listen.

  74. Apparently Paypal is having technical problems tonight. Wait till morning before trying to upgrade your subscriptions and give them time to fix the problem.

  75. This comment has been removed by the author.

  76. >But no way in hell the miners should be acting like this if gold was going to take off on a parabolic move.

    You know my opinion on the miners and my belief that nobody should be playing them until they *factually* demonstrate outperformance (as a group) on an ongoing basis (not just a few weeks here and there. And not just a single stock or so.).

    So far they have not since 2004.

    That is long enough evidence for me to listen. Others seem to feed off hope or "they are bound to outperform soon" or entertainment value or whatever.

    Great. Good luck with that. But
    I'm sticking with gold and not using the miners to tell me much more than that I shouldn't be in miners.

    If gold plummets here I'll get out with some (reduced profit), but I'm not going to exit at this point for FEAR that it is going to drop when I read current events as being very strong and when I don't see much of a reason for a top yet.

    I'm willing to live with my call either way.

  77. PS: FRODO...thanks for posting that chart of $hui:cef earlier. I saw you also posted SVM, but one of my other statements during that discussion (months ago if you missed it) was that a SINGLE (or two or so) miner which nevertheless demonstrated some outperformance against 'straight metal' was not sufficient because a person would be crazy to put their entire net worth in such a stock (ANY stock). However a person would not be too crazy to put their entire net worth into only gold and silver (insured, allocated, etc.)

    Thus SVM didn't prove a counter point (and hasn't even outperformed as of late anyway).

  78. TZ,

    Gary gave a few solid reasons other than miners divergence for there being near a top...also the TSI is negatively diverging and turning down and stochastics are rolling over on a daily, more than enough reasons for a top...I guess we'll see how it pans out.

  79. Here's one for the evening.
    I throw out a challenge topic:

    Give reasons why miners are NOT outperforming 'straight metal' so far in this bull market (since 2004.)

    Furthermore, give reasons why they might NOT outperform for a continuing period going forward and MAYBE NOT FOR THE ENTIRE REST OF THE BULL MARKET.

    (All of this contrary to experiences in 70's whereby they DID tend to outperform as best I know).

    I can think of MANY REASONS, but will withhold them at this time.

    Let's see how able and willing others are to try to counterargue "they are going to outperform" and also to justify why they are not so far (which is true).

    If you can't think of reasons then either you aren't trying or you don't care. In either case your bank account might reflect that result. Give it a try.

  80. WW, I subscribe to gary and he maybe right. I'm wrong plenty of times myself. I have simply decided that I think that triangle in gold a bit below 1600 will hold and I'd rather hold here with a stop below that than sell out and be left if it continues to run.

  81. TZ,

    Subscribe to John Doody's Gold Stock Analyst and you'll have all the proof you need, he lays it all out and shows how his Top 10 gold miners outperform gold over the last few years. If you want I will email you the july report...BTW I am straight metal for over 2 weeks now, sold all miners.

  82. I'll start with reason #1 for why miners may NOT outperform as many are expecting (bolstered by the 70's example), or might underperform until very very LAST moments of this bull.

    #1: Unlike the 70's and decades ago, the mines and ore grades around the world are a small fraction of the concentration of ages ago. ON AVERAGE, humans have simply found a great many of the "easy" and cheap precious metals discoveries (just like oil) and extracted them. Ongoing production is progressively smaller and smaller concentrations at worse and worse locations and depths. THis will only get worse and worse over time.

  83. WW,

    You and others keep twisting my statement. I have said a MIX OF 50/50 SILVER AND GOLD.

    Please at least start with my correct assertions.

    PS: I'm familiar with GSA. I'm using $hui/gdx in my statments regarding my assertions.

    Such that somebody wants to use a MANAGED/PICKED list that changes somewhat regularly (as per Doody) then that introduces a new element in the discussion.

    You are now arguing JOHN DOODY vs "straight metal". Not "mining stocks."

  84. From the beginning of the bull market miners have so outperformed gold by such a wide margin that gold isn't even in the ball park.

    Miners could be waiting for gold to catch up.

