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Friday, August 3, 2012

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Just as I expected the stock market is back knocking on the door to new highs. My expectation was for the Fed to do nothing. The ECB I really had no idea. But I was looking for a couple of days of mild selling following the Fed statement and then a resumption of the intermediate trend.


I said last week when the bears started calling for a new bear market that it was too early in the daily cycle for stocks to top.


Mark another victory for cycles :)

62 comments:

  1. Shawn,
    Should I mark to market daily the gains we are making? You demanded I do that with the previous trade.

    Just so you know we are up quite nicely and that draw down we took is quickly evaporating.

    No system is flawless. Every system will take a hit from time to time, but in my many years of investing the system I use of cycles, sentiment, COT and money flows is the best I've ever found to generate long term, and more importantly sustainable gains.

    Might I suggest you fellas renew your subscription so by the time the next C-wave is done you will have made some money. :)

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  2. Spain inched closer to seeking a sovereign bailout on Friday as Prime Minister Mariano Rajoy opened the door to a request

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  3. Crazy times, Gary's still standing!

    Using my 401k s&p got in at 1279(ish), got shook out at 1372...did pretty good for my sorry butt.

    Now my problme is I fear a re-entry mostly because of the Transportation divergence, am I correct to feel this way?

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  4. There is no divergence. Neither the transports nor the industrials have moved above or below the last intermediate pivot.

    Tiho was just being Tiho, but his comment about the transports diverging had absolutely no significance.

    Despite the dollars surge yesterday it still looks like it has begun a move down into an intermediate degree bottom. That decline should drive stocks and commodities higher for the next 2-3 weeks.

    Like I've been saying I don't think we get any serious downside until the S&P tests or marginally breaks out to new highs. Certainly not until the dollar cycle bottoms.

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  5. I don't see any reason to be excited by a one day movement, but just my opinion. I'm pretty sure you know that too, especially if you look at a weak performance by GDX today during huge risk on. QE3 is off the table now with jobs, break even rates and Core CPI too high.

    I do not flip flop around, so when I buy or sell something, I hold it for a longer run, not a day or a week. The shorts I hold on the market will not be closed due to one green candle or one red candle, or several candles in either direction, but will be closed when my market outlook changes.

    Has anything changed?

    No. When I look at the markets, they S&P 500 is back to where it was last Friday, last Monday, and last Tuesday. Earnings and revenues will continue to disappoint, GDP is going to continue to disappoint, profit margins are falling for the first time since 2009, PMIs and IPs are weakening globally and long term breadth continues to weaken.

    The overall rally strength out of June bottom is based on defensive sector strength and that spells trouble. Cash levels according to Rydex funds, retail money markets, AAII allocation surveys and pension funds are super low. The VIX is at 16. His is a time to panic, not be bullish, but you ARE a contrarian indicator so it would be strange for you to be bearish here.

    I'm thinking about opening up another small short on Retail Sector (XRT). I think we are about to break down. I personally think when economists look back on US GDP they will realize that a recession started when US ISM collapsed two months ago and retail sales posted three month declines. Retail sector always breaks down first into a recession.

    Besides commodities are up a lot more than equities, and I hold a lot more PMs and Agricultrue than I have shorts in equities.

    p.s. you act like a kid with your posts. For a 40 year old man, you are very immature.

    p.s.s. your comments are going to look awesome in months from now when stocks sell off hard and reality of a major slowdown sinks in.

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  6. p.s. Dow transport stocks have a HUGE divergence with Dow Industrials. This is a major negative and only a blind 40 year old (you know what) cannot see this one coming lol!

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  7. Dow Transports vs Dow Intrsutrials chart

    It looks like a total disaster and the VIX is very low. In the meantime, Dumb money is bullish and singing victory songs. Now that QE3 is off the table and so is Super Mario's bond program (for awhile), all the surprises will be on the downside in coming months. September and October are seasonally very bad for the stock market.

