For months now I've been warning investors to get out of the general stock market. I was confident that once the dollar put in its three year cycle low the next deflationary period would begin and stocks would enter the third leg down in the secular bear market.
Well, the dollar did put in the major three year cycle bottom in May and stocks almost immediately started to head down.This won't end until stocks drop down into the four year cycle low due sometime in mid to late 2012.
Let me explain to you what is unfolding so you don't listen to Wall Street or CNBC and get sucked down into the next bear market.
In a healthy bull market intermediate degree corrections hold well above the prior cycle troughs. Higher highs and higher lows. When that pattern of higher highs and higher lows on an intermediate time frame gets violated it is almost always a sign that the market is topping. We are at that stage now as the market is moving down to test the March intermediate cycle low.
Oil has already violated it's intermediate bottom. Energy stocks are a big part of the S&P and they are going to be a big drag on the index going forward.
In a healthy bull market we shouldn't even come close to testing the March low. Actually this market hasn't been healthy since last summer. That was the point at which I recognized the large megaphone topping pattern that was being driven by a double dose of QE.
Last year the market was able to push higher for almost a month on momentum after QE1 ended. This market has already rolled over even though QE2 isn't scheduled to stop until the end of June. The conclusion is that the market is much weaker now than it was when QE1 ended. We all know what happened last year when the money pumps were shut off. It led to the flash crash and a severe stock market correction. It would have led to a new bear market except Bernanke quickly started QE2.
Actually QE is the reason the market is in trouble. Just like I said over two years ago, all QE did was give us a brief reprieve and temporarily reflated asset markets. I knew all along it wouldn't create jobs and it didn't. (Well I guess a few bankers got to keep their jobs and pay themselves some big bonuses, but the general population was never going to prosper from QE).
As a matter of fact just as I said it would, QE ultimately spiked commodity inflation, and just as I knew it would commodity inflation has now poisoned the global economy, crushed discretionary spending, squeezed profit margins, and is sending the world down into the next recession.
Unfortunately we are entering this recession in a much weaker state than we went into the last one. Real unemployment is somewhere around 12-15%. It is going to get much, much worse. I often wonder how in the world we could appoint such fools to run our monetary policy. I mean seriously, how many times must they make the same mistake before they figure out they are the cause of our problems?
Ok enough of the Fed ranting, back to the market.
Not only do we have a market that is testing the prior intermediate cycle low when it shouldn't be, but we also have a clear topping pattern in place. Just like in `07 the market managed a marginal breakout to new highs in May that failed to follow through. You can see the same thing occurred in October of `07. This is quite often how markets top...or bottom for that matter. A technical level is breached, technicians either buy the breakout or sell the breakdown. Smart money fades the move and the market reverses. This is exactly how the `07 top was formed. It's also how the market bottomed in `02. And now the cyclical bull has topped with that exact same reversal pattern in 2011.
This isn't the only warning sign unfortunately. The banks and housing have been diverging from the rest of the market for some time. These two sectors are still impaired and will remain so no matter how much money the Fed throws at them. They led the market down into the last bear and they are leading it into the next bear.
Here is what I expect to happen over the next two months. We should soon test the 1249 intermediate cycle low. Actually I think we will probably marginally break below that level. As most of you probably know by now breakdowns and breakouts almost always fail to follow through. So I expect we will see a violent counter trend rally once the March low is penetrated. That should wipe out all the technicians who sell into the breakdown.
However the rally, although I'm sure it will be convincing, will almost certainly be a counter trend affair that will quickly fail. The problem is that the current daily cycle is only on day 12. That cycle on average runs 35-45 days trough to trough. So once the counter trend rally has run it's course we should have another leg down. And that leg down will almost certainly cause tremendous damage to the global stock markets.
Once the market penetrates the coming low it shouldn't be long before traders recognize that something is terribly wrong. At that point everyone is going to head for the exits at the same time which should lead to some kind of waterfall decline bottoming around the middle of August. This is when I expect Bernanke to freak out and initiate QE3. I have no doubt the market will rally violently on the news as traders have become conditioned to expect QE to drive stocks higher. I expect we will see the market test and maybe even penetrate the 200 day moving average during the fall rally.
