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Saturday, August 13, 2011

PRIMED FOR A TREND REVERSAL

"Liquidity will eventually find its way into undervalued assets" Gary Savage

I think it's time for liquidity to drain out of gold and flow back into a severely beaten up stock market. Depending on how quickly the market tests the 200 day moving average will likely determine whether or not it can make marginal new highs before resuming the cyclical (and secular) bear trend.

More in the weekend report...

719 comments:

  1. aklaunch, not sure why that happens

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  2. Eamonn, Do you have an alarm for Gary's tweets?

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  3. . just felt the urge to get a dot in

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  4. Oh, so the DOT is just a game to see who's the first to post???

    I thought it was utter acceptance of the lunar full moon cycle and the affects upon the tides, crime and mental disturbances throughout the planet unbenonced to all, which can cause people to act opposite one's normal thoughts and behavior, thus prompting a "DOT" to form in lieu of commas or exclamation marks, not to be confused with skid marks that one should never question...

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  5. Gary

    High frequency trading (HFT) is consuming a larger share of the trading volume recently. Is there a possibility that computer related trading is changing or affecting the human emotional theory behind cycles?

    http://www.businessinsider.com/high-frequency-traders-august-market-crash-2011

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  6. Tommy D.
    "." is used as there were complaints on using other words or something like "BEEP" to be able to check the box to follow new comments posts from Gary.

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  7. Other than QE stretching the stock market daily cycles a bit they seem to be coming pretty much right on time.

    It appears the intermediate cycle has bottomed on week 21. The average is 22.

    What makes you think that HFT is having any effect what so ever on cycles?

    It's just day trading on steroids but still just day trading. When has day trading ever deflected the cyclical or intermediate trend?

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  8. I'd love to know if these computer trading algorithms make much money

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  9. HFT is just another excuse some people use for why the market didn't do what they wanted it to do.

    Mark my words, just as soon as gold enters a D-wave decline the conspiracy wackos will blow a gasket.

    All the scam artists (like GATA) will claim that's why gold didn't get to $2000 or $2500 or what ever price they guaranteed will be hit by the end of the year.

    Then they will conveniently not have to take responsibility for getting all their followers caught in a $500 point correction.

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  10. Gary

    "What makes you think that HFT is having any effect what so ever on cycles? "

    Im not here to poke holes in cycle theory or questioning your ability but what I'm suggesting is the possibility when 75% of volume is HFT that human emotion is not entirely in the control.
    I guess I'm on the lookout for curve balls (not excuses) and wanted to run it by you for you thoughts.

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  11. Well as far as I can tell it's not having any effect on the market other than increasing the daily volume.

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  12. Gary turns gold bear ... got off the rocket just before take off ... stay tuned

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  13. Too bad you can't "junk" people on blogger...

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  14. Gary

    Thx

    Oh yea it was good to deploy the $ I had removed from the market in April / may. While everybody at work was boo hooing about their 401k last week, when asked how mine was doing, I said "fine I'm all cash but I'm buying today".

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  15. Alex

    If you're around over the weekend (unlikely I know) I've got a question for you.

    Thanks for those charts you posted of the bullish breakout patterns many of the miners have been tracing. But I wonder if you're concerned about what a potential correction in gold might do to the miners' prospects.

    Personally, even though Gary's made a compelling case for a major correction down the line, I'm still fairly confident that any correction at this stage in gold will be just a wave 4 pullback, and that there's still a wave 5 to come. This is based on the breakpointtrades (which I subscribe to) charts and indicators, which show a convincing looking impulsive wave count, as well as the fact that on Wednesday the miners rose strongly while the rest of the market tanked.

    Thanks.

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  16. Eric Janszen piece that rips Mike Shedlock a new one on deflation/inflation debate with interesting graphs.



    http://www.itulip.com/forums/showthread.php/20102-You-re-not-going-to-believe-this-Eric-Janszen?p=205428#post205428

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  18. That Janszen piece may convinced me to sign back up for his premium service. I had forgotten how insightful he was.

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  19. blindweb, what kind of service does Janszen offer, is it a monthly report? Is it worth subscribing to?
    He made alot of sense with that article rebutting Mish, I certainly agree he tore Mish a new one!

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  20. i'd feel a lot more "in tune" with the market if last tuesday's wick is threatened in a meaningful way because as of now it's thrown my system a curveball. regardless of my gut i'm going to try scaling in again on any weakness early in the week.

