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Sunday, August 19, 2012

Dollar, Stocks, CRB

Just a quick post today illustrating what I expect over the next 2 years, and the intermarket relationship between the currency markets, CRB and stocks.

Pay particular attention to the inverse relationship between the dollar index and the CRB. Notice how the CRB almost immediately began moving down into it's three year cycle low once the dollar formed it's three year cycle bottom in May 2011.

Stocks are driven by not only the dollar but to some extent by commodity prices. When commodities start to surge too high they act as a drag on the economy and consequently the stock market begins to stagnate. When commodities are falling, like they have been for the last year, it tends to act as a mild tailwind for the stock market, which explains why stocks have continued to rise for most of this year despite the dollar moving generally upwards since February.

I think I have mentioned before that virtually every recession since World War II has been preceded by a spike in oil prices of 80%-100% over a short period of time (usually a year or less).

The surge from $50 a barrel to $100 in 2007 was the straw that broke the camels back and tipped the economy over into recession, which began in November 07. A further spike to $147 a barrel the next summer guaranteed that the recession would be the worst since the Great Depression, especially considering that the real estate market and debt bubble was imploding at the same time.

Now that the CRB has formed its three year cycle low the dollar index should be at or pretty close to a final top, which should then be followed by a move down into its next three year cycle low sometime in 2014.

If the intermarket relationships continue to hold up, and I don't see why they wouldn't, then we should see commodity prices moving generally north for the next couple of years until the dollar forms its 3 year cycle low in mid-to-late 2014. At some point along the way rising commodity prices are going to begin pressuring the economy, just like they did in 2007 and 2008, and also in 2011 as the CRB surged up into its final three year cycle top.

My current guess is that we will see the stock market start to stagnate in 2013 forming a very extended rounded topping pattern. By late 2013 the stock market should be clearly in a new bear market that will begin to accelerate to the downside as commodities spike into their final top as the dollar bottoms in 2014.

At that point I expect to see a severe deflationary event as the stock market and commodities collapse, similar to what happened in the fall of 2008 and early 09. This collapse and deflationary event should be accompanied by the dollar rallying out of its next three year cycle low in 2014.

Most bear markets tend to last between 1 1/2 to 2 1/2 years so we can probably expect a final bottom in early to mid 2015.


  1. Nice job gary thank you. You said a while back that you think the 4 yr stock cycle would be extended to maybe 6 years. Why did you think that?

  2. I think the reason it is happening is because CB's are intervening in the currency markets. That is causing the 4 year cycle to stretch.

  3. Oh Gary there you go chasing the dollar to its premature 15th demise based on your predictions.

    CRB's bear market rally is almost over.
    Dollar should bottom soon and then launch a rip roaring rally.
    I would think around Tuesday or Wednesday, although Speigel's senseless comments over the weekend regarding unlimited ECB bond buying might be the "Europe might be saved " headline that might bottom the dollar.

  4. We'll see which one of us turns out to be right as events play out over the next 6 months - 12 months or so.

  5. I will say this; in order for your scenario to work it would require the dollars three year cycle to be extremely right translated with almost no dip into the three year cycle low in 2014.

    It would also require that the next bear market either be very short and only last one year, or extremely long and last 3-3 1/2 years.

  6. Sounds good but so far you have been wrong on most of your calls.

    We need QE3 for the dollar to go down and we are not even close to that. Dollar will rally. You are wrong (again).

  7. Deflation is occurring right now. We are currently in the middle of a dollar rally (I am so amazed that you cannot even see that).

  8. Yes all of that and more will happen.
    QE3 will not occur or will have almost zero impact.

  9. http://www.alsosprachanalyst.com/economy/chart-chinarsquos-iron-ore-price-hit-new-low.html

    This is a sign of things to come for all commodities, most importantly base metals and steel

  10. How bout this.....regardless of daily/weekly calls....regardless of short term/medium term trade ideas...regardless of the volatility that could most certainly maked anyones charts "squiggles n zig zags"...complete opposite anothers - with generally the same long term outcome.

    If the big boys have learned anything from the last crash (2008)..and if we consider the GLOBAL ECONOMY moving forward.(WITH ALL GOING ON IN EU...CHINA ETC..)...BOTTOM LINE - DOES IT MAKE MORE SENSE FOR EVERYONE INVOLVED - EVERYONE! - FOR THE DOLLAR TO RISE OR FALL?

    I think Gary has put his view out there quite straight forward.

    So....for the well being of a now "GLOBAL ECONOMY" - what say you SAIF?

  11. Dollar to the moon....and in tern its global implications.

    Seriously...lets (for my learning for sure) flush it out - lets entertain the dollar literally "to the moon".


  12. Pibe,
    Other than an early entry into miners, which I've freely admitted to multiple times what else have I missed?

    The dollar has closed a whole 4 days above the June 1st high that I was expecting to cap the rally. Up to this point you can't seriously consider that a miss.

    I called the bottom in the CRB almost to the day. I got the bottom in stocks in June and the last daily cycle low in stocks on July 24 almost to the day.

    I correctly predicted that the entire commodities complex was waiting for the oil cycle to bottom. Notice the grains didn't start to rally until oil bottomed despite drought conditions that have been building all summer.

    I correctly called the bottom of golds B-wave in May.

    I said back in February that gold would have to trade sideways for most, if not all this year, and that we shouldn't see a breakout to new highs until next spring at the earliest.

    Does one early entry into miners outweigh every other correct call?

    Does a system have to bat 1000% before you will acknowledge it's merits.

    I have news for you, no system in the world will do that. The best in the world rarely get it right more than 60% of the time. What I've just described to you is a system that's getting it right about 80% of the time and even the one miss was just an early entry that suffered a draw down. The direction was still correct.

    So if you want to get technical there are no missed calls...well other than the 2012 being the worst year since the 30's. I now believe Central Bank interventions in the currency markets will delay that until 2015.

  13. Pibe,

    The stock market is 4 points away from a new bull market high. The CRB just turned in a 15% rally in three weeks. Oil a 25% rally in a month and a half. Gasoline a 26% rally in a month and a half. Corn 63% in 2 1/2 months. Wheat 58% in 2 months.

    So when you say we are in a deflation I have no earthly idea what the hell your talking about.

  14. In order to believe in these perma bear theories one would have to believe that central banks are lying about their intentions to step in front of a recession. This would be contrary to everything they have done since 2000.

