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Monday, August 8, 2011

HISTORY IS BEING MADE

We are truly seeing history being made as the stock market moves down into its yearly cycle bottom.

The last time the market was this oversold was after 9/11.


Breadth has moved to levels even more extreme than the crash of 2008.



When this bottoms, and I think it is days, if not hours away, we are going to see a rally unlike anything we have ever seen before. A rally back up to the 200 day moving average is almost a certainty. Plus the degree of stretch we are seeing right now probably even guarantees a move considerably above the 200 day moving average.

It seems like a great many folks have got it into their head that one is only allowed to make money in the precious metals market. Take a look at the long-term chart of gold though.

This has now become the steepest parabolic move of the entire secular bull market. As we found out in May, parabolic moves are prone to crashes. At this point I have no desire to be in the gold market. I could care less whether it goes to $1800, $1900, or $2000. The risk of getting caught in the crash when the parabola collapses has become too great.

I don't care where I make money. Gold, silver, or stock market, it's all the same to me. Profits are profits.

At this point I would rather put capital at risk in a severely oversold stock market than a parabolic gold market.

363 comments:

  1. Shalom,

    Suppose the miners fall along with gold, do you have a stop where you'll get out or will you continue to buy in all the way down?

    If you have a stop, can you share where it is? e.g. NUGT or GDX.

    Thanks.

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  2. Gary, good grief, take some time off and go on a date once in awhile.

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  3. Nice work Gary,
    Factor shares has a 2x etf which is S&P bullish and US$ bearish. Seems like QE2.o2 or QE3 would make this etf soar as FSG has today(+19%)

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  4. So you COULD care less if gold goes to 1800?

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  5. gold will open at 1800 and go to 1900 tomorrow at this rate :)

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  6. gold hasn`t stopped rolling since close. unreal.

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  7. Broken, I think you catch his meaning. We can wake up to gold down $200 in overnight trading which will devastate most here that are still in, and I am but pretty hedged. So, safe than sorry.

    Gary breadth readings are at 1940 extremes, this seems more than a run of the mill yearly low to me.

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  8. Another thing to bear in mind, some of these hedge funds are long GLD, and may be forced to puke up these shares. ZH says we can see a 20/30% one or to day crash in GLD. Not something I am interested in riding down.

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  10. IMHO it's pointless to call a top or bottom in a market; I feel much safer holding a core long position in a bull market and at the same time trade volatility - buy the dips and sell the rallies. In the gold market this has proven a much better strategy.

    For this reason I have sold only a very small position on this megarally - I will hold the rest until 4000. We'll be there in a couple of years - maybe 3.

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  11. Agreed Gary,
    I sold out on Thursday morning when it seemed to me that risk was greater than reward in Gold. Obviously, I was early, but I really don't fret it. Although its easy to count the profits one misses, the truth is there is always another set up around the corner, and you do a good job of pointing out the setup that's occurring in stocks now.

    But check out the setup in gold...As far as buying gold at this point, it could easily go up another hundred points, but it could easliy go down a hundred fifty points, and it will when the parabola breaks. I'm licking m chops hoping gold goes higher as I'd love to buy some puts on a vertical move. I know there's a great chance I can make everything I missed in the rally if I'm in puts for a fall from the parabola.

    So, if gold corrects here, great, maybe we'll have a shot at another daily cycle up, but if it just rolls higher, we get a shot at playing a broken parabola..one of the most exciting and juicy times to be short, via puts in this case to limit risk. The fall from a parabola is often 3 to 4 times quicker than the rise it took to build it.

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  12. Great article, Gary. Short 'n sweet, and most importantly, all CORRECT.

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  13. I know this isn't a "short" forum but ZSL is looking better every day...

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  14. Technicals have now exit the building.

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  15. Hack,
    I bought a very small position in ZSL today..3%. I'll double it on a swing high in Gold, but would much rather limit risk in shorting the pms using puts. Anyway, Silver is definitely seeming weak and not part of this fundamental move.

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  17. Gary,

    everyone in the world has now agreed that we're in a bear market and are calling for dooms day...and waiting for short any rally..this seems too easy

    is it possible for us to not only take out highs, but rally to 1500-1600 on the S&P?

    Am I am the only one thinking this way?

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  18. Gary,

    Continuation of the previous post: If that happened it would shock both longs and shorts

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  19. Too easy? I'll be knockin' on your door if we're down another 3% tomorrow. :)

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  20. I'm calling it - this is the top in gold.

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  21. As bad as this is I don't think any of us can imagine how bad it is going to be next year.

