I think that the Korean issue might just result in a greater flight to safety, as the fears of the world economic order melting down rise. I think silver might suffer on a relative basis since it does not have the same safe-haven cachet as Gold and industrial demand might take a hit.
Since I'm only 85% invested, I'll stick with the original plan at $1330.
Besides, the dollar up/gold up relationship is telling us all we need. Perhaps more people are understanding the real flight to safety should be to gold?
An excellent intermediate term gold indicator is Bullish Percent. $BPGDM on stockcharts.com. It has flashed a sell signal by dropping from severe overbought, which already had me nervous about holding gold, and given the recent developments...
I certainly understand Gary's rationale here, but this may be one of those times where it's better to analyze the PMs on their own merits (cycle, etc.) rather than assume they will react in equal and opposite fashion to the dollar.
Certainly that's been the case so far today. I'm holding my trigger finger here. Though I am debating taking off leverage, every time I go to do it I take another look at gold/silver and they are higher again!
Just be careful with leverage. Gold is deep enough into the intermediate cycle that it could begin an intermeidate decline and this could be the excuse it uses to initiate the move.
I'm not trying to second guess whether a war in south Korea will be good or bad for gold. I'm just looking at the intermeidate cycle and today's news will potentially send the dollar higher for several weeks. Gold may resist that briefly but the deeper we get into the intermeidate cycle the more likely gold will be to roll over and drop down into its intermediate low.
So I am removing leverage and then I'm going to honor the stop at $1330 to return to a minimum core position.
Interesting discussion- Harvey Organ publishes a daily blog that looks at current/upcoming COMEX Gold/Silver deliveries...there will likely be many more contracts standing for delivery in December than in the past, which means the prices have to rise to enable delivery and the bullion banks (JPM, et al) will get crushed on their massive shorts. They will work to manipulate the price down, and it's likely we'll continue to see the exchange increase margin requirements, but at the end of the day, it looks like there will be a commercial delivery failure (of physical metal), which is extremely bullish for price. That said...it will be interesting. There are too many cross-currents to have great clarity.
My thoughts, fwiw: Ben needs a weak dollar to pay down our debt and thread the needle. China wants to bust the FED by forcing a strong dollar. Enter trade wars, and world instability. American people peoples financials are on the line throughout this mess. So, Let us count our blessings on this particular Thanksgiving day and hug your loved ones.
The miners are affected by the stock market. If stocks tank badly the miners will go down, because they are, after all, stocks. People need liquidity and sell what they own.
Caveat: I am a trader at heart and will have no problem buying gold back higher if need be. I also will have no problem buying a load when it looks frightening at an intermediate low. If you are not 100% confident you can do both of those things, don't sell because you'll miss a great ride. But...I am mostly out of PM's. I faulted myself for not selling on the reversal day. I'll be damned if I ever do that again. I feel like a heretic on this site, so perhaps this is True Confessions, but between the dollar and the $BPGDM, I am happy to let everyone else make some money for a while. Good luck everybody!
Careful here, this Korean incident could easily trip a frothy and edgy market, I'm getting an uneasy feeling as if the market is poised to turn. Spanish debt is selling sharply this morning and we know the market can not support a run on Spanish debt. Portugal looks like it will fall much faster that thought.
These two events could drive the dollar up very sharply in no time.
Poly- Are PM's best seen as an alternate currency, or merely something shiny to buy with dollars? I think the more they're considered the former, the more understandable it becomes that they can also rise with a rising dollar. Perhaps we're beginning to see how they are increasingly being viewed.
Gary, I see gold up, and silver a slight bit lower. I don't quite understand your rational for the USD rising via the EURO decline for the most part causing PM's to fall. Is it due to cycles, and this being the excuse for the decline? Gold has decoupled from the dollar many times, and seems strong today. I guess it lends to the fact that this C-wave is being led by the USD decline, so if the USD is up(even if the USD we are referring to is an imaginary USD; but people believe in it), gold and pm’s can’t go up. This is not a critique of your analysis, more of a question in comprehension. At what point would you consider your current perception a head-fake to your previous understanding. Again I am not critiquing, I am really trying to understand how things changed so drastically!! I am sure you will post in tonight’s report, so I guess I will look forward to your insight then. Many thanks as always! And thanks for the portfolio update.
The fact that the other leading group of late, agriculture, is taking a beating b/c of the $USD was my motivation. It's just a hunch, but I think we'll at least be able to get back in at these levels on metals/miner and lower on the ags.
Staying put, I was looking at my stocks ( EXK , HL , GBG , ssri) on a daily chart (with red/green volume indicators) most sold off following the general mkt , then they got rebought with higher volume.
I'm selling all my lower performers and a percentage of my higher ones I guess. I hate being a novice at this. Feel like I'm always missing something obvious.
I'm staying put, right where I am, old turkey for me. Can't say I am optimistic about my stance, first going against Doc's advice and now Gary's, but I am not willing to risk losing my position. Nap time, wake me up in the spring please.
all things concidered, its a tough call when you are trying to time 'sentiment' when N.Korea is trying to flex some muscle as their leader tries to insert his son in place as ..."the new leader , and dont mess with him."
Lot of external headwinds here which are all bullish for the dollar. Equities could drop if they break below 1,170 previous low support.
So the question becomes can massive gold buying hold it's own against that tide? If not then we know PM's could get crushed.
I brought in my heavy leverage at the open, happy to bank it all, preserve and at the ready.
The setup looked great a few days ago but have to acknowledge the risk here. Best case we buy bargains, worse case we miss a small run getting back in when the dust settles.
Daniel and I took some off, but I'll be looking to add back once the stochastics are no longer overbought. That doesn't mean I expect them to get oversold, just that I don't feel I'll miss too much immediate upside.
As much as the SoS traders couldn't know about the coming Korea fiasco, the OEX traders did. The smart-money OEX traders bought one of the largest number of put options ever yesterday. They are having s fine day. They are often worth emulating.
I think I get what is Gary thinking. He saw USD bounce because of N.Korea, and it seems going to last from time to time. Gold can't get to new high as USD rally. So, gold has high probablity going into intermediate correction. Gary, Do I correct?
Yep, Doc. Huge blowout reversals on gigantic volume are not to be dismissed lightly. I am grateful for the bounce we had after the initial drop, as I rediscovered I am a jackrabbit and I was trying to be a Turkey. I have learned my lesson. One needs to trade consistently given his own personality; a lesson that having been reinforced I am unlikely to forget again anytime soon. Nice call, by the way.
It is kind of playing out as I kind of thought it would. Gold bid but Silver not. Silver in unlikely to be the go to metal in times of stress where USD is strong. Further signs of silver producers hedging means that the smart money senses prices are high enough to do business. As always the little guy who chases will be left holding the bag. Silver from this point onwards is a trade. It needs to make a new base to launch from.
oa92000, I totally agree. News is just an excuse for the markets to do what they already wanted to do. The move higher in the buck was already in the charts. Apart from the cycle setup, the last few day's action formed a trend line crawl on the DX, and crawls are continuation patterns.
If the dollar is going to rally for 3-4 weeks while the market sorts out the Korean implications then it's probably untrealistic to expect gold to put in the huge parabolic move we were looking for. That kind of move will likely only happen with the dollar collapsing.
If stocks are dropping down into an intermediate low like I suspect they will be if the dollar continues to rally that will inevitably rub off on miners.
Intermediate cycle lows are scary affairs and there is alway margin selling. That has always affected miners to some extent no matter what happens to gold.
But don't forget gold is on the 17th week of it's intermediate cycle. Those don't go up forever. The normal duration is 20 weeks. So at some point soon gold is going to be looking for an excuse to move down into that intermediate cycle trough anyway.
Despite todays action I'm afraid several weeks of dollar strength will eventually be used as an excuse for gold to drop into its intermediate cycle low.
Hate to say it, but I am starting to see the up coming short-term pain as well. Ah well, so be it...part of this gold bull game.
Good news for long-term gold....maybe relieve some tension from Ben's plan to print the dollar to nothing....he may have the "see I told you QE doesn't affect things(or whatever it is called these days)". QE3 may get back on the table.
Doc, On that one I disagree. I think the dollar rally was nothing more than a dead cat bounce that would have rolled over.
The dollar was certainly not discounting something out of left field from N. Korea and certainly not after an intermediate cycle that lasted only 13 weeks.
I don't believe for a second that anyone, anywhere, had any inkling of what was going to happen today.
While it is still way too early, Since the $$$ has started an intermediate Right Translated Cycle, it could be possible that we just saw the yearly and 3 year cycle low on the $$$?
I doubt it will be the three year cycle low. I still expect that will occur in the spring but it it takes several weeks for the korean situation to calm down we probably have the dollar's yearly cycle low in place.
News does not move the market. News can accelerate or trigger a move, but the move must have already been inherent in the conditions. A match does not cause an explosion, but if the room is filled with dynamite something will eventually set it off. We were overbought, $BPGDM gave a sell, we had a huge reversal, and everyone hated the dollar. That's the dynamite-filled room. Then Korea dropped a match. I posted a week or two ago that the most typical reaction after a high volume reversal is to rally into the reversal day's range and then fail. If you exceed the high the pattern is ruined, but not until then. Silver bounced into the reversal range and look to fail. Korea did not cause any of that.
