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Saturday, October 8, 2011

GOLD AT A MAJOR CROSSROADS

I think next week will mark a major turning point in the gold market. Depending on whether the dollar continues higher or turns back down we will either see a resumption of the D-Wave decline or this will just turn into a normal run-of-the-mill intermediate degree correction followed by another leg up in this 2 1/2 year C-wave advance.

First the pros:
The COT report has now reached a maximum bullish level on the commercial contracts. In the past this has always marked major bottom turning points.



Sentiment & breadth have reached extreme bearish levels (contrary indicator).



Chart courtesy of sentimentrader.com

It's possible that gold has formed a small T-1 continuation pattern (A move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move. Generally, when the second move from the sideways range has run its course, a counter move approaching the sideways range may be expected.)


There is a small problem with this interpretation as the second leg of a T-1 pattern is generally slightly smaller than the first leg.

The cons:
The current intermediate cycle is too short. Barring a shortened cycle, which does occur rarely, there should be one more leg down into the normal timing band for an intermediate degree cycle bottom (20-25 weeks).


Also the HUI mining index is potentially forming a megaphone topping pattern. If gold does have one more move down into a true D-Wave bottom then the bounce off the lower trend line should fail followed by one more aggressive move lower.


Also there is a much larger T-1 pattern in play that fits the normal parameters much better than the smaller version.


You can see from the chart above that unlike the smaller T-1 the larger version does feature a second leg slightly smaller than the first, and if this pattern is playing out then we need one more move lower to test the midpoint consolidation zone.

Right now the battle is being fought at the $1600 level. So far every time gold reaches that level buyers step in. 


If however gold closes below $1600 that would be a serious warning sign that the current daily cycle will be left translated and that gold is indeed caught in a true D-Wave decline. If that's the case it still needs to test the consolidation zone of the large T-1 pattern and the intermediate degree cycle will bottom in the normal timing band (November). If this scenario unfolds then we can look for an A-wave advance to begin once that final D-Wave bottom is in place.

As I have noted before A-waves usually test but fail to exceed the prior C wave top. They are almost always followed by a lengthy 1-1 1/2 year consolidation before the next leg up can begin.


In my opinion next week is going to be critical. Either the current daily cycle is going to break down below $1600 in a left translated manner, in which case we will probably see gold continue sharply lower to test the 75 week moving average and the consolidation zone of the large T-1 pattern. Or if gold can gain some traction and breakout of the recent trading range to the upside then the smaller T-1 pattern comes in to play and we should see gold make another run at $2000.

154 comments:

  1. great
    im leaveing wendsday for vacation
    grrrrrrrr

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  2. Gary, the chart for the USD still looks bullish. No reason why $81 on the DX should not be tagged. This means gold and equities move lower. Given your thesis that the current intermediate cycle in gold is too short, you think that maybe you need to reexamine your thesis regards October 4th being the intermediate low in equities?

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  3. M,
    There are pros and cons for each side.

    A very big con for the dollar is sentiment. It has reached levels of bullishness similar to the fall of 08 and June of last year.

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  4. Gary,
    Very good post--This news just came out and could have a major influence on the markets Sunday night and into next week--not sure how they will react but probably not good
    reports, that i) "Dexia's Funeral Will Be Announced On Sunday" and, as Bloomberg reports, that ii) Slovakia’s ruling Freedom and Solidarity party won’t back the overhaul of the European bailout mechanism after Prime Minister Iveta Radicova rejected the party’s conditions for approval, a lawmaker said. Said otherwise, bonds are currently thanking their lucky stars the bond market is closed because not only will Europe have to deal with the headline risk that the weakest link in Europe, the tiny country of Slovakia, can scuttle the entire second Greek rescue operation, and thus, lead to the expulsion of Greece from the eurozone following its bankruptcy, but this will have to take place as Europe fights the stem the contagion resulting from the collapse and nationalization of the first Greek bank, which nobody, nobody, could have foreseen.

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  5. Nice post and great charts.I feel time is not complete for the bear phase of this cycle,and the silver chart seems to be suggesting 25 needs to be tested.1440 should be good support from a Gann perspective and should we get there I will be buying aggressively

    http://chartramblings.blogspot.com/2011/10/silver.html

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  6. Gary/Poly:

    Are you ruling out the possibility of a the last intermediate cycle simply stretching longer than usual, with the panic/capitulation selling from two ago marking the low? It would put the cycle length at a very stretched 35 weeks but the nature of the bull and the markets may be warping intermediate cycle times just as we've seen with daily cycles over this period (i.e. 14 day cycle starting on Jun. 14 followed by a 38-day cycle on Jul. 4).

