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Thursday, November 24, 2011

THE SECULAR BEAR MARKET & GOLD'S A WAVE ADVANCE

I have decided to post the weekend premium report to the blog this week. In the report I'm going to take a look at what has transpired, and what is likely to come, as the third leg down in the secular bear market begins to intensify.

Back in April of this year I warned investors to get out of stocks in their 401(k) accounts. At the time the dollar was moving into the timing band for a major three year cycle low. It has always been my expectation that the rally out of that major bottom would correspond with the stock market moving down into the third bear market leg of the secular trend that has been in place since 2000. As we now know the dollar did bottom in May of this year and that did correspond with the top of the cyclical bull market that began in March of 2009. It has also been my expectation that the next four year cycle low would occur in the fall of 2012, and that 2012 would be one of the worst economic years in human history.

This is already starting to unfold across the globe as social unrest that began in the middle east has spread to Europe and now the United States. Economic data has been steadily eroding for months now. We should expect this trend to continue and intensify as we get into 2012.


As most of you know I use cycles analysis and sentiment to determine likely timing band's for major turns in the stock market, gold and the dollar. This is what allowed me to anticipate a bottom in the dollar cycle at a time when everyone was expecting the dollar to collapse, and a top in the stock market when everyone was bullish and expecting a move back to new highs.

An interesting development in the yearly cycle for the stock market has now emerged. Generally speaking most yearly cycles tend to run about 12 months trough to trough. However the Fed's quantitative easing programs have stretched the yearly cycles from March 2009 into June of 2010, and this year the yearly cycle has stretched again to arrive in October. The market is now set up for the next yearly cycle low to occur in the fall of 2012, which, not surprisingly, is exactly when I have been expecting the next four year cycle low in stocks to bottom.



I have also indicated the expected timing band's for the next three intermediate degree cycle lows. For reasons explained in the nightly reports I don't think the current decline is going to move below the October low. I expect we will find a bottom sometime in the next 1-4 days followed by a Santa Claus rally into the middle of December. If the market avoids making a lower low it will embolden the Bulls to continue holding long positions. The hope for a miracle will be misplaced though as the market will almost certainly begin to roll over before making higher highs and by the next intermediate degree bottom in February/March we will see the October lows broken, and the summer 2010 lows tested.

The recent rally out of the October low will undoubtedly be the most powerful countertrend rally of this bear market. Any further countertrend rallies, and there will be several, are likely to be short-lived and weak. The window of opportunity for these long side trades are probably going to be too brief for the average investor/trader to successfully trade. From this point on investors should keep 401(k) accounts solely in money market funds until we reach the bottom sometime in the fall of 2012.

This brings us to the topic of gold. Despite what is happening in the stock market gold is clearly still in a secular bull market. That being said the days of easy money from the gold bull are probably over for the next year as stocks move down into their four year cycle low. In the chart below you can clearly see the affects QE1 & 2 had on the gold bull. 


They drove the largest C-wave advance of this entire secular bull market. However, for reasons that I will explain below I think the C-wave topped in September and gold is now going to enter an extended consolidation phase for the next year.

That begs the question if the C-wave has topped then where was the D-wave? Well I think we just saw it in September. Let me explain.

Because of the massive liquidity floating around the world I now think the D-wave terminated with the overnight spike down to $1535 on September 26. I'm now seriously considering that the last D-wave was exceptionally mild because of the extreme global liquidity. If that is the case then gold has now entered an A-wave advance. As most of you know A-waves don't tend to make new highs. So my best guess is that gold will test the $1900 level sometime in the next three weeks followed by an extended corrective move down into an intermediate degree bottom in February (B-wave). That bottom should hold above the $1535 level. What should then follow will be a year long frustrating, whipsawing, consolidation that should terminate slightly before the stock market bottoms in the fall of 2012.




At that point gold will start to sniff out the next round of massive quantitative easing as the Fed and central banks around the world go into full panic mode and begin printing unimaginable amounts of money in the attempt to halt the global sovereign debt implosions and economic depression that will have developed. As usual central planners will not account for the unintended consequences of their actions. This time quantitative easing is going to have the opposite affect that it did in 2009. Yes it will put a bottom in stocks, at least temporarily, but it is also going accelerate the cancer that has now infected currency markets. And as currencies start to collapse so will global bond markets. This is the recipe for the final bubble phase in the gold bull market.

While gold is in this long consolidation phase/bear market phase for stocks, trading strategies will be vastly different than they were during QE1 and QE2. Trades are going to be shorter and there will be long periods of time where the correct strategy is to just sit in cash. I started to make the transition to this new trading strategy back in July. The recent breakdown in stocks has now eliminated any reservations I had about the bear market. With that confirmed, there is little doubt that gold has now entered an extended consolidation and that new trading strategies are called for.

Make no mistake, we are now entering what will be one of the toughest markets ever to make money in. So far the model portfolio is performing admirably even in these tough conditions. 

For anyone who would like to sample the nightly premium newsletter, I have opened a $10 one week trial subscription. You will have full access to the SMT premium website including all historical archives, model portfolio, and terminology document for a full week. If during the week you decide the subscription is not for you, or the shorter term trading strategies don't suit you emotionally than simply cancel your subscription by following the directions on the homepage prior to your week expiring. If you do enjoy the newsletter then simply do nothing and your subscription will convert to a yearly membership at the end of the one week trial. Click here to link to the premium website. You will find the subscribe link on the upper right-hand side of the home page.

785 comments:

  1. Gary since you expect gold to test $1900 in the next month do you expect silver to outperform gold over this same time frame and if so do you see it testing $40?

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  2. I noted in Wednesday's report that silver has been trying to decouple from the dollar, stock market and to some extent the gold correction in the last several days.

    That would suggest we could see a nice run in silver although there is virtually zero chance of a move to or above $50 any time in the next year.

    ReplyDelete
  3. Time Vibration chart,That Hits November,23/25 and a Price of around 1150 ish :

    SPX:
    http://screencast.com/t/MuZ7dtYjMe

    UUP Weekly:
    http://screencast.com/t/HlSY2IboOZLR

    $SPX:
    http://screencast.com/t/dKXO9A5wbuq

    JJC:
    http://screencast.com/t/BKTFk3xZT

    $XBD:
    http://screencast.com/t/6CF6B4dF9rqw

    ALL this points to a Possible Bottom forming Here

    Good Luck to All

    Gann360

    ReplyDelete
  4. GARY

    That is a thorough and well presented report.

    I saw you mention on the blog Yesterday that you felt we may have seen the D-wave and be in the A-Wave...so I went back to all D & A waves to compare.

    Looking at 2006 vs 2011 shows an uncanny resemblance already...and the way 2006 played out...It DOES look tough to make consistent money, even in the GOLD bull.

    Pull up side by side & compare...

    2006

    http://www.screencast.com/t/uaa30Etba0X

    2011

    http://www.screencast.com/t/Xsw7pyM26iW

    POLY has also repeatedly been calling for a GOLD drop soon and caused me to search this out too.

    ReplyDelete
  5. I think a lot of the perma-bulls are stuck long from above, and are hoping/praying to get back to even.

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  6. Alex,

    If the stock market plays out as I mentioned and bounces for a few days and then continues to make a new low before another bear market rally ensues, we will most likely see gold rally to around the $1750 level before rolling over..I would think it will find strong support on the 150dma as the market finds a bottom. What we will see then on the Gold chart is extremely similar to 06'.

    BTW, you know my outlook for the dollar, and the dollar is due to dip into a DCL for a few days, so it all seems pretty fitting at the moment.

    ReplyDelete
  7. Gary,
    How do you see the gold & silver miners doing next year?
    Many aren't even at their 2006 highs, but with the price of both metals up significantly I'd assume they'll go up much like they did when the PM bull market started in 2002. Also, the fact their dividend payouts are increasing should help boost their value.

    Thanks for the report and your insights.

