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Thursday, December 22, 2011

PORTFOLIO CHANGE

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192 comments:

  1. kgc is the cheapest in the sector.

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  2. Thoughts on silver.

    Silver could be building a base in an unconvincing way that would keep bullish sentiment in a lull.

    or

    Maybe this is a bear flag and silver falls to $24.0 or so to break the last bulls.

    I have no idea but would be curious as to what other subscribers think.

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  3. That was a confirmed Flag in $SPX with an upward breakout. Flag has already reached its trading target.

    Also an Inverse H&S in $SPX but has not broken through the neckline yet. You take a long position with a close above the neckline. Not there yet.

    Interesting the neckline is also the 200ma. 4th try at cracking the 200ma. Trading target for successful inverse H&S would be low to mid 1300's.

    The last two inverse H&S on SPX have been failures. Will this one succeed? Time will tell. I will say that if it going to succeed we should see a close above the neckline on Friday. Monday or Tuesday at the latest.

    Also, gold is not performing badly considering the drop it just suffered. The chart is very similar to August through September. That drop took 4 weeks to digest. It has only been ONE week.

    Too many people on this board may be screwing around with options. Their faith in Gary is so high they are starting to gamble (against Gary's instructions). That's why there are freak outs at every wiggle. And not many here are qualified to trade futures either. WW and a few others might qualify, but the rest should be trading regular stock.

    FWIW

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  4. Seems to me we are re-entering the market phase where you can throw a dart at a newspaper (if those still exist) business section and buy the stock it hits with both hands. Sure, one may have to endure some short term pain...but do you really believe the outcome is going to be any different this time???

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  5. James
    I really don't know. The bull in me believes that it can't go below current levels. If Gold and Silver do breakdown, I think it will just retest the lows, not break them. But one thing I know for sure, is that anything is possible.

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  6. James,

    Just average into eagles or maples and don't worry about it. I would think that if the "spot price" (whatever that means anymore) reaches the lower 20's we'll either A. not be able to get physical or B. have to pay 6-8 dollar premiums.

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  7. Interesting article on Harvey Organ's gold site...COMEX amd its troubles with paper gold and silver....if article is correct, gold could blast off and not look back

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  8. Gold bugs are always harping about a blast off and never look back. That's not usually how it works though.

    It almost always requires and extended period of steady gains before an asset can develop the momentum required for an explosive move higher. It took three years to produce the last C-wave spike.

    Right now hot money is landing in other sectors, specifically energy. It will likely continue to drive that sector until it gets stretched also. Once it does then liquidity will start to leak out and look for undervalued sectors.

    This is exactly what is happening right now. Liquidity began leaking out of the overextended precious metals sector and started flowing into oil.

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  9. PM sector is 'overextended'? Really?! GDX is hovering just above a 52 week low, gold just fell out of bed, and silver is actually negative for the year...not to mention BPGDM is in the cellar and forming a double bottom...hmmmm....

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  10. PM was over extended. Gold at $1900 was over 30% above the 200 DMA. Silver at $50 was 80% above the 200 DMA.

    Now the sector is working off that stretch. It's probably not reasonable to expect hot money to jump right back into the same sector again especially after many investors that got in late got burned badly. It's probably going to take time to build up another base to launch the next big push.

    If however the dollar really starts to collapse we could see liquidity flow into everything. If that happens then gold will likely recover quickly and the "bubble phase" will begin.

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  11. The income dividend on GDXJ is $1.212. GDXJ will also pay a short-term capital gain of 2.5 cents per share and a long term gain of 34.9 cents per share.

    GDX is paying a 15 cent per share income distribution, and no short- or long-term capital gain. They took steps to avoid the 60-cent long-term gain they expected at October 31.

    The ex-date for these is December 23, record date December 28, payment date December 30.

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  12. Farm girl,

    How the hell does gdxj pay such a high dividend?

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  13. what a miserable IT cycle this was in gold. Absolute shite

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  14. This comment has been removed by the author.

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  15. This comment has been removed by the author.

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  16. Two positives about the inverse Head & Shoulders in $SPX.

    1. The peaks are sharp and narrow. This type of H&S performs better.

    2. The neckline is slanted against the direction of the potential breakout. This type of H&S performs better.

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  17. I put a 75% probability that Gold see`s $1,400 - 1440 before a move back above $1700

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  18. BM,
    What is your insight of 75% probability of a correction down to $1400 on gold?

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  19. Lots of people are asking me what comes first in the First Half of 2012 - Gold back above $1740 or down to $1,440.
    The technical’s tell me that $1,440is the better probability.
    First macro wedge resolved to the downside with downside gap followed by by a so far not convincing bounce around the 200 DMA (you have to go with a bear flag which is a continuation pattern). For now it still rests on a LT uptrend but if $1530-50 doesn`t hold (and I think it will not) we can see $1400-40.

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  20. It is difficult (for me anyway) to follow what the dollar chart is trying to do here. It might be easier for the time being to look at $SPX. It essentially tells the same story (in reverse). $SPX is saying it wants to move higher. Of course the move might fail. But if $SPX can close above the neckline, that might signal at least one more good week.

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  21. Danno
    "The neckline is slanted against the direction of the potential breakout. This type of H&S performs better."

    I have observed the opposite.

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  22. John,
    Thanks. Duly noted. Although I believe your observation is in direct opposition to 'The Encyclopedia of Stock Charts'.

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  23. Danno, Maybe we're both correct ...I should have noted that I most often use that pattern intra-day on 1 minute charts.

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  24. Okay. That makes sense. The Encyclopedia only discusses daily charts.

