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Saturday, October 1, 2011

BACK TO THE BEGINNING

Bear markets are about cleansing the excesses of the prior bull market. Secular bear markets are about P/E compression, a move from extreme overvaluation to extreme undervaluation. The current secular bear market is now in its 11th year and in the initial phase of its third leg down.

As many of you know I expect next year to be one of the worst years in human history, at least economically speaking. Certainly on par with 1932 if not worse. This should drive one of the worst stock bear markets in history. Before this secular bear market expires we need to cleanse all of the excesses that were generated during the final bubble years leading up to the top in 2000.

I'm expecting at next year's four year cycle low, which should occur in the fall, that we will see a true secular bear market bottom. That means single-digit P/E ratios, along with a dividend yields on the S&P above 5%. I also expect this leg down will erase all of the gains during the bubble years from 1995-2000.


However I don't think we will be quite out of the woods yet. We will probably have to endure one more nasty leg down in this secular bear market before we put in an inflation adjusted low, likely it will occur in 2016 with a final bottom slightly above the 2012 bottom. At that point we should begin a new secular bull market that I think will be driven by truly astounding discoveries made in the field of biotech and nanotechnology.

But first we have to get back to the beginning.

379 comments:

  1. Any advice on where to buy physical bullion?

    I know about APMEX but also wanted the opinions of others.

    Thanks.

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  2. whitebear,
    Blanchard and Kitco

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  3. at ease..
    Working up the courage to post? Atta boy!

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  4. Gary,
    How do you think QE3 and possibly more might play into this scenario or are the bounces you indicate those events?

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  5. Gary Savage and SMT got a mention in Jim Puplava's Financial Sense Newshour today....wow! First Marc Faber, and now Jim Puplava. Holy Beep

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  6. Warning about ZSL (double short silver).

    Due to the math, there is very little chance that ZSL will exceed $30 even if we experienced a couple more legs down and silver tagged $19.

    So realistically, ZSL is very unlikely to surpass the mid twenties.

    I would stay away from ZSL. It has other problems as well related to the way it is 'recalibrated' at noon in London (7am ET).

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  7. Thanks Danno,

    I will check those dealers out.

    Have you looked at Westminster Mint? They seem to offer good selection and price.

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  8. I'd never heard of Westminster Mint. Sorry. But thanks for the tip.

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  9. E,
    Really. Do you have a link.

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  10. Gary, it's http://www.netcastdaily.com/broadcast/fsn2011-1001-2.mp3
    It's the call in section and someone calls in talking about you and how great the SMT is...sounded ALMOST like a plant. Jim said he might have u on the show!

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  11. The audio is from: "Jim’s Big Picture: “Knowing When and What to Buy in Precious Metals”
    Also Kathy Derbes on the heavy buying wave of physical precious metal during the recent price correction, and your Q-Calls"

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  12. Gary,

    At any point along this timeline do you think it would be worthwhile to buy physical bullion? To me, that seems like betting on hyperinflation, which I don't think is likely. Do you think hyperinflation is likely in this timeline?

    I ask because I have some friends who are hell-bent on stacking physical as their only investment strategy.

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  13. Whitebear

    http://www.golddealer.com/

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  14. Back to the beginning? Are we meeting Vezzini there?

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  15. Gary,
    It was "Greg from Michigan" who promoted your site as you are a great technician. Listened to the radio broadcast. Thanks for sharing it Eamonn.

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  16. I thought "Greg from Michigan" sounded familiar. I'm sure I've heard that voice on Contrary Investors Cafe........*cough*

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  18. myagi,
    Was changing my avatar, spring/summer over. Bears are out.

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  19. Eamonn, your right that voice did sound familiar. :)

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  20. Eamonn

    The calls were recorded. Notice the host never talked to the callers after their question. They were all plants.

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  21. This comment has been removed by the author.

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  22. one of the worst years in human history, at least economically speaking. Certainly on par with 1932 if not worse.....
    For years and years many economies had to survive with 10-20% unemployment - and they did -
    we have socialistic welfare states in many countries with a strong support system but one big think Gary is missing here in his Armageddon views (in which he is certainly NOT alone - many subscription based blogs beat the same drums)over 70% do not own any stocks anymore - and they do not care if IBM would trade again @ 90.
    I guess Gary likes to think ahead and publishes these predictions but I trade what I see and for now the trend is down - nothing more.

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  23. Nice scare em blog post...don't disagree...

