Precious Metal Bull Market
http://bp1.blogger.com/_V7Pddp58Py0/RqoVuPgx_pI/AAAAAAAAAXo/iwD67_oSz04/s400/oil.png
http://bp2.blogger.com/_V7Pddp58Py0/RqoVufgx_qI/AAAAAAAAAXw/NtNl_46CVqY/s400/copper.png
http://bp2.blogger.com/_V7Pddp58Py0/RqoVufgx_rI/AAAAAAAAAX4/JG1bFzmYt3M/s400/platinum.png
http://bp3.blogger.com/_V7Pddp58Py0/RqoVuvgx_sI/AAAAAAAAAYA/a6K1Pk0WmwQ/s400/gold.png
http://bp3.blogger.com/_V7Pddp58Py0/RqoVuvgx_tI/AAAAAAAAAYI/Fp4I60r_3tg/s400/silver.png I'm going to show you what tends to happen in secular bull markets. Notice the oil and copper long term charts. Once the market was able to break above the all time highs there is basically a vacuum above. Prices tend to explode once they enter this vacuum zone. The average gain once the all time high is broken is roughly 140%. As you can see, oil was a bit below that on its initial breakout leg with 100%. Copper on the other hand just demolished the average with a 290% gain. Now lets look at the PM. Notice so far the strong sister has been Platinum. It has exceeded the old highs of 1045. I would say that's a pretty good sign that the rest of the PM are going to follow. At the moment gold still has about 30% to go to break the old highs. Silver on the other hand has almost 300% to go before it breaks out. Now do you see why I say silver is just ridiculously cheap. The only thing cheaper than silver is sugar. Sugar has over 600% to go. If sugar decides to get it's butt in gear my IPSU position should do wonderful.
Posted by Gary at 8:54 AM
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Wednesday, July 25, 2007Trading the COT reports.
Has anyone noticed how hard it is to trade the COT reports? This is one of the strongest bull markets in many a year and I'm guessing very few have been able to hold on to longs during the current COT long signal. You see why I don't worry about the market discounting the COT reports. The COT's typically change trend at times when emotions very strongly disagree with the signal. Ah ...the never ending battle in the investing game of fighting your emotions. The current signal is a classic example. The commercials are screaming buy but emotions are screaming the market is overbought, subprime is a landmine, inflation is out of control, The bull is historically very old, we haven't had a 10% correction in 5 years, etc., etc. Sometimes I wish I were Spock ;).
Posted by Gary at 6:26 PM
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90% Down Days
This article on Minyanville would suggest that the VTO trade is the correct thing to be doing right now.
Posted by Gary at 12:43 PM
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The Wall of Worry
James Altucher gives 7 reasons for why the bull isn't done yet here. This is one very smart guy. I tend to agree with all of his reasons and so does the big money for that matter.
Posted by Gary at 10:09 AM
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Tuesday, July 24, 2007Breadth charts
http://bp3.blogger.com/_V7Pddp58Py0/Rqaf9vgx_lI/AAAAAAAAAXI/emppiuNnuec/s400/Nas+new+lows.png
http://bp1.blogger.com/_V7Pddp58Py0/Rqaf-Pgx_mI/AAAAAAAAAXQ/P7n0urTVkSQ/s400/NYSE+new+lows.png
http://bp2.blogger.com/_V7Pddp58Py0/Rqaf-fgx_nI/AAAAAAAAAXY/vTFs4cLrWCQ/s400/NAS+NHNL.png
http://bp3.blogger.com/_V7Pddp58Py0/Rqaf-vgx_oI/AAAAAAAAAXg/eEbljfX4Obk/s400/NYSE+nhnl.png I've posted several breadth charts so everyone can get an idea just how oversold this market is and in less than a week. We are rapidly approaching levels last seen after the 8 month decline in 04. This is not the time to press the short side. Expect a violent reaction in the not too distant future.
Posted by Gary at 5:54 PM
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To buy or to sell that is the question.
http://bp3.blogger.com/_V7Pddp58Py0/RqZ3xvgx_jI/AAAAAAAAAW4/q14ybPWuYMI/s400/spx+short.png
http://bp1.blogger.com/_V7Pddp58Py0/RqZ3yPgx_kI/AAAAAAAAAXA/NkC735oVfwo/s400/spx.png Remember how the other day I told you that as long as you live every pullback will look like a selling opportunity. Well obviously we are in that situation right now. However look at the next chart and you can see what the outcome of taking advantage of these irrational moves has been. Both the VTO and Bollinger Band Crash trade have produced winning trade after winning trade. The odds are way more in your favor to buy this decline than to try and pick another top.
Posted by Gary at 2:57 PM
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Monday, July 23, 2007A Different View
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http://bp1.blogger.com/_V7Pddp58Py0/RqUvRfgx_iI/AAAAAAAAAWw/5o7B_w0chfA/s400/spx.png Sometimes we get so caught up in the daily action and TA indicators that we can't see what's actually unfolding right in front of us. When I find myself getting caught in this vicious loop I eliminate all the indicators and moving averages etc., etc. Take a look at these three charts and you tell me what direction the markets are moving. Sometimes you can't see the forest for all the trees.
Posted by Gary at 3:43 PM
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Gaps
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http://bp2.blogger.com/_V7Pddp58Py0/RqTDL_gx_fI/AAAAAAAAAWY/txZgXswjqQE/s400/csco.png Notice the gaps on GOOG, CAT and INTC. These gaps normally get filled especially in a bull market. Take a look at the CSCO chart. Sometimes they take a bit but they almost always get filled. I'm wondering how we could put together a profitable trading system around these gaps. Let me do some thinking on that one. If anyone already has a proven system feel free to post. I already know of one very profitable system that buys whenever a stock drops 10% or more. Those occurrences are rare though and usually take a while to fill. I'm guessing we could put together something to take advantage of these little earnings miss drops. Especially when the miss has nothing really to do with the overall viability of the company.
Posted by Gary at 8:01 AM
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Sunday, July 22, 2007Here is your bear market.
http://bp1.blogger.com/_V7Pddp58Py0/RqPNP_gx_bI/AAAAAAAAAV4/jwYCoOeg-HY/s400/Dollar.png This is for all the bears out there. I'm going to show you where the bear market is. A few days ago a subscriber asked me if I keep track of money supply. He was wondering if the Fed was printing money. I said heck I don't need to find money supply figures all I have to do is look at a chart of the US Dollar. At the end of 01 it became very apparent that the bubble had burst. Normally after a bubble of this magnitude bursts many bad things are going to happen. However the Fed had no intention of letting that happen without putting up a fight. So what did they do? Well obviously they started cranking up the printing press. As you can see they've been going pretty much full blast ever since. So far this bear has unfolded just about how most bear markets unfold. The first leg down usually lasts about 2 1/2 years. This one was a little long at 3 years. Then the counter trend rally over the last 2 years. We should be set up for another leg down now. Notice what happened though. As the Fed cranked up the money supply the stock market decline was halted and the recession in 01 was very mild. The Fed just decided to sacrifice the dollar to keep the economy rolling and to halt the blood letting in the markets. Low and behold its worked...so far. Like I've said many times before though all this excess money will eventually find its way into undervalued assets. That means commodities. This is one of the reasons we have $75 oil and almost $4.00 copper. This is why the nickel in a nickel is worth more than 5 cents. There is no free lunch in this world. Sooner or later the quick fix the fed instigated is going to come back to bite them in the ass. It's going to start IMO with an oil spike. That will set the stage for the first of probably several recessions. For now though the COT says keep riding the money train.