    Are we seriously to believe that the money printers of the world are really going to step aside and allow everything to collapse after they have worked so hard to reflate asset markets?

    Not once have they chosen this path. They certainly didn't do it when the credit bubble imploded. On the contrary Bernanke printed like a madman and drove the dollar below long time support at 80 for the first time in history.

    It didn't have the effect he was looking for, and instead spiked the price of oil to a level that collapsed the already weakened economy.

    In order to expect a different response this time one would have to assume that Bernanke learned from his mistake in 2007 and 2008.

    Does anyone really think that Ben is that smart? I think he is an eternal Keynesian and completely incapable of admitting 2008/09 was his fault. So to that end I think he is going to make the same mistake again.

    1. Bernanke is a $ucking lunatic academic that serves to protect the long-term interests of the banking cartel who's sole exhistance is to leach off of productive society like the $ucking ticks they are. The fully fiat debt and trust based fractional reserve banking system is rotten to its inner core and will burn to the ground. Gold and silver are, have and will be money (not credit) after the criminals in are done looting what is left of this monstrosity we call the global economy. And that's all I've got to say about that. Oh and if you've got a problem with what I've said and how I've said it... The $uck you too. :-)

  15. Empirical Proof of current Deflation:



    "So when you say we are in a deflation I have no earthly idea what the hell your talking about"

    Of course not and that's the problem with you! Specially when you are supposed to be well informed and provide economic advice to your subscribers!

  16. Seriously? You counter a 25% rise in oil with zero hedge/Mish conspiracy nonsense.

    These two sources have been perma bears since the beginning of time. If you take advice from either of those you have no chance of ever making any long term money in the market.

    I suggest you delete both of those from your reading list. You will end up with a lot more money.

  17. Edwin G. Dolan: Economist and educator with a Ph.D. from Yale University. Early in his career, he was a member of the economics faculty at Dartmouth College, the University of Chicago,etc..


    Gary Savage: Author of "Smart" Money Tracker Blog, climber and lift weight professional.

    Who should I take out of my reading list?

    1. You might think that Bernanke and the Federal Reserve has go IT all figured out but in do time you'll see the market is going to $uck Bernanke and the Federal Reserve Bank raw road dog style. Bernanke keep double 'n down and everytime the market calls his bluff. If Bernanke and the rest of the clown car brigade on the FOMC want to gamble away the world's reserve currency then they'll keep going down the current path.

      The market has called and re-raised your sorry @ss again Mr. Bernanke... It's your move sir, you can call, fold or re-raise! :-)

  18. I guess it depends on if you want to make money or not.

    Did Mr. Dolan call the bottom of the CRB cycle, the bottom of gold's B-wave, The intermediate cycle low and daily cycle low in the stock market?

    Did he warn the perma bear's over and over that it was too early to sell short, and that the stock market was going to at least retest the highs and probably make new highs?

    Did he try to explain the reason for both of these was that the dollar was going to drop down into an intermediate cycle low?

    If you want to trust academics whose Keynesian theories are directly responsible for the mess we are in and have missed every call since basically 2000, then sure keep reading these people and keep loosing money.

    I told you I was going to make you regret giving up your subscription. Unfortunately just like the proverbial horse, you can lead them to water but you can't make them drink.

  19. I believe gold and the dollar can go higher together. Base metals can go lower because the demand is falling, but things we must have are going higher (food and energy).

  20. Exactly.

    No takers on the "dollar to the moon" theory.

    Granted there will be peaks n valley's - and I for one can't rule out an additional dollar rally (DCl)...fine.

    Globally....weaker dollar helps most...and further EUR strength (as it is....oh yes...the second most liquid/reserve on the planet - and likely not going anywhere regardless of current situation) could certainly bolster further GLOBAL INVESTOR CONFIDENCE NO?

    Against a backdrop of almost certain CB suppport - hey....Im a bear at heart and cant really beleive this thing hasnt already packed it in but....as per above....u wanna bet against that? those guys sittin across the table?

    I trade what I see....until I see otherwise.

  21. "dollar to the moon" - No, the FED won't allow it. The US seems to be the engine of hope. So if they won't allow DX to the moon it stands to reason we'll have dollar devaluation..one way or another.

    Kong- Yes EWZ - went long it a couple weeks ago. I like the looks on a weekly chart for a nice run.

  22. Gary,
    You confuse the issue.
    a 26% rally in 3 months? You citing stats to prove your point.
    What about over the last 4 years?
    Since 2008 oil is down at 6-10% compunded based on what benchmark you use.
    Copper, Steel, Aluminum are significantly below their former peaks.
    Ditto for Coal, Wheat, Rough Rice and Platinum.
    So 4 years and huge balance sheet expansions, and China's GDP expanding 40% over that time point, and most commodities are below those heights.

    It is easy to make fun of Mish, but he was long long bonds and Gold in 2008 when everything collapsed. Since then that call has done better than the stock market by a huge margin with almost no risk.

  23. Amen GL....I agree on both fronts.


  24. If you want to cherry pick dates then let's start at the last three year cycle low in March 09.

    Oil +174%
    Gasoline +275%
    Wheat +80%
    Gold +77%
    copper +160%

    For some reason you refuse to grasp the concept that assets move in big cycles. The CRB formed a major three year cycle low in March 09 and again in June 2012.

    The dollar formed a major three year cycle low in April 2008 and again in May 2011.

    Gold formed an eight year cycle low in 2008. The next one is due in late 2015 or early 2016.

    The stock market used to run in a pretty dependable 4 year cycle until the turn of the century. At that time we entered a secular bear market and central banks decided to fight the secular trend by printing money.

    That intervention in the currency market stretched the last four year cycle to 6 1/2 years.

    I believe central banks will continue to manipulate currency markets and this will stretch the four year cycle into a six year cycle, at least for the duration of this secular bear market.

    Instead of trying to compare prices from peak to trough, try making an apples to apples comparison and compare prices from trough to trough or peak to peak.

    I think everyone can tell that prices at the 2012 trough are holding quite far above the 2009 trough.

    At the next peak, which I believe will occur sometime in early to mid 2014, then you can make a comparison to the peak prices in 2008.

    Otherwise one would have to assume that the commodity bull market ended in 2008. If I'm not mistaken this would make it the shortest commodity bull market in history.