    The only thing I will add is that the future will most likely also include a return to higher interest rates, which will bankrupt the US one way or another and personal credit will no longer exist at the bottom. IE credit cards and like will become debit transactions only. Housing will most likely fall to intrinsic value which is what...man got a number in my head but the number is too scary to mention....rent is definitely a viable option.

    The best we can hope for is a quick purge, but the fed will prolong things and make this depression at least a decade long....Ben is no longer a moron, but is now an F'ing moron...anyways I guess it takes time for the world's best to realize what a bunch of BS all their education is worth.

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  24. Gary

    why are you so big on biotech. I know its developing and comeing up on new developments, but what are you reading or studying that would give you such a expectation?
    Im not saying your wrong at all.Its just i have not heard very much about it ( no suprise there). Who, what , where are you gattering this conclution from?

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  25. Keys

    Speaking of housing. Bankers survey of home prices unlikely to recover before 2020

    http://www.fico.com/en/Company/News/Pages/09-30-2011.aspx

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  26. Jason,
    I don't think we are going to hyperinflate in the near future but we are headed down that path if we don't stop piling more and more debt onto the government balance sheet.

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  27. LOL it did almost sound like a plant but I can assure you it wasn't me or anyone I know.

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  28. thats just like some people ie they always think conspiracy theories. i wish there were more opportunities to make money in these bear markets. even gold takes a beating - at least initialy. whats a guy to do just stay cash?

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  29. stay cash until there is a good setup. cash is a tradeing postion

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  30. Yes there is an excellent opportunity brewing.

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  31. i think i am my biggest enemy - trading wise, you are correct cash is a position! its hard to fight that trading high though and just stay cash, losses usualy cure me quickly of my itchy trading finger though!

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  32. i make silly losses and the worst part of that move is being slow to jump on a good trade

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  33. been there done that, sometime i overanalyze and by the time i decide i miss 75% of the up, gotta stay sharp and ready and jump before the herd moves, either you make dust or you eat dust. i always like to hear garys slant on whats going on, very unique and ahead of the curve,

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  34. of course in the end you have no one to blame but youself though, just gotta be focused, if you cannot focus then just walk away. good luck to you guys

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  35. Gary, I assume the 'excellent opportunity' you're referring to is the coming intermediate low in gold?

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  36. Bravo! this will erase all the excess liquidity that caused the dotcom bubble(2000), the housing bubble(2007) and the safe-haven bubble(2011). I just hope that it does not lead to any war.

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  37. Alhough much of the time stocks and gold trend in the same direction, over long time periods they are inversely related, and therefore the Dow Gold ratios is to me perhaps the single most important piece of info for a long term investor. I think after gold's correction here it will go up strongly starting 3-6 months prior to stocks bottoming, and its ascent will far eclipse stocks. However, the really big upmove in gold should occur after stocks make their real bottom, during the period in which stocks are consolidating for their new bull market(in EW, gold's wave 5, stocks wave 2 of 1). This will either be in 2015/16 or 2020ish, depending how this plays out.

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  38. I think 2016 is a good guess. These secular bulls/bears in stocks tend to last 17-18 years (1929-1947; 1947-1964; 1964-1981; 1981-1999; 1999-2016?).

    2016 would also make sense as a deflationary year - it should be Year 2 of a 3-year dollar cycle and the 8-year cycle low in gold.

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  39. Mark Hulbert has an article on MarketWatch about stock dividends paying more than 10 year treasury notes. Looks like Gary is on the right track.

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  40. Taking myself out of EUO trade based on this dollar target.

    http://screencast.com/t/u8AQa8adyPn

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  41. Well said, Gary. I unfortunately share your dismal economic outlook for 2012-13, though I still have August labeled as a yearly low and believe there is a good chance we get the 4-year low in spring rather than autumn next year. I reserve the right to change my mind by spring, though!

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  42. Harry, if you are there, thanks for sending that link with money supply & Mises Institute. Hope you are making a fortune for you clients there :o)

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  43. Gary,

    The mention I believe Eamonn was referring to was my Q line call. I've thought for a while now that you would make a good guest to speak on the technical analysis portion of his program. I called in last week asking him to invite you on. He said the producer would look into it. Keep up the good work.