I have a question for anyone. I have been putting my kids money into miners instead of the bank. They have some really nice profits. since they are all teenagers and don't need the money, would it be smart to book some profits, say sell half of all positions, or just forget about it and stay old turkey?
My two cents: No one ever went broke taking a profit, but lots of people have gone broke over time by taking small profits that are insufficient to offset their losses.
I am not suggesting the Korean news was factored into the markets but rather that the news doesn't matter. The dollar and thus far, stocks, are doing exactly what the charts have been telling me they would do for the past two weeks. As always, this type of news is just used as an excuse to get on with it.
Besides, this skirmish is nothing new. NK sunk a sub a few weeks back, and we didn't see a sharp move higher in the buck. I think if a significant conflict were about to break out, the reactions would be much more severe, so I can only conclude the markets are just taking the determined path.
Natan: There's no real answer to that question. Is there a chance that you will panic at the bottom and sell because you worry about your kids accounts getting decimated? If so, sell now. Is there a chance that Gary has the whole picture wrong and the bull has ended? If that doubt will plague you during the decline, sell some now. Will you fail to get in lower out of fear? That would be a shame. These are the questions that, once answered, will answer your question. And only you can answer them. I believe lack of self-honesty dooms traders.
Actually many short term traders go broke taking profits. The reason being they are too nervous to let a winner ride so they book small profits but those small profits aren't large enough to overcome the big losses.
But to respond to Nat there is no right or wrong answer to that one. I decided to take some profits and then let the rest of my position ride with the plan.
If gold does move down into an intermeidate trough it will take out the prior cycle low.
One thing I have noticed it that at intermediate tops it's very tough for investor/traders to take the "safe" trade (book some profits) because greed has it's hooks in them and all they can see is clear skies ahead.
If you think it's hard to sell now wait till we get to the top of the C-wave or top of the secular bull :)
It is very counter-intuitive to go into the intermediate decline at the strongest part of the year. Having run upwards for so long though it is probably a good place to sell into some strength.
I think we do need a bull trap in this market right now, and we're probably going to get it.
DG/Gary you guys read too much into the taking profits comment. I guess I should have said "no one ever went broke taking humongous profits". Which is the same as basically trading sentiment.
If you've been riding since August I wouldn't say taking profits is a poor decision right now.
That said, surprises do come to the upside (I still hold PM shares), and whatever anyone does do not short gold or silver.
The more I think about it, I'm going to try and put in some shorts in Tech at good entries (much safer than commodities which are most likely in a long-term bull).
ok..well I took some profits on the kids account. Sold about 40%, Let the rest go and look to add at intermediate low. anyway, they have their whole lives to make it up if I blow out their account..LOL..I don't use margin so that shouldn't happen.
Up day tomorrow with SoS, or later this week? Possibility.
Gary keeps saying Old Turkey, and Turkey day is approaching so I did move 50% of my portfolio to the following for this week (historically a very good week for this equity):
> I don't believe for a second that anyone, > anywhere, had any inkling of what was > going to happen today.
I'd say the North Koreans wouldn't start shelling an island with South Korean civilians actually living there -or pretty nearby- without first notifying the Chinese.
Dollar broke up out of the flag, daily trend from the highs earlier in the year convincingly broken, also the 60EMA has been good support and resistance and is now broken.
Pretty muted response by the metals in light of this, but it looks like a fairly convincing move by the DX
Wes: I agree. I am out of just about everything: PM's, stocks. Have a huge wad of cash and will wait for a time to deploy it. An interesting wrinkle though. The AAII survey showed one of the largest one week drops in bulls ever. As it has only happened four other times so relying on the data is a little weak, but each time it happened the SPX was well higher three months later. Will this be number five?
I measure complacency by using a 4 or 5 week average of sentiment. That drop was from a very high level, last exceeded in January, 2007. The five week average, even after the drop, was the highest since 2005.
There can be no question about market complacency.
@DG re. OEX Options. Thank you. I was hoping for a more synthetic presentation. For those concerned, stockcharts.com/h-sc/ui?s=$CPCI&p=D&st=2010-02-01&en=%28today%29&id=p50415979065
Contul: Careful. I don;t think that's OEX options. All option traders are dumb money except OEX traders. The overall PCR works, but the OEX PCR is much more sensitive.
It is a good sign that it is difficult to short stocks at the moment.
But, geez louise, Bernanke is spewing out $800 or so billion into the economy and the world is still going to seem like it is ending sentiment wise to the dumb money in a month or two. Go figure.
Gold's last $1265 hit was on Sept. 13th. Silver that day was a little under $20. If gold were to decide to retreat that far, I doubt silver would also go back to $20, but stranger things have happened. Maybe $23 for silver? The gold/silver ratio at that time was all the way up at 63! I don't see it going back above 57-58 to be honest, that would be around $22 max pain. We'll see, this could be fun... the re-entries of course!
My dad works in Lockheed Martin and him and all his buddies have been arguing about the need to start another war. They have been showing diminishing returns now in Iraq and Iran. j/k on the father part, but not so sure about the other part. ;)
South Korea admits firing first shells in row with North Korea
South Korea has admitted it fired artillery shells that triggered an early morning clash with North Korea. However it says it was part of a military drill and denied it was directed at the North. Earlier Seoul blamed the North for what it called an unprovoked shelling of its island. Pyongyang claimed the South had violated its maritime border during the military drills. Seoul has since threatened its neighbour with what it called 'enormous retaliation'.
If true, that South Korea provoked North Korea to retaliate (this is hard to deny after we have the fact that South Korea admitted running a military operation in that area, but I'm still not saying it's true), it reminds me perfectly of Gordo Gekko's specific Wall St. quote:
"You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it."
There clearly isn't enough information to lean either way in this one to be honest, being that North or South Korea fired first. I'm simply presenting the case that it is not completely cut and dry that North Korea suddenly attacked South Korea. The rest is speculation.
Question though, why would North Korea a clear inferior military power randomly attack a superior military power, South Korea? This makes no sense. You can call the North crazy but very few people are crazy enough to do something that results in their death.
But onto the markets, are we going to see dollar strength now with war "brewing"? Are Doc and Gary right about an intermediate decline beginning in stocks and gold? The writing on the wall is saying yes.
To put simply...those that follow short-term trading, we are in the WTF trading zone...enjoy! For those that don't care, physical holdings will help. Welcome to old Turkey, or burn in the sight of PM's bastard burn. Again gold is a shit investment....90% of people will not make money off of it after inflation…You can’t trade gold, it will kill you. Anyways I locked a good portion of my holdings in physical since I know what a coward I am! And I will be locking more in tomorrow! I know what type of weak link I am to my own investments. Gary is still a great coach BTW. Not my point. Just saying….the path to riches will be by the dumbest moron in the world who picks up a couple cheap gold coins at 1k and doesn’t realize their value until 5k. The rest of us only think we are being smart by trying to trade that intelligence; ummm myself included(in my own stupidity)…
N.Korea is a Chinese satellite. The Chinese have been trying to up the ante by stoking up conflicts with all their neighbors, Japan, India and Korea. The N.Koreans sunk a S.Korean boat with a torpedo a few months ago, so this is not out of the blue. There is also a power transition in N. Korea and every dictator has to prove his mettle.
The question to ask is why is China trying to raise the temperature. It might be just some internal power struggle within the CCP with the PLA being given more leeway to flex the muscles and test the adversary. However, why the CCP would like the PLA to do that is not clear. One school of thought is that things are not hunky-dory within China, and nothing beats a war in getting people under control.
There is another school of thought that the PLA wants to install China as the supreme power in Asia, and would like to strike a blow to India in the near future. India started her economic program about 15 years after China, and has started catching up. The PLA feels that right now the military gap between India and China is optimal for the PLA to make a decisive strike; the gap is going to narrow going forward. The Chinese have been using the Pakistanis as their proxy to keep India under check but things are very dynamic there. Hence the need for some direct action. As the first step, PLA troops have moved into the Pakistani part of Kashmir; they have cordoned off areas and built underground tunnels/bunkers where even the local are not allowed.
Every 18 months or so, N Korea throws a tantrum designed to get the West to provide the foreign aid it needs to continue operations. This is just another one of these episodes.
China mostly views N Korea as a nuisance -- the idiot stepchild n the family. They certainly did not direct N Korea to take this action.
The incident will be forgotten shortly and the markets will move on to the next crisis.
After booking some profits yesterday, I still cant get over the Korea situation altering the course of PM/equities and USD. I agree its gonna be almost impossible to sell at C wave top.
What will happen to oil if equities have started a move down?
Gold now at 1380. Safe haven in times of uncertainty? Could decouple from the dollar given the threat of instability, sovereign debt crisis leading to more printing of all Fiats etc... I think the large investors are into a big picture frame of mind here. What makes gold attractive? It is immune from the machinations of nervous central banks, except that hey will continue to be net buyers in the face of global strife.
V, Oil tends to follow the market and there is still time for oil to move down one more time before the oil cycle stretches past the normal timing band for a trough.
You mentioned in weekly report that oil could rally for 20 days or so with the stocks but with dollar changing trend we could see a extremely left cycle and can except another 10 days of down move in oil.
