In the chart below I have marked with blue arrows the last several yearly cycle lows. As you can see they tend to occur in January or February. The timing band for the next cycle low should occur sometime in early to mid January. That should mark the bottom of this D-Wave decline with the slight possibility that there could be one more short daily cycle down bottoming in early February. This will almost certainly be dependent on whether the dollar cycle has one or two more daily cycles higher before rolling over into an intermediate decline. Current sentiment levels on the dollar index are suggesting only one daily cycle higher, which should signal a final bottom in the gold market sometime in the next 2-3 weeks.
If gold can make it back to the 50% retracement in the next couple of weeks I would probably be inclined to call a yearly cycle low at that point. If however gold holds above $1500 at the next daily cycle low due in early to mid-January then I would be wary of one more daily cycle down to test the 2010 consolidation zone and 50% retracement ($1400) sometime in early February.
The combination of the dollar rally out of its three year cycle low, a yearly cycle low, and a D-Wave decline are going to produce a very sharp correction in the gold bull market. Before this is over most analysts will declare the gold bull dead. On the contrary sometime early next year you are going to get the single best buying opportunity we will ever have to reenter the secular gold bull in preparation for the bubble phase that should top in late 2014 or early 2015.
As a matter of fact now that we have confirmed that this is an ongoing D-Wave decline Once that bottom has formed it will generate a violent A-wave advance that should test the 1800 to $1900 level rather quickly later this spring.
Serious money will be made during the A-wave advance. One just needs the patience to wait for the D-Wave to bottom before jumping back into the pool.
Nice job Gary. I was just thinking you should write a post about the D-wave.
ReplyDeleteFelipe,
ReplyDeleteI have to see how things look when we get there, as I mentioned I was going to do with the 300dma...I got the strong bounce directly off the 300dma I expected, but as I watched it began to rollover, the weakness was still evident. I need to see follow through, typically I will place a buy trigger directly on a MA and nail the exact bottom, but if confirmation of that bottom fails I bail, so I will do the same on the 75 week moving average. Whether or not that bottom holds is to be seen, as the 300dma failed after a $10 bounce the 75wma may fail also. My main focus is getting in at the bottom, if its short term so be it, if its a permanent bottom thats even better.
Well if gold will go back up to 1900 in the A wave then does that mean silver will go back to the 40s in the A wave?
ReplyDeleteNo disrespect Gary, and Ive been a subscriber for over 2 years, but to me, D-wave = Elliot wave = works great with hindsight.
ReplyDelete.
ReplyDeleteAaron,
ReplyDeleteA D-wave has nothing to do with EW. A D-wave is a regression to the mean profit taking event that follows a long C-wave advance.
Heard something on local radio this AM that i thought was interesting......MSM is already starting to warn Joe six-pack about $5 gas this summer due to "tension in the middle east".....
ReplyDeleteI understand that, but the general wave theory be it a ABCD wave or the ridiculous elliot wave, it can be fitted to suit your needs...you yourself have been on and off the D wave for a while now...ofcourse at one point it will work. But in terms of predictability, its pretty useless wouldnt you say?
ReplyDeleteAaron,
ReplyDeleteWe trade based on cycles which have been pretty useful wouldn't you say since they have allowed us to make a pretty decent profit while almost everyone else is losing money?
The only strategy that I would base off a D-wave confirmation is that the A-wave that follows should be bought aggressively.
Cycles have been VERY useful. It has made us lots of money...I dont see the added benefit though of a D wave. IC are to be buoght, period.
ReplyDeleteD-waves aren't something you trade they are just the label I put on the corrective process that follows a C-wave. Once that corrective process has run it's course there is a great opportunity to be had riding an A-wave which is the upside on a new intermediate cycle.
ReplyDeleteThanks WW,
ReplyDeletealways nice to see your comments, your disposal is as good as your calls.
Alf's comments seem to concur:
ReplyDelete"A 21% correction from the peak of $1913 gives a target of $1511. A 26% correction would target $1416. There is one further possible target and that is $1478, the point at which the explosive extensions commenced. The price of an item will often retrace the full amount of the explosive extension.
Once this correction has been completed, Intermediate Wave III of Major THREE will be underway. This should be the largest and strongest wave in the entire gold bull market. The target for this wave should be around $4,500 with only two 13% corrections on the way. "
AMZN - the worse performer on S&P today down 2.3% on a positive day. Troubles ahead for tech..
ReplyDeleteWhile everyone is either buying gold, silver, energy, staples, healthcare and utility stocks the best of breed bank or Wells Fargo & Co. (WFC) keeps rolling along after basing out at $22. WFC has the 200 sma and the rally since Thanksgiving is starting to pull up the 50. We've got a 13/34 EMA buy signal and we've got dividend increases later in 2012. Earnings are January 17th, 2012 so if you have yet to get on board get you some! :-)
ReplyDeleteaapl is also down...this is prob just a head fake...
ReplyDeleteGary,
ReplyDeleteI believe the time has come for a burrito bet. I do not agree with the call for gold to bottom in late January. I believe gold is presently forming a bottom. Consider:
* The last intermediate cycle was incredibly short at 13 weeks. Rather than see the current cycle stretch into the normal timing band (5 weeks to go), these two cycles could act as one big cycle, meaning we are effectively on Week 26 and seeking a low.
* Gold's daily cycle may not have bottomed 2 weeks ago. Extending the November cycle puts us on Day 26 and seeking a bottom for both a DCL and ICL.
