Friday, April 8, 2011


The S&P is currently forming a volatility coil. I've noted in the past that the initial move out of a coil tends to be a false move that is quickly reversed and followed by a more powerful and durable move in the opposite direction.

The assumption is that the coil will break to the downside early next week as earnings season begins. Stocks are now in the timing band for a half cycle low which also lends credence to the downside theory.

Usually the initial move only lasts 2-4 days. So I expect by the end of next week we will see the market start to reverse. Stocks should then enter a powerful uptrend for another 5-7 weeks.

This should push sentiment to levels consistent with bull market tops. By this time oil will have spiked high enough to poison the economy.  I expect by early June will start to see signs that that the economy is rolling over again.

Bernanke in his infinite wisdom will have made the same mistake he did in `08. In the effort to print prosperity all he will have done is spike inflation and collapse the economy again.

My expectation is for the current intermediate cycle to play out as a left translated cycle (top in less than 11 weeks). I think a tag of the upper trend line of the megaphone topping pattern we've been watching for the last year would be a reasonable level to establish short positions in preparation for the next leg down in the ongoing secular bear market.

One caveat: I would not trade a break higher by shorting, expecting a reversal back down. It's too early in the daily and intermediate cycle to expect a prolonged correction in stocks. If the coil breaks up then I would assume that this will be one of those 30% that the initial move is the correct move.


  1. Do you expect silver and gold to correct also if the general market does?

  2. The metals are moving into the timing band for a correction but I tend to think they will probably run opposite one another.

    By that I mean stocks will dip for a few days while gold finishes the move into the cycle top. Then stocks will rally as gold corrects.

  3. Gary, I really like your blog but I am not familiar with these timing bands that you refer to in your write ups. Can you point in the right direction where I can learn about them? Thanks!

  4. I go over and use cycle timing bands extensively in the premium newsletter.

    If you want to subscribe there is a link on the right side of the home page.

  5. i thought it was " time to get out now" a few weeks ago...another failed recommendation,Toby, Gary or whatever your name is

  6. As usual the trolls only see what they want to see. If you had exited the stock market when I posted that article you would have avoided the Japan debacle.

    If you would have put your capital into the precious metal sector like I've been saying for months and months you would now be up 12.5% if you had just bought silver. Much more if you bought AGQ or silver miners.

    You might want to check your facts next time before you stick your foot in your mouth...again.

  7. Gary

    personal abuse hardly helps your case.

    On March 13th ( two days after the Tsunami) you wrote

    "it's now time to get out of general stock funds and move IRA's to a money market fund until the next four year cycle low is reached (probably in late 2012)."

    The S&P is now about 30 points higher,and you are presenting charts that suggest it will go higher still.

    I reckon that is a poor call.

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  9. And I would say the same thing today. Even if the S&P can make it to 1450 that's less than a 10% gain form today's level. The risk of getting caught in the next leg down of the bear market is too great at these levels. The reward too small.

    No way would I waste time and capital in the stock market here and I don't suggest anyone else should either.

    Gold however is still in a long term bull market and after we get one more corrective move we should get a final huge parabolic run to top off this C-wave. That is worth investing in. And it's what I have been telling my subscribers to do for months and months now. Most were up 50-100% last year and most are already approaching 100% for this year too.

    So if that's what you call missing another call I'll take it :)

  10. Gary,

    In your radio interview which you posted, you opined that the final correction in gold (prior to the parabolic move up) should occur at the next daily cycle low, which you estimated may take place in the next couple of weeks (before the end of April).

    Just confirming that this is still your opinion? Or does your response to GW's first question above mean that the cycle low of gold could occur later?

    Thanks for your insights.

  11. Gold has now moved into the timing band for a cycle low so we should expect a short term top any time now.


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