    Looking at your chart, it also looks like intermediate cycle lows are marked by a break below 50 on the RSI, which we've clearly had over the last few weeks. Between these factors and sentiment and breadth it seems like the only real scenario where gold takes another bath is if we experience a six sigma event like the 2008 crisis (and central banks do nothing about it).

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  7. I would tend to discount the 35 week scenario as not very likely. It's nearly double the normal cycle length.

    Gold is either in a very short intermediate cycle or there is another leg down that will likely start next week.

    I don't really have any idea which until I see what happens next week.

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  8. I'm going to be asking Micky mouse where gold is
    Do you think he will know?

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  9. The demand for physical gold and silver is at the point where supply can't meet demand.Normally you would see the price go up--but not with the games played at the comex market--the price of both gold and silver should be exploding like it did in the summer, but the manipulation has gone into high gear to keep the price down

    2:00 PM
    Global Demand for Gold & Silver at Unprecedented Levels King World News is continuing to get reports from sources around the world regarding tremendous physical demand in both gold and silver. The Perth Mint, one of the largest mints in the world, communicated to its customers on Friday, “Demand for our coins is currently running at unprecedented levels and we have been inundated by high levels of web and telephone traffic from clients all around the world. This has put tremendous pressure on our business systems and Customer Service department which have struggled to cope with the number of enquiries and orders.”

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  10. Robert,
    I see some shortages in Platinum coins but other than that I'm not seeing any shortages in gold or silver. If there is manipulation it will cause shortages which will just result in price exploding higher.

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  11. Don't discount human natures ability to go to extremes. At the recent top gold was stretched quite far above the mean. With the dollar rallying nominal price could fall a ways below the mean before a turn occurs and another snap back rally ensues.

    That's what D-waves and A-waves are all about. Human nature.

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  12. On the lighter side...

    A conversation at the eye doctor yesterday.

    Me (walks out of exam to look at glasses).

    Floor Manager, "Looking for glasses?"

    Me, "Yes. I need reading glasses. The laser surgery I had screwed up my near vision. I like to read a lot so I'd like very large glasses with no frame on the bottom so I don't have to look at the frames for hours while reading."

    Manager twirls a rack, picks out a pair of very small glasses with a thick, black frame and puts them on my face, "You'll like these because frame size doesn't matter if all you're doing is reading. Are you ready to check out?"

    [That is literally what happened. I kid you not.]

    Me (WTF??), "Um. Not just yet. I'd like to look around if that's okay."

    Manager (audible condescending sigh), "Well, what kind of books do you plan on reading?"

    Me, "Personal finance books mainly."

    Manager, "Personal finance? Do you read Dave Ramsey?"

    Me, "No. He was negative on gold and has been wrong for years."

    Manager, "Gold is in a bubble."

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  13. I am 90+ percent sure gold will go down further based on EW. I have targeted 1380-1440 for a long time now. My only real question is whether it is safe to assume that during stock's 3rd of a 3rd at some point next year gold will just kind of go sideways, and not collapse further, which is a bit of a scary assumption. I agree with much of what you say, but this is not a 50/50 scenario, gold is almost surely not done going down yet.

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  14. Danno

    Well we know that manager watches CNN and CNBC.

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  15. Like I said there are pros and cons on both sides. Sentiment and the COT say the bottom is in. Neither one of those has ever missed a bottom. Sentiment on the dollar has reached extremes, which should be a negative for the buck and a positive for gold.

    The intermediate cycle says there should be another leg down.

    It's anyone's guess as to which side will win out.

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  16. This comment has been removed by the author.

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  17. All I know for sure is that (so far) silver has been behaving like it's 2008 all over again. Which means, in 3-10 more trading days there could be another sharp leg down. If an idiot like me can see the 2008 pattern repeating itself then every silver trader with any real money saw it long before I did. Look at late August of 2008. That may be where silver is at right now. Will we see another repeat of Sept-Oct 2008? I have absolutely no idea. But the potential is certainly there.

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  18. Well glad I was enplanes all day yesterday and missed all the fireworks on the sub blog.

    Cot looks awesome for silver. Commercial net position is the same as 2003. Yes folks even lower than 2008. This doesn't mean the price can't go lower though. However,
    I think the whole Dodd-Frank compliance has changed this game. No one seems to be talking about that.

    If silver was to take a dump over the next 3 or 4 weeks the commercials might end up as a net long.....which has never happened on a Cot report as far as I can tell. I am with G man on this. Nothing spots bottoms for Precious metals as well as the Cot report. Not TA, not charts, not EW or anything else.

    Should be interesting watching this play out over next week or two or three.

    Good luck to all.