    In 08 it was clear why miners where underperforming, the price of oil was going through the roof. Profit margins were being squeezed.

    Miners are underperfroming because they are warning us that the run is over. QE has ended. It was the driver of this leg up in the secular bull market.

    Has that for reasons?

  85. TZ,

    Sorry about that didn't realize you meant 50/50 gold and silver.
    BTW..John Doody is "mining stocks" (maybe not 50/50) he has SLW in his Top 10.

  86. Gary,

    You are making the same flawed assertion as a previous poster.

    Do not say 'since the bull mkt beginning' when I am saying since 2004 and 2005. The miners won from 2001-2004/2005. CEF (50/50 gold and silver) beats from there forward. Are you contradicting this statement?

    Clearly if you go back and use the gains from 2001-2004, add them in, and use them to override the underperformance since that time you will have some gains "for the whole bull".

    Works great except that my broker screen doesn't have a "buy at 2001 prices" button. In light of such a button it is logical to me that something which has continued non-stop since 2004 until now should not be invested against until it visibly changes.

    That's just how I see it.

  87. The $hui:cef chart which FRODO posted earlier.


    Note the chart is LOG which kinda messes up thew view a bit, but clearly 2004 was the peak of 'mining stocks' (the best index I can find going back that long) and it has been flat to down since.

    Clearly there are jags and wiggles on the way. If you choose to try to catch and trade these, fine. It's the same as trying to find a winning table in a casino when the casino *as a whole* is taking money on a roughly ongoing basis.

  88. I said the miners are waiting for gold to catch up.

  89. Anyway. Food for thought. Sorry about all the posts. We've had this go around before of course.

    Best investing to all.

  90. I noticed that its so much harder for people to sell gold than to buy it.

  91. Gary,

    I feel like we are back in june when you were telling us how gold will suck in as many people as possible before rolling over.

  92. We are "crawling" along the 10 day moving average.

  93. a close below 1608 would be bearish

  94. Thanks, Gary. The reason that I am a subscriber is because you have not been afraid to change direction. I form opinions and then bounce them off of you! I have really improved my swing trading by thinking about your calls...Thank you!

  95. Gary

    do you have any suggestions for people who have entered into the BB Crash Trade for the miners?

    eg. should we really wait up to 15 trading days for the GDX to be profitable or is that too dangerous?


  96. The sell on my system really jumped over the weekend, and is now at 1581.

  97. Gary-
    SPX is either on week 20 or week 7 of the intermediate cycle, correct? Also, we wont know which it is until we make this daily cycle bottom that should come in the next 10-15 days. If it is week 20, that daily cycle should also mark the intermediate cycle low? Or do we have one more daily cycle after teh current one to prove the 20 weeks is the correct count.


  98. Gary - so we get a Sept/Oct correction in gold. Miners are leading the correction. Do you think miner will lead out? At what level do you expect miners to start moving up on $HUI or GDX?

  99. sorry Aug/Sept correction in gold.

  100. Excluding the 2008 plunge in the miners, which corresponded to the 8-year cycle low in gold, miners are now the cheapest they have ever been vs gold at any point since the 1980's. (Gold vs XAU).
    A consolidation above $1,600 for a week or two and the miners are set for a possibly significant rally. A meaningful close below $1,600 in terms of price and time, and we will have to be a little more patient :) Note, USD is trading lower this morning vs EUR, though early days yet.

  101. Gary: you wrote
    "But no way in hell the miners should be acting like this if gold was going to take off on a parabolic move."

    Can gold rally and just not go parabolic? Can the miners act this way and gold have a normal rally instead? In March of this year GDX dropped badly after gold bottomed and had its first correction after that bottom, and it meant nothing as they both then bottomed and went much higher.

  102. the short silver trade has been working out well so far. As soon as gold decides to move down there should be some nice profits there

  103. DG,

    Agree, not sure why the discussion seems to be parabolic or collapse to IT cycle low.

  104. not good,
    If you are going to take the trade you have to be willing to wait at least 15 days.