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  25. Re SPX, Check out the monthly chart. So far, the move off of the highs is typical of the last couple bear mkts in terms of slope at this number of months into the bear. The snap back to the 200 day felt huge because we got so stretched on the initial thrust lower. It'll take a break of October's high - the first test of the 200 day - to kill this bear for sure.

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  26. Don't mean to beat a dead horse but I'm very curious if a close above the neckline (only 1/2% higher) will trigger more buying.

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  27. John,
    I see what you're saying on the monthly charts. The price patters are similar, although the indicators such as the MACD do differ. I guess we'll see. I'm certainly not making any predictions. Just waiting for some kind of confirmation.

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  28. I can squint as hard as I can but I can't manage to see an inverse H&S on the S&P. There is a well defined triangle continuation pattern though.

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  29. Oh great. I must be losing my mind. (Wouldn't be the first time.)

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=11&dy=15&id=p08281061368&a=241443770

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  30. RUT already broke out of the triangle...

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  31. I can't really see the triangle consolidation in November as a left shoulder.

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  32. Hmm. Yeah. I see what you're saying. In my chart it looks kinda like the left shoulder of late February 2011. I guess that was an inverse H&S. Or not?

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  33. Danno ..I'll give this to the bulls ...it is unusual for a bear to poke at the 200 day this many times ...and I agree, a break of the most recent test (earlier in December) should trigger buying/covering.

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  34. FWIW, I'm selling my most recent longs (energy, regional banks, ag chems) today as we dick around at the 200 day yet again. I'll buy back if we breach those prior Dec highs.

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  35. Put on first short position on the SPX at the 200dma.

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  36. OT: FARM GIRL,
    A while back I believe you were discussing a better test to tell ones doctor about for cholesterol
    testing. Could you share with me what the test was called?
    TIA

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  37. Tommy D,

    That was me telling farm Girl about the VAP test.

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  38. Let me see if I got this right.

    2 weeks ago we were told the most important message we would ever hear was that gold had to wait unitl Feburary.

    Last week we were back on the bubble bandwagon becasue of a one day high volume breakout. I never buy the breakouts.

    This week we are taking a reality check that nothing is going parabolic over the holidays.
    Better to vacation like everyone else.

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  39. WW, I am most appreciated...

    Gotta get my VAP test first thing in 2012...
    Now, to gorge on some holiday foods...

    Merry Christmas, Happy holiday to Gary, fellow trackers and all that tune-in to Gary's blog.

    Peace,
    Tom

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  40. thank you WW, following your SPX short.

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  41. Sherrie,
    You are missing the most important point...the dollar.

    If the dollar breaks down violently then gold is going to enter the final bubble phase of the bull market.

    At the moment the current daily cycle in the dollar is right in the middle of being right or left translated. A failed daily cycle would confirm not only an intermediate top but most likely a three year cycle top as well. That would have high odds of signaling the beginning of the bubble phase.

    All the conditions are in place. Now we just have to wait and see how the dollar cycle plays out.

    I understand most humans want instant gratification but in this business it rarely happens.

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  42. If we were day traders, we would enter trades early even after hours, then settle that day. Probably between 11 A.M. and 2 P.M.

    If we were week traders, we would enter trades for Monday and settle between Wednesay afternoon and Friday by noon. You know the schtich. Expectations seem to be that we will only hold positions for a couple of days.

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  43. Sherrie,
    You know the answer to that one too. In the current market there is no strong trend. Without a strong trend the only way to make money is to buy and sell quickly.

    If we get a trend then we can lengthen our holding times. I'm guessing you are a subscriber so you already know all these things. Are you just upset because the market won't do what you want it to do or are you just being deliberately obtuse?

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  44. There is the breakout above the triangle and 200 DMA I have been expecting.

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  45. This comment has been removed by the author.

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  46. This comment has been removed by the author.

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  47. GDXJ looks like going back to 22-23

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  48. Oa92000

    GDXJ went ex-div today. It was over $1 per share.

    GDX went ex-div also but strange that it didn't open down. There must have been enough buyers to offset it.

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  49. If we were year traders, we would put trades on for the end of the year and settle during January.

    If we were cycle traders, we would put trades on at the bottom of the cycle and settle towards the end of the cycle.

    Originally we were not traders. Hence, the term tracker.

    The cycles are so warped. They have not been hitting regular for years.

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  50. Once I’m convinced that the cyclical bear market has reached its bottom at the next four year cycle low (due in late 2012) then I will concentrate on aggressively growing the model portfolio again, mostly by investing in the secular bull market in precious metals and possibly in agriculture.

    Good-bye. Not that anyone cares.
    See you at 4 year cycle bottom.

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  51. Sherrib

    I feel your frustration. I think we are in a time than know one really knows for sure the next direction. There is no crisis yet. And crisis I mean daily headlines and market panic. It's all contained or hidden from the public until they can't hide it anymore.

    Next year is an election year so there will be tricks that we can't even fathom that the boys on wall street are going to play.

    See you at the bottom whenever that might be.

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  52. Guys, all the best for the holidays! I just got called back to work I don't know for how long but I'll take it. Xmas came a little early for me. Stay thirsty my friends

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  53. GDX's dividend was only $0.15 or < 0.3%. On the other hand GDXJ yielded about 4%.

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  54. SherriB's attitude is a reflection of the very very low sentiment in the PM sector. I keep seeing predictions of lower levels, and lots of people waiting for that to happen. Typically, the market isn't so generous.

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  55. Sherrie, like many people, want to go back to the Old Turkey strategy that worked so well last year and in the spring. Unfortunately the market isn't in that kind of environment right now. Trading that strategy will just cause one to get whipsawed back and forth and go nowhere for months. Or worse, buy high and sell low.