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  19. The pattern and cycle left information is excellent. In looking at the fundamentals, I think Big Money is bracing for this Recession, which we are already in, quite possibly. Signs are pervasive about the Recession, so my bet is the market continues to spiral down, and we get the second severe recession in the past 3 years. I also thought Gann360's fractal pattern to be remarkable.

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  20. Gary has stated that his number one indicator is his cycle analysis, and to me, that analysis generally seems right. We need another 12 to 15 weeks of the recession reflected in a severe stock market downturn. We are in for round two of severe deleveraging....and there will probably be round 3 in about 3 years from now. Makes perfect sense since they are just borrowing more. I saw too a recent tracking of margin debt, and several months ago it had gotton right up with the debt bubble at its peak in 2008. We may have a month bounce, but we are going down big time. And if it bounces, I will short; if not, I will wait for the destruction come January/February...

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  21. This comment has been removed by the author.

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  22. silver in the 20s is a steal unless the bull market in the metals is over. I just dont see it going in the low 20s but if it does then i will back the uhaul up and get some more physical.

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  23. Remember too Gary has also posted, with great conviction, that 2012 will be a horrible year for the stock market. He feels very strongly about that, and I ain't arguing with him. So what if it gets here a month or two earlier? And gold will not be the best hedge in a deflation/recession. For this point in this cycle, I gotta think the best hedges are as follows: short the Q's or the SPY or the Rut, second buy the dollar, and then after that, nothing. gold will go down, and the miners will be throw in the trash with other equities...at some point, in late 2012, buy gold and the miners with both hands and hang on.

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  24. Gary,

    Thanks for pointing out the 75 week moving average as support for basically this entire gold bull market, I have been pointing out for weeks the 300 day moving average as a target for a D-wave bottom. I actually sent Poly a chart the other day noting that every bottom except the 8 year low was basically on the 300sma. I think we will all be jumping back in gold head first at the 300, I know I'll be.

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  25. Gary,

    Couldnt gold go up somehwat here, alleviating the COT and sentiment issues, and then plunge toward the end of october and in november to make it to the 1400ish area?

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  26. If gold breaks the 10 day moving average now that it has regained it, we will see it slice through 1600 like thin air. Long silver futures are coming off at a break of the 10 day and the gold short goes on with a stop above the 10 day. I would expect 1500, which is the c-wave upper trendline, to offer a decent bounce but not a bottom... being I have seen price levels never really hold, only MA's.
    Couple weeks ago I mentioned that I would like to see gold back test the 10sma and bounce off it to confirm a short term move higher, let's see if we can get even that next week.

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  27. gideon, that's roughly what I expect to happen.

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  28. Gideon,
    Well it could but it is getting to the midpoint of the daily cycle. Gold needs to make a decision as to whether it is going to be a left translated or right translated cycle.

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  29. my dealer is clean out of 1kg silver bars, and has a huge backlog of orders.

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  30. This is a tough game, I personally got knocked out of positions on Friday, If miners are down a little on Monday I will jump in with 33% if we make new(recent) highs I will add 33% more and put stops where I see fit, don't want to lose much capital.

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  31. Silver has also come down to it's 75 week MA. We'll see, but I'm not going to try and sidestep a potential $200 move lower in gold and instead will just buy more into the move lower if it even occurs.

    The real and sneaking danger is sitting in confetti, IMO. Sooner or later we'll all have to convert to real money, and if traders think they'll just put 100% in metals right before a currency event when they can't even buy a $300 pullback with confidence and hold it, I think they're kidding themselves.

    I'm not predicting direction of the next few weeks because both scenarios seem plausible, just sharing the best approach to it.

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  32. Why must one catch the bottom when there are two scenarios, but in both the bull market eventually bails them out with higher highs?

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  33. Clarification
    My comment on Micky mouse was not meant towards anyone's thoughts
    It's just I'll be in Disney and be a little info starved

    After I read down threw, it didn't sound to nice

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  34. SB, I didn't quite understand your last post. Are you saying you are a buyer now of PMs and miners, or are you waiting? Thank you

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  35. And if I had to guess direction, I would think we go lower first, in line with Gary's second possibility. Poly also made the simplest observation of the gold charts late last week.

    Extreme selling like we've seen usually begets more selling. Either way, I hope SMTer's aren't trying to get THE bottom because they're risking being empty-handed when they need to own metals/miners for the next several years.

    It's gonna be wild, so buckle up and enjoy the ride. :)

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  36. Shalom
    That is my current thinking, eventually the bull market will bail you out, and with that long term chart that Gary posted in the COT section I know we are getting things at 30% off so what if I don't get it at 50% off eventually my portfolio will be up and eventually I'll have strong hand status. This is where you learn alot about yourself. I think I'm going in with a bigger % for a long term hold. And maybe just trade 50% of portfolio. I think I will be less stressed too.

