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Thursday, March 13, 2014

Mar. 13

A few people have commented that they can't post to the blog. Folks you will need to create a google account to be able to post to the comments.

Stocks:

After today I think it's safe to assume that yesterday's reversal was indeed a manufactured rally to allow Wall Street to hand off the bag on to technical dip buyers. The selling on strength number yesterday provided us with a very timely warning and prevented us from getting caught. 

It's sad that virtually all markets are rigged nowadays and we have to second guess which way the big banks are going to take the markets in order to make money. 

Oh well since there's nothing we can do about it, and there's virtually no chance the government is going to crack down on the banking system, I guess we are stuck with this for the foreseeable future. Ever since the ban on short selling financials in 2008 it became glaringly clear that no effort would be spared, or laws ignored, to insure that the banks would be protected from now on. 

In that vein of thought I have to think it won't be long now before the Fed steps in to stop this sell off. Even in a natural market today's heavy selling pressure would probably trigger some kind of snap back rally. On top of that there was a Bollinger band crash trade in the NDX.



Let's just say I won't be at all surprised if all of today's losses get reversed tomorrow. That being said I'm going to stay on the sidelines in the stock portfolio until stocks recover and make new highs. They also have to do it quickly. I wouldn't be interested in buying if it takes stocks another two weeks to recover as that would be too late in the daily cycle to buy. 

As a matter of fact at this point barring a complete reversal tomorrow I probably won't be interested in re-entering positions for the stock portfolio until we enter the timing band for the next daily cycle low (DCL). That's not due until the end of the month or first week in April. So we're probably going to twiddle our thumbs for a while in regards to stocks, unless we get a complete reversal tomorrow. 

Dollar:

Today the dollar dropped enough to test the Oct. bottom, and not surprisingly bounced. This is exactly what we were expecting, but again it's too early for the DCL to be finished, so while we may rally for a day or two it's unlikely the decline is done. 



I'll say it again: An intermediate cycle that topped on week two in one of the most extreme left translated cycles of the last decade isn't going to bottom until it moves below the previous intermediate cycle low (ICL). It's not going to bottom until sentiment hits extremes, and not until everyone starts to freak out. We haven't reached the freak out stage yet. 



Source: Sentimentrader.com

Gold:

As expected the miners finally followed gold and have broken out of their 3 week consolidation. They did so with a big move, also as expected. I figured there would be a lot of buy stops right above $27 that once they triggered would produce a strong trend day.



That being said the metals may now have to consolidate for a day or two. If the dollar bounces and stocks rebound we may see some short term profit taking in the metals after today's big move. Both stocks and gold have generated powerful moves over the last two days and it wouldn't be unreasonable to expect both trends to take a breather.

Another consideration is that gold is now bumping up against the notorious Sept. FOMC top. 




To refresh your memory that was the most blatant manipulation of this entire manufactured bear market other than the April stop run. That marked the only time in history a daily cycle topped on day 1. Obviously in a natural market we would never see a daily cycle top on day 1. So I suspect gold may take a day or two to get through this resistance level. I don't however think it will take anywhere near as long to get through $1375 as it took to get through $1350.

Ultimately I think gold is going to test $1425 and I suspect we will see another manufactured top with a marginal move above $1431 to get gold bugs excited and buying into the breakout the same as they did last Aug.



I'm not really expecting much of a pullback here, more just some sideways chop for a day or two before the trend continues higher. So I wouldn't advise one to lose their positions to try to avoid one or two sideways days.

Gary

Cycle counts:
Stocks = Day 25. Average duration 35-45 days.
Gold = Day 9. Average duration 18-28 days.
Dollar = Day 16. Average duration 18-28 days.
Oil = Day 44. Average duration 50-70 days.

59 comments:

  1. Create a google email addy, post a comment then Google will ask for a profile.. create a blogger profile, use the same name as on SMT, and publish.
    Gary - when will the premium site be back up??? just asking:)

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  2. Gary -

    "I probably won't be interested in re-entering positions for the stock portfolio until we enter the timing band for the next daily cycle low (DCL). That's not due until the end of the month or first week in April."

    Barring another huge sell-off tomorrow, do you see anything that changes you sentiments about the markets continuing, in about a month, on their parabolic blow-off path and the NAZ approaching 5,000?

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    Replies
    1. I'm a bit concerned that the Nasdaq has dropped back below 4290 and the S&P below 1850. Stay out for now.

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    2. Oh, I was not considering going in . . . just whether the markets had topped and we should consider some puts for the "great unraveling."

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  3. "you will need to create a google account to be able to post to the comments."

    I wondered why so few of us had all the attention. It was nice while it lasted.

    Good trading to all,
    Le Fou

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  4. Replies
    1. It looks like it's forming a large bull flag, but it's about time for it to break out.