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  8. Most traders that are in a losing trade use the excuse that they are holding for the long run. At least I admit when I'm wrong. I clearly miss timed the previous entry on miners and it cost me a 22% gain back down to a 9.6% gain. Sure I could have used the "I'm just holding for the long run" excuse and not have to admit the loss.

    I didn't do that though did I?

    You use that excuse to keep from flip flopping. But that excuse lets you turn a loss turn into a bigger and bigger loss.

    What any professional knows is that flip flopping isn't a fault. It's a very necessary trait that keeps one from generating big losses.

    When the market tells one you are wrong the absolute correct strategy is to flip flop has fast as you can.

    I've been telling subs not to expect any big moves in the precious metals right now. Gold is in the consolidation phase of a new C-wave. Those are almost always a slow grind with a generally upward trajectory but I doubt we will see any real momentum in the sector until we get into the high demand season later this fall.

    However the big gains are going to come from miners because they got the most undervalued and liquidity always eventually finds it's way into undervalued sectors.

    My system is the best I've ever found for long term gains. It suggested that this would happen.

    Again might I suggest you get a subscription so you can make some long term money :) At least you would get a working knowledge of cycles and you would at the bare minimum understand that 22 weeks into an intermediate cycle on the dollar index is not the time to sell short.

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  9. When stocks/currencies start to show weakness then I get short - just that simple.

    So.....until I see it.....I go with the program... and check my fundamentals at the door.

    Being right about the long term / mid term is easy - I just get bored with it, and choose to participate in a slightly higher frequency type trading.

    Take for example my 4% gains (I sold) today alone....Ill stuff that in the account - and just have more ammo for the long run.

    Youve sure got it right though....a candle a trend - does not make!

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  10. Blog,
    I tried to point out to Tiho the other day that the trend is up. We still have higher highs and higher lows. As long as that remains the case most market participants will continue to buy dips until sentiment gets extreme.

    Tiho is trying to buck the trend but he's still to early. Sentiment is neutral at best.

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  11. Please do not misrepresent the truth. I haven't lost any money, because you only lose when you close a trade. Im not sure what you are on about, you are acting like a kid and over execrations everything. I'm still long commodities and short stocks and nothing has changed. I'm not sure why you make silly remarks about how i should be covering shorts or how I am wrong when it's only been one day or one week.

    What's wrong with you man? Are you a day trader or something? I don't trade, I invest and flip flopping isn't necessary for me. That is why I find it so strange how much flip flopping you do. I don't use stops or margins or leverage. It's not my style.

    And I'll remain short stocks until capitulation occurs, VIX spikes and bears come out of hiding, crying for more QE3 as recession becomes obvious.

    And I'll remain long Silver and Agricultrue until the final mania spike sometime several years away with a buy and hold. I've been long these investments for ages and ages. You can see updates on my blog and I keep buying into these investments every quarter or whenever sentiment is bearish.

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  12. Bam new highs for the move. Just swallow your pride and get a trial subscription :) You won't regret it. Cycles are a very useful tool.

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  13. I have no problem with being too early, but If I am wrong or right, we will see where stocks will be in months and quarters from now. I haven't shorted anything since 2008. I was even bullish last year in September and October and refused to call a recession (link here).

    It's been over three years since the bottom in March 2009. My opinion is that now is the time to get bearish, now it's the time to expect a slowdown. After elections things will turn for the worse. Now is the time to sell not strength and now is the time to be bearish. Months from now, everyone else will be very bearish!

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  14. No thanks... I rather donate money to charity.

    Besides, I'm already very lucky enough to be a subscriber to Docs website, so if I need any cycle help, I'll ask him. He is a great trader with great ability to anticipate moves and also turn cautious when time is right. And he is amazingly polite and a real gentleman, unlike some.

    Gary, here is my view: try and be a contrarian and go against the herd for once.

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  15. Let me give you a quick cycle lesson.

    The next intermediate decline that you are trying to catch isn't due until late Sept to mid Oct (that's the trough not the top). The current daily cycle is only 8 days old. It's too early to expect that cycle to top.