    The Bollinger band crash trade has a very high winning percentage. But when it does have a loser it tends to be very large. So you can't ever put a large position on with this kind of trade.

  105. Brian,
    The gold XAU ratio is dependent on gold holding its current price level.

    If gold starts to accelerate to the downside the ratio could improve even though both are dropping.

  106. Mike,
    The extensive interventions into the markets by the Fed is making it pretty tough to determine where the stock market is at cyclically.

    My best guess is what I said in the weekend report.

  107. CHRYS,
    If we get a correction in gold it should occur this month.

  108. Absolutely Gary. Either gold breaks lower here, or the PM stocks play catch up over the next few weeks. I am undecided but leaning towards your scenario.

  109. DG,
    It's certainly possible. But as you know I'm not basing this solely on the action in the miners.

    We also have the extreme sentiment reading, the stretch to the upper trendline, and a possible three year cycle low in the dollar Along with the ending of QE2.

    All in all there are enough warning signs that I want to go to the sidelines and see what happens as the dollar bounces out of its daily cycle low before making any further decisions.

  110. After rebalancing for the month:
    Long GDXJ 88%, EUO 8%
    Cash 4%

    Performance for July: +2.93%

  111. Miners are outperforming the metals this morning fwiw.

  112. Look at that GDX go! Good morning everyone.

  113. The big components of GDX got hammered after earnings last week. They still have bad looking charts, but AEM, ABX, GG, NEM might backtest and fill gaps at this point before turning lower again and resuming their downtrend at maybe the 10 DMA. The $VIX was up there pretty high too. The junior miner charts are a lot better looking than the big boys.

  114. ISM at 50.9....oooooooooooooopppps

  115. how do you spell R E C E S S I O N ?

  116. It would appear SPY took a Big Bite of something it didn`t like.

  117. Exactly want I was afraid would happen. Everyone knew the market would rally on the news. The market wasn't going down because of the debt ceiling. It was going down because a recession is coming.

    Traders used the bounce to unload stocks.

  118. European debt selling off, fast. ISM not pretty, I smell ink.

    Dollar and gold sharply rally, July 1st correlation back.

    Expectations and "assumptions" are the mother of all evil.

    Good luck everybody.

  119. I wonder if Bernanke sold his gold holdings?

  120. Poly,
    My only assumption is that gold is due for a daily cycle correction and the dollar is due for a rally.

    I want to see how those unfold before I step back onto the field.

    Right now there are just too many landmines on the field.

  121. Gary,

    That's not a reference to your position specifically. Just stating the market was fixed on a equity rally/gold drop.

  122. An argument against QE3 coming soon:


  123. SPY is red now..crazy market..

  124. i think the spx broke 200dma at 1280 but it does not show on TOS. Any ideas as to why--i assume the break is 'significant'

  125. miners leading the action, again

    with gold & silver getting walloped the miners were green and added to gains

    interesting action

    not involved, yet

  126. I believe the Miners are acting correctly. They bottomed FIRST in mid June and took off , some of my Miners gained 40 to 60% (AG went $16 to $25.5 = 60% , SVM $8 -$12=50%).

    They then led down...retracing 50% of that move , most bounced around off their 50sma last week and made inverse H&S.


    and Sentiment ( from my eyes) can do what it did NOV 2009...pegged on the high side, but stayed there for months. Gold went about $900 to $1250 with sentiment where it is today.


    I bought Mid June, and Bought again recently and today.

    The question "what are the Miners telling us? applies now too...they lead up, they lead down, they may be leading the charge to new highs now.

    Miners Now seem to be forming a flag pattern on a 3 day chart, after breaking out from the bottom consolidation. Bought Ag at $22.50

  127. Careful buying todays dip in the stock market. $INDU H&S top close to confirming also $TRANS trend line also broken.


  128. This comment has been removed by the author.

  129. "also" I meant "almost broken"

  130. The problem is that a lot of people sold gold and lost the strong hand.

    Probably Gary will get it right, but if hes wrong and gold goes to 1800..What then?

    Poly told us about a plan to not sell before the last top at 1575 and TZ is also talking about this..

