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Saturday, August 31, 2013


The gold section of this weekend's report.

Now that gold has broken its daily cycle trend line I think we can assume that the daily cycle decline has probably begun. My best guess is that we will see gold drop into next week's employment report and test the support zone and intermediate trend line between $1340-$1350.
We knew this was coming, as gold will enter the timing band for a daily cycle low on Monday, so no one needs to freak out. That being said, daily cycle declines need to make traders freak out in order to reset sentiment and prepare for the next leg up. So I suspect what is going to happen is that the bulls will try to defend that $1400 level for a few days, followed by a very scary $30-$40 crash day that will bring gold back down to that support zone and a final daily cycle low possibly on the employment report or the following Monday.
I don't pay as much attention to the point and figure charts as I used to. I probably should as it spotted the daily cycle top at the declining trend line perfectly. I think we will break through that trend line during the next daily cycle.
The bullish percent chart is also suggesting it's time for a minor rest. It hasn't reached levels indicative of an intermediate top yet (80%-90%), but the big surge off the bottom needs to pull back and consolidate before the next push higher.
All in all, I think traders need to prepare for some whipsaw's early next week as the bulls try to defend $1400, followed by a hard move down into the daily cycle low at the end of the week or the beginning of the next week.
Once we put this daily cycle bottom behind us I think the next daily cycle will test the April stop run level at $1523. Then depending on what unfolds in the dollar we could very well see a fourth daily cycle higher that tests the QE 4 manipulation level at $1700-$1800.

Thursday, August 29, 2013


Let's try this one again. It appears that the Syrian mess has stretched the daily cycle a little bit. However the market never broke the downtrend line which would have signaled a final daily cycle low had been completed. So I think the cycle just stretched 5 extra days.

We have another swing today, so another opportunity for the cycle to bottom. Stops should be right below yesterdays intraday low under the assumption that this will turn out to be the daily cycle bottom.

I see many analysts assuming the bull market has ended. I really don't think a 5 year bull market is going to give up that easy. At the very least I think we need to re-test the recent highs, and I'm expecting marginal new highs before this intermediate cycle rolls over later this fall. 

I do believe we are in the end game though. The housing sector and now maybe the financials are starting to roll over. 

This is usually how a bull tops, with the weakest sectors rolling over first followed by the rest of the market once the fundamentals are no longer deniable. 

I continue to believe we will get a final bull market top sometime this fall, to be followed by a multi-month volatile trading range as the Fed tries to reflate. All they will succeed in doing is inflating a spike in commodity prices. I expect the topping process to take the better part of a year with the real downside momentum starting in late 2014.

Tuesday, August 27, 2013

Quest Update

New total $1794
Up 500%. So far so good.

Monday, August 26, 2013


Daily commentary


Many analysts lately have been calling for a top in the stock market. On the other hand I've been warning traders that what we experienced over the last three weeks was just a normal profit-taking event into a daily cycle low. These profit-taking events happen almost like clockwork every 35-45 days. I was expecting the bottom on either the retail sales or the Fed minutes last week. As it turns out the Fed minutes were the trigger to put in the bottom.

I told subscribers in the weekend report that I thought the Fed would use this low volume last week of August to drive stocks back above the 1680 resistance level and set the market up for a rally at least into the next FOMC meeting and maybe much further if the Fed abstains from tapering. As I have noted many times in the past, traders rarely come back from summer vacation in the mood to fight the trend. I'm pretty sure the Fed is going to make sure the trend is up as we begin fall trading.

On another note, I think the grains have confirmed a bottom along with the precious metals and energy. I believe the super spike in commodity prices that I have been expecting to begin this year and progressing into next year as the dollar puts in its three year cycle low has begun.

Over the next month or two I expect everything to rise, with the exception of the dollar and bonds.

Well after today it looks like we haven't found that bottom just yet.

Sunday, August 25, 2013

The Quest for 100,000

On June 28th I had a very strong suspicion that the bear raid and artificial bear market in the precious metals sector had come to an end. If I was right then one of the greatest opportunities in the last decade had just been created. 