However this too will only be a counter trend affair. QE is the cause of our problems and more of it isn't going to make things better, it will only make them worse as it will start to spike commodity prices again into a rapidly weakening economy. Remember spiking commodity inflation is what caused this in the first place. Doing it again as the economy rolls over into recession is only going to guarantee that this turns into a depression instead of just a severe recession.
Traders and investors need to start preparing for what's ahead. If you ignored me previously and are still invested in the general stock market, exit, either now, or into the rally that should come off the March lows in the next week or two. Don't get fooled by the analysts who will be telling you the correction is over, it won't be. This won't be over until late July or early August.
Get back into dollar denominated assets as the dollar will continue to rally and gain purchasing power in a deflationary environment.
Once it's appropriate we will transfer assets back into gold and precious metals, but it's still too early for that. Gold needs to move down into an intermediate cycle low before we want to buy. My best guess is gold will dip down to somewhere around $1400 over the next 4-5 weeks. I am monitoring not only the stock market but also the gold cycle in the premium newsletter and will let subscribers know when I think it's time to get back into precious for the next ride up.
For the next week I will re-open the 15 month subscription special. Click here to go to the premium website. Then click on the subscribe link on the right hand side of the home page to go to the subscription options page.
what bulls Gary, sentiment is as negative at the 2008 and 2009 bottoms?
ReplyDeletewhich is exactly why we need a counter trend rally to clear sentiment before the next leg down can begin.
ReplyDeletedo you follow the nyse cumulative advance decline line as it made an all-time high on may 31st and history going back to 1926 shows that the NYSE always top 6-12 months before stock market tops....if the indexes make new highs on the next leg up, any comments?
ReplyDeleteThe DOW and DJTA are not near march bottoms?
thanks for reply
sorry I meant the NYSE CAD always tops 6-12 months before indexes
ReplyDeletewell usually the advance decline line tops before the market but nothing is 100%.
ReplyDeleteUsually we see a Dow theory nonconfirmation before bear market starts also that hasn't happened either.
But if both the industrials and transports violate the March intermediate cycle low it will almost certainly guarantee the next leg down in the secular bear market has begun, it will also trigger a Dow theory sell signal.
The market has bounced off the 200 day moving average today, that may signal that the countertrend rally has begun although I tend to think that we will have another move down next week to break the 1250 level before a more substantial Valley develops.
cool,
ReplyDeleteone other indicator I follow is are the index equity/put call ratios...all are make highs not seen since nov. 2008 bottoms
should be nice fireworks shows going forward
thanks
If the dollar rallies and inflation is under control, and the Fed keeps interest rates low through its derivative mechanisms behind the scenes, and corporate profits continue to hold steady, what drives deflation? Oil prices are market and speculation driven, and are not a good indicator of inflation. Commodity prices, particularly copper, are holding steady. When QE2 ends, presumably the Fed has people waiting in the wings to buy our treasuries, because otherwise they wouldn't/couldn't stop QE or else they'd crash the bond market. So I am not sure how this situation predicts a market crash other than through the charts. Would appreciate any thoughts on this.
ReplyDeleteSo, "Healthy Bull Markets are not supposed to test their previous intermediate cycle lows"
ReplyDeletePlease tell me what exactly happened in 2004 before the roaring bull market went on to an additional 48% gain?
In 2004, the correction went 8.6% from its high, taking out its prior two bottoms. Yet, as of today, we are still just 7% off our highs.
I agree that the correction has been scary due to the quickness of the plunge. But that is what corrections do, they scare most folks out of their positions prematurely.
I am certainly not a perma-bull (I exited the market in January, 2008) and I can see all sorts of problems out there.
But QE2 at $600 billion is a flea on the bond market elephant. Now that the Fed's balance sheet has been expanded to such a large extent, simply rolling over maturing assets will maintain a good deal of support for the markets.
We may indeed have already seen the highs for this time around, but I think it is premature to assert that.
Leo,
ReplyDeleteThe dollar rally is in predicting inflation it's saying that we're entering deflationary, similar to what happened last summer.
The problem is that the Fed can't run QE three with commodity prices at current levels. QE1 and QE2 have already spiked commodity prices high enough to poison the economy. Another round of QE at this point would just exacerbate the problem.