Posted by Gary at 2:33 PM
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Saturday, July 21, 2007Buying Opportunity or Selling Opportunity
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http://bp2.blogger.com/_V7Pddp58Py0/RqJzLfgx_aI/AAAAAAAAAVw/ZBL414MuTTE/s400/spx+2001+d.png When is a pullback a buying opportunity and when is a rally a selling opportunity? I've got news for you, as long as you live every pullback is going to look like a sell signal at the time and every rally is going to look like a buy signal. That's just the way human nature works. We require positive feedback and we are very short term oriented. Look at the first chart. The market is obviously topped out and heading down right? Well look at the second chart for your answer. This decline was a buying opportunity. Now look at the 3rd chart. The bottom is in and the market is moving on to new highs. Well not so fast look what followed. This is a case of the rally being a selling opportunity. So how do we know when a decline is a buy and a rally is a sell. TA is not much better than flipping a coin IMO. For me the COT tells me whether the big money is buying or selling. If they are buying then I want to buy the dips and if they are selling I want to short the rallies. The COT has produced much, much better results over the last 20+ years than TA alone.
How many of us started out investing and were soon churning our accounts and gradually giving all our hard earned cash to the pros or to the brokerage firms in the form of commissions? I'm going to guess a very large percentage. Granted there are some who manage to survive the learning process and can be profitable short term trading even after you factor in heavy yearly fees. Sadly most of us won't. Quite a few will just continue to day trade to satisfy their desire for excitement. All the while refusing to accept the fact that their trading habits are costing them money. They rationalize that they will soon get in a groove and make it all back. I've got news for you until you change something don't expect any different results. Let me point out the cold hard facts. If you are stuck in this vicious circle you are in fact not investing you are gambling. On top of that you are gambling against people that are much smarter, better capitalized and more disciplined than you. Basically you are easy pickins for them. The only way you are going to beat these people is to use a system that gives you an edge in the market and then have the discipline to stick with it. Otherwise these sharks are going to eventually get all of your money. At some point you have to decide whether it is more important to be excited or whether it is more important to make money, hopefully before you've lost all your capital.
Posted by Gary at 1:55 PM
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Friday, July 20, 2007COT report for July 20th
Still bullish. Even more than last week. The big boys believe in this rally even if nobody else does. So far they've been on the right side of the trade.
Posted by Gary at 7:11 PM
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DOW:Gold Ratio
http://bp1.blogger.com/_V7Pddp58Py0/RqCv-C4_nuI/AAAAAAAAAVQ/DvsHKmQjrd0/s400/Dow+gold.png I'm going to show everyone what I consider the most important chart in the world. The ratio of gold to the Dow. A little history lesson. This ratio runs in very long cycles. In 2001 it took roughly 42 oz. of gold to purchase one share of the Dow. Even though the stock market has been in a 5 year bull market and is at new all time highs it now only takes about 20 oz. of gold to buy one share of the Dow. The take away is that gold (real stuff) has been vastly outperforming the Dow (paper assets). You would have been vastly better off to have owned gold than stocks over the last 6 years. This cycle normally runs until the ratio gets to or very close to 1:1. It briefly touched 1:1 in 1980. What I'm trying to say is that in inflation adjusted terms the Dow is a long way from making new highs. Does that mean one should short the market? Of course not. It just means we are in a secular period where real stuff is going to tremendously outperform paper assets. BTW you will get this same looking chart if you compare the Dow to oil, copper, nickel, zinc, cotton, soybeans, etc. You get the picture. This is what happens when the fed embarks on a money printing binge trying to inflate away unpayable debts and pay for expensive wars. Now do you see why I buy silver? I don't want the Fed to inflate away my purchasing power.
At some point in the future we will see a 1:1 ratio again. I have no idea if that will be at 36,000 or 3,000 but I guarantee we will see it because politicians will always opt for the easy way out. What they never seem to learn is that there is no easy way out.
Posted by Gary at 5:51 AM
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Wednesday, July 18, 2007Leverage
This is going to tie in with the position sizing post the other day. I see this quite often on the blogs how such and such has increased their portfolio 100% in the last month or they added 20% a one day. Sounds impressive...unless you're an experienced trader. If you've been around for a while you know that when you hear someone bragging about those kind of gains you will in the not to distant future hear them say they blew out their account or probably you just won't hear from them any more. Let me say right up front that every system will have periods when it incurs multiple losses in a row. Let me show you what happens to a portfolio when someone is playing with options and leveraging up only 5:1. Lets say you start with $100,000. Now lets assume you give the underlying asset a 2% move before you're stopped out. I'll quickly add that a 2% stop is going to mean you will most probably get stopped out quite often. You're not giving your position enough room to work. Back to the example. Your first losing trade costs you $10,000 ( 2% x 5 = 10%) Now you've just reduced your overall portfolio to $90,000. Not the end of the world by any means and definitely recoverable. However now you take another trade using the same leverage and you lose again. Now your portfolio is down to $89,000. Your down almost 20% with only 2 losing trades. 20% is starting to get serious. The next trade if its another loss brings you down to 72,900. Next $65610 and then $59049. Its not hard to have five losing trades in a row. If you hit that kind of losing streak while using 5:1 leverage you will cut your account almost in half. Now you are in the position of having to make almost 100% on the remaining capital just to get back to even. Now let me give you the sequence at 10x leverage, which by the way is what the more conservative Bear Stearns fund was trading. $100,000-$80,000-$64,000-$51,200-$40,960-$32768. By using 10x leverage 5 losses will cost you 2/3 of your portfolio. But here is the real pitfall. If you get lucky and score a winning trade on your first try then most likely human nature takes over and you say to hell with 5 or 10x leverage I'm going all in, this is easy. 1 loss at 20x leverage will cost you almost half your account. Holy s**t that wasn't supposed to happen. Now I'm down big so I guess I better go all in again and make it back quick. So you take another 20:1 trade again with a 2% stop which already most likely reduces your odds of a winning trade to under 50:50. That means you are staking the remaining $60,000 on less than a coin flip. End result of two losing trades at 20:1 leverage, $36,000. You've lost twice and cut your account by 2/3. Now you have to make almost 300% to get back to even. Do you see now why it is so important not to lose money. If you do lose it better be small. The way to do this is obviously keep your position sizes small enough so that you don't get hurt when you lose.