  25. By the way, part of the reason why the CRB didn't exceed the 2008 high during this last three year cycle is because we are in the second stage of the commodity bull market. The CRB is heavily weighted towards energy.

    This stage is being driven by currency debasement instead of demand like the first stage of the commodity bull.

    During the first stage we had massive expansion in emerging markets, particularly China, India, Brazil, and Russia. We also had a global real estate bubble. This drove exceptional demand in commodities like energy and base metal.

    Now the global economy is permanently impaired. What is driving the commodity bull market at this point is currency debasement. Currency debasement is more favorable to precious metals, and it is the reason why gold has massively outperformed oil over the last three years.

    As the second phase of the commodity bull market unfolds we should continue to see how performance in metals, and possibly agriculture as opposed to energy and base metals which have somewhat impaired fundamentals due to weakening demand.

  26. This guy, I LISTEN to: Ray Dalio


  27. Gary,
    It will be the shortest bull in the history. You will have another bull at some point, and I doubt we will come anywhere near the 2000 bottom, but 2008 highs will not be exceeded for some time (maybe 5 years).

    My point was to show how well his calls have fared.

  28. Saif,
    You are assuming someone was dumb enough to ride the entire bear market down and back up. I certainly didn't do that. I called the top in November 2007.

    We aren't dealing in hypothetical, hindsight actions. We have to trade in real time. In hindsight yes holding bonds for the duration was better than holding stocks.

    In real time no one did that. We have been trading gold for most of the duration of the C-wave which began at $860. yes we exited silver 4 days too late and it cost us some of our profits but all in all we vastly outperformed bonds or the stock market either one.

    Now we are at a point where some think the bull is over. I think CB's will continue to print and delay the process and in the meantime spark enough surge in commodity prices.

    We should know who is correct within the next 6-12 months. Essentially we will know during the next intermediate cycle. If stocks rise above the high of this intermediate cycle then the bears are wrong and I'm right.

    If stocks drop down into an intermediate low in Sept./Oct. then fail to make new highs and instead drop below the Oct. low then yes we have probably begun a new bear market.

  29. Gary, I've noticed that the oil ETFs eg USO, OIL etc suffer from decay. Can you advise of a strategy to buy into oil when an oil intermediate cycle low is in? Would a selection of large cap oil stocks instead be a good strategy? Thanks

  30. We bought XLE a few weeks ago. Or one could just buy oil futures.

  31. Thanks Gary. I appreciate you answering my dumb-ass questions.
    Hope your back is ok.
    My private opinion is that you should quit weightlifting to preserve your body and prevent future troubles. I hae some medical knowledge.
    Just my opinion, but there you go

  32. Saif.....hangin it out there on someone elses "call"...gimme a break.

    Make your own calls.....start your own blog/newsletter....attract thousands of subscribers....and throw your own hat in the ring.

    Mish has...Gary has.

  33. Why do people mis-quote/mis-understand history ?

    Bernanke did not start the problems assoc with money printing......Greenspan did with his free market zero interest rate policies.

    The "credit bubble imploding" was not the event of 2007/08...it was Bear Stearns...followed by Lehman Bros. bankruptcy. That btw was not a credit bubble event ...it was OTC derivatives causing the banks' balance sheet to be severely impaired/insolvent (liabilities > assets). FORCED BANKRUPTCY.
    Money printing was the direct action of the then secretary of treasury Hank Paulson (ex GS CEO).
    He was the one who went to congress to partition for the then $700BLN bailout of the Banks. To be followed by AIG if one remembers correctly. Bernanke (being chairman of the FED) acted under the instructions of Timothy Geithner (FED President).
    Anyone who believes the FED has acted to resolve economic issues needs to have their head read.
    They (FED) introduced ZIRP and TARP to resolve issues of debt financing (amongst the BANKS).
    The side effect of all the money printing is debasement of the currency. It was never meant to be stimulatory....moreover to ensure LIQUIDITY remained in the financial system. The side effects were well known as well. The alternative was destruction.It was clearly stated to congress that had they not approved the injection of funds (money printing/nationalization of BANKS) that the financial system would have collapsed in days.

    On that basis, we can only expect more money printing when there is another credit event/threat to the financial system. The next one is likely due to the same causes of the last one....OTC DERIVATIVES.

    Given that these still operate in an unregulated market and are opaque...the chances are very high of more frequent collapses over the years ahead....in orders of magnitude of the previous one.

  34. Smart,
    At the moment the decision is out of my hands. I haven't been able to lift since nationals.

    I'm hoping the PRP will heal the injuries and give me another year or two.

    I'm so close to the world records I just hate to quit now.

  35. BB is the public face of that lunatic assylum. That's why he takes the brunt of the bashing.
    They are all part of the Ivy League of academics leaching off society. Agree 100% its the system thats rotten to the core.

    1. Bernanke's job is to protect the interest of those who control the world's means of production and seek rent on the back of the masses productivity nothing less and nothing more. Bernanke cannot allow a deflationary credit collapes otherwise the 99% who've saved can take back what the 1% control which is why we're going to have a stagflationary (at best) and hyperinflationary (at worst) currency and bond market dislocation. Since CONgress and the US Treasury control the Federal Reserve and have since the early 1950's Bernanke is going to continue to monitize debt until the free market takes away the ability to paper over the malfeasances of a profligate spending government. Book it.

  36. Gary,you said "I'm so close to the world records I just hate to quit now".
    I know what you mean. You are just going to have to go for that then.

    My wise uncle once said to me: "age is age". Lifting those weights are putting enormous stress on your body. Hidden things like aneurysms can develop, and pop.
    But, of course, I wish you well in everything you do

  37. Blog Posts - RNM,
    I have been making calls for the USD to go higher and it has.
    I am making a call that it will go higher than any of you can fathom.
    You will see the AUD under 60 cents, Euro below parity and JPY, well probably down 75% from here.
    That clear enough a call for you?

  38. Gary @ 3:29--

    Thanks for the very helpful recap of the recent history of multi-year cycle lows.

    Why do you suppose the CB printing has stretched the stock market cycle from 4 to 6 years but hasn't stretched the Dollar or $CRB multi-year cycles?

  39. It appears the stock market cycle has lengthened to encompass two dollar cycles.

  40. Simple ...
    He either keeps the financial system functional and destroys the currency in the process, or we have a deflationary depression.