Oil made a lower low yesterday so obviously the cycle hasn't bottomed yet, unless yesterday was the bottom.
Just a thought for traders. The dollar tagged 80 this morning. 79.992 to be exact. One could take long positions this morning under the hope that 80 is going to turn the dollar back, the stock market bottom will hold, and gold will continue higher. Then put a stop on all positions if 1173 in the S&P gets broken and if the dollar breaks through 80ish (give it a reasonable amount of leeway).
Risk is very low, about 8 points in the S&P to be exact.
An excellent intermediate term gold indicator is Bullish Percent. $BPGDM on stockcharts.com. It has flashed a sell signal by dropping from severe overbought, which already had me nervous about holding gold, and given the recent developments..."
DG,
When you say $BPGDM is overbought, which technical indicator are you looking at? I'm not familiar with $BPGDM, could you give a quick rundown on how it works versus its correlation to gold's price?
Never mind, found this article explaining how the gold sector bullish percent index (BPGDM) works:
"A bullish percent index (BPI) measures the percentage of stocks trading with bullish "point and figure" charts. There's no need to get too technical here. Suffice it to say, a sector is overbought when the BPI is above 80. And a sector is oversold when the BPI drops below 30.
For the gold sector, BPGDM generates buy signals when it drops below 30 and then turns higher. Sell signals occur when BPGDM pops above 80 and then turns lower."
Jabalong: yep that's it. That plus OEX traders plus dollar rally plus lack of stock mkt bears plus...and I am happy to stand aside until the dust settles. But people should NOT sell unless they are experienced traders and will not be afraid to buy back into gold and stocks when they look terrible. If you yourself are not nervous when you place a big order it's probably wrong!
Gary - have you thought about the possibility that the US dollar and SP-500 both move higher into 2011/2012? Similar to what we saw from Nov 2009 to April 2010 when the US dollar rose the SP-500 rose from 1105 to 1220. If the Eurozone is about to implode wouldn't it stand to reason that European funds would seek a safe shelter in the US despite all of our debt problems.
@DG re. OEX Options. The link I posted is for CBOE Options _Index_ Put/Call Ratio (CPCI). True, it is not OEX-specific. However, there exists a CBOE Options _Equity_ Put/Call Ratio, the difference (ratio) between CPCI-CPCE presumably capturing the "smart" versus "dumb" option activity. Therefore, CPCI, especially by contrast to CPCE, is a proxy to the same effect that the study of OEX options tries to capture. CPCE link: stockcharts.com/h-sc/ui?s=$CPCE&p=D&st=2010-02-01&en=%28today%29&id=p74207950336 CPCI:CPCE ratio link: http://stockcharts.com/h-sc/ui?s=$CPCI:$CPCE&p=D&st=2010-02-01&en=%28today%29&id=p84269891020
The only graphical sources I could find for OEX-only options activity are here: www.crimsonmind.com/optionsR/QuoteOptionsAll.aspx?s=oex&goButton=Go and here: http://schaeffersresearch.com/streetools/sentiment_brief.aspx [type symbol OEX]
But they are not "live" and finely grained. I was hoping you found something better. Thnks for your input.
Contul. Sorry not to have better links for you, but as a subscriber to Jason's sentimentrader.com (actually he comps me his service for the buy and sell signals I post here), I just use his data. He slices and dices is it several ways that improve accuracy. For example, Open to Buy orders as opposed to purchases to close positions, etc. No indicator is going to be better than about 80% over time, but watching the OEX guys when they get extreme is one of the best. He's the best there is at this stuff, and has a little on gold as well.
Chrys, I doubt that we will see that happen in the current environment. If you will notice even during that time when the ddollar was rallying strongly the stock market was trading sideways or declining. The stock market only made real headway when the dollar was trading side4ways or correcting.
It's been this way sine 2002 for the most part.
The last two cyclical bulls were driven by currency debasement not real productivity. Productivity is a required ingredient for the stock market and the dollar to rise together in a susutained manner.
David: China does not view N.Korea as a nuisance. N. Korea is like the US' 51st state would be. According to a recent quip by a Chinese official, China and Pakistan are like China's Israel.
@DG: I read good opinion about Sentiment Trader from sources I deem reliable. It is on my short "wish list". Thanks for the comment & regards. BTW, Option Mark, for what it's worth, has recently added OEX (optionmark.com). Corroborate that with a standard OEX chart, and one gets an idea as to where the price attractor lies.
Wes: I also like to eat lunch. I have an order in to short OIH at 129.90. Got 4 points in 4 days two weeks ago---just give me a little more rally. And I agree about a fade, but we won't gap up Monday. I'd suggest shorting at the close friday. The Monday after T'giving if Wed and Fri up is usually lousy.
Alex: I don't wait for it to get to 30 to buy! It doesn't need to signal, but when it does it's pretty good (it's sufficient but not necessary). And, no, I wouldn't rely on just that, but that coupled with the blowoff reversal, coupled with the rallying dollar, and coupled with the fact that stock bears have become an endangered species...now I am interested in the "plus 90" readings.
Look at this chart. Each one caught a tradable drop in gold:
I would be very leery about trying to short. There still hasn't been any selling on strength days and the dollar tagged 80 this morning and turned tail.
Today is the 14th day of the dollar's daily cycle. It's not unreasonable to think that the daily cycle topped today with that tag.
If the dollar rolls over and the market can regain the 200 week moving average by Friday we could still see the stretched cycle I have been expecting.
Yes if the dollar turns and moves back below the Nov. low Doc would have to give back that burrito certificate :)
I'm not sure I would add back leverage at this point as we are getting very deep into not only the stock market cycle, but are also approaching the normal timing band for gold to make a move down.
In order to add leverage back I would have to be convinced we are going to see a streched gold cycle, which isn't so hard to visualize.
I would also have to be convinced we will see an extremely stretched stock market cycle. That one I'm not confident in since we are now operating with a weekly swing high in place.
Gary: My stop is a point away. How leery can you be about risking a point on a $130 stock? My whole game is picking precise entries with better then usual odds of working and tight stops. I don't need a SoS day to make 5-10 points on a stock. I made 12 points in 4 days on the AMZN short I posted last week.
DG, I'm not talking about you I'm talking about the average trader trying to copy you.
Most of the time they will miss the exit and just give back any gains they make and then whittle away at their account.
I've always thought it was pretty much a waste for people to post their entries. That doesn't tell anything. The perfect entry is all for naught if you miss the exit.
Learning how to pick a good entry and not learning when to sell at the right time, is like learning to fly and not bothering to learn how to land the plane...
The dollar WILL turn lower and go below the Nov low... maybe even in the next daily cycle. However, considering the present cycle is forming as R-T, I don't think a new intermediate cycle can be denied any longer. I mean, just look at the weekly chart and tell me with a straight face we didn't just see an intermediate low. No sir, I'm keeping that burrito ;-)
Yes, Gary. Fair enough. I have actually debated about whether to even post my short-term trades but a few people have expressed interest. For the others: Don't try this at home! I was a very bad trader for a long time. If you want to learn to trade it takes study and practice like anything else. My entries are systematic and my exits are a combination of system (if the right variables line up) and feel (tape reading). That said, a good entry, cutting losses, and letting winners go a bit will result in consistent profits.
Poly: I almost shorted SLV at 27.00 as it showed up on one of my short screens at that price, but had I done that Gary probably would have mailed me an anthrax-laden turkey, so I passed on the trade. I think you'll be happy (short-term) to be out of AGQ for a little while. Have a good T'giving
By the way, the AMZN cover was simple: It hit the lower BB and the rising 50-day line at the same time. Should have gone long it there with a tight stop a point below the 50!
For trading I use reversion to mean type stuff (overbought oversold), Hitting the lower BB is what Gary calls a crash trade, but they can go against you a fair bit, so you need a stop (or you guts it out and pray). The 50-day line often holds string stocks correcting a previous overbought status. The 50 is where funds tend to step in to buy, so it acts as support. Of course it doesn't always work, but as I was not intermediate term bearish it seemed like a good spot to take the profit. My going long was based on my willingness to do almost anything with a tight enough stop, and those two item held up and AMZN has made a new high.
Gary: That's why I use stops. Nothing has to work "every time." You're just looking for a 5-1 or better risk/reward. I can get stopped out on the next 5 "AMZN" trades that "don;t work" and still be ahead. 20% is not every time.
I have no way of knowing that in advance. What I do know is that 80 is a very significant resistance level. The dollar rallied to that point this morning and then turned tail.
The stock market has reversed almost all of yesterdays decline and is back above the 200 WMA. If the S&P hits 1201 it will start a pattern of higher highs and complete a 1-2-3 reversal.
So far the daily cycle low at 1173 is holding.
There has been no SoS days yet.
This is why I said traders should just continue to work stops below 1173. maybe it turns out to be a winning trade and maybe it doesn't but as of today there is no reason to abandon the trade.
That bear flag on gold seems to be angled too high at this point (I'm no chart expert)...Others are pointing out the H&S pattern with a target down around 1260's. (Doc pointed this out too).
On the other hand, it looks like silver is forming a cup and handle!