    Next year will be a 4 year cycle low, not just a yearly cycle low.

    Like I said in the nightly report 2012 will be one of the worst years in human history, certainly in the last century.

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  22. Sounds like fun.

    As it is, I can't imagine what the market is trying to price in right now -- but it's clearly bigger than downgrades or europe. Something really ugly is waiting for us this fall...

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  23. MARKET TURNS ON RUMORS OF QE3 The market has turned after touching a low of 3765.9 earlier in the day, currently up 3.5 points to 3989.6 points. Rumors have swept the market that QE 3 will be announced tonight.

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  24. Gary, assuming QE isn't working by then, can you postulate what is going to drive stocks out of the 4 year cycle low? Thanks

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  25. FYI old quote from Bernanke on some options if economy continues its softness.

    On the one hand, the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further. One option would be to provide more explicit guidance about the period over which the federal funds rate and the balance sheet would remain at their current levels. Another approach would be to initiate more securities purchases or to increase the average maturity of our holdings. The Federal Reserve could also reduce the 25 basis point rate of interest it pays to banks on their reserves, thereby putting downward pressure on short-term rates more generally. Of course, our experience with these policies remains relatively limited, and employing them would entail potential risks and costs.

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  26. I hope they do not initiate QE3

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  27. I'm going to write a few vertical spreads on GLD to take advantage of the volatility.

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  28. Starting Oct, the drop in the DJIA will be from the low yesterday/tomorrow a drop of 2000, 4000, and 6000, with targets of 8500, 6500, 4500.

    As of the last week of Sept, we may see a market setup that will be a double monthly top and in essence, a depression as the prices move towards those targets.

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  29. Harry, I'm with you, the top in Gold is in. It just occurred at Jim Sinclair's target number.

    This will now fall out of bed; the retracement will be the backside of this hourly parabola. 1600, here we come.

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  30. futures down double digits now...whats going on?

    QE3 confirmed?

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  31. must be some rumours running around...

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  32. how the fu*k did jim sinclair pick that number?

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  33. I recall Jim Sincliar offered an open $1M bet on his blog that gold would be $1500 by Jan 2011. No one took him up on it and he removed the entry from his blog :-)

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  34. Going have to start reading Jim Sinclair LOL I always thought he was a little bit wound up so I tended to ignore him. Not anymore

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  35. What was Jim's number? 1775?

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  36. jeff, does he have a paid subscription service?

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  37. HArRY, it was $1764. close enough

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  38. wow... S&P futures are at break even...something is up

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  39. This comment has been removed by the author.

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  40. Rob L., The value $1764 was Jim Sinclair's target :o) he was pretty close to $1773

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  41. here: http://www.jsmineset.com/2011/08/06/no-top-in-the-gold-price-next-target-is-1764/

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  42. omg the market futures are all green

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  43. Éamonn ,

    I didnt read closely enough. Sorry 'bout that.

    Thanks for the link!!

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  44. Sinclair doesn't just call these numbers. After the fact, last time, he stated he acts on these climax points by terminating his long positions, and stepping aside.

    He's now done this twice within the past few years.

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  45. Hurray! Thanks Éamonn!

    I so wanted to stay up and wait for "the turn," (Like watching for Saint Nick). At least it'll be nice to go to bed with visions of green.

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  46. I'm debating whether to put in an order for 1000 shares of DZZ before I go to bed...

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  47. While you guys are sleeping ES an NQ are up by 1%, coming back from the abyss. Gold is off the highs of 1775 but has actually started rallying in tandem with ES.

    This could be bullish for miners if the trend holds.....

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  48. something is definitely going on....markets have jumped suddenly, hang seng, csi 300, bombay....

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  49. Where are yall going to check overnight prices?

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  50. Futures market:

    http://www.bloomberg.com/markets/

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  51. Wouldn't it be nice if gold could stabilize around 1750 and pull the miners back up?

    Your online broker should provide futures. TD Ameritrade has them on their otherwise annoying Iphone app.

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  52. I trade the futures sometimes on Ameritrade's Android app, it actually works pretty well.

    ES is unbelievable tonight, up over 30 now.

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  53. Wow something big happened, futures all bright green

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  55. Damn Gold, your killing my puts

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  56. "...Something really ugly is waiting for us this fall..." Could be the ominous black clouds forming over Syria = oil threats, etc

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  57. Not bad, as I quit the blog.. called the top at 10:58 and 2 hours later, silver's rolled out of bed, down 0.70 and on its way, and gold can't do more than mark time.

    The breakaway gap of gold down to 1720, and a cross right through it, is a very normal, high probability event.