    I sold some half of my gold and got long position in US dollar and it feels fine. I still got my strong hand left..Oki half of it and I can add to it..If we go down hard I sell under 1600..

    Will be very interesting to see what happens now..

  131. This comment has been removed by the author.

  132. Thanks for the info Alex..Still got some gold left..:-)

    Will be very interesting to follow this..

    Seems like the dollar is due for a rally and we will see how cold react..

  133. This comment has been removed by the author.

  134. Alex,
    Sentiment can only stay pegged at those high levels if the dollar is collapsing.

  135. As I said earlier, I disagree with those who say 'this budget thing is just politics', 'of course they are going to increase the ceiling', 'means nothing...', etc.

    I have said I believe this is a huge event unlike previous times cause it is now revealing, for lack of better words, that Superman (the US and thus world) is Vulnerable.

    EVEN IF/WHEN we raise the ceiling our actions have shown that the US is as much of a disaster and runaway trains with NO BRAKES as all the other countries of the world who are also heading for the wall.

    As proof I give you today's WSJ story on that exact topic:


  136. I will have no problem jumping back on gold. But not until I see how the daily cycle correction plays out. If you think gold is just going to go straight up and never correct again I suggest you look again at a long term chart.

    Everyone screams if we are late to exit and then they scream if we are early. Decide which you prefer, late or early.

  137. Gary / TZ / others:

    Maybe this is a complete dumb question regarding Miners / Gold:

    Given that miners are most exclusively bought in US versus Physical Gold which has global demand, would'nt it be logical that more money flow into gold than miners?

    Perhaps, in 2004 the global demand for Gold was yet to kick in and hence HUI outperformed till then.

    Maybe the global demand for Gold also explains why SoS and BoW on GLD don't have as much predictive value as the SPY?

  138. interesting that the dollar has weakened significantly against the CHF today

  139. AG 50% re-tracement ..need to hit 21.

  140. Blogger Gary said...

    Sentiment can only stay pegged at those high levels if the dollar is collapsing.

    I checked and , yes, the dollar was dropping at the 2009 autumn run.

    So-If the dollar rises now , AND GOLD rises too in a sort of run-away move...would you expect sentiment to weaken? ( and therfore could become a bullish indicator at some point , reduced bullish sentiment)?

    I know there are prob hundreds of possible scenarios and 'what ifs'...I dont mean to be that way , I'm just wondering about the issue of sentiment being too bullish, but when I looked at that chart , it seems to have been there before and Gold rallied successfully. thx

  141. NJ,

    I have no idea why you would be so shy or doubtful of your reasoning abilities. Kudos. You are spot on.

    You have just correctly voiced what would be #2 of the multiple reasons that a person could argue 'straight metal' is beating and might very well continue to beat 'miners' for much of the rest of the bull mkt.

    So I will add your #2 (elaborated) to my #1 starter and recap:

    #1 ore grades in the earth's crust are NOWHERE NEAR their levels of decades ago. Most of the good stuff is GONE....DUG UP. Scraps remain, just like peak oil. Scraps of something that is gone don't make much of a good industry.

    #2 Stocks and miners are played by relatively wealth and upscale members of society. The collapse of the *world* reserve currency is going to be a WORLD event. Inflicting damage on many MANY people who live on pennies and dollars a day.

    Our view if skewed. There are BILLIONS who do not and never will have an etrade or whatever account. But they can, will and DO buy metal.

    Years ago people in western companies once marveled that "all they wanted to do was sell a toothbrush to every chinese person" (or pencil, or bicycle...you get the idea).

    Well...what if all the chinese and indians and a billion more elsewhere buy gold and silver?

    I can promise you they will do THAT before they start opening an etrade account and 'clicking it in there'. And they are. The buying stream of a few billion people just might overwhelm the trading stream of some relatively tiny western daytraders.

    Well there are #1 and #2 possible reasons. There are more. I'll see if anybody else wants to give a shot.