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  21. Great article from Janzen and this is what he is saying in English.
    1. With fiat money, we cannot have long term deflation (short term may occur) as the US had under the gold standard in the 30s because the government will "print" to produce inflation
    2. Inflation is a function of both price (i.e. supply shocks) and money supply (currency depreciation) and the the primary cause of inflation can only be observed after the fact over the long term
    3. He distinguishes debt deflation (consumers paying down debts and not taking on new debts) from deflation (sustained GDP contraction) and explains how the government is now spending ( printing money) to cover the short fall in GDP. That is the government is printing to compensate for the decrease in consumer spending (and drop in consumer debt).
    4. Gold is rising because of government deficit spending (printing money).
    5. The consumer debt deflation is overriding price inflation at the current time (this why CPI is low, housing is a large percentage of CPI)
    6. The consumer debt deflation and government printing response implies lower stocks/house assets prices AND higher food and commodity prices and (wages eventually).

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  22. Mentoring question for Gary

    Everyone welcome to respond as well.

    Do you use a financial news website as your home page? If so, which one? How often is it updated?

    What are the websites that you visit everyday? What are others that you find most helpful?

    Aside from SMT, SMTP and THE DOCument, I visit Bloomberg.com, Zerohedge, TSI Trader, Marc Faber, & Naked Capitalism.

    Do you subscribe to WSJ Online? Is it worth subscribing to?

    Anything else you do to keep up with the world of business, finance and investing?

    Appreciate any feedback,
    Le Fou

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  23. I mostly avoid the news. The news almost always seems to fit into the cycle count anyway.

    I also try to avoid other analysts because I find it influences my decision making process, especially when things are exceptionally volatile.

    Like everyone else when the market is going crazy I have a tendency to look for someone "who knows what's going on".

    The truth is, that during those periods everyone gets lost and I'm better off just trusting my own judgment.

    I look for turning points on major economic data releases or Fed meetings. But other than that most of the news is irrelevant to the market.

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  24. Thanks Gary,

    So you know what's going on in "the markets" because you have data on them that you work on regularly?

    For example, you plan at some point on investing in Biotech. Do you have charts ongoing charts in SmartCharts which allow you to make decisions about those markets? Or do you use some other resources?

    Le Fou

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  25. Le Fou,

    I miss your old profile pic....

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  26. Thank you Gary. I admire your balanced thought process and calm attitude.

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  27. A SIGN! Dollar will go up.


    Was at gymn and was watching that silly "Kardashian" reality show.


    The husband was confronting his 2 teenage daughters for stealing his credit card and going shopping for second time.

    He says he wants them to learn value of $, when one of them talks back with "Value of $ is falling..".


    When the movie "2012" came out in November 2009 and I understand there was a quip in it about the $ falling, the $ went on to rise dramatically.


    (BTW: when nauseating shows like "the Kardashians" get pulled off air, that will be a sign we are beginning to fix this generational mess")

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  28. (BTW: when nauseating shows like "the Kardashians" get pulled off air, that will be a sign we are beginning to fix this generational mess")

    if they get pulled, it will mean they have 2 to replace them. ( ive never seen it though)

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  29. the news has a new meaning to me since i found gary. The brokers just say " well they will sell the news or buy the news and sometimes it does not seem to have any reasoning as to the direction. i.e. bad report markets go up. well i have learned from gary that when it is cycle time it doesnt matter what the news is, the cycle just needs a trigger to do what it was due to do.
    its amazing to me

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  30. If your not sufficiently scared of being caught in a D wave, read John's latest in TSI trader. I got the same feeling about swimming in the ocean after the movie Jaws was released.

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  31. Beksacki,
    I watched the movie Cowboys and Aliens the other day. Take a guess what the aliens were after on earth.

    I'll give you a hint. It's shiny and yellow.

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  32. I have trouble watching the Kardashians reality show which is probably one of the most stark examples of conspicuous consumption.
    Five minutes is about all that I can take.

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  33. I would like to have next weeks COT reports now please!!

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  34. Gary,

    Yes, I thought that was funny that aliens came all the way from some other planet to get gold.

    Sign of the times...

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  35. Gary, that was good! Even the Aliens are printing out of control! LOL.

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  36. My system will sell at 1725, not having moved up substantially since Friday's sell point. I would have to think the correction will move forward in earnest when the sell point is hit.

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  37. The Bulls and the Bears are having a good fight with Gold overseas at the moment. I almost feel like a nice sharp spike new high could fit the bill before a good sized correction? Going to be a great week to see how this all plays out.

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  38. My system has sold all major gold highs 1-3 days after the top. IMO, it has to sell Mon/Tues if this past week has been the IT high.

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  39. I'm showing gold at 1725.80 on Friday. Was that not close enough?