    I think 1600 will appear very quickly.

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  58. I have to go out in a min and haven't time to read all the comments so far, but I want to ask 'the panel' if anyone in their experience has been in this situation before - where markets [like SPX and gold] are hugely overstretched and the FOMC meeting is around the corner.
    If I was controller of the financial world, I wouldn't want things to be so obvious as to do what almost every single trader and institution is expecting right now today...

    {Ran out of time!]

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  59. McBryde,

    i dont know what David had in mind, but i'm very afraid that whatever it is, consequences will be the same.

    Look at mindless vandalism in London going on last few days. Put some more pressure on people of US and EU with another economy crash and things can go nuts in VERY short order on a much larger scale.

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  60. McBryde and all,
    Would be kinda cool fi Bennie stands up today and go all Rage against the Machine on the market sayin' "FU I won't do what you tell me!

    Ironically that would be the long-term right thing to do, but fingers crossed he'll juice up the markets a bit more :-)

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  61. Yeah Gary…echoing comments above, why can’t we have the 4 year cycle low in SPX this year instead of next? After all the 2002, 4 year cycle was the longest ever in history….Maybe this 4 year equity cycle is the shortest.

    Also, the current IT cycle for SPX is LT, having topped at week 7. Shouldn’t all future IT cycles also be LT till the 4 year low? Given the carnage this past 10 days, I would think the odds of the SPX making new highs (or challenging the old highs) in an LT fashion are pretty slim.

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  62. QUESTION GARY
    when gold snaps back, will we still get a good ride on the gold for the A wave?

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  63. 1764 is a long term channel breakout I believe. Dan Norcini and Eric Degroot, both connected to Sinclair, were saying something similar

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  64. Gary, regarding parabolas.....

    I am a commodity broker working primarily in the agricultural space and am familiar with parabolas. You have mentioned many times that once a parabola breaks that it takes a lot of time for them to come back together, if ever. Why do the gold parabolas seem to come back so quickly? Do you ignore the gold parabolas and instead just focus on the waves and cycles?

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  65. RJ,

    It's possible miners will fall with gold if it turns lower. The way I'm playing it is to add small amounts into the smash lower. Volatility is through the roof so cut size and use much wider stops so one can stay in the trade.

    When we get moves like this there are bargains to be had, but I've also found these potential huge gains will probably take longer to materialize. Positive sentiment will take time to rebuild, but that is ok as long as you're thinking "buy" into these pullbacks and can keep a level head, not be a slave to emotions. We will almost never get it perfect, so leave a wide margin for error.

    I do not own GDX as yet, and would not consider NUGT into a down trending market. NUGT is for uptrends. If I were to buy GDX today, I would use a stop of roughly $7/share loss (2x average weekly range to compensate for increased volatility),then size accordingly.

    For example, if you're willing to lose $70,000 on the trade you would only buy 10,000 shares. This might not be as many shares as you'd like if GDX turns higher, but it'll guarantee you can think straight and stay on the right side of the bull. One can always add if miners find solid footing, but I'd suggest keeping overall risk at the original level as it's something that was predetermined before the heat of battle.

    I'd say consistent position sizing within a trader's comfort zone is the single most important factor a determining a trader's profitability. picking the exact turn and giving a .50 stop with huge size will destabilize a trader, IMO. If one only wants large size with close stops, I wouldn't be buying right now. Wide stops and smaller size are not as exciting as taking a big stake and nailing the turn higher, but they'll keep a trader focused on the bigger picture. Nailing the price is not nearly as important as seeing the bull for it's potential and staying on, IMO.

    Whatever keeps you on the bull. :)

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  66. Man, that was long post. Sorry, it's early and I still don't have my thoughts together. Some coffee would help.

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  67. Last point, and especially pertaining to declining markets like we're witnessing, I will not chase prices higher and instead ONLY buy into weakness.

    There are times I can "pay up", but this is not one of them barring some news like QE3 or something. If the Fed openly starts to debase, then I'll buy size as quickly as possible. Until then, only pukeouts should be bought with the realization more pain is likely before getting paid.

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  69. Maybe it is time for correction in Gold and rally in stocks.From early morning Mr.Bernanke picture is everywhere in internet news sites,even here on the blog:)

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  70. Nice to wake up to green arrows....even on the equity side

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  71. $1,770 gold was my price objective starting out on July 5th, hitting it much sooner here, but time to cash in the chips at the open.

    What happens next is still up for debate, look at all the options. I doubt we're heading for an IT low, that would involve a $300 drop to qualify.