    ReplyDelete
  8. Sold my FTSE 5000 Put option and converted into GDX for the Santa Claus rally. Will look to sell and go into cash over the holiday season then buy the FTSE Put again in Jan.

    ReplyDelete
  9. Very well written article, great charting.

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  10. JN13, yes my USD system is still on a buy, and I don't really follow Gary's analysis on it so I don't know how they line up.

    ReplyDelete
  11. Alex,

    Another thing, if we do see a scenario similar to the 06' D-wave and gold does push a bit higher now putting in the second peak that you have projected on the 11' chart, seen in 06', it would obviously be a test of the lower high (in this case near 1800)...before rolling over again and bottoming at a higher low than the 1535 low (which I mentioned recently, presumably the 150sma 1645 area). On your 06' chart where you labeled "are we here?" gold was still in a D-wave at that point, this would put gold in an incomplete D-wave currently, with the A-wave ahead of us...this is why I said to Gary the other day that I believe we are possibly still in a D-wave, and spoke of my concerns about the 50sma, which gold has still not reclaimed.

    ReplyDelete
  12. gary,

    would it not be more reasonable to expect that a similar thing will happen as in 2008. Then, gold topped after equities, dropped less, and began a new uptrend about 5 months before stocks low. So far this time, gold topped september vs stocks in May(check on point 1). Now, gold will decline significantly, but less than stocks. Then gold will bottom maybe 5 months before stocks(early to mid 2012?) and will begin it's wave 3 of 3 up. I will make a gentlemen's bet that gold makes a lower low than 1535 and that it does NOT make it back to 1900 in the next several weeks

    ReplyDelete
  13. Uncle Buck (DXY) has tested and held the 79 level twice and getting ready to go verticle through 79.20 on its way to an 80 handle. I'm thinking Uncle Buck doesn't slow down until it hits the 85 level as the Euro bloodbath really gets going under 1.30 at the same time. I can't wait to see the look on the faces of the CNBS Market Crooners when the VIX has a 50 handle on it! :-)

    http://www.marketwatch.com/investing/index/DXY

    ReplyDelete
  14. gideon,

    That's pretty much my argument. Gary agreed, until he changed his mind. Now he changed his mind again, but it looks like he is coming around to this original scenario. One more revision and we'll be there. :D

    ReplyDelete
  15. If we did see a mild D wave, it is pretty much unnoticeable on the monthly gold log chart:

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID735617&cmd=show[s216344359]&disp=P

    ReplyDelete
  16. Gary,

    So will the HUI finish it broadening top and head generally lower with the stock market, possibly bottoming before it in 2012?

    ReplyDelete
  17. If so gold stocks will be the extremely cheap.

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  18. Anyone willing to make a one year daily gold chart marked with margin increases including increases from other countries. I've got some leftover turkey if ur interested.

    Thx

    ReplyDelete
  19. Blogger RJ said...

    If we did see a mild D wave, it is pretty much unnoticeable on the monthly gold log chart:

    I thought that was a good point, however, I did look at your monthly chart and noticed ...the same thing on the 2009 DEC top.

    Also If Gold now continues up and then drops again, it'll also look like the 2006 drop.

    ReplyDelete
  20. W W

    you mentioned "On your 06' chart where you labeled "are we here?" gold was still in a D-wave at that point, this would put gold in an incomplete D-wave currently, with the A-wave ahead of us...."

    I didnt think so. I believe on the 2006 chart, the D wave ended when it bottomed in JUNE and the A-Wave is the sideways consolidation from then onward.

    ReplyDelete
  21. W W

    also on your post you discussed a bounce to either $1750 or as I drew $1800 area.

    When I look at the 2011 chart, the $1750 is the middle line on the Bol bnd...the $1800 is the top area. Both are reasonable, but I just thought that Gold could go to %1750 in 2 days..so I pictured more upside.

    I actually (prob same as you) just take it day by day from this point and see where it wants to go.

    If the dollar drop is gradual, the dollar could move down to it's 50sma, and Taking a week or 2...Gold could rally good enough to draw everyone back in. Maybe.

    It's all just "wait and see" from here I.M.H.O. :]

    I'd rather see it blast off and fly to $2050

    ReplyDelete
  22. GUYS,

    At the end of the LAST post on this blog I put in quite a few comments about IB in relation to other brokers regarding safety, security, protection, insurance, pros/cons, etc.

    These comments were particularly addressed in regard to what happened to MF Global and how:
    A) I dodged that bullet by not being at that firm for some very specific reasons.
    B) How I don't think I'll get caught in the future for those same reasons (given in my comments and linked to at IB's site).

    I HIGHLY encourage anybody who didn't read them to go back and review - especially if you trade any futures or commodities, etc.

    I also mention how IB solves the same problems for many people who are INTERNATIONAL and keep asking "I'm in X country, what is a good broker".

    ReplyDelete
  23. GARY,

    One of your own recent posts shows an A and then a B where the A was almost exactly what we just experienced peaking a week or so ago.

    garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    We are now easily in the B with no need for it go any higher as you are arguing.

    ReplyDelete
  24. Your TSI trader guy shows all the ABCD's to date here:

    2.bp.blogspot[PUT.DOT.HERE.TO.FIX]com/_soZ-vCrr6Y8/TF8Evc0_-MI/AAAAAAAAAuk/L0i_NS2RP-A/s1600/GOLD+ABCD+All+6%2B.png

    Frankly there isn't much rhyme or reason to the A/B sections. Essentially it boils down to "A and B are the parts where it screws around before finally launching higher into its next main wave".

    It is tempting to say that A is a rebound back towards the high, but all those examples show it isn't necessarily the case. We can easily be FINISHED with A now and heading back towards the 1535 low (but not break it).

    Your thoughts?
    Personally I think we may now be in the churn and grind part and missed the sharp A move up already.

    ReplyDelete
  25. TZ

    I agree. I was with ETRADE in 2008, and their stock was getting trashed, so I called and asked about their business practices and believe it or not, the person on the line said

    ..." We are working to resolve the current problems that we are finding ourselves in. You dont need to worry though, we have full SIPC and FDIC coverage, but we do not expect any accounts to be frozen and if they were, it'd probably just be for a month max. But your Money is Safe"

    No Joke- they told me straight up that they had a derivative problem that was quite large... I said, "Thanks " and transferred my acct.

    I dont know where they stand today, but if someone had them, they may want to check.

    ReplyDelete
  26. GARY,

    Interesting difference in those two links. Please explain:

    TSI GUY drew the 2006 D wave down to OCT 06 (which was not the lowest point) whereas you drew the same low down to Jun 06.

    Can you comment?

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  27. TZ said


    "....garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    We are now easily in the B with no need for it go any higher as you are arguing."

    November 24, 2011 6:57 PM

    In that chart,I see exactly what you are saying .

    First labelled was The D (leg down)-

    then had 1 leg up as "A" -

    and the 3rd leg down to retest the "D" low was labelled the "B" leg

    and you're saying we are currently in that area ('B' down to retest "D" low)

    HHHMMMMM

    ReplyDelete
  28. Gideon,'
    The big difference between now and 2008 was that 2008 was also the 8 year cycle low for gold. The next one isn't due until 2016. We just aren't going to see that kind of decline again in gold until the next 8 year cycle low. Plus now the world is awash in liquidity.

    In these conditions and with no 8 year cycle low there's almost 0 chance of another decline like 2008.

    ReplyDelete
  29. Well, ALEX, I'm simply saying that is an ABCD chart drawn by the Man himself and the A on that chart went up almost the same amount % wise as this one just did.

    You can see the B leg dribbled back down for 3 months before putting in another seriously buyable low.

    If then then why not now?