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  5. Gary, what are your thoughts on the direction of silver? I've had a position in GDX and Slv since December. GDX is doing much better. Think sliver is going to catch up?

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  6. Silver has entered a daily squeeze currently on day 2 of the set-up.... however GDX & NUGT have been running daily set-ups for 4-days now... With Silver currently underperforming here - I would think there is a great change for catch-up here off a positive daily fire.... A must if Silver is to get anywhere on this spring rally - however diggers & gold seem to be out-performing here currently... Silver's daily fire will come above $22.50 giving it a change to catch up a little here..... we should be in the $23.20 range already relative to the price of gold....

    Cheers Schmed,

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    Replies
    1. Hey Scmed.... I am glad to see you here tonite. Like others here I have missed your presence. Is this your new handle for the premium site or are you just here during the breakdown?

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    2. Just jumped in here..... add my 2-cents on the current outlook (PM's)... Seeing that Silver & Diggers are in Daily Set-ups.... thought it might help..... hopefully I'll be able to post on the fires as the play out...

      I also have a weekly set-up in the DXY closer to firing off Neg here which would really drive down the dollar - even breaking the 77 - handle IMO.... however not sure we get the weekly fire here this Spring.... This may hold off till the fall.... we will just have to wait & see.... the next set-up is on the monthly which should line up with the 3-year cycle low come this fall...

      Cheers Schemd,

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  7. Gary... what's your comment on the huge commercial short position in the COT report....thanks

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  8. My twitter handle is SHII@csipec - post set-ups there relative to PM & other sectors for those who are interested.... just sharing my info again for those interested.... not much time but through things out when I can.... other then that just been scalping PM's for the last year.... has not been a buy & hold market as we know.... had to change my approach from last June... was just not working & my PF was suffering greatly..... my email is csipec1997@gmail.com for those that want to reach out..... I am trading about 14-16 hours a day so might take a little while to respond.... trading all three sessions.... all the best to the group....

    Cheers Schmed,

    ReplyDelete
    Replies
    1. Hello Schmed, found you on twitter. I am @topodinapoli. As a retiree I follow the market when I am not doing other fun stuff. That is weather dependent. Bad weather means I am at the screen all day when the US market is open. Ciao, TT

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  9. Gary, whatever happen to the plan to reduce metal holding once gold gets past 1360?

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  10. Does it really take a week to get a website "fixed"? Or perhaps this is an extended "free trial" that just happens to coincide with a 3-5 week run-up in metals? How does that saying go?

    Sometimes truth is stranger than fiction?

    ReplyDelete
    Replies
    1. It didn't take too long for the first annoying guy to show up

      Delete
  11. Gary,

    what are your thoughts on adding to existing winning AU positions here? or is this market to volatile to take the extra risk? There's roughly 50 bucks between here and 1425 that presents a tempting target for potential profit. thanks

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    Replies
    1. I do think we are going to make that run, but I wouldn't leverage heavily tomorrow as we could see a pullback to $1360 before resuming the push. We've made good money on this run. We don't have to go crazy during this last daily cycle and risk getting caught at the top if gold doesn't make it to $1425.

      Everyone should accept that the spot to go crazy heavy is going to come in May not in March. take what you can get now but don't do anything stupid. Save the really big commitment for the later half of the year.

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  12. Gary.. doesn"t the COT report indicate a very large short position in gold..that's what I was referring to in the above post. thanks.....important?..

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    Replies
    1. The current Blees rating is at 59. That's dead neutral. The total commercial short contracts are 279,000. They've been as high as 440,000. Again pretty much dead neutral. As the price of gold rises the commercials will hedge heavier and heavier until it gets to an extreme. It's at extremes where I start to get nervous. Not so much when it's neutral.

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  13. Gary, or anyone, RE: HACKING
    I've been a member of the premium site for about 10 months, and did not find out about the hacking and this site until today via a google search. Been frustrated as hell trying to find out what happened because I've been out of touch with Gary's comments during this critical time and it's cost me $$$. HOW IN THE WORLD DID YOU GUYS FIND OUT ABOUT THIS SITE??!! Did Gary send you an email, or what?? - any info appreciated Thx
    - sign me frustrated

    ReplyDelete
    Replies
    1. after the site was hacked, Gary was posting in the comments section. he posted a link to this site on Monday or thereabouts. then the comments section went kaput a day or so later.

      Delete
  14. I'm sure you have gotten plenty of advice, but switch your hosting company. Your site has been down far too long for such a small website.

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  15. Elaine, change is hard for an administrator. I agree though there are great sites out there to find a new one. His archives and history is in the site that got hacked.