* The dollar's daily cycle, which began as we entered Dec, just set a new high on Day 20. It has 8 more days to seek its low and so should roll over presently. That decline should lift gold into a new daily cycle.
* Sentiment for both gold and the dollar are at extremes and suggest significant trend changes are very close.
* Mining shares are posting a strong rebound today, a typical positive divergence seen at major lows.
So I bet you a burrito that gold begins a new daily and intermediate cycle as we begin the New Year rather than in late January.
Happy New Year!
I wouldn't trust these moves in the miners on holiday volume. They look tempting, but to me it's a trap. Remember one year ago today we had a failed dollar on low volume curve ball only to come back in January to a huge up move.
ReplyDeleteI think I already won the burrito bet on the character of the gold bull changing and there would never be another D-wave :) Human nature never changes. We also go a violation of an intermediate bottom which was never supposed to happen except at 8 year cycle lows.
ReplyDeleteRegarding a bottom here. I think we are going to put in a short term bottom for sure. $1520 is the 38% fibonacci retracement. But I'm not comfortable calling a daily cycle low after only 9 days. And I don't buy that gold is still in a continuing daily cycle.
My best guess is that both gold and stocks will move down into the next daily cycle low together with gold bottoming a little before stocks.
Gary, how will you call the D-wave bottom?
ReplyDeleteYou both always maintained an IT cycle will never fail, unless during an 8 year low only. These claims were made up until very recently, when I proposed the IT cycle could fail.
ReplyDeleteCan I get mine with guacamole?
I agree with Gary this is certainly still part of a new (4th daily) set on 12/15, no way this is a continuation cycle.
Well, I never said gold would not suffer post-parabolic hangovers again, just that the ABCD stuff would no longer work after the 2008 liquidation. Case in point is that over the past 3 years the methodology has had almost no predictive value. Just like Elliott waves, the ABCD interpretations have consistently needed to be changed to explain what has already happened.
ReplyDeleteSo the hunt for gold's low really pivots on the daily cycle count. I say Day 26 while you say Day 9. I suppose we'll find out soon enough since my cycle count is at the far end of the timing band.
I would also note that the 80WMA, which has held all declines save for the 8-year cycle decline, is at $1479, so gold really doesn't have much room to fall given 4 more weeks to do so.
This comment has been removed by the author.
ReplyDeleteWith all due respect to the Doc,
ReplyDeleteThe dollar had a trend line break, indicating a new daily cycle.
A new daily cycle for the dollar will likely cause stocks to head into its daily cycle low, dragging the miners down with it.
Actually Doc said an IC should never fail. I just took his word for it after a quick look at the long term charts but I failed to notice the 04 IC that did fail. I think WW pointed that one out.
ReplyDeleteOne thing I've learned over the years is that every time in history is unique. One can't base a trading strategy on what happened before.
But human nature never changes. In that regard certain things will repeat, never in exactly the same way, but in general. D-waves are a normal regression to the mean profit taking event triggered by a parabolic C-wave advance and human emotions. That will never change. So to say that the environment had changed because of the financial crisis in 2008 and we would never see another D-wave one would have to assume that human nature had also changed.
Since I doubt one financial crisis somehow altered human genetics it was a pretty safe bet that we would see another D-wave at some point.
We've had a ton of people expound about various trading strategies over the last several years. Moving averages, EW, historical charts, cycles, The Great Doubling etc. etc. They all work at times and they all fail at times. There is no holy grail trading strategy that will work every time.
Traders have short attention spans so they tend to latch on to who ever made the last "great call" and assume that that person has it all figured out. Unfortunately it's never long before the market decides to "break" their system and then the crowd migrates to the next guru.
I just try to adapt in real time to changing market conditions and if the market decides it's time to break my system I try to recognize it as quickly as possible and figure out something else that is working.
Gary's last comment is the simple truth, it's just the way things work plain and simple.
ReplyDeleteI have been saying for months that when gold begins to correct it would retrace to the 300dma, if not the 75 week moving average or lower. A post parabolic regression to the mean is a regression to the mean, gold could care less whether or not it resulted in a IC failure, nor does it care whether or not this is a new daily cycle or a stretched one.
ReplyDeleteI dont like burritos :)
WW,
ReplyDeleteI hate to say it, but the last sentence of your previous post was gold.
theDoc.. if ABCD's are like EW, then so is cycles because all 3 experts had differing opinion on the previous bottom at 1565. Only Poly's came out right. Again, only hindsight validates. Cycles have had less predictive value apart from minimizing losses at bottom trades.
ReplyDeleteBTW, its glad to see that you are ready to combine the previous & current IC into one. Just a couple days ago before the drop from 1640, you were vehemnetly opposed to it.
Great discussion Doc, Gary, Poly, WW!
ReplyDeleteLearning a ton from you guys!
Final bottom or not, I think it's a great time to start loading back up on long term silver holdings. The last time in 2008 I was early and bought at an average of 12 dollars but sold almost at the top this spring.
ReplyDeleteI think DOC has some good points, and EVERY gold guru seems to think gold will bottom late January 2012.