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  72. Great chance there is no QE3 and no new signs from the FED which sends gold down into at least a sharp DCL.

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  73. Poly,
    big congrats on your fantastic trade!

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  74. Poly: I know the 'rules of a bull market'--but would you play the short side of gold given the huge short-term surge?

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  75. Anyone buying QQQ at the open or are you waiting for a gap fill?

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  76. Deshy,

    I wouldn't recommend it, although I'm probably going to take a "little" punt myself :)
    Something very small, looking for a quick $100 over 3 day correction.

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  77. Poly

    You say no chance for QE3. What do you think the fed will announce today, if any?

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  78. how stretched is GLD? here are a bunch of keltner bands on the daily

    http://i53.tinypic.com/2qlzz3l.png

    think GLD sees at least 170.35 before it tanks though.

    the question for me is, will the first decline turn out to be a bear trap? look at 2008- hit the red band, corrected 9%, then blasted back up 30% again before really eating it during the crash. not unreasonable to expect something similar if you really think the 4 year cycle low in stocks is due next year.

    i would seriously just not short it, like at all, ever.

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  79. Has anybody seen the futures? You would never know we had a 4th largest crash in history yesterday.

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  80. Poly: Thanks--my idea was to go little as well--less than 1% total capital in. As Doc suggests just a 'feeler' position :-)

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  81. Poly:...sorry also wanted to ask how you developed your specific exit price of 1770? What general techniques are you using to come up with these targets? THX

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  82. Gold is not going to roll over easily.

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  83. Gary - I understand your concern about the gold parabola but we are only 24% above the 200 dSMA. During the silver run up you looked at the 30-40% and the 40-60% envelopes as a measure of extendedness. At today's high of 1778 we are only at 24% above the 200 dSMA. The 30% band is at 1893 and the 40% band is at 2039. So based on this analysis we still have a ways to go before we need to get overly cautious. Just me 2 cents.

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  84. Poly,

    Congrats on your run of this bull.

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  85. Interactive Brokers now has short sale restrictions on BAC, C, JPM, MS, GS and FAS from 10:30 yesterday until 8:00 PM tonight.

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  86. Article on silver parabola consolidation.

    http://www.marketoracle.co.uk/Article29761.html

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  87. Thanks WW.

    Deshy, mainly projections based on past blow-offs and based upon the way this IT cycle began (formed) in relation to it's past cycles and in terms of the action once it got under way.
    What may it difficult was you had to see this being a blowoff from the start and in addition, without a dollar collapse.
    Mature bull markets are also a lot about "demand", not just the dollar. Where we go from here is not so clear, IMO.

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  88. Chrys,
    Those numbers are extremes. Once gold moves over 15% above the 200 day moving average it has reached a dangerous territory.

    Throw in the fact that the mining stocks have been diverging for months, extreme bullish sentiment, silver now diverging, and you have the recipe for getting caught in a D-Wave decline.

    It easy to talk Old Turkey when gold is moving higher. But just a typical D-Wave decline would take gold back to $1200-$1300.

    I guarantee every single one of you would poop your pants if you get caught in a D-Wave decline.

    I'm trying to protect people from getting caught in something like that. But most of you are looking at the pie in the sky instead of the downside risk, where you should be looking.

    I have been doing this a long time, and there is a reason I have survived and made money. It's because I learned to control my emotions and when risk becomes too great I step aside.

    I've violated that rule in May and paid a heavy price. I'm not going to make the mistake again.

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  89. Thx Poly. I figured it was some what complicated but was hoping for just a quick equation. ;-)

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  90. Damn the futures aren't blood red like I wanted walking in this morning. I was looking for a down 30+ handle type morning which would have been an easy buy. I don't think we get a "gap and go" so I'm going to wait for this mornings gap to be faded by the johnny come lately shorts who refuse to let go of the bulls balls for even one minute. I'm going to put 1/2 on the gap fill and the other 1/2 just before the FOMC's announcement at 11:15 am (PST). I love this market as you can make or loose 3-5% in one day provided you're on the right side of it. Fast money is so good!

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  91. Gary,

    LOLLL...poo in the pants is no good for trading.

    Thank you for controlling my emotions as well as yours.

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  92. So,

    what if the FED decides to to their job. I mean their real job and do not help the market. Just because they did not do it so far does not mean it can't happen ?

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  93. Gary's got "old hand status" and shares that with the many. Everyone who comes to the S.M.T. realizes Gary's as calm, cool and collected when the MARKET and YOU are freaking out. Thanks for doing what you do Gary.

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  95. Shalom,

    Don't sweat the long posts...not every blog has a banker of your eminence as a regular. ; )

    Big day today for you.