At what point do you discount the bearish patterns and switch back to full position? I had entered some new positions after our last sell off and sold them this week...However, it's amazing how I feel uncomfortable not having a heftier position now...Itching to get back in so this could mean not the right time to buy.
Gary, when you say 75% its just not leveraged. Do you mean you are 75% of the 130% or 75% in with 25% cash. Just curious, I try to keep my portfolio consistent with yours.
I think I will have to see a failed daily cycle on the dollar index before I'm comfortable putting leverage back on this late in the intermediate cycle.
"If the S&P hits 1201 it will start a pattern of higher highs and complete a 1-2-3 reversal. " they are going to do it, gary. From $nymo chart, bull going to run it..
this is great....i was betting on a rising stock market today so i entered my metals positions again last night only to make no gains while the stock went up 1.3%. I should have just bought one of the indices.
I think that the Korean issue might just result in a greater flight to safety, as the fears of the world economic order melting down rise. I think silver might suffer on a relative basis since it does not have the same safe-haven cachet as Gold and industrial demand might take a hit.
ReplyDeleteJust my thoughts
On NOV 17 almost a week ahead, posted this one:
ReplyDeletehttp://img716.imageshack.us/img716/6122/bplaneuro.jpg
I hate to say "told ya", but ehi, told ya :)
For the first time, though, i disagree with Gary.
If gold can manage to stand the ground against a falling Euro, when the new intermediate will start we should see it skyrocketing.
Gary - what about silver? Sell or hold?
ReplyDeleteDo not be alarmed, everything is OK! :)
ReplyDeleteThe change in the dollar is just one aspect affecting price. Gold is being bid up now on pure buying, offsetting loses due to the appreciating dollar.
ReplyDeleteand gold just turned green!
I think Korean incident is Chinese version of Kabuki theater. Message sent and received. Now mkts. can go back to "normal."
ReplyDeleteJust be careful with leverage here. If this does turn into an intermediate correction then this is how gold traps the dip buyers.
ReplyDeleteComex expiration today on gold and silver. Always interesting.
ReplyDeletehttp://jessescrossroadscafe.blogspot.com/2010/11/gold-and-silver-option-expiration-in.html
Silver and gold just shot straight up.
Since I'm only 85% invested, I'll stick with the original plan at $1330.
ReplyDeleteBesides, the dollar up/gold up relationship is telling us all we need. Perhaps more people are understanding the real flight to safety should be to gold?
Gary,
ReplyDeleteI know it is a little scary being an old turkey couple days before thanksgiving, but are you sure you want to do that? :)
Jesse,
ReplyDeleteI still have a core position so I'm not really sure what you are talking about.
An excellent intermediate term gold indicator is Bullish Percent. $BPGDM on stockcharts.com. It has flashed a sell signal by dropping from severe overbought, which already had me nervous about holding gold, and given the recent developments...
ReplyDeleteGold/Silver holding should give us cover to unwind this leverage at least.
ReplyDeleteSorry, just being a smart ass. I know you are holding a core, but even going below 100% seems risky to me, taking off leverage, maybe a good idea.
ReplyDeleteIt does seem to me that events like Korea are gold positive in the past, but it is hard to tell this time for sure. And for silver, who knows?
Another option would be to wait for a break of the bear flag on gold. (1350ish)
ReplyDeletei dont see what the big deal is...this happens everyday in other places of the world and these 2 are always going at each other
ReplyDeleteI certainly understand Gary's rationale here, but this may be one of those times where it's better to analyze the PMs on their own merits (cycle, etc.) rather than assume they will react in equal and opposite fashion to the dollar.
ReplyDeleteCertainly that's been the case so far today. I'm holding my trigger finger here. Though I am debating taking off leverage, every time I go to do it I take another look at gold/silver and they are higher again!
Nothing like this has happened since 1953.
ReplyDeleteI agree with Aviat. I think this is a case in which the dollar, treasuries and Gold/Silver could go higher. In times of war, doesn't Gold outperform?
ReplyDeleteGold is outperforming the doll-hair so far today.
ReplyDeleteJust be careful with leverage. Gold is deep enough into the intermediate cycle that it could begin an intermeidate decline and this could be the excuse it uses to initiate the move.
ReplyDeleteGary
ReplyDeleteMost of the time, wars always drive gold price. Could Korea be an excuse to drive gold?
I don't see how China benefits by war in the Koreas. Therefore, I don't see it happening.
ReplyDeleteI've put on a "lunch money" (200 QLD) trade in deference to seasonal strength, but I'm hoping it's a loser.
ReplyDeleteThe intermediate cycle low continues to lie ahead, according to my psychology indicators.
I'm not trying to second guess whether a war in south Korea will be good or bad for gold. I'm just looking at the intermeidate cycle and today's news will potentially send the dollar higher for several weeks. Gold may resist that briefly but the deeper we get into the intermeidate cycle the more likely gold will be to roll over and drop down into its intermediate low.
ReplyDeleteSo I am removing leverage and then I'm going to honor the stop at $1330 to return to a minimum core position.
Bought SDS on 11/19. We'll see.
ReplyDeleteSilver is totally underperform gold today
ReplyDeleteInteresting discussion- Harvey Organ publishes a daily blog that looks at current/upcoming COMEX Gold/Silver deliveries...there will likely be many more contracts standing for delivery in December than in the past, which means the prices have to rise to enable delivery and the bullion banks (JPM, et al) will get crushed on their massive shorts. They will work to manipulate the price down, and it's likely we'll continue to see the exchange increase margin requirements, but at the end of the day, it looks like there will be a commercial delivery failure (of physical metal), which is extremely bullish for price. That said...it will be interesting. There are too many cross-currents to have great clarity.
ReplyDeletehere is the link to Harvey's blog:
http://harveyorgan.blogspot.com/
gold and usd rally at the same time.
ReplyDeleteGold Price Change due to Strengthening of US Dollar -11.25
Gold Price Change due to Predominant Buying +18.85
Gold Price: Total Change +7.60
Damn it looks like North Korea is going to cost me a burrito :)
ReplyDeleteMy thoughts, fwiw: Ben needs a weak dollar to pay down our debt and thread the needle. China wants to bust the FED by forcing a strong dollar. Enter trade wars, and world instability. American people peoples financials are on the line throughout this mess. So, Let us count our blessings on this particular Thanksgiving day and hug your loved ones.
ReplyDeletePeace to all
Tom
Gary,
ReplyDeleteHow often have you seen an intermediate decline missing SoS?
The JPY is up against the USD. I think the Ireland saga is contributing more toward the USD strength than Korea.
ReplyDeleteAnyway, strong gold and strong USD in parallel is fine with me. And GDX is green.
I'd feel much more comfortable shorting stocks, in the short term, had we seen SoS lately. I'm abstaining for the moment.
ReplyDeletewith gold and silver both up, why are all the miners down?
ReplyDeleteThe miners are affected by the stock market. If stocks tank badly the miners will go down, because they are, after all, stocks. People need liquidity and sell what they own.
ReplyDeleteSo now we have a weekly swing low in place on gold. How does this affect the intermediate cycle at this time? Is it behind us possibly?
ReplyDeleteCaveat: I am a trader at heart and will have no problem buying gold back higher if need be. I also will have no problem buying a load when it looks frightening at an intermediate low. If you are not 100% confident you can do both of those things, don't sell because you'll miss a great ride. But...I am mostly out of PM's. I faulted myself for not selling on the reversal day. I'll be damned if I ever do that again. I feel like a heretic on this site, so perhaps this is True Confessions, but between the dollar and the $BPGDM, I am happy to let everyone else make some money for a while. Good luck everybody!
ReplyDeleteCareful here, this Korean incident could easily trip a frothy and edgy market, I'm getting an uneasy feeling as if the market is poised to turn.
ReplyDeleteSpanish debt is selling sharply this morning and we know the market can not support a run on Spanish debt. Portugal looks like it will fall much faster that thought.
These two events could drive the dollar up very sharply in no time.
Korea??...today is he day to buy...
ReplyDeleteGary,
ReplyDeleteHow will the Korean situation effect equities. IF 1173 is broken, Mild correction/panic and then back to bullish December or down.
V
Poly-
ReplyDeleteAre PM's best seen as an alternate currency, or merely something shiny to buy with dollars? I think the more they're considered the former, the more understandable it becomes that they can also rise with a rising dollar. Perhaps we're beginning to see how they are increasingly being viewed.
OK, Who is reducing positions today and who is staying put?
ReplyDeleteThat's it, I can't take anymore! Selling half my miners here. SVM, I hate to lose you!
ReplyDeleteI'll add back one the stochastics take a breather.
good fills here. I only took portfolio down to 50%, instead of taking it below that.
ReplyDeleteGood sleeping point for me, but I really hate letting go of any. Well, I'l be only half-right and half wrong going forward. :)
Gary,
ReplyDeleteI see gold up, and silver a slight bit lower. I don't quite understand your rational for the USD rising via the EURO decline for the most part causing PM's to fall. Is it due to cycles, and this being the excuse for the decline? Gold has decoupled from the dollar many times, and seems strong today. I guess it lends to the fact that this C-wave is being led by the USD decline, so if the USD is up(even if the USD we are referring to is an imaginary USD; but people believe in it), gold and pm’s can’t go up.