ReplyDeleteThe price action in gold starting with the break on December 12 strikes me as untrustworthy, in the following sense: while I respect that it triggers a new technical perspective, my sense is that it will look like an aberration on the chart, looking back some months from now. I really enjoy Gary's blog posts, and I can see how the price action post 12 December forces a new perspective. However, the D-Wave threat which appeared as a possibility some months ago, and now appears as a certainty now, is still a theme that could confound us all. The 1523 low today is awfully close to Alf's 1511. Also, the levels in the 1400's are well known. My point: pretty soon now, gold is about to frustrate any shorts, and any who were waiting to get in. After all, gold has bewildered long for nearly 4 months now, which is a really healthy stretch of time to have killed people's beliefs.
ReplyDeleteGreat blog, Gary.
Gary,
ReplyDeleteIf gold continues into D-wave decline, why then SPX is growing?!
Is it possible, that SPX will not follow?
DeMark musings:
ReplyDeleteEURUSD has met its downside target WEEKLY of 1.2867. Kevin Depew on his Twitter feed says that longer-term, he agrees with economists forecasts of <1.20 before rebound mid 2012 to 1.40 or so.
S&P futures still looking for 1267 to record a deferred DAILY SELL Sequential 13 signal. MONTHLY Sequential SELL needs to hit 1320-1330 area. Nasdaq futures have already been in Monthly Sequential SELL since last April - so 3 more months of that signal. That divergence in S&P and Nasdaq is indicative of dispersion, and is healthy for the general markets. Once again, I am reminding folks that we are emerging from a 12-YEAR S&P SELL signal next week. Not to say that all the nuttiness is over with, but there are going to be great opportunities in stocks in the years ahead!
Gold futures GC showed their hand last week when they qualified a downside break around 1620/oz. WEEKLY, GC is on Bar 6 of 9 down, so 3 more weeks of downside until a possible 4-week countertrend rally, which corresponds to what Gary says in this article. On a MONTHLY basis, we are on Month 3 of a downside reaction to a perfected SELL Setup that happened in September, so once again February should show easier times.
Hate to say this guys but the crystal ball is broken. Gary says we are now in a D wave...was a B wave till we hit 1535...as they say, hindsight is 20-20. I have heard this is the bottom, or 1100, or 1200, or 1400 or 1500...we will know when it happens...so much for predicting with cycles. Starting to add at current lows...will add at major dumps...otherwise we may miss the bottom...buying silver at 26 better than 40.
ReplyDeleteDoc:
ReplyDeleteHow do suggest trading the bottom? If you are early, which is the obvious risk of your call. you are subject to massive gap risk if gold resumes its waterfall decline overnight.
Miners are benefiting from the stock market bounce today. If SPX reclaims and defends the 200 DMA I'd be inclined to agree with you, but if it rolls over today or next week the miners and perhaps metals as well will go down with it.
We may miss upside but it seems that waiting for stocks' daily cycle low is the safe entry point?
Gregor makes some good points. $1,523 could well be close enough and when everybody is waiting to buy gold at $1,420 - $1,450..... well, it most likely won't get there. Have to rely on Gary's cycles for an entry point here.
ReplyDeleteRB,
ReplyDeleteGold and stocks are two different asset classes with different cycle timing bands.
Gold is definitely close enough just be prepared to weather more drawdown if it still has another 10 days down into a more "normal timing band" for the daily cycle low.
ReplyDeleteRight now we have a Bollinger band crash trade in play. The bounce may be solely due to that instead of a real bottom.
I never assume a short cycle because most of the time the run a normal duration.
I would also caution to wait till the end of the day and see if the rally in the miners is still there.
ReplyDeleteI subscribe to both Gary and Doc and I find it interesting when they disagree.
ReplyDeleteOne thing that has bothered me over the many months I have been a sub here is that something of a cult of personality tends to develop and some people like to blindly follow Gary (or Doc) on every trade without thinking for themselves.
While they both have good track records, I never follow either of them exactly. I look at their ideas, compare them with other information, and then make my own trades and take responsibility for my results.
For example, I picked up a little AGQ, AG and EXK today even though Gary would probably say I'm too early. It's just a small starter position, but if Doc is right and Gary is wrong, I'm already on board the train. If Gary is right and there is a big drop ahead, my position size is small enough to limit the damage.
So keep disagreeing! It's very helpful to have an open mind about multiple possibilities.
BTW, if you want to add Poly's excellent analysis to the mix, he is now sending out his cycles opinions in a free report. You can get on his list by emailing him: tradepoly@gmail.com
I've got half a mind to start accumulating here. We know we have an A-wave ahead of us and further downside is probably capped at 10% or less from these levels. Taking a 25% or even 50% position with the potential of loading up if we do correct another 10% doesn't seem so unattractive right now. The reality is that no one is going to know if gold has bottomed until we are late enough into Gary's cycle timing band. If it's this week it'll be "too early, sucker's bounce" if it's next week it'll be "too close to stock cycle low", so on.
ReplyDeletePeople are shorting oil, gold, silver, copper ??
ReplyDeleteOne thing I will point out is that no bottom can form without a swing. We obviously can't have one today. So unless you just think you are getting an exact bottom here you could just wait for a swing and improve your odds of not having to weather a drawdown if your timing is too early.
ReplyDeleteLast year, we had one heck of a rally from 1360 to 1425 in mid December to year end which was given all back in the first 2 trading days of 2011.
ReplyDeleteThis year, we are having a panic sell off into the year end. Maybe we get one heck of a snap back in early 2012.
Gary,
ReplyDeleteSure, stocks and gold are different.