The Fed is now stuck between a rock and a hard place, if they let QE to expire like they say they will than the stock market and the economy are going to roll over just like they did last summer.
If the Fed tries to run QE3 immediately after QE2 it will just spike commodity prices further causing more damage to the economy.
Dom,
ReplyDeleteEarly in a cyclical bull market it's not unusual to violate a prior intermediate cycle low. It can happen as the market consolidates the massive gains from the first and second leg up out of a bear market bottom.
But in a mature bull market like we have now a violation of an intermediate cycle low is almost always the sign that a new bear market has begun.
If the transports follow the industrials, and both violate a prior intermediate cycle low it will trigger a Dow theory sell signal.
Toby says, "Get back into dollar denominated assets as the dollar will continue to rally and gain purchasing power in a deflationary environment."
ReplyDeleteAm I correct to assume that US Treasury bills and notes are "dollar denominated assets"?
They are. Although if you are going to hold treasuries I would stick to very short term notes and be prepared to transfer back into precious metals once the intermediate degree cycle has run its course.
ReplyDeleteThanks for the reply, Gary.
ReplyDeleteAlthough if you are right, Bill Gross and the legions of conservative investors in his Total Return Fund are going to get burned with all their non$- denominated assets which have replaced Treasuries in that fund.
Dom,
ReplyDeleteThe rally in the dollar will be temporary. I suspect Bernanke you will start to aggressively debase the currency by sometime later this summer, and even though it won't rescue the economy or the stock market will eventually take the dollar to new all-time lows.
Personally I would rather own gold.
take a look at the dollar and sp500 relationship between 1977-1980....dollar fell and sp500 rallied along with gold and oil...the dollar today is at exactly the same point it was coming out of the triangle consolidation pattern in the late 70's..
ReplyDeletethe dollar has broke down out of the triangle and is now heading back to retest the underside of the trendline joining the bottoms out of 2007-2008 till now...
The last chart on this link:
ReplyDeletehttp://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2869063
supports your thinking.
Be prepared!
Jimmy,
ReplyDeleteDon't typically put a lot of stock technical chart patterns. To me people have gone broke trying to trade solely off of charts.
This is why I use cycles and sentiment. They give you a much better edge in the market than trying to trade chart patterns.
Gary, why has not gold followed the miners downwards? Looks like the miners are currently bottoming out and ready to resume upwards will gold follow and not correct?
ReplyDeleteGW,
ReplyDeleteWhat is it about the miners that makes you believe they are bottoming? They are still holding below the 10 day moving average and appear to be going to close below 500.
I'm assuming that the mining stocks are leading gold and that soon gold will start to decline down into its intermediate cycle low. If the action in the mining sector is any indication the decline should be rather severe.
Should we expect the US Dollar Index to spike in the next two months as the S&P500 rolls over and eventually plummets?
ReplyDeleteI concur with the author. I use technical indicators to time the stock market with great success. My latest sell signal was on May 23. I use leveraged ETF's. My 3 year CAGR (compound annual growth rate) is 126.7%
ReplyDeleteParture,
ReplyDeleteUsually the bounce out of a major three year cycle low will last up to nine months to a year.
This bounce in the dollar should correspond with the next deflationary period and the move down into the next recession and cyclical bear market.
The timing band for the next four year cycle low in stocks is between the summer and fall of 2012. At some point Bernanke will initiate QE3 and turn the dollar back down. All it will do is to spike inflation into a rapidly deteriorating economy and exacerbate the recession.
99% of what I read and listen to, here and elsewhere seems to assume that the FED's, and it's cohorts, intentions are to prevent disaster and "save" the economy.
ReplyDeleteOn the contrary, Diogenes' lamp wouldn't even emit a dim glow in the central banking world.
Their goal is to reduce this country and the rest of the western world to third world status and ensconce themselves as overlords ala Joseph Stalin and Mao Tse Tung.
To ascribe any other motives to their actions simply muddies the glass through which we look to the future and distorts any predictions.
99% of what I read and listen to, here and elsewhere seems to assume that the FED's, and it's cohorts, intentions are to prevent disaster and "save" the economy.