Posted by Gary at 4:11 PM
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Tuesday, July 17, 2007Gold
http://bp0.blogger.com/_V7Pddp58Py0/Rpyzjy4_ntI/AAAAAAAAAVI/Msvn9AxDc60/s400/gold.png Take a close look at this chart of gold. Notice the arrows. It almost looks like I arbitrarily picked the best entry points doesn't it. However these aren't my entry points these are times when the commercials had extreme bullish net positions in the futures market. When the commercials aggressively cover their shorts the gold market tends to go up. We had more than a year of consolidation since the peak last May. Look what happened to gold after the last large consolidation in 05.
Posted by Gary at 5:17 AM
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Monday, July 16, 2007Position Sizing
I want to talk about position sizing this morning. Not only is position sizing the key to making money in the markets I have a feeling its what is causing these violent swings we've been watching since Mar. I have a feeling that not only the bears but many of the bulls are taking on too much risk. When the markets move very much in one direction all these investors with too much leverage can't hold on to their positions and we get a lot of people bailing out of positions all at once. The Feb. 27th decline was a good example. In the last month and a half we've had 3 days where the SPY has traded over 200 million shares on one down day. That's over 30 billion dollars changing hands. I don't see any reason why a mere 3% drop in the market should cause such widespread exiting of perfectly good stocks. Well actually I do see a good reason for it. I think way too many people are leveraged maybe 2:1 with SSO or more likely with options. If your leveraged with a double fund like SSO or QLD then a 3% move in the market will cost you 6%. Not the end of the world but not a pretty sight on the old account balance. However I think it may be even worse than that for many investors especially novice investors. With the explosion in derivatives I believe too many novices are playing with fire and have absolutely no clue the danger they are in. Lets say you are leveraged 5:1 with options. Well that meager 3% move just cost you 15% of your total portfolio. Now that one hurts! That's like stubbing your toe on the way to the bathroom in the middle of the night. There's a good chance that other people in the house are going to hear about it. I suspect quite a few are leveraged more like 15:1. At that kind of leverage you just watched as half your portfolio evaporated in 3 days. It works the same way on the short side I suspect that way too many people were not only betting on the market correcting Thursday but were also leveraged pretty heavily under the rational that well if the market broke out to new highs then it wouldn't be by much so they would get out with a small loss if they were wrong. Well the market didn't just break through resistance, which in itself started the short covering but it just kept going. All that leverage caused extreme pain for the leveraged shorts so more and more investors couldn't hold on through the pain as the day wore on. The end result is the strongest one day gain in years. Now I could have had my whole account short on Thursday and only lost a little over 2%. Definitely not the end of the world.
This is the thought process that goes through my mind every time I take a COT trade. Hmm... I know the COT produces a winning trade 3 out of 4 times and I know it averages much larger winning trades than losing trades but I just know this is going to be that one trade that ends up being a loser. So if you know that you are going to lose what's the rational thing to do. Bet small of course! That way if you are right and this is the 1 in 4 losing trades you won't do much damage to your account. However if the odds come to your rescue then congratulations you just made money. So what if you didn't get rich in one month you also didn't get poor either. Getting poor is the more important consideration don't you think?
Posted by Gary at 4:45 AM
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Saturday, July 14, 2007Those Deceptive Patterns
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http://bp1.blogger.com/_V7Pddp58Py0/Rpi1KC4_nsI/AAAAAAAAAVA/O392dgpHmX4/s400/spx+2b.pngBear with me on this one. Since I'm not a big "chart pattern" fan I may not draw these patterns completely correct but you'll get the idea. In the first chart we see some of the reasons given for why this market was topping out, at least short term. The S&P was at the top of the trend channel and had obviously failed and was now regressing back to the middle or lower end of the channel. Momentum and daily money flows had deteriorated seriously. Volume was enemic. Sounds reasonable even I could buy it. However for any bearish pattern some one else can find a bullish pattern out of the same charts. I'm just the someone to do that. Let's look at the next chart shall we. The Nasdaq 100 (Q's) are not confirming the weakness in the rest of the market. It should be leading the decline not showing relative strength. Next the NYA has completed the 1-2-3 reversal by closing above the initial reaction and as a matter of fact it like the Q's are already at new highs. Now lets take a look at those pesky trend lines that everyone likes to use as resistance and support. Well low and behold the trend lines have already been broken twice. I've got news for you that's what happens in bull markets. They go up and they don't give a d**n about lines on a chart. When we look at volume over a longer time frame we see it has been expanding as this bull progresses. Isn't that what's supposed to happen? Now in the final chart we see the 2b reversal to which I called attention too when it happened. Always a good sign that the selling has dried up and we see the result of all this. The bullish patterns proved to be the correct patterns to pay attention to. So how you ask do we know whether to pay attention to the bullish patterns or the bearish patterns. Well if you must try and make sense of patterns then I suggest you let the COT report tell you what kind of patterns to look for. The Cot has been saying look for bullish patterns since early Mar.
Posted by Gary at 4:34 AM
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Friday, July 13, 2007COT report for July 13
COT still bullish.
Posted by Gary at 3:45 PM
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Thursday, July 12, 2007COT system
I'm going to do some blatant promoting tonight. Not because I need more subscribers. Actually I'm beginning to wish I had never started this blog. It's taking up too damn much of my time. I'm constantly trying to answer e-mails some of them coming from Europe in the middle of the night. Oh well I made my bed so I'll lie in it. The reason I'm going to promote tonight is that I see a tremendous opportunity for huge profits in the coming months and not just on the long side but the short side also. I also foresee that most investors are going to miss this opportunity completely and many will blow out their accounts. I'm going to tell you right up front the COT is simply the best mechanical system I've ever found and I guarantee you won't be able to find a better one that will consistently produce Warren Buffet like returns without having to leverage your account. You can spend $100's to $1000 of dollars for trading software or proprietary trading systems and none of them will compare to the COT over the long haul. If you are willing to do your homework you can figure out how to read the COT reports from the free sample spreadsheet that I will send you on your own. If you can afford the meager $50 and want to bypass the learning curve I will mentor you thru the learning process. In any event we have a rare opportunity at this time, find a way to take advantage of it whether it be by using the COT or not.
Posted by Gary at 4:24 PM
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Conversations With a Bear
Today I thought I would post a conversation I recently had with a subscriber.