This is not a critique of your analysis, more of a question in comprehension. At what point would you consider your current perception a head-fake to your previous understanding. Again I am not critiquing, I am really trying to understand how things changed so drastically!! I am sure you will post in tonight’s report, so I guess I will look forward to your insight then.
Many thanks as always! And thanks for the portfolio update.
The fact that the other leading group of late, agriculture, is taking a beating b/c of the $USD was my motivation. It's just a hunch, but I think we'll at least be able to get back in at these levels on metals/miner and lower on the ags.
ReplyDeletePSEUDO...
ReplyDeleteStaying put, I was looking at my stocks ( EXK , HL , GBG , ssri) on a daily chart (with red/green volume indicators) most sold off following the general mkt , then they got rebought with higher volume.
So far I see much more green volume than red
SSRI = UP .40
GBG and PZG up today too. Not following the mkt
staying put
I am with Shalom-- Went to Basic Core! Sleep at night position-- (and happy with profits)
ReplyDeletePSEUDO
ReplyDeletethat should say a 1 day/3 minute chart
looking at todays action alone , and also 3 day 5 minute
I see no reason to sell here (as of yet anyways)
staying put
i am really upset that silver don't rise with gold :(
ReplyDeletegary,
ReplyDeletedo you see bull flag for NG?
I don't waste time with individual stocks other than SLW. And I really doubt you will ever get any kind of edge trading patterns in individual miners.
ReplyDeleteI'm selling all my lower performers and a percentage of my higher ones I guess. I hate being a novice at this. Feel like I'm always missing something obvious.
ReplyDeleteRobert,
ReplyDeleteAs far as I can remember there has only been one other intermediate decline that began without the SoS day.
But then I doubt that N. Korea broadcast their military plans to anyone so there was no way for the market to "see this one coming".
I'm staying put, right where I am, old turkey for me. Can't say I am optimistic about my stance, first going against Doc's advice and now Gary's, but I am not willing to risk losing my position. Nap time, wake me up in the spring please.
ReplyDeleteIf I'm not mistaken, cotton was the best performer on the upside, and it continues to get trounced even after a substantial pullback.
ReplyDeleteI thought this was supposed to be a quiet week! :)
all things concidered, its a tough call when you are trying to time 'sentiment' when N.Korea is trying to flex some muscle as their leader tries to insert his son in place as ..."the new leader , and dont mess with him."
ReplyDeleteLot of external headwinds here which are all bullish for the dollar. Equities could drop if they break below 1,170 previous low support.
ReplyDeleteSo the question becomes can massive gold buying hold it's own against that tide? If not then we know PM's could get crushed.
I brought in my heavy leverage at the open, happy to bank it all, preserve and at the ready.
The setup looked great a few days ago but have to acknowledge the risk here. Best case we buy bargains, worse case we miss a small run getting back in when the dust settles.
Daniel and I took some off, but I'll be looking to add back once the stochastics are no longer overbought. That doesn't mean I expect them to get oversold, just that I don't feel I'll miss too much immediate upside.
ReplyDeleteAs much as the SoS traders couldn't know about the coming Korea fiasco, the OEX traders did. The smart-money OEX traders bought one of the largest number of put options ever yesterday. They are having s fine day. They are often worth emulating.
ReplyDeleteI think I get what is Gary thinking. He saw USD bounce because of N.Korea, and it seems going to last from time to time. Gold can't get to new high as USD rally. So, gold has high probablity going into intermediate correction. Gary, Do I correct?
ReplyDeleteNew daily cycle high for the DX on Day 13 gives us a virtual lock on a right-translated cycle and confirmation of a new intermediate cycle.
ReplyDeleteI love the smell of burritos in the morning :-)
Yep, Doc. Huge blowout reversals on gigantic volume are not to be dismissed lightly. I am grateful for the bounce we had after the initial drop, as I rediscovered I am a jackrabbit and I was trying to be a Turkey. I have learned my lesson. One needs to trade consistently given his own personality; a lesson that having been reinforced I am unlikely to forget again anytime soon. Nice call, by the way.
ReplyDelete@DG: What source are you using for OEX options, please? Thank you by anticipation.
ReplyDeletewatching $usd to drop from here...
ReplyDeleteCurrent OEX readings are at http://www.cboe.com/data/IntraDayVol.aspx
ReplyDeleteEnd-of-day and historical readings are at
http://www.cboe.com/data/mktstat.aspx
Go to page 2.
It takes a little while to analyze them properly, though. Web reserach (or subscribing to sentimentrader.com) is required.
silver has formed a swing high
ReplyDeletewow...was that an earthquake?? this volatility is better than 6 flags :)
ReplyDeleteFrom $nymo chart, Korean is just an excuse for this drop..
ReplyDeleteIt is kind of playing out as I kind of thought it would. Gold bid but Silver not. Silver in unlikely to be the go to metal in times of stress where USD is strong. Further signs of silver producers hedging means that the smart money senses prices are high enough to do business. As always the little guy who chases will be left holding the bag. Silver from this point onwards is a trade. It needs to make a new base to launch from.
ReplyDeletei reduced my leveraged with great pains. Now i need a drink
ReplyDeleteoa92000, I totally agree. News is just an excuse for the markets to do what they already wanted to do. The move higher in the buck was already in the charts. Apart from the cycle setup, the last few day's action formed a trend line crawl on the DX, and crawls are continuation patterns.
ReplyDeleteIf the dollar is going to rally for 3-4 weeks while the market sorts out the Korean implications then it's probably untrealistic to expect gold to put in the huge parabolic move we were looking for. That kind of move will likely only happen with the dollar collapsing.
ReplyDeleteIf stocks are dropping down into an intermediate low like I suspect they will be if the dollar continues to rally that will inevitably rub off on miners.
Intermediate cycle lows are scary affairs and there is alway margin selling. That has always affected miners to some extent no matter what happens to gold.
But don't forget gold is on the 17th week of it's intermediate cycle. Those don't go up forever. The normal duration is 20 weeks. So at some point soon gold is going to be looking for an excuse to move down into that intermediate cycle trough anyway.
Despite todays action I'm afraid several weeks of dollar strength will eventually be used as an excuse for gold to drop into its intermediate cycle low.
Hate to say it, but I am starting to see the up coming short-term pain as well. Ah well, so be it...part of this gold bull game.
ReplyDeleteGood news for long-term gold....maybe relieve some tension from Ben's plan to print the dollar to nothing....he may have the "see I told you QE doesn't affect things(or whatever it is called these days)". QE3 may get back on the table.
Doc,
ReplyDeleteOn that one I disagree. I think the dollar rally was nothing more than a dead cat bounce that would have rolled over.
The dollar was certainly not discounting something out of left field from N. Korea and certainly not after an intermediate cycle that lasted only 13 weeks.
I don't believe for a second that anyone, anywhere, had any inkling of what was going to happen today.
Except for perhaps the North Korean army...
ReplyDeleteGary,is this the yearly cycle low in the dollar?
ReplyDeleteJoseph Smith Jr. told me in my sleep last night about today's Korean incident. It pays to be Mormon ;)
ReplyDeleteYeah Gary,
ReplyDeleteWhile it is still way too early, Since the $$$ has started an intermediate Right Translated Cycle, it could be possible that we just saw the yearly and 3 year cycle low on the $$$?
I doubt it will be the three year cycle low. I still expect that will occur in the spring but it it takes several weeks for the korean situation to calm down we probably have the dollar's yearly cycle low in place.
ReplyDeletedoes news matter or not??
ReplyDeleteIt may already be baked into this cake , but the FED minutes are being released at 2 p.m. today.
They may reveal concern for the economy not expressed when the 600 billion bail was announced.
Could it roll the dollar???
If the S&P moves below 1173 then we potentially have a daily cycle that topped in only 3 days. That's pretty bearish.
ReplyDeleteWell, I guess, thanks (or no thanks) to N. Korea, Gary has to stay indoors today! :( or :)
ReplyDeleteNews does not move the market. News can accelerate or trigger a move, but the move must have already been inherent in the conditions. A match does not cause an explosion, but if the room is filled with dynamite something will eventually set it off. We were overbought, $BPGDM gave a sell, we had a huge reversal, and everyone hated the dollar. That's the dynamite-filled room. Then Korea dropped a match. I posted a week or two ago that the most typical reaction after a high volume reversal is to rally into the reversal day's range and then fail. If you exceed the high the pattern is ruined, but not until then. Silver bounced into the reversal range and look to fail. Korea did not cause any of that.
ReplyDeleteOk took some profits today.
ReplyDeleteI have a question for anyone.
I have been putting my kids money into miners instead of the bank. They have some really nice profits. since they are all teenagers and don't need the money, would it be smart to book some profits, say sell half of all positions, or just forget about it and stay old turkey?
No one ever went broke taking profits.
ReplyDeleteMy two cents: No one ever went broke taking a profit, but lots of people have gone broke over time by taking small profits that are insufficient to offset their losses.
ReplyDeleteGary,
ReplyDeleteI am not suggesting the Korean news was factored into the markets but rather that the news doesn't matter. The dollar and thus far, stocks, are doing exactly what the charts have been telling me they would do for the past two weeks. As always, this type of news is just used as an excuse to get on with it.