  142. Well, I was kicking myself about letting go of my SLV puts, but now I look pretty smart!

    Le Fou

  143. I was a bit surprised with Gary's switch on the miners. Afterall, he had expected GDX to fill the gap on the chart, which is *exactly* what it did. You have many of the miners now set up with the inverse head and shoulders, which Gary also hinted at.

    Yes, one day does not mean Gary's current stance is wrong, it just seems a little extreme given his prior bullishness (triple top breakout, etc.).

  144. Alex

    What did you buy today?

    I just bought some more dollar longs here..

    My gold futures is still here also..

    Gary for me its better to sell early..:-) But there are so many scenarios here..Will be interesting to follow..But if the miners will rally here will it change your analysis? If they rally and the stockmarket falls apart..

  145. Blogger oa92000 said...

    AG 50% re-tracement ..need to hit 21.

    Thats true, but stronger stocks retrace less. I use Fibonacci numbers (mostly .382 or .500 or .618)...so check this out.

    Ag went roughly $16 to $25.5 (ROUGHLY)...thats a $9.5 move.

    9.5x .382= $3.63 off the top

    so subtract $3.63 from $25.5= $21.87 target and it hit $21.79 Thursday

    close enough for a 1/3 fib retrace I guess :)

  146. Le Fou,

    In case you haven't noticed, the hardest thing to do right now seems to be to HOLD long metal positions.

    I was even feeling it last night and thinking about exiting. However the charts do not appear to FACTUALLY show weakness and much of the selling is emotionally generated cause people simply can't believe it is so strong and seemingly can go higher.

    I think this is a Livermore situation where it is hard to 'sit tight' but yet might be the exactly correct thing to do.

    If we go much higher in gold it might very well launch into some recognition/capitulation buying.

    I could be wrong and I bumped up my stops near 1600 in case of so. FYI/Warning.

  147. Reverse H&S pattern on gold (last week approx projecting up to 1665 or so if we break higher from here.

  148. Italian and Spanish debt cliff diving, again. Both 10yr debt back above 6%. This was and remains the driver of the dollar/gold trade.
    Dollar index is rallying, but Yen/Franc are too, don't be fooled.

    Euro ISM down. Euro firms missed Q2 earnings by the widest margin since 2000. All major Euro nations implementing oppressive austerity. US 9Fed) no longer providing any stimulus, state/local contracting like crazy.

    The slowing (recessionary) world economy and austerity will suck the last growing green shoots our of this world and bring on a 2nd deflationary wave like you wont believe.
    The net effect, a sovereign revenue collapse that will bring a $2T+ Euro "Tarp like" program and multiple central banks liquidity like you will not believe.

    (Obviously the above is not a short term trade/description. I agree, DCL would be great if we want to move much higher. But I'm not waiting for one)

  149. Considering how the commercials (COTs) have NEVER been wrong on gold during this bull market, and how they are quite bearish on gold right now, Im leaning towards a correction myself.
    Bias; Long USDX

  150. Alex,
    I think way too many people are misunderstanding sentiment. I think a lot of people are trying to use it like a technical tool.

    Sentiment isn't an overbought oscillator, it's a sign that we are in jeopardy of running out of buyers.

  151. TZ,

    Although I exited my metals position last week, and have no regrets doing so, I none the less appreciate your comments.

  152. One of the great things about investing/trading is that you simply do not need to swing at every pitch. Imagine a game of baseball where you could take as many called strikes as you want. What would bee the right strategy? Wait for the pitcher to make an error. Just stand there with cash and wait for a great setup, then go heavy (swing hard). I am light right now as things do seem confused to me. Gary is of course right: here will be a DCL at SOME point from SOMEWHERE. I plan/hope to but a ton again then. I was long 50% of my net worth and am now light. If gold rallies higher and then drops and I catch that bottom...great!...wherever it is.

  153. Green,
    I was expecting GDX to fill the gap at the bottom of the daily cycle correction. Not before gold had even corrected.

    Now we've got even more of a divergence going. Gold is] new all-time highs HUI is struggling to stay above 550 not to mention we probably have a selling climax coming in the stock market.

