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Wednesday, February 15, 2012

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289 comments:

  1. whew! My heart always skips a beat when I read that all caps NEW POST message from Gary.

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  2. kmisak, its a race to get the first comment in LOL

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  3. Dollar up, gold up, stocks up? Something has to give...

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  4. This comment has been removed by the author.

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  5. Gold break above the 10dma. Expect a swing low.

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  6. Do gold futures charts on thinkorswim (papermoney) show live prices? They differ a bit from my NetDania feed. Thanks for any advice

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  7. 86d4life, thanks. Thought an angry beaver had killed you

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  8. 86, where you been? Missed you around here!

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  9. Gold closing over 1735 is key.

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  10. Greece Default:
    Dollar up, Gold up
    Everything else down

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  11. Months from now Dollar will be much lower than today. Than everyone will be bearish on the Dollar... unlike today!

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  12. TOS Paper is DELAYED 20 minutes if you haven't opened an account with them and funded it.

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  13. Mr. Dad, thanks for that advice.
    86, what say you?

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  14. Hi,

    I have tradeinterceptor on my andriod phone - it's mainly forex, but has gold, silver, oil, markets..

    So I tried the PC version, it's pretty good too..better than netdania. Maybe give it a try if you're looking for free charting (it can also be used for trading).

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  15. Tiho,
    What no one is even considering is that the dollar has entered a secular bull market. Notice that for the first time in 10 years the 200 week moving average has turned up.

    The last 3 year cycle low held above the 08 three year cycle low.

    We obviously have a daily cycle low in place but I also think we probably have an intermediate cycle low.

    Everyone just assumes that Bernanke will be able to trash the dollar, but Japan has been trying to trash the Yen for 4 years... unsuccessfully. It just means the forces of deflation are more powerful than the BOJ.

    We may have something similar unfolding in the dollar index especially if the CRB is unable to make new highs. That is the clue that this isn't just about the dollar measured against other currencies, but also against something of stable value like commodities.

    Like I always say when everyone is thinking the same thing then no one is thinking.

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  16. Gary,

    so how they will going to handle the debt ??

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  17. Gld looks like it has a swing low on 2/13.....maybe gold and the dollar get bought up and the market goes down hard?

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  18. Good luck with that one Gary. You should go and buy some Dollars if you think you are a contrarian there.

    To me, following CNBC and Bloomberg everyday of my working life, and reading research notes from Wall Street sheep-le for hours on end, every single man and his dog thinks that the Euro will reach parity with the Dollar.

    That tells me that every already thinks Dollar is in a bull market, or in other words, Euro is doomed. We are still at close to record all time high net short positions on the Euro - don't you remember?

    My persoal experince and study of history has taught me that secular bull markets are not built on moving averages, they are built on fundamentals. And the Dollar is the worst out of the lot... probably even worse than the Pound (if that's possible).

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  19. Pretty sure when I started playing around on there it said it was real time, but it`s pretty easy to figure out for sure :)

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  20. To be fair to Gary, Bernanke often says he supports a "strong dollar policy". LOL!!

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  21. Is there some kind of news causing the massive $ swings?

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  22. Don - I don't know. You should ask super smart people around here. I'm not good at predicting things with time targets or with price targets. I'm just short the Dollar as of middle of Janurary. The market always tells us if we are right or wrong eventually...

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  23. SB,
    We all know the strong dollar policy is a sham. What I'm telling you is that your bias is preventing you from seeing what is actually happening.

    It's entirely possible, just like Japan, that the deflationary forces are overwhelming the Fed's efforts to debase the currency.

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  24. Lots of people think that.. deflationists..Prechter et al.

    Yen strength is more about successful USD destruction.

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  25. Gary,

    Both Bernanke and the BOJ can crush their currency if they want. They don't want it smashed, just a steady leak over time.

    If they want to kill it, they can print as much as it takes. However, that ushers in too much inflation and wakes people up to the scam that is "central banking".

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  26. Tiho,
    You need to get a subscription to sentiment trader.com so you can get actual sentiment levels rather than just what you would like to believe they are.

    The truth is sentiment on the dollar has collapsed over the last three weeks. During that time the dollar had one of the mildest intermediate pullbacks from extreme sentiment levels in the last 10 years.

    You might want to look at markets with unbiased eyes so you can see what is actually happening. Right now the rally out of the three year cycle low is intact and if the stock market drops down into an intermediate degree correction the dollar will put in another leg up, possibly a big leg up.

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  27. My bias as you say is not preventing me from seeing your chart and the 200 week moving average. My bias is that you are essentially trading the dollar vs euro and have no control over the news flow that will affect the outcome.

    Measure the dollar vs other money like gold (or any commodity for that matter) and tell me "the dollar" is in a bull market.

    You're overthinking, if you ask me. If this is the beginning of a secular bull for the US confetti, I hope you plan to stay in for much longer than originally planned.

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  28. Movax,
    No the Yen was driven higher by the deflationary forces unleashed when the Japanese asset bubbles collapsed 20 years ago.

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  29. In any case, I wish you luck in the UUP. I don't see it doing anything much on the upside or downside.