Besides, this skirmish is nothing new. NK sunk a sub a few weeks back, and we didn't see a sharp move higher in the buck. I think if a significant conflict were about to break out, the reactions would be much more severe, so I can only conclude the markets are just taking the determined path.
Spanish 10yr yield's exploding!
ReplyDelete"No one ever went broke taking profits."
ReplyDeleteOnly if you're much more diligent taking loses.
Natan: There's no real answer to that question. Is there a chance that you will panic at the bottom and sell because you worry about your kids accounts getting decimated? If so, sell now. Is there a chance that Gary has the whole picture wrong and the bull has ended? If that doubt will plague you during the decline, sell some now. Will you fail to get in lower out of fear? That would be a shame. These are the questions that, once answered, will answer your question. And only you can answer them. I believe lack of self-honesty dooms traders.
ReplyDeleteActually many short term traders go broke taking profits. The reason being they are too nervous to let a winner ride so they book small profits but those small profits aren't large enough to overcome the big losses.
ReplyDeleteBut to respond to Nat there is no right or wrong answer to that one. I decided to take some profits and then let the rest of my position ride with the plan.
If gold does move down into an intermeidate trough it will take out the prior cycle low.
One thing I have noticed it that at intermediate tops it's very tough for investor/traders to take the "safe" trade (book some profits) because greed has it's hooks in them and all they can see is clear skies ahead.
If you think it's hard to sell now wait till we get to the top of the C-wave or top of the secular bull :)
Where's TZ. We need his opinions ;)
ReplyDeleteIt is very counter-intuitive to go into the intermediate decline at the strongest part of the year. Having run upwards for so long though it is probably a good place to sell into some strength.
I think we do need a bull trap in this market right now, and we're probably going to get it.
DG/Gary you guys read too much into the taking profits comment. I guess I should have said "no one ever went broke taking humongous profits". Which is the same as basically trading sentiment.
If you've been riding since August I wouldn't say taking profits is a poor decision right now.
ReplyDeleteThat said, surprises do come to the upside (I still hold PM shares), and whatever anyone does do not short gold or silver.
The more I think about it, I'm going to try and put in some shorts in Tech at good entries (much safer than commodities which are most likely in a long-term bull).
ok..well I took some profits on the kids account. Sold about 40%, Let the rest go and look to add at intermediate low. anyway, they have their whole lives to make it up if I blow out their account..LOL..I don't use margin so that shouldn't happen.
ReplyDeleterobert..most of the positions are from last February. core holdings (CEF) are from dec '08/jan'09.
ReplyDeleteMVG EXK HL SVM FRG went or about green
ReplyDeleteso if you were going to sell the open and didnt...now is even better
or is it??
Korea is supportive of gold. Miners will follow if it moves to new highs.
ReplyDeleteHey, even JAG is green today. That's my latest value-investment experiment in miners.
where is coolkevs?
ReplyDeletegive us an update on $USD, please??
Up day tomorrow with SoS, or later this week? Possibility.
ReplyDeleteGary keeps saying Old Turkey, and Turkey day is approaching so I did move 50% of my portfolio to the following for this week (historically a very good week for this equity):
http://www.google.com/finance?client=ob&q=NYSE:TUR
fed minutes being released in 3....2....1...
ReplyDeletenow
Gary,
ReplyDelete> I don't believe for a second that anyone,
> anywhere, had any inkling of what was
> going to happen today.
I'd say the North Koreans wouldn't start shelling an island with South Korean civilians actually living there -or pretty nearby- without first notifying the Chinese.
i still think $USD is topping here..
ReplyDeletei still think $USD is topping here.. reson: 200DMA, 50DMA all downtrend.
ReplyDelete200DMA is 81.75 for dollar. Is that an objective, Gary?
ReplyDeleteDollar broke up out of the flag, daily trend from the highs earlier in the year convincingly broken, also the 60EMA has been good support and resistance and is now broken.
ReplyDeletePretty muted response by the metals in light of this, but it looks like a fairly convincing move by the DX
?DX
You're right Jay, no doubt in that one.
ReplyDeleteSentiment in the stock market has been too complacent for some while, and a little saber rattling by North Korea probably won't turn it.
ReplyDeleteSo far, there is no sign of any fear in stocks.
I think this will take awhile before the downside ends.
I will say that considering the news today, the market has been rather composed. You could have expected a bloodbath today. Down only 1.3% on:
ReplyDeleteKorean attack.
Ireland $113B bailout.
Spanish Debt collapsing.
Sharp FED revisions to 2011/12 outlook.
Stronger dollar.
gary ...does this now mean a different target for $USD (80) ?
ReplyDeleteWes: I agree. I am out of just about everything: PM's, stocks. Have a huge wad of cash and will wait for a time to deploy it. An interesting wrinkle though. The AAII survey showed one of the largest one week drops in bulls ever. As it has only happened four other times so relying on the data is a little weak, but each time it happened the SPX was well higher three months later. Will this be number five?
ReplyDeleteDG,
ReplyDeleteI measure complacency by using a 4 or 5 week average of sentiment. That drop was from a very high level, last exceeded in January, 2007. The five week average, even after the drop, was the highest since 2005.
There can be no question about market complacency.
As to after the correction, my indicators are looking for full speed ahead.
ReplyDeleteAs you know, the 1994 congress was the last previous to see such a big change from D to R.
Take a look at what happened to the stock market in November, 1994.
@DG re. OEX Options. Thank you. I was hoping for a more synthetic presentation. For those concerned, stockcharts.com/h-sc/ui?s=$CPCI&p=D&st=2010-02-01&en=%28today%29&id=p50415979065
ReplyDeleteContul: Careful. I don;t think that's OEX options. All option traders are dumb money except OEX traders. The overall PCR works, but the OEX PCR is much more sensitive.
ReplyDeleteThere's still plenty of bulls out there that is for sure. The markets went up for so long they sure did get complacent.
ReplyDeleteI think they're going to get reamed over the next few weeks.
Intermediate decline, you there?
It is a good sign that it is difficult to short stocks at the moment.
ReplyDeleteBut, geez louise, Bernanke is spewing out $800 or so billion into the economy and the world is still going to seem like it is ending sentiment wise to the dumb money in a month or two. Go figure.
Gold and silver beginning to turn around at the moment...
ReplyDeleteGold's last $1265 hit was on Sept. 13th. Silver that day was a little under $20. If gold were to decide to retreat that far, I doubt silver would also go back to $20, but stranger things have happened. Maybe $23 for silver? The gold/silver ratio at that time was all the way up at 63! I don't see it going back above 57-58 to be honest, that would be around $22 max pain. We'll see, this could be fun... the re-entries of course!
ReplyDeleteFYI.
ReplyDeleteRussia Today is reporting that South Korea admitted firing first today saying "it was part of a military drill."
http://www.youtube.com/watch?v=O33sfN00oDk
80% of news is reporting the exact opposite of course.
My dad works in Lockheed Martin and him and all his buddies have been arguing about the need to start another war. They have been showing diminishing returns now in Iraq and Iran. j/k on the father part, but not so sure about the other part. ;)
ReplyDeleteTuesday, November 23, 2010
ReplyDeleteSouth Korea admits firing first shells in row with North Korea
South Korea has admitted it fired artillery shells that triggered an early morning clash with North Korea. However it says it was part of a military drill and denied it was directed at the North. Earlier Seoul blamed the North for what it called an unprovoked shelling of its island. Pyongyang claimed the South had violated its maritime border during the military drills. Seoul has since threatened its neighbour with what it called 'enormous retaliation'.
http://geraldcelentechannel.blogspot.com/2010/11/south-korea-admits-firing-first-shells.html
Another link:
http://macedoniaonline.eu/content/view/16923/53/
If true, that South Korea provoked North Korea to retaliate (this is hard to deny after we have the fact that South Korea admitted running a military operation in that area, but I'm still not saying it's true), it reminds me perfectly of Gordo Gekko's specific Wall St. quote:
ReplyDelete"You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it."
There clearly isn't enough information to lean either way in this one to be honest, being that North or South Korea fired first. I'm simply presenting the case that it is not completely cut and dry that North Korea suddenly attacked South Korea. The rest is speculation.
ReplyDeleteQuestion though, why would North Korea a clear inferior military power randomly attack a superior military power, South Korea? This makes no sense. You can call the North crazy but very few people are crazy enough to do something that results in their death.
But onto the markets, are we going to see dollar strength now with war "brewing"? Are Doc and Gary right about an intermediate decline beginning in stocks and gold? The writing on the wall is saying yes.
Tonight's report is up now.
ReplyDeleteAnyone have a thought about the pms in the futures markets tonight. I'm seeing a reading of 1374 on Gold. Pretty impressive. Silver at 27.61.
ReplyDeleteThe dollar is a bit lower overnight. That's probably supporting the metals altough I'm showing gold still down slightly.