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  44. Interesting research by Dr. Jean-Paul Rodriguefrom Hofstra University on bubbles. Notice his chart of the main stages in a bubble: http://people.hofstra.edu/jean-paul_rodrigue/images/Manias%20Bubbles.pdf

    Now, look at a silver chart: http://screencast.com/t/vdRSGzUnOoB

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  45. I think the USA is heading for a total and irreversible implosion. It will be of such magnitude that the country will never recover.

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  46. Duuuude,

    Kind of the same thing Gary has always embraced...revision to the mean. Based on your charts then, at what level is the mean for silver? It looks to be much lower than the lower $20's, i'd gusee the mid to upper teens.

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  47. WMP, I did not mean to infer a price. I think I just found the similarities striking. I think the pattern applies because silver was so much further stretched than gold was. I believe ultimately silver will follow gold as it goes higher.

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  48. Greggy M.
    Great plug for Gary/SMPT!

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  49. The Tesla Grin
    http://www.youtube.com/watch?v=_J89ZIgx2iI

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  50. Duuude,
    The only problem I have with the guy's bubble chart is that silver never really had a 'stealth' period.

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  51. If you think that the US is going to implode then why are you on this blog? Shouldn't you be busy buying a cave in Arkansas and stocking it with food, water and ammo?

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  52. Silver isn't in a bubble yet. Precious metals are still in the second stage of the secular bull market.

    When we get to the bubble stage we won't get a measly 80% above the 200 DMA. Silver will probably be 200-300% above the 200 DMA and gold could rise 60-100% above the mean also.

    During the last bubble gold rose 300% in one year.

    We are still a long way from that kind of frenzy.

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  53. Should we be worried that the Hang Seng is currently down over 4%?

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  54. Rob,
    You know what I expect this week.

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  55. Looks like it is starting in Asia tonight. Scary shizzle, G.

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  56. Hack,
    I did not mean to suggest the USA would implode immediately. If I had to guess I would say the implosion will come before 2030.

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  57. I feel so lost being all cash! Directionless...

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  58. I'm not worried about the US imploding, we survived the Civil War, nothing can match that. But watch the Chinese. They can't stop 1B people from rioting so there will be blood in the streets. This happens every 100 years or so, so it's nothing out of the ordinary for them...

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  60. I would go into greater detail but it would require talking about religion and I won't burden the fine people here. Let's just say, it has everything to do with the USA's relationship to Israel. I'll offer one tip. If you see the USA pull support for Israel... brace yourself. This is the primary reason I no longer support Ron Paul.

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  61. To all you guys who bought (or wanted to buy) this guy's stuff...

    Donald Lapre was found dead in his cell at a Florence facility Sunday morning.

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  62. I think Gary's high percentage/probability trades are very cool. If i where a multi millionaire and had to move that much money around i would only buy stocks at 3-5 year lows hold for a year or a little more and just wait for the next end of the world to come. Making a cool couple hundred percent every few years on very high probability trades and then waiting out the rest is classy!

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  63. Hack,
    Didn't you mention the big boys would be stepping in around 1660?

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  64. This comment has been removed by the author.

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  65. We won't make a new nominal low - that is already in during March 2009 low. You already missed it. However, I do agree that we will get a new inflation adjust low later in the decade.

    This bear market will disappoint many many deflationists like Prechter, Shilling, Rosenberg, Roubini and Edwards who you seem to follow.

    By 1932 Dow crash a lot. By 2002 Nasdaq also crashed a lot. That ws the nominal low for Dow in 30/40s secular bear, and that was also the nominal low for Nasdaq in 00s/10s secular bear.

    You are also wrong about another thing, the excess does not lie in the corporate world as much as in the public world. So therefore, since you are so extremely bearish, why are you recommending such dramatic lower corporate equity prices?

    Shouldn't you be recommending to short Government Bonds instead? After all, they are win a 30 year secular bull which started in 1981 and will end very very soon. That is the bubble to short... while stocks just move sideways for majority of the decade like in the 10s, 30s/40s and 60s/70s.

    I bet you we will not make a new low below 666 on the S&P!

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  66. Danno
    I can't help myself, what does Don Lapre and his death have to do with Ron Paul?

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  67. My gold system buy was almost triggered overnight, and will buy with any move over 1671.00

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  68. Haggerty,
    Gimmie a break. It was the middle of the night.

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  69. I can feel the curve ball on anything going from Stocks, PMs and $ right now....Hold your shorts guys!

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  70. Sophia,
    Please let us know when it's time to drop our shorts.

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  71. Ok Danno
    I am holding some small shorts too, please let me know when you guys are getting out.