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  40. I have to say its satisfying to see gold correct. Was tough to watch it climb up while not being involved

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  41. I enjoyed "Cowboys and Aliens" on a hot afternoon. I related on the GOLD!,lol

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  42. OK, so the COTSTIMER Gold signal did go Bearish on the open Monday anyway despite the huge large spec swing in Net %. I believe this signal only lasts for one week, though - TBC.

    http://www.cotstimer.blogspot.com/

    Stars do seem to be aligning....

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  43. aklaunch,

    Your wish is my privilege.

    Le Fou

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  44. A couple of long ideas.

    http://arum-geld-gold.blogspot.com/2011/08/coal-stock-relief-rally-play.html

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  45. Gary you need to add "never short a bull market" as another great quote

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  49. Only an alien could do the clean and jerk like Gary.

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  50. And the aliens left the Rothschilds here to store up the booty so it`s ready to go for the next trip. I wonder if they`re still using fossil fuels to propel their ships. Maybe they`re using some kind of alternative/solar energy source. Hey, wait. You guys don`t think maybe.....Beano? Do you guys think he drove them bonkers too and they exiled him to earth?

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  51. I've seen the aliens trading website blacklist. Aliens are prohibited from visiting Beanie's site because so many before have lost their money. Slope of Hope was number one on the list.

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  52. "Bear charts" don't work in bull markets. We will bounce, and eventually make new highs, not go to bear market.

    Bull markets usually end with euphoria -- 2000 Internet euphoria, 2007 housing euphoria. There is no euphoria in 2011, only gloom and doom.

    Folks, it's time to buy stocks, for the next 5-7 years.

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  53. Oh, and I'm talking about the equities market, of course.

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  54. He was released onto the earth....

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  55. I'll buy stocks in the fall of 2012 at the next 4 year cycle low but for now this will just be a typical bear market rally even though it might possibly make a marginal new high (if it can get back to the 200 DMA in the next two weeks).

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  56. Anybody else see this?

    http://news.yahoo.com/sales-gold-ebay-amid-stock-market-turmoil-121644140.html

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  57. Boy if that doesn't say "major top" I don't know what does. All those late comers need to get wiped out by a D-wave, then the bull can continue higher.

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  58. national newspaper here had a full page article on gold investing

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  59. Gold bugs are people who's read one too many bear blogs.

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  60. Gary, thanks to you I will not be wiped out. Its just the kind of thing I would have done a year ago - buying tops and selling bottoms. I'm sure glad I have wisened up. And I would not like to be a buy & hold investor of stocks either. They have got their ass handed to them. Its sad to think of all the money they worked hard to invest

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  61. Eamon,

    Not sure what you mean buy that. Buy and holders would be crazy not to snatch up bargains of 2008 and 2009. True buy-n-holders always buy (more) stocks when there is blood in the streets. Many have made out extremely well. Now there is a difference between your typical public investor (like your aunt or schmoe joe who only buys during euphoria) vs. the smart buy-n-holding investors.

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  62. Yeah, sad people have been paying more than $1900 for an ounce on eBay thinking they are smarter than everyone else.

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  63. Beanie, I don't think now is the time to buy stocks, IMO. I will buy stocks when they have reached their full lows, just like when I would buy any other asset. But I think the signs are ominous that the world economy is stalling with parts already in recession, and thus it is likely we will see new lows. Maybe the Fed will come with a whopper QE and then I will jump in with call options.
    btw Beanie, I don't think its fair that people sometimes deride you here because you have a contrary opinion. I enjoy hearing your opinion, but at the moment I would not agree with it.
    I feel this is a good article: http://www.financialsense.com/contributors/chris-puplava/2011/08/12/economic-indicators-show-us-recession-as-early-as-next-month

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  64. KAL, I agree with you, very sad. Those are the people who really cannot afford to lose money, and they will get eaten alive, because they will sell at the bottom

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  65. Eamonn,

    Hey buddy. How's Eire?

    Maybe if the gold buyers figure they're just early for the party, they'll bury the gold until the real blow off top comes. But, you're probably right. They'll panic and sell, and since it's physical they'll get less than spot, just like they paid more than spot when they bought in.

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  66. Beanie just has trouble recognizing the difference between a secular bull market and a secular bear market.

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  67. When you look at that long term chart you really get a good idea just how stretched gold got at what I presume will be the C-wave top.

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  68. Eamonn,

    Whoever wrote that article I'm sure have been writing articles like that for a very very long time. I would short it and I would short the guy.

    I think too many people are making things way too complicated than it really is. Also, too many people get too complicated with (or hide behind) charts when the answer is already right in front of them.