    Wait until the dollar's intermediate cycle bottoms before selling short.

    The dollar is now in a failed and left translated cycle. The normal duration of a dollar daily cycle is 18-28 days. So stocks should still have 2-3 weeks to rise while the dolalr declines.

    Once the dollar bottoms that is when you want to sell short stocks for a move down into an intermediate degree bottom.

    I'm telling you even just a one month subscription so you get a working knowledge of cycles will pay off handsomely.

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  16. I would be more than polite if you had started out that way to begin with.

    You came here with the intention of being rude and obnoxious so I'm enjoying rubbing your nose in it.

    Anytime you want to change tactics and start acting civil and use the blog as a learning tool I'll be more than happy to bury the hatchet and start over fresh.

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  17. I'm not here to learn. I'm here to prove that you are a contrarian indicator. I have a bet running with I few mates here in Asia that I can do it. Hopefully, I'll be successful lol!

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  18. I hate to point out but I've been right on the money with everything except one early entry into miners and 4 days above the June 1st high in the dollar.

    If anything I'm about the most exact opposite of a contrary indicator there is.

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  19. Hahaha! I guess I'll lose my bet...

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  20. You're already losing it. I suggest you flip flop as quickly as possible.

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  21. The Cyclical bull in secular bear on average lasts about 3 years. We are now past 40 months so the final top is close.
    Another nominal high is possible but after that it is curtains.

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  22. Siaf,
    That would be so under normal circumstances and it was my premise for expecting 2012 to be a terrible year as it should have been a four year cycle low.

    However I'm starting to think the central bank interventions and money printing are stretching the four year cycle into a 6 year cycle. In that scenario we would get a top some time next year followed by a bottom in 2015.

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  23. "Months from now everyone will bearish!" ......no really!? - and then what? - you will declare you where right?...oh man..this gets better by the day.

    Im all for buying/selling "around the horn" as I too am often guilty of being to early (actually I generally scale in contracts at as many as 5 - 8 buys/sells adding to a position before the final turn is made) ..but months!? - what's the point? Nothin "right" about that...sitting around for months just to get break even....or worse adding to losing trades only to find them going further against you.

    Just admit you're wrong (moreso for yourself and your future trading/investing - in that han
    ging on to losers is just plain inexperience and pride)and get back on track.

    I mean really...the money is literally staring you in the face at this very second as indices continue to climb! There it is!..whoah! - there is some more!

    Sitting around waiting... just to get back to break even is nonsense.

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  24. Gary,
    I know you do not follow foreign markets , but just for funsies if the CBs are so powerful how come all merging markets, all western markets ex -US are in a bear market?
    How come all Peripheral Euro bond markets are in a bear market?
    The total capitalization of all those markets is several fold higher than that of the US stock market.
    How come the CBs are failing where they need to succeed?

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  25. France, Spain, Italy, China and Greece are certainly in a bear market. None of those countries can print their own money except China which has been trying to pop its housing bubble and reign in inflation.

    The US, Germany, Great Britain and EEM are not in bear markets yet. Most are in a trading range very similar to what happened from 37 to 45.

    The US which has been the most willing to debase it's currency is quite clearly still in a cyclical bull. Granted we are still in a secular bear.

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  26. Great point Gary.
    Now China can and has been printing its own currency to keep the Yuan pegged.
    In fact by every measure China's printing is far in excess of the US, yet its stock market is down more than 60% from the peak and making new lows again.
    Why so?

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  27. China had a massive bubble in 2007. It's going to take a long time to recover from that.

    China also has to move to a democratic political system in order to sustain it's long run economy. Extractive systems always eventually hit an economic dead end.

    If China makes that transition then we will see China as the next world super power of this century. If not then they will go the same way as the Soviet Union and burn brightly for a brief period of time, then stagnate and decline.

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  28. Gary possible daily swing low in gold?

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  29. It would have to go above $1618 to form the swing. I think it probably will though next week.