But you were expecting a major decline of SPX in 2012 and the dollar rise - after which Bernanke would begin QE3. And that will drive the A-wave in gold.
Do you still hold this view?
If gold moves below 1300 and Silver below 19, can we say this PM bull market might be dead? At what point would one have to consider such an assessment?
ReplyDeleteVer,
ReplyDeleteThat's exactly why I started adding today.
Trying to hit the exact "bottom" is a fool's game.
If you think we are very close now why not get in the game a little early?
Too many times in the past I have waited for the bottom, only watch the market reverse and take off without me. I then had to chase at higher prices.
Poly
ReplyDeleteJohn Hathaway is on cnbc talking mining stocks
RussianBear,
ReplyDeleteEverything depends on the dollar. Once Bernanke breaks the dollar rally then we will get our A-wave.
If the dollar continues to rally then we will get stocks dropping into a 4 year cycle low and potential secular bear market bottom next year.
GottaHaveIt:
ReplyDeleteAgreed. I will say it can be daunting to add after taking a bath on a new position even if the account impact is tolerable, but that comes down to trading style and discipline.
Gary:
Indeed on waiting for the swing. Would you you use a swing on GLD or $GOLD? GDX is too volatile to use as a swing signal in my opinion.
$gold
ReplyDeleteMy sister in law and her husband have been buying gold & silver in the past few weeks. I don't know where they get their information from, I know that he has no clue about the markets and she's got less than that. They never have asked me anything even though they know how involved I am with the markets.
ReplyDeleteAs soon as they start panicking or get super depressed and either sell or jump off a bridge, I will know that we have bottomed.
Put me down for a burrito with Doc. I think the miners are bottoming right here. They simply can't get any more hated than they are right now. Every reason to sell -- year-end redemptions, tax-loss selling -- expires on Dec 31.
ReplyDeleteJust a brief macro comment: if you look at the composition of the US economy post 2008, the only organic trend that is keeping things held together is the enormous advance in exports. The rest of the economy, post 2008, is transfer payments. QE to the financial system, and food stamps and unemployment checks to the populace. There is no wage growth, and the economy is deeply, deeply underutilized. The output gap measured in either production or labor terms is huge.
ReplyDeleteBack to exports. They have zoomed above 15% of GDP. At the margin, that is unbelievably helpful. And much of this was made possible by a weaker dollar, and the fact that GDP is flat at best. So the delta on this is big, coming from shy of 9% of GDP to at/above 15%.
My point: the entire complex of D.C. does not want to see a quickly rising $USD. Think of this in terms of risk: a rapid downside move in the USD puts pressure on USTreasuries. But a rapid up move zaps exports. The best forecast is that the FED will tweak things to prevent both outcomes. I would neither bet on a USD cascade lower, nor a sustained move higher.
Ver + Gotta Have It, I am of your opinions on this one. I began building a big core at the recent lows (Cdn jrs). They just can't get much cheaper - if and when they do, I'll finish shopping. If, to take a famous example, Great Panther were to even approach its 2011 high, buying at $1.91 or $1.85 or whatever isn't going to matter too much.
ReplyDeleteSome of these juniors are battered to a pulp. Look at the Yukon; my goodness, when the next wave of the rush begins again, those juniors will FLY out of their lows. When it happens, I'll already have a position.
I would caution that we may or may not have a bottom in miners here but the stock market still has a daily cycle low ahead that will either drag miners back down to test these levels or take them much lower if they don't get any traction soon.
ReplyDeleteOne will have less chance of having to weather a drawdown if they wait for the stock market to move into it's daily cycle low before pulling the trigger on miners.
Nice to see I am in line with you, David, since I respect your opinions.
ReplyDeleteThroughout the past 10+ years of gold's daily cycles, extreme left translated cycles tend to run 14-16 days. we are close, be patient.
ReplyDelete...and since my ultimate fealty is to Gary, I'm waiting a little to add... ; )
ReplyDeleteGary,
ReplyDeleteThere are some missing comments in the premium side from last night that I explained to sophia about TRIN.
http://tinyurl.com/camdx5q
ReplyDeleteLeBron
SLB trading like small cap...
ReplyDeletemight start thinking about putting on equal parts short stocks long gold soon. possibly on the close or tomorrow morning.
ReplyDeletegold target is still about $50-60 lower at 1475 or so (377 day == 75 week) but i feel i'm starting to quibble too much. agree with doc that the bottom will probably come sooner rather than later.
i'll cover the stock shorts and add to gold when/if that target is met.
have been reading a lot of people predicting $1200, $1300, $1400 and think that is wishful thinking. unless what we're seeing is a derivative meltdown which seems unlikely but always on the back of my mind.
MrM,
ReplyDeleteAre you sure? I looked back all the way to 10am yesterday and I don't see anything that needs to be approved.
WW you trading the swings today, been best I've done in a while.
ReplyDeleteGary must say learning the cycle counts has helped my trading, even my daily scalps. Thanks
Kmisak, that's very kind of you, though I would caution you that my track record stinks of late. I would listen to Gary, Doc, or Poly instead.
ReplyDeleteI do think that whether you buy now or in two weeks, it will hardly make a difference in a year's time.
I would caution everyone that is getting an itchy trigger finger to wait till the stock market moves into it's daily cycle low. Buying ahead of that is just asking to get squashed.