    The CRB and Stocks are going to take a beating if there is no concerted money printing exercise during September. Dollar rallies in that circumstance. Clearly your cycle theory will be tested if there is only more jaw-boning.

    Buffet, Soros and Paulson (having inside information) know something is about to happen/not happen whatever context u look at...as in CB's not delivering what the market expects...therefore markets correct ??

    I see yields on bonds rising dramatically when we have a red light on QEIII.

  41. "If you want to trust academics whose Keynesian theories are directly responsible for the mess we are in and have missed every call since basically 2000, then sure keep reading these people and keep loosing money."

    I can't take seriously anyone who doesn't know how to spell "lose."

  42. Crystal clear Siaf...absolutely crystal clear...and I do appreciate that.

  43. Yet another day with the usual "Morning pop or flop" to keep / bring us back to the top or bottom of this incredibly tight range.

    The U.S sesssion is serioulsy just paint drying - god...usually until Thursday!. Good luck this week all.

  44. liquid,
    The next intermediate cycle low for stocks is due in late Sept or Oct. Gold is due in late Sept.

    There will be no QE in Sept. That disappointment will drive assets down into their ICL.

    Actually stocks have a daily cycle low coming due right around the next FOMC meeting so my expectation is for marginal new highs by the end of the month followed by a move down as the market prepares for no QE.

    So yes we already know a drop is coming and we know when to expect it.

  45. On a short term basis the markets seem priced to perfection and could take a tumble.

  46. More money is lost trying to time (short) market tops than made in bear markets. If you don't like the market right here then stay in cash and buy into a 5% - 10% pullback because crashes like 2008/9 don't come around every 4 years.

  47. Tough crowd on this blog. Gary just gave his expectations so no need to get hostile if you disagree. Just give your position and see who gets it right. I disclosed that I got net short last week and I will stay that way unless the S&P takes out 1425 with conviction. I expect a market turn before September but am prepared to change course if price action proves me wrong. If that Bill Cara article about active ECB bond buying that was posted here is true then this rally could very well continue a few more weeks.

  48. Had to buy some BBY at these prices.

  49. "crashes like 2008/9 don't come around every 4 years."

    would you consider coal , steel or other miners (aumn,gpl..) already crashed ?

  50. My algo trades love these choppy markets and need pull backs.

  51. DX seems to be getting rejected at the (now adjusted)down trend line.

  52. copper: 3.30 is a big support level

  53. Gotta love that silver pop. I am kind of leaning towards the PMs not making a run for new highs until 2013.. who knows, I'll take it when the market gives it.

  54. I have to say only Saif has the balls to stick around when he's on the wrong side of the trade.

    I of course don't have the luxury of hiding in a hole when I'm weathering a draw down. So I'm fair game for every troll during those periods.

    The next time these fleas want to pile on during a draw down they are going to be deleted.

    You can't have it both ways. If you want to twist the knife when we're down then you damn well better be prepared to take it when it comes back to bite you in the ass.

  55. Gary maybe you can create a proprietary sentiment indicator based on negative comments on your blog.
    My puts have not fared well but they are a small part of my portfolio and I have a lot of time left on them.
    My USD call is still doing ok. USD index is off just 2% of its highs and up about 4% since I called for it to go higher.
    Still it is a frustrating market.

  56. Im sticking it out here - regardless of my hits n misses - as I value the convo as opportunity to learn - and as well to contribute, if anyone can learn from me.

  57. Hey Kong, I want to learn how to be an international man of the world like you. Living off my trading profits. Except I wanna do it from my own yacht :)

  58. Saif,
    At one time I published a troll meter that was pretty good at spotting bottoms. Of course it was just my judgement as to when the meter pegged 100% but I could usually get it to within a day or two.

  59. he he.....tough to get a steady internet single at times from the yaught - depending on where you are at!

    Even on the ground - if I could list the number of times over the past few years where Ive been thru hurricanes/power outages/net connection issues etc... - and have done my fair share of sweating over open trades.

    It certainly keeps one on their toes!

  60. In an interview today Jim Rickards confirmed his call for an ECB rate cut on September 6 and for new QE by the Fed on September 13. If its true then precious metals and miners may not see much of pullback if any from here.

  61. "internet from the yaught"

    what kind of internet service can you get from yacht?

  62. Somethign weird is brewing in these markets today. Everything says to go short. Price action implies to go short. nothing happening.

    This will be a fun week.

  63. I use my Droid as a wireless hot spot to trade when not at home.

  64. Driver, unless you pay for hotspot its hard to get tethering on a phone without rooting. especially on newer androids. I would recommend you check out FoxFi. Its the best software i found for this.

  65. Impressive move for silver. Short covering rally about to take off?

  66. I too use FoxFi. When using this fine build, please do the following;
    1) change the hostname of your hotspot.
    2) enable WPA2, disallowing snoopers from riding.


  67. Gary, you feel like mexican?

  68. Gary,
    Are you the one selling this? :)


  69. Gary, There are times in our lives that despite all our best efforts, we come to realize that we must move on or leave behind younger years ideas and beliefs. Unfortunately, we usually we cannot move on until we leave the past behind. If you make it, great! However, if your body is telling you it's time to ease up, all is not lost. Just remember when one door closes another one opens. You just have to have your eyes and mind open to new ideas and plans.

  70. ...at ease, great comment. Disappointments often lead to new opportunities. Strange how life goes

  71. I think Gary should heal up and go for it. I don't know exactly what happened Gary, but I found doing serious core strengthening helped my powerlifts. A weak core caused me to use too much of my back.

    I think Gary has a good post here. It's easy to see how the CRB and USD are opposites.

    Gary, I don't think the mistake of going in early on gold was going in early. I think cycles told you to do so. I think it was not having a floor closer in. My 2 yen. That all said though, did cycles mess up there, or what? I thought so, and so that's why I stopped subscribing - I couldn't trust the cycles. Curious your take on that now, cycle-wise? Thanks.

    BREAK THE RECORD, but 1st heal up and 2nd find out exactly what happened and why. ;-)

  72. ... or if you're broken, drop weightlifting altogether and go for 5.13a !!!

  73. Bill,
    I have arthritis in my back and neck, and a degenerated disc. Mostly it's the disc that is causing my problems.