    I'm reminded of the Great Warren Buffett who always say to buy on fear and sell on greed. Sounds simple enough but so few take advantage of this tried-and-true wisdom of the stock market.

    We had doom and gloom talk all of 2009, 2010, 2011 since this bull market began. Now the bull market just hit another bump and everybody is calling for the resumption (or start of) a bear market. Bull markets never end with fear. Never. It always end with euphoria/greed.

    I'd go with the simple.

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  69. Beanie, I agree with you "buy on fear and sell on greed". However, I believe there is more damage to come, down to S&P at 1000. Then, I believe the Federal Reserve will put a floor under the market with more policy support. At that point I will buy. But not now

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  70. Sure, Gary, gold is in a secular bull market I don't deny that. But it's not something you can ride on for a few decades like great stocks. Eventually you have to get off before the whole thing gets blown to pieces. There is no way to measure what gold is worth, other than another guy is willing to bid it up. I hardly call that a great investment you can pass on to your kids. As such, it sounds so much like tulips and ponzis.

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  71. Beanie,
    The problem with that theory is if they get caught in bear markets, like you have a tendency to do, then they have no money to buy at the bottom because they rode the wave all the way down. They are forced to sell at the bottom or risk insolvency.

    You got caught in the last bear market and now you are caught in current bear market.

    You will get your chance to unload stocks during the impending bear market rally but your permabull mentality will prevent you from selling.

    I got everyone out and avoided this entire mess. You on the other hand are going to take everyone down with you because you can't seem to comprehend the meaning of a secular bear market.

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  72. Actually it's very easy to value gold. Once we get rid of Bernanke and get someone in charge of the Fed that is willing to make the hard choices and turn off the printing presses then the gold bull will be finished.

    We will also see a Dow:gold ratio of 1:1 or less before this tops. At the recent top it had dropped to 6.2:1.

    I suspect that it will move down a bit more as the Dow drops down into the 2012 four year cycle low. Gold should just consolidate in a high range between $1300 and $1800.

    If the Dow drops back down to 7000ish and gold hangs around $1500ish that would drop the ratio down to about 4.5:1.

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  73. Beanie, I put my entire net worth in the stock market in 1998, it is at the same value today, but everything I buy costs more than double. I am a buy and hold investor, what should I do?

    Sarcasm off. LOL

    You must be a caricature.

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  74. gary,

    It's just wrong to assume that buy-n-holders or bull traders never sell stocks. There are times to sell (either thru valuations or technicals or sentiments or forced) but they all know when it's time to put money (new or cash from sold stocks) to work and snatch up stocks and it's usually when everybody is extremely fearful.

    Even Buffett himself, sell stocks on a quarterly basis (not sure if he day trades or swing trades) as you can see at gurufocus.com . Smart bulls are not as stupid as bears seem to think. And no, bulls do not buy and hold stocks for ever.

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  75. Beanie, I agree with you - nominally, the stock market will go higher.
    However, in real terms, it shall not

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  76. Beanie,
    I'm not a bull or a bear. I sold my gold a couple of weeks ago and I bought stocks last week.

    But I do understand what happens during a secular bear market. Stocks go from extreme overvaluation (P/E of 45:1 in 2000) to extreme undervaluation (P/E ratio in single digits & dividend yields in the 5%-10% range). This process usually takes 15 or more years, barring a complete melt down like 1932, when it happened in 2 years.

    That extreme undervaluation may come at the 2012 low. If it does then I will start adding biotech ETF's as a long term hold to ride the next secular bull market.

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  77. I actually think we now have all the ingredients for a mega bull market in equities. I recommend watching your shorts if you guys are shorting. I think 2012 is when everything goes crazy crazy...to the upside. And I think I know what will cause that. It will be a combination of green tech and mobile tech.

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  78. Gary, the sell was at 1719 on Friday, and it doesn't sell till it does. That's how all the stats are compiled.

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  79. God Bless your optimism Beanie. good for you

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  80. Beanie, what stocks are you snatching up, with the intention of holding through a bull market, right now?

    BTW, the great Warren Buffett, hedges/trades/shorts with options, all the time. I wonder what he would think about an entire market ban on shorting?

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  81. And that is why you will get dragged down into the depths of the next bear. Because you refuse to acknowledge that secular bear forces are at work on the stock market and it will continue until it cleanses the system of debt and returns stocks to insanely cheap valuations.

    The rest of us will use our profits from riding the gold bull to buy stocks at the bear market bottom rather than getting caught in it.