    Ask yourself if the BOJ keeps printing, and the Fed does as well, just like the ECB, do you want to focus on the dollar vs. the other confettis, or the fact that all real assets deserve higher prices?

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  30. It's entirely possible, just like Japan, that the deflationary forces are overwhelming the Fed's efforts to debase the currency.

    That's actually not completely correct. Deflation in Japan is not the reason the whole world is experiencing and watching Yen strength. Unlike the Dollar, Yen is not a reserve currency and majority of the worlds debt is not written in this currency.

    The reason for the Yens strength is quite different. If you study history of the 80s and especially post bubble crash 90s as Japan cut rates dramatically.

    It all started before the Plaza Accord, you will notice that Regan worked very hard in lobbying Japanese to purchase US denominated assets. They went as far as buying Western Country asset which include Europe as well as other parts of the world.

    Majority of these ivestments were done by Toshin investors. That means wealthy Japanese individuals who had mutual funds acting on their behalf to chase yield as post bubble crash policy of BoJ was zero bound.

    As of 2007, interest rates globally have been cut dramatically and bond yields do not produce reasonable returns when adjusted for inflation. Carry trade is over and Yen is in a super bull market. Why?

    Not deflation, it is capital flows. Toshin investors are actually returning money from aboard, that was heavily invested between 80s/90s/00s back home to Japan. This is increasing demand for Yen and it will contuiue as long as yields elsewhere stay low or even zero bound by Fed, BoE, ECB.

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  31. My company already has subscriptions to sentiment trader, daily sentiment idea and many others.

    While Public Opinion fell on the Dollar recently, that is a sorter term more volitle reading. Net short futures positions on the Euro are close to record highs. That is a real sentiment indicator.

    Everyone hates the Euro and loves the US Dollar...

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  32. SB,
    Not true. Since the summer of 2008 the CRB is clearly making lower lows and lower highs. Until that changes we have to assume that the Fed is failing in its mission to debase the currency. At best they have been able to generate some inflation out of the 2009 low but that topped in May of last year and commodities have been basically flat to slightly down ever since.

    Now if we get a three year cycle low sometime in the next couple of months and the CRB manages to move above the old highs then I would agree that the Fed is successfully destroying the currency. But as of right now it seems to be a stalemate.

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  33. Tiho,
    If you would take the trouble to study the historical data you will find that the COT contracts have no predictive value in the currency markets.

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  34. Tiho, that was a great explanation... thanks for sharing that...

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  35. Hey WW,
    Are you worried about silver diverging down today with your gold position?

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  36. That is a good point, and I agree they are failing in fighting deflation, but it's not like they'll stop trying. They need to print more and they know it, have even said as much.

    Interesting debate, and I agree with your observations, but I would not bet against the Fed in an entirely fiat world.

    Let's give it some time to see how it plays out.

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  37. Gary, it works perfectly fine for me. Maybe It is the way you use it, that doesn't work for you. I don't want to speculate, I'm just guessing. Either way, I've been using COT data for years and it's fine. I use currency and commodity data and it's great. Stock market data does not work properly however, so I never use that.

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  38. Brain Question for experts,
    How catastrophic would it be if CME and LBMA went under due to MF Global?

    http://uk.reuters.com/article/2012/02/08/cme-rating-idUKL2E8D8FC420120208

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  39. SB,

    this is fundamental difference here. I agree that may be USD may appreciate against other currencies but against gold ??

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  40. IvanG,

    Exactly! Gold up 700% in last decade, despite inflationary forces like 2007, and deflationary forces through years like '08.

    Inflation or deflation, gold does well. No need for me to guess which paper beats other paper.

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  41. USD is the numerare for everything, I don't think it's crazy to argue that a weaker dollar made the Yen look stronger, regardless of the asset bubble in Japan.

    What was happening before 2000/2001?


    http://gftnet.gftforex.com/uploads/usdjpy080910_3.jpg

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  42. Don said

    "Greece Default:
    Dollar up, Gold up
    Everything else down"

    AAPL is up another 12+ points. Anyone shorting must be barfing in the toilet now.

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  43. Japanese Yen will go much stronger against the US Dollar in coming months and quarters. Cross boarder capital flows will be returning back to Japanese by their individual's at a rapid rate when European crisis accelerates next year 2013 (for the time being we got a Euro short squeeze happening, which should keep things calm for awhile).

    Obviously we have speculators being net long the Yen as of late which is creating a correction now. At the same time, sentiment surveys on the Yen have started dropping substantially.

    Once the correction runs course, long term investors, should buy more Yen against the Dollar. The trend is not over yet, despite Yens overvaluation. If they haven't done so in January already, investors should also buy more Swiss Francs against the Dollar too. the aero peg won't hold during the next crisis in Europe around 2013!

    Both of those currencies will do well.

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  44. I will buy Gary's argument the moment someone tells me how will wipe the debt issue without crashing the dollar.

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  45. The true black swan of this year will be rising rates if market forces that

    nobody expects it since the 2014 commitment coming from the Fed

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  46. During the deflation of 08 gold lost over 30% of it's value. If the stock market corrects into an intermediate degree cycle low it will set off a deflationary event, although probably temporary, and gold will almost certainly test the Dec. low, maybe even marginally break it.