    NOTE: I am clearly aware (and all else here should be) that the market essentially never repeats a pattern that is easily visible and studied on charts by the market participants. EACH of these D pullbacks and subsequent actions are known and studied by EVERYBODY. You will notice that not a single one mirrors the others - because that is how markets work. Too many people see and remember and try to trade whatever pattern is closest and thus any pattern that starts to match will break and do something different.

    SO...while it is interesting to look at all these ABCD's the only REAL comments you seem to be able to take from them is:
    1) once the D low is in it doesn't break lower (except the 2008 crash which was a mess)
    2) there is some kind of rebound from D called an A, but you don't know how much or how long.
    3) there is a pullback from the A, but you don't know how much or how long.
    4) then you get a C where it really starts moving again, but you dont know when that starts.

    Clearly not as useful as it originally seems.

    ReplyDelete
  30. TZ,
    Highly unlikely gold is finished with the A-wave yet. The intermediate cycle would be left translated if the A-wave has topped. That would suggest that the B-wave would move below the D-wave bottom, and that can't happen unless the D-wave has been miscalculated, and I don't think it has since we saw multiple 100 Blees ratings at that bottom.

    ReplyDelete
  31. Actually it's not that hard to spot a B-wave bottom. It will come at an intermediate cycle low. I've been pretty successful at spotting cycle bottoms.

    However just because a B-wave has bottomed doesn't mean the C-wave is ready to accelerate. There is often an extended consolidation period before the C-wave is ready to accelerate even though technically gold has entered a C-wave advance.

    ReplyDelete
  32. Thanks for your comment.

    Does that criteria apply to the 2006 ABCD example when you apply your cycles to it?

    ReplyDelete
  33. GARY,

    The INT cycle of the A/B in 2006 is left translated and yet the B didn't go below the A.

    Seems to still argue the A is possibly in since the A here would also be left translated, but might not go below either.

    ReplyDelete
  34. I'm not the cycle guy. What am I missing?

    ReplyDelete
  35. The A-wave in 2006 did top in a left translated manner but the B-wave did hold above the D-wave bottom.

    That however was an exception to the odds and I never bet against the odds. More often than not a left translated cycle moves below the prior cycle bottom.

    Since that shouldn't happen during a B-wave then I can't trade based on a low percentage outcome. So I'm going to assume that this A-wave (if that's what it is) will have one more leg up and more fully test the all time highs before dropping down into a B-wave decline.

    ReplyDelete
  36. OK,

    But 2005 did the same thing.
    Left translated on the A peaking in 4 weeks, then sharp pullback almost back to the lows (but not breaking it) on the B.

    The A in that example ALSO rallied up % wise about the same amount as 2006 and now.

    So now that is 2 for the probabilities and they don't seem so clear anymore.

    ReplyDelete
  37. Gary, if the ECB starts to print heavily, do you expect gold in US dollars to fall heavily?

    ReplyDelete
  38. Dont' get me wrong. I'm long and looking up with the rest of us, but I still think it isn't all too clear we aren't already in a B *AND* heading lower.

    As we enter the fri night turkey takedown zone where gold has been hit last two years I want to point out (unfortunately) that despite all commentary and belief, we do not ACTUALLY have a daily swing low in gold yet.

    Most of us are long on a bit of hope and expectation that the low is actually in. That may not be the case.

    My next lower target is actually closer to 1630 (same with Ross Clark/Hoye) and we may very well find out that not waiting for the daily swing was a mistake.

    I note that (read any news service tonight):
    1) germany is resisting any kind of printing or bailout still.
    2) china is saying tonight that they will not be printing or easing at the moment.

    So we might find that the daily has a bit more to go lower and that this is now a B and going to retrace more.

    Sorry for the pessimism.

    ReplyDelete
  39. Alex,

    06' correction (D-wave) began 5/12/06 and bottomed 10/4/06...

    A-wave began 10/5/06 and topped on 4/23/07

    B-wave began 4/24/07 and bottomed 6/26/07

    ReplyDelete
  40. WW,

    I dispute that and so does gary from his link:

    garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    bottom was june 06

    ReplyDelete
  41. TZ(8155,

    I have an account with IB, but I also have another acount Amp Futures. I'm concerned about the lack of any kind of insurance or SIPC protection with a futures-only account (same thing as a commodity account). In addition they are self-clearing (IB is too) but Amp is a lot smaller operation than IB. I'm concered about what could happen if a bigger trader were to "blow out" their account at Amp...would it affect me?

    I'm thinking it's probably safer to stay away from commodity-only acounts (futures-only accounts) and move the money from that type of account somewhere else. However, one issue is that all brokerages only have 250K of SIPC protection. I realize IB and other brokers have excess insurance, but if the s**t really hits the fan, then I'm concerned that maybe it would be difficult to impossible to collect on the excess insurance, or even the SIPC insurance itself if the account is a margin account. (even I only really have the margin to avoid the 3 day settlement rule, to avoid free-riding, and so that they will allow me to write naked puts and calls even though I always keep enough cash to cover me if I were to ever by assigned)

    How protected am I with a margin account even if I don't actually tap into my margin? Will SIPC and/or excess insurance REALLY cover you if you have margin account? I believe that IB can loan out your stock even if you don't tap into your margin. I've received payments in lieu of dividends from IB even when I had no less than 90K extra cash in my margin account (credit balance, meaning I did not actually borrow any stock).

    What is to stop the SIPC and/or excess insurance company from just saying, "sorry, sucker, you had a margin account so we ain't covering nothin!"??

    ReplyDelete
  42. I am currently out of my gold futures and waiting patiently for gold to reclaim the 50sma or tag the 150sma.

    ReplyDelete
  43. It seems pretty clear to me that gold is not in a rush to go anywhere right now, waiting for dollar to top and market to bottom.

    ReplyDelete
  44. TZ(8155) This is something I received from IB when I asked about why I was receiving payments in lieu of dividends when I didn't tap into my margin. I don't fully understand it, but it sounds like they are saying there was a shortage of the stock that I bought and it was "owed to me" so I received payments in lieu of dividends. It sounds like they hold everyone's stock together in one big database and there wasn't actually enough stock held by IB to cover what was supposed to be in everyone's cash account so some people got payment in lieu of dividend even if they didn't tap into margin. If you have any idea what they actually mean in the following message, please let me know. If I'm misunderstanding then let me know. Here's the message I received:
    ____________________
    Please be advised that IB would not loan your stock if the account does not have a margin loan. With that being said, the segregation is performed on a net basis. As such, it is possible to have a technical segregation deficiency due to matters outside the broker's control, such as fail to deliver or an increase in segregation requirement for accounts that were previously borrowing funds. When these types of situations occur and shares cannot be secured, a Payment in Lieu will take place
    _______________________

    ReplyDelete
  45. Until the market shows me that it has any intention of significantly bouncing from here, which at this point I am not counting on in the least...I have been stressing since early October that this market rallied too hard too fast and the result would be that this cycle would top in a left translated manner because this market wasnt going much higher than the 200dma, not without more QE...I simply cant ignore that there is nothing in the past bears (or any reason for that matter right now) that suggests anything other than the fact that when the initial bear market rallies rollover we dont see the next one until a new low is put in, it seems like a stretch below the prior cycle low is a requirement to spawn the next bear market rally. We see this in the consolidation stages also after the head and shoulders tops waterfall decline, all three bears made a marginal new low before spawning the first bear market rallies. Its no coincidence we see the same behavior in this and the two previous bear markets, its human nature, its the stuff cycles are made of. I covered all my shorts yesterday and went long, then I said to myself what the hell am I crazy going long right now, and stuck to my outlook and took off the SPX long right before the market puked into the close. I do hope we get a significant bounce so I can put the short back on at higher levels than I covered.