You need a system that wins more times than it loses and wins bigger than the losses. As easy as that sounds I've only found 3 that do that (although I'm sure there are more). The COT, the VTO and the Bollinger band crash trade. If you are going to use leverage you NEVER EVER trade against the trend and the big money. If you are down to your last straw and have no choice but to take large risk then you buy deep in the money call options on the Q's. The big money is on your side and the overall trend is on your side. All intermediate rallies have lasted a minimum of 21 weeks and a maximum of 32 weeks so far in this bull. So you will have to buy at least the Dec. options. Shorting is what got you in this mess and if you keep doing it then shorting will eventually bankrupt you. Shorting is very dangerous and should only be done when you have all the odds in your favor. Right now you have none of the odds in your favor. You
need to stay away from the blogs. It's easy to listen to what the morons (and I do mean morons) are spouting especially if you already have a negative bias. But when you let these fools make your decisions for you then you lose money. How much have they cost you now? At what point do you quit listening to these idiots and make your own decisions or better yet let the big money make the decision for you. Sorry I'm so critical of the bears but these are obviously novice traders that have no idea what they're doing and they are posting these bearish opinions because they are trying to bolster their confidence that they are doing the right thing. No professional in the world tries to pick tops. It can't be done. The best you can do is get lucky once or twice in your life. Do you really want to bet your financial future on luck? If I catch you reading any more of that crap I'm going to come over and knock you in the head.
Capiche LOL
Basically I'm just trying to get the point across to this fella that he is letting his bearish bias be reinforced by frequenting the bearish blogs. He needs to get off there if he is ever going to make money in this bull.
Posted by Gary at 1:49 PM
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Short term/day trading
Here's my problem with trying to profit from TA. I've tried to keep an open mind but I just can't see how an average investor can profit from trading short term "patterns". Lets face it the vast majority of us are going to fall somewhere under the exceptional level. History has shown time and again that only exceptional traders can make enough money to cover expenses by short term/day trading. First off I'm not sure what a bearish technical pattern is. I have no idea what my entry and exit points would be going into the trade. I do however understand when the COT goes long . It's pretty simple, to me anyway, it's saying buy until otherwise notified. When the VTO or Bollinger band crash trade signal I know when to enter and I know when to exit. Nothing changes the next morning. Just to use an example on Tuesday morning TA says sell then on Wednesday morning it says cover but on Wednesday night it says sell again. The excuse that I always hear is that TA and patterns are constantly changing. hmm...ya think? How does an average investor manage to negotiate all these changing signals? More importantly how does one build a profitable system around something that is constantly changing? I don't deny that there are investors who can master this kind of investing. However I can guarantee that there will be very few investors that will be able to do it with any degree of success. I'm sure that everyone thinks they are one of the 10% (and I'm being generous here, its probably closer to 1%) that can invest this way but the reality is that 90% will be fooling themselves. Let me state the obvious. In order to be profitable in the market you have to do one of two things. You either have to win more times than you lose and the winning trades have to be at least on average the same size as your losing trades, unless the trade is extremely profitable like the Bollinger band crash trade (98% profitable) OR if you lose more times than you win then your winning trades must be larger than your losing trades. The COT not only wins more times than it loses, it wins a lot more than it loses (75%) AND on average the winners are much larger than the losers. That is the definition of an exceptional system. As a matter of fact I defy anyone to show me a mechanical system that is better. The VTO is very close to the COT producing a winning trade 70% of the time and if you stick to bull markets closer to 85-90% of the time and the winners are twice as big as the losers. Again an exceptional system. For the average investor you are just never going to approach those kind of returns using TA. As a matter of fact for anything other than an exceptional trader you aren't going to produce any returns at all using short term TA.
And yes I know this is going open a can of worms but history and statistics are going to back me up on this one.
Posted by Gary at 1:08 AM
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Tuesday, July 10, 2007Point & Figure Charts
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http://bp1.blogger.com/_V7Pddp58Py0/RpQ3UWhaueI/AAAAAAAAAUY/PGcKWqusVf0/s400/Q%27s.pngWe've had one down day and apparently the sky is falling again. LOL So lets get rid of the noise and see whats really going on by looking at the point and figure charts. We can see in the first two charts the Dow & S&P appear to be consolidating the big gains is all. For some reason the BKX seems to be very important to a lot of people so lets take a look at that one too. Still in a very solid uptrend and it appears to be consolidating in a triangle pattern with higher lows. Very bullish action. Now how about the Q's. Heck they still can't even put in a three box reversal. I'm not sure if I want to call the end of the world just yet.
Posted by Gary at 6:48 PM
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Monday, July 9, 2007What a difference a week makes
http://bp1.blogger.com/_V7Pddp58Py0/RpK1A2hauZI/AAAAAAAAATw/K1hHgmvF4QA/s400/Q%27s+june+29.png
http://bp2.blogger.com/_V7Pddp58Py0/RpK1BGhauaI/AAAAAAAAAT4/uSKBZ5s62YI/s400/Q%27s+july+6.png I've gone over this before and I'll say it again TA can tell you with 20/20 vision what has happened in the past but it can't predict the future. Take a look at the first chart. It is pretty obvious the momentum is fading fast. This rally is just about over. The MACD histograms are contracting to 0 in preparation for the coming correction...right? Well lets take a look at the second chart :0 Wow who knew the Q's would surge upward again busting out above the upper bollinger band and momentum would start to accelerate all over again. The answer of course is nobody knew because nobody has a crystal ball.
I'm going to tell you right here right now how to write a very popular blog. #1 It has to be bearish. People like to hear bad news. Don't ask me why. I have no idea why we are hardwired to stop and look at the accident on the highway I just know we all do it. #2 You need to make predictions and if they are bearish predictions even better. Here's what happens to all of us and I've been just as guilty as anyone. We have a bias so we search out a blog or website that confirms our bias. Being able to see it right in front of us makes us feel more confident that we have made the right investing decision. Someone else thinks exactly like we do so that makes it right. The next thing that happens especially if you are a novice is we look at that prediction and we immediately start calculating our profits. Here's how it works. Well if such an such says the S&P is going down to 1400 and if I buy 20 puts on the SPY then I should make $$$... yeah that sounds about right. Wait a minute though if I were to buy 100 puts since I know I'm right and such and such is an experienced investor and its very unlikely he will be wrong then I will make $$$$$ instead of $$$. Alright now we're talking. I know damn well that exact thought process has gone through every ones mind before. I know it still happens to me and when I catch myself starting to think like that I calmly walk over to the wall and beat my head against it until I get that thought the hell out of there. Let me tell you what you should be thinking. Hmm...such an such is predicting the S&P will fall to 1400... Who the hell does he think he is? Jack off, nobody can predict the market. I'll buy 1 put just in case he might get lucky and if he's wrong which he most likely will be I won't lose very much of my hard earned cash. My suggestion is you view all these predictions and claims to be able to call market turns with a high degree of accuracy for what they really are...entertainment.
Posted by Gary at 3:20 PM
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COT report July 9
Rarely am I surprised by the market anymore but I must say I am surprised by the COT today. I was expecting the commercials to start reducing their long position. Shows you what I know. They increased their long position by a huge amount. Nothing to do but keep holding those longs. I think I will start switching out a little of my Q position to QLD on any pullbacks.