ReplyDeleteMy mistake Gary, she asked the question on the last "portfolio change" post here on the blogger site which I answered. They are still there.
ReplyDeletethat is very likely the wise call.
ReplyDeletei, like most people i imagine, am very often early and very seldom late
wouldn't hurt to wait for monday at least
Or he.. Can't assume that "sophia" is a female, could be an affinity for Bulgaria..
ReplyDeleteMrMiyagi, why don't your in-laws ask you for advice?
ReplyDeleteA word of caution to people who start buying or even worse leveraging on Doc's bottom call. Doc has been heavy in PM positions for some time and has had a tough time trading for last couple of months. Anybody following him for last few months would be down substantially.
ReplyDeleteHis trading style is very unlike Gary, who manages very tight stops and changes course in a moment to preserve capital.
Eamonn,
ReplyDeleteBecause he is an idiot and she`s clueless.... Typical following the crowd keeping up with the Joneses and then some crowd.
nice reversal in the 10yr today. back below 1.9%
ReplyDeleteeffective volume saying /es due for a ~25 point evaporation in short order.
Mr M
ReplyDeleteLOL...
They sound like a great team
Bunch of mixed signals out there today. TBT/TLT not buying today's up day.
ReplyDeleteI think the year closes tomorrow with a red day.
SLW and SLV have come back nicely intraday though.
Allright,off to look at more houses.
SFGF,
ReplyDeleteYes they are quite the pair, they spend money like they have it. Which they don't, always buying crap and unnecessary junk, always going out for dinners and drinks with friends, the list goes on and on. But she's my wife's sister...
ver,
ReplyDeleteWaiting for at least a daily swing low in gold would be prudent. If my view is correct, a swing would mark a daily cycle low, and we would have a hard stop below the recent low. I would also note that the first daily cycle within an intermediate cycle tends not to be very powerful... gold tends to see a rally acceleration with each daily cycle. So a very conservative trader could wait and buy the next daily cycle low, assuming it confirms my view by forming as RT.
I would note that mining shares and silver are severely undervalued by about every measure I use. I personally would prefer GDX here to gold because the initial snap-back could be vicious.
I would also note that miners continue to press higher today in the face of weaker gold... a key sign that a trend change is close. If gold forms a swing low in the next couple of days... along with strong continuation in the miners and a swing high on the DX... my confidence in a low being set will skyrocket.
MrMiyagi, I wonder if they sell at the bottom LOL
ReplyDeleteI wouldn't put much stock in the miners move today (no pun intended). The miners are stocks and over the past year they have been more closely correlated with the stock market than the POG.
ReplyDeleteI have zero confidence in the miners to presage anything. In fact, I won't trade them. I'll stick with the metal but that's just me.
gary, finally you are agreeing with what I have been saying for MONTHS! Gold will bottom most likely around 1425, but with a range of 1380 to 1445. This is a wave 2, and must retrace at least 38-39% of the advance from 681 to 1924. This yields 1445 at least, but likely a bit further down. I wish you would be willing to combine cycles with elliottt wvae, which has served me extremely well.
ReplyDeleteSilver is leading the gold in the rebound from the lows. Let's see how long this dead cat bounces.
ReplyDeleteI'll say it again. There is no need to jump on miners or gold right now. Even if this does turn out to be the bottom it is going to get tested when stocks move down into the next daily cycle low.
ReplyDeleteThat is when you want to enter positions. At that point you will have all asset classes pushing higher and the dollar dropping. Entering now you are just going to watch positions melt again in a few days as stocks start to drop into the next daily cycle low. And if this isn't a bottom then when stocks start to move down gold and miners are going to take a real beating as this would have been only a fakeout and not a real bottom.
Be patient and wait for the stock market to do it's thing first.
Gold churning out a reversal here off the 335dma, trying to hold back above the 300dma. See if we get a close above the 300dma and follow through tonight.
ReplyDeleteWW, You dont' anticipate a drop lower below 1535 range into 1495?
ReplyDeleteThere is a good chance we bottomed today.
ReplyDeleteAgreed TZ, a very good chance. I started a position myself.
ReplyDeleteMr M
ReplyDeleteWell I can see why you are staying in a hotel rather than your in-laws...
If the reversal holds we will almost certainly get a bounce, just be prepared to have the low tested when the stock market moves down into it's daily cycle low.
ReplyDeleteStocks and gold dont necessarily have to follow each other though Gary, we saw that earlier in the week. Gold could easily ignore the stock market correction and just stall instead of drop and retest the lows.
ReplyDeleteAt ease,
ReplyDeleteGary said:
"If the reversal holds we will almost certainly get a bounce, just be prepared to have the low tested when the stock market moves down into it's daily cycle low."
My thoughts also.
At ease,
ReplyDeleteIts possible the 300dma holds as I initially anticipated, we have to see how gold reacts to the stocks moving into a DCL.
Miners always get dragged down by a daily cycle low in the stock market. The selling pressure is too intense to completely resist. Also a daily cycle low in stocks will almost certainly correspond with a dollar rally. A strong dollar has been pressuring gold for months now.
ReplyDeleteLike I said this may or may not be "the" bottom but it is likely to be tested sometime in the next couple of weeks when stocks drop.
well crap
ReplyDeletethere are more if / then / and / buts than congress trying to figure out if we have global warming or not
I suggest one look at a chart of gold and miners from the fall 08 bottom. Specifically 9/17/2008. Big move and huge volume only to be lower in a month. Gary and other heavy hitters will call the bottom. It may not be perfect but will be darn close. For what I’ve seen (and correct me if I’m wrong) these major bottoms are not V bottoms.