    I've found I make more money if I try not to suffer from recency bias.

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  47. During the deflation of 08 gold lost over 30% of it's value. If the stock market corrects into an intermediate degree cycle low it will set off a deflationary event, although probably temporary, and gold will almost certainly test the Dec. low, maybe even marginally break it.

    I've found I make more money if I try not to suffer from recency bias.

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  48. Well, of course the deflationary forces have been strong, just looking at graphs published by Fed shows that

    they have been pumping for years and look at multiplier or bank credit or inflation expectations published by them


    Many thing it is the Fed suppressing the rates, in fact, it is the global capital market looking for places to park capital

    parked capital means less demand for capital and less demand for capital suppresses the rates globally speaking

    if there is global demand for capital, cash becomes sought after, and banks will have to compete with business for capital and rates will rise and Fed will follow

    It's been like that for decades. Maybe it's different this time -- we'll see

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  49. Stock market is not topping, despite is overbought technical level with bullish sentiment.

    Do keep in mind, major tops and sell offs occur, when there is bearish breadth divergence within the index. Also prior to tops, defensive sectors start outperforming cyclicals - flight to safety trade.

    Today, we have expanding bullish breadth, with no divergence and cyclical sectors are outperforming defensives.

    Stock market has a high chance of staging a correction to work of its overboug readings. Will it be a deflationary sell off? Anythings possible, but it is very very improbable.

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  50. CRB lately made a marginal higher low (December 16) and then pierced through its downtrend

    it looks flattish and indeterminate

    it has not made a new high

    It's a very interesting juncture, if it does not make another lower low, and, better yet, if it holds above the broken downtrend line, then bulls may be off to races after the next intermediate low


    CRB is 39% oil, and oild is amn interesting beast that changes due to economic demand and monetary conditions as well as due to geopolitical conditions

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  51. There is breadth divergence alright, just look at S&P's Summation and McClellan


    Now, look back across the history and see how many times price have ignored divergences

    It is not a trigger to have breadth divergences only a warning at best

    price is the most important indicator and a study of price cycles and periodicity (like gary does) can help

    Divergences may be ignored by price

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  52. I shorted AAPL and all I got was this  T-shirt :-)

    Found on twitter

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  53. SF LOL!
    I think DOC mentioned a couple days ago that it`s going to derail, but at 500 or 600 or? Man, this whole thing just sucks. Looking at the almost perfect H&S on CL daily almost has my knees knocking. GL to everybody.

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  54. Gary,

    I am a bit shocked that you think the USD will be entering a secular bull market based on a moving average.... Also, you keep on banking on a gold crash to its decemeber low.. that won't happen.... but in any case good luck to you

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  55. ILUVPMS,
    It's not just the moving average. The three year cycle low also held above the 08 bottom. That is a pattern of higher lows.

    Plus you know darn well this has nothing to do with gold and everything to do with the stock market. When stocks move into an intermediate degree low, it generates a tremendous amount of selling pressure. That selling pressure tends to infect everything and that will include gold.

    The more severe the correction in stocks is the more likely gold will be to test that December bottom. And the more parabolic this rally becomes the more likely that the intermediate degree decline will take on crash characteristics.

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  56. Is there a relatively steady time stocks take to move from ICPeak to ICL?

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  57. Todd,

    I have a tight stop at $1725 on this gold long.

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  58. IF this is a runaway move in the market, we could expect it to last until ? Mid summer?

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  59. SF Giant Fan
    Stay inside till greece default and then come out and check AAPL price

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  60. If im stopped out of this long it will be a break even trade. I know that if the stock market rolls over gold is certainly going with it.

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  61. WW - I'm starting to think that the Fed has created so much liquidity, that any minor pullback gets bought up (in any asset class) and to time the pullback is like swimming upstream.

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  62. Veronica: is your stop price based on April futures or spot?

    Thanks as always for sharing!

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  63. Thx WW,
    Is that April Gold or spot for your stop?

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  64. Tiho and SB,

    Exter thought USD and gold would correlate during a major deflationary event. Check out Exters Pyramid and note that gold and USD are both at the bottom of the inverted pyramid. Also, Exter could be called a "gold bug" even though he was a major insider.

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  65. Quy:

    Be careful, this market feels eerily similar to the run up before the infamous flash crash.

    That said if I recall PMs held up amazingly well in the face of a panicking stock market.

    But point is don't get sucked into the emotion and psychology of this market, be prepared.

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  66. Todd,

    April Futures. Hoping for a little suprise to the upside at 2:00.

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  67. Hillary Clinton to become head of World Bank.

    http://www.reuters.com/article/2011/06/09/us-obama-clinton-worldbank-idUSTRE7586P720110609

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  68. Ver - Since I'm playing options, I have to be right, so your caution is in the back of my mind. But I'm starting to see too many people cautious (DeMark & now Poly), which tells me Doc may be right on the upside surprise (nothing against Gary cause if Doc is right, Gary will be on board soon - so win/win for everybody). GLD is now tracing out a "cup & handle" on the chart, which if broken out, could be powerful. That's what I'm betting on. We shall see.