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  96. This hitting-extremes-pre-opening stuff is going to drive me nuts. We should have opened lower and I'd have taken my positions! This smells just like silver topping overnight. Now with the gap open it becomes problematic. I will buy some on the first pullback I suppose, but no more "all-in," I am quite conservative and need a perfect set-up to go all in, and we had it until this morning...

    I may need to get that futures account like TZ's been championing. But then what...you don't ever sleep? besides I can;t get my real-time sentiment data during overnight trading. Oh well.

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  97. Trivia Question Of The Day.....

    What are the two companies trading above their 200 day moving average?

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  98. Spending cuts, tax increases, austerity, deleveraging, defaults, excess capacity utilization, higher unemployment, collapsing oil prices and soft aggregate demand. Not buzz words, they are what we're going to experience in spades.

    All of these will rain down deflation and Bernanke will need to respond with all he has. It will not be pretty. Interesting times all right.

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  99. Poly said: "Great chance there is no QE3 and no new signs from the FED which sends gold down into at least a sharp DCL."

    Yes, this might fit. It somehow doesn't seem that realistic to believe that the wording from FOMC will trigger a simultaneous exodus from gold to the stock market. Bernanke's picture is all over the place, and seems the majority expect a magic word from the meistro to lift stocks.
    I think it will happen soon, but not necessarily today..

    Maybe there'll be news of holding interest rates further than an extended period.

    Perhaps gold money, feeling a bit precarious, will shunt into bonds for a while, thus bringing gold down, but keeping stocks oscillating within a range for a while.

    Can we wait as long as the Jackson Hole event for relief?

    All indulgent conjecture - the market will reveal all soon, no doubt.

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  100. definitely planning on a down gap fill before adding SSO part 2-of-4 long positions here.

    expect to see one more push down, actually. will leave an open order at 36.20.

    fishing for volatility-inspired lowball bids circa 2:15 might be a good idea too.

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  101. Speculation of collapse is much greater than the reality of America's demise. Treasuries have actually OUTPERFORMED Gold these past 5 days. That is not supposed to happen in a collapse. A ton of commodities are down on the year, some more than stocks. Oil is down over double digits. Corn is down YTD. Cotton, Beans, Wheat etc. Again - not supposed to happen in the collapse of America scenario everyone talks about.

    Gary - I think your get out of gold and get long stocks here is going to be epic.......

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  102. What is this strange green color I'm seeing on the screen???

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  103. Also sold My gold today.

    Long spx..

    Thanks Polly, Gary, DG, Alex, Shalom,Fubsy..........

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  104. Duuuude,

    Here is another trivia question for today, are the markets in the green or red before Bernanke?

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  105. Going lower means breaking this two-year trendline. Important?

    http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=5&mn=0&dy=0&id=p55219049389&a=241238299

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  106. Opening gaps filled in opening hour. That was easy short money. Get ready for a slow drift upward into the FOMC statement and then a rocket shot upward. Bears are going to get CRUSHED for messing around with Ben. Threw the first 1/2 of cash on the filled gaps and I'll throw the other 1/2 on when we go higher with buy limit orders just above the day's highs going into the FOMC statement. If we go dowm on disappointment they'll never get filled as the market dropped and then I'll stop the first 1/2 out at the overnight futures lows. Small risk... huge reward!

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  107. Good one WW. That one is just a blind folded dart throwing contest. I would have no idea!

    Lexmark and Google were the only two companies in the S&P above the 50 dma. My brother works at Lexmark, so I need to let him know he is doing a fine job!

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  108. Felix,
    That's a nice chart there. I guess we find out after the 2:15 meeting how things go. Maybe one more shakeout going into and during the speech. Then a buying frenzy going all the way into the close? Stay tuned...

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  109. That pullback to even was great!! Bought QLD at 69.54 and TNA at 39.11. It's important to have a plan and then stick to it. The historic readings meant we are at or near the bottom, so the pullback was a gift as the scared folks saw some green finally and sold it down.

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  110. Why is gold weakening on this, the day of the great and wonderful QE3 announcement? Perhaps more balls than brains I'm short Gold via 7 GLL Sept $19 calls @ $0.85

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  111. LOD still in premarket. ideally would like to see this circa the 11am reversal zone instead..

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  112. also can't believe GLD is going to top out at 170.00

    don't buy those puts just yet!

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  113. For those ready to jump back in to stocks, is it recommended to do so before or after fed meeting?

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  114. Silver looks pathetic..miners don't look that great either..