  154. ROB,

    Thanks. And thanks for putting up with them. I know I have a way of talking sometimes that isn't all 'happy feely' like some prefer.

  155. Moneyman,
    I've learned my lesson the hard way. I try to control my emotions when something is late in its daily cycle, stretched extremely far above the 200 day moving average and everyone is looking for excuses why it will continue.

    Somebody mentioned the other day that massive call buying is usually a sign of an impending top and we saw that in spades last week. At this point I still have a little bit of GLD in the model portfolio which will catch any more upside.

    But there's no way in hell I'm going to be stepping on the gas this late in a daily cycle with gold stretched this far above the 200 day moving average with sentiment going through the roof and if it holds at this level tomorrow it's going to be even more extreme.


    I should say that in times like now...a little unclear, I 'trade' as much as I 'buy and hold' for a bit.

    Today I bought a good chunk of AG just based on a decent 'trade' set up ( but I may hold if things keep improving )

    there IS a gap at the 50sma...so I keep an eye on that, but its at the 20sma , volume really dried up the last 3 days down-

    and on a 5 day / 15 minute chart, the bottom was thursday was retested Friday on less selling.

    today broke out and now looks like a bull flag


    notice the MACD didnt support the sell off, now it's hopefully a flag pattern to work off short term overbought , and resume upward

  157. Weekly swing low in for the $. + watch the 10yr bond. 2.74% yield!! Traders are looking at slowing growth ahead.

  158. TZ,
    "the hardest thing to do right now seems to be to HOLD long metal positions"

    Absolutely false. Everybody and their cousin is buying gold because it's the only thing going up. Sentiment isn't where it's at because people are having trouble holding gold. Sentiment is where it's at because everybody is buying gold.

  159. This comment has been removed by the author.

  160. DG,

    Thanks for your comments. Good reminder for those of us who are lighter PM's than we'd like. We don't have to swing at every pitch. Instead, wait for a great setup!

  161. Poly,
    Yes I think Docs trend line break is probably correct most of the time.

    But gold hasn't broken its trend line yet. When it made a higher high before closing below the trend line we had to redraw the trend line.

  162. Gary said..."
    Sentiment isn't an overbought oscillator, it's a sign that we are in jeopardy of running out of buyers."

    August 1, 2011 8:39 AM

    Well, as a 'sign', ...you posted a chart of the history of it. Your charts purpose (I thought) was to say...we were here before..its at a high. Signals we could run out of buyers at this level.

    So I merely say...That same chart of history shows me that "we've been here before, at this high, and didnt run out of buyers for months".

    ESPECIALLY if..the markets liquidate some of the current positions from Spx and re invest in Metals and Miners. Maybe? Maybe not?

    I am new to sentiment reading as a guide.

  163. DG,
    Very well said. I have no problem waiting until that sentiment level clears or the dollar shows signs of breaking down before I push this trade.

    When I get all of the I odds in my favor I'm more than willing to stomp on the gas, obviously in my personal portfolio much harder than the model portfolio.

  164. Alex,
    Don't forget that I added that in order to hold at these high levels the dollar has to be aggressively moving lower.

    Yes sentiment can hold at these levels but there has to be a fundamental reason for it to do so.

    And even then there were sharp daily cycle corrections to tease sentiment briefly before the next pop higher.

  165. I am not new at using sentiment as it is a major part of my work and always has been. The trouble with "lots of bulls" is that we can go to "more bulls." Sentiment taken in a vacuum is useful only when it reaches a true extreme. In 1978 there were 97% stock market bulls. The economy remained strong, but the SPX went into a bear market because it had too with everyone bullish. Just using that sentiment reading you could short safely. If we ever get to that level of bulls in gold we will know what to expect. We will get to that level at some point, but the only way to get there is to get to THIS level and then have gold keep rallying so the bullish camps grows even more. To me, the fact that this is the highest level of bullishness in the past 3 years is mildly interesting and certainly allows for a decline, but does not in any way demand one. $BPGDM is dead neutral, Hulbert is neutral, and Rydex traders are neutral. We are hardly so overdone that we have to go down.