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  37. However, what concerns me is the 4 year cycle low due in stocks next year

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  38. I've noted that Tim Geithner was in Europe attending the meetings of the EU finance ministers. I would not be surprised if they were co-ordinating efforts to manage a Greek default later this year

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  39. Haggerty,

    It depends what you plan on putting the 30% in. For example, if one puts 30% of his portfolio in a very volatile junior miner it'll be harder to ride the turbulence, but in a GDX he might want to go in 50%. It's necessary to know the volatility and average range (monthly?) in the specific vehicle that a trader chooses to play. It might be the case that one should only put 20% into a GDXJ, or 40% in GDX. This is why I don't decide % of portfolio to invest, but rather how much total risk (TR) I'm taking, regardless of the vehicle I choose.

    Gotta get some coffee, but I'll be back later. :)

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  40. I am starting to accumulate...If we fall then so be it, holding for the long-run...If we fall further then I guess I will buy more...

    With both Europe and England announcing QE programs, and with the States more than likely not to far behind, I don't want to be naked...

    But to each their own, just sharing. :)

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  41. "Why must one catch the bottom when there are two scenarios, but in both the bull market eventually bails them out with higher highs?"

    The answer is of course that most people can't hold on to positions if there is another leg down. Imagine how painful this will be if there is another leg down and you double your current drawdown.

    You may be able to weather that but 95% of investors can't, and they certainly won't be able to buy more at the bottom or more importantly hang on to their position when and if they get back to even.

    It will be hard enough to pull the trigger at those levels if you are sitting in cash because it's going to look really scary at that point plus we won't get the exact bottom and there will likely be whipsaws and a draw down as we enter.

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  42. I understand your take Gary, just sharing a perspective and approach that will be very difficult to beat, IMO.

    Of course, execution is everything, and it's possible I can't see the trade through the possible difficult period even though that is my plan.

    I am anxious to get to the other side intact co I can get back to my regular swing trading and shorter term stuff. This whole strategy is really meant to get my assets into something that will hold value over time (with a cushion so I don't feel like I'm trading it). It's a place to park wealth for the next 5 yrs or so, and I have to buy 'em when I can, not when I feel it's urgent.

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  43. First, one could note that gold's performance is not necessarily dollar-dependent. If the dollar takes off again under the duress of crisis, we could very well see gold move higher, as well, in a safe haven play.

    Second, I recognized the ABCD pattern that metals took during the earlier half of the decade and discussed that pattern way back in my public blog, though I didn't assign letters to the wave names. However, I've been pontificating for 3 years now that the nature of the gold bull changed after the 2008 liquidation. I hypothesized that we would see a more trending market, as is typical for a bull in its middle phase. In other words, a series of intermediate cycles all ending with mini-parabolas would give the market a consistent uptrend until the next 8-year cycle low. So far, that has been exactly the case.

    After the next 8-year cycle low, the nature will change once again, and we will go into bubble mode. So the reason the ABCD structure continues to baffle is that it simply does not apply anymore.

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  44. I really doubt it. I think at some point you have to have a severe enough correction to knock all of the retail traders off of the trade.

    We've seen this trend last for 2 1/2 years. At some point gold will need to enter an extended consolidation To digest those gains. Usually it is initiated with a very severe D-Wave decline followed by an A-wave and an extended multi-month consolidation.

    And the only time gold can defy a strong dollar is when the strong dollar is only strong because the euro is being debased. I don't think that applies right now. I think the dollar is rising because Bernanke has quit printing and deflationary forces are starting to take hold in the world.

    I really doubt the nominal price of gold will be able to buck a real deflationary period. In real purchasing power though gold will maintain or even increase its value.

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  45. After the semi parabolic rise we just saw the only way gold can snap back up to new highs would be if the correction is severe enough to knock virtually everybody off the bull. That obviously hasn't happened as there is still strong demand in the physical market.

    Without a true D-Wave decline the best gold will likely be able to do at this point is a multi-month consolidation and probable test of the $1535 low in 6 to 8 weeks in the normal intermediate cycle timing band.

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  46. If there was ever a time for gold to hold up rather than bonds it seems like it is now.

    Central bank buying would to seem to back that up.

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  47. After going through all the comments seems that pretty much everyone here is bearish . This would match all the PM sentiment indicators.

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  48. What could trip people up is a false PM pop early in the week. Not saying do or don't go long. Just saying if you bite, maybe take precautions. Sprinkle in a few puts, or whatever.

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  49. Why not wait until we are in or near the timing band for an IT cyle low?