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  82. It looks like you are using a parabolic SAR indicator. If so what settings did you find worked the best with the least whipsaws?

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  83. Gary,

    I'd like to know your insight of the long term picture for Dow/Gold ratio. If it does drop to around 4.5 in 2012, when do you expect it to drop to 1 or lower?

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  84. You can tailor any explanation you like why mkt goes up/down. But don't forget 1 indisputable fact: Bull markets end w/ greed, not fear.

    This is the time to back up the truck on equities.

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  85. Auger,

    Buffett has publicly stated that he thinks shorting helps the bulls, but I don't think he really believes that. There was a reason why he never split BRKA for many years, and it has something to do with keeping the daytraders and shorties away. Short term short selling bans (2 weeks) are bad for the markets, I agree, because shorts wait for the ban to get removed and they short like hell (just to prove short selling ban is bad). Short selling is hedgefunds' bread and butter; so they will do everything in their power to make it look like bans are bad. However, if countries ban short selling for 1 year, 5 years, or forever, I don't think there is anything bears can do but to find other ways to make money. I suspect long term or permanent bans
    actually help the market, not hurt it like the bears want people to believe.
    ---------------------------

    Nobody knows what Buffett really does in the short term because he has permission from govt not to reveal all of his trades. But he did claim that he rarely turns on the computer during market hours.

    Gold is okay to own but since it is a bet against America, I wouldn't hold more than 25%. Nobody has ever won betting against America in the last 200 years. The odds aren't on the bears' side -- just horrible odds if you ask me.

    Technology - anything that helps speed up or removed bottleneck on the internet is a good bet, as well as anything related to cloud computing and apps. I like FIO (chief architect is cofounder of Apple), VMW (founders orginate from Microsoft), GOOG, AAPL. Of course, I like AMZN, the next Walmart.

    Green tech -- FSLR (king solar), BYDDF (Buffet electric car pick), and......special secret sauce...

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  86. Beano,

    Looking at CY, MU, and STM I see many names in your favorite group (semiconductors) have been cut in half since only May-June.

    What's Buffett say about losing half your portfolio in 3 months?

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  87. The reason I subscribe to SMT, and the reason I believe it is indespensable, is because SMT gets the secular nature of market moves. Whether or not a subscriber takes every cycle trade, the basic assumptions of SMT about how markets behave over time are the same as this subscriber's. That understanding is key to long term growth of one's capital imo (and personal experience, at least, supports the case).

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  88. My thoughts from last week havn't changed. Gold needs to rally here back towards the highs in the next day or so for the parabola to still be in effect. It really could be. Don't count it out yet.

    But it can't just stay flat down here and meander. After you've gone vertical you either need to keep going up or it's over. Move like a shark or die.

    Silver looks like a bear flag last two months, so that seems to suggest lower. And gold has a triangle here last day that is looking like a continuation down.

    So for the moment the odds would seem to favor us going lower, but I'll let the mkt tell me.

    If we *DO* go up then there should be plenty of ability to jump back in for a final 100-150 dollar move.

    Don't forget that this week is also equity options expiration so there will be games involved there too. There are a ton of calls on GLD at most strike points and very few puts except at much lower levels. So that should offer no downside resistance.

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  89. This comment has been removed by the author.

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  90. Gary,

    Why is Silver Climbing while gold is going lower. You said silver will get annihilated when gold goes down.

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  91. TZ thanks for your insight.

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  92. Tracy,

    SILVER

    Wait until end of this month. Silver has a 10 to 20% drop coming if the 2004, 2006 and 2008 corrections are any indication

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  93. Gross: Hedge funds unwinding risk assets b/c stock declines require margin calls or client withdrawals. Shades of 2008!

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  94. I put it out there again that gold and silver will NOT necessarily perform like they did in 2008 even if lots of other stuff drops.

    People have LEARNED THE GAME this time.

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  95. Tracy,
    Gary said that silver will get annihilated when Gold moves down in its D-wave.

    Furthermore, today is hardly a significant move down in gold since it is moving toward its Daily cycle lows. Silver have not moved very much either, it's basically flat.
    Watch silver when gold drops down to the 1500-or-so-area.
    BR,
    D

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  96. Beanie,
    The secular bull did end in greed, extreme greed. It was called the tech bubble.

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  97. I agree with TZ that everybody would love the opportunity to load up with PM's in an '08 environment. PM's will not offer up the same game only 3 years later.

    I'm long metal and miners, not yet adding to gold until Gary wants to get long. However, I am adding to miners into puke outs from now til the end of the secular bull.