    ReplyDelete
  46. Margin increase started the d wave or the timing was just a coincidence. The 8 increases in April/May did not help silver.

    http://seekingalpha.com/article/309958-silver-and-margin-requirements-how-the-cme-system-increases-volatility


    http://www.bloomberg.com/news/2011-09-23/cme-group-increases-margins-for-gold-silver-contracts-1-.html

    ReplyDelete
  47. I had written some Puts/calls during that month, so I wonder if, even though I had the cash to cover those puts/calls, they use any writing of options (even if fully cash-covered in the event of an assignment) as an excuse to say "he's using margin, lets loan out his stock" ??

    ReplyDelete
  48. As of right now gold is crawling the underside of 50dma and the 50 is turned down.

    ReplyDelete
  49. William Wallace,

    But, Beanie says everything is going to fine and this selling is ridiculous, and we should keep buying dips.... :-)

    Do you think SPX will retest last summer's low of around 1000 before the next bear rally?

    ReplyDelete
  50. WW,

    Your comment at 9:00pm would be more useful if you indicated whether you were talking about gold, spx, or the dollar.

    ReplyDelete
  51. Anything is possible but with sentiment at extreme levels again I think it's unlikely that gold has a significant decline right now. Plus we still haven't had the dollar move down into it's cycle low yet.

    ReplyDelete
  52. OK, thanks gary.

    Just wanted to push the analysis. It is always important to look BOTH ways on a trade and I wanted to make sure we were.

    I do think monday was a valid low as I have said (at least certain enough to bet some money on), but there are arguments for lower as well.

    We will see what happens.

    ReplyDelete
  53. Sure it could go lower. But it's deep enough in the daily cycle that I think our entry is "close enough" and any further downside will be quickly recovered.

    I'm not heavily leveraged so I don't have to pick a perfect entry, I just have to get close, and I think we probably did that.

    ReplyDelete
  54. JR,

    If this bear market is anything like the past two, and it has proven to be just that in many more ways than one (its almost silly to just ignore it), we will certainly see a test of 1000 before the next bear market rally. A complete divergence from the way markets go down would suggest otherwise, there is nothing right now indicating that....the dollar will have to crack for that to happen. I was expecting and calling for a new low before the Oct 4th low was put in for a true bear market rally to ensue, we got that...I wasnt just guessing or trying to predict this, its how bear markets behave... I would say its pretty clear that the world is running to the cleanest dirty shirt in the closet right now also - $USD.

    ReplyDelete
  55. REDUCED my position by 1/3 in gold futures.

    ReplyDelete
  56. TZ,

    I think it was pretty clear that I was speaking of a bear market (SPX)...gold is not in a bear market.

    ReplyDelete
  57. WW,

    I wasn't trying to be a jerk. People post stuff here all the time without indicating which security and people have to figure it out. Clearly people will get it wrong some % of time and it is simply an unnecessary error to have.

    "..Until the market shows me that it has any intention of significantly bouncing from here, which at this point I am not counting on in the least...I have been stressing since early October that this market rallied too hard too fast and the result would be that this cycle would top in a left translated manner because this market wasnt going much higher than the 200dma, not without more QE......"

    That sounded EXACTLY like you were talking about gold and then other parts conflicted so I just gave up trying to figure out the post.

    ReplyDelete
  58. I'm long Gold futes, GDX, and SPY, but I plan on lightening up on SPY after we get a dead cat bounce.

    ReplyDelete
  59. TZ,

    I think it was pretty clear that I was speaking about the SPX and not gold when saying "I have been stressing since early October that this market rallied too hard too fast and the result would be that this cycle would top in a left translated manner because this market wasnt going much higher than the 200dma"

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  60. i dont know A wave or D wave.....
    but Gary everyone is still invested big time in gold in asia....
    and if gold goes to 1900$... asian currency terms the move will be parabolic....

    Gary can you give us an inverse view? if
    gold has already topped around 1921$ levels....
    and headed much much lower, what is our stoploss for longs?

    ReplyDelete
  61. Reduced down to about 2x gold.
    I'm more comfortable with that amount all things considered tonight.

    My stop is higher than the "daily swing" low of 1667 by about $5. I don't want to hold down to that point. If we are that soft then i'm not sure that was a daily low yet.

    ReplyDelete
  62. I'm about 1.5x now with a stop I'm willing to take below wed's low.

    The turkey shoot on gold seems underway now. Thanksgiving fri 2011.

    ReplyDelete
  63. Ananyavrat,
    Where did I say gold was going much lower? I said it would probably enter a long consolidation.

    ReplyDelete
  64. JR,

    If you have a CASH account at a broker they are not supposed to loan out any securities you have. MARGIN accounts they can loan out securities. In either case you still are owed what you own. I don't think the loaning out increases your risk much and IB is seeming to say that if for some reason an entity with your shares cant provide them that would be given the same amount of cash (and could therefore just buy it back on the mkt). This whole scenario sounds very unlikely to occur and there are significant advantages to having a margin vs. cash account.

    I have never found in the US that you can have a margin account with its advantages and yet prevent your broker from loaning out securities you own. It would be nice but either it is written into the regulations or it is so pervasive it will never be changed.

    You just have to deal with it, but again I don't think it is a big deal.

    As far at all the puts and call stuff I don't really do options. I don't like losing my money :-)

    You had one additional comment about dividend and payments in lieu of. If a person borrows your shares to short, they are responsible for paying you any dividends that the stock issues out of their own money. That is one of the costs of being short. So that is all it appears IB is explaining to you.

    Disclaimer of course: this is just helpful advice that I THINK is correct. You are ultimately responsible for getting accurate information and understanding what you are doing.

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  65. JR,

    As for your info on SIPC it appears vague and misunderstood.

    SIPC (google it) has a website with clear brochures on what they do and what they cover. $250k is only ONE of the applicable numbers and only for certain instruments.

    And remember that MF has shown that SIPC only covers a 'security' account and not a 'commodity' account.

    Disclaimer again: my comments believed correct, but you are responsible for trusting them.

    ReplyDelete
  66. WW,

    If we head lower I have buys ready for the same 150sma zone you are looking at, roughly.

    ReplyDelete
  67. TZ,

    said:

    "WW,

    I dispute that and so does gary from his link:

    garyscommonsense.blogspot[PUT.DOT.HERE.TO.FIX]com/2010/02/golds-b-c-d-wave-structure.html

    bottom was june 06"

    I agree and dispute myself :)
    Most B-waves break below the 200dma and C-waves are born on the 200dma...fits well with my analysis.

    But Alex still had it wrong I believe in saying

    "I believe on the 2006 chart, the D wave ended when it bottomed in JUNE and the A-Wave is the sideways consolidation from then onward."

    ReplyDelete
  68. TZ,

    If you ever plan on going 100% cash in your account, then the
    250K number is what matters, IMHO, unless the excess insurance covers cash and you believe you could collect on the excess insurance it if the s**t hits the fan.

    I still wonder if SIPC, etc. could say "you have a margin account, so your securities may have been loaned out and if we can't recover them, you are out of luck"

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  69. EURUSD, this donkey is having a hell of a time finding a bottom. Looking like we have date with 1.325, the lower trendline on the falling wedge.

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  70. I'm glad there is no cartel pushing gold down on weak volume predictably three years in a row. That would suck.

    :-)

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  71. This comment has been removed by the author.

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  72. TZ,

    Last year, the pushing down on Gold was only on Black Friday or did it extend on monday. Maybe we may only have our botton on monday....

    What´s your thought ?

    Thks.

    ReplyDelete
  73. Hedge fund manager Kyle Bass interview. Really good listen.

    http://www.youtube.com/watch?v=K-F_QF1XTXI&feature=player_embedded

    ReplyDelete
  74. Not arguing anything here ..no "tit for tat" but- simply For Clarity-

    Just so people reading last nights discussion can understand clearly...what a basic A-B-C-D in the Gold Bull looks like

    http://www.screencast.com/t/jdh9tQbriSY

    The "A" point goes from the LOW of the D point (which ended in JUNE 2006) , So "A" starts in JUNE..and goes sideways to 'upward' in a consolidation, almost reaching (in some cases closer than others) the prior "C" point high, then drops into a "B" wave low.