    It wasn't cycles that failed. The B-wave intermediate cycle lasted a normal duration (20 weeks). Most of the damage occurred over the last 7 days. If it wasn't for those 7 days we would have entered pretty close to the bottom.

    The problem was that I paid to much attention to technicals instead of trusting the cycle to run a normal duration (several technical indicators gave buy signals during the bottoming process. I took the bait and had to ride out those 7 days.).

    B-wave bottoms are just tough. Every single one of them in this entire bull market has been volatile and very tough to trade correctly in real time.

    That's the key of course. What do you do in real time.

    I think we all know the trolls that came on after the fact are mostly just the usual scumbags that lurk on the internet looking for some one to kick when they're down. None of them did any better than us in real time, and most of them are on the wrong side of the market right now as evidenced by the fact that they haven't shown up in weeks.

    Like I said none of them will be allowed to post on the blog any more, they are going to join Basil in the banned club.

    They can't have it both ways. If you want to take digs at us when we miss a call, then you damn well better show up & fess up when it's your turn to eat crow.

    So far the only one man enough to admit when he's wrong and isn't hiding in a hole somewhere is Saif.

    The rest of the fleas will have to find another dog.

  74. Oh, man, you gotta be INSANE to do weightlifting with spinal problems. I'm with at ease on that one - and since climbing uses more pulling than pushing, would that work out better for you to focus on climbing moving forward?

    Just remember, the record was most likely set by someone on steroids.

  75. On that gold B wave bottom, I'm still a bit confused. As I recall, the technicals showed a whole line of reversal candles, which were all fakeouts. It was the sentiment that was bullish. And I thought the cycles said to buy. But my memory isn't so good.

    I'm still in cash, although today's action in silver looks real good. The 60 min RSI(14) is overbought, so I'm hoping for a pullback to buy the buyout.

    Good that cycles are straight, at least for you! They are a MYSTERY for me still!

  76. Yes climbing doesn't hurt my back, a little hard on my neck belaying but not too bad. But I've never had good genetics for climbing. I managed a few 12.c's when I was much lighter and in my 40's.

    I'm never going to climb that hard again.

    I have world class genetics for weightlifting. If I could just fix the low back and get two more years I think I could break the snatch world record for sure and probably have a decent shot at the clean & jerk and total as well.

    My total at nationals in March would have easily won the worlds last year.

    I'm tentatively planning on the master world games in Italy next year if I can heal my back.

    I found a doc here in town that did PRP treatments on my back two weeks ago. I should know by the beginning of next week whether they are going to work or not.

  77. Gold miners outperforming Gold by 200% since May...looks like they are leading this time around. Hold onto ur hats peeps.

    Anyone shorting AAPL ???
    Supposedly market cap is 3X total market cap of all gold/silver miners....cant be true..but it is.

  78. Not surprising since they probably have about 100X the customer base as all the mining companies in the world.

    Rule #1 in business. If you want to make more money find a way to sell your product to more people.

  79. At Ease
    That was a great post. I actually saved it because it home for me. Thanks for that.

  80. Gary,
    IMO..Its not sustainable....on a number of different metrics. Notwithstanding their "customer" base.

  81. pity those who follow anything other than the price itself -- be it mish or moosh or mish-mash-moosh

    all you need to make a buck is a bit of common sense

    S&P is banging on new highs, even if it fails and those who went in against all the blah-blah of perma-creatures, the positions are in money and will closed in profit

    did mish-mash-moosh tell you when to expected good probability low in S&Ponna tell you z

    No, he just regurgitated blah-blah-blah

    Is Mish-mash-moosh gonna tell you when to exit your position?

    No, of course not

    You need to do the work yourself, but, if you spend your time looking for answers from mish-mash-moosh et al, then when do you get the time, not to say objectivity of your own unbiased approach to do the work your self?

  82. I may buy some puts on Apple.
    The concept here is not that it is not a great company but it is the Gross margins. It is impossible to sustain those kind of GM's with Amazon, Samsung and Google on its tail.

  83. Gary,

    I am sure you have noticed the number of sell on strength days recently

  84. P,
    Yes I have, but as I have noted before they have been coming early for the last two years. I think the big boys slowly exit their positions over time nowadays. The SoS numbers are becoming worthless for timing tops.

  85. Saif,
    Again let me warn you not to jump on the short side too early. Nothing is going to go down until the dollar prints a final intermediate cycle low.

    If my cycle count is correct (and I'll admit the recent volatility has made it a bit fuzzy) then we should still have about two more weeks before the dollar bottoms.

  86. I know,

    picking tops for a market that is supported by monetary policy is like playing russian roulette

    I'd rather move stops and let market take me out

    I just mentioned that since wr are moving closer to both int and daily cycle low windows

  87. So noted Gary. Appreciate the input.
    Where you and I differ is the strength of this bottom and to some extent the timing.
    I am still thinking Wednesday (which would fall in your timing band, though early)and that would be a long term bottom.

  88. Lord Rothschild in $200 Million Bet Against Euro


  89. Actually if one were to consider July 19th as the last daily cycle low then Wednesday would fall in the latter part of the timing band. The dollar would still need to move below the Aug. 7th intraday low though.

    However my instinct says Aug 7th was the last daily cycle low. If that's the case then we shouldn't expect a bottom until the end of the month.

    Also almost no stock sentiment levels are indicative of a top yet. Most specifically we need the intermediate score and ROBO put call ratio to reach overbought levels. They aren't there yet.

    Until they are (overbought) it's unlikely we are going to get an intermediate top hence I think the Aug. 7th cycle count is probably the correct one.

  90. DOW


  91. counts are all over theplace. Is it at all possible to have one more DC in the USD before the ICL?

  92. You have the $vix putting 6 consecutive closes below 15.Last time this happened was in 2007.
    Throughout 2009, 2010, 2011 and 2012 we never had that.
    On rallies more powerful than this, against better economic conditions, we never had so low a fear index.

  93. Is that an anomaly?
    The index, the repetition, the history ...all of them are rear view mirror analysis. Its not predicting the future. Careful not to let your judgement be clouded by historical patterns.

  94. I'm wondering, if gold's B wave is done, and if C is impulsive, why we're not blasting out of here yet?

    Maybe silver leads gold this time then, w/yesterday's breakout?

  95. Uh, makes me think that there may be more to this B wave.

    Like a few analysts have said, I wouldn't be surprised to see one more big down in gold.