    ReplyDelete
  16. Hey Gary
    2 Q's if you may
    first, is entering a position in slv anticipating a breakout is smart? I hate waiting for pullbacks, never know if it's real and the risk/reward ratio is ugly.
    second, I think the stock market is gonna touch it's 50 ma soon. Assuming a hammer is formed, does it worth it taking some upside position (short termish)
    thanks

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    Replies
    1. eliyahu: Only you can determine if this is a smart move for you. I am in silver via SLV and SIL as well as some miners. My position is based on my conviction that silver will return to its old high and then some. I also think that moves might be rather sudden or when the market I trade is closed. I am a day trader having made well over a thousand trades a year for over 10 years. My current silver positions are NOT short term, so when I entered is not that critical. Always better to buy low, so I have been adding recently with money made trading other names. Probably have too much silver now, but this is an investment for me, ie. timing 1-5 years. My trades are from minutes to months. What are you - a trader or investor?

      Delete
    2. Gary & Others, Ukraine situation is heating up with a referendum on Crimea splitting off this weekend. USA says they won't recognize it if it happens. I heard on the news (ugh) China supports Russia's position. What happens if the Chinese & Russians start dumping their US Treasuries on the market in retaliation to our sanctions? Gold up or down?

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    3. Gary, re: your last chart says the big money should pull the rug out from under us at $1425-$1431; the same place as last time. Why do you think they will make it that simple for us to avoid the drawdown? Don't you think they will be more clever?

      Also, why not tighten up one's stops as we get closer to $1400 to maximize the gain and minimize the pain? Thanks.

      Delete
    4. Hey TraderT,
      I'm buying for the long term, but trying to sell on intermediate highs and buy in lows (or vice verse via shorts and puts). I am not trying to time daily cycles and I do believe SLV will catch up with GOLD in this run.
      I think I'll buy some calls on april SLV.
      Are you positioned in options as well in SLV?
      E

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    5. eliyahu: Sounds like a good plan. I have SLV April 20/21.5 call spread entered at 61 cents. The spread is used to minimize risk, ie. breakeven is 30 cents lower than a straight $20 call purchase. Percentage gain is higher due to about one third lower cost. Of course the gain is capped to 1.50-.61= .89. I took a $500 - 100 contract lotto ticket on SLV May $26.50 calls bought at 5 cents. Pure speculation.... But with the US and Europe poking Putin we may see some acceleration of USD dumping and big impact on PM's. Still short UUP since Jan and have added.

      Delete
  17. I have the majority of the portfolio in stocks positions, nice slow and steady.
    In 10% of the portfolio I use to buy options, and within those 10% - I use 5% to pure "gambles". Like the SLV one.
    Can you please elaborate on why the profit is capped?

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    Replies
    1. This is a spread that at expiration will have a maximum value of $1.50 if SLV is equal or greater than the upper call at $21.50. SLV to $25 is still the same max value. Thus it is capped at $1.50 which is not bad for a 61 cents cost. Gain can be 145% for a move of about 6% in SLV from the value at time of making the trade.

      Delete
  18. Gary - any comments on that one-
    http://finance.yahoo.com/news/bearish-spread-hits-gold-miners-084559087.html

    ReplyDelete
    Replies
    1. No comment. It looks like you are trying to find reasons to talk yourself out of a strongly trending trade. I'm not sure why.

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  19. Gary, do you think there will be solid profit taking at the end of the day?

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  20. Is anyone else tightening up.your stops this morning? Thanks.

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  21. Boy this is fun! If anyone trades after and premarket, would you tell me what service you use? Thanks.

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    Replies
    1. David, I think most of the big names offer that: Etrade, Schwab, TDAmeritrade, IB. Personally, I like Interactive Brokers for the commissions.

      Hum

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  22. Yowza! NUGT gapping above 59 and JNUG above 42 pre-market. When these guys move, they move! Where's BTFDSTFR???

    -apt10o

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  23. Looks like we may get a break out on Silver this morn for those that were asking.

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  24. Silver showing some life here. Up around 3x what Gold is up. Once she gets through 22, I think it's a straight shot to 25.

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  25. I am locked out of Etrade as far as order execution today. 3rd time in about 2 years. Thinking of changing brokers, if I can know that others do not have the same problems. Good experience anyone?

    ReplyDelete
    Replies
    1. TraderT
      I have been using TD Ameritrade the past 15 years or so and am very happy. I think the only time I had issues was back in 2008-2009 when everyting was crashing.
      They give me $5 trades, which is nice too. You could probably get the same if you ask. I usually get good executions too.

      Delete
    2. OK Troy, thanks. I moved some money to my OptionXpress account as I am unable to execute trades on Etrade today. OXP is expensive so I do not use them much other than for options tools and research. Etrade executions surprise me as to how good they are.But that does not count if you are locked out when you want to make trades.

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  26. Damn are those GDX Apr 19 2014 30 Calls moving fast. I was so enamored with NUGT's and JNUG's moves this past week, I didn't notice these calls are up 200% the past week.

    apt10o

    ReplyDelete

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