    I understand the frustration but that doesn't mean we can bend the market to our will. We just have to make the best out of what the market gives us. Right now it's not giving us a strong trend so we have to trade more frequently in order to make any money.

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  56. "How the hell does gdxj pay such a high dividend?"

    GDXJ owns stocks in companies classified as Passive Foreign Investment Companies - non-U.S. corporations having 50% or more of their assets invested in cash or securities, or having 75% or more of their gross income originating from passive sources, including but not limited to interest, dividends and rents. In other words, these foreign companies primarily derive their revenue streams from investments, rather than operations.

    GDXJ has to take its share of the income of the Passive Foreign Investment Companies into its own income, and then distribute 90% of that to shareholders (net of expenses not covered by the dividends and interest on other securities, securities lending, and so on).

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  57. TommyD -

    I get my cholesterol checked every year, to be sure it stays over 200. The Harvard Health Study (40,000 men for 40 years) showed absolutely no relationship between cholesterol levels in the food you eat and cholesterol levels in your blood. There also was no relationship between cholesterol levels in the blood and heart disease.
    But there was a slight - not statistically significant - relationship between cholesterol levels in the blood and strokes. The higher the cholesterol level, the lower the number of strokes. So I try to keep mine up.
    Incidentally, this study was the largest and longest study of any medical condition ever. The doctor/researcher who headed the study has written several books blasting the myth that cholesterol has anything to do with heart attacks.
    But Lipitor has been a $6 billion a year business for Pfizer, one of the largest spenders on lobbying, and he has been drowned out.

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  58. This comment has been removed by the author.

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  59. A couple words on oil versus gold. Oil will always win out since it makes sense to trade something that directly affects real inflation. However the problem with oil is that it will cap as soon as the economy falters, ie real demand can't afford it. This is what, imo, caused the last oil crash...printing=run to the best inflation hedge=oil, and then we start talking about $300 oil, and then we crash...crap, now what! Gold, back in we go...

    I have locked my old turkey play in metals, doesn’t make sense for me to trade out of a long-term winning trade to save a couple bucks. A couple quality miners, in my opinion, and physical.

    In terms of Oil, nice to get back to looking at companies again in terms of fundies. With a slightly bearish to positive oil market, ie we stay above $75, it is pretty easy(ah hum, easy in market terms) to make 20%+ off of dividends, selling calls, and capital gains.
    Trading into this sector is not a bad idea. I, however, will not be bouncing around in the sector with overnight trades, I see a more prolonged venture. Of course if oil breaks out and surges in a parabolic or mini-parabolic move, that would be the sell everything button.

    Good Christmas, and Happy Turkey day all.

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  60. Long position confirmation on $SPX.

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  61. WW, at ease,

    Took a short as well EOD, thanks for posting.

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  62. The market is almost certainly going to confirm a right translated daily cycle next week. It will also likely confirm a right translated intermediate cycle. Right translated intermediate cycles are what bull markets are made of.

    What is rule #1?

    Be careful you aren't taking low percentage trades just for the sake of trading.

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  63. Gary

    For the market to confirm RT DC and IC next week one could assume that conversely the USD will likely be trending downward?

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  64. the COT looks pretty bullish for gold...but it did last week as well and not much happened as a result

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  65. Merry Xmas Gary and followers!

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  66. Gary,
    You're probably right, I'm never good at shorting. Just a small play for me.

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  67. Gary,

    My stop is a right translated cycle confirmation.

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  68. I'd like to throw in my week ending observations F.W.I.W.

    I am still in my MINERS as this market seems to be melting up. Light volume Often floats it upward. As for GOLD...still a 50/50 picture short term for me.

    I can EASILY see a drop to $1450 area and the chart still looks great!
    Or I see us drop down to the recent lows and maybe that does it.

    BUT-ON THIS CHART- I adjusted the STOCHASTICS to 60 (and all Gold lows hit -20 pretty clearly). NOT THIS LAST SELL OFF...More downside coming??

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

    ON the chart ABOVE---See the SOLID PURPLE SUPPORT LINE holding recent lows (good enough, and retest that to get buy signal??) It held the break off the top 2x

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  69. ALSO on that above chart..

    See the BLUE DOTTED LINE FOR SUPPORT
    Lines up with that ORANGE DOWN CHANNEL and other supports. DEFINITELY would get that stoch 60 and my Buy Signal then.

    HOWEVER- the C.O.T. chart shows extreme bullishness. Is this DATA rumored to be rigged to mislead the masses??

    http://www.screencast.com/t/WK5Wou5LF5O

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  70. So for me, it's still unclear with cycles, T/A and so on. There are a couple of different scenarios that can play out.

    Be safe all! See you next week (maybe continue another low volume melt up?).

    Sometimes thats what looks best for yr end on a presidents 3rd yr...a positive end. : ]

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  71. Ryan,
    If you know you aren't good at some thing then why do it, especially when doing it costs you money?

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  72. Blogger Gary said...

    The market is almost certainly going to confirm a right translated daily cycle next week. It will also likely confirm a right translated intermediate cycle. Right translated intermediate cycles are what bull markets are made of.

    What is rule #1?

    Be careful you aren't taking low percentage trades just for the sake of trading.

    December 23, 2011 1:08 PM


    I guess that would be indicating a Dollar Drop and GOLD surge , if it plays out that way?

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  73. Alex,
    Maybe maybe not. The market rose today despite a higher dollar. oil has been rising despite a strong dollar. Lately the only thing that has been unable to fight a strong dollar is gold.

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  74. Thx Gary ( I still feel strongly about Gold and the Miners so far, but you're right...Its ALL ABOUT THAT DOLLAR lately).

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  75. ..add to my last comment ...Gold Soon, but maybe just not right here and now.
    It looks 50/50 right here.