    Puroman made a very good point a week ago in the comments section in the premium letter. He wrote about conviction in the trades we make.

    Won't our conviction in a PM trade be that much greater if we are in the timing band for a low? If one is unsure, just be patient and wait. Who cares if we miss out on a few percentages of return on our investment? We'll just be that much more confident that the trade will go our way.

    If the goal here is 15% return per year let's strictly follow timing bands even if sentiment is extremely low and the COT is extremly high. If numerous bunts and singles are what we need to do to make money (as was preached here), why swing for the fences with so much uncertainty in the air? Shouldn't we be more strict with our analysis using timing bands, with the markets presently being so ambiguous?

    But then again, what do I know?

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  50. RobL,
    The obvious answer is that if this turns out to be the intermediate bottom then waiting six or seven more weeks would put you fairly close to an intermediate top.

    Who wants to buy close to a top?

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  51. Are we not in the gold season?

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  52. We are but we are also rolling over into a recession so presumably jewelry demand will be week this year. And demand for gold for jewelry is a big part of the total demand in the gold market.

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  53. So where are we on the CRB 3 year low? does it give any clues?
    it looks like the Grains are bottoming, but they just got slaughterd.

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  54. i said bottoming.. well they stopped falling at supersonic speeds

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  55. 4 hour /gc with buy/sell volume

    http://i53.tinypic.com/161hjf9.png

    i will probably cover my shorts at 1500 but who knows how much panic might set in.

    average /gc buyer over the last 89 trading days is down more than 2.9% as i type. i doubt they're going to be as tightly-gripped with their contracts this time.

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  56. Looks like we have a gap up tonight of 4 bucks on GCZ11.

    Very curious, I'd like to know how many of you out there think that this gap will be filled this week or not.

    My guess is over 80% think there will be a gap fill.

    My vote is yes.

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  57. RJ,

    I don't see the gap you speak of. Friday's close was 1642.2 and Sundays open was 1640.5.

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  58. Matt,

    Hmmm. The optionsexpress iPhone app has GCZ11 prior close at 1635.8, the open at 1640.5 and the low tonight at 1639.9....

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  59. Matt
    thanks for your answer on the dollar cycle the other day

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  60. SB,
    how do you calculate your total risk? Is that the difference to the stop in place? Then how do you get such a low risk (you mentioned 8%?)? that means you are only in 50% of total?

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  61. RJ, hahaha, I thought I was the only one in the world who used the OX app...

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  62. This comment has been removed by the author.

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  63. Yep, U calling it as it is, without any real conviction (ie.each way bet). Still you dont want to enter into the manipulation and engineering of markets !!!
    Timing and coincidence of market correction , USD rally, EUR fall, PM's down.
    Unusually low levels on COT indeed esp. LCNS let alone tot open positions on both AG and AU !!!
    This is nothing short of the players (smart money) looking for an opportunity to cover their shorts ahead of the CFTC "position limit" meeting on Oct 18.
    Your analysis may give credence to the current dilemma of the market...doesnt know which way to go.....ultimately the comm's and mm's will dictate that. Wise to wait and see which way they go first before rushing in and calling a play....Hmmmmm!! in any direction.

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  64. paul,

    It's based on the average true range (ATR) of the specific vehicle(s) I'm trading. Since I have a decent number of smaller miners as well as silver miners which are very volatile, I have smaller total dollars invested in those than in the bigger names I own. The larger miners not only cost more/share, but are less volatile (smaller average ranges), so have more dollars invested.

    I do not focus on what % invested because it harms my trading in that my only concern should be "what can I lose with what I own?". There are times I can get 150% invested, or only 25% invested, it all depends on the expected volatility of what I'm involved with.

    For a trader to start his trade by thinking "I'll put 30% into this trade" is a mistake, IMO because 30% of my portfolio in the most volatile junior miner is a whole lot different than 30% in Newmont. One moves 10% from low to high each week, while a junior might move 50% in that same week (5x more risk on same $ invested). The problem is that people decide how much to invest FIRST, often without even deciding the specific vehicle they'll trade and the volatility. I believe the way I do it is the only way to ride out the volatility, short of going all in and closing my eyes or turning off the computer.

    So, my 50% invested could move 2-3x or more than your 100% invested depending where we chose to invest. Focusing on percent of portfolio deployed is useless, unless we're all invested in the exact same miner. All I care about is my anticipated total risk. Everybody wants to try and catch the exact bottom and buy there, and not own any before, then sell the exact top, but not too early, rather than focus on total exposure and letting the market take care of the rest.