ReplyDeleteOn the contrary, Diogenes' lamp wouldn't even emit a dim glow in the central banking world.
Their goal is to reduce this country and the rest of the western world to third world status and ensconce themselves as overlords ala Joseph Stalin and Mao Tse Tung.
To ascribe any other motives to their actions simply muddies the glass through which we look to the future and distorts any predictions.
Gary,
ReplyDeleteyou do a lot of good work and so don't take my comments as criticism and of course I never have nor will I rely on just one indicator such as chart patterns....currently, NYSE Cumulative advance decline line, AAII sentiment survey, all index equity put call ratios, DOW theory and many other technicals all say we are still in a bull market with a correction taking place....once these indicators change, then we can conclude bear market (20% or greater decline)....too many stock market pros called tops all the way from 2003-2008 and got their heads chopped off or many got out way too early and watched oil go to all-highs from 2007-2008 and the SPTSX make all-time highs in 2008 despite the warnings from the NYSE CAD line in summer of 2007 and the divergence in late fall 2007....
got to look at the whole picture and opportunites in many sectors
just one other quick thought...the data around presidential pre-election years shows that we should expect an up year for the stock markets unless "it is somehow different this time"...look at the Major Bradley turn dates this year..Feb. 17th, July 29th and Dec. 28th, give a hint as to how when and how the markets will turn this year
ReplyDeleteA majority in the stock market means nothing but I totally agree with Jimmsmith2. We are now looking at the worst sentiment since last July, and in some cases even exceeding it (such as the put-call ratio, which last week was off the charts.) The surveys reveals a falling off the cliff bearishness change and yet the stock market is down but 8% compared with over 20% last year when the Hindenburg Omen and the Death Cross were constant sightings. Insiders have turned buyers again and the public has been retrieving their money in a large way from the market. This is a tasty bull recipe like last year's move in August.
ReplyDeleteBesides silver's sentiment has plunged and yet the price is holding up while it has gone down. Very strange since silver and stocks go together.
My take is that there will be announcements that we are pulling out of Asia and there will be a world-wide massive infusion of more worthless paper. The next move in gold will be the defining one with miners finally breaking out.
Here is the problem. The dollar appears to have put in its three year cycle low. If we were at the beginning of a new cyclical bull market and coming out of a recession then yes the stock market could fight a rising dollar, at least for a while.
ReplyDeleteYes sentiment is extremely bearish, and this should lead to at least some kind of bounce. However, if the dollar continues to rise, and usually it does so for at least a year out of a major three-year cycle low, then it is going to continue to pressure stocks.
During the deflationary period of 07 and 08 sentiment became meaningless. The forces of deflation overwhelmed any and all sentiment extremes. The dollar's rally out of the three-year cycle low should correspond to the next deflationary bout. We are again entering a period when sentiment indicators will break down.
The current daily cycle is only 14 days old. The average duration is 35 to 40 days trough to trough. So yes we should have a bounce in the near future, but it should just be a brief counter trend move to clear sentiment and pave the way for another leg down.
Ladies and gentleman, do not forget about the china stock market which i believe has entered a bear market, this article its right, I believe with q2 and china stymulus it got us from the march lows so now take both away, and take the merging markets like India,South korea,add the increase of rate hikes and cash reserves in banks, money supply decreasing, yeah global meltdown, by the way i am a small business ower, its a video game store/Lan center/game stop like, blockbuster like and repair shop, and yes while the industry might by shrinking, i tell you there is no Target, wallmart, gamestop, toys r us in my city , there are 50000 plus people and i cant even sell two freaking copies of the nuber one game in America PS3 Infamous 2, recession? I dont think its a freaking depression
ReplyDeleteyou have to separate the stock market from the economy...everyone knows that it is bad out there, the numbers show it...we live in canada, our central bank was going to start raising rates our rates .25 x 6 into 2012, it is now on hold till 2012 some time...we have more debt per capita than the US......1930's US devalues US dollar 65% in 1933....DOW rallies 500% into 1938....we are in the same position right now in the US Dollar, If my analysis is correct a lot of Bears are going to be surprised in the next 4 year, the stock market ALWAYS bottoms before the economy....in the short-term look for markets to turn up July 22nd and a higher high higher low into late july or early august (there is gold pulling back to 1400)
ReplyDeletemeant June 22nd as it is a minor Bradley turn date
ReplyDeleteTo some extent yes you have to separate the stock market from the economy but never in history has the stock market been able to resist an economic recession.