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  76. Gary,
    I want to try and learn and get better on shorting. If the trade doesn't work out I'll chalk it up as tuition.

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  77. Ryan,
    Selling short is a very tough if not the toughest way to make money in this business. Considering that, why would you voluntarily choose to do something that has low odds of producing profits?

    Successful short selling involves reading financial statements and ferreting out sick companies. If you aren't prepared to do that kind of due diligence and instead think you can successfully make long term money selling short with no more effort than looking at chart patterns you are almost guaranteed to lose money over the long haul.

    Why do something if your odds of success are low? In this business we can choose to only take trades when we have an edge.

    One of the goals in writing the SMT newsletter is to try and break people of destructive habits.

    I learned those three trading rules the hard way, by losing money. One can either learn from my mistakes or you can also learn the hard way. (It will be cheaper if you learn from my mistakes)

    Trading just for the sake of trading, whether or not one has an edge isn't going to earn you any long term profits. And if you aren't in this to accumulate long term gains then why are you doing this?

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  78. Perhaps treasuries are about to implode and that's why the market is taking off?

    Look at the daily and weekly chart for TBT, for example, or $tnx. Oversold as can be and positively diverging. Of course they can get even more oversold, but probably worth a gamble with a tight stop.

    That would be the fed's nightmare scenario, imo--mass dumping of treasuries. It's the one thing that could replace QE in terms of spiking the money supply.

    I have a sneaking suspicion that gold and silver pop next week, then perhaps retest the lower BB the following week or two. They should start basing for real this time. It really all depends on the 10 and 20 year treasuries though. Should be interesting.

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  79. If rates start rising i have a feeling all of those excess reserves parked at the Fed come flooding into the system. Once a critical threshold is reached, the herd will rush for the exits. Of course, no one knows what that threshold is.

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  80. I jumped on WFC on December 14th when Gary made his DCT call on the USD and I'm +7.42% fro m my cost basis of $25.86. I can't think of a better run bank in the US and a sector of the market that'll suprise everyone in 2012. I only wish I would have jumped on them the Wednesday before Thanksgiving. Oh well.

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  81. Here's one to ponder:

    Weekly chart of $spx:tbt

    Either stocks are about to pull a 2008 and crash harder than yields;
    or stocks and yields go up, with yields going ballistic.

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  82. Gary,

    I see you are impressed with oil but didn't we get too far too soon - four days and almost 8% increase. The sentiment must be very bulish for oil.
    Also - in equities spring 2009 the first IC after 4 year low was RT and then we had LT IC to consolidate. Charts look quite similar.

    I am not asking if to get in now. I am concerned when to go out :)

    Otherwise Happy Christmas to all SMT-ers here :)

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  83. Neither oil nor XLE are stretched very far above the 10 DMA. Sentiment is dead neutral. Oil is on the 5th day of a new 50-70 day cycle.

    My expectation is that oil is preparing to breakout above resistance at $103 and at least test $115 before a retracement or consolidation.

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  84. Green,

    Excellent observation---and a very likely scenario IMO. It would potentially cause an immediate spike in the spx and pm's--say 1Q12, which would lead to a 'bottom' in the bond market 2Q12 followed by a flight back to 'safety' once the spx begins the vicious bear market decline into the impending 4 year cycle low. All of this would eventually lead to (sustained) higher interest rates and inflation---while further eroding confidence in the USD. If the USD is not safe, and USTs are not safe....perhaps a shiny yellow
    metal is? Timing may be stretched or compressed nut it seems to line up fairly well with the cycles and PM bull.

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  85. Phil, thats right. You could have a scenario where bonds and stocks tank together. Commodities and gold, and silver especially, should take off.

    I think TBT or TMV could outperform everything. Then again, the fed will likely be forced to QE to keep rates low to keep the govt and itself solvent. That would send gold and silver into orbit.

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  86. It's nice to dream about another parabolic move right on the heels of the last one, but that's not usually how markets work.

    Probably the only way that scenario unfolds is if the dollar really starts to collapse aggressively. Even then I would expect gold to consolidate for another intermediate cycle before breaking out to new highs.

    I'm becoming more and more convinced that the precious metals sector is going to be dead money for at least several more months.

    At this point I would really prefer gold breaks down below $1535 as that would signal that we are still in a D-Wave decline, and that would at some point generate a violent A-wave rally rather than a continuing long consolidation.

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  87. Green,

    Yes---and the obvious problem is that rates cannot stay at 0 infinitely without disastrous consequences. Once QE is no longer effective...or worse, has the opposite effect, then it's UH OHHHHH or DOH (if you're a Simpsons fan) time!! I think that time is closing in on us more quickly than most people think.

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  88. Perhaps you are correct...but the part where you say, 'that's not usually how markets work' speaks volumes. Seems like 'usual' markets are over considering money printing and forcing interest rates to 0 for years. It's all about bubbles and ponzi schemes!

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  89. RE: TBT and yields going up in 2012

    The TBTF money center banks have been destroyed w/ a flat yield curve thanks to QE. The banks have seen their NIM (Net Interest Margin) fall to zero... Remember banks borrow short and lend long and with as flat yield curve they don't make money. If rates were to rise banks would start loaning money and their NIM would go up. I think the FED stress tests on the TBTF banks are going to allow names such as WFC, JPM increase dividends to share holders around the time the US Bond Market starts to sell off. All of the fools who piled into Treasuries in 2011 will get smoked in 2012 and beyond. Anyone looking to refinance or buy real-estate had better lock and lock yesterday as 30 YR FXD rate loans were 3.875% the other day.

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  90. It's not really about that, it's about human emotions. It's just going to be pretty hard to generate another strong momentum move after so many traders and investors got crushed during this D-Wave decline.