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  65. By now, everybody should own SOME of the miners, regardless of account size. And their current position size should be determined by how much of a drawdown they could experience, even if it's only 100 shares of something on a small account. It will break the habit of arbitrarily deciding how much to put in any idea. Even GDX has changing expected volatility over time, so one might put 30% in this year's trades, while 25% of one's portfolio would be more appropriate in quieter times. This approach also makes sure one is not invested too lightly b/c of fear, b/c investing too little is almost as bad as investing over one's head.

    The point is that drawdowns occur, and it is necessary to be able to hold trades that will be eventual winners through those drawdowns. Understanding and accepting one's total exposure is the only way to do that.

    Good luck to all this week. :)

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  66. Excuse me, I meant "while 50% (GDX) might be appropriate in quieter times".

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  67. Does anybody have experience or an opinion on companies like Bullion Vault or Goldmoney? I'm naturally skeptical of anybody holding metal for investors and just giving them a receipt (online) for it, but are they viable for "storing" metal outside the US.

    I know Gary thinks the government doesn't care about a shiny metal, but I see it differently. My thought is that gold is money, and they DO need to keep people playing their game, whatever it takes. Other commodities like grains or energy can even have price controls put on them, and capital controls are already beginning to creep into the US. I noticed that most investors can sell their goldmoney units for any currency they want, but US investors can only exchange back to USD.

    Make no mistake, desperate people do desperate things, and more controls are coming to this country. It's only a matter of time. This is one reason I prefer miners over other vehicles, although they are just another layer of protection and not entirely immune from the criminals in Washington, either.

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  68. SB, I have an account with Goldmoney.
    Legally, your gold is held by them in the form of a bailment. They have no claim on your gold, even if they went bust

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  69. Eamonn,

    Thanks, I did read that on their website. I imagine that our gov't here in the US hates to see citizens dump their paper for real money, and even more so when that real money is held outside our borders where they have less ability to steal it.

    Have you been with them awhile, and are you happy with them?

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  70. there a huge divergence in SIL and SLV in the premarket right now

    SLV up 3.5% SIL down 2.65%

    can anyone shed anylight on this?

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  71. SIL is not open for trading, so that's Friday's price.

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  72. SB, I have been with them for a couple of months. When I get really worried about the US Government I plan to transfer all my assets to them. I'm pretty sure they will enact a 90% tax on gold trading profits if things go bad for the US dollar. There could also be capital controls on the movement of capital outside the US, I believe, so I want to be able to avail of a safe harbour to park my assets before that time comes.
    My understanding is that US law now requires US citizens to disclose all of their overseas assets. I am not a US citizen, but if I was, that's a little too BIG BROTHER for my liking

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  73. thanks sb, yahoo finance confusing me there

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  74. SB, Im not sure if you have ever met James Turk, but if you do, you will realize that he is a very stand up guy and smart to boot. He makes a lot of sense, its just his predictions are tad lofty, but then again, you arent investing in his predictions :)

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  75. Just a reminder about AGQ split this week.


    The split will apply to shareholders of record as of the close of the markets on October 10, 2011, payable after the close of the markets on October 12, 2011. The fund will trade at its post-split price on October 13, 2011.

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  76. Did I miss something? Is Euro-land fixed? The Dollar is getting a smack down, while Euro is up. I think I'm getting another opportunity to buy EUO. Preparing for the storm by helping banks capitalize doesn't seem bullish to me. Is the market saying this concern was overdone?

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  77. Gold now has a perfect 10sma swoop in effect, resistance is at the 75sma, which happens to be in line with the C-wave upper trendline. Gold has back tested this trendline twice already and failed to break back out of the channel. If gold doen't break above 1685 and fails to break out of the channel again, I would expect this 10sma swoop will be nothing more than a short term bounce that is going to fail, and gold will put in a new low.

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  78. Quick question for the 'old' guys on here. Are you more inclined to book profits in this environment on a shorter time frame, or let your winners run? I am holding two positions that are up 10+ percent, and with the volatile nature of the current tape I am thinking I should initiate some stops to preserve profit. It makes more sense to me to trade around swing low / swing high spots where I have a clear exit and can measure risk/reward.

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  79. Dollar daily cycle trendline is broken.

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  80. Expecting the SPX 75 day moving average to initiate a half cycle low.

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  81. SB,

    I have a goldmoney account and am very happy with them. They are responsive, service is great - my only concern is the general suspicion about the concept of not owning gold physical yourself.

    As for Bullionvault, I am not a customer but another blog I follow (iTulip's Eric J) has validated them. I did think BV's interface and site is a little hard to navigate/understand.

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  82. SPX about to rip through the 50sma, let the chasing begin.

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  83. This comment has been removed by the author.