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  98. Gary,

    In 08 the Nasdaq rallied 200+ points out of what looked to be a bottom and then dropped to make a new low before rallying 300+ points before the next leg down began...do you expect something like that will happen again, or are you leaning more towards the low is in?

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  99. WW,
    That is how bear markets work.

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  100. Appreciate your views,

    Alex in Montana & Dubbelito

    Thanks

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  101. Good morning Gary,

    Would you then advise us to take profit now on our Qqq and reload later in the next few days?

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  102. not unless you are a day trader.

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  103. Gary,

    I see...so even with what looks to be a swing low in now we may still get a new low before we get this bear market rally back to the 200ma, how will you determine if the Daily, IT, and Yearly cycle low is indeed in then?

    Hope that makes sense.

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  104. Sophia,

    That was my thinking...maybe we get a 200 point pop here off the low before making new low to put in the cycle bottom. Im thinking maybe see if we test 2600 and take profits before heading lower.

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  105. Gary, why do you continue to reply to the Beanster's goofy comments? His views of the world were cute at first. Now its just sad.

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  106. WW,
    No you misunderstood me. I think this intermediate bottom is in for now. We should see a multi-week bear market rally and then a move to new lows later in the year.

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  107. W2,

    I have more or less the same target, slightly lower as this market can turn very fast...I bought the future at 2035 last week, so I won't hang around for too long....

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  108. Bear market rallies tend to last 5-10 weeks. This won't turn until the intermediate sentiment levels have reversed. That takes time.

    You can relax for at least the next month.

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  109. Gary, if the Fed announces a $600 billion QE at Jackson Hole, will you be going long gold again?

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  110. Thanks Gary! You are a great teacher!

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  111. Gary,

    Ok thanks for clearing that up for me...im just going to hold fast then.

    Sophia,

    I remember you mentioning that you bought futures, and that you were hoping Gary made the right call :)

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  112. Gary,

    I knew you would get bored not talking to us, it actually lasted a little longer then I thought it would though....lol :)

    Thanks Beanie!

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  113. Good morning all.
    I see we are approaching the 10 dma on QQQ then comes the 200 day not too far up.
    My garden has weeds and I feel lazy.
    oh, what-to-do...

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  114. E,
    They won't. and I wouldn't anyway just look at how stretched (link I posted in an earlier comment), gold is. One would have to be nuts to buy something like that.

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  115. Gary,

    If you get the chance, take a look at the low put in on the Nasdaq on 1/23/08...thats what im concerned about. After the swing low was put in the market turned and pushed lower, im not sure where we were in the cycles at that time though.

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  116. I am going to be posting a lot less here until at least October. I am traveling a ton for business until then, and have started a couple of new enterprises that are taking a lot of my time. (BTW, my new website had some technical difficulties, but should be live this week.) Email me at dgamone@gmail.com if interested). Also...

    I passed my Series 65 exam and am now Registered Investment Advisor! (as soon as CA finishes the paperwork.)

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  117. Congrats DG, how exciting for you! Please keep us posted. Love to hear people following their ambitions and being successful. :)

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  118. Good for you DG and best in your new endeavors. We have been very fortunate here that you have shared your expertise with us. Thanks and good luck.

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  119. DG, I'm looking for a partner for my hedge fund. You interested?

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  120. Gold is holding up well today in the face of a rising market.

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  121. Good show, DG. All the best in your new endeavors.

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  122. I like where the usd is heading. now... more please ;)

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  123. In terms of being stretched, this would be one of the lighter C-Wave tops. It would also be considered very light in terms of the multi-year preceding run up, you would expect a massive top. We're also well into the 2nd half of this glorious bull market, so they should get bigger.

    We've also got that big unknown out there, out all of the C-Wave tops, this was the only not to be dollar collapse fueled, it was all demand driven. One should not so readily discount this point.

    It certainly will be interesting to see it unfold here, I'm keeping all possibilities open, last thing we want is to miss another big $300 move once this settles into a cycle low.

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  124. We also need to take into consideration how the market collapse effected this daily cycle.

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  125. Is there a consensus expectation for gold's *short-term* reaction in the event of a Tuesday Eurobanker announcement of new money printing?

    Separate question, what is the recognized most liquid inverse gold ETF?

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  126. Poly, which c-wave is more stretched, than this one?

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  127. Gold has sky rocketed up 0.25%

    After weeks like last week this one might be long and boring?

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  128. GLD looks like it's on a melt up, to fill its intraday gap, around 170.63.

    It's also a possibility Gold futures are building another bull flag, on the daily

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  129. I'm more worried about getting caught in the crash that always follows than missing any further move.

