Food for thought: Peak to peak, if this cycle is similar in time to the last cycle, the Dow will peak next month. The blue “1” on the left is at the peak of the bubble in the year 2000 and the red “1” is at the peak of the bubble in 2007. The blue “1” on the right would mark the peak of this bubble in the event that these two consecutive bubble cycles are identical in terms of time.
If we get a correction down in the market, I think this count might be right on… However, the Gold chart posted earlier gives me doubts unless (and it has happened before), Gold goes up and the mining stocks crash….
Now if you look at the Wm%R from the Daily GDX chart, we could be reaching a bottom in about a week (e.g., if we get a simple ABC type correction with divergence as highlighted). The fact that the ADX line is turning up is telling me this Bear may just have bigger legs…. Just need to let it play out….
We got a sell signal on the Tuesday after triple-witching expiration for the SPX.
The SPX EW pattern may be tracing out a bearish 1-2, i-ii pattern – we’re looking for a scary sell off into the July 1 Full Moon. July 1 could mark an important trading low where we would favor financials.
Gold should also give us a bounce into July 1 but a growing speculative short position. threatens to break this market down.
To follow the waves and turn windows of the SPX and gold, check out my blog:
We have been in Phase III since October, but the true damage lies ahead. We have simply been digesting the initial breakdown into Phase III for the past 8 months building out a H&S pattern. Its now complete. Also keep in mind that its typical for the POR to come about 1/3 of the way into a bear market. It developed according to script.
Just think, I don’t believe we have yet seen a POR in the bear market for the oil stocks. Pretty eye opening if that turns out to be the case. Back in March I put this chart together as a fearless prediction of how the bear in the oil stocks could play out. So far so good…
Just for fun here are two examples of what a “Death Star” phase III bear looks like on two sector leaders
I thought it was interesting and valuable, so saved it, and am passing it on FYI. I don’t know if the one time (I think) poster is still around:
I’ve been investing/”trading” for 40 years
(quikpik) Feb 22, 00:29 (2002)
And there are no books that can take the place of “on the job” experience. My dad was a stockbroker and I’m well schooled in dealing with bull and bear markets but it has taken me a lifetime to become proficient at deriving my sole source of income from the stock market. It’s all a game anyhow. I just try to “take what the market offers”, knowing it’s a game, in order to make money. There is no high moral ground that needs to be considered when it comes to the stock market.
I’m sure your aware of basic TA rules. When a stock moves, you always want to see heavier than normal daily volume. If the stock is moving down on extremely heavy volume you want to be out. Always check the “size”. How many shares are being bid for and offered. When a stock is moving down you don’t want to see small size on the bid side. You need to wait, not only till the price stabilizes but it needs to be confirmed with heavy bid sizes.
The simplest fundamental is using the long-term trend lines. Whether it’s a stock or index averages. When the Naz was over 5,000, the long-term uptrend line showed that a pullback to 4800 would VIOLATE this uptrend. When the pullback happened I advised all my family to liquidate 1/3 of their positions. At 4500 we would sell out everything. That simple uptrend line got us out of the bubble very near the top. My own analysis at that time( March of 2000) was to move into forgotten preferred stocks of “A” rated REITS yielding 12-15% dividends and closed end Bond income funds also yielding 10-11%.
Even with any stock I might “adore” incl gold stocks, I would sell if that particular trend line was violated (especially on heavy volume) because somebody knows something that will eventually become apparent at some later date.
The money talks – heavy volume, up or down is telling you a story. However, if there is continual heavy volume and the stock price fails to continue to rise, that that would be considered “distribution” and I would liquidate my position.
The thing to remember is that you can always get back into a stock. You don’t need to catch every single point of the move.
Never let a profit turn into a loss.
As my daddy used to say: “You’ll never go broke taking profits.”
Between my regular accounts and my/and wife’s IRA accounts, I make about 2,000 trades per year, 75% of which are profitable. My average holding time is anywhere from 10 minutes to 2 days.
Day traders need to use the 7-10 DMA to trigger buy and sell decisions. Using this gets you in and out very, very fast. But in time you get to study stocks and their price and volume trading patterns. There are many times that I ‘m able to trade the same gold and oil stocks 2, 3 and 4 times a day. True, I have to pay taxes on my trading profits, but it’s only the difference between the 20% Capital gains rate and my tax bracket rate and only in my regular trading accounts and not in my IRAs. I’d rather have the profits in hand than HOPE that they’ll still be there over 1 year later.
P.S. – I’ve been retired since I was 52 yrs old and that was 10 years ago. I made and lost tons of money in the 1978-1980 gold mania. I sold all my Kruggies back in 1980 at $500/each when gold broke down. It’s only been this year that I started to accumulate gold and silver bullion again. What I’m doing now is that whatever trading profits I make on my gold trades, I use that money to buy physical bullion. I’m not afraid of being out of gold stocks, for short periods. Like I said, I’ll just pay a little more to get back in. In the meantime, I’m building quite a physical portfolio of PMs.
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Bulls are getting ready to throw in the towel–Capitulation!
Eagleseagle Response to :
1….What is your experience with Gold.
Average college educated white guy without any specific background in metals, mining, or securities. Self taught “chartologist” that became intrigued with reading the charts a few years ago. Self reliant mindset–nothing is obtained easily in life. Success requires focus, determination, and hard work in any chosen endeavor. Became disillusioned with all the misleading bull articles I previously read authored by the purported “experts”. “The mouse click is mightier than the sword”. A trader is either on the wrong side or the right side of a trade; one has to be fluent in reading the charts like a second language to excel. No time for drivel to be successful.
2….Are You / Were You a Goldbug.
Yes, until I came across Rambus 3 years ago. He was the first technician to see the downward turn in the PM market. I give him credit, works hard with his charts. My guardian Angel led me to Rambus.
3….Where do you think we are now in the Gold Price in the grand scheme?
Following an ABC Elliott Wave correction. A=1040 B=1500 C=750. Still on our way to “A”.
4….What is your trading modus operandi?
Minute charts loathed by many, but mastery is essential to make money. X3 leveraged ETFs are designed to take our money. Fight the b@$t@rds at their own game, down and dirty. The “average” investor does not have a chance with the “bots”.
5….How are you doing , trading these wild markets?
I do well when I am watching the charts. One cannot trade profitably with high beta instruments unless on a very tight leash. Currently using the Heikin Ashi 2 minute charts to ride this volatility. Looking forward to October as everyone else, so I can buy and hold for awhile.
6….Which sectors other than gold interest you?
SPX and VIX ETFs. When I cannot watch the monitor, stick with the SPX. Use a pivot chart and trade off those reactions.
7….Is trading a Hobby or Your main source of income …..or somewhere between…
Like you FGC, trying to “buy an island”. However, I would be content with a cabin in Montana near prime waters to pursue my hobby of flyfishing.
8…What is the most important lesson you have learned trading the Gold and related markets.
Successful trading is hard work. PERIOD. One has to have the “warrior” mentality. This is war with the algos. Exhausting work at times, learn to walk away when frustrated. Another set up will always be in the future. Do not take every trade; learn from your mistakes. As Matrix quoted earlier “stay humble. Surround yourself with people who are “smarter” than you in your pursuit–leave your ego at the door”. Tim sums it up well with his sport analogy, “that’s what making money at trading really comes down to: being in a position to spot and take advantage of an opportunity before it’s gone”.