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  72. Vuvvy/Veronica,

    Thanks for the update. Keep us posted.

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  73. Tiho,
    Ask Japanese bond traders how well they did shorting bonds during the last 20 years. We are in the same situation, actually worse, but now you see why I don't want to short bonds.

    Bond cycles turn very slowly.

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  74. Danno,

    You understand the Israel/U.S.relationship perfectly.
    To me, it is the most important foreign policy issue.

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  75. Anybody care to guess, How safe would a 10% exposure to SH be this week?

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  76. Tommy D:


    I am getting a small piece of SDS at the open. Will add to it if S&P drops below 1100. Will sell no later than Thursday.

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  77. As long as your position size is 10% then you can't do any serious damage to your portfolio even if the market were to reverse and pop back above 1220...which should be your stop BTW.

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  78. Alex,
    Thanks. Wish I could take credit. Just years of having it explained to me coupled with witnessing events unfold just as predicted.

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  79. Gary,

    Why would I ask Japanese Bond traders that? You would be insane to short JGBs during periods of disinflation. Let me explain some history.

    If you recall the Japanese market cashed in 1989 and started its secular bear market which is still in process but about to end shortly. Obviously, I'm talking years here for investors like myself, who are students of history and cycles, not minutes for trading junkies.

    What were commodities doing during the 1990s Gary?

    They were in a secular bear market. What are commodities doing now?

    They are in a secular bull market. Brent Oil is up 10 times in the last decade. That is right, not a typing mistake - 10 times. Many commodities are up 3 to 5 times as well. And this is not the end, because all great bull markets end in a bubble. Stocks did into late 90s and commodities will in several years from now too!

    Therefore, just like the commodity bull of 1940s and 1951 blow off top led to the end of the bond bull market than, today commodity bull of 2000s and the upcoming blow off top by middle of this decade, will lead to the end of the bond bull again.

    We could be there pretty much around here, as every man and his dog are now piling in, creating a short of a century!

    So I bring my point back to Japan. Why short bonds during the disinflation of the 80s and the 90s as commodities were in a secular bear market?

    Its suicide to do so and I feel so sorry for those who did it. Looks like they didn't do their research right.

    Overvaluations do not matter as much as primary secular trends. Look at Nasdaq from 1996 to 2000 or Gold from 1978 to 1980. So shorting based on valuations alone is not a good investment.

    Today we have a commodity secular bull market, unlike during Japanese era of the 90s, so lets just see how long this bond buying panic lasts...

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  80. Yes Gary, I will keep it 10% or below.

    Thank you for the stop...

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  81. This comment has been removed by the author.

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  82. Tiho,
    Hey, If you want to short bonds as the global economy falls back into recession/depression be my guest.

    I think I'll pass on that trade.

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  83. What if Europe solves its issues? Don't you think that we could have a major rally in stocks/selloff in Bonds? Danno? WDUT?

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  84. Tiho,
    You might want to ask yourself how well that strategy worked during the last two recessions.

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  85. Sophia,
    There is no way to "fix" what's happening. All the politicians are doing is making it worse.

    The only cure that has ever worked in the history of the world for a debt bubble is to bite the bubble and suffer through the depression.

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  86. Gary,

    I know...but what's keep me alert is that I think that some of the move is now overdone..The DAX and the CAC40 are higher than they were in August/Sep with the same level of US markets...
    That makes me thinking that just a little bit of good news and this market will overshoot to the upside...Shorting here is fine, but with a very tight stoploss

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  87. Sophia,
    As to how the problems in the EU will affect our near term investments I would absolutely defer to Gary. What I know about the EU long term (or whatever it will be called in the future) is that it will be the world's leading military power, which suggests the EU (revived Roman Empire) will only grow stronger and stronger. But, since nothing moves in a straight line it is still possible that in the shorter term their Euro currency could suffer further or even be replaced.

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  88. Danno,

    don't make a bet on the disappearence of the Euro...

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  89. Sophia,
    The time to try and pick a bottom is after we see a large BoW day.

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  90. Just learned that buying short-term debt of good European companies is the favorite Swiss investment banks strategy besides PM speculation.

    Anyone knows if such tools are available?

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  91. I know Gary...waiting for your Ok to get in...Just bought back my short Copper before the ISM number...tiny tiny

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  92. After rebalancing for the month:
    Long DIG 15%, SSO 27%, GDXJ 88%
    Cash 0%

    Performance for September: -21.68%

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  93. Was there any news? Market reversed hard.

