Wednesday, October 20, 2010

THE CORRECTION HAS BEGUN

Yesterday the market broke the trend line off the August bottom.


The dollar also followed through on it's snapback rally.


The odds are now high that we have the cycle top in place for stocks and the cycle low in the dollar. We should now see the market drift lower possibly till the third quarter GDP report next week.

However let me stress again this isn't over. This is just a profit taking event and once it's run it's course the dollar will resume what I fully expect to be a complete train wreck (especially if Bernanke is stupid enough to run QE2) as it continues to crash down into the yearly and three year cycle low.

Initially this will push stocks higher, until surging inflation next year destroys the fragile economy. At that point the stock market will begin the next leg down in the secular bear market and the economy will roll over into the next depression.

22 comments:

  1. with regard to cycles,what is the minimum time that the dollar low and counter move can remain? If it is particularly weak, could it refuse to bounce and just go sideways-or is today so far just a reaction to panic selling ( in your opinion).thx

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  2. Toby,dollar just plunged yet again.
    I really can't believe this.
    Is it possible that people's will to get out of the dollar is stronger than any cycles or technicals?
    I mean this is getting ridicolous.

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  3. Toby,
    Does this market´s day change your conclusions about Dollar, Gold and Silver ?
    Thanks

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  4. I believe you can rename this from "The correction has begun" to "The correction has ended",LOL

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  5. If the dollar breaks below the recent low then yes the correction will have never gotten started.

    That would of course mean the train wreck in the dollar is coming sooner rather than later.

    Now you see why I don't turn lose of my core position in miners.

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  6. two days of very very high volume is gone in UUP. yesterday and 2 days back. way higher than 3m avg. Hope it dosen't go waste so immediately

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  7. Toby, in your opinion, has the correction ended (dollar, gold and silver) ? Dollar index inded in MA5, MACD of Gold mantain correction, MACD of Silver flat (0 diference). What do you think?
    Thks

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  8. I'm going over the possibilities in tonights report.

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  9. I took the dollar's rise as a coordinated jawboning by Geithner to go along with the rate hike in China. I'm having some trouble comprehending how the dollar could give up its gains completely. Looks like maybe we get a whimper from the dollar and then maybe game on here for gold. The selloff was vicious and painful, but I couldn't sell based on what that twerp Turbo Timmy said for some G 20 window dressing. I really want to hold on to the miners here because it just doesn't look like their move up has done enough justice. Let's hold on on try to see the most optimistic price action as coming thru because there's very few who see it playing out that way. However... That last sell off felt like being in the ring with freaking Ivan Drago! Toby do you think the worst is over for the HUI? God I don't want to get my ass kicked like that again!!! Wow I was in a coma for a while there yesterday!

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  11. Toby, with the last move of markets and since tomorrow there is expirations in precious metals ate the Comex, how can this turn on for Gold and Silver ?

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  12. I don't worry about trying to predict tomorrows move. That's why I jsut sit tight with my core position. If the cycle still has further to go no problem It will be short lived and the bull will recover the drawdown quickly.

    If the correction is over then I'm already positioned to take advantage of it.

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  13. How can a daily cycle ended with one day correction? em?

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  14. Toby,

    It seems to me that the dollar printed a higher high and a higher low yesterday.

    As long as the dollar does not fall below 77.06, then there is no swing high.

    Still until we to see a break below 76.15, that would be a clear signal to load up on precious metals

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  15. so if in 2011 dollar will hit all time low and as you say major bottom then this means that plunge with began 10 years ago is over and dollar will start to rise in long term ?

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  16. Noah....I felt some of that pain, but thx for making me laugh about it haha :) I chose to look at the UUP chart and guaged that the dollar shot up on HUGE volume in that fund and yesterday ..SO FAR..came down and closed that huge gap. another bounce couldcome after jobless claims? who knows. the GOLDBULL is running and always adds volatility to shake riders off. I do as Toby...Hold a core position, i do as you do...bleed a little internally on days like this week , but when it turns and runs up for days in a row...weeks like this are soon forgotten.

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  17. So Alex, you think Gold and Silver will resumed their bull now and dollar will continued to go down. The dollar rebound ended yesterday ?

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  18. Really Its as clear as mud right now...mixed signals on the dollars weakness vs. its oversold condition and a possible bounce. The regualr MKT is up in pre mkt, the dollars up a tad, Gold is down a tad. I'm just going to watch it and if the dollar fails, reinvest in mining stocks ( I sold 1/2 position on Monday just to sleep better haha)I can always get back in if volume up looks good, but I just hate the ride down fully invested. sorry I couldnt help more Carlos.

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  19. Ahh, it was the old head fake!! Gold going lower and Dollar rising...Now I am glad I sold 1/2 position, buying opportunities SOON! :)

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  20. Hey Guys...observation here...

    The GDX and the HUI are retesting there breakout from a top of a triangle on a 1yr wkly chart..this also puts them at 50dma.

    Also, the GDX tested it 2 days ago on 16 million volume -bounced yesterday- and is down today on only about 12 million so far.

    No recommendation here, but I'm the kind of guy that starts adding to positions here if I lightened up when dollar bottomed. GDX could fill gap at 53 tomorrow? stochastics is getting oversold. Just an F.Y.I.

    could still bounce a bit lower while dollar reacts, but its Nibble time for me. happy trades!

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  21. We have key reversal day on lots of gold stocks, including HUI and GDXJ.
    I believe this is going fast and hard to the 200 MA area as i have suspected. Think HUI 455, GDX 50

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  22. HUH?? I traded the 2003 and the 2005-2006 gold mining shares run up...look at those bull runs. The hui never went below the 50 ma, BUT...most of the pullbacks only went back to the 20dma on daily charts for 6 months. check and see. the 200 dma seems too far down for this bull correction.,i, as I said, have sold friday/monday, and thought it would be 2 wks, but am buying 1/2 position back ( AT LEAST FOR A BOUNCE that started 2dAY)..the stochastics are oversold, rsi no longer overbought, and support levels reached as i mentioned.

    happy TRADING

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