    Generally speaking after traders get stung in one sector they usually don't come right back for fear of getting bitten again.

    The hot money tends to find a another sector. Then the process repeats. Momentum builds until finally the asset class gets stretched to the upside followed by a regression to the mean profit-taking event, and then liquidity goes looking for a another undervalued sector.

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  91. Gary I think your call on oil is the best bet in the near term. Reason i think that is it is the least overvalued relative to TBT. It could really rally like crazy if this whole bond scenario plays out.

    I dont see gold outperforming anytime soon either. The weekly MACDs of gold vs anything else are still extended. But it doesnt necessarily have to go down in nominal terms either. i.e., I dont think it has much further to fall in dollar terms.

    But for me, gold and silver are THE endgame in terms of gains in purchasing power as the fiat system implodes.

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  92. In theory the fed could send interest rates to zero and keep them there if they buy an infinite number of treasuries. That is Weimar.

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  93. Well said Gary...I'm still learning! Sometimes I lose sight of the fact that most investors do not even consider cycle analysis nor do they have near 24/7 access to one of the best out there....and yes, that would be you...but don't let that go to your head!!

    MERRY CHRISTMAS and a sincere Thank You for all that you do (and endure from people like me) every day!!

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  94. Merry Christmas and Happy Holidays everyone!

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  95. Ken what do spiking rates do to MBS?

    Thats what I thought. If the fed qes in response you are back to square one.

    I would stick with oil for now, then switch back to gold and silver when thay bottom vs oil. Imo :)

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  96. Went short S+P at close today with few e-mini's. Probably have to hold for couple weeks or get stopped out 1290 area. I like the fact cnbc reporting economy improving, as if. Now if Big Ben gets publicly busy, I'm out. Like the model portfolio play also. Merry xmas all.

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  97. In oder to short the s&p for anything but a day trade, you have to look at bond yields and where they are likely headed in the next 6 months. The US economy sucks, but i think gary is going to be proven correct. We are pn the verge of hyperinflation and thats no hype. Look what the zimbawe stock market did in nominal terms.

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  98. I have to agree with green. Better off buying TZA at the close on an up day and hope for bad news overnight. I pretty much equate it to selecting red or black on the roulette wheel though.

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  99. This week’s reading is the biggest net long position ever for commercial traders of euro futures (since 1999). The commercial traders are still at a high net short position toward the dollar, reliably associated with important tops for the US Dollar Index.

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  100. Gary,

    Can't access your weekend report. Anyone else have this problem?

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  101. An even more ridiculous weekly chart is $usd:tbt

    Somethings gotta give and it sure as hell isnt POG.

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  102. Yeah - Can't access the weekend report either!

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  103. Eamonn, Peter Schiff is going to be sooooo right it isnt even funny. Yes he's been a broken clock re: USD, but you know what they say...

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  104. He wanted to add some of my insights so he pulled it. He's editing right now. :)

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  105. Sadly, all of the evidence points to the fact that the USD basically has a very bad disease and will soon be in hospice...part of me really hopes I'm wrong...

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  106. Gary:

    Do you consider miners a lost cause in the "dead money" consolidation scenario? Your premise is that hot money won't flow into assets that have just recently gone parabolic and crashed, but as we know this never played out for miners like it did silver and gold. Perhaps miners will break out while gold and silver consolidate, especially if the "risk on" trade is on full force?

    Happy Holidays, all!

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  107. Ver,

    I am inclined to agree with you. Even if gold goes sideways, mines can still move up because it is still undervalued. So still holding my core of mining etfs.

    Also did anybody notice anything strange about the GDXJ chart in stockcharts. The prices seem to be a dollar+ lower after the distribution!?

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  108. "Also did anybody notice anything strange about the GDXJ chart in stockcharts. The prices seem to be a dollar+ lower after the distribution!?"

    - ver

    GDXJ paid out a dividend distribution of $1.212/share. A dividend distribution lowers the NAV of the ETF by the amount of the distribution; thus, the value of the ETF will always drop by the amount of the distribution. You will pay tax on the distribution but get no real value from it since the value of the EFT drops by the amount of the dividend.

    Ditto with mutual funds.

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  109. Unknown,

    I understand. I would expect that the drop would apply only to the Friday session. There should be a gap down on Friday.

    But apparently all the prices before that are uniformly lowered. Friday's gap also disappeared.

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  110. This notion that the economy is broken just doesn't hold up to observation. The restaurants and stores are packed. At the moment I think it's more likely we see inflation start to pick up next year than a deflationary recession.

    I'm also starting to consider that with all the currency intervention that the four year cycle in stocks is starting to stretch to 5-6 years. What we were expecting in 2012 may not arrive until 2014 and it may come as an extreme inflationary event rather than a deflationary one.

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  111. Gary, I cant see your w/e report

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  112. Gary,

    Who knows, as perverse at it souunds, money may start flowing from Asia back to the US. E.g. if you look at real estate prices, those in Asia are starting to decline while in the US real estate may have bottomed.

    This may lead to a stronger AND stock market.

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  113. WW - your stop being a RT daily cycle confirmation - as compared to a possible RT IC change above?

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  114. Oops...

    I meant 'stronger Dollar AND stock market'.

    BTW, I too cannot see the weekend report.

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  115. There is no weekend report yet.

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  116. Gary, that's fine. Just that I got a tweet: December 24 weekend report http://t.co/3GCJcdSe

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  117. Gary said "This notion that the economy is broken just doesn't hold up to observation. The restaurants and stores are packed."


    Gary,

    One scenario is that due to a poor economy, stores and restaurant branches close. Same with airlines- they cut back on flights.