    So my statements were all correct.

    -The D-Wave ended in JUNE (in no way did it go to October)-

    -Where it ends, the A-wave begins-

    -The "A" wave ENDS at the next highest point -

    - before dropping into the next low called "B"

    I believe this is also how Gary views this pattern.

    That just for clarity : ]

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  75. TZ

    massacre?

    Those are scary words for being down ~ 1%. I was expecting > 3%.

    ReplyDelete
  76. Gary - you've suggested that in the coming year "currencies will collapse".

    Obviously they can't "all collapse" so....which do you see/envision "benefiting" from the coming storm?

    And which do you imagine to be debased/devalued the most?

    The money has to go / be held/exchanged one way or another so....who wins?..who loses?

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  77. After losing 1.5% this morning, Dax is coming back to the flat line...Maybe something brewing for the w/e?

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  78. EURO-CHF: Rumours circulating that SNB to move the band with reports of
    a press conference to be held at 5pm local time. Euro-chf currently
    deals Chf1.2311.

    ReplyDelete
  79. Alex,

    Just sounded for a second like you eliminated the B in saying

    "I believe on the 2006 chart, the D wave ended when it bottomed in JUNE and the A-Wave is the sideways consolidation from then onward."

    Thanks for clearing that up, I knew you wouldn't let my comment escape you bro...lol
    No biggie were all on the same page basically, I think it's great, this blog is like a well oiled machine...a killer team :)

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  80. Yes we are starting to see some truly extreme breadth levels. Down pressure has reached levels only seen a couple of times in the last decade. The NYMO is at levels usually only associated with extreme intermediate degree bottoms.

    It seems unlikely that the market will continue to drop another hundred points in the next two or three days despite these massively oversold conditions. I think it's more likely we are going to put in a narrow range day soon and then form a swing that should mark the bottom of the daily cycle.

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  81. WW

    OH, I see what it looked like I said. Like 'D' to 'A' for that entire sideways move until the next 'C' arrived (skipping a "B") LOL

    Gotch, It kind of did sound like that when I termed "A" as the rest of the sideways move.

    :]

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  82. GARY

    If Monday remains the low, and we get a swing , do you count yesterday as a day too ( Gold did trade elsewhere).

    And if today broke Mondays low and a swing forms...you just start today as day 1. correct?

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  83. Actually, Yesterday was showing up on one of my Gold charts, and not showing up on Stockcharts.

    So I'm assuming you skip yesterday- I remember you saying you have to see it on the chart (no overnight , etc)

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  84. Alex,
    I think I would tend to ignore yesterday because NY didn't trade. At this point I would prefer gold make a slightly lower low and start the cycle count fresh because I would prefer not to waste several days of a new cycle churning.

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  85. Looking to me like we might kiss WW's 150sma. I think that might be the slightly lower low, looks to be about 1640ish right now. That would also be enough to freak a lot of people out and convince them to sell right at the lows.

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  86. Putting the gold futures back on this morning.

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  87. GARY

    THX, I was hoping for the exact same thing, but it doesnt look likely.

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  88. Mutton,

    If the market reverses today we should see gold move above the 50sma, though I do think the bounce in the market will be short lived.

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  89. Anybody knows what is symbol for gold @ freestockcharts.com

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  90. Stocks falling to and below March 2009 lows on the S&P 500 is a deflationist dream... and it will not happen.

    Printing starts at 1000 or below!

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  91. Tiho,
    The nominal price isn't terribly important. We just need to see P/E ratios in the single digits and dividend yields above 4%. Once we get those conditions we should be at valuations where a true secular bear market low is forming.

    That being said I think we probably will see marginally lower lows in 2012 but the earnings will be much better than in 2009 so P/e ratios will be much lower.

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  92. Has anyone else bought sil this morning?

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  93. Someone either knows something or is just having fun here...Gold cruising, stocks up and mostly Treasuries down, which means that they are taking advantage of a small volume day to move things around..!?!

    ReplyDelete
  94. Wow, have a look at the SOS on SPY. So soon an already this value.

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  95. Double top on the buck & H&S Top on the 15 min chart.

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  96. >We just need to see P/E ratios in the single digits and dividend yields above 4%. Once we get those conditions we should be at valuations where a true secular bear market low is forming.

    www.decisionpoint[PUT.DOT.HERE.TO.FIX]com/TAC/SWENLIN.html

    bookmark for life;
    the first chart is all you need to invest in stocks.

    ReplyDelete
  97. Took profits on the gold futures, see no strength here, sticking to my plan.

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  98. Sophia,
    Low volume and yes, someone is pushing stuff around here.
    A question on your prior post:
    what is SNB stand for? TIA

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  99. I find it telling that gold couldn't make it above $1700 and silver couldn't make it through $31.50 on the back of a SNB currency intervention to support the Euro. Gold and silver are going to get smacked hard when the Euro breaks the October low. The waterfall slide in the Euro should slice through the 1.30 level forcing commodity complex lower and the USD higher.

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  100. Boy, I am tempted to go 100% in now. Averaging down sounds logical. But, so was full throttle towards icebergs on the Titanic...

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  101. This comment has been removed by the author.

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  102. Ken,
    Time to bet on that kind of outcome isn't 20+ days into a daily cycle. This is why I use cycles in the first place because technicals will cause one to make the wrong decision at turning points.

    Now isn't the time to be pressing the short side of anything. Even if there is further downside it's so late in the cycle that your window of opportunity to profit is going to be very narrow and you risk getting caught in a sharp reversal.

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  103. It's a good thing that Gary's SMT portfolio up 20% YTD on trades since July. I'm thinking he'll close out the current model portfolio position at a 5-10% loss or when gold falls back below $1600 and silver into the high to mid 20's. Everyone's looking for upside when they should be looking for downside... What a perfect setup!

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  104. Gary I've been watching you for years and you're good, damn good, but it's time for the gold bull to throw you a curveball. Being up 20% YTD since July is better than every hedge fund manager in America. It's time for a loser trade and the collapes of the Euro should do just that. The market is trading with the thesis that eventually Germany or the ECB will print, but that isn't going to happen. Gold, silver, oil etc. has done a wonderful job shrugging off the USD strength, but they'll play catch up with the indexes as the flush below 1100 SPX drags them down. We are going into a global recession/depression and the money printing (if we ever get it) will come around SXP 950 and not before. The Fed will use the Euro/Market Crash as the reason to launch QE3 but too much damage will have been done and it will prove in effective. The global financial system is terminal and all we can do now is sit back and watch it die. Hopefully it is quick and easy (deflationary credit collapes) rather than long and drawn out (hyperinflation) but either way we go we're going down.

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  105. silver getting beaten like a dead horse as usual...

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  106. Keep in mind people, we have a left translated daily cycle in stocks in the first bear market rally, a first for the last three bear markets. Both prior bear markets had right translated initial bear market rallies. Gold is clearly refusing to decouple from stocks, and the dollar still has atleast two daily cycles left in this intermediate cycle.

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  107. Ken,
    Fortunately everyone is starting to think like you. And as we all know when everyone is thinking the same thing then no one is thinking.

    That's the recipe for a reversal as too many people get on the wrong side of the boat.

    I don't have to time a perfect entry, just "close enough" Even if gold has one more dip below $1667 it will almost certainly be quickly recovered and even though we didn't get in at the exact bottom our positions should still show a decent profit. All markets have a large gap above that will almost certainly get filled during the next daily cycle.

    GDX has a gap above $60 that should get filled. Even if the rebound only fills those gaps we will make money and the model portfolio will then score another base hit and tack on another couple of percent.

    This is how the model portfolio continues to rack up steady gains in one of the toughest trading environments in history, because I concentrate on cycles and sentiment instead of charts and the news.

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  108. William Wallace,
    Not necessarily true. What if the dollar double tops here, confirming the 3 year cycle low in the CRB?

