I will go over expectations and cyclical structure for a second leg of the C-wave in tonight’s report for subscribers.
For those of you thinking about getting side tracked by a meaningless daily cycle low that is coming due, let me tell you from bitter experience the one thing you don't want to do is lose your position at the beginning of a C-wave or C-wave second leg.
At this point the daily cycle corrections aren't profit taking opportunities. That will come as we near the end of the C-wave.
At this time a daily cycle low is a last chance opportunity to get invested.
Don't forget in bull markets and especially during aggressive C-wave advances the surprises come on the upside. Daily cycles can and often do run exceptionally long as a C-wave starts to gain momentum so losing one’s position in an attempt to "time" a short term correction can potentially cost one many percentage points. It's just not worth the risk. It’s time to heed "OldTurkey" advice.
I have no doubt this will be the greatest bull market that any of us will ever see in our lifetime. Since November of `08 the precious metal sector has been doing everything but hit investors over the head with a pipe to let us know this is the leading sector of this bull.
Miners are the only sector exhibiting massive accumulation.
Compare the above chart to other sectors during this bull and you will see where the smart money has been positioning.
These are just a few sectors, but the picture is the same no matter where you look. Steadily declining volume. Only miners are showing heavy accumulation.
I’m even seeing analysts touting the energy sector as the place to be. It’s not unusual to see traders flock back into the leading sector of the prior bull, but if history is any indication energy will not lead this bull. You can see from the chart of XLE that energy, just like every other sector, is showing no signs of accumulation. Let’s face it the supply and demand fundamentals for the energy sector are now impaired and will be for years as the world cycles through multiple on again off a gain recessions and stubbornly high unemployment levels.
The only sector with improving fundamentals is the precious metal sector, which will benefit from governments ongoing attempts to “print” prosperity. It will not work, but the blizzard of paper will drive the secular gold bull to amazing heights before it’s finished.
Once the HUI & silver join gold, platinum and palladium at new highs the entire precious metal sector will move into a vacuum with no overhead resistance.
That is going to be incredibly bullish for the sector.
I bought SLV calls a couple days ago. I bought 300 Contracts (3000 shares) of $13 Jan 2011 calls at $6.10. I am up $12,000+ in two days.
ReplyDeleteSilver is moving at a higher % per day than Gold. You really don't want to pass this up if you have funds in cash at essentially 0% interest. Far out Options are the way to go. In the money, high Delta trades are the best.
I have a lot of time to reap gains on this trade before the options loose any time value.
Do you have any take on junior mining stocks, specifically the $CDNX index and how it has recovered since the collapse in 2008?
ReplyDeleteDuring the latter stages of a bull the crapiest companies will exihbit the largest gains. Expect to see juniors going crazy in the next few months and years.
ReplyDeleteHere's a 5 year chart of gold vs TSX-Venture Index where many juniors are listed. Notice the underperformance since 2008. Now that gold is breaking out to new highs, there is liable to be a feeding frenzie for the producers. My guess is after that the juniors should finally take off.
ReplyDeletehttp://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=GCM10&freq=1&compidx=aaaaa%3A0&comp=&ma=0&maval=9&uf=0&lf=1&type=2&time=8&style=320&startdate=&enddate=&size=2&lf2=0&lf3=0
Could you describe what you mean by "daily cycle low" please. Thanks.
ReplyDeleteI have a detailed description of cycles on the
ReplyDeleteterminology document.
Marc- I'm a neophyte options player.That said: Am I to understand that you bought 300 $13.00 Jan.22,2011 calls @ 6.10 or, $1830.00 and are betting that these calls will increase to $13.00 in Jan.2011 and now, are up over $12K? Would you please break this down so that I may have a better grasp of the concept? I would really appreciate it! Thanks, tom2
ReplyDeleteTom,
ReplyDeleteI would warn you that options have killed more accounts than you can shake a stick at. If used properly they are a great way to control risk.
Unfortunately most retail investors use them for leverage and they end up blowing out their acocunt.
The only time I would want to use options is at an intermediate cycle low. That passed quite a while ago.
Options are very sophistcated financial instruments if you don't have many years experience and understand the right and wrong way to use them I would suggest you just stick to buying shares.
Just as an example. If Marc is using options for leverage (and I'm not saying he is but 300 contracts would mean he needs to be trading a 5.7 million dollar account to be using them properly) any small move against him will evaporate that +12,000 and turn it into a huge minus. He could drop $90,000 to $120,000 in the blink of an eye. If you don't have the emotional control to hang on through that kind of draw down you end up destroying your account in the blink of an eye.
Is this s sign that we are at the beginning of the public euphoria for buying gold?
ReplyDeleteRemove Card and Take Bullion; Gold ATM Debuts
Amid fears over the strength of nearly every major currency, Abu Dhabi's top hotel has come up with a new type of ATM for their most risk-averse guests. The Emirates Palace is giving those staying there the chance to withdraw gold from the world first ever gold dispenser.
Source:http://finance.yahoo.com/news/Remove-Card-and-Take-Bullion-cnbc-760626755.html?x=0&sec=topStories&pos=4&asset=&ccode=
We will eventually see gold everywhere as the bull progresses.
ReplyDeleteOnce the public starts to come in in earnest we have about a year to a year and a half before the party is over.
I wish people would realize that these ATMs are in Abu Dhabi, a totally different culture.
ReplyDeleteI recently purchased a junior mining stock-Paramount Gold (PZG). I'm extremely optimistic about it; however, I'm mutually concerned that the euro debacle will have a crushing blow to US economy/markets. When can I expect juniors to start their upward trend? Also, do you feel we will have another market fall-out before they move upward, after all, gold does well in times of crisis.?
ReplyDeleteMost juniors are up sustantially since the Novenber 08 bottom. Some by many hundreds of percent. I would say they've already starting going up :)
ReplyDelete