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  30. "Shawn,
    Should I mark to market daily the gains we are making?"


    Gary,

    Sure, if you want to make lavish claims like beating world 95% hedge fund, then you better have something to back it up, like cumulative-daily-returns for the year published on your site.

    But please, don't behave like a 40-year testoteron guy with too much hormone, that you make all the victory claims and show the number, but hide the published number once it started embarassing you.

    I know I know, your testoterone could not handle it once it went DOWN from like 20%+ down to 8%+? Right?

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  31. I changed the portfolio returns immediately once the trade had closed.

    The simple fact is that over the last 2-3 years the SMT has outperformed the vast majority of professional money managers for the simple reason that I use a better system. No it doesn't work all the time but over the long haul it works better than any other system I've ever found.

    I'm rather tired of the troll squad lurking in the shadows and only coming out when it suits them.

    Where are they now when they are clearly wrong. No where to be seen of course. I'm here day in and day out. If I'm wrong I admit it and take my loss and then I get busy back to trying to make money.

    If you want to be here for the times when I'm wrong and you want to gloat about it so be it. I'll let you take your shots. But I'll be damned if you are going to slink back into the shadows when I'm right.

    If you want the privileged of harassing me when I miss a trade then you also have to be willing to endure the same when I'm right.

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  32. gary, Again, I am not here to be ignorant or argumentative, but Gary you got to face your own records and statements, esp when you are selling a subscriptions.

    Integrity and Honesty is most crucial to a long term successful business.

    To begin with, Just read your predictions on dollar over last 3 months, and your flip-flop and denial of making any Dollar-Immediate-Doom statements.

    And then, 2 days ago Gary you have to GALL to claim you were right all along about Dollar making new high and someone owed you burrito.

    LOL! whoever the poor guy making bets with you and you now lose yet steal a burrito.

    Where is Honesty and Integrity in these?? luckily I am not here to make predictions or bets, just call out your lies.

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  33. Yes, I give you credit today for making sticking to IT trade of higher high.

    But, you had also not been truthful about your statements. Read the dollar statements.

    You were lucky that you were not trading dollar currency else you will suffer a lot of losses.

    You are probably honest about the trades you enter (gold + miners), but not honest about many other statements you made.

    But then again, why hide the performance number once it get worse??

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  34. The model portfolio performance was updated immediately on the premium website.

    I'm not planning to publish it on the blogs anymore no matter where it goes.

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  35. Shawn,
    I clearly stated I was wrong on the dollar for 4 days. That's the total number of days the dollar spent above the June 1st high.

    Let me refresh your memory. The trade was that the CRB was going to form a three year cycle low. That in turn should mean that the dollar is at or very near a three year cycle top.

    The trade is long commodities, not short the dollar. It was never short the dollar. I don't trade currencies other than a very rare trade on UUP.

    So far I have been right on the money. The CRB has formed a major bottom and the dollar appears to be following through with the top despite managing to close four days above where I expected the top to be.

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  36. The US, Germany, Great Britain and EEM are not in bear markets yet. Most are in a trading range very similar to what happened from 37 to 45.

    What is this - 1937 to 1945. So we'll get to the beginning of next bull drifting sideways ?

    If that's the case I can think 2012 to be 1942 - the bottom from there on the exit was clear. Or it is not ?

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  37. Ivan,
    I think this will play out much different than 37 to 45. The world had already experienced much of the depression by 37.

    We have yet to suffer the depression we owe for creating another debt bubble. I have to assume that our payment is still in the future somewhere.

    If we continue the way we've been going for the last 12 years, our depression is going to come in a completely different form than the one in the 30's.

    Ours will be of an inflationary nature instead of deflationary. Possibly even hyperinflationary if we don't come to our senses in time.

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  38. He will come back. Easy to assume a new name.

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  39. He's pretty easy to spot and swat. He never has anything positive to say.