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  94. ISM was better than expected.

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  95. The market will have to get back above the 200 week moving average. I doubt it will be able to do that.

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  96. Better than expected manufacturing report..economic crisis solved!

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  97. test,

    For seasonality, Don't you think QLD will do better than DIG??

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  98. I was hoping for a Monday metals smackdown to wash 'em out. Maybe later today or tomorrow morning?

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  99. if US slides into recession prior to elction, what is the chance that Republicans get the blame? Might republican road blocks back fire?

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  100. Anybody figured out why gold got sold off recently?

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  101. The fact that it got stretched over 30% above the 200 DMA might have something to do with it.

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  102. The next two weeks will be quite vibrant for gold. I just purchased 200 Oct 170 calls, as my time series forecast line on the yearly has held under the price of gold. Combined with more than adequate spacing beneath dma 28,-14 I fully expect to make 300% on these calls next two weeks or so. Good luck to all enjoy this blog and comments. Comments are a blogs goldmine.

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  103. If gold can hold above 1640ish I would be confident that gold is going to rally with the dollar.

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  104. Unless you're sure you know what the market is going to do during a selling climax it's probably a bit risky to buy gold at the moment.

    If the market has a hard break lower we could get panic selling in everything and the baby might get thrown out with the bathwater.

    Missing one week of a potential rally isn't the big of a price to pay to wait and see what happens during the coming panic.

    You never know, you might be able to get gold $100 cheaper as it could test the low or maybe even a slight move below that.

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  105. This market is like a tennis match today

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  106. Gimme the green light, Gary. I'm itching to add more miners but am waiting on you. :)

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  107. If I'm right about an intermediate low then we need to see some kind of panic selling climax. Even a daily cycle low should trigger some kind of hard selloff.

    We haven't had that yet. So I'm assuming it still ahead of us. The fact that the dollar is very strong today probably means the close will be pretty weak.

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  108. Dollar firmly through 79 level

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  109. Just got some Panama 20 balboas coins (those things are huge-I might use them as coasters) and added some sil.

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  110. I appreciate the comment Gary, I see what you are saying. Gold looks really good here though. Just my opinion, of course. 1640 is a short term breakout, so it is something to watch. Plus we are at the levels on the Euro where it really started to tank last time they said the Euro was finished - from around these levels on the Euro and lower gold did very well. Of course if we do get a bit of 2008 type selling, cash is still king - for now.

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  111. Question:

    I have ITM SPY puts that I bought last week. Gave me a great day on Friday, but this morning they seem to be off the market.

    SPY is down and so are the puts.

    Can someone explain?

    Le Fou is confused.

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  112. My timing model shows the int. cycle in gold has been reached. I'm certain it'll not only hold but provide sizeablh the returns over next week or two. We're good to go up to DMA. Since the DMA 28,-14 is downward sloping we'll need a push to breach that to upside so I'll take most profits on my newly initiated positioned there.

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  113. The SPY isn't down much at the moment so you have theta burn that is probably offsetting the minimal decline in the underlying.

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  114. Anthony,
    Does your model factor in the unpredictability of a selling climax in the stock market, or even a normal 1-2-3 reversal that would be a normal bottoming process?

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  115. Thanks Gary,

    The SPY puts are OCT. Does it make sense to roll them over into NOV/DEC, when I only plan to hold them a few more days this week?

