Since the current daily cycle is now in the timing band for a bottom we should see an intermediate top fairly soon.
Yearly cycle corrections are major corrections, only exceeded by the four year cycle low in severity. So once the correction begins it should be a doozie. The severity of the impending correction will tell us whether the cyclical bull is on it's last legs or not.
If the correction retraces back to or maybe a little below the 200 DMA then it will be a normal intermediate correction within a cyclical bull market.
If, however, the market were to retrace all of the autumn rally and test the summer lows that will be a very strong sign that all the stimulus and money printing was for naught.
Keep in mind the next four year cycle low is due sometime in 2012. And since bear markets tend to last about a year and a half I strongly suspect this cyclical bull will top sometime this year.
As a matter of fact the market is already potentially forming a megaphone topping pattern. This pattern of wildly expanding volatility is caused by the underlying debt cancer and inflation trying to pull the market down while at the same time the Fed tries to counter the bear market forces with ever larger monetary stimulus.
The result is a market being whipped back and forth in larger and larger swings.
In the end the Fed will fail and the next leg down in the secular bear will begin, only this time will be much worse than the last one. All the Fed will have succeeded in doing is making the problem bigger.
I would suggest if one has retirement funds still invested in the stock market they get them out and back into a money market at this time until we see just how far down the market drops as it moves into the yearly cycle trough.
Thanks a lot for your insights and sharing them with us.
ReplyDeleteToby,
ReplyDeleteThere's some tall calls here right out of the gate here calling for the lows in the metals to possibly in here for the year now or coming up very soon. Obviously that would be wonderful and I'm hoping they're right! You feel as well that the metals will eventually rise again this year. But you feel that the market is going to be bearish. If the market started rolling over, I can't see the metals just holding up to that. If things start rolling over, won't the Fed just start frontrunning the deflation trade by buying bonds again and juicing S&P futures?
Noah,
ReplyDeleteThey haven't stopped.
QE1 was still in progress last January but that didn't stop the market from dropping down into the Feb. intermediate correction.
These are profit taking events and outside of the fundamentals.
A word of warning to readers: Don't take Gary's/Toby's word for gospel.
ReplyDeleteLately, the quality of his advice has deteriorated substantially and as a subscriber, I'm seriosly thinking about not extend my subscription.
Example: In December, with the gold price around $1380, we were adviced to exit most of our gold and silver positions. Then in late December, at $1425, we were adviced to enter again, with LEVERAGE. Then early January, around $1360, we were adviced to exit those positiong. Now we're at $1380 and he is advising us to re-enter if gold surpasses $1420!
You can imagine what this does to your portfolio! Catastrophic.
Further, the language in the reports is filled with "I hope", "I think", "I believe", and their is too little fact based analysis. Clearly, Gary is getting emotional with his money.
Further, I think Gary/Toby did not understand that the action during the holiday period in late December, was low volume 'noise' trades by amateurs, which should not have been given so much attention.
If he analyzes the recent action with that perspective it will probably be good.
Further, don't look at the lines he draws. Looking back at the history, these are most often wrong both in direction and levels, and confuses more than helps. For example, after gold had five down days last week, he painted a further downwards line the coming days even though most people know gold very rarely have more than 5 down days in a row.
/Kristoff
To be exact I re-entered at slightly above $1400. Why? Because gold had reversed the pattern of lower lows and the dollar had broken down and made a lower low.
ReplyDeleteStops were set at $1361 for gold positions. Everyone was told to only take a position large enough that if those stops were hit they could accept the loss.
I warned many many times that every person should determine for themselves whether or not they wanted to use leverage or even be fully invested in precious metals. They are a volatile sector.
So any normal investor would calculate the risk and choose their position size based on those stops.
It appears you didn't use any commonsense risk control on your position sizing. I'm guessing it never even occurred to you that the stops might get hit.
I have news for you, in this business everyone is going to get thrown a curve ball from time to time. I don't have a crystal ball any more than anyone else so I'm not going to be able to look into the future and see those curves ahead of time any better than anyone else. So I do the sensible thing. I plan for what to do just in case a curve comes.
I did that and I told everyone how to do that. If you ignored me then who's fault is that?
And to answer you final 5 day remark. We aren't day trading here. Sure gold could have an up day. It could have several.
ReplyDeleteWhat I said is that gold isn't in the timing band for a cycle low yet. So if history is any indicator gold should have one more dip down sometime this week or early next before putting in a more lasting bounce.
You do understand probability and odds don't you?
FWIW in order to re-enter we now need to see a higher high out of the precious metal sector. That meqans the HUI has to break above 580 and or gold as to break above $1422.
ReplyDeleteJumping in before the pattern of lower lows and lower highs is broken would just be guessing. And if one wants to gamble they might as well go down to the local casino.
Gary,
ReplyDeleteYou are doing a great job! I personaly listen to you and take most of your advices seriously . There is no person in the world who can predict the exact moves. Most of the time I read your comments,but I áct like what I feel market is going to do.
wrong trade....in this business only people with 1 day experiance maybe are all right.
Once again you did a great job in 2010 and people who understand the markets and know what is all about apreciate that!