  166. seems the S&P has finally knocked down the door of the 200dma: http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p30047014117

  167. Another opinion on sentiment, FWIW.

    Low sentiment levels have marked every IT cycle low and sentiment does not make it to those basement levels without an IT cycle low. But they have not marked every top. Obviously there is a strong correlation on tops/bottoms so we do need to be careful.

    We had a record 2.5 year sentiment low on July 1st, to not believe that was an IT low but to now talk about the current high sentiment levels as a possible top is rather contradictory, is it not?

  168. GARY,

    How does jason calculate his 'sentiment'? Cause it is going against what I am feeling and seeing in people I know and people on this board. The urge seems to be to sell or be worried about the downside which is not typical near a top.

  169. Thanks Gary

    I'm sure all of these conversations can seem tedious, but just think of the education that your readers (especially newer ones) can be gleaning.

  170. Anyone here have an opinion of the Daily Market Summary and Lance J. Lewis?

    I went ahead and signed up for the free trial after discovering some interesting techniques he uses.

  171. As I look across the gold sites...everyone was predicting gold drop triggered by Washington
    deal....big money short precious metals...gut feeling this is setup for parabolic rise...interesting to watch...only time will tell

  172. Moment of truth; spy & indu at 200.

  173. Odd..
    ABX up 1.7% US, down 0.7% Canada.
    SLW up 3.27% US, down 2.41% Canada.

    Usually they run pretty close.

  174. It looks like we aren't going to get our bounce and then second leg down. Traders used the bounce to unload stocks immediately. The panic stage is starting.

    I wonder if any of the perma bulls still wish to argue the bull side???

  175. MrMiyagi ,

    Aren't Canada's markets closed today?

  176. I know that BoW and SoS dont work for gold but FWIW...

    3 straight days GLD on the SoS List - 33M, 38M and 41M today)

  177. Now silver and miners both are diverging from gold.

  178. Rob L.
    Ah yes, holiday in them there Eastern provinces. Some anyway..

  179. POLY

    That was quite a strong vote for the IT low remaining July 1 , was it not? It certainly seemed like an interesting line of reasoning :)

    and DG

    thanks for adding this..

    "$BPGDM is dead neutral, Hulbert is neutral, and Rydex traders are neutral. We are hardly so overdone that we have to go down."

    I wasnt aware of those stats here.

    We really seem to be in the middle of no-mans land here.I am SO looking forward to longterm clarity!!
    For now I am back to 'trading until proven otherwise'

    Out for lunch! Good day all

  180. So.. deal or no deal? What is the outcome?

  181. MrMiyagi,

    What you smoking, my friend? It's BC day out west!!

  182. where's BEANNIE? who's real alias is -


  183. Rob L,
    In that case, let's say Territories and the Frenchies.

  184. Gary,

    If we redraw the DC TL using the 7/28 low, then today's low has broken that TL. So could today's low turn out to be the DCL?

    (The drop from Friday's high to this morning's low was almost $30, not what we would usually expect for a DCL. However, this appears to be a very strong market, maybe $30 is all we will get??)

  185. Neither Bull nor Bear on SPX but if I can catch a trade at about 1270-2 I would likely be a buyer. This is 4th day 2 day rsi below 5. This, I have seldom seen. There are studies am privy to that this is a high percentage trade but there are always excetions,

    That is why I would use a stop if I get a chance to buy. Yes I know that would be below 200 day ma.

    I may not even get the chance as I want more weakness today in SPX.

  186. TZ,

    reason #2. I actually said something similar yesterday. You have millions of people who lived through WWII, communist takeovers, and who believe the end is coming. They are buying physical gold and securing it. When the traders realize their models are being marginalized they'll rush back in and drive miners higher. 2008 was the first warning of a new paradigm, this is the second. New models will be made to reflect changing reality.

    This is the biggest inflection point since 2008, and other than 2008 the biggest in a decade or more. It seems logical to me for the sentiment to reach very extreme levels

  187. Setting up for a nice BB crash on SPY today.

  188. I'm a perma gary..do what gary suggests, end of story


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