ReplyDeleteWe also have the fact that Bernanke has clearly stated that he is going to stop quantitative easing in June. What happened the last time quantitative easing ended? That's right the forces of deflation slammed back down on the economy and stocks. We had the flash crash and a severe market correction that was only halted by the initiation of QE2.
We are in a secular bear market and have been since 2000. That means the forces of deflation are always going to be waiting in the wings, ready to breakout the second money creation ends or slows.
If we take Bernanke at his word than it is about two end.
And by the way the stock market does not always bottom ahead of a recession. The recession in the early part of the decade ended in late 2001, yet stocks didn't bottom until the fall of 2002.
ReplyDeleteStocks bottom in their four year cycle low. Sometimes this corresponds the end of a recession and sometimes it doesn't.
Oh, and before I forget, the next four year cycle low is due in mid-to late 2012.
ReplyDeleteIn secular bear markets a four year cycle low always corresponds with a recession and a cyclical bear market in stocks.
Cyclical bear markets tend to last 1 1/2 to 2 1/2 years. If the next four year cycle low is due in 2012 and based on a normal duration bear market, then the top must occur sometime this year.
I am just going by the current conditions, patterns and technical indicators and to second guess these will cost an investor dearly...I believe this next leg up in the markets will reveal a lot, like last summer the extreme bearishness should take a few indexes to all-time high between the next 2 Major Bradley turn dates July 29th - dec. 28th....the last 4 year cycle was according to some extended due to the meddling by the FED 2008 instead of 2006....well the central banks around the world are meddling even more and this is what will confuse most investors as this is why the "Dumb Money" is in cash or net short and until this changes we will only see corrections along the way until 2016..
ReplyDeleteIts always about Smart Money and Dumb Money and Smart Money is ALWAYS correct..
All of this is foreplay for the real big up moves we should see in the commodities sector over the next 4 years as they all top out one by one....Golds last nominal top 1980, next projected top 2014, oil last top 1981, next projected top 2015..
By 2016 all asset classes will have made their major tops including bonds and then we will see true deflation (all asset classes falling, which is a very rare event, only 3-4 instances in the past 100 years)...then we should see gold go to highs in real terms that should make the non believers shave their heads
anyways this is the thesis I have been working on and so far it is playing out, but more importantly the charts tell me I am correct, take a look at every commodity from 1990-present, all in major up trends, with the final parabolic moves yet to come
I would beg to differ, smart money was consistently wrong during the last bear market and sentiment indicators were mostly worthless.
ReplyDeleteThere is a difference between what works in a healthy bull market and what happens as the market recognizes an impending recession.
Part of that recognition is breaking the pattern of higher intermediate highs and higher intermediate lows.
I leave you with this Gary as I believe only time will reveal the answers...
ReplyDeletegoing back to 1928 NYSE cumulative advance decline line has always topped before the stock market...May 31, 2011 made an all-time new high which based on history says we have not seen the highs...for example the RUT and DJTA indexes recently made all-time highs
what we will see is the DOW, SP500 and other indexes make all-time new highs but the NYSE CAD does not and then we can conclude the tops are in and even then here is some recent data:
1926 NYSE CAD topped
DOW topped in fall 1929
April 1998 NYSE CAD top..
DOW topped in late 1999
NASDAQ topped in spring of 2000
SP500 and SPTSX topped in fall of 2000
NYSE CAD topped in june 2007
SP500 and DOW topped in fall 2007
SPTSX topped in summer 2008
I mention the SPTSX in Canada because the index is heavily tied to resources and we will see new highs for years to come and should top with oil in 2015-2016
All of that is meaningless if the economy is rolling over into recession. The only question you need to ask yourself is if the economy is rolling over into recession again. Many of the leading indicators would indicate it is.
ReplyDeleteHow you answer that question will determine whether you want to take a chance on the long side and risk getting caught in the next leg down of the secular bear market.