ReplyDeleteTo put simply...those that follow short-term trading, we are in the WTF trading zone...enjoy! For those that don't care, physical holdings will help. Welcome to old Turkey, or burn in the sight of PM's bastard burn. Again gold is a shit investment....90% of people will not make money off of it after inflation…You can’t trade gold, it will kill you. Anyways I locked a good portion of my holdings in physical since I know what a coward I am! And I will be locking more in tomorrow! I know what type of weak link I am to my own investments. Gary is still a great coach BTW. Not my point. Just saying….the path to riches will be by the dumbest moron in the world who picks up a couple cheap gold coins at 1k and doesn’t realize their value until 5k. The rest of us only think we are being smart by trying to trade that intelligence; ummm myself included(in my own stupidity)…
ReplyDeleteRobert:
ReplyDeleteN.Korea is a Chinese satellite. The Chinese have been trying to up the ante by stoking up conflicts with all their neighbors, Japan, India and Korea. The N.Koreans sunk a S.Korean boat with a torpedo a few months ago, so this is not out of the blue. There is also a power transition in N. Korea and every dictator has to prove his mettle.
The question to ask is why is China trying to raise the temperature. It might be just some internal power struggle within the CCP with the PLA being given more leeway to flex the muscles and test the adversary. However, why the CCP would like the PLA to do that is not clear. One school of thought is that things are not hunky-dory within China, and nothing beats a war in getting people under control.
There is another school of thought that the PLA wants to install China as the supreme power in Asia, and would like to strike a blow to India in the near future. India started her economic program about 15 years after China, and has started catching up. The PLA feels that right now the military gap between India and China is optimal for the PLA to make a decisive strike; the gap is going to narrow going forward. The Chinese have been using the Pakistanis as their proxy to keep India under check but things are very dynamic there. Hence the need for some direct action. As the first step, PLA troops have moved into the Pakistani part of Kashmir; they have cordoned off areas and built underground tunnels/bunkers where even the local are not allowed.
We are living in very interesting times.
Every 18 months or so, N Korea throws a tantrum designed to get the West to provide the foreign aid it needs to continue operations. This is just another one of these episodes.
ReplyDeleteChina mostly views N Korea as a nuisance -- the idiot stepchild n the family. They certainly did not direct N Korea to take this action.
The incident will be forgotten shortly and the markets will move on to the next crisis.
Gary,
ReplyDeleteAfter booking some profits yesterday, I still cant get over the Korea situation altering the course of PM/equities and USD. I agree its gonna be almost impossible to sell at C wave top.
What will happen to oil if equities have started a move down?
V
Gold now at 1380. Safe haven in times of uncertainty? Could decouple from the dollar given the threat of instability, sovereign debt crisis leading to more printing of all Fiats etc... I think the large investors are into a big picture frame of mind here. What makes gold attractive? It is immune from the machinations of nervous central banks, except that hey will continue to be net buyers in the face of global strife.
ReplyDeleteV,
ReplyDeleteOil tends to follow the market and there is still time for oil to move down one more time before the oil cycle stretches past the normal timing band for a trough.
gary,
ReplyDeleteYou mentioned in weekly report that oil could rally for 20 days or so with the stocks but with dollar changing trend we could see a extremely left cycle and can except another 10 days of down move in oil.
Price wise what levels should oil hold?
V
Oil made a lower low yesterday so obviously the cycle hasn't bottomed yet, unless yesterday was the bottom.
ReplyDeleteJust a thought for traders. The dollar tagged 80 this morning. 79.992 to be exact. One could take long positions this morning under the hope that 80 is going to turn the dollar back, the stock market bottom will hold, and gold will continue higher. Then put a stop on all positions if 1173 in the S&P gets broken and if the dollar breaks through 80ish (give it a reasonable amount of leeway).
Risk is very low, about 8 points in the S&P to be exact.
"DG said...
ReplyDeleteAn excellent intermediate term gold indicator is Bullish Percent. $BPGDM on stockcharts.com. It has flashed a sell signal by dropping from severe overbought, which already had me nervous about holding gold, and given the recent developments..."
DG,
When you say $BPGDM is overbought, which technical indicator are you looking at? I'm not familiar with $BPGDM, could you give a quick rundown on how it works versus its correlation to gold's price?
Thanks!
Never mind, found this article explaining how the gold sector bullish percent index (BPGDM) works:
ReplyDelete"A bullish percent index (BPI) measures the percentage of stocks trading with bullish "point and figure" charts. There's no need to get too technical here. Suffice it to say, a sector is overbought when the BPI is above 80. And a sector is oversold when the BPI drops below 30.
For the gold sector, BPGDM generates buy signals when it drops below 30 and then turns higher. Sell signals occur when BPGDM pops above 80 and then turns lower."
http://www.stockhouse.com/Columnists/2010/Nov/24/Your-last-chance-to-buy-gold
And found the chart here if anyone else wants to see it:
http://stockcharts.com/h-sc/ui?s=$BPGDM
Jabalong: yep that's it. That plus OEX traders plus dollar rally plus lack of stock mkt bears plus...and I am happy to stand aside until the dust settles. But people should NOT sell unless they are experienced traders and will not be afraid to buy back into gold and stocks when they look terrible. If you yourself are not nervous when you place a big order it's probably wrong!
ReplyDeleteGary - have you thought about the possibility that the US dollar and SP-500 both move higher into 2011/2012? Similar to what we saw from Nov 2009 to April 2010 when the US dollar rose the SP-500 rose from 1105 to 1220. If the Eurozone is about to implode wouldn't it stand to reason that European funds would seek a safe shelter in the US despite all of our debt problems.
ReplyDelete@DG re. OEX Options. The link I posted is for CBOE Options _Index_ Put/Call Ratio (CPCI). True, it is not OEX-specific. However, there exists a CBOE Options _Equity_ Put/Call Ratio, the difference (ratio) between CPCI-CPCE presumably capturing the "smart" versus "dumb" option activity. Therefore, CPCI, especially by contrast to CPCE, is a proxy to the same effect that the study of OEX options tries to capture.
ReplyDeleteCPCE link: stockcharts.com/h-sc/ui?s=$CPCE&p=D&st=2010-02-01&en=%28today%29&id=p74207950336
CPCI:CPCE ratio link: http://stockcharts.com/h-sc/ui?s=$CPCI:$CPCE&p=D&st=2010-02-01&en=%28today%29&id=p84269891020
The only graphical sources I could find for OEX-only options activity are here: www.crimsonmind.com/optionsR/QuoteOptionsAll.aspx?s=oex&goButton=Go
and here:
http://schaeffersresearch.com/streetools/sentiment_brief.aspx [type symbol OEX]
But they are not "live" and finely grained. I was hoping you found something better. Thnks for your input.
Contul. Sorry not to have better links for you, but as a subscriber to Jason's sentimentrader.com (actually he comps me his service for the buy and sell signals I post here), I just use his data. He slices and dices is it several ways that improve accuracy. For example, Open to Buy orders as opposed to purchases to close positions, etc. No indicator is going to be better than about 80% over time, but watching the OEX guys when they get extreme is one of the best. He's the best there is at this stuff, and has a little on gold as well.
ReplyDeleteChrys,
ReplyDeleteI doubt that we will see that happen in the current environment. If you will notice even during that time when the ddollar was rallying strongly the stock market was trading sideways or declining. The stock market only made real headway when the dollar was trading side4ways or correcting.
It's been this way sine 2002 for the most part.
The last two cyclical bulls were driven by currency debasement not real productivity. Productivity is a required ingredient for the stock market and the dollar to rise together in a susutained manner.
David:
ReplyDeleteChina does not view N.Korea as a nuisance. N. Korea is like the US' 51st state would be. According to a recent quip by a Chinese official, China and Pakistan are like China's Israel.
China Spurns Obama
Right now they perceive the US as weak and are trying to probe and see how far we will go to defend our interests.
On the Drudge... China and Russia quit the dollar and use their own currencies for bilateral trade.
ReplyDelete@DG: I read good opinion about Sentiment Trader from sources I deem reliable. It is on my short "wish list". Thanks for the comment & regards.
ReplyDeleteBTW, Option Mark, for what it's worth, has recently added OEX (optionmark.com). Corroborate that with a standard OEX chart, and one gets an idea as to where the price attractor lies.
Elaine--
ReplyDeleteThat report on Drudge is big news. BIG NEWS!!
Intteresting. Dollar down, mkt up over 100 points, and PM's flat. Hmmm...
ReplyDeleteI've closed my lunch money stock market trade for lunch money.
ReplyDeleteEven though I don't short bull markets, this set up sure is tempting. If we have a gap up on Monday, I think I'll put on a small fade.
Wes: I also like to eat lunch. I have an order in to short OIH at 129.90. Got 4 points in 4 days two weeks ago---just give me a little more rally. And I agree about a fade, but we won't gap up Monday. I'd suggest shorting at the close friday. The Monday after T'giving if Wed and Fri up is usually lousy.
ReplyDeleteInteresting that China/Russia story hits the wire right before the holiday.
ReplyDeleteDG
ReplyDeleteWas looking at the $BPGDM , and saw that last March it flashed a sell signal , with no buy signal until june...
that means that nice move in april to may would have been missed
PAAS $22 to $28.41 April -May
SLW $15ish to $21+ April - May
also, buying in June to July would've sucked a bit too.
I definitely wouldnt rely solely on that indicator ( I am sure you dont)
gary,
ReplyDeletefrom $nymo,do you think bull going to run couple days?