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  69. QUY,
    I learned a long time ago that these kind of parabolic moves always end in tears. Even if we still get more upside the downside when it comes will almost certainly take on crash or semi crash characteristics.

    If you aren't lucky you just end up getting caught in that and watch all of your profits evaporate, sometimes in the premarket.

    Didn't we learn anything from the silver debacle. It amazes me how human beings can make the same mistakes over and over because emotions are more powerful than logic.

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  70. ver:

    Don't forget crashes don't just happen out of the blue. They are very rare occurrences but do happen and what usually happens is you get a few days of sell off. The sell off just keeps getting deeper and deeper. It is these conditions that lead to a crash.

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  71. Gary

    But this time it's different :-)

    AAPL looks eerie to AGQ

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  72. We've had 7 distribution days as per the SoS numbers over the last month and yet people still can't heed the warning because all they can see is blue sky forever.

    I dare say most gold bugs could only see blue skies on the afternoon of Sept. 6 also. How well did that work out?

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  73. William Wallace said...
    Todd,

    I have a tight stop at $1725 on this gold long."

    Gold swing low. Can we turn off the device couple of days now??

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  74. It appears they are warming up the hinges on the exit doors over at AAPL.

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  75. 86

    Yep, I think i heard someone yell "Fire"

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  76. WW,

    That was a nice play off the 200 MA on the 5 minute. Too bad I was already out to Valentine's Dinner with my wife. She has no idea just how expensive that dinner was.

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  77. Glad I picked up those AAPL puts this morning.

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  78. Transportation index is telling you all you need to know.

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  79. hi everybody,

    just checking in...did I miss anything?

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  80. Gary - Trust me, I'm scared "you know what", but since I'm not playing with a lot of capital, I have to take extra risk. I do feel honored that you even read my post, firt WW, now you. I do sincerely thank you guys for the cautious comments. You guys do truly care about helping others.

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  81. WW

    SnP sitting on the 10ma. Watching for the break you mentioned yesterday.

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  82. WW, you stopped out..are you short now?

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  83. As I mentioned yesterday, bearish if the 20dma is breached.

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  84. SF,

    Still above the 10, simply wont die...lol

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  85. WW, Please post if you get back in. I am stopped out and waiting to hear next entry. thanks!

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  86. I have more and more the feeling that the German government wants a default from the Greeks...That is a shame for the people of Greece who are suffering beyond belief!

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  87. Gary, on the afternoon of sept 6, the gold bugs that only saw blue skies did well... look at the price of gold then and now... see nothing but blue skies :)

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  88. at ease,

    Lets see if we get a close above the $1737 level, to play the long side, move below the 20dma for possible short.

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  89. WW

    Yea someone saw Ben down the street with a wheelbarrow of money. Time to throw it at the market at the close.

    Man when this market breaks its going to be ugly.

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  90. Gold is still wedged between the 10dma and the 20dma, falling fruit pattern may still be in effect. Like I said this is where bulls and bears get grinded to shreds.

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  91. SF,

    And I bet the dips will be bought all the way to hell.

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  92. Apple is busted. Over. Peak is in today. High volume spike reversal.

    (This does not mean apple won't be a good company going forward and won't stop selling good products. This is an INVESTING decision based on the STOCK price)

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  93. I think that people are now terrified by the last 10 minutes of trading ( remember last night?)

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  94. Long-term treasury yields peaked intra-day today at 2PM est, since then, ES has headed south and treasury yields have risen - the opposite of the normal relationship. Bad 30 year TIPS auction?

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  95. :) ultimately it will just make the fall that much more extreme.

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  96. Divergences in my mo indicators - XLK, XLY and QQQ set-up for a swing short. IMO

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  97. Look what happened to the financials when they banned short selling in 08.

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  98. Beenie @bettertrading posted

    "All dips will be bought. Count on it SPY"

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  99. Yes, Beanie is the epitome of the emotional retail trader.

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  100. LOL, like I said all dips will be bought all the way to hell.

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  101. Big outside reversal on QQQ's today. Now we'll see if it pulls GLD down with it, or not.

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  102. SPX almost smooched July high today.

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  103. WW,
    If gold breaks to a high again tomorrow are you a buyer or will you wait for the close?

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  104. I slept in ... catching up on the blog.

    Gary wrote:

    "It's entirely possible, just like Japan, that the deflationary forces are overwhelming the Fed's efforts to debase the currency."

    "No the Yen was driven higher by the deflationary forces unleashed when the Japanese asset bubbles collapsed 20 years ago."

    >> Bill: Totally agree. Few people see this about Japan. Deflationary pressures pushed the yen higher. I was working in Kobe as an engineer when the yen was 160. Now it's 78 - more than double the power. And the currency going up caused stocks to go down - see the monthly $NIKK fall from 1990's high of 39,000 to 9000 today.

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  105. So, applying to the US today, if the $SPX is about to correct, it should make the $USD rise, and $GOLD fall. At least for a bit. We'll see.

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  106. Todd,

    If the SPX is dropping with gold completely decoupled from it (which I doubt), and pushes back above the 10dma & today's high I will most likely put on a long again with a stop below the 10dma.