    In that scenario stocks could continue to churn sideways while commodities rally.

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  109. Gary,

    If gold drops below 1667 where is your stop?

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  110. The only thing shorts need to worry about is holding onto them (cycles be damned). We have too much intervention in the markets and cyles while good are going to prove ineffective. Those shorts who panic cover on rumors of a Euro bailout (that's when you should enter into shorts) will find it hard to re-short in a declining market. The best news I heard all day was that Tim Knight over at Slope Of Hope panic covered all his shorts this morning. Tim will watch the biggest crash in the last 70+ years from the sidelines. If you're short turn off the computor and let your winners run. The $VIX is only at 34 and I expect a rocket shot into the 50's before I cover any of my shorts and a 1% $TNX and a 2% $TYX before I sell any of my bonds. When I cover my shorts and sell my bonds I will be exiting the paper financial system.

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  111. At this point I would prefer gold dip below $1667 because I would rather not see it churn and waste the first few days of a new cycle.

    I try not to stop out at daily cycle lows. So at this point I have no stops. My risk control is position size not a stop.

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  112. We're smack dab in the middle of the D-Wave decline Gary. When the USD/Bonds moonshot higher on a waterfall collapes of the Euro/Equity Markets margin selling pressure will hit gold/silver hard. The rumor of Isreal attacking Iran is baseless and has held the commodity complex higher than it otherwise should be. I'm looking to buy back gold/miners below $1500 and silver in the low $20's. I don't think you'll be in your model portfolio position(s) too much longer. While you can stomach a -10%+ account drawdown your subscribers can't. I bet many start to panic sell their AU under $1600 and AG under $28.

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  113. Ken,
    If the market was in the timing band for an intermediate cycle low I would agree with you, but this isn't an intermediate degree decline, it's a daily cycle low.

    It's already too late in the cycle to keep pushing the downside unless you don't mind holding on during the next violent rally.

    Today was the 37th day of the cycle. Most of the time they bottom on the 37-39th day. Occasionally one will make it to 40.

    But we are already seeing extreme breadth readings that have only occurred a few times in the last decade. It seems unlikely that the next 1-2 days will be able to muster another 100 points down from here.

    We now have another narrow range day forming. That is one of the things I'm looking for to ease the parameters for a swing low, possibly on Monday. Plus we've seen several large Bow days. That is almost always a sign that big money is starting to step back in. When that happens it's usually not long before a bottom forms.

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  114. Gary,

    Haven't you said before that when a daily cycle looks like it is bottoming early in the DCL, that bottom is often tested or slightly exceeded late in the cycle. That may be what we're looking at.

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  115. This comment has been removed by the author.

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  116. Gary,

    As of now I will stay focused on what the last two bear markets are telling me, until I see otherwise... being we are seeing the same behavior playout without fail time and again (that same behavior and history that enabled you to say that we would see stocks rally to the 200dma before rolling over if we are indeed in a bear market), right now im pretty convinced that any sideways move in stocks will be short lived...and as I have been saying we will see gold most likely push higher in that time, but if the market continues to fall off gold will not bounce until the next bear market rally in stocks, which I am almost certain at this point will not ensue until the Oct 4th is broken. This bear market is proving to be no different than the last two, until it does im not going to ignore the fact.

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  117. Ken,
    First off you will never be able to pull the trigger below $1500 because the same conditions would exist then as do now. Your target would have evolved lower to $1200 or $1000.

    We saw the COT trigger multiple 100 Blees ratings at the 1600 level. The only time a 90+ Blees level has ever been penetrated was during the market crash and 8 year cycle low in 2008.

    The next one of those isn't due until 2016.

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  118. Coming into today's trading the good folks over at Bespoke reported that the decline of -4.43% coming into today will go down as the worst Thanksgiving week ever for the S&P 500 (since the government officially designated Thanksgiving as the fourth Thursday of November in 1941).

    http://www.bespokeinvest.com/thinkbig/2011/11/23/worst-thanksgiving-week-ever.html

    I can't wait to see the the size of the red candlesticks we print on the charts over the comming weeks/months. They'll be Epic in size and should blow everyone's mind. Something in the way of the BRD's silver printed in May and September is what I'm looking for.

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  119. muttonfish,
    Gold didn't bottom early, it appeared to have bottomed right in the middle.

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  120. Ken,
    And I think you will probably get that but not until February when the next intermediate cycle is due to bottom. You likely have the right out outcome but your probably just a little early still.

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  121. Is it just me or does gold appear to be starting a pattern of lower highs and lower lows?

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  122. Frankly I could care less what the price of gold and silver are or what time we are in a particular cycle. I'm looking for two things before I completely transfer my paper wealth into real assets.

    1) 1% $TNX & 2% $TYX level
    2) Euro Fail or USD parity

    When I see that I'll be buying. Gold/Silver need the printing of money (credit expansion) in order to go higher and that isn't going to happen until we see serious blood in the street which hasn't happened, yet. Deflation is winning.

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  123. WW,
    The problem is that we are just running out of time for that scenario. We would need the market to drop over 100 points in 3 or less days. The NYMO is already at -120 and downward pressure is already at levels only seen a couple of times in the last decade.

    The market is now at risk of a selling exhaustion and more importantly it's fast approaching the end of the timing band for that to happen.

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  124. Unmknown,
    Gold and miners both are still in a clear pattern of higher highs and higher lows.

    Gold would have to dip below $1604 to break that pattern.

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  125. We are starting to see "The Plan" start to work. As the European banks collapes the TBPT banks like WFC are making bids on distressed assets. Europes financial loss is our gain.

    1) Lower borrowing costs to government with a flight to safety/quality fron the Euro/Euro Bonds into the USD/US Bonds.

    2) the TBTF banks borrow from the Federal Reserve at 0% to buy up assets (debt) in Europe for pennies on the dollar.

    http://www.bloomberg.com/news/2011-11-25/bank-of-ireland-said-to-near-sale-of-burdale-lending-unit-to-wells-fargo.html

    Who ever thought of this evil plan for the US TBTF banks to seize assets in Europe for nothing was a genious. I expect we'll see more of this sort of activity soon.

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  126. Silver is fighting for its life to hold the $31 level. When we break back down below $30 I think a low $20's or the $22 level is in play.

    http://finviz.com/futures_charts.ashx?t=SI

    Gold should find itself around $1500 with a brief overshoot into the high to mid $1400's before the D-Wave decline is complete. That's a great opportunity for those looking to buy.

    http://finviz.com/futures_charts.ashx?t=GC&p=d1

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  127. Gary,

    Right now it looks to me that you may be a bit early, The first bear market rallies in stocks stretch well beyond 40 days...the previous two bear markets actually had right translated daily cycles(First bear market rallies), and they both stretched well beyond 40 days. After stocks top and rollover into a waterfall decline (as we see in all three bear markets), the consolidation stage that follows that decline are roughly all 40 day DC's that occur before the first bear market rallies ensue. Again, all initial bear market rallies that follow that consolidation stage and 40 day DC's are stretched DC's. Thats what makes me believe we are going to see this daily cycle (left translated) will certainly stretch, possibly taking out the Oct 4th low.

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  128. If gold doesn't get it's butt back above $1700 and quick it runs the risk of getting pulled down with the equity markets. All I can say is that the SPX 1120 levl had better hold or this sucker is really going to come unglued. Seven straight days of selling is starting to look and feel a lot like the late July early August time period. When does one start to think or better yet call waterfall collapes?

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  130. Ken,

    We should see the SPX make a new low and bottom, 50-70 handles below the Oct 4th low, this will only pressure gold to the 150sma at most (1650 level), especially if we get a 3-7 day bounce next week in the SPX before rolling over again. After the SPX bottoms below the Oct 4th low the NEXT bear market rally will ensue, and gold will most likely test the 1800level again during that time. So if gold is going to drop to $1500 it will not be until the NEXT bear market rally tops and rolls over.