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  115. T an J, now know you have no clue about money and debt. Look at John Exeter's pyramid of risk.

    Since the world is aswash with debt and margin, as fear grips the markets a scramble for liquidity ensues. Investors abandon risk assets for risk averse assets, see chart attached.

    Gold is the safest, then dollars, then Treasuries. You are simply seeing a scramble for tangible vs margin derivatives.

    http://www.lesjones.com/2009/09/09/word-of-the-day-john-exters-inverted-pyramid-of-assets/

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  116. St. Deluise, I was thinking along the same lines as you, but short term now looks like a double bottom. I'm taking a position in SSO, looking for a scalp short in SLW.

    http://content.screencast.com/users/augertrade/folders/Jing/media/0facf96f-d697-4322-9981-d201832f23f7/00000557.png

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  117. Adding to what I asked yesterday about buying options when the VIX is high...

    So today since the VIX fell, my options are also lost some value due to the loss of volatility?

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  118. Right Bob - you have me pegged - I know nothing about money......

    Bottom line - in the event of an all out collapse as you seem to predict - the ONLY investment will be commodities like food - and maybe gold.

    The fact most commodities are down, and TSY's have outperformed gold in this short crash show that people are not giving up on the "system" as you probably are preparing for.

    As I often say: Queue up the countdown for Bob to tell us how the evil Fed kicked the can down the road and just delayed the inevitable, and how that end will be even more painful and devastating......

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  119. BTW, hello SM Trackers, a non-subscriber here. Hope people don't mind me posting a few trade related charts/comments, from time to time. :)

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  120. any portfolio change with this post?

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  121. Wonder if Cory is still holding ZSL?

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  122. E,

    look in the model portfolio section in the subscriber area.

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  123. The fall of spot gold has been too orderly.

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  124. auger

    I welcome it :)

    And Moneyman, thx

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  125. Great little clip of Greedscam talking about US not having a problem because it can always print money. From Sunday on NBC:

    http://www.youtube.com/watch?v=q6vi528gseA&feature=player_embedded

    The look on Goolsbys face is priceless.

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  126. Ken,

    Is that a "STOP LIMIT" order that you place above the high?

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  127. Don't get too hung up about your option greeks. I just closed my QQQ trade with ~50% gain. (I tripled down at the close.) Don't hold on too long when the volatility is high. The imp vol still around 43 when I sold. My options expired in 10 days so at 52 they mostly had time value when I sold. My experience is that you are either very right or very wrong so that the imp vol doesn't matter too much in the grand scheme of things. Not so if you hold them for months.

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  128. Auger,
    We welcome all that like to contribute to the topics here.
    Bring it on.

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  129. Gary,
    Will you be shorting this gold parabola ounce it clearly starts to roll over?

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  130. High 5, is that Jack N. as your avatar? Downright crazy looking.

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  131. Where is Fatman, I haven't seen him on the blog in so long. You still out there?

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  132. Has anyone considered the possibility that multiple rises of margin requirements will be visiting gold futures at this [parabolic] level - thus creating a May 1st/silver-type collapse?

    Or does it have to be near contract renewal date to make that effective??

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  133. theory: 'disappointing' fed announcement, kneejerk selloff/beartrap to a slightly lower low which then marks the bottom anyway.

    unfortunately i'll be at the dentist while this is all happening! weekly SPY pivot at 109.74. open SSO buy order at 36.20. here's hoping.

    good luck and duh auggie, post away

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  134. If anyone is looking for a miner bargain, GSS is trading in the 1.80s.

    Buyer beware. Read the release from yesterday first.

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  135. Fed announces NO easing = all assets tank
    Fed announces easing = All assets soar
    Fed hints easing = All assets move higher

    Can anyone suggest other scenarios?

    I expect a violent reaction up or down on Fed announcement. Any ideas on how to play this appreciated.

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  136. I think we will have to confirm more than a 4 hour rally in the market prior to calling a collapse in gold.

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  137. Gary,

    What are you expecting to happen if QE is not announced, will you still keep position in QQQ?

    If you addressed this in the nightly report my apologies.

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  138. at ease

    It is Jack. I think it's from 'The Shining' where he says "Heeere's Johnny!"

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  139. dunno bout gary... but i'd be out.... no QE and this thing is going down down down down

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  140. D,

    That is correct. It is more desirable to sell options with volatility this high than to buy them.

    A drop in volatility lowers option premiums.

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  141. sos figure for SPY increasing rapidly

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  142. Gold daily strech level reference:
    http://minus.com/ljfKQe

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  143. W2, I think he does tell us. Let's go look there.