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  107. At this point im not going to let gold take off without me if it plans on grinding higher, but im not going to let it grind me up either in the MA blender. Being taken out of my long today didn't result in a loss, the next long may result in a small one.

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  108. WW, I think you should make a video game about your adventures w/gold. It'd be a good tool for PM traders to learn how to trade.

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  109. Back to the Japan story, note that $GOLD in yen terms ($GOLD:$XJY) went up from year 2000 on, same as in the US and Europe. So despite the fall of the $NIKK, and the rise of the $XJY, $GOLD in yen terms still rose.

    Which makes sense, right? All fiat currencies swim around each other down the toilet.

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  110. I also find it interesting to note that all the smug-ass financial experts and commentators in the US, who made fun of Japan falling into a deflationary recession or depression because of the housing bubble here, did not see that they were stepping into the same dog doo as Japan did. Stupid arrogant fools.

    "Pride before a fall".

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  111. I think I'm in a rage today because I'm not making money on gold yet. Sorry folks! Time to hop on my bicycle trainer and ride 'till the tire melts.

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  112. I would like to see the branch of my falling fruit pattern complete today and the fruit begin to fall off tonight, so we can all buy a decent puking DCL in a couple days or so.

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  113. Gary, are you sure that the WSJ SOS and BOW numbers are useful? Today AAPL posted a huge number (122) on BOW. But the daily candle looks like the mother of all sell signals. So, the WSJ numbers mainly (or only?) works with SPY?

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  114. WW, in your video game, you need an apple orchard dropping gold apples, with snakes and bugs and trap doors that lead to hell.

    Just trying to get the video idea ball rolling in your head. ;-)

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  115. Bill,
    I've never found the money flow numbers to be predictive for anything except the SPYder's and possibly GLD.

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  116. The monster selling on strength in GLD two weeks ago was the clue to exit our mining position.

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  117. GLD has been pretty predictive here and there.

    Bill,

    I put you in the game riding your bike dodging falling apples, you get knocked of your bike you get bit by venomous snakes, sound good?

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  118. GARY,

    >The monster selling on strength in GLD two weeks ago was the clue to exit our mining position.

    I'm going to disagree again with an updated chart (which people can bookmark if they want.)

    www.barchart[PUT.DOT.HERE]com/chart.php?ss=1&spread=%24hui%2Fcef&p=MO&d=M&sd=01%2F01%2F00&ed=12%2F28%2F11&size=M&log=0&t=LINE&g=1&x=19&y=5&sh=100&indicators=&addindicator=#jump

    The key to getting out of miners (actually better stated as to not even getting INTO miners in the first place) is based on that chart doing something other than going down and to the right for the last EIGHT years.

    Old story. Same topic. Not picking a fight again. Just want people to see the latest chart and remember how many times we have been expecting it to change.

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  119. Thanks Gary. Makes sense.

    WW, sounds good. Pretty close to the truth - Japanese parents have the nasty habit of letting their toddlers walk around unattended - I walways slow way way down near kids here - worse than a dog off a leash.

    I have a name for your video game: "Purgatory - Repent! or Die a slow, painful death for all eternity!". ;-)

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  120. I earlier said GDX had met ONE of two criteria I was looking for (during the last buy), but it never met the second and, ultimately, it turned out that the miners folded yet again and returned to lows.

    I'm sticking with those two criteria and a 'show me' attitude as best possible.

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  121. Gary, though it seems that your scenario is perfectly set up to play out (UUP rising; SPY falling, pulling down GLD w/it), what if in the off chance that GLD actually breaks out and goes up? If that happens, what would that mean, cycle-wise? Thanks.

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  122. It would just mean that the A-wave is still intact. But I still have no desire to buy anything until the stock market puts in an intermediate cycle low.

    I've seen too many of these, and I know what happens during one of them for me to be at all interested in the long side of anything right now. Well, other than the dollar.

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  123. Well, shoot, maybe you're right that I'm trying to read too much into cycles. I'll think on that.

    Although the SPY could pull GLD down, is waiting for the SPY to bottom the best approach? I mean, if while the SPY was going down, if GLD put in a reversal, wouldn't that be enough to go long? I mean, the target is GLD not SPY, so that's why I'm saying this.

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  124. Bill,

    Thats funny :).

    It would mean that the cycle beginning 12/30 bottomed on 2/10, and gold is now in a new daily cycle... that if moving above the 2/3 high would be a second daily cycle higher in an on going A-wave.

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  125. Thanks WW. So if this A wave continues, the correction will be bigger and bigger. And the huge A wave would mean a MASSIVE C wave. Wow.

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  126. You can find a chart of the ABCD wave pattern in the terminology document.

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  127. C'mon TZ. I know you're secretly long a boatload of NUGT.

    We love miners *because* they underperform. Gives us something to complain about!

    They're like that old girlfriend you broke up with fifteen times and yet somehow always ended up back in the sack with. There are worse things in life.

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  130. WWallace,

    In 2008/2009 gold's A-wave was made up of +three+ daily cycles, in total going from $680 to $1005, or almost 50% up. A similar size A-wave would now take us from $1520 to almost $2250. Even assuming A-waves usually do not set new highs, why couldn't the current A-wave turn out to be made up of more than one daily cycle - in fact, wouldn't that be likely?