By the way I agree commodities are still in a structural bull market but the CRB is now due to move down into its three year cycle low.
ReplyDeleteOil has already violated its last intermediate cycle low indicating the odds are high that the decline into the three year cycle low has begun.
As I said before you do a lot of good work and I believe your followers will do fine in the coming years
ReplyDeletecheers,
We at this time are a little more than halfway through Alexander's 20 year long term bear cycle.
ReplyDeleteIn the Alexander cycles there are bear runs and bull runs but over the 20 years equities are outperformed by bonds.
His book on this 20 year cycle was written in 1999 and published in early 2000, just before the bubble burst. I have read a million theories and all have a lot of "yes but" in them I include Alexander's, but he still has 9 years to go. "Yes but" he's dead on so far.
I would guess a rebound is starting. If this rebound can create a higher high, the bull has not dead whilst it fails over at SP1350 then a fierce bear cannot be controlled.
ReplyDeleteIt might be. Although I think that would require the dollar to head back down.
ReplyDeleteI think it's probably still too early for the dollar to rollover especially with QE2 coming to an end.
But yes, until the market breaks through the March pivot at 1249 we don't have any confirmation of the bear market.
Ha! While you are waiting for the plunge to below 1,249 the market rallies on no news, leaving the dumb money behind. Nice call again Gary, though I desperately wait the day, when one of your calls turns out to be right. Your are the man ...
ReplyDeleteGary, I am confused, are you retracting your "THE BEAR IS BACK" proclamation?
ReplyDeleteThis comment has been removed by the author.
ReplyDeletechma,
ReplyDeleteShorts are covering in front of the Fed meeting.
Not to mention that I clearly stated in the article that we should get some kind of rally soon because sentiments had gotten to bearish. In order for the market to continue down we have to have a rally to clear sentiment.
Do you really have so little understanding of how the markets work or inability to read and understand what I write?
Spinoza,
ReplyDeleteNo I fully believe the market will roll over again and break the 1249 level during this intermediate decline.
But until it does we don't have confirmation of a bear market. That means no short selling at this time.
Get the salt ready for the crow pie. You still lack grace when anyone disagrees with you and that is not a good trait. New highs coming across the board.
ReplyDeleteI doubt it. But if it does then I will readily admit I was wrong.
ReplyDeleteBy the way I told subscribers to cover shorts when the S&P tagged the 200 DMA so either way we've made good money off the move.
It looks like Charles is going to have to eat that crow pie himself. :)
ReplyDeleteAnd Chma owes me a big apology.
What do I owe you? Common Gary, you live in a world of fantasy. You're right: the bear is back ... to the slaughterhouse. Did the market penetrate 1,349 to the downside like you called it? Where's the plunge to SPX 1,000? But sure, you understand the markets correctly - just your problem is: the market do not understand you. Anyway; I know you are going to delete this post. Cheers. chma
ReplyDeleteI believe this is a counter trend rally. The one I called for in the article.
ReplyDeleteIt is occurring on very light volume.
It's still way too early for either the daily or intermediate cycle in stocks, oil or gold to bottom.
Over the years I've learned to trust these cycles because 90% of the time they end up being right.
I'm always here and if I'm wrong I'll say I'm wrong. We'll see if you are still here next month when QE ends and that's when I expect everything to fall.
My guess is you will be nowhere to be seen just like you went and hid the other day when the market was falling.
That's what I've come to expect from trolls though. They never stick around and fess up when they are wrong although they expect others to do so.
This comment has been removed by the author.
ReplyDeleteGary - just read your article, I've been day trading since May with my trading account and held with my long term accounts.
ReplyDeleteI'm at a point where I've gained 4% in my trading account, and up 2% on my long term accounts over the 3 months. I've trimmed dramatically in my long term accounts, and I'm 100% short SPY @ 130.58 in trading account with 65% cash. I agree with your thesis as long as QE3 doesn't come, thus why I trimmed in long term accounts and will continue as we go up (if we do), but will keep going long my SPY short, as well as starting to add TVIX. Wish me luck, I'm seeing the same thing you are. It's uncanny.
Jason,
ReplyDeleteI think you'll make a lot more money if you exit those shorts and let someone else fight with the stock market.