ReplyDeleteWW, just doesn't seem like a bottom on the 5 minute chart we would expect to see...
ReplyDeleteso 1400 gold is most likely not a possibility? and the bottom in?
ReplyDeleteat ease,
ReplyDeleteSome bottoms have more buying conviction, these are the ones your use to looking at when gold is correcting in an uptrend. Long positions can be taken here if gold closes above the 300dma, but like Gary said, if your expecting to just hold be ready to possibly get caught in a draw down when stocks dip into a DCL. Its possible gold completely decouples from stocks, but when stocks are dropping the dollar will almost certainly be rising and its likely it will pressure gold as it has been.
I 'm not posting this to be a jerk
ReplyDeleteBut facts are good to have on hand. I'm NOT saying buy now, but the MINERS DOUBLED after bottoming OCT 2008 to FEB 2009, while the $SPX bounced and dropped a LOT lower in March 2009...
Miners bottomed Oct 27 area & DOUBLED by Feb 2009
http://www.screencast.com/t/FXbSPrC7WOb
Markets sold off to new lows by March 2009
http://www.screencast.com/t/sh7zHhcP3Avy
MINERS do NOT ALWAYS drop with the markets
Like I said yesterday, clear your minds of further downside and expect a bottom any day now. There is no guarantee that gold is going into the 1400's, but the dollar and stock cycles shouldn't be ignored.
ReplyDeleteAlex,
ReplyDeleteBut they are always affected to some degree by DCL in the stock market.
Gregor, nice to see you here. I've read your blog & posts on SI.
ReplyDeleteGood points about the dollar, and great observations and data. My personal belief is that Bernanke wants the dollar to creep up to give him room for QE3. Inflation is already running > 10% according to Shadowstats (and my own anecdotal viewpoint). A stronger dollar helps mitigate the imported inflation (e.g. China/oil), yet oil is already so high. A declining dollar could put a few nails in the coffin of our domestic economy.
GARY
ReplyDeleteI actually thought you'd say that 2008 was a very different circumstance (And it was) : ]
Yes, they are affected and they dropped really hard into Oct 2008-but I just thought it was good to see how they reacted in 2008 , they rose and DID pullback for a 2nd chance to buy, but then doubled.
THAT just backs your old call to hold a "CORE", and even though we may be in the D-Wave , I'd say we are close enough to take on a "core" if we can be resolved to take drawdown or apply stops.
Personal preference , thats all. Much different if I was running a subscriber service and had to care for "others" money.
Alex,
ReplyDeleteWe are definitely "close enough".
And Gary
ReplyDeleteBottoms and Tops can be anxious enough ,I certainly wasnt trying to add to that. I havent seen you miss any bottoms, and know you wont start now, I just wanted to share that visual-
I've added to my core this a.m., even GOLD $1420 wouldnt bother me...and a nice bounce wouldnt either :)
Ok. My arguments for a likely gold low today (or small chance of a SLIGHT blip lower, but not much).
ReplyDelete-I do not think we started a new daily cycle 2 weeks ago. The pattern that at that time before we dropped into today was a bear FLAG. A flag is a *continuation pattern* of a move and thus I think the low here is a end move of the daily cycle started mid nov. Thus we are not in a new cycle which has a bunch of days left, but the ending of an older cycle RIGHT NOW.
You can argue that the sept 1535 low was a short INT low and this is a new INT cycle happening now, OR you can COMBINE the two (starting at July INT low) (as per DOC comments) and call it a SINGLE INT cycle. I will address both:
IF YOU COMBINE THE TWO AND LAST INT CYCLE WAS JULY:
-With almost no exception (minus 2008), an INT low does not go lower than the previous INT low. If we are still in a single INT cycle since July then the previous INT low then of 1478 has a VERY strong chance of holding (100% if you don't count the 2004 failure). Enough of a chance that a low should be bet on here with at least a few % risk. Not buying and waiting for lower than 1478 has a VERY low chance of coming true.
IF YOU SAY THERE ARE TWO INT CYCLES-JULY and SEPT:
-If you argue sept low was an INT cycle and we are currently in a second INT cycle, then consider the following: Except for 2008 crash, no INT cycle has ever bottomed lower than the previous TWO INT cycles. 2004 violated a SINGLE previous INT cycle, but NEVER TWO. If you want to argue Sept was the start of a new INT cycle, then TWO CYCLES AGO is still the July 1478 low and again should be expected to hold (not counting 2008). Reason #2 to not expect lower than 1478.
MORE REASONS:
-You will notice yesterday how I said "that's it...I'm watching and not doing anything for a while. I've had enough". You will also notice other people taking this same view including gary, etc. Well...Markets have a way of causing the exact wrong behavior, COLLECTIVELY, at the EXACT WRONG TIMES. That I took that view, others I knew, and people on the blog (standing aside and looking down) is a good indication that the low was imminent and thus the market had trained us NOT TO BUY IT. Exactly as markets do. Thus a low today would have occurred at a point where the greatest number of us were unwilling to buy it.
CONTINUED
ReplyDelete-My general trading technique is based on picking buy levels which I think will hold and then leveraging with a small stop. I said I suspended that approach in the last day or two 'to watch'. Well...the next lower buy point was WHERE WE WENT TODAY! But I watched it. Funny how that works, eh?