I knew that if the move over the last eight months was not a natural move, that the fundamental supply and demand properties of the metals market had been severely damaged, and ultimately this would lead to an acceleration and intensification of the secular bull market.

About a month ago I became convinced that I was right and that June 28th had marked a major bear market bottom. At that time I decided to start a project to see what was possible as the new bull market got underway. I started with $300 with the goal to try and turn it into $1200, a 300% gain. I reached that goal last week, and realized my sights were set way too low. 

Over the course of the next six months, using short-term option strategies, I think it's possible to turn that $300 into $10,000, and depending on how aggressive and sustained the move is, I think $100,000 isn't out of the range of possibilities.

Options are always risky and there's a strong possibility that I may get part way to the goal, miss a trade, and just end up losing the initial $300 stake.

I'll update the progress as I go along over the next six months. If I miss a trade and the position goes back to zero I'll publish it and the quest will come to an end.

Current total $1290.

Thursday, August 22, 2013


Click here for the interview.

Saturday, August 17, 2013

Thursday, August 15, 2013


To listen to the interview click here

Monday, August 12, 2013


First off let's go over the key cyclical points from today's action. Today gold broke above the cycle downtrend line, thus confirming August 7 as a daily cycle low.
Again I expect some short-term profit taking once gold reaches the previous high of $1348. This is the most likely resistance level for day traders and short-term traders to take profits. It's also the level that should deliver the most bang for the buck for options expiration manipulation to begin. So I continue to think we are going to see some kind of minor pullback between now and Friday. At this point I don't believe that pullback is going to succeed in pushing gold below $1300. This is going to be a "buying opportunity". It's going to be a tough opportunity to seize because it's going to appear like the bears are back in control of the market. But as I will explain later, I think it will just be one of many short-term manipulation events to allow big-money high-volume entries into the gold market.
For those of you waiting for a breach of $1425 before re-entering, the confirmed daily cycle low has now revealed a lower price target. Gold no longer has to move above $1425 in order to make a higher high. Now it only has to move above the recent daily cycle top at $1348 to initiate a new pattern of higher highs and higher lows.
That being said, you don't have to wait for gold to move above $1348. Now that we have a confirmed daily cycle low on August 7th you can enter full positions at any time with a hard stop below the August 7th  intra-day low of $1272. If that level is breached it would signal that the daily cycle has failed and the intermediate cycle has rolled over and is again in decline.
Now I want to discuss what I believe was the motivation for the bear raid that the metals have undergone over the last eight months.
At first I thought it was solely about pushing physical gold back into the market, and to move that physical gold from west to east. Let's face it, anyone with half a brain understands that global QE is going to end badly, and countries are going to need physical supplies of gold to eventually back their currencies. I'm absolutely sure that Germany, China, and Russia understand what is coming. So I think the initial manipulation after the QE4 announcement was mostly about driving physical gold back into the market.
In the chart below I have indicated the highly unlikely series of events that followed Bernanke's QE 4 announcement at the December FOMC meeting. To start with gold was driven back below the key psychological $1700 level during an unnaturally high volume hit in the middle of the night. No normal trader seeking to maximize returns would dump that kind of volume in the thin overnight market.
Equally strange was the intense selling pressure that would emerge any time gold approached that $1700 level over the next two months. The fact that the dollar was moving down into an intermediate bottom during this period makes it even more unlikely this was a natural move.
The next event, and a personal highlight, was Goldman Sachs coming out with a public recommendation to sell gold short the day before the stops were run below $1520. Since when has Goldman Sachs ever been interested in making the public money? It seems much more likely that Goldman Sachs traders were already short the gold market and were looking to juice the downside as they already knew a stop run was coming.
Again the hit came with a massive futures dump, the equivalent of 500 tons of gold, in the thin premarket trading where it would have the most damaging effect.
Then in late May and early June it was called to my attention that unusually large positions were being accumulated in GDX June expiration puts. At this point it wasn't surprising that gold was repeatedly prevented from closing, and holding above $1400 and miraculously by the June expiration gold had collapsed by another $125 sending all of those puts deep into the money. Coincidence? I hardly think so.
Now let's assume that I'm not the only one that understands that global QE is going to have serious consequences down the road, and that those consequences are going to drive, at the very least, another large leg up in the secular gold bull market, if not the bubble phase. Let's also assume that there are at least a few traders that are not only blessed with common sense, but also with the means to temporarily influence market direction, especially in thinly traded markets like gold and silver (I suspect it's considerably more than a few, and I think we can be pretty confident in assuming that most of the big banks are included in this group).
So for the moment let's just assume that the last freely traded intermediate cycle low (bottomed in November) had been allowed to function as the springboard for what should have been another normal C-wave advance as QE ∞ got underway. Based on what transpired during the last C-wave, we would probably have seen gold rally over the next two years to somewhere around $3000-$3200. Roughly a 100% gain from the October low of $1675.
But let's assume that we aren't the only ones that recognize QE ∞ is going to eventually drive another huge leg up in the secular gold bull. Let's also assume that these big players have the means to create a bear raid in the sector and push price to artificially lower levels.
Assuming that the eventual end game is that same $3200, look what a bear raid does to ones profit potential if you know the raid is coming, and can enter close to the bottom. Instead of a 100% gain you are now looking at a 200% gain. And that's not including any profits one might make by participating in the raid on the short side.
Next look at the massively increased profit potential that has been generated in the mining sector by this same bear raid.
I think we can expect continued small manipulations from time to time to manufacture minor sell offs and artificial daily cycle bottoms, similar to what happened last week with the Tuesday take down that stretched the daily cycle and temporarily drove gold back below $1300.
In fact I think we are probably going to experience some kind of manipulation this week as we move towards options expiration. But from now on I think these will just be brief to tangle cycle counts, or run short term stops, and allow big money insiders slightly better entries. The major manipulation is complete. It has accomplished it's goal.
In my opinion, the last eight months had nothing to do with the Fed trying to suppress the price of gold, and only a little bit to do with moving physical metal from west to east. As usual this was mostly about big-money insiders manipulating the market to generate maximum profit potential during the next leg of the secular bull market (which in my opinion will probably turn out to be the bubble phase of the bull market). They've managed to lower the starting point considerably below the natural bottom in October of $1675. The bear raid has massively increased the upside percentage potential during the next leg of the bull market, along with generating some pretty decent short side gains as they set up what I expect will be the trade of the decade.