Posted by Gary at 12:34 PM
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Sunday, July 8, 2007Gaps
http://bp0.blogger.com/_V7Pddp58Py0/RpGdr2hauYI/AAAAAAAAATo/lK8nAsDFEY4/s400/gaps.png I'm going to let you be privy to an argument that I've been having with myself all weekend. Whether or not I should trim my long position on a gap up at the open. I would put the position back on when the Q's filled the gap. Looking at the daily chart the 5 day RSI is getting very overbought and the Q's are up 6 out of the last 7 days. That alone is normally a sign for at least some kind of pullback. However I don't think this is a normal market. So I decided to take a look at the last abnormal market. Oct. 99 to Mar 00. I quickly noticed that overbought stayed overbought for a long time. Then I noticed there were 3 times where gaps never got filled and 4 times when it took a week or more to fill a gap. I don't think I could keep from chasing if it takes more than a week to fill the gap. I've decided that even though the market is ripe for at least a down day or two it's just not "safe" to be out of the market.
Posted by Gary at 7:28 PM
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Spotting tops
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http://bp1.blogger.com/_V7Pddp58Py0/RpD-DWhauXI/AAAAAAAAATg/8EM8wxsCtt4/s400/four+down.png First off let me say right up front that accurately calling tops is a fools game. It can't be done with any consistency. Ahh how many bears just keep getting this lesson taught to them over and over. However there are a few things to look for when we do get the odds in our favor. By in our favor I mean the COT is extremely short. First off as I've mentioned before I want to see divergences on the weekly charts. If the COT is short and we're getting divergences then we can zoom in to the daily charts. Victor Sperandeos sited the 4 day rule. This works equally good for tops and bottoms and all it says is after a long intermediate move 4 days in the opposite direction often signals a trend change. He also points out a similar signal which he calls the 4 day corollary. This rule states that after a long intermediate move and the market has 4 or more days in the direction of the trend then the first day in the opposite direction can often signal a trend change. Both of these rules make sense when you think about them. When you get 4 or more days in the direction of the trend at the end of a long move this often signifies the bullish or bearish sentiment has reached an extreme level. The first day in the opposite direction is a sign that the move has exhausted itself. The same rational works for the 4 day rule. After a long move if you can't even get one day back in the direction of the trend after 3 counter move days it's a pretty good sign the trend is over. Let me emphasize the word LONG intermediate move. Don't try to apply these rules when a trend has only begun. They won't work. As a matter of fact neither one of these rules are by themselves very good at spotting tops. When we combine them with the COT and divergences though we at least have a fighting chance of getting close to the top.
Posted by Gary at 8:08 AM
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Thursday, July 5, 2007He who hesitates is lost
http://bp1.blogger.com/_V7Pddp58Py0/Ro1_jGhauVI/AAAAAAAAATQ/wDUpzBTsU08/s400/spx.png When the markets decide to move it's usually a good idea to be in early and hold on as the initial rise is typically fairly powerful and then is followed by sideways consolidation or a corrective move. Normally its not a great idea to sit around and watch these moves as they can leave you behind quickly and then your stuck entering during the consolidation or correction phase. We appear to be entering this initial upwards move. Especially in the Q's which have been very strong while the rest of the market corrected.
Posted by Gary at 4:31 PM
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Wednesday, July 4, 2007Riding the Bull
http://bp1.blogger.com/_V7Pddp58Py0/Rox-cWhauUI/AAAAAAAAATI/tzh6LpQKI2M/s400/spx+06-07.png I've made this point in the past but I don't think it will hurt to bring it up again. There is a quote in the Jesse Livermore biography about an old trader who was advised by a young trader that the markets were severely overbought and that he should sell his position and wait for the market to pullback so he could buy in cheaper. The old salt calmly agreed with the youngster but refused to sell any of his position. When the newbie asked him why he wouldn't sell his reply was "I would lose my position and it is a bull market after all" Look what would have happened if you sold waiting for a pullback in either one of the two uplegs so far in the last year. We didn't get much of a pullback and if you were out you risked getting quickly left behind. Now notice that the Feb. correction was only 2/3 the % of the June/July correction and about 1/3 the time. The most recent correction was half of the Feb. correction. The corrections are getting smaller and smaller. The short interest just keeps getting larger as more and more investors try to pick the top. AKA we have a lot of fuel for the fire. Losing your position now could be very costly. At some point this bull is going to pull in the retail money again like it did in 2000. Maybe not to the extent that it did in the bubble years but they will start to chase this market. We need that to happen before this bull can die. Nobody ever said riding the bull was easy.
Posted by Gary at 10:14 PM
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Another failed pattern
http://bp0.blogger.com/_V7Pddp58Py0/RouPcWhauTI/AAAAAAAAATA/0t_Qku26-ew/s400/Q+trends.png Here is the latest pattern from the TA crowd. Apparently since the Q's didn't reach the upper trend line before starting to decline this was confirmation that the pattern was going to break to the down side. Well if that is the case how come the Q's are at new highs. Just another example of how unreliable these patterns are. The markets are people buying and selling stocks. Buying doesn't stop just because two lines on a chart do or don't touch. As long as the big money is buying these bearish patterns are going to keep failing. I would be very hesitant to put much faith in patterns when investing unless they confirm what the big money is doing. How many think that Buffett would be worth 40 billion today if he had been trying to trade patterns for the last 40 years? The only thing these patterns can predict with any accuracy is the past and even that is questionable in my mind.
Posted by Gary at 5:14 AM
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Monday, July 2, 2007Is the bull back?
http://bp2.blogger.com/_V7Pddp58Py0/RomDHWhauSI/AAAAAAAAAS4/PqmCmsvRQEU/s400/Dow.png I noted last week to subscribers that the Dow appeared to be coiling for a powerful move. Of course we never know whether the move will be up or down. I speculated that the move would have better odds of being up since the COT reports have been so bullish lately. Well we got the answer to our question today. Up it is. If the markets can close above the reaction high then we will complete the 1-2-3 correction and have confirmation that the trend hasn't changed. The double top theory is starting to look a bit shaky. I noted last month that the double top theory didn't really fit the norm for this bull.
Posted by Gary at 3:57 PM
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Sunday, July 1, 2007Buying opportunity or bear market?
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http://bp3.blogger.com/_V7Pddp58Py0/Rofq-GhauRI/AAAAAAAAASw/IW-mTWd52IU/s400/spx+07+end.png I want to point out something that probably everybody knows but that very few can act on. Every pullback when it is happening looks like a selling opportunity and every rally when it is happening looks like a buying opportunity. That is just the way the human mind and emotions are programed to work. We seek positive reinforcement. Take a look at the charts from every correction so far in this bull and tell me at the bottom if you weren't inclined to sell instead of buy. My guess is about 90% of you wanted to sell aggressively at market bottoms. It is very hard to control our emotions and do the opposite of what the mind wants us to do. So how do we know if a pullback is just a pullback and should be bought or if it's the start of a bear market and should be sold. Well the only reliable method I've found is to watch the COT reports to find out what the smart money is doing. If they are buying at these bottoms the odds greatly favor that it is a normal correction in a bull market. If they are selling heavily like they were in 2000-2003 then it's probably a bear market.
