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Wednesday, March 19, 2014

Mar. 19th Morning report

Things are going to happen fast this afternoon right after the FOMC statement is released so I'm going to go over a couple of strategies now so everyone can decide how they want to play this and be prepared. 

First off stocks: 

Here is how I'm going to play it with the stock portfolio. If the market can rally back to 1880 before the statement at 2:00 I will go ahead a sell our stock positions at that point. If not then I will wait till after the release as I think stocks will use the statement as an excuse to test the all time highs if they haven't done so earlier in the day. 

For those willing to gamble a bit you might hold till the end of the day and see if stocks rally and break out to new highs and maybe even try to reach 1900 before this daily cycle tops. 

Gold:

As of this morning gold has broken the daily cycle trend line just like we needed it to do to confirm a DCL in progress. All the buyers at the 1350 support yesterday woke up to their stops being run. This also had to happen.

Now for those of you that are going to try and pick a bottom you have to do so at some point that has a logical reason for others in the market to do so also. Just picking a random number is unlikely that anyone else is going to back you up and you will almost certainly suffer a draw down and in the volatile market that's going to exist after the FOMC statement that draw down could be big.  

The first logical place to make an attempt is at the 38.2% retracement which comes in at roughly $1333 today. At that point you will likely have a bunch of hedge funds buying right along with you and the odds are better that the decline will stop there.

If that level doesn't bring in enough buyers to stop the selling then the next place to take a shot is at the intermediate trend line (roughly $1318). The nice thing about this level is if the intermediate rally is still intact then the DCL will hit a brick wall at that level and up gold will go. If it does go through there you don't need to stop out immediately because the market will almost certainly bounce tomorrow and give you a chance to exit, probably at a small profit or at least break even.

 

For those of you not brave enough to try and pick a bottom in a volatile DCL environment, you should wait till 10-15 minutes before the close and see if gold has exhausted the selling and printed a reversal candle. If it has buy your positions right before the close. 

For those even more risk averse wait for gold to form a swing before you buy. 

I'm going to wait for a swing in the metals portfolio unless we get a reversal candle that ends the day positive. 

Gary

30 comments:

  1. Gary -

    You say, "If the market can rally back to 1880 before the statement at 2:00 I will go ahead a sell our stock positions at that point. If not then I will wait till after the release as I think stocks will use the statement as an excuse to test the all time highs"
    What in Yellan's words would trigger a spike up? A likely continuation of the taper is bearish, no?

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    Replies
    1. It's irrelevant what the statement says (unless there is a big surprise like no taper). It's just that the statement will be used as a trigger to complete the push to retest the highs or breakout to new highs before the cycle tops.

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  2. Gary,
    For those of us who need more guidance from you, will you let us know when you will enter a position in metals? Will you post the entry (timing) point?
    'I am entering now full position ......'?????

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  3. Gary

    Does the drop down to ~1340 qualify as a DCL or does it need to make it down to the 38% retracement?

    thanks

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  4. Gary, great plan; gold siting just below $1340 at the moment. Let's hope the Ms don't throw us a curve ball by driving it well below the ITL. If they do, will that just stretch the rubber band tighter and give us additional momentum up toward $1500 or.will it cause decline for thr next couple of months?
    Also, assuming gold does bounce and heads higher.for the next couple of weeks, what are the odds silver will outperform gold? Thanks Gary,.so far so good.

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    Replies
    1. If the IC trend line is broken then we will play this as a failed IC and sell the rest of our positions into the bounce out of the DCL.

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  5. Great Blog Gary!I believe that gold is going to correct towards 1230-1270(fib 61,8-76,4 of the entire upleg from december2013) and then resume its ascend.Thiw kind of move i think is in accordance with a possible IHS pattern in GDX.I am sorry for my english.It is not my native language.Great blog again!

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  6. oops i forgot it...my views:http://goldenopportunitytrading.blogspot.co.uk/

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  7. Like the fact silver has bounced back over 20.67, back up to 20.77.

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    Replies
    1. Gary, silver just went green. Per my last post, if gold moves up out of this cycle low today or tomorrow, do you think silver will outperform gold?

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  8. Gary -

    SMT Terminology: "A swing low is simply a sign that selling pressure has declined and the stock or index has moved above the previous intraday high." (I had to look it up.)

    You say today for gold, "I'm going to wait for a swing in the metals portfolio unless we get a reversal candle that ends the day positive."

    Barring the "reversal candle" (don't know that one, and not on your Terminology page), am I correct you will hold off buying PMs until yesterday's intraday high for the GDX index is exceeded? That appears to have been 26.86, by my chart.

    ReplyDelete
    Replies
    1. Since gold made a lower low today it would be a move above today's intraday high to form a swing.

      If gold ends the day positive then I'm going to assume the swing will form tomorrow and buy before the close. If not and gold ends negative then I will wait for a swing just to make sure gold doesn't drop below the IC trend line before the swing forms.

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    2. This comment has been removed by the author.

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    3. "If gold ends the day positive . .. " Positive relative to what figure? (Sorry for being dense.) And to buy before the close, you will necessarily have to project the end-of-day value a little, yes?

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  9. Replies
    1. What does that implicate?

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    2. Looks like gold bounced right back in short order. Nice to see silver did not participate as I am heavy to the silver side.

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  10. Don't know what Yellan said, but markets not liking it!

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  11. ". . . as I think stocks will use the statement as an excuse to test the all time highs if they haven't done so earlier in the day." How did you get this, again? Not looking good.

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    Replies
    1. Gary sold the stocks, didn't u get the twitt?

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    2. Wait till the end of the day. Everything is volatile right now. I'm guessing stocks come back and end green, but I'm going to go ahead and take profits on our positions and wait for the next DCL before going back in.

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    3. That was in response to FF's comment that stocks were going down instead of up like I expect.

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  12. Seriously??? Tell me which service gets 100% of the calls right and I'll subscribe.
    BTW, New Post!

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  13. Gold at the 38.2 Fib level...let's see the reversal now.

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  14. Gary,
    How we look at this big spike up in the dollar?

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  15. gary, thoughts on gold so far?

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  16. Gary - Is the spike underway in the $USD the false move you mentioned yesterday?

    "As most of you may remember about 70% of the time the initial move out of a coil will usually end up being a false move that is soon reversed".

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  17. Gary any comment on the gold market??.. we do still not have the swing right?

    ReplyDelete

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