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  84. This comment has been removed by the author.

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  85. Taking off the silver futures long today.

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  86. AGQ gone. W2, why 75sma for mid cycle low? Just the next logical turning point? Good call btw. Gonna have to grease your head just to get it through the door....LOL

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  87. WW,

    Can you share what triggered your silver move?

    Thanks

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  88. Gary,

    We appear to close to a failed dollar cycle, do you have any additional thoughts if it follows through?

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  89. Took position in Nov EOU 18 call.
    It was on sale, could not resist.

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  90. The dollar would have to drop another 1.5 points before we would have a failed cycle. The current cycle is right translated so the odds are not high that we will have a failed cycle. That doesn't mean the next cycle can be a failed cycle though.

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  91. wmp,

    I am selling into strength today. I am not convinced that gold will be going higher until it breaks back out of the C-wave channel and above the 75sma. So far this is the 10sma bounce I have been expecting and mentioned weeks ago. Until then I will be waiting to see if the 10sma swoop fails to put on a short. If gold breaks out of the channel again I will go long. I said a couple weeks ago that I expect that once people really start chasing the market money may come out of gold and silver.

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  92. If you look at the macd on slv or agq (30d, 90d or 180d) it looks like a clear signal heading up.

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  93. 86,

    See I was right in thinking money would be coming out of gold and silver and into the market...you dumped AGQ today and chased UPRO....LOLLLL!

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  94. The trade trigger link has been updated.

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  95. Thanks Aaron and Beksachi for the info, much appreciated.

    SfsGiantsfan,

    No, I was not intending to trade copper but instead using it as a barometer for the general economy and industrial commods. I'm not predicting $2.85 on copper, but that would have been a 50% retracement of the entire move out of '08 and an area to look for long side trades and possible bottom in other metals. Same with the CRB.

    I have been getting more interested in grains from the long side but have done nothing there as yet, either. Not sure I want more moving parts while I'm trying to stay focused on the metals bull.

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  96. And although it looks like metals have turned the corner and could head higher, I still won't be shocked if we get one more shakeout caused by booking profits of those that timed the bottom well from last week.

    People are nervous, and if they're sitting on 10%+ gains over just a few days, I imagine the temptation to book 'em will be hard to resist.

    If we do get another test of the downside, it'll set up for a very situation to add.

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  97. Shalom Bernanke,

    How did miners perform vs gold during the depression?

    (can you give some sources)

    thank you

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  98. Turenne,

    Here's a chart of Homestake vs the Dow. Homestake is today's ABX (Barrick Gold):

    http://silvergoldcharts.blogspot.com/2007/05/1924-1936-homestake-mining-versus-dow.html

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  99. Keep in mind that gold was "confiscated" in April of 1933, which might not happen the same way this time around, though nothing says it can't happen, either.

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  100. SB, did all of the gold miners behave like Homestake during the depression? How did silver and the silver miners fare, do you know? Thank you...

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  101. Taking profits on the UPRO here, the dollar bounces tomorrow the market will pullback and test the 10sma before moving higher. I will look to put the UPRO back on at the 10sma again.

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  102. I dont expect to see the 10sma on the SPX tagged again tomorrow, maybe 2 days or so.

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  103. SB
    You know that these days it is hard to turn down a profit of 7-8% in a few days. One never knows what the next day will bring.

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  104. Eamonn,

    No, they did not, however they did well. I can't find a chart I saw a few months ago, but it had a basket of smaller names compared to majors, and a few other ways to play the move. All strategies were at least a doubling, with the ones raising dividends along the way performing the best.

    Specific Juniors will blow out the upside, but many will not work as well as just playing a few mid to large caps that increase dividends.

    Keep in mind I am not predicting they confiscate although capital controls are already creeping into place. Just the fear of confiscation is enough to drive investors to miners. This is a several year play, and more a place to park assets instead of confetti, as seen in the chart. As usual, it appears the confiscation was leaked ahead of time as the miners started their ascent at least 6 months prior to the announcement.

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  105. funmike,

    Oh, I understand alright. :)

    Nothing wrong with that if you got what you came for. I used to make many more short term trades than this project I'm working on currently. Swing trading has been the most profitable strategy for me over my career, but I'm switching gears until I'm, mostly out of fiat.

    Several months ago I wrote here that I was excited to get back to regular trading, but with the Fed possibly busting out the checkbook at any time it has changed the game and opportunities, IMO.

    I'm doing my best to stay Old Turkey!

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  106. SB, thank you very much on your info RE behaviour of miners during the Depression.

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  107. Once parked in miners, I'll use margin for my short term ideas. With rates so low and expected hold times of a few days to a couple weeks, I'm comfortable doing it this way.