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  131. Neo said...
    Wow, have a look at the SOS on SPY. So soon an already this value.


    SPY was the #1 on the SOS all morning long with about $125 MM I believe, and it disappeared from the list in the end. Something is cooking IMO.

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  132. What's cooking is that SPY went negative :)

    Hence the removal from the Selling on "Strength" list. The underlying selling was still there.

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  133. >Gold and silver are going to get smacked hard when the Euro breaks the October low.

    Unless central banks and govts do what they usually do and announce something over the weekend.

    At SOME point the printing (or some other kind of idiotic move) will start. Gold loves idiots in govt.

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  134. Excellent comments by Ed Butler on silver /gold and the manipulation of thee markets --oh i forgot they are not manipulated ,its just profit taking

    "The manipulation, which I liken to financial terrorism, takes on a regular pattern. There’s a group of around 20 commercials on the COMEX, including JPMorgan, that know how to suddenly rig prices lower (usually in the middle of the night or at some other thinly-traded time). Knowing that this will scare some people into selling and keep others from buying, this small group of commercials then sits back and waits to buy what they can scare others into selling. The proof of this is that government data consistently reveals that these commercials are always the big buyers on any sharp sell-off in silver. No exceptions. Some might call this just good luck on the part of these commercials. I call it manipulation and financial terrorism."
    "The most ironic thing is that most silver and gold investors originally bought precious metals as protection against exactly the type of financial crisis we are going through now. In other words, the price of gold and silver should be soaring based upon current conditions. Instead, the manipulation and financial terrorism is so pronounced that the crooked commercials on the COMEX have managed to convince the market that financial crises involving a flight from paper assets is somehow bad for precious metals. That’s preposterous...and you should not be fooled by their crooked games. The proof is that these commercial crooks are buying hand over fist on the contrived sell-offs. So should you."

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  135. I'm still long at about 1.5x on gold futures, but my stop is now near the turkey massacre low today. If that doesn't hold, I'm out.

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  136. UUP has hit the upper bollinger band..

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  137. Black Friday was a zoo. Lots money getting spent today.

    Should be for a good pop next week when retailers announces black Friday sales.

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  138. The dollar has a habit of riding bollinger bands.

    http://screencast.com/t/oMFLOFJsO

    Say what you will about our FED and our deficits, but the dollar's 3yr cycle position, macro news and the recent action in the dollar is extremely bullish IMO. We're due a move to a DCL low, but that's immaterial on a weekly chart.

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  139. Robert

    There is IMO indirect manipulation. It's called the CME with their margin increases. Why the margin increase in silver in sept after the collapse in may?
    The margin Increase is by far the biggest unknown and can crush a good thing for us PM investors.

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  140. Slow burn on the VIX continues. No spike or any indication of a stock selloff bottom.

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  141. Ken

    you have a lot of posts on here all of which seem to exhibit a great deal of certainty about what is to happen next......what's your track record ? have you got posts here or elsewhere that i can view to see if you have called it correctly in the past?

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  142. TommyD,

    Sorry tomcome back so late to you...SNB Swiss National Bank....last time they acted on the Swissy, the dollar rallied...

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  143. Robert, the thing I don't get about the market manipulation theory by JPM et al is, why in heck did they allow gold to get above $1000? If I were the boss of this group of ringleaders, I'd consider them an absolute failure. Trying get's one no points in my book; execution and delivery do. The fact that gold went from $300 to $500 to $700 to $1000 to $1500 to $1900, makes these guys an absolute failure in my book. Doesn't make sense, does it? These guys don't play to loose; they play to win; but they're loosing; so they ain't playing!

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  144. Sophia, on the daily chart the Swiss Frank ETF (FXF) is looking like it's about to turn up (as is the Euro). Is that what you're seeing, too? Thanks.

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  145. I think $GOLD's about to go up. It may have 1 more down day, as this week's action looks like a flag; but any close above $1700 spot and I go in.

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  146. Gary this article is a dublicate of Toby Occoners, no? If this is tobys article then you may want to reference that...
    http://www.goldscents.blogspot.com/

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  147. For those that think the dollar can continue to run higher on euro weakness, just remember that Big Ben will begin to push back on that at some point. The Fed's bias is to inflate. Continued dollar strength only gets us closer to QE3.

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  148. I'm not (yet) a cycles guy but I'd have to agree that was a darn good post by Gary.

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  150. Sophia,
    Thank you! I will be meeting the wife someplace in Europe in March. Where are you located?
    She works in central Asia so connecting in eastern Europe makes sense. Prague is a place I would love to see. Email me at tedavis630@aol.com

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  151. I have no track record other that what I've done personally and for my clients. I'm a registered FA at a major wire house firm and am personally up over 35% YTD by shorting stocks and going long gold and silver. I was short from June 2nd until August 6th when I went long and then shorted the market again on Oct 13th (a little too early on my entry) and after suffering over a 10% account drawdown I'm positive by 4% on my current short trade. I'm looking for a lot more downside which should feed its way into gold and silver via margin selling pressure and I'm thinking I'll be covering shorts and going long AU and AG sometime in mid-December or early January around SPX 950.

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  152. WW,
    I'm not sure what you mean by stretched cycles. Every cycle during the last bear was between 35 and 38 days except two short cycles that ran 25 days.

    During extreme market declines it's not unusual for the selling pressure to exhaust itself quicker than normal. Both of those short cycles came during the Sept-November crash.

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  153. Actually I guess the final daily cycle in 09 was a little bit short at 32 days also.

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  154. One problem with all this cycle non sense is that you are all extremely bullish on Gold with quotes like there is almost 0 chance of that type of a decline - referring to a repeat of 2008.

    I'm not a prophet so I am not here to tell you that I saw it in the future. I do not know what will happen. However, Gold is now up 11 years in the row - one of the rarest events in financial markets for any asset class. I remember Nikkei finished off its run with 10 annual gains into 1990 and than crashed. I do not think Golds secular bull is done at all, but having said that a huge bull trap could be in the process.

    You see Gold had an amazing run into mid 1970s before falling 40 to 50% into 1976. It shook the living lights out of every Gold bull who panikced and closed out their investments. A 50% fall is not easy to hold onto, that is for sure.

    Afterwards, Gold went up almost 9 times, I think it was 850% in 4 years into the final secular blow off top in early 1980. So many missed out only to start the buying chase closer to the end of the move.

    Today we have the same type of an outlook. So many people are so eager to buy Gold, claiming that only a MINIMAL correction will occur. My friends email me telling me to buy and their reason is Europe or US debt, Gary tells you to buy and his reason is cycles, Sprott tells you to buy and his reasons is whatever and Peter Schiff tells you to buy and his reason is a USD collapse.

    History doesn't reap itself, but it does ryheme. Gold doesn't have to repeat the mid 70s drama of a bull trap, however after 11 straight years of gains, and every single investment bank quote "negative interest rates" as the reason to buy... there are too many people bullish on Gold right now from the long term perspective... despite what Public Opinion and COT and Hulbert Gold Sentiment read. It would just be too easy to buy here and expect a sideways consolidation like 2006/07...

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  155. NFP next week. Something else to give the market to digest. Like Europe isn't enough.

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  156. Rickard interview. He thinks euro has to go up since US, China, and Germany all want it stronger:


    http://www.youtube.com/watch?v=rnoYlW5nBRc&feature=player_embedded

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  157. High 5, good post :o) I bought his book "Currency Wars". I like the way he has an intuition about the big picture. I watch what he has to say & learn a lot from him

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  159. WW,
    I missed the slightly long cycle in the summer of 08. The stretched cycle in early 2011 was triggered by QE and was to the upside.

    But I doubt we are going to see another 100 point loss on the S&P this late in a daily cycle. It would require the dollar cycle to stretch really long and break through resistance at the prior intermediate top, and it would require an increase in selling pressure which has already stretched to levels only seen a few times in the last decade.