Alex: I don't wait for it to get to 30 to buy! It doesn't need to signal, but when it does it's pretty good (it's sufficient but not necessary). And, no, I wouldn't rely on just that, but that coupled with the blowoff reversal, coupled with the rallying dollar, and coupled with the fact that stock bears have become an endangered species...now I am interested in the "plus 90" readings.
ReplyDeleteLook at this chart. Each one caught a tradable drop in gold:
http://img251.imageshack.us/img251/765/bpgdm.jpg
DG
ReplyDeleteI did notice that...it catches a drop. I definitely wouldnt wait for that buy signal below 30 and turn up tho either :)
I use a variety of 'indicators' and signals too. I still didnt sell this one yet though.
sidenote:
AMOK..breaking out with volume again AMOK.OB for some charts
DG
ReplyDeleteand that link (chart) was way different than the $bpgdm I was looking at :)
thx
Juerg Kiener on Gold--
ReplyDeletehttp://www.cnbc.com/id/15840232?video=1661019956&play=1
Much Ado About Nothing: China, Russia Drop Dollar In Bilateral Trade
ReplyDeletehttp://tinyurl.com/3ajrvva
Shorted a little more OIH at 130.30. That's enough. This is supposed to be a lunch money trade not a dinner money trade.
ReplyDeleteI would be very leery about trying to short. There still hasn't been any selling on strength days and the dollar tagged 80 this morning and turned tail.
ReplyDeleteToday is the 14th day of the dollar's daily cycle. It's not unreasonable to think that the daily cycle topped today with that tag.
If the dollar rolls over and the market can regain the 200 week moving average by Friday we could still see the stretched cycle I have been expecting.
Gary
ReplyDeleteand if the dollar tagged 80 and turns as you origionally had been calling for...
same move upward for gold as expected?
(and still a burrito on YOUR plate??) :)
Gary-
ReplyDeleteIf that happens, would that lead you to another portfolio change?
Yes if the dollar turns and moves back below the Nov. low Doc would have to give back that burrito certificate :)
ReplyDeleteI'm not sure I would add back leverage at this point as we are getting very deep into not only the stock market cycle, but are also approaching the normal timing band for gold to make a move down.
In order to add leverage back I would have to be convinced we are going to see a streched gold cycle, which isn't so hard to visualize.
I would also have to be convinced we will see an extremely stretched stock market cycle. That one I'm not confident in since we are now operating with a weekly swing high in place.
A move above 1200 would form a 1-2-3 reversal and a short term pattern of higher highs BTW.
ReplyDeleteGary: My stop is a point away. How leery can you be about risking a point on a $130 stock? My whole game is picking precise entries with better then usual odds of working and tight stops. I don't need a SoS day to make 5-10 points on a stock. I made 12 points in 4 days on the AMZN short I posted last week.
ReplyDeleteDG,
ReplyDeleteI'm not talking about you I'm talking about the average trader trying to copy you.
Most of the time they will miss the exit and just give back any gains they make and then whittle away at their account.
I've always thought it was pretty much a waste for people to post their entries. That doesn't tell anything. The perfect entry is all for naught if you miss the exit.
Case in point that AMZN short is getting destroyed today unless one was lucky enough to make a perfect exit.
ReplyDeleteLearning how to pick a good entry and not learning when to sell at the right time, is like learning to fly and not bothering to learn how to land the plane...
ReplyDeleteWilliam O' Neil
look at 15 min chart, UUP ready to drop..
ReplyDeletei hope we see a stretched cycle so we can finish the year with a bang. :)
ReplyDeleteAlso I dont see anything wrong with shorting as long as it is a short term trade (intraday) which can have low risk in a strong move down.
The dollar WILL turn lower and go below the Nov low... maybe even in the next daily cycle. However, considering the present cycle is forming as R-T, I don't think a new intermediate cycle can be denied any longer. I mean, just look at the weekly chart and tell me with a straight face we didn't just see an intermediate low. No sir, I'm keeping that burrito ;-)
ReplyDeleteYes, Gary. Fair enough. I have actually debated about whether to even post my short-term trades but a few people have expressed interest. For the others: Don't try this at home! I was a very bad trader for a long time. If you want to learn to trade it takes study and practice like anything else. My entries are systematic and my exits are a combination of system (if the right variables line up) and feel (tape reading). That said, a good entry, cutting losses, and letting winners go a bit will result in consistent profits.
ReplyDeleteDoc,
ReplyDeleteIf this current daily cycle rolls over and makes new lows you are going to have to cough up that burrito.
No, I don't give great odds for that happening but just in case... stranger things have happened.
Wow! I haven't even looked at AMZN since I covered it. I guess the cover at 159.78 worked out.
ReplyDeleteGoing to be a carefree thank-giving with this wad of cash, just can't get too excited about any real trades right now.
ReplyDeleteFeel kind of naked not having a decent AGQ stake, that baby was so kind to us all.
Yes, granted if this cycle somehow dives to a new low, I'll hand the burrito back. But I've already taken two bites out of it ;-)
ReplyDeletePoly: I almost shorted SLV at 27.00 as it showed up on one of my short screens at that price, but had I done that Gary probably would have mailed me an anthrax-laden turkey, so I passed on the trade. I think you'll be happy (short-term) to be out of AGQ for a little while. Have a good T'giving
ReplyDeleteis the market open tomorrow?
ReplyDeleteBy the way, the AMZN cover was simple: It hit the lower BB and the rising 50-day line at the same time. Should have gone long it there with a tight stop a point below the 50!
ReplyDeleteJust shorted some UNG at 6.17
Amazon $176 a share, who'd a thunk it? DG, can you explain why those indicators mark that it would go up?
ReplyDeleteStockmarket is closed Thursday (Thanksgiving Day)and only open until 1 PM Eastern Time on Friday.
ReplyDeleteElaine,
ReplyDeleteThey don't mean it will go up. If the market had started down into an intermediate decline those levels would have been blown right through.
There is no holy grail. What works one time may not work the next. And the only thing that works everytime is looking in the rear view mirror :)
Well Said Gary!!
ReplyDeleteFor trading I use reversion to mean type stuff (overbought oversold), Hitting the lower BB is what Gary calls a crash trade, but they can go against you a fair bit, so you need a stop (or you guts it out and pray). The 50-day line often holds string stocks correcting a previous overbought status. The 50 is where funds tend to step in to buy, so it acts as support. Of course it doesn't always work, but as I was not intermediate term bearish it seemed like a good spot to take the profit. My going long was based on my willingness to do almost anything with a tight enough stop, and those two item held up and AMZN has made a new high.
ReplyDeleteoops---meant "strong" stocks not "string stocks"
ReplyDeleteSo, Gary, are you saying that the odds are that the dollar has topped out at 80?
ReplyDeleteGary: That's why I use stops. Nothing has to work "every time." You're just looking for a 5-1 or better risk/reward. I can get stopped out on the next 5 "AMZN" trades that "don;t work" and still be ahead. 20% is not every time.
ReplyDeleteGary and DG,
ReplyDeleteThank you. I have a lot to learn. I appreciate your help.
I have no way of knowing that in advance. What I do know is that 80 is a very significant resistance level. The dollar rallied to that point this morning and then turned tail.
ReplyDeleteThe stock market has reversed almost all of yesterdays decline and is back above the 200 WMA. If the S&P hits 1201 it will start a pattern of higher highs and complete a 1-2-3 reversal.
So far the daily cycle low at 1173 is holding.
There has been no SoS days yet.
This is why I said traders should just continue to work stops below 1173. maybe it turns out to be a winning trade and maybe it doesn't but as of today there is no reason to abandon the trade.
Gary,
ReplyDeleteIf we hit 1201. Do we add our positions back in?
I'm confortable with what I have for now. 75% is still a large position it's just not leveraged.
ReplyDeleteGary-
ReplyDeleteThat bear flag on gold seems to be angled too high at this point (I'm no chart expert)...Others are pointing out the H&S pattern with a target down around 1260's. (Doc pointed this out too).
On the other hand, it looks like silver is forming a cup and handle!
At what point do you discount the bearish patterns and switch back to full position? I had entered some new positions after our last sell off and sold them this week...However, it's amazing how I feel uncomfortable not having a heftier position now...Itching to get back in so this could mean not the right time to buy.
Gary, when you say 75% its just not leveraged. Do you mean you are 75% of the 130% or 75% in with 25% cash.
ReplyDeleteJust curious, I try to keep my portfolio consistent with yours.
I think I will have to see a failed daily cycle on the dollar index before I'm comfortable putting leverage back on this late in the intermediate cycle.
ReplyDelete25% in cash
ReplyDeleteGreat. Thanks for answering my questions, Gary. Have a great Thanksgiving.
ReplyDeleteFlat bullion and the miners want no part of this big move....
ReplyDelete"If the S&P hits 1201 it will start a pattern of higher highs and complete a 1-2-3 reversal. " they are going to do it, gary. From $nymo chart, bull going to run it..
ReplyDeleteI'm not convinced the S&P can go higher without strong pullback towards the 200.
ReplyDeletethis is great....i was betting on a rising stock market today so i entered my metals positions again last night only to make no gains while the stock went up 1.3%. I should have just bought one of the indices.
ReplyDelete