The big money is going to be made in the mining sector once gold has finished it's intermediate decline.
Gary - GDXJ hit my target of $32 the other day, and I didnt pull the trigger, if it gets close to that, I'll definitely hit it. I think we're due for a pull back. What took 7 weeks to form 7-8% losses was erased in 4 days basically. This is pure lunacy to me.
ReplyDeleteAs long as the dollar index breaks 74.20, I'm comfortable with my SPY short, I'm not completely sold on this short, so will exit when I can profit at this point. I'm only down 1%-ish so I'm not worried yet, and have 85% cash in trading account and 45% cash in long term account.
I'm going to dip my toe on gold when it hits $1486, then $1450, and lastly $1400ish(200DMA), after that, I think its rockets higher and we do not see the prices again. I'm looking for silver to hit $32, $28, and $26, I'm gonna give that more leeway.
The one's I'm watching: GDXJ GDX GLD SLV PSLV GPL HL AAU PZG
I watch close to 40 miners, but these are my favorites.
Good luck to you. Keep me posted how things go for you.
Good luck to you.
Rather than just scaling in at random levels try waiting till gold moves into the timing band for it's daily cycle low and then start buying. Either below $1462 or more likely a test of the winter consolidation zone around $1425 or when a swing low is made.
ReplyDeleteIntermediate cycle lows are almost always made after a key technical level is breached. The most obvious at this point is the $1462 May pivot.
I typically allocate 50% of my portfolio to gold/silver.
ReplyDeleteMy break down:
35% of that position is GLD
35% is GDX
10% is GDXJ
10% of that is SLV/PSLV
5% is silver junior miners (GPL HL)
5% is gold junior miners (AAU PZG)
When I see a nice technical level (GDXJ hitting $32) I'm buying but not the complete position.
I buy in 1/2s. I'm usually wrong in my technical level pick, so I give myself room to be wrong. and buy again when I like it again. After I'm entered fully, I'm holding.
That's my long term approach. I set stops at catastrophic levels (losing 35% of the position).
Usually this works for me.
OPS left comment on wrong blog. But anyways, I have to go back and see how this move compares to the historic moves in the stock market.
ReplyDeletealmost 1000 points in the DOW, 90pts in the S&P, and 150pts in the Nasdaq.
Pure insanity, plain and simple.
I did warn you not to short the stock market. It's not worth the headaches fighting the Fed. Easier to just wait patiently for gold's intermediate cycle to bottom and then make some real money.
ReplyDelete@Gary: I am not really around here ... just read your stuff for fun sometimes.
ReplyDeleteAnyway I think the trolls are those you stay, not those who are leaving after a short time.
i saved a link to your "THE BEAR IS BACK AND THIS TIME IT WILL BE MUCH WORSE" story on june 16th and filed it under a folder called "Things Not To Do, Whatever Happens", as a reminder to my "future" self, in case i would be tempted to sell, the markets being very soft and all. i had a very large leveraged long position (SSO) at the time and it was very painful to watch it drop for a month.
ReplyDeletemy decision to hold was finally "confirmed" (to borrow from chartist-speak) last week, when the market was up 1% every single day and i recovered completely, and even had made some modest gains.
it just keeps reaffirming my previously held beliefs that the best times to play the market is when word of the big bad bear start to intensify and people start to lose their heads in a panic.
Of course the problem with that is that sooner or later you're going to get caught in the next bear market and if you have a "heavily leveraged long position" you are going to get destroyed.
ReplyDeleteIf you are a subscriber to the newsletter you would know that we all covered short positions when the S&P tagged the 200 day moving average. At that point I told people that sentiment had gotten too bearish to continue holding shorts.
I also told subscribers that we would not be shorting anymore until we had confirmation that a new bear market had begun.
I'm going to post another article here in a few minutes that will explain what is happening. To make it short the key is the dollar.
If the dollar made its three-year cycle low in May then yes we are entering a new cyclical bear market and any move to new highs will likely only be marginal before rolling over again.
If however the dollars three-year cycle is ahead of us then the deflationary scenario will be put on hold until later this year when the dollar does form its final three-year cycle low.
looking back .. uncanny my good man
ReplyDeletemay i call you master?