Wednesday, August 7, 2013


Today the dollar broke through 81.40. This is a major development as it signals that the current daily cycle topped in only 2 days, thus confirming that the intermediate cycle has also topped.

I've been warning for months and months that this was coming. Anyone with a modicum of common sense knew that printing trillions of dollars was going to eventually have consequences. There is no escaping the inevitable, if you debase your currency like that eventually you are going to have a currency crisis. The first one has now begun. 

Over the next 3-4 months the dollar is going to test the lower trend line of the megaphone topping pattern and ultimately break through. When it does we are going to witness a spectacular collapse in the dollar, probably testing the 2011 bottom by the next intermediate cycle low due in November.

This is going to cause all kinds of problems. We are already seeing the bond market breaking free of Fed manipulation. This will only get worse as bonds recognize the severity of the crisis ahead. Ironically the Fed is going to print harder and faster to try and tame the bond market. It will have the reverse effect. It will just accelerate the dollar collapse which will intensify the selling in bonds.

This has already pricked the echo bubble in housing. In the chart below we see the same megaphone topping pattern in play as in the dollar index.

Smart money has known for months this was coming. I strongly suspect the manipulation in gold over the last 8 months was done to transfer physical metal from weak hands into strong hands in preparation for this event. Now it's time for gold to do it's job of protecting wealth during a currency crisis. I told subscribers last night that we will see a war over the next several days and weeks as gold breaks free of the manipulation and gets busy discounting the coming currency crisis. 

The intervention is going to try hard to keep gold prices down, but ultimately gold is going to win and break free of the artificially low prices. Ultimately gold is going to protect wealth during an inflation just like it always does. And ultimately all the manipulation will succeed in doing is to cause price to rise much further and faster than would have occurred if gold had been allowed to trade freely.

Batten down the hatches the next Fed created catastrophe has begun.