    TIA,
    Le Fou

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  116. Not looking for the worst year in human history myself - I think we have been living through the worst years already. Let's see - what has already collapsed - Nasdaq in 2000, still more than 50% off its trading high and that was before AAPL got on fire. General markets in terms of S&P, collapsed over 50% twice in a decade. Our currency - the US Dollar - has collapsed more than 50%. Crude oil is down almost 50% from its 2008 high. Financials have collapsed and have returned to low levels. Even the giant squid GS is down 50% with talk of them going private. Silver is down 40% or so, so that's a collapse. China in terms of Shanghai is way down and lots of small-cap Chinese stocks are down at 0. European stocks have collapsed again in the last few months, although the Euro hasn't been hit as hard for some reason. Gold has been down 20% or so recently. The only thing I see right now that haven't collapsed are US Treasury bonds - are these the next target?? Most of the time there is an inverse relationship between stocks and bonds - the money has to go somewhere, right??? Maybe we can give some money to the folks on Occupy Wall St so their student loans can be forgiven? Housing has collapsed and is at very low levels. Employment in the US has collapsed to historically low levels looking at U-6.
    Trying to be constructive here - believe me I was a bear of the bear of the bears in 2008/2009 and made a killing. This time just feels different. There is no Bear Stearns, Countrywide, Lehman Brothers. We all know that Europe is in trouble - Greek will most likely default - could that be a BUY? A lot of the excesses of that time seem to have been squeezed out - companies have made themselves leaner and meaner. There is still a long way to go for sure, but to me the worst year in human history would require famine, pestilence, lack of access to grocery stores and gasoline, nuclear war, a mark in our hands and foreheads, etc., etc. I just don't see that yet - indeed, I could be wrong and I will admit that I am wrong - I have been wrong the last 20% down or so. If we collapse to the 500 level that Gary shows, the least of our concerns will be writing comments to a blog.
    In Demark land from Kevin Depew at Minyanville, we have TD Sequential 13 DAILY BUY signals in place for SP, INDU, NDX, and RTY, all awaiting confirmation with a close above the close 4 price bars earlier. These signals are good for 12 bars. We also are finally out of that wicked 1-4 MONTHLY SELL Setup window - one less bearish factor weighing on the market. And 3 more months of the grandaddy of them all SELL that recorded on the YEARLY in 1999 that will expire on Dec 31.
    The DAX did not respond very much to its recent DAILY Sequential 13 BUY, tho - a muted response in the range of 5130 to 5730. It's getting a bearish price flip today which could see follow-through tomorrow with a lower low.
    Gold held its 1619.89 TDST line and will record a bullish price flip today. A high above today's high tomorrow would be good news for precious metals.
    Thanks for reading and even Little Orphan Annie in the midst of the First Great Depression sang "The sun will come out tomorrow!" not until 2016!

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  117. Tiho, can you make a recommendation as to the best way to short government bonds? tia. Hannibal

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  118. Tiho, can you make a recommendation as to the best vehicle to short government bonds? tia, hannibal

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  119. Since it's late in the cycle the move should happen this week so it doesn't really make much sense to roll at this point IMO.

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  120. AAPL is set to announce next gen iphone tommorrow. Anyone think it could move stocks up? (I'm a nervous short at the moment).

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  121. Hi Gary,


    My model is showing that a waterfall selloff within the next weeok or two is highly unlikely. Based upon positioning of the major indices relative DMA in conjunction with angular displacement of said instrument I don't see it. I'll re-evaluate next week or so. As for 1-2-3 reversal I dont know what the definition of that is. My trading reversal decisions are based on time series forecast data , linear regression analyisis will a special emphasis on DMA. Thank you for all that you do here buddy. Like your passion and straight shooting no bs analyisis. Continued success I know you'll go far just remember us little guys!

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  122. Antony,

    Is your DMA 28,-14 is 28 Daily MA 14 days backward shifted?

    Then you get 14 days gap behind current date.

    Are you extrapolating it to fill the gap? Linearly?

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  123. SB:

    You can say that again! GDX is underperforming gold, looks like an ugly bear flag. We may (hopefully) get a total washout like we did early August on a similar setup.

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  124. H&S bottom on the 10 min silver chart. Bullish COT for gold. My thinking is why not start a small position here?

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  125. The SPX 150sma on a weekly is at the 1100 level now, resistance may be a bit heavier.

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  126. Because you don't know how a climax selling event in the stock market will effect silver.

    Just be patient folks. Missing one week is a small price to pay if everything starts getting thrown out the window later this week.

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  127. EQUITIES

    Looks like all the indices are making new lows fot this bear move

    S&P 500
    Russell 200
    Transports
    Wilshire 5000

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  128. I don't trust silver just yet. But good luck.

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  129. Plus the miners are not acting good either. And we want to be in miners not the metal when the time comes.

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  130. HVU.TO is the best thing ever invented.

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  131. NASDAQ 200sma and 150sma on a weekly at 2240, if SPX breaks the 150sma 1100 level I would expect a tag of the 200sma and look to take my SQQQ off.

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  135. Miyagi--
    They would do a reverse split!

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  136. What would happen to FAS if it kept dropping to zero?

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  137. Quit posting the same line dumb ass computer/blogger/google!

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  139. SPY candlestick tail hit BB crashline and bounced.

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  140. Gold and silver holding very well during this sell off... impressive.