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  108. This comment has been removed by the author.

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  109. William Wallace said...
    Taking profits on the UPRO here, the dollar bounces tomorrow the market will pullback and test the 10sma before moving higher. I will look to put the UPRO back on at the 10sma again.
    "

    WW ,
    what is your target for UPRO?

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  110. WW, excellent trades on UPRO and SPXU last few trading days... and thanks again for sharing via your posts...

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  111. Michael,
    I`m glad I don`t have to live with him. He`s just going to be insufferable after this.........

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  112. Gary,
    If 9/15 was the daily cycle low for the US dollar, then we should expect the dollar to bounce soon, ie next 2-3 days. The dollar should not be labeled as failed cycle until it drops below 76.2. I'm thinking the green upticks we're enjoying today may take a huge hit soon as I don't think the US dollar is going to fail, especially in it's competition against the Euro.

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  113. Man,the dollar down hard...is it just an over reaction?

    I jumped in today hard, I will wait for an opportunity to deploy the rest.

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  114. I think GOLD is a short here @ $162.

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  115. That's quite the gap up on a holiday light trading. Yeah.. just woke up...
    This could be a down to the gapfill event tomorrow.

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  116. SPY, SLV, GLD, DIA, QQQ, TNA and all the rest.
    The inverse ETFs gapped down.

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  117. Look at the textbook gap fill on CVX...

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  118. 86 said:

    "Michael,
    I`m glad I don`t have to live with him. He`s just going to be insufferable after this........."

    Michael,

    86 would be out trapping beavers today if it weren't for me telling him the market was open today, he thought it was closed....can you imagine what its like to live with this guy!!!

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  119. Mr M and Hack
    What chart are you using to observe the gap?
    I can see it on a 3 day 1 minute chart but what is your preference?

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  120. WW & 86,

    I'll leave the beavers to you and watch from here...

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  121. funmike,
    The gap is on all charts from the Friday close to today's open.
    Here it is on my trading platform.

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  122. 2 day rsi on euo at 12---w0uld love to see below 10----often a good trade. ie buy euo.

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  123. Margin Increases. Its OK..... Don't freak out.

    http://screencast.com/t/midBrLejXkg6

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  124. W2,

    well done! you seem to be on a roll, enjoy it! It is nice to book some profits indeed!
    Take care mon ami

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  125. Sophia,

    Thanks :) Im just getting warmed up...lol

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  126. WW,
    What do you think of SPX, broken through 10, 20, 50 next is 75 at 1223.
    I don't think this rally can be sustained much higher, but about 1225 has been resistance since it broke below in August.

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  127. Mr M,
    So then to fill the gap on your illustration there would need to be a drop to 117?

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  128. Miyagi,

    I think SPX will pullback for a couple days before moving higher...I think we will see a half cycle low begin around the 75.

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  129. funmike,
    It is not set in stone but gaps like to get filled and in this case yes, just below 117 would fill it.
    This can be tomorrow or next week or next month, there's no timeframe.

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  130. Miyagi,

    Maybe we tag the 1200 handle tomorrow and reverse, but I would think we will see a pullback for a couple days. I dont think SPX is going to blast off straight to the 75, atleast I hope it dont...this rally may not last too long and a tag off the 200 may be less likely if it does.

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  131. SB, once you kindly let people know what miners you're in. I forgot to take note at the time...if you dot't mind could you please post the list of your miners? Many thanks

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  132. WW,
    The last couple of times SPX hit 1204-ish and reversed.
    We just have to be patient I guess my East Coast friend.

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  133. Miyagi,

    Yup sensei....I would like to see a pullback for a couple days to the 20, then a bounce off it to the 75.

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  134. Miyagi,

    Took off my silver futures today.
    Waiting to see if gold breaks above the 75 I will go long, if it breaks below the 10 I will go short.

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  135. Miyagi,

    The swoop of the 10sma is so perfect today that usually this is what I look for to go long (talked about it a couple weeks ago that this is what I was waiting for), but being gold tested the 75 basically 3 times and failed causes me to believe that this swoop may fail and we may see gold put in a new low. So I want to see it break above the 75 before considering a long.

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  136. WW,
    I'll keep an eye on those, sold my SLV calls this morning, decent profit.

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  137. Sold PMs today. Bought UUP Dec $21 to add to EUO calls. Unless Ben shows up with printers ink on his hands, this reversal of US$-Eur seems excessive.

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  138. Russ, I am looking to short EURO too. I would like to hear the estimate on the timeframe for the decent of the USD first though, or expert confirmation/recommendation...

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  139. SF Giant Fan,
    Split on AGQ as well as NUGT also?

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