    As a result remaining stores, restaurants and available flights become filled and appear packed - leading to cost inflation when in reality, underlying structure of economy is crumbling.

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  118. Sounds plausible but that doesn't hold up to observation either. I haven't seen any business go under in a long time. Pure and simple, the economy is humming along at a reasonable rate at the moment.

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  119. In my industry (high tech hardware) we are seeing a slowdown industry wide.

    Regarding why retail looks busy, there were reports that a lot of folks are returning Black Friday purchases 14% more than last year due to buyers remorse and stretched bank accounts.


    Groupon may have also helped remaining restaurants appear busier than usual but how long will that last.......


    If you throw in austerity driven recession in Europe and China also flailing, overall, it can't seem possible for US economy to hold out too much longer.

    Also have you noticed gas prices at pumps (quite low) vs crude oil prices (high)?

    Hopefully, we get a big deflation scare that finally lowballs gold and forces QE3 :-)

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  120. Eamonn,
    Well glad to know it's not us... must have been Toby and Channel playing around and pushed the send button. :)

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  121. RA:

    As is typical for miners I think their performance is going to be anchored to what happens in the stock market. If stocks are about to notch new highs, miners may finally breakout sucking in money flows and leaving gold and silver to chop around for the next several months. One can't ignore that the big boys have been reallocating PM metal positions to PM stocks. But any sign of the bear resuming and all these trigger-happy hedgies are going to dump miners till the cows come home. So once again it comes back to the inflation / deflation debate for any clarity. Joy..

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  122. the economic situation in the uk is the worst I've ever seen it. major companies going into administration at an unprecedented rate, high street shops closing at 20 a day, pubs and bars 6 a week

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  123. S&P500 broke out on Friday but there may be a limit to how far it can rally. There is massive overhead resistance in the area of 1330, the multi-year downtrend line.

    If $SPX rolls over around or before 1330 things could still get ugly.

    But this is unlikely to happen all at once. It could take weeks to chop up to 1330. Then more weeks to teeter and, finally, rollover.

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  124. The economy in my metropolitan area is sending mixed signals. Almost no one I know is out of work. No one in my building is behind on rent and we have no vacancies.

    But even thought the malls were busy on Friday, I had no problem getting to stores and did not have to wait in line. That seemed odd on a Friday before Christmas. At Best Buy the cashier asked me to swipe my card again because she had assumed I would be charging my purchase instead of using debit. So I asked, "Have most people today been charging to credit?" She said, "Everyone in my line today has charged to credit. You're the first person to use debit." It was 7 pm. That was a little creepy.

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  125. All I can say is I've never seen this area so bad. Violent crime rising, high unemployment, and to top it off cuts to the police force on top of the cuts they just had. I work in the medical field and the uninsured are close to out numbering the insured.
    On top of my PM investing and SM gambling, I also invest in guns and ammo. A nice Smith and Wesson 357 revolver will hold its value better than SPY.

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  126. According to the Oil Price Information Service, quoted in an Associated Press article, an average household will have spent more than $4,000 on gasoline by the time it toasts the New Year.

    The actual number is $4,155, representing 8.4 percent of median household income--the highest percentage in almost three decades, since the 1981 fuel crisis.

    http://www.greencarreports.com/news/1070931_how-much-did-the-average-american-household-spend-on-gas-this-year

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  127. FWIW.. a possible longer term scenario I'm looking at. Note the massive multi-year Symmetrical Triangle. Of course there is no law that says the triangle cannot shock everyone and breakout to the upside. I'll be cautious as (or if) we near the upper trend line. Symmetrical Triangles typically breakout (up or down) within 75% of the way to the triangle's point (looking left to right). We are way past 75% so anything could happen at any time and it could be explosive.

    Another word of warning. In spite of what just happened with the downward breakout of Gold's Symmetrical Triangle, Symmetrical Triangles actually breakout to the upside 54% of the time.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=5&mn=0&dy=0&id=p45441988992&a=240954229

    Done yacking. Have a Merry Christmas everybody.

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  128. ok, if silver does not recover next week to above 30.5, then we may be heading to $22/$23 ... ay it will hurt ... we close the December month at that price level, and recover in January ... this senario is based on maybe silver is still in phase 1 and will transition to pase 2 after the correction is over... similar to what happened to gold at $1000
    So for those with dry powder ... load up the trucks at that level, for me it's going to be painful since I'm loaded in the 2x and 3x silver ... ay ay ay

    so Gary's original prediction may come true next week.

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  129. http://stockcharts.com/h-sc/ui?s=$SILVER&p=W&yr=13&mn=0&dy=0&id=p19424834176&a=251795544

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  130. so either a %50 correction
    or %61.8 correction

    we'll find out next week....

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  131. But Gary!

    Even Rosemary's Restaurant has closed!!!

    Happy holidays everyone. Be safe.

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  132. Interview with Jim Sinclair

    http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/12/23_Jim_Sinclair_files/Jim%20Sinclair%2012%3A23%3A2011.mp3

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  133. Try this link for Jim sinclair

    http://thenewsunit.blogspot.com/2011/12/wall-streets-winter-wonderland.html

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  134. silver at $22-23 my arse! show me the dummy that will sell his physical silver at $22

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  135. Looks like it's about time to violate rule #1.... :-)

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  136. Keep it simple. Simplicity is the mother of clarity, clarity leads to Power to achieve your goals.

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  137. You won't time the exit correctly or the bull will do something you don't expect and you'll just end up losing money.

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  138. I'm just talking a small bet...OTM gld puts.

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  139. Gary, are you happy it will be a good buying opportunity when this thing bottoms as expected in January?

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  140. Sorry if that seems like a dumb question to you. I beginning to have "the gold bull is dead" feelings

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  141. Feeling the same way...which probably means it's almost time to buy more.....