  96. Last comment ...

    Though this correction has been 1 yr, and that pretty normal, the depth is really shallow IMHO.

    If no QE3 is announced at Jackson Hole (as Gary predicts I believe), then I could see gold drop $100 or more.

    W/out QE3, I can't see it going up, fundamentally.

  97. Bill,
    C-wave's don't "blast". They experience a multi month consolidation phase before they can break out to new highs. Look at the chart I posted back in Feb (It's included in the last article )and you can see what the beginning of a C-wave looks like.

  98. LM on a site that makes predictions based on a time immemorial cycle pattern, that is a weird comment,

  99. Saif,
    If you look at the last bull market the VIX stayed below 15 for the majority of 5 years.

    Trying to rationalize a top just because the VIX is at 14 probably isn't a strategy with a positive expectancy.

    Like I said give it two more weeks and let the dollar get into the timing band for a cycle low. Once it is wait for a swing to mark a likely bottom.

    Let me warn again that this top isn't going to be easy to sell short. I suspect we will chop around most of Sept with multiple retests of the highs before finally moving down in Oct. Even then expect several counter trend rallies that will rip shorts out of their positions.

    If I had to guess I would bet that most of the losses will occur in the last 7-10 days and by then both bulls and bears alike will have gotten whipsawed to death and be so shell shocked that neither one will make any money.

  100. The distinction is that Gary is forward looking. Your analysis/data points are historical and offer no clue as to future movements other than by way of statistical probability. Not weird in my book.

  101. We got our "Europe is saved headlines."
    I am going long the dollar here.

  102. Instead of continually getting kicked in the teeth trying to pick the bottom and top why not at the very least wait for a swing?

  103. And going 100% short the market as well.

  104. Kicked in the teeth?
    My account is up 2% for the year. That is hardly teeth being kicked.
    I have used mainly puts for a very small value. It has not worked out but in there lies a built in stop loss.
    Here, I feel Bold.

  105. saif what happened to your 90 USD... is it still coming.

  106. Saif u kill me.

    Its obvious that you've got no plan...and that's kind of too bad considering your general market knowledge etc...

    Why not put a plan in place to match?

    To suggest a "headline" has been provided - and to actually act on it (even worse in my view - contrarian!) And get short the dollar is 100% completely ridiculous no? (please...maybe it was sarcasm?)

    Its impulsive, naive....amature..and most certainly spurred on some emotional level.

    I suspect you have likely lost considerable cash over the years and have possibley developed a "grudge" and are now trading (if you are really trading) on pure emotion.

    This will certainly clean out the rest of your accounts in a very short time.

    I mean....not even a simple Moving Average Cross on a smaller time frame chart has turned.....literally...at this moment...every single indicator under the sun (including price) is pointing straight north!

    Tell us you're kidding...please.

  107. My account is up 16% in last 12 trading days.

  108. ooops "Long dollar" sorry....common...seriously?

  109. And there are the new highs that I warned were coming.

  110. And there is the big move in miners that I told subscribers we should see this week. I think it probably has further to go and will eventually take out the June 6th high and complete the 1-2-3 reversal before the next intermediate correction.

  111. 16% Kong!! That rocks! This market is melting up. I love it.

  112. Be wary about getting too excited.

    This should only have 10-15 days left. Once the dollar bottoms (it's very late in the intermediate cycle) we've got another very difficult period ahead of us.

  113. Saif - 2% for the year? You have to realize you're on the wrong side of some trades, right? Damn - I was up 25% in the 1st Q.

  114. If you were up 25% in the first quarter with the market only up 13% you were probably using too much leverage.

    I would think twice about that. Sooner or later you are going to miss a call and that kind of leverage will turn a 25% gain into a 50% loss real quick.

  115. Its been a great month for sure...all be it - a pile of work....and likely alot more screen time than most of u.

    I am commonly up to trade the London sessions - and just as often am back out of trades or moving stops around pre market time U.S.

    I plug at it at times when we are trending etc...and equally - have considerable periods of inactivity. Its a lifestyle choice for sure.

    In any case....I likely booked profits here this morning a touch too soon - (now 100% cash again - short of eternal long hold USD/JPY) but will look for possible re entires this evening.

    I still dont see the participation/enthusiasm outta NZD and AUD that I would like too see with rallies like this...so unfortunately am stil jumpy / with my guard up.

    I can always handle missing a lil upside, or part of a move... with the firm knowledge that there are about a million other trades setting over n over n over n over again.

    Have fun guys.

  116. I don't use leverage - well, only when I trade futures. But, no, I made 25% by trading IBD 50 stocks algorithmically. I stayed with it a little to long and gave back over half, but as of today I'm up 23.88% on the year.

  117. SIL already took out June high 20.46..

    sil stronger than gdx

  118. Here is what typical IBD 50 stock algo trades looked like.


  119. Saif
    Don't go 100% anything. Ever. Play the ranges with your net exposure. In addition to increasing my short exposure I also reduced my long book into this morning spike to get me to my 15% net short target. S&P 1432 will have me covering shorts to get me back to market neutral. I still expect a pullback but gotta respect the price action. I have seen people lose the most when they thought the chances were the smallest.

  120. Rocksit,
    It is an Index. An individual stock, no I would never do that.
    Most people are 100% long all the time, what is wrong with being 100% short after a run like this?

  121. Saif
    Everyone has their own system but I'm never 100% long either. I can't time directional moves with certainty so I don't even try. Just advice though so if your system works then just ignore my comments

  122. This comment has been removed by the author.

  123. I will say.....this is the absolute largest "bearish wedge" pattern of all time...and todays "candle" has all the makings of a turn around for sure....not to mention the lazy AUD, NZD - and divergences everywhere.

    One certainly cant be blamed for considerations "short" here - I apologize SAIF... if I was a lil brash.

    Me....Ive just learned too many times (as stated here by others) I will just wait out the "toppy part" as it can (at times) go on forever - tieing up capital and grinding up accounts.

    As Gary suggests....it could go on for months..and sideways n me......dont get along.

  124. Bet whoever sold me BBY at 16.40 pre-market is kicking them self in the rear. BBY had a revenue of -2.80% year over year and you would of though they declared bankruptcy.