-There is a momentum indication that denotes downside exhaustion. Forgive me for not describing it directly, but it too is saying a bottom is imminent. I noticed it in the last day or so.
-The july INT 1478 low which I gave two arguments for holding was after a 2-3 month consolidation and resulted in a strong launch point of TEN STRAIGHT UP DAYS in gold. A VERY strong launch point. The strength and significance of that point is another reason it is unlikely to fail. Go ahead and try to find other parts of a gold chart with 10 straight days up and you will see.
-The gold/metal market saw many people sucked into the blowoff tops this year. *WE* didn't buy the tops, but much of the masses *DID*. Therefore a lot of dumb money is sitting on losses in this sector and going into the end of the year. Thus what we are also likely seeing is this group of people selling their losers for tax loss reasons. This is causing all this selling pressure in the last week (which is NOT normal for gold - usually it goes UP). If this excessive downside action is tax selling then it will end tomorrow and potentially the action today is already sensing the end (who wants to wait until the exact end of fri to sell? Even trading losers want to take friday's off).
-Finally, I think 2008 won't repeat the same way cause markets simply don't do that and the central bankers don't want it either. People suffered and learned horrible lessons in 2008 that they are unlikely to repeat for many many years to come. That means a repeat of the same action is unlikely.
----
So these are the multiple reasons I argue we will NOT go lower than 1478 and that there is a good chance the low today is already the low.
Comments welcome.
(I currently have no position other than core. I'm still pausing and thinking like most - which is the exact wrong thing to do when you are at a bottom, but that is how bottoms work. If, of course, I am right)
FWIW--I've heard "close enough" way too many times now and will definitely be waiting for a swing to enter!
ReplyDeleteHow is this for another good indicator and a likely 'jab' at getting people to sell at a bottom:
ReplyDeleteMain front headline of bloomberg right now:
"Soros Sees Gold Prices on Brink of Bear Market"
www.bloomberg.com/news/2011-12-29/gold-bubble-seen-by-soros-ends-bull-year-on-bear-market-brink-commodities.html
points:
-Soros is an insider type tool similar to buffet. They use his comments, or SEEMING comments, to move markets.
-Soros was not saying gold was IN a bubble a while ago. He was saying gold is THE ultimate bubble (as in in the future when this all ends.)
-And the REAL KICKER. The title says Soros sees gold on 'brink of bear market'. TRY TO FIND ANY BACKUP OR CONFIRMATION OF THAT STATEMENT IN THE ARTICLE. THERE IS NONE I CAN FIND. THE TITLE (and perhaps the entire article) appear CONSTRUCTED for a purpose. A hit piece to shake out final hands by my measure. They know what they are doing and they are good.
Unless something has changed in the last 2 months, Soros has been loading up on miners, even dumping some gold to buy them.
ReplyDeleteI look at what he does, and ignore most of what he says.
Find where he said that in the article and copy the line here to the blog.
ReplyDeleteSB,
ReplyDeleteI agree with your comments - follow the money and actions. And I'm not really telling you to do anything.
I just challenge anybody to find the backup of the article title within the article and post it here.
NG was $1 @ 2009...
ReplyDeleteAgain, I don't listen to what he says, or even care. Instead, look at insiders and major shareholder purchases of mining stocks and you'll find his name all over the place as of the Sept. 30 reportings.
ReplyDeleteJust pointing it out and I don't use this for trading purposes, so wouldn't recommend anybody buy just because he was buying all through the summer.
TZ,
ReplyDeleteI agree. I didn't see the article you linked, but know enough that Soros is one shady character. :)
Well that was quite the tape paint job on the ES, the hilariously low volatility gives it away. One of those no-brainier days where you just buy even the smallest of dips and rest assured that you will be able dump it all to a greater fool at the HOD on the close. When you recognize a day like this, I think there inst a higher probability trade on this planet.
ReplyDeleteWW, TZ, pretty safe to go long here now on gold futures?
ReplyDeleteWhat we need to see now in the next 24hrs or over this weekend is a hit piece on gold from the WSJ also.
ReplyDeleteJust wait....
I caught up with the discussion today regarding whether this is "the" bottom or not. My thoughts are simply that it could be, though I wouldn't bet the ranch, so to speak.
ReplyDeleteAs Alex, Gary, Doc and others mentioned, it certainly is close enough, especially for those with a longer time horizon. Rather than try and get the exact bottom, it might be best to start legging into some holdings with size one can hold through drawdowns. One thing for sure, they're not gonna ring a bell to tell everyone when to buy, and one has to be in BEFORE the move.
It'll be interesting to see how this plays out. One the one hand, we shouldn't read too much into the final trading days of the year, on the other, even Gary admits we are getting close.
Good luck to all! :)
The volume on /GC (though to be expected this week) is awfully soft for a major reversal candle, not sure what to make of that..
ReplyDeleteEASE,
ReplyDeleteI suspect a low for reasons I have said but am not in yet. Clearly I'm not 100% sure (who is ever?)
I also like to go leveraged with small stop. I can't see a clear small stop point right now other than today's low but that is $25 down which is rather big for my approach.
I'm just gonna wait a bit and see what sort of pitches I get. Gary, DOC and Poly's views will help too. They haven't come around yet and the confirmation helps.