    This is by far the biggest most
    parabolic C-wave of the entire bull market. Those that don't know any better worry about missing the move. Those that have been through this kind of thing before worry about losing all their profits.

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  130. Auger, the two most recent one's covering the majority of this bull market.

    In fact, the 09 peak was greater, that wasn't even a C-Wave top!

    Careful getting hung up on one idea, the evidence can be viewed from many prisms.

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  131. I cant find any point at which gold was this far stretched above the 200 sma, be it in this C-wave or the previous ones over the last 10 years.

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  132. 09 peak was $241 stretched above the 200ma, This top is $360 stretched above the 200ma

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  134. Poly, I'm not hung up on one idea, at all. But, Gold is clearly stretched further than previous peaks. Plain as day.

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  135. The 09 peak pulled back to the 75sma...it's at 1565 area right now.

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  136. WW,

    Why on earth would use nominal values?

    This past top is only the 4th highest above the 200dma, a serious warning for sure.

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  137. "Those that don't know any better worry about missing the move. Those that have been through this kind of thing before worry about losing all their profits."

    Gary, it's a good warning for many, but it's never black and white. We already banked our profits, watching this from the sideline and can then play the next DCL with very limited risk, I'm sure you know that. You keep referencing the silver experience but they are in no way related. You rode that drop to the bottom, you're already out here.

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  138. Poly,

    You said in fact the 09 peak was greater...whether I use nominal values or not its a fact that the 09 peak wasn't greater.

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  139. Poly,

    http://content.screencast.com/users/augertrade/folders/Jing/media/8d1f729c-a9fc-40b8-b57c-0909c46c26b1/00000571.png

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  140. Poly,

    We will see how the DCL plays out...if we can jump back in so be it :)

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  141. Poly,

    I can understand your thinking 100%...This bull is morphing into one of those super buff cattles.

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  142. Not sure how many follow Serge...he always has beautiful charts

    He and Gary are both aligned on this one.

    Here is one of his latest posts on gold - a beautiful one

    http://www.etf-corner.com/markets/2011/08/gld-gold-crash-gold-bubble-.html

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  143. Poly,
    I'm talking about the people still in or contemplating jumping back in because they are worried about missing a move.

    For many people it's more painful to miss a move than to lose money. Well almost :)

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  144. Auger,

    You're showing me a 20 year LOG scale chart of a major bull market. OMG.

    WW,

    2009
    High $1,227 200dma = $975.50
    Stretched = 25.79%

    Now
    High = $1,817 200dma = $1,459
    Stretched = 24.54%

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  145. Gary, agree, anybody riding this now is asking for a spanking.

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  146. This comment has been removed by the author.

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  147. Sorry that should you're showing a "Linear chart" of course.

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  148. Poly, I'm not sure why you're OMG'ing, buuut that is a linear scale, monthly chart. You said, that there were other c-waves that were more stretched. Please show me on a chart.

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  149. Doc showed today that gold is 36% stretched above its 80MA now and has been 44% and 51% stretched at previous tops.

    The point is probably academic but as markets generate more and more data, the whole concept of stretch gets more extreme. Read a market book from 20 years ago and they were all freaking out non-stop about October 1987 - we just had an event in equities of comparable magnitude and we had several in 2008. 2008 blew the barn door off of any historical comparisons. Historical precedents need to be taken with a grain of salt - extreme will become much more extreme in future.

    The simple analog charts are misleading for longer time periods and log or semi-log charts reveal a truer picture. Nothing stopping gold stretching 60% above its MA before a top.

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  150. Buffett, who is estimated to be worth more than $47 billion, called on Congress to commit to "shared sacrifice" and raise taxes on people earning more than $1 million. Buffett said the rich are "coddled" by Congress "as if we were spotted owls or some other endangered species."

    "While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks," Buffett wrote in a Sunday New York Times Op-ed.

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  151. This comment has been removed by the author.

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  152. Auger,

    Sorry if you took offense to the "OMG".

    But you can not use a linear chart for a bull market.

    Are you saying that in 2001, if gold went from $200 to $500 overnight, that it still would not compare to this $300+ move? I don't think so.

    Again, 2006, 2008 and 2009 were all stretched further.
    I'm off to lunch.

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  153. Poly,
    Why the log charts for bull markets?

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  154. Poly,

    Percentage wise your correct, but I think price gain or loss has more of an effect psychologically than percentage gain or loss.

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  155. Poly, didn't offend me, no worries. It doesn't matter what scale you use, stretched is stretched. I'm talking about technicals, you're referring to price appreciation, it's not the same thing.