  125. Lyon,
    If you are long BBY,
    I recommend buying the Dec 20 Calls in addition to your existing longs and sell twice as many 23 Dec calls.
    Your risk is zero.
    The cost of this trade should be only about the commissions.
    Between 18-20 you make what you would have anyway.
    Between 20 and 23 you make additional money equal to 1X your long position.
    Between 23 and 26 Your gain on the first set of calls neutralizes your loss on your sold calls but you do make money on your pure long position.
    Beyond 26 you stop making money on your long position as well.
    Risk free way to double your bet on a takeover. Just my thoughts...

  126. Saif,
    I have no doubt you know what you're talking about with those options. I'll have to look into that.

  127. AGQ having a couple good days.

  128. This comment has been removed by the author.

  129. This comment has been removed by the author.

  130. "Lyon said...
    AGQ having a couple good days."

    short term top..

  131. AGQ 200 -> 40 ..that was Fast & Furious

  132. No kidding. Yeah I think several on this board overstayed that trade. I think I got smacked a couple times trying to time a trend reversal. There wasn't much bounce in that dead cat. lol

  133. "saif what happened to your 90 USD... is it still coming. "
    Oh yes it is.
    It is so funny that all of you who criticize the dollar, get excited and buy the Euro, whenever the ECB agrees to, and get this, PRINT MORE.

  134. I most certainly would not buy the euro. It's way too late in the dollar cycle to be buying euros or selling short the dollar.

  135. Gary, I was not referring to you in particular, But I am sure u will appreciate the irony.
    The largest up moves in the Euro have coincided with promises of ECB largesse.

  136. For the most part I pretty much ignore the news and just pay attention to the cycles. The dollar should now be on week 25 which makes it very very late in the intermediate cycle.

    Certainly too late to sell the dollar short or by the Euro long.

  137. Ok....Ill chime on here only in that -Gary! - huh?...not sure Im following you.

    If its not a at decent time for an individual to get short the dollar or long the EUR - so what then?....you had just posted you envision another 10 - 15 days of dollar weakness no?

    Ok...so you arent into trading currency...fair...but....we just went through 9 straight days flat as a pancake....xle has done absolutely zip.....GLD has barely moved...and now you more or less discount the next 10-15 days as "too late" in the cycle to do "anything"??

    Im trying to figure out how it is that you have planned...or plan...on making any money any time soon then? as you've also suggested you dont "get short".

    I dont get it.

    Flat as pancake last 2 weeks = no money....too late to "get long" or "short"..= no money ..........you dont trade "bearish/short "...which we all pressume to be the next move = no money!

    As I am an extremely aggressive and active trader....this just seems so "passive" to me!

    Help me understand!

  138. If you want to know exactly what I'm doing then you have to buy a subscription :)

  139. But Gary, you do expect a left translated dollar move? i know, first down, then up, then down hard. Right?

  140. Kaboom.

    Forex_Kong has pulled back the curtain.

    Im a good sport - and good on ya Gary.

  141. Glad to have you on board. I'm sure others will be happy to hear your comments on the premium board.

  142. Here's the vix

  143. Not sold on the reversal and don't think that the bulls are ready to give up the ball just yet. Any gap down open will likely have me adding to select longs for one more push higher. Still think we are playing in thin air up here but tops are processes. In any case its time for me to move on now so I wish you all good luck

  144. Just my 2 cents worth...
    USD move after bottoming will take some heat out of commodities (incl PM's)..but that will be fleeting.
    The gold rush has well and truly begun...hope ur all aboard the train.
    Cost push pressures will support the gold price going forward. I've said it before ...cost of mining is increasing...at rate of ~15% pa. This is very supportive of the gold price increasing to match the cost increase.
    Additional to that we have China who are agressively taking more than is readily available on market.
    Combined with CB buying and potential tsunami of buying as a result of BASEL III we have a fantastic catalyst for very strong moves in a short period of time. Basel III is not expected until Jan 13...so Gary could be right on the money there in terms of timing for the move into 1900-2000 levels.
    Break through 1640 then 1675 opens up 1700, 1750 and then 1900.
    I'm excited...!!!!!!

  145. As a former US Treasury Secretary..what this guy says you need to take note of.


    I dare say this is going to rattle a few cages.

  146. Overworked European Central Bank to Add Staff


  147. i would be very careful here in silver

  148. Yeah, be careful with silver and don't short it :)

  149. I never could figure out what makes retail traders attempt to fight trends.

    Professionals are either trend followers or regression to the mean traders. That's why they generally make money.

    Retail traders almost invariably do the exact opposite. They continuously try to pick tops and bottoms and jump on trends only once they've gotten stretched far above the mean.

  150. I at least thought GDX and GDXJ would get their gaps filled today. Nothing doing.

  151. They almost certainly will at the next daily cycle low. This kind of rocket launch is indicative of an ending move for an intermediate cycle. Depending on where the dollar is in it's daily cycle we could get a top in assets and bottom in the dollar sometime in the next 10 days.

  152. "I never could figure out what makes retail traders attempt to fight trends.Professionals are either trend followers or regression to the mean traders. That's why they generally make money.Retail traders almost invariably do the exact opposite. They continuously try to pick tops and bottoms and jump on trends only once they've gotten stretched far above the mean."

    hahahahaha,Didn't you do exactly that with the miners? Only you averaged down along the way. Talk about a retail trader mistake. Which raises the question do you consider yourself a professional or retail trader?

  153. Trades that don't work out is just part of trading. Even billionare partner to Warren Buffet, Charley Munger lost half of his clients money on his first years. He felt so bad he gave them back their money and closed his management firm - he was a pro :)

  154. Who said anything about trades that dont work. G-mans words were retail fights the trend and tries to pick a bottoms because it got stretched from the mean. His words nto mine. I just pointed out that is what his miner trade was.

  155. Lion
    If your wondering why I needed to do that it's cause the G-man had to look down his nose and take a dig at the spaceball guys comment. You also had to give a snide coment too when we have no idea why that guy put out a warning in the first place. Helmut get out here and defend yourself and let us know why we should be careful in sivler.

  156. Maybe you should read what I wrote again. I said professionals are either trend traders or regression to the mean traders. Cycles are basically a way to trade regression to the mean and that's exactly what I was doing.

    Nice try, but all you did was demonstrate your inability to comprehend what I wrote.

  157. Cab,
    Didn't mean to be snied. It was more a comment about how the market often doesn't do what we expect. Hell, I didn't expect a sharp move up with silver.