    I think it's more likely we get a bottom in the next few days and a more sustained move down in the timing band for an intermediate bottom in Feb.

    The McClellen oscillator is stretched to levels that can rarely be maintained for very long. For stocks to drop below the Oct. low we would have to see the NYMO move to levels probably never seen in history. Doesn't seem very likely.

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  161. Gary,

    If we get a decent bounce 4-5%, or trade up to sideways for a few days before rolling over, it will relieve some of the oversold conditions, will it not? This is what we see in the prior two bear markets before a new low is put in.

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  162. Another consideration is that we've now had 7 down days in a row. That's pretty rare and the first up day is going to set up a potential swing that will likely mark the bottom of the cycle. To drop another 100 points we would probably need to see 9-11 down days in a row.

    One of the worst market crashes in history unfolded over 8 down days in Oct. 2008. In order to penetrate the Oct. low we would probably have to exceed that streak.

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  163. Gary,

    Thanks for the response, appreciate it my friend...bed time. Sleep well :)

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  164. Yes a 4-5% bounce would definitely qualify as a daily cycle bottom which should be followed by another left translated cycle that penetrates the Oct. low.

    The real damage from this bear market should occur next summer and especially next fall.

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  165. Thats what I have been saying for some time now, that the next DC would fail and take out the Oct 4th low...I just wasnt sure if you would mark a 4-5% bounce as a new cycle or a continuation of this one, so I was just refering to it as a stretched cycle now. That clear things up :)

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  166. That is what I meant when I was saying just recently that this particular daily cycle in a bear market (the DC following the first bear market rally) fails very quickly and rolls over within 4-9 days (4-5% bounce) or so.

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  167. So now you understand why I am compelled to expect a 4-5% bounce next week before the market rolls over and takes out the Oct 4th low, and why I have been saying that I dont believe that we will be seeing the next substantial bear market rally until a new low is put in. Lets see what happens.

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  168. I'm sorry I thought you meant the current cycle was going to drop another 100 points or more before bottoming.

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  169. Thing is, if the market does bounce 4-5% and then rolls over to take out the Oct 4th low, how high will gold rally and how much of a pullback will we see if it continues to follow the market. Gary, what percentage will gold rise in correlation to the markets 4-5%, do you have an idea?

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  170. Not a clue. I'm just trading based on what I expect to be a right translated intermediate cycle and the tendency for A-waves to test the highs. So if the rally can make it to day 10 then I'm going to start thinking about taking profits.

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  173. Thanks for posting Ken. We typically get some know it all come along and brag about how gold is gonna crash right around the time it's about to launch higher! Beenie, Mylifemytrade (mylifeislame), etc etc.

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  174. Time to die

    Yes ur right. They come and they go but mostly they go. He did state a good case for a collapse. To bad he wasn't here 2 weeks ago when the market and gold was higher. It's easy now after the decline.

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  175. I'm bullish on gold for currency reasons, but one thing that I keep in the back of my mind is the $50T in derivatives that could unwind - if that starts to go, it would plummet the S&P, wouldn't it? And like in 2008, wouldn't that take gold down? Also, related, the GLD ETF may becoming large enough to affect the spot price of gold, rather than the ETF tracking it; so like domino's, the derivative death star could implode, bringing down the S&P, along with everyone's 5-10% share in GLD, which forces down the spot price. Just saying it could happen is all.

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  176. On the charts, I just noticed that $SILVER made a lower low today (Fri) on a market closing basis. $GOLD did not. Focusing back to just silver, it wouldn't surprise me to see another low on Monday, then a turn up to start the new trend (I hope).

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  177. http://www.grandich.com/2011/11/mistakes-i-made-a-few-no-make-that-many/

     
    3. “Hope” is not an investment strategy—When it comes to faith, hope is very good, but in investing it can be a killer. If I only had a dollar for every time I heard an investor say they’re “hoping” their stock goes back up so they can get their money back. Look, if you’re hoping the price will rise yet not willing to buy more at the reduced price, who do you expect to do so and pay up to the price you originally paid? Just hoping for these changes without sound fundamental reasons to back  up that hope is a license for disaster.

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  178. Revised post.

    Gary,

    Just to name a few stretched daily cycles from the last two SPX bear markets....

    A.) 10/19/00 to 12/20/00 - 45 day Daily Cycle (which I refer to as the consolidation cycle that occurs after the head and shoulders waterfall decline)

    B.) The following DC...12/22/00 to 3/22/01 - 61 day Daily Cycle (which I refer to as the first bear market rally)


    A.) 1/23/08 to 3/17/08 - 38 day Daily Cycle (which I refer to as the consolidation cycle that occurs after the head and shoulders waterfall decline)

    B.) 3/18/08 to the Daily Cycle top - 44 days. If you count from trough to trough (3/18/08 to 7/15/08) - 83 day Daily Cycle...(which I refer to as the first bear market rally)


    A.) The last Daily cycle (8/10/11 to 10/4/11) - 39 day Daily Cycle...(which I refer to as the consolidation cycle that occurs after the head and shoulders waterfall decline)

    B.) Current Daily Cycle began 10/5/11 - 37 days so far...(which I refer to as the first bear market rally, and I believe you agree with me)


    Now If you notice the "consolidation cycles" are roughly 40 days and the following "first bear market rallies" are stretched Daily Cycles (beyond 40 days)
    And if the prior two bear markets, and so far this one also, are any indication...the market will make a new low before the next substantial bear market rally begins.

    If you remember (and I kept stressing it), back in August I was telling you that I believed that the Aug 9th low was not going to be what spawned a bear market rally, and that the SPX would consolidate and put in a new low before a substantial bear market rally would ensue... you disagreed with me.

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  179. The US Bond market is telling you everything you need to know about what is just around the corner and it isn't (Hyper)Inflation:

    http://www.ritholtz.com/blog/2011/11/bondstock-relationship-echoing-2008/

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  180. A "December to Remember" sounds good to me!

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  181. Keep your head on a swivel because December 13th is a FOMC meeting/statement. I'd expect the doves to start chirping about GDP targeting etc as GDP goes negative. Remember that GDP is at 2% and should go negative sometime next year as the world's recession/depression gathers steam. Something to think about going into 2012 is the FOMC statements and cycles.

    2012 FOMC Meetings
    January 24-25
    March 13
    April 24-25
    June 19-20
    July 31
    September 12
    October 23-24
    December 11

    http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

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  182. Ken,
    Nobody here disagrees with you on the direction of the stock market in 2012. I've been calling for this for more than 6 months. Heck I've been desperately trying to warn Beanie so he wouldn't get caught in another bear market. Of course he ignored me and did get caught again.

    I'm just skeptical that the market is ready to crash right here right now. It's too late in the daily cycle. If I had to guess I would say the first day that spikes the Vix at least 10-15% is going to mark the bottom followed by a convincing Santa Claus rally.

    What you are looking for is more likely to occur during the next daily cycle when it moves down into a much larger intermediate degree decline due to bottom in Feb or March.

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  183. From today's Barron's, an alternative view to the pervasive negativity we're seeing on the blog at the moment:

    "On this Thanksgiving 2011, start by giving thanks that the U.S. economy is "no turkey," according to a Wednesday missive from the economists at Credit Suisse.

    The Credit Suisse recession-probability model now puts the risk of recession in the U.S. at one in 10 (specifically, 11%), based on preliminary estimates for November that admittedly include projections. But that's way down from the high end of more than one chance in three (36%) as recently as September."

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  184. I think Barrons may be looking at the world through rose colored glasses with the hidden agenda of trying to increase circulation :)

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  185. Silver can spike up this week. This Silver Symmetry chart is surprisingly bullish.

    http://cyclicalmarketanalysis.blogspot.com/2011/11/silver-third-time-is-charm.html#comment-form

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