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  131. Ver, it is based on the most active futures contract, currently April.

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  132. Walter,
    That A-wave was out of an 8 year cycle low. Completely different animal than anything else in this bull market.

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  133. Thanks Veronica! Keeping my fingers crossed for a gold dip into a DCL here with a bounce from the low that pushes up through a dropping buy stop from your system. Though do I remember right that you are still waiting (hoping) for a losing trade from your system? :)

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  134. Gold has been in this same price zone for 4 weeks now (assuming we don't move by fri...which might be true since this is options ex week).

    That is pretty unusual if you go back and look at weekly charts.

    We are building up pressure and it's going to break soon one way or the other. When it does all the people taking sides the last month are going to panic out if they chose wrong.

    I'm looking for a buy 1680-1700, but maybe that doesn't hold. Who knows. I'm just saying to be ready for some action soon. This tight range isn't normal and won't last much longer.

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  135. Gary,

    Ok, I see your point. But if the new ABCD-wave (that is, IF the D-wave has ended) is of a 'lower order' than the previous one out of the 8-year low, then it seems to me the new A-wave should still be able to come up with at least two daily cycles. Because if not, it would be pretty weird to have the first leg of a grand aggregated pattern like ABCD consisting of the most basic cycle pattern - a humble daily. What would be the point of that in the first place? It would be rather out of proportion, particularly considering the upcoming C-wave will likely consist of multiple intermediate cycles.

    Alternatively, it would seem more reasonable to argue that in case the current leg up does NOT make it into a second daily cycle, then for that very reason it cannot possibly be an A-wave. (Which I think was close to your position anyway, albeit not for this particular reason.)

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  137. Other than the move out of the 8 year cycle low and the weird 04 cycle no A-wave has lasted more than 1 daily cycle.

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  138. Walter,

    This was a $200+ move in a pretty stretched daily cycle, this is what A-wave's are made of.

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  139. Thats not to say we cant have another DC higher, if the stock market were to just keep running thats probably what we'll get. If the market is indeed moving into a ICL I would say this A-wave has certainly topped, unless gold completely decouples from stocks again.

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  140. Gary,

    So you're saying each A-wave usually will be one daily cycle. Which I suppose would then apply to each B-wave as well. Then what's the point in calling those two waves separately - what's special about tiny A and B? Why not just incorporate them into the C, which dwarfs both anyway, and call the whole thing a repeating CD-pattern? (And then rename that to AB-pattern, of course.)

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  141. B-waves usually run multiple daily cycles. You can find a definition of the ABCD wave pattern in the terminology document.

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  142. Gary,

    Speaking of A, B, C, and D waves and the multiple daily cycles contained within each (with the exception of A)--I would think this pattern would break down sooner rather than later if we were going to experience a currency crisis less than 36 months from now?? (obviously assuming the PM bull will peak at the same time)

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  143. Dollar's trying to reclaim the 50dma here, gold breach the 20dma.

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  144. At what point would the breach of the 20 make you enter? A set number, the market action or would you wait for the 3 am opening?

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  145. Phil,
    The currency crisis probably won't intensify until 2014. The really scary part will occur in the last three months as the dollar moves down into its next three year cycle low, due probably in the fall of 2014 or early spring of 2015.

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  146. Matt,

    Market action, I wouldn't wait for the European open because as you know gold could be $20-$30 lower by then if the floor falls out. Lets see how things go below the 20, I would like to see a heads up Newton.

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  147. Gary,

    Thanks for the reply. Your response re-confirms my thinking that everything is going to be compressed/accelerated moving forward. Fall of 2014 is only about 2.5 years away--30 months give or take....which is not long at all! Will be interesting to see how it all plays out.

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  148. I mentioned this in the past a few times, gold is completely squeezed between the 10dma and the 20dma now, it will pop one way or the other, the 10dma will either force it below the 20dma or the 20dma above the 10dma, if my falling fruit pattern plays out the 10 and 20 will pinch the fruit from the end of the branch and gravity will take hold.

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  149. The head of the International Monetary Fund may get a new face.

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  150. I want to make an additional point about mininig stocks vs 'straight metal' with a chart I have never posted:

    imageshack[PUT.DOT.HERE]us/photo/my-images/696/hui2cef.gif/

    (CEF is 50/50 gold and silver bullion)

    The blue lines, of course, show the uptrend till 2004 of miners beating metal and the downtrend since which shows no stopping yet.

    It appears that the argument of most for owning mining stocks (and to keep guessing when to buy them) is the PINK line.

    In other words it is the argument that at some unknown point in the future, the mining stocks will surge tremendously in almost zero time (a day? and hour? a week?).

    Boom! POP! All profit made instantly. Losers...winners...game over!

    Thereby making up all underperformance to date and putting them far ahead of straight metal. That if you aren't in you won't win. You MUST buy now cause they are 'clearly undervalued' and you can't be in that pink line if you wait till after.

    But this argument doesn't fly.

    There simply isn't a valid example in history of a recognition or change happening like this.

    Yes, individual companies can be taken over and you see charts like the pink line all the time, but it isn't going to happen to the entire mining sector. (If it did due to a war or massive crisis event then I promise you the 'straight metal' will do MUCH better.)