Posted by Gary at 10:56 AM
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Posted by Gary at 10:55 AM
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Sunday, July 1, 2007
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Posted by Gary at 10:53 AM
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Friday, June 29, 2007COT Report
The COT is still extremely bullish. I'll have the market summary out tomorrow.
Posted by Gary at 4:41 AM
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Thursday, June 28, 2007SPY VTO results
I have backtested the results of using the VTO rules on the SPY. One thing that became apparent was that during the bear years even though there were some very profitable trades one would be better off not to risk taking the trade as the markets can stay oversold for a long time. My criteria would be once the 200 DMA starts declining one should forego VTO trades. I suspect once we enter a bear phase one would be better to only trade the Bollinger Band crash trade. The BB trade has been profitable about 98% of the time. However the profitable trades won't be as large as the VTO trade since one is only looking for a bounce back above the lower band.
Here are the results from 03 to the present:
Exiting when the RSI(5) closes at or above 50.
29 profitable 5 losses,
profitable 85% of the time
Ave number of days in the trade 5.2
Average losing trade .48% Average winning trade 1.11%.
Exiting when the RSI(5) closes at or above 70:
30 profitable trades 3 losses,
Profitable 90% of the time.
Average losing trade .93%
Average winning trade 2.09%
The VTO wins 8.5 and 9 times out of 10 and the winning trades average about twice as large as the losing trades. Those are pretty good odds.
I want to note that if you don't follow the rules you will probably turn a postive expectancy into a negative one. Hint the VTO trade from June 26th has not closed yet. If you are going to trade this system you must follow the rules if you want it to consistently produce postive results.
If anyone wants to take a look at the spreadsheet just give me an e-mail.
Posted by Gary at 3:57 PM
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Wednesday, June 27, 20072b reversal
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First off I will go over 1-2-3 reversals. Then I'll discuss the 2b variation. Victor Sperandeo describes a 1-2-3 reversal this way. Once a stock or index breaks the up or down trend line there will typically be a reaction move. That reaction move is deemed #1. Then you will normally see a test of the low, move #2. Sometimes this test is strong and reaches the full trend break low or high and sometimes it is weak hardly even worthy of being called a test. The confirmation comes at point 3 if the index can close above point #1 or if it breaks down and closes below the original trend break low or high. I know it sounds kind of complex but just take a look at the chart and it becomes clear. A 2b reversal is the test of the intial break except it actually does break that support only to reverse and close higher or lower as the case may be. This is a strong signal that selling or buying has dried up and the trend break can't be continued. Very often a 2b will signal the exact bottom or top of a move.
I must admit all the talk of a double top totally distracted me from seeing the 1-2-3 correction that was happening in the markets. I don't think the action has been a double top at all I think we just witnessed a very powerful #1 reaction to the intial decline. There was much talk about how quickly the intial break at the begining of June was overcome. The reality is that this little correction is taking the about the same time to recover as the Feb. 27th correction. Today we are getting a 2b reversal in the DOW, S&P, WLSH, NYA, UTIL & RUT. The Nasdaq has been much stronger and never even broke the uptrend line so no 2b there. None needed. The Nasdaq has been trying to tell us that the market is not breaking down yet
Posted by Gary at 12:27 PM
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Tuesday, June 26, 2007Critical support...or is it?
http://bp3.blogger.com/_V7Pddp58Py0/RoG_-mhauEI/AAAAAAAAARI/LHj1D5_68SA/s400/s%26p+support.png
http://bp3.blogger.com/_V7Pddp58Py0/RoG_-mhauFI/AAAAAAAAARQ/rCLyY7lktRw/s400/nas+support.png I would like to point out something that I think everyone and their cousin is watching very closely. The obvious support level for the S&P is the recent June low. If this level fails all hell will break lose, right? Maybe and maybe not. Take a look at the next chart of an obvious break of major support. The commercials went long in Aug. It looks like the commercial money was more powerful than the technical breakdown. As of last week the commercials had a much stronger long signal than they did last Aug. Granted this may all change on Friday but we won't know that until Friday. I'm just not totally convinced that 1487 is the end all be all level in the market. What better way for the big money to trigger sell programs than to push the market down below this level. It would certainly allow them to accumulate stock at a lower price. Remember the smart money likes to see panic. They know it is a buying opportunity and they don't have a 2-3 day investing horizon like most traders do. So before you panic and sell everything stop and think about who's buying from you. There's always someone on the other side of your trades. Many times that someone is a very shrewd professional.
Posted by Gary at 6:37 PM
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Monday, June 25, 2007VTO trade revisited
http://bp2.blogger.com/_V7Pddp58Py0/RoBI05e1V9I/AAAAAAAAARA/d-jldiRgOmc/s400/VTO.png The rules for the VTO trade are very simple whenever the Q's close with the 5 day RSI below 30 buy long and hold till the RSI closes above 50. This trade could be used with front month options as they are now priced in penny increments. The QQQQ is purchased during after hours trading on the day that the RSI buy signal is generated. It is sold during after hours trading on the day that the RSI sell signal is generated. I suspect that you could also buy the next morning without affecting long term results.
From 1997-2005 the strategy was up 349.7%. A “buy and hold” strategy for the Nasdaq 100 was up 76.2%. I'm guessng one could apply the rules to the SPY and DIA with similar results although I haven't actually tested either one of these.
Posted by Gary at 3:58 PM
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Sunday, June 24, 2007Point & Figure charts
http://bp3.blogger.com/_V7Pddp58Py0/Rn7nwpe1V7I/AAAAAAAAAQw/8IX3s8LKXSI/s400/SPX+P%26F.png
http://bp1.blogger.com/_V7Pddp58Py0/Rn7nxJe1V8I/AAAAAAAAAQ4/P9m99scU_vg/s400/Nasdaq+P%26F.pngI think its time to have a look at the point and figure charts. Lets get rid of all those goofy squiggly Stochastic, MACD, RSI, etc. etc. and just look at the price action. In other words lets get rid of all the distractions and see whats really happening. After the S&P had a powerful nonstop run it looks to me that it is just consolidating those gains kind of like it did in Feb. & Mar. only this time it's giving back even less than before. On to the Nasdaq. The Naz is so strong that it hasn't even been able to put in a 3 box reversal yet. Neither index is even close to breaking the up trend lines. How much stronger can you ask for? Now add in a very bullish COT report. If you are going to try and fight this market I would keep positions very small and be ready to take profits quickly. Its probably safer to use the pullbacks as buying opportunities.