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  144. any and every dip in gold being bought like crazy...amazing

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  145. F.W.I.W.

    I am thinking that Gold may still have one more "massive" leg up.

    I am not long Gold right here, but if conditions are favorable, I am believing that the pullback will hit $1632 MOST LIKELY , if it closes below $1667 ( $1667 is my first target down, but less likely).

    Then I think Gold puts in the REAL parabola and the markets may even turn and retest yesterdays bottom.

    Thats how I see it SO FAR...things could change and I'll know as time goes on.

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  146. DARELL

    That MIGHT be the prettiest chart I've ever seen. Quite fluid

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  147. W2,
    The answer is in the weekend report, and followups. It will happen no matter what Ben or any other Fed, WH call it.

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  148. ALEX, you can find more here
    http://darell.posterous.com/rubber

    Its just a good way to see how much price is stretched from the mean, im not an expert though.

    Good luck everyone

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  149. at ease

    I figured it was appropriate for this market phase. LOL. Your avatar is very serene.

    ReplyDelete
  150. D your options lost more value today than if let's say the vix would have not fallen or had increased. Your options can of course can be positive - it depends on how large the vega factor is.

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  151. Wow...Sos on SPY and Tech leaders is amazing!

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  152. Alex,

    thank you for the update..

    yea it seems doubtful that gold goes straight down...a nice 150 point correction followed by another parabola would be unexpected :)

    Maybe Gary will see the same thing as well when the time arrives

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  153. This comment has been removed by the author.

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  154. I am not convinced we need QE3 to cause stocks to turn. When the financial crisis began in 08, we had a very similar situation and price pattern on stocks. At point 1 which I marked on this chart, stocks roared higher to point 2 where they then dropped precipitously till QE1 was ultimately announced.

    http://screencast.com/t/y5IGA30Yz

    Different times today, but the world banks are trying not to get into a currency war now. I expect further QE will be more coordinated.

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  155. I'm not entirely sure of this because I can't tell how accurate Netdania's data is but it may be that there was a shift in the past half-an-hour to PMs trading in tandem with the dollar.

    Could this shift preview both their reactions to add'l liquidity

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  156. Gary,

    A follow up question on the parabola for gold.

    You mentioned that collapse of the parabola will get gold to retrace back to 1200-1300

    how long would this retracement take? 6 months? or the normal 4-8 weeks of d wave?

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  157. St. Deluise, it's a good theory, PM's front running the announcement(?). Anyways, no sense in you enduring pain both from the dentist, and a premature market long. :D

    One thing that has my attention, is today's candle, on $SPX. Just doesn't look like a bottom (reversal candle), to me. Ready for the dreaded chart correlation?

    http://content.screencast.com/users/augertrade/folders/Jing/media/438524f4-083c-4cc1-bd66-44d019849aa0/00000558.png

    ReplyDelete
  158. High 5,
    I am always on the move and away from home a lot. My current avatar is the walkway up to my house this past spring when I got to be at home for a bit.

    ReplyDelete
  159. DARELLL

    Really nice gallery , thx.

    So is there a focused USE for these? In other words...do you look at them and assume time to sell when they get thin and whispy because they're stretched...or when they get darker and richer , they are gathering energy nearing a bottom??

    Its a different perspective for sure, DO you have software that draws them or are they someone elses??

    I am in and out today so I apologize if you write and I dont respond right away.

    ReplyDelete
  160. Sofia,
    Are you and your family safe from all the rioters going on around London?

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  161. at ease

    Lovely curb appeal. Are you military? Don't mean to pry but your handle sounds it. I'm retired Navy.

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  162. Duuuude,

    Thanks for that chart, definitely makes sense.

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  163. 1 side point to my comment earlier about the possibility of another leg up in GOLD.

    Gary is correct that the end of this parabola will probably be we wake up 1 morning and GOLD is down $40 or $50 , just like it was up $30 or $40 recently.

    BUT if we get a reasonable correction to relieve sentiment somewhat and form a daily clcle low, I believe that the next FINAL leg would HAVE TO BE longer than the RECENT one.

    I observe the TOP in 2009 was much like this one, even about as steep really( maybe this one was a tad steeper? )...but the 2009 top was just 'a part' of this C-Wave, not the blow off top part. Since IT WAS NOT a blow off parabola TOP...I would expect that a real BLOW OFF PARABOLA wouldnt look just like the 2009 top.

    A pullback and One more leg up would be Even MORE EXPLOSIVE, and another $200+ I.M.H.O. Very worth buying the pullback.

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  164. Darell, nice charts. can you elaborate more?