    The rational view (that I take) is that *IF* the mining stocks will outperform, they will begin at some point...A BIT.

    Then a bit MORE.

    Then it will gain some steam.

    Then it will go faster and faster.

    Then it will go mania.

    Essentially, the GREEN LINE.

    The thing about the green line is that there is NO RUSH to catching it. You just wait until you see something clearly changing that trend and then move in.

    Why have arrows in your chest for being early? Lotta arrows from 2004-now and bodies laying on the side of the road.

    So I just wanted to illustrate the PINK vs GREEN argument and why I think a person can and should wait to see GREEN and stay in straight metal investments until that time.

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  151. aah that is the falling fruit pattern, sweet image, thank you ww, maybe like cranberries those points are already fallen and mr orchard will have them floated up and juiced......it is close isn't it. i can't sleep just yet. you thinking silver will follow gold here?

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  152. PS: my chart does NOT show two more lines that I should have put there:

    -a line that goes flat
    -a line that keeps going down

    so 3 out of 4 lines argue for waiting and 'show me'; 1 line (which doesn't exist in reality) argues to buy now and 'get in before...'

    The final argument people have for buying miners is you are buying 'good value in the ground'.

    Not many people focus on those last three words. And when they so they often talk about it as a BENEFIT which is funny to me. About how "cheap i'm buying ozs in the ground".

    I may be wrong, but there isnt' much I have that is valuable 'in the ground'.

    -in my hand? yes
    -my car, my house, my bank account?
    yup

    not in the ground.

    Cause in the ground means there can be a whole mess of reasons why it never leaves that ground and ends up in my hands. Or by time it does there is no profit in it because some entity decided I needed to 'share' the profit.

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  153. OK, end of my latest 'metal vs miners' rant. Back to your regularly scheduled program....

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  154. $TRAN broke down even further today, very close to busting down through 5000.

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  155. I have probably said this before....

    It's a mistake to say that there is or has been deflation in Japan. Deflation is a monetary phenomenon and if you look at M2 it has chugged along at 1-2% typically for the past 20 years. A Unlike the US, the Keynesian policies here (disregarding some weak QE attempts) have been on the deficit spending side. Politically, it is different if you have a nation of savers versus debtors. In the US, the average Joe thinks he is better off if the Fed creates inflation because Joe is in debt. Thus, there is a social compact that the Japanese people buy JGBs at less than 1% yield and the circus keeps on going...... Some of this is not voluntary via pension funds etc. (45%) but 50% of JGBs are held by banks and individuals (could of course be in mutual funds or other packaged financial products).

    The fact that you have had price deflation in Japan is healthy. There are many factors involved in that like liberalizing agricultural barriers in the early 2000s. Many westerners have odd anecdotal views that goods are extremely expensive in Japan, which date back to the bubble days.

    Referring to the JPY, it was undervalued during the credit bubble because of the carry trade. Hence it went from 120 to 80 vs. the USD. But if you study the True Money Supply data then you will understand what is going on.

    http://blogs.forbes.com/michaelpollaro/files/2012/02/RTMSGlobal-2-12.pdf

    Pollaro also has Japanese data post 2004.

    This is also puts to rest the fantasy that there is or has been any deflation from 2008 to date in the US. M2 or M3 can send false signals because they are not true money measures. But even M2 never went negative during the crisis in 2008, although Euro M3 was close. BTW, you want to use TMS2 and not TMS1.

    BTW, where I live (the most upscale in Tokyo) a 200 SQM house probably sells for around $2 million and this depends a lot on the age of the house. Which is not cheap but there are more expensive places in comparable locations, e.g. Manhattan, West London, etc. Consider that 20 years ago it would have sold for $15 million or more. Another factor is that the value of the structure is depreciated over 30 years. So if you buy a new house then you should expect depreciation of the value of your house. So a 30+ year old house only has value based on the land. This notion is mindboggling to the average American or European. But again, this is NOT deflation......

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  156. I can't figure out how anyone can live in Tokyo or NYC and not end up sucking their thumb curled up in a fetal position in the bathroom after three years.

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  157. Hi Frank. Bill here in Fuchu-shi.

    I read your blog twice, and I'm confused on 2 things you said. Can you please clarify for me, as it may just be a typo.

    "It's a mistake to say that there is or has been deflation in Japan."

    "The fact that you have had price deflation in Japan is healthy."

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  158. Also, I'm no economist so I see I've used the word "deflation" incorrectly. Japan did however have a housing bubble - as now does the US - and so my point earlier today was that after the US had their good laugh at Japan, they then proceeded to do the same thing.

    Good point about Japanese being savers vs. Americans often times in debt, and that they see being in debt as being smart.

    Am also curious your take on gold in US$ terms.

    And any other points you have. ;-)

    Oh, 1 last thing: as you know Japan is about the size of California, yet has 1/2 the US population, yet most of Japan is mountainous and uninhabitable, so that explains to me why land prices are high - little land, lots of people per square meter, as compared to the US.

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  159. Miyagi-san, why do think that?