Posted by Gary at 2:47 PM
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Thursday, June 21, 2007Semis still strong
http://bp2.blogger.com/_V7Pddp58Py0/RnsVlJe1V6I/AAAAAAAAAQo/BBJctOPQsaU/s400/smh.pngAfter consolidating for 7 months the semis are on the move. Semis are economically sensitive and tend to lead an economic expansion. For the market to have a meaningful decline I believe we would need to see the economy falter. The semis are saying on the contrary the economy is ready to accelerate again. The tech sector has held up much better on the last several declines. The Q's are actually up on the week while the S&P and Dow are still down a bit. I try not to get caught up in the daily action. Sometimes it's hard to see the forest for the trees. Keep your eye on the big picture and currently the big picture is still up.
Posted by Gary at 5:18 PM
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Testing support?
http://bp1.blogger.com/_V7Pddp58Py0/RnqNFJe1V5I/AAAAAAAAAQg/ZIZXxc-dums/s400/spx+test.png During the Mar. correction the market had to test support before it could go on to new highs. Could we be doing it again? Obviously I don't know the answer to that question but it is a possibility.
Posted by Gary at 7:36 AM
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Wednesday, June 20, 2007Weekly charts
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http://bp1.blogger.com/_V7Pddp58Py0/RnmgjZe1V4I/AAAAAAAAAQY/GGSdpDSdlwo/s400/q%27s+weekly.png Looking at the weekly charts the S&P is down 1.31% for the week and the Q's are again holding up better than the general market only down .88%. Is this the start of the big one or just another buying opportunity. The COT is saying it's a buying opportunity. I have a feeling that the use of too much leverage is causing these volatile moves. When you panic and sell because you are using too much leverage you might want to stop and think who's buying from you. Chances are it's someone who's not panicking and is thinking clearly.
Posted by Gary at 2:47 PM
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Tuesday, June 19, 2007Double top?
http://bp1.blogger.com/_V7Pddp58Py0/RngQ5pe1V2I/AAAAAAAAAQI/mVWNpnS-KQo/s400/spx+double+tops.png The market is making a double top scream the bears. This is the latest doomsday prediction from the bears. Again the permabears are letting their bias control their decision making process. Lets look back at the last couple of double tops and you will notice they encompassed a much longer time span than the one week decline we experienced. No the odds are in favor of the market just needed a little rest and used the interest rate spike as an excuse to take that rest. The chances are much greater that we move through the old highs than make a double top and fall from here. Which is not to say that it can't happen just that your chances of shorting the market here for a double top aren't nearly as good as staying long per the COT bias.
And yes I know I left out the o in "double" on the chart. I'm just too damn lazy to go back and change it :)
Posted by Gary at 10:22 AM
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Is history rhyming again?
http://bp0.blogger.com/_V7Pddp58Py0/RnfWJpe1V0I/AAAAAAAAAP4/qQD_RSjlGsg/s400/spx+90%27s.png
http://bp2.blogger.com/_V7Pddp58Py0/RnfWKJe1V1I/AAAAAAAAAQA/CfuaS0dLhpA/s400/SPX+00%27s.png There are some interesting similarities developing between the 90's bull market and the bull from 03. I would never trade on the expectation that the market will duplicate the same price action as the 90's but it is an interesting comparison.
Posted by Gary at 6:10 AM
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Monday, June 18, 2007breakout pattern in oil
http://bp2.blogger.com/_V7Pddp58Py0/RnbQDZe1VzI/AAAAAAAAAPw/pfhaVT_gLw8/s400/oil.png Here is a pattern I want to pay attention to. Oil has broken through resistance convincingly. Technical rule #1 would imply we could see a level of $83 later this summer. You can find the Technical rules on the lower right side of the home page.
Posted by Gary at 11:30 AM
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The megaphone pattern
http://bp2.blogger.com/_V7Pddp58Py0/RnZ23Ze1VxI/AAAAAAAAAPg/7m17nxAxI_M/s400/fan.png Here's the latest one from the chartists. I see them drawing these lines on the charts and predicting dire results when this megaphone pattern breaks down which apparently it is guaranteed to do. However the Nasdaq was forming this same pattern at the beginning of the year and actually did break down out of the pattern. But if you'll notice that didn't stop the bull. My guess is that since the commercial players were long their buying was more powerful than the pattern drawn on a chart. "Money speaks louder than lines". Hmm... I like that one :). Anyway I would suggest you just ignore this goofy crap. As long as the commercials are buying then the odds are in favor that bearish patterns are going to keep getting negated.
Posted by Gary at 5:12 AM
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Sunday, June 17, 2007Aden sisters on gold
I think the Aden sisters pretty much hit the nail on the head about gold (and silver). Read the whole story here .
Posted by Gary at 11:09 PM
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Friday, June 15, 2007COT report for June 15th
The commercials are still bullish. Nuff said!
Posted by Gary at 9:18 PM
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The COT report
I want to talk a bit today about why I use the COT. You can get a brief view of my thoughts under the profile.
Generally speaking for me to use a system I have to not only be able to back test it and have it show a positive expectancy but it has to also make sense. I have tested the COT for the 20+ years that it has been available. During that time the COT has produced roughly 3 winning trades for every loser. On top of that the winning trades are much larger than the losing trades on average. That's about all anyone can ask for in the markets. As a matter of fact I've never found anything else that even comes close to producing those kind of returns. The challenge is to be ready to adapt as the COT evolves. Pre 2001 the flip zone was at 0 meaning that when the net commercial position was positive one went long and when it was negative you went short. However after 9/11 the world changed. At that point I think the commercial traders became aware that risks in the world had become elevated. At that point in my opinion, the zero line moved from 0 to a zone around the -15,000 level. All this means is that the big boys were always hedging to some extent because of geopolitical risks. At that time waiting for the commercials to reach a positive net became a losing proposition.
Now lets take a look at who the commercials are and why I think its a good idea to follow behind them and not stand on the tracks in front of them. The Commercials are for the most part large banks (think Goldman, JP Morgan, Lehman, etc.) or large pension funds, etc., etc. These are players that control billions and billions of dollars. In fact they control about 75-80% of the money in the markets. For all practical purposes the market is the commercial longs battling the commercial shorts. These are institutions that have huge research departments. They can afford to buy information that's just not available to you and me and they're going to get it weeks or months before we will. So when the COT position doesn't agree with the current fundamentals I have to keep in mind that yes maybe it doesn't agree with the fundamentals today but it might very well agree with the fundamentals 2 months from now. So I have a system that has produced superior returns, I can test it and be assured that it has worked for many years and on top of that it just makes sense to me. There you have it the reasons why I trust the COT to keep me on the right side of the market.
Posted by Gary at 7:24 AM
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Long term trend
http://bp0.blogger.com/_V7Pddp58Py0/RnKM05e1VwI/AAAAAAAAAPY/m5yEDQaPvi4/s400/long+term+spx.png I'm going to show you a very simple way to determine market direction that any 6 year old can do. First enlarge the chart. Then go stand on the other side of the room. If you can determine from the that far away what the trend is then trade in that direction. If you are going to try and trade counter trend then be ready to take profits very quickly and keep position sizes very small because the larger trend is going against you. Very important don't ignore bottoming signals. We just got very clear bottoming signals but I see many permabears again ignoring the signs.