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  142. I'm looking for $20.00 to 22.50 as the spot price of silver before I re-load on the poor mans gold. I dropped by the coin shop the other day and they said people are dumping a lot of junk silver and the global industrial slowdown has created a glut in the market. The guy at the coin shop said he'd have no trouble getting as many 2011 Silver Eagle Monster Boxes as I wanted... He said he'd more than likely drop the $3 -$4 premium over spot that he ussually charges per/coin after calling and checking in with his supplier. I'm getting the feeling that gold is going to break $1535 confirming the D-Wave and the washout into late January or early March is going to blow everyones minds. I'm thinking that by March 13th, 2012 gold will be under $1250 and silver under $20 for a AU:AG Ratio of 62.50. That's what I'm looking for a complete pukefest in early 2012 making everyone and I mean everyone give up on the PM bull market. Bring on the washout!

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  143. Ken or anyone

    I was reading some things online this weekend that during the last crash in PM in 2008, specifically October of 2008 when silver was about $10, that premiums on phisical silver was as high as 2x spot. Do you remember anything like that?

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  144. Here is a post about the spot price of silver from October 22 2008

    "Just checking in to report Spain’s biggest dealer is out of gold stock except for Kilo and 1/2 Kilo bars. No silver. They are still advertising 1oz silver Phillarmonics at EUR 18. At today’s change, that is USD 24. Only 2.5 times the COMEX price..."

    http://arch0708.goldtent.net/2008/10/page/116/

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  145. I don't remember anyone charging 2X's spot back in 2008, but back in May '11 when silver dropped from $50 my local coin dealer wouldn't sell anything until he knew what price he'd be able to replace the inventory at. My local shop seems to run a JIT (Just In Time) inventory system and seems to be out of stock a lot when the price of silver drops quickly. He tells me that he can order anything I want from his supplier but wait times vary. He said gold doesn't have the wild swings in demand or price and that he's selling it at normal rates. After talking to him about the recent price action and the publics response to metal prices I get the feeling that he feels like we're in a lull period or trough where J6Pack went crazy when gold was $1800+ and silver was $40+ and now J6Pack feels sorry for himself now that gold is under $1600 and silver is under $30. The average guy hasn't given up on gold and silver (yet) but a D-Wave decline would make the Johnny Come Lately's who bought above $1600 and $30 puke up his positions because of fear. Because of the extra premiums to deal in physical gold ($50 -$75 per/ounce) and silver ($1 - $4 per/ounce) and the fact that dealers get slammed with inventory durning panics we've got a really sweet setup brewing.

    FYI: The economy stinks where I'm at (Stockton, CA), people have lost 65% of their home equity, local unmeployment is 16%+ and we set an alltime record in homicides in 2011 all of which could effect my local market and coin dealer sentiment. Gary's in L.V. which is pretty bad so maybe he could call around or walk in and have conversations with pawn shop or coin dealers and update us SMTs with what is going on there.

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  146. Ken

    Thanks for the update. I'm in the bay area so I'm not to far from you. Stockton is the foreclosure capital of the US. Things aren't too bad here. Still see many new cars on the road, malls packed, real-estate is still in the dumps, unless you talk to a realtor :-) The high end housing is finally starting to crack with big price cuts. Keep us posted on the premiums for silver.

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  147. It appears the market is levitating PMs but for how long? Depends on the market. I'd give it 2-3 days then reevaluate. It's looking like the market will be happy for 2-3 days.

    If the market pulls back after 2-3 days but is only catching its breath before rallying again you risk getting whipsawed if short.

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  148. Oil appears to be making its move

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  149. Hard to see economic strength in this, Sears/Kmart to close 100-120 stores;

    http://www.msnbc.msn.com/id/45795148/ns/business-retail/

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  150. Kmart got run over by walmart.

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  151. FYI. The MACD (fast line) of the weekly $SPX is threatening to cross above the zero line. That could trigger a multi-week or even multi-month rally. It's angle of attack suggests there is a significant chance it will be successful.

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  152. Agree with Gary. Sears/Kmart was mismanaged in the face of daunting competition.

    Comment about Stockton, CA. It has always been a dump in the middle of nowhere and home prices are only coming back to reality. Stockton is just a place to sleep for commuters to Silicon Valley. There is no industry in Stockton, so few well paying jobs and mostly in the service sector.

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  153. JPM got pushed around like small cap..

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  154. "This notion that the economy is broken just doesn't hold up to observation. The restaurants and stores are packed. At the moment I think it's more likely we see inflation start to pick up next year than a deflationary recession."

    Look at the retail sector (RTH). I've been noticing this for quite some time. The bearish in this economy goes a bit unwarranted. There are many that still think we are in a recession. How could we have a recession with record retail sales numbers in Oct and on the black Friday weekend.

    Bias kills in this business.

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  155. Using anecdotal observations to judge the likely hood of recession is probably a mistake. Especially if your observations occur in a region that doesn't accurately represent the nation as a whole. For example the area I live in is infested with high net-worth individuals who are generally unaffected by economic downturns in-regards to their purchasing habits and thus would not be a good gauge of consumers as a whole. Additionally a recession generally occurs following a peak in economic activity (see Economic Cycle).

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  156. Strat81 said...
    Using anecdotal observations to judge the likely hood of recession is probably a mistake. Especially if your observations occur in a region that doesn't accurately represent the nation as a whole. For example the area I live in is infested with high net-worth individuals who are generally unaffected by economic downturns in-regards to their purchasing habits and thus would not be a good gauge of consumers as a whole. Additionally a recession generally occurs following a peak in economic activity (see Economic Cycle)."