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  40. Gary, if you dont mind me asking, what was the hardest lesson you learned in your business life. I assume you had many, and I imagine you have a wise head on your shoulders at this stage. Thank you

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  41. Gary I see. I was in the mid of regretting missing the Biotech move from last summer :)

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  42. Gary,
    Some could argue that the US is already suffering a depression....just that its not "offcially" recognised by the mainstream keynesian economists.
    I seriously doubt that it will ever be recognised during the phase (numbers being distorted). Some years afterwards when the data is analysed, the history books will reflect/show the truth.
    In the midst of the Great Depression of the 30's there was denial and ignorance until final recognition. Stands to reason doesnt it that professing or acknowledging a fact (recession/depression)by the regulators creates a vicious cycle and downward spiral in attitude/confidence and well being of the economy. If it aint broken ...we dont need to fix it.

    IMO we are living the depression now in many parts of the world.

    ReplyDelete
  43. DCL in USD with a bottom expected in 2-3 weeks.....does Gold find its feet and rally up to test $1640
    I know ur bearish on gold short term Gary, but this has merit and positive implications.
    Similarly Silver (although showing extreme bearishness) could test the $30 resistance.

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  44. SOMETHING TO THINK ABOUT!

    http://news.yahoo.com/us-really-experience-violent-upheaval-2020-162332158.html

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  45. I'm not bearish on gold. I have a position in miners.

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  46. joed,
    Thanks for the post.Good read.

    There is a pattern there and some very clever people have recognised that these repeated cycles are more than coincidence...they are directly correlated to certain planetary alignments (see my earlier post on previous 2 blogs). The planets in our solar system move in orbits similar to Earth's only with different time periods and because of the time differences of the orbits, such specific alignments it is believed, have an influence over the inhabitants of earth. These alignments are like clockwork OR CYCLES and are repeated over 30,84,165, 248 yrs.
    One very important event occured in 2008, and will continue through to 2019-20 (outer planets forming hard angles to the Earth). The influence of two specific planets on the USA will imply civil unrest..perhaps even civil war, rebellion (anarchy) and very clear distaste for ruling authority perhaps even a 2nd revolution. Prolonged economic troubles are envisaged.

    I find it very interesting that others are recognising the pattern there. Although their qualifications for suggesting such uprisings are "effects" not causes. What creates the problem in the first place and what triggers such circumstances is critical for understanding the eventual demise. Only to then understand that coming out of such an event is a positive and enlightening event for all.
    One recent event which most americans would be aware of is the drought...one of severest on record. In fact you would have to go back to 1931 to witness something of the same magnitude. Eerily, in that time, the Planet Saturn (in ancient Roman religion their god Saturnus was the god of Agriculture) was in transit, as it is now. Critically other outer planets have come into transit simultaneously. These slower moving planets are malicious and when aligned in certain angles/opposed to, work very hard to bring negativity to/upset the dominant planet(s).
    That's not my theory, but I find it fascinating the events we are experiencing are something more than coincidence with history and with planetery alignments. As Mark Twain put it "History repeats, but it doesnt rhyme". Same is true for planet orbits and alignment. Difficult economic times were forecast well before they arrived. As to the ongoing effects...well they too are forecast.

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  47. Gary,

    I understand.......I find this heat wave cycle very interesting also! AND it anin't all over yet if the Master Cycle plays out as it has so far....

    By the Law of Periodical Repetition, everything which has happened once must happen again, and again, and again -- and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law... The same Nature which delights in periodical repetition in the sky is the Nature which orders the affairs of the earth. Let us not underrate the value of that hint." - Mark Twain

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  48. NOTHING NEW UNDER THE SUN,,,,,,,,,,,


    http://img600.imageshack.us/img600/4799/dowj.jpg

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  49. The on going debate between stock bulls and bears is in progress. I've recently written about this on my blog, so please give it a read and vote which one you are. It will be very interesting to see the final result.

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  50. You guys and your planetary alignment BS. Arch Crawford was on Jay Taylor's radio show a couple weeks ago and stated in no uncertain term something VERY BAD was going to happen in the stock market between July 16 - the 18th. I wrote it down because I knew it was bull. NOTHING HAPPENED. Looking at the planets is fine, but there is a MUCH higher power that created them.