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  141. Not much would surprise me, but the highest probability scenario for gold IMO would be for it to roll over, likely starting this week or next and move itself down into it's final ICL, probably by Nov 1st-4th at the latest, likely a week earlier. $1,500 should hold firm, but those recent overnight lows in the $1,530 area should be challenged.

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  142. Its war at 1100 on the ES now!
    The battle is on.

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  143. Poly,

    Would you mind if I dropped you an email?

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  144. Poly,

    Ok thanks, probably tonight or tomorrow sometime :)

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  145. At this rate SPY setting up for a BB crash. Last two times this happened, it rallied for 5 and 3 days respectively.

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  146. Would it be considered greedy if I still held on to my UUP and EUO today?

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  147. I was just thinking the same thing.

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  148. Le fou

    Are you going to hold your shorts?

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  149. Haggarty,

    I'm holding half of them at this point. I've put the rest up for sale on a wash out.

    Good trading,
    Le Fou

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  150. Haggerty,

    SPX tagged the August low. I'm expecting a breach, but if we don't get it I'm cashing out at the close

    Good trading
    Le Fou

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  151. That's exactly what I was thinking. If we get a breach I will hold

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  152. I doubt the low occurred today. The dollar just broke out above 79. There's nothing but clear sky between here and 81.

    A bounce off the August low is expected but the fact that occurred on the first day of the week is not a good sign. I suspect this week is going to get really ugly.

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  153. There have been no BoW days either. Bottoms almost always occur with one or more of those.

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  154. I just looked at SPY and it just made under the August low.

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  155. The dollar is getting stronger as the day continues which will continue to pressure equities - so I am with Gary....more selling to come.....

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  156. Thanks Gary,

    Sell orders canceled.

    Great trading,
    Le Fou

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  157. 5 down days in a row bouncing off lows from September 2010.
    If this support breaks, it is going to be very very ugly. It may also bounce here a bit.

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  158. Thanks Gary, that reply indirectly answers my question.

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  159. Intermediate degree bottoms tend to be pretty ugly, and if I'm right about re-phasing the yearly cycle low, then this should be not only an intermediate bottom but also a yearly cycle bottom, which suggests extremely ugly.

    This is why I keep stressing there's no need to jump the gun on the metals at this time. Wait for the panic selling phase to run its course.

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  160. I'm nibbling on some LVS here; very small amount.

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  161. I would suggest you might want to control your urge to trade. Wait till you get the odds in your favor. Nothing about this looks like a final low. At least wait for a large BoW day before trying any longs.

    Impatience and over trading almost always end up costing one money.

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  162. Sold my UUP at highs of day +28%
    Sold 1/2 USO puts for +60.6%

    Holding remaining USO puts, plus small SDS position.

    90% cash now, waiting for Gary's call.

    I will sleep well tonight. ;)
    Thanks Gary!

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  163. SPX 1100 broken and bleeding, new low within 40 days of August low as expected.

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  164. Still long dollar futures, still holding SQQQ.

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  165. wow. stocks about as popular as a hunk of poop in a swimming pool here.

    last week /es had one of the bulliest buy/sell volume divergences i've ever seen. between the 27th and today that's almost entirely been negated. whatever the strong hands were so certain was going to happen seems a lot less likely today.

    been takin' 'er easy otherwise. actually starting to watch /zn and /ab for any weakness as they move to retest their OpTwist highs. it was curious how they just blasted off then immediately erased that pop a few days later.

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  166. The only difference between now and 2008 is the fact that the market tagged the 50% fib level from the highs to the august low during this consolidation instead of during the bear market rally, before putting in a new low. Now the bear market rally can begin.

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  167. Confession time,

    I sold the last of my SPY puts for a very good price at the close. I think Gary is probably right, but my account has never been worth as much as it is today, and I'd like to enjoy that for awhile.

    Still holding about 15% in UUP Calls.

    Great trading,
    Le Fou

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  168. Le Fou,

    Then you made the right decision. Buy a bottle of scotch and enjoy!

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  169. Le Fou,
    Good for you. Tough to go broke taking profits. With what this game has turned into, it almost wouldn`t surprise me if the Ball Headed Wonder(Uncle Benny :) came out about 9 pm somenight to anounce another round of porkulus. Started trimming lightly today,euo & spxu. I go along with Gary on this one. Watching the after market sell off continue suggests something brutal. GL to everybody.

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