Posted by Gary at 5:57 AM
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Thursday, June 14, 2007Oil Breakout
http://bp3.blogger.com/_V7Pddp58Py0/RnHlN5e1VuI/AAAAAAAAAPI/wp5s4VUEOtc/s400/oil+breakout.png
http://bp0.blogger.com/_V7Pddp58Py0/RnHlOJe1VvI/AAAAAAAAAPQ/kaCBGMKkmd8/s400/P%26F+oil.pngFinally got the updated charts. I'll repost so we don't lose the comments on the previous thread.
Oil has now broken out of the 2 1/2 month consolidation phase to the upside. Notice the double top breakout on the Point and Figure chart and the bullish price target of $80. I will be watching this closely. Author Stephen Leeb notes that when energy spikes rapidly in a year it almost always brings on a recession. If oil can get to the $85 - $90 level this summer I think the economy is going to be in trouble. This is part of the problem when central banks inflate the money supply. Eventually the extra money will find it's way into commodities. Throw in the fact that the world hasn't found a giant oil field or built a refinery in 30 years and you have the beginings of an energy shock. Stay tuned.
Posted by Gary at 6:02 PM
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Thursday, June 14, 2007Oil breakout
http://bp0.blogger.com/_V7Pddp58Py0/RnGmJJe1VtI/AAAAAAAAAPA/PrSJv3zXkLo/s400/oil.png Oil has now broken out of the 2 1/2 month consolidation phase to the upside. Well it has as soon as the daily chart updates. (I'll update the chart as soon as the data changes) I will be watching this closely. Author Stephen Leeb notes that when energy spikes rapidly in a year it almost always brings on a recession. If oil can get to the $85 - $90 level this summer I think the economy is going to be in trouble. This is part of the problem when central banks inflate the money supply. Eventually the extra money will find it's way into commodities. Throw in the fact that the world hasn't found a giant oil field or built a refinery in 30 years and you have the beginings of an energy shock. Stay tuned.
Posted by Gary at 1:33 PM
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Wednesday, June 13, 20071-2-3 Reversal
http://bp1.blogger.com/_V7Pddp58Py0/RnDACpe1VsI/AAAAAAAAAO4/Di-oi6qQAqA/s400/123+reversal.png Victor Sperandeo in "Trader Vic" describes a 1-2-3 reversal. 1. The reaction breaking a trend line. 2. A test of the lows (or highs) and then 3. The confirmation that the trend has changed when the index closes above the reaction. Occasionally the market will form a 2b reversal. This just means that the market dropped below the previous low but then reversed to close higher. Sperandeo points out that when a 2b reversal forms it many times marks the exact bottom of a trend change. BTW we got confirmation of the trend change back to up today when the SPX closed above the reaction high from last Friday. Of course nothing is written in stone but it is a positive sign.
Posted by Gary at 9:11 PM
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More chart patterns
http://bp0.blogger.com/_V7Pddp58Py0/Rm_9Ape1VrI/AAAAAAAAAOw/EBy28B6Lpgo/s400/intc.png The chart of INTC demonstrates again how unreliable chart patterns are. The odds of making profitable trades based soley on chart patterns are roughly 50/50. Not very good odds. Definitely not good enough for me to trade soley on them.
Posted by Gary at 7:18 AM
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4 year history of COT buy and sell signals
http://bp0.blogger.com/_V7Pddp58Py0/Rm_PFpe1VqI/AAAAAAAAAOo/21M1lV4anSY/s400/new+history.png
Here is a 4 year history of COT buy and sell signals. Notice again that the sell signals usually come early. You tell me whether the COT gives an investor an edge trading the intermediate moves.
Posted by Gary at 3:53 AM
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Tuesday, June 12, 2007New highs at new lows
http://bp2.blogger.com/_V7Pddp58Py0/Rm92DJe1VoI/AAAAAAAAAOU/Pehe7nWiVVw/s400/New+highs.png Take a look at NYSE new highs. They are currently at levels that have indicated bottoms over the last 4 years. Just another sign that this market is very oversold. When markets get extremely oversold smart money starts looking for bargains. I've also noticed that everybody seems to be jumping on the high interest rate train. When everyone is thinking the same thing it usually means that nobody is thinking.
Posted by Gary at 9:43 PM
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Point and Figure charts
http://bp1.blogger.com/_V7Pddp58Py0/Rm9BV5e1VlI/AAAAAAAAAN8/itvMMV7Z0Lc/s400/S%26P+P%26F.png
http://bp1.blogger.com/_V7Pddp58Py0/Rm9BV5e1VmI/AAAAAAAAAOE/1URxapnMs-s/s400/dow+P%26F.png
http://bp2.blogger.com/_V7Pddp58Py0/Rm9BWJe1VnI/AAAAAAAAAOM/7-2Cv3QxchU/s400/Q%27s+P%26F.png Lets take a look at the point and figure charts shall we. The point and figure charts eliminate the noise and give one a clear view of what is actually going on in the market. Notice after moving straight up 12 & 14 boxes the Dow and the S&P have pulled back 3 boxes. Doesn't seem unusual to have a little consolidation after such a strong move to me. The Q's are even stronger. So far they haven't been able to even put in a 3 box reversal. I don't think the sky is falling just yet.
Posted by Gary at 5:58 PM
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Discipline
http://bp3.blogger.com/_V7Pddp58Py0/Rm8D5Ze1VkI/AAAAAAAAAN0/GmGfpOqD87Y/s400/qld.png
I want to relate a trade I saw today on one of the Blogs. At the open this investor bought the QLD on the gap down. The trade is that the market will usually fill the gap sometime during the day. I know from back testing this that over the long haul this trade has a small positive expectancy. However this investor was nervous about the trade and closed it very quickly for a small profit. He felt that he had done the right thing by taking the profit. However when you violate the rules of the trade and cut your profits short then when you do hit the losing trades they will be larger than your winning trades. So by taking his profit early and not following the rules of the trade he is actually turning a small positive expectancy into a negative expectancy. If this investor doesn't learn to be disciplined in his trading this particular gap trade will over the long haul end up costing him money.
Posted by Gary at 1:36 PM
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Monday, June 11, 2007Interest rates are what brought down the market, Right?
http://bp0.blogger.com/_V7Pddp58Py0/Rm2u8Je1VjI/AAAAAAAAANs/LrIheLmpN34/s400/spx+rates.png The popular belief right now is that interest rates rising are what is putting pressure on the markets. Lets take a little closer look at that concept. Notice from the chart that interest rates have been rising since this rally started in Mar. Did we all of a sudden reach a level that was just too much for the market to handle? I guess it's possible. However rates have been rising since June of 03 and the market is up almost 100% since that time so I don't know if stock market return is extremely correlated to what happens with interest rates. Seems more likely to me that the market was just extremely overbought and was looking for an excuse to pullback a bit. Interest rates just happened to be the whipping boy at the time.
Posted by