Strat81,
ReplyDeleteI don't think we can use volume to support or detract from a plan at this time of year. That's what makes holiday trading so tough. It's also one reason Gary might just be right again about another shakeout into the new year, even if I am confident about my current positions.
At ease,
ReplyDeleteHistorically tomorrow has a 31.8% chance of being an up day in the stock market, although gold looks like it wants to hold the 300dma, im waiting to see how futures behave tonight.
Ok, will be watching with you, appreciate if you let me know when you get back in. Thanks :)
ReplyDeleteI've given reasons to think this is a low. I'm likely a bit excited by the thought and I also haven't followed with any money yet.
ReplyDeleteThe reasons were given for people to think through and also comment (especially the cycles stuff) on alternate interpretations.
Even if I get in I usually have small stops and leave fast if things don't go my way. Regardless as it is now I think I just have to ponder things and give it a bit of time to make sure I'm not being hasty.
TZ:
ReplyDeleteMy view is still different; maybe not right of course. :)
We broke important support this week, and on high volume (GLD). I don't believe that's something to ignore, and I also don't believe it to be end of year profit taking as it fails to match overall market volume.
The U.S. economy is currently perceived as being not as weak as Europe's (probably true), and the Eurozone has run out of ammunition saving just Ireland and Greece (which is pretty sad, if you think about it). What do they have for Italy, Spain and Portugal? With a 7% 10-year in Italy, the answer is "not a lot". And look at their attempts to kick the can - I give 'em credit for trying, but zero marks for success.
The US will thus be seen as the safe-place to park money. Treasuries might go even higher (as ridiculous as that sounds today - just as it sounded a year ago). We're once again a safe haven until we are not.
Today's failed Italian bond sale sets the stage for 2012. Add to that the almost certain downgrades which are supposed to have been priced in but I suspect have not. When FrAAAnce becomes FrAAnce, EFSF gets hit too. Bond holders are going to sell first and ask later, and no-one will want Sovereign debt (look at ECB's RECORD holdings - this is supposed to be money used to buy government debt).
All this means that the the Euro is likely going even lower against the dollar, and if so, Gold will suffer a double whammy:
1. Euro holders sell Gold;
2. Gold depreciates against a strengthening dollar.
So I'm staying with my not so cheerful bear position on Gold.
Next stop down is 1445, but I actually think that Gold will go much lower next year. In fact, I personally am expecting Gold to be in decline until attention turns once again to the US economy (and debt). This may occur next year, but it all depends on how ugly it gets and for how long in Europe. US is more robust, so our turn in the barrel could be as much as a couple of years away. That's when Gold goes up.
Key caveat: UNLESS the Fed start printing QEn, in which case I am an instant Gold fan again. :-)
Sorry for being negative on Gold still. No offense intended on those that like the yellow metal. I do want some (metal, not GLD stock), but just not at these prices.
If I'm wrong, I say congrats to the Gold bugs! :)
Happy New Year to all.
Long gold futures on the 300dma. Stop below the 300.
ReplyDeleteWW:
ReplyDeleteIf it's not too much trouble, I've got a couple of questions about your trade (mostly for my edification, I don't trade futures but learning):
a) do you set a hard stop and if so how far below the target, in this case the 300 SMA, to prevent being whipsawed out by low volume spike shenanigans?
b) I'm guessing you all trade on the contract date with highest volume (Feb. 12 for now) so are you setting the stop based on the SMA calculated with the Feb. 12 contract prices or triggering the stop based on spot price / spot price SMA? which data sources are using what, I can never seem to reconcile the prices on Kitco vs. stockcharts vs. gold futures charts provided on the CME site
Thanks and good luck on that trade!
WW thanks reaffirmed my play, did well buying the bounces today using 1533 as bottom, of course didn't get the big spike as more moderate after learning yrs of whipsaws. Flipped at 1646 today as that looked to hold, Your ma's working well. will keep following until don't. Nice to find place where convictions are not set in stone. Good luck with remodel
ReplyDeletemeant to say back in at 1646, not flipped.
ReplyDeleteVer,
ReplyDeleteTrading the Feb contract, 300SMA is calculated on that contract, I use ThinkorSwim. My stop is at today's pivot before breaking out back above the 300dma, $1540. Gold shouldn't move back below the 300dma, unless today wasn't a bottom. If its a short term bottom I will be trailing price until my stop is hit. If stock futures start to dip when European markets open gold may dip and hit my stop, we'll see.
Riley,
I assume you mean your back in at $1546.
Thanks WW. By the way...
ReplyDeleteNEW POST
Well, not so new anymore but there are crickets over there.
thanks WW, Just got back in.
ReplyDeleteWW yeah, in at 1546, I probably trail as you say to close, but stated hate losing profits.
ReplyDeleteYou still short S+P. I am.
Forget about waves. Gold is up 11 years in the row. A several month correction does not work off gains for 11 straight years.
ReplyDeleteWe are about to bottom on intermediate basis, suck in all you sold bulls, and than go to $1200 / $1300, which will go down and sideways all year next year. The year will be a big red candle.
In other words, after 11 UP YEARS, Gold will post a DOWN YEAR before it enters into a bubble spike phase.
Wow Tiho, that's quite a prediction!
ReplyDeleteHappy New Year!
You herd it here first. Its called a S-Wave aka Slaughter Wave for slaughtering newbs who constantly remain perma bullish in secular bull markets!
ReplyDelete