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  51. I'm pretty sure the markets are controlled by human emotions. The same thing that has controlled them for thousands of years and the same thing that will control them for the next thousand years.

    I really can't come up with any logical reason for the planets to influence traders. They certainly don't exert enough gravitational pull to have any noticeable effect on the earth. Certainly nothing even vaguely close to the moon which circles the globe every 27 days.

    Of course if the moon's gravitational effect was influencing traders then that effect would ripple around the world as it made it's monthly journey. So in effect it would create a wave and trades on one side of the world would react opposite to the side the moon was on.

    Obviously that doesn't happen so I have to deduce that humans are not responding to the minimal gravitational effect of the moon. And if they aren't being effected by that then how in the world could the vastly smaller pull of the planets have any effect?

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  52. Gary can you please read that post if you have spare time, and tell me which side, if any, you would be taking? Thanks.

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  53. I think the economy is slowing and in recession in Europe. That however has nothing to do with the stock market.

    The dollar is now moving down into an intermediate cycle low. That is going to drive stocks and commodities higher for the next 2-3 weeks. I expect at least a marginal breakout to new highs and maybe even bigger gains if the dollar drops really aggressively.

    But then that will be it and stocks and commodities will form another intermediate top and another multi week decline into the next major cycle low in late Sept or early Oct as the dollar rallies out of that intermediate low.

    At that point the market will call the CB's bluff and it will take real action and true balance sheet expansion if they want to keep asset prices inflated.

    I believe they will take real action because they keep telling us they will. That will rescue the stock market temporarily and start the long topping process that I'm expecting in 2013. It will also ignite the fire underneath commodities that I believe will ultimately end in a major inflationary spike in 2014 during the dollar's next three year cycle low.

    It will also complete the three year cycle top in the dollar.

    Whether or not the dollar can move back to new highs during it's next intermediate cycle remains to be seen. My guess is that it will not. But the first leg up in the CRB occurred with the dolalr rising so I may be wrong about the bottom in the CRB marking the exact top in the dollar. We may very well see one more spike higher in the dollar before Ben intervenes to break the rally.

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  54. Ok, so does that mean regardless of moves over the coming couple of weeks which don't really interest me, in general you are very bullish on commodities for the next couple of years, relatively optimistic on stocks to stay around these levels or a little higher into 2013 and therefore bearish on the Dollar?

    What about Treasury Bonds?

    Am I right to assume those longer term outlooks? So go long commodities, don't short stocks, short the US Dollar for the next few quarters to say the least?

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  55. One can go long stocks aggressively for the next 2-3 weeks.

    Then one could short stocks or go long the dollar for the move down into the next intermediate cycle low in late Sept or early Oct.

    Shorting stocks is going to be difficult though as the move is going to unfold over many weeks. That usually means it's going to be a very difficult move with many counter trend rallies. Going long the dollar would be a lot less volatile and easier to hold onto than short stocks.

    Commodities should also experience a significant correction during this period.

    But once we get the next round of real QE then get long everything, commodities will vastly outperform stocks as this progresses for the simple reason that inflationary pressures will start to compress profit margins.

    This is the topping process I've been talking about in 2013. At first stocks will rise on the back of the next QE but they will start to stagnate as inflation heats up.

    Ultimately I would look for a top sometime in early to mid 2013 but it's going to be a very difficult top with multiple retests of the high before finally giving up and heading down in earnest late in the year or in early 2014.

    Bonds I really have no idea what to expect. With the Fed constantly in the market I don't think it's being allowed to trade freely.

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  56. Ok thanks for your opinion. I'll check back in September.

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  57. It makes sense. Lets see how it plays out.

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  58. Gary is absolutely spot on with his "100% completely free" outline of the coming months /year......

    As well....there will be incredible gains/opportunities to be found in the currency markets.

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