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  160. TZ, some of us don't buy GDX. Try your charts for the likes of NGD and SLW, which are my biggest holdings and my reference point is Oct/Nov 2008 when I bought these things.

    I bought some SLV at the same time as SLW. The former is up 4X and the latter 14X or something like that. Sure, ideally I would have sold last February, bought SLV and then liquidated to cash around May 1. But it's easier to do that with hindsight.......

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  161. Good mornng all!

    Gold and Silver are still holding pretty well considering the Usd, but Copper looks like it is giving up....let's see what the next 2 days bring us.

    Gary,

    If today is Day 12 of a new cycle for the stockmarket, is it a bit too soon for a move down to a Dcl? And if it really initaite a move down, that would mean a lower low than Dec low, right?

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  162. Or some of us just buy GDX at cycle bottoms and sell them at cycle tops.

    At the coming ICL the miners are going to be the bargain of the century, but many won't pull the trigger because of past history. During the bubble phase miners will produce millionaires and billionaires.

    Liquidity will eventually find its way into undervalued assets. This is one of those laws you can take to the bank.

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  163. Sophia,
    I covered that in tonight's report.

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  164. Gary,

    Re-read it...right, HCL...I forgot about half-time! Thanks!

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  165. The true definition of deflation is in monetary terms and the TMS in Japan has not dropped over the past 20 years to my knowledge. The only TMS data I have is Pollaro's post 2004. But M2 shows a flat line since 1990. I always use price before the word deflation when referring to the conventional. Maybe I should say general price reductions to be clear.

    A key difference is that Japan has been able to push debt to 200% of GDP (I forget the net number). The US cannot without breaking the global bond bubble. It's really precarious in Japan. I think at 2 or 2.5% interest rate on its debt then the Japanese government would be insolvent, not able to cover the interest payments! Another 4 years of Obama (or Romney.. ha!) and the US will be in the same boat.

    Sure land prices are elevated but they are down about 80-90% from the peak. But population is also contracting.

    I have no clue what Miyagi is on about. Anyway my stay here is limited to 3 years, so I should be ok..... Actually, the neighborhood I live is extraordinarily quiet and residential with SFHs. But an 8 min walk and I am in the madness from Lost in Translation. Best of both worlds.

    Where gold is going short term, I have no idea. Long term it is going up, but I think most people here would agree. I don't the December low will be broken, but I said the same after October.

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  166. Japan has huge inflation and their country/system are going to collapse hard just like most of the others.

    As Frank says inflation is monetary based.

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  167. FRANK,

    >Try your charts for the likes of NGD and SLW...

    I addressed those types of comments many times before. You are clearly on the ball based on your inflation comments so I will simply say there are clear flaws in asserting one or two stocks against my "gdx/hui vs straight metal". I leave it to you to work those out.

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  168. As gold dribbles lower tonight I mention again my earlier comment:

    GLD sweet spot for options seems to be 135 and that would roughly put gold in the 1680-1700 range I'm seeking to buy.

    I also said that moves heading into options ex tend to occur before fri. Fridays' often just flatline.

    "Before fri" only leaves us with tomorrow so a drop below 1700 by tomorrow fits my expectation.

    My orders down there have been live for over a week so we will see what happens.

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  169. WW I went short gold 1726.2 as looked to me the fruit was falling.
    Could be wrong as am 50% of time but have stop at same price so rarely lose much. This my last play between the hedges as have been ground up before if not trending. Hopefully in bigger on the ? dcl-Icl. You still waiting?

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  170. Still short at 1737.60...June contract....saved by the fact that kids and I had a busy schedule yesterday and I didn't switch my PC until late afternoon

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  171. I think that Gary is right in terms of timimg...
    This Greek/German relationship is going to deteriote until the 20th March, then default or last minute deal is difficult to say, but it will be time to buy then

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  172. Great deal Sophia, I was to chicken to short at 1736. Not have my setup.

    As always thanks WW you're the best.

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  173. Riley,

    Thank you but it was William who gave me the guts to short on Monday....and since I saw the rally above 1740 after the fact, I was lucky enough to keep it....But we shall see how far it goes, it seems that everybody is ready to jump on bioard at 1680, so I am not sure we will even get to 1700!

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  174. For the 2nd time in 6 trading days SLV printed a red candle that engulfed the previous day's red candle. Since mid 2008 just one of these instances has signaled significantly lower prices ahead for SLV. Now we have seen 2 instances back to back. I'm not sure how significant this truly is. I first noticed this phenomenon with UUP. Just something to note. (It does not apply to all markets.)

    One mistake I made a few posts back (Bill I'm talking to you): The SLV Jan 31st red candle did not engulf Jan 30th's red candle. I was not zoomed in far enough. Jan 30th was actually a white candle with a red border.

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  175. Just noticed this CNBC article on gold, saying that prices will dip below $1500 over the next 3 mos, according to 20 HF's, economists and traders.

    http://www.cnbc.com/id/45718622

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  176. That would mean the D wave could still be alive.

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  177. Bill,

    That CNBC's article is dated from 18 Dec 2011....we touched 1523 on the 28-29 right?

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  178. WW,
    Still watching for that DCL, let me know when you see it!!! :) Thanks

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