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  165. Alex,

    Said:

    "Gary is correct that the end of this parabola will probably be we wake up 1 morning and GOLD is down $40 or $50 , just like it was up $30 or $40 recently."

    Gold was $60 off its highs this morning, and was up over $60 yesterday...a collapse of gold's parabola will be alot worse then a $40 - $50 drop.

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  166. Good point Alex. I have wondered the same thing.

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  167. Darell, nice charts. Can you elaborate more on their practical uses?
    tia

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  168. Huge volume spike in GLD 10 min. ago. 140,000 shares, anyone see that?

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  169. I think Gary has the right idea. Gold is getting ripe for some profit taking and I have suffered through several of gold's profit taking sell offs. Sure it could go higher first, but what if it doesn't? And even if it does go higher first it is still ripe for profit taking at any moment.

    Another way to play this if you do not want to sell your gold shares (or you want to protect your physical) is to hedge your long position with some shares of an inverse gold fund or a few put options.

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  170. The institutional traders are luring in the retail investors today before they shut the trap. That's why gold is on the upswing, they'll catch the ride on both ends...

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  171. William,

    I dont dis agree, But-

    Its possible, but it also could gap up $40 and then the next day gap up $40 and the next the same, then reverse THAT DAY and drop in a fast sell off.

    So what I am saying ( and its all risk related...each has to ask "is it worth it to me") is that when I see a stock gap open and rise , gap open and rise etc...I'm out.

    When gold goes up $40 1 day, then $40, the next , $40 the next...its time.

    Tops are observable, and Silver top was too. So IF we get a pullback for a week or so...and I see a set up for another leg up...or even just a double top...It'll be a trade for me...with caution at the top.

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  172. Everyone Is Watching Paint Dry

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  173. ANybody trade Platinum & Palladium here?

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  174. Even the RSI has flat lined ...

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  175. Wanting to do some discount shopping but have no free capital, would have to borrow at high interest to invest, maybe a bad idea at an uncertain time like this.

    ReplyDelete
  176. Alex,

    "So IF we get a pullback for a week or so...and I see a set up for another leg up...or even just a double top...It'll be a trade for me...with caution at the top."

    If you are able please post when you think we will see a leg up after gold pulls back, I really appreciate all your input and charting :) Thanks alex.

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  177. This comment has been removed by the author.

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  178. heads up for gold longs:

    record volume on DZZ today again...

    day is only half over - we're already have a volume greater than yesterday's volume which was 4x normal volume

    by today's end, we could be at 8x-10x normal volume

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  179. Saampa,
    Have to agree with Felix, bad idea.

    ReplyDelete
  180. http://www.zerohedge.com/news/while-everyone-watching-paint-dry-waiting-chairsatan-either-kill-market-or-send-it-soaring

    if you are bored.

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  181. Some anon on CNBC just posted this ... I thought it was funny.

    I think the name of the game the government and bankers are playing is called “I win”. Oh we wrote bad loans “I win”. Oh we can’t pay our debts “I win”. Oh we are going broke at war “I win”. Why? Because “I win”. Charlie Sheen for president.

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  182. William

    I will, I will post a chart and the reason why if things work out that way. IF gold were to just take off after Bernanke speaks...Its too risky to gat into Gold without it having a proper rest.

    I would only post out here on this blog- I wouldnt be posting on the subscriber blog any ideas that may not mesh with Gary's current thoughts.

    I'm in & out 2day helping a buddy of mine...so good day all!

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  183. GOLD SILVER TROLL

    Good call, same on GLD...could be a high volume reversal. A top , and then we see how this all wants to play out.

    Not sure what you thought about the DZZ, but it looks like the Volumes HUGE and yet price down is not (minimal), which would indicate ( to me) distribution, and a direct change soon.

    ok, out for now, cya

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  184. Well OK ... I think it close enough to "The Emperor's Speech" to place my stops (a few points below the open) ... good luck all.

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  185. At ease ..
    my daughter moved out of her flat yesterday as the riots are getting closer.
    In the area where my wife's flat is just now in the process of selling [just exchanging contracts] she saw in the paper today someone describing it as a war zone! [That makes her a bit jumpy!]

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  186. ALEX,

    Yep...huge volume with not much price change (distribution)

    I saw the same thing with ZSL in April end (volume started increasing exponentially) BUT I ignored it and paid the price.

    Can't make the same mistake twice and don't want others to make the same mistake as me either.

    The volume in DZZ is really saying something.

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  187. I`ve been thinking about putting a sheet of bullet proof glass over the monitors in case they explode at 2:15.01

    ReplyDelete

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