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  156. Gary, even though gold is pulling back it's not showing the type of sudden sell-off usually associated with parabolic tops. Any thoughts on that?

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  157. "Why the log charts for bull markets?"

    If you bought this bull on day 1 and held for a few years, you would have doubled your money and sold out at $500, for example. That's a $250 move. If you bought 18 days ago, you also had a $250 move. Who made more money?

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  158. Poly,
    I don't get it unless I misunderstood.
    Are you talking about a logarithmic scale vs a linear one and if so, how does that affect what you are saying?

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  159. @Auger,

    "It doesn't matter what scale you use, stretched is stretched"

    I'm not sure this is accurate as the argument here is not if it's stretched, I've acknowledged it is.
    The argument is if this is stretched the most ever and I'm saying there have many other instances, one not even associated with a C-Wave top, that have been stretched further.

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  160. Miyagi,

    Does this answer your question about log charts during a bull market.

    Imagine a company with a stock price increasing by 15% each year for 20 years. Think about how you'd normally draw a chart of its stock price. You'd probably use a linear chart, as that's what most of us learned to do in school. The graph would show a really curved line, though. It would look like the stock price grew slowly in the first years, and then zoomed up a lot in the last few years.

    That's because in the first few years, the change in the stock's price might have been from $10 to $11.50, and later from $25 to $28.75, and later still from $75 to $86.25. So the absolute changes will look small at the beginning, and will look large later on. But it's really just been a steady 15% increase from year to year. (Remember, an investor should be just as happy with a total 50% return from $20 to $30 as from $100 to $150. Investment-wise, percentage-wise, it's the same thing.)

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  161. WW, in the end percentage is all that matters IMO...

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  162. Gold is setting up for a nice little sell off over the 1/2 hour or so

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  163. Poly, that doesn't explain why log charts are used. You wouldn't double your money, just because you used a log chart.

    Log scale, simply plots the vertical axis in percentage change. So, $250-$500 looks the same as $500-$1000.

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  164. No matter what...to go long gold at this point is crazy. Its a gamble right now.

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  165. Dub,

    I agree, but like I said before I think price plays more on the mind.

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  166. Ok Poly, I'm not here to argue with anyone. We're all on the same side anyways, right? :)

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  167. Anyone surprised that the small drop in vix during this counter rally?

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  168. If you want a good index fund look at VEU. Seasonality for QQQ is in October. I'll give QQQ and DZZ one more day to shape up or they're gone, (gold and silver look strong here). And REIT's are killing it today, VNQ.

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  169. Jeff,

    Looks like there is no big selling going on today...gold will grind higher or trade in a tight range

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  170. Auger,

    Thats how we better each other, Poly is just mean....lol

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  171. I'm really confused on the insistence and focus on nominal change over so many years. You presented a 20 year chart showing a massive bull market in linear terms and dedcuting from the awesome "visual" of the chart that we are stretched further this time around. Of course we are and always will be, you're solely looking at the absolute change and not the percentage change.

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  172. There was talk about money coming out of the swis into gold because of the meeting in Europe tomorrow.

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  173. Auger,

    Of course it's all good, except for that shady WW character. :)

    In the end, it's all free anonymous advice, 99.5% of it is useless.

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  174. Poly,

    Stop lying your not confused...you know most of us dont understand what the hell the difference between Linear and Logarithmic charts are!!! Try being more helpful in your explanation and stop bashing us fools...lol :)

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  175. Was that just profit taking in gold last week and now headed back up again? hmmmm

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  176. I wasn't expecting gold to drop like a rock but this is more recovery then I expected.

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  177. Poly,

    Thanks for your insight on the log charts, I owe ya another one brother.

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  178. Here you go WW, from one "fool" to another :)

    http://www.fool.com/foolfaq/foolfaqcharts.htm

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  179. Haha Ploy, you're good at putting words in people's mouths. I'm not insisting, deducing or focussing solely on anything. You say Gold has been stretched further, at previous peaks, that's fine with me.

    Meanwhile, it looks like Gold wants to break out of another bull flag, here

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  180. Detailed information on C-Wave tops and their corrections from Gary's partner John Townsend.

    http://thetsitrader.blogspot.com/2011/08/gold-c-wave-tops-and-d-wave.html

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  181. at ease,

    We should expect at least a clear DCL, so we should see it drop below $1,700 soon enough, IMO.

    OK, back to real work.

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  182. Just after I posted it will sell off, it put in a bit of a rally, but it will sell off for a 1/2 or so very soon.

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  183. Im not suprised at gold's action today, if it rips through 1770 I would be wondering.

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