  158. Cabriolia,

    Silver seems to be overbought now (according to several technical indicators)along with most of the miners so it might be due for a pullback. That does not mean that silver is not a good investment long term - I am talking about years here-(It might be better to buy physical to not get into the temptation of selling and buying at the wrong time).

    I hope that helps

  159. Lion,
    At least you are remourseful. My bad for dragging you in it. Pibe, thx

  160. First off I made it clear the other day that trolls whose only purpose was to come on and twist the knife during drawdowns but then disappeared once the market started going against them were not going to be allowed to post on the blog any longer.

    I don't have the lecture he of hiding in a hole when the trade is going against me. I have to set here and weather not only a draw down but the endless taunts of the fleas.

    If those fleas think that they can run off and hide when the market starts going against them then they are going to lose the privilege of posting on the SMT blog.

    So far the only one with the balls to stick around while is trades have been going against him is Saif.

    Notice how no one is piling on him for being on the wrong side of the trade.

    Saif can post his opinions any time he wants.

  161. Gary, what did you think of today's Fed minutes?
    Seems like a strong QE signal

  162. I think they are determined to do it but I think it will come in October.

  163. Wait for the WSJ (fed)mouthpiece to let us know what the Fed is going to do and when. Should see something by the EOW. Otherwise we are still in the dark about QE.
    1675-1700 target on AU and low to mid 30's on AG...ST.

    Gary...is the consolidation over or just a st blip bcos of usd cycle.

  164. This should be the ending phase of this intermediate cycle. Gold is starting to accelerate and this should quickly push sentiment levels into extreme territory (the same for the dollar).

    At that point gold should begin moving down into it's next intermediate cycle low (due in late Sept.).

    The next intermediate cycle is where we should see some real gains. Probably a test of the $1900 level sometime in November or early December.

  165. Apparently a whole lot of drama here on my account!

    Cabriolia, please don't "defend" me again. Not necessary and certainly not wanted.

    Lyon, way to give the idea at least 2 hours to work. I advised being careful in Silver when SLV was at 28.80 and it closed at 28.92. Besides, based on your comments I'd prefer it if you were on the other side of the trade.

    Gary, reading the thread, I'm not sure if your comment was directed at me or not but I never advised anyone to go short silver. I simply commented based on silver being outside its upper BB and some unusual option activity in SLV. Regardless, I really could care less about anyone's opinion of my trading methodology.

    In the future, I'll just take my comments elsewhere.

  166. I wasn't commenting on anything you said.

  167. Gezzz, Gary needs to give free Midol out. lol

  168. Awww Gary,
    Thanks for the compliment.
    U r right though, people need to take the punches if they want to throw them.

  169. Hey Rocksit,

    Not sure if you're still out there but your comments this morning seemed to pretty much nail it.

  170. Darkhelmet,

    Can you please expand on the unusual options activity that you saw with SLV?


    Silver up over 30 now. Looks like everything is in BUY BUY BUY panic mode.

  171. Does anyone actually think DX will break out to the bottom side of the uptrend line? see chart - man would that rock the PMs higher


  172. This comment has been removed by the author.

  173. Last attempt that was hilarious and so true. Can you make that into a flowchart? :)

    I am sure Gary's system works for him, I have only had a problem with his occasional God Complex.

  174. I think we all know how this started. Several trolls, including Tiho, Basil, Shawn, etc. showed up with the sole intention of being rude and disruptive.

    I made a simple statement that the SMT portfolio had out performed the vast majority of hedge funds over the last couple of years. There was nothing false in that statement. We have outperformed most hedge funds. So investors could either put their money in a hedge fund or follow the model portfolio. Following the model portfolio would have produced much better results for most people.

    We have considerably outperformed the market during the last two years and the precious metals sector.

    I've never had a problem with differing opinions. I even offered one time to let bygones be bygones and start fresh with Tiho. He of course ignored the offer because his intent was never to have a rational debate but to just cause disruption.

    If your sole intent is to just cause disruption then I don't want you on here. If you're willing to discuss in a reasonable and polite manner then I'm more than happy to entertain opposing views.

  175. Yep, good analysis Toto. "pay no attention to that man behind the curtain" :)

  176. I offered many times to just make a burrito bet. But instead I get called a moron or an idiot because I don't see things the same way as someone else.

    Maybe it's just me but I don't particularly like being called names.

    It would be much more civil if we just made the bet. That's what Saif and I did.

    What's so hard about that? We just have differing opinions and we'll settle it by one of us buying dinner.

  177. Gary, I am going to go out on a limb on another call here.
    Till now I believed that Gold "Could"rise along with a rising dollar, but Now I no longer am in that camp. The Deflationary pressures are extremely strong and Gold will be sold to meet redemption/margin call pressures.
    I think we may still get some run here but Gold should top out before end of 2012 and I think $1250 is on the cards.

  178. Doug Kass says the markets have already hit the high for the year. Agree or disagree?

  179. I still have a gut feeling that the DX will have to be allowed to fall (a trend reversal to the downside), that the FED will be forced into letting it fall to try to save the economy. But, of course I don't have a crystal ball.

  180. I'll definitely take that bet and raise you a burrito :)

  181. So bet number 3.
    We playing for "Sir" , subscription and now a Burrito.

  182. Saif @ 7:02

    Now there's a bold call, but you hedge when you say $1250 gold is "in the cards." A lot of things are in the cards. I can say nuclear war with Russia and China is "in the cards" in the next few months, but I wouldn't be saying much.

    Why not simply say something like "Here's my prediction: gold will drop below $1300 by Dec. 31st of this year."

  183. Rosetta Genomics, (rosg)..stock of the day

  184. I forgot what's the subscription bet again? We've go too many for me to keep track of in my old age.

    Sometimes I forget my middle name...

  185. "A Serious Disturbance in the Force!"

    Well.....I am sooooo pleased to see that you "precious metals fellows" finally got a move! - I can most certainly empathize - with respect to the amount of patience/waiting that has been required... I truly hope its been worth it. Congrats.

    Otherwise...and in case you havent noticed.....THE YEN IS ON A TEAR! - AND WE HAVE NOW SEEN TWO DAYS OF MAR

  186. This should be an ending move for the metals sometime in the next several days. My original expectation was for a tag of the $1700 level followed by an intermediate decline.

    The next intermediate cycle is where the really big money is going to be made.


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