    New Jersey’s Hunterdon County, the hilly region of horse farms and weekend retreats where last year’s median household income was almost $100,000, is a surprising new face of federal food aid.

    The percentage of U.S. households using food stamps has more than doubled in six of the 10 wealthiest counties in the nation as more residents find themselves out of work and unable to sell their homes. The increase among counties with more than 65,000 people was greatest in Hunterdon County, according to Census Bureau data compiled by Bloomberg.
    Hunterdon, whose 2010 median household income of $97,874 was the highest in New Jersey and fourth-highest in the U.S, saw food-stamp usage surge 513 percent between 2007 and 2010, although the overall numbers are small.

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  157. WW - stopped out of spx short @ 1267?

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  158. I hear ya. Will be interesting, dollar coiling, commodities took a dump today except oil - inflation precursor or war premium?

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  159. Stockton has been and continues to be an agricultural based economy. Local politicians and media outlets have been long beholden to a select number of local developers and the public service unions at the expense of long-term strategic planning. Now that capital has been misallocated by government officials Stockton will be forced to file Chapter 9 Municipal Bankruptcy sometime over the next couple of years. Tax receipts continue to fall while long-term obligations accelerate in earnest as baby boomers defined benefit plans (pension) obligations come due. Local schools have been ravaged by state budget shortfalls creating a negative feedback loop that will be felt for many decades in this area. Hopefully the Central Valley can produce the food the world wants, needs and will be forced paying up for to survive in the coming years. The weather is great and we're less than 100 miles from the Golden Gate, Yosemite, Lake Tahoe and Napa Valley all with a median home price of about $135k. Overall Stockton CA isn't a bad place to work and live if you're educated and have a skill set in demand.

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  160. Fairytale Of New York


    http://www.youtube.com/watch?v=FwXBtmRTsFs



    Big as rivers of gold.

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  161. Another decent size (considering the low volume today) SoS on SPY today.

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  162. Ken

    Stockton will not be the only city to go BK. As we all know, there are many other cities on the brink. Your are seeing it on the monthly jobs numbers when public unemployment is increasing and private is steady or improving. Many who can are leaving public sectors before they change the pension system.

    Meredith Whitney got it right when she called for many large municipalities to go BK. I just think her timing was a little early.

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  163. Ken,
    Didn't mean to offend about Stockton. It's been while since I was there. I may have confused Stockton with Modesto.

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  164. WW are you thinking of shorting gold futures? I think after 1st week in jan. spx gives you profit. Good holidays to all.

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  165. Great long term analyst of USD

    http://likesmoney.dojispace.com/index.php/2011/12/great-expectations/

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  166. Re-Test "B" or A-B-C-D down

    http://www.screencast.com/t/B4spLxyFV

    And looking for this stochastics to bottom as it has for every major drop in the past

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

    And I'm looking for this

    http://www.screencast.com/t/jP3QfaqX

    THESE CHARTS WERE DRAWN SATURDAY-THATS WHY THEY SAY "NEXT WEEK"...I MEANT THIS WEEK.

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  167. Alex - I hope you are right about GDX (the last chart).

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  168. Alex, I noticed all those tails also, and was wondering if it was of significance...

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  169. HIGH 5, LOL, this is what I got with your link....

    500 Internal Server Error

    Sorry, something went wrong.

    A team of highly trained monkeys has been dispatched to deal with this situation.

    If you see them, show them this information:
    q4FvAhbAGxTuHbnjEf1vc0gfi0lw66S_mzaGC2UPddGbKhvNeJhKwLqcZWWs
    E1xlYmAFxS0-mjv8oUnt49KDxdOy716izjEfa_amGvHNTjcNr3C_9C_0DJq-
    wA5-np-9ttHxbZLxC3n_R0SkPNyXFCHGc6LmcPSJI13xfEb1ooqBOJC-vyCC

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  170. Intelliblue2000 and AT EASE-

    A friend just emailed me about the 3 charts I posted and asked if the GDX could mstch the GOLD DROP possibilities?

    SO I will just clarify a point or two.

    1) IF GOLD dropped to target "D" noted in the GOLD A-B-C-D chart , then I would imagine the GDX chart would experience a break of support in a "shake out" , but find support at the 200dma .

    2) GOLD may just drop to retest the area noted as "B". We are almost there, and Miners look to be bottoming.

    Due to the $BPGDM and other factors, it just seems that we are in a bottoming area, BUT because of the "world falling apart at the seems" scenario...One would want to expect that "ANYTHING -CAN-HAPPEN"..when investors return from VACATION next week.

    I hold a "core" of Miners, and I'm comfortable with that , and am watching cycles possibilities, charts possibilities, and other factors.

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  171. This comment has been removed by the author.

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  172. Now that gold and silver are well off their highs, when does the CME lower margin requirements?

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  173. Been up all night screaming at the dollar, "You shall not pass!"

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  174. bloomberg just had a little report that gold will have a up year in 2012 and then down for 3 years after that.
    ill just follow gary in real time. that keeps me from trying to figure all this out. which i cant do

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  175. Monday's close was confirmation to take a short position in gold. Price closed below the inverted flag. I'll pass however. High risk trade.

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  176. Gary,

    Have you ever looked into MESA Sine Wave cycles? They usually align quite nicely with your cycle counts especially if you use a study that dynamically calculates the dominant cycle length. It printed daily cycle resistance (possible cycle top) today on /CL and /ES.

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  177. Tiho,
    We haven't been in any PM positions for several day. We exited the energy position this morning for a small gain.

    I will look to reenter PM once we get into the timing band for the next daily cycle low, which won't be till at least the middle of January.

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  178. WW, you expect gold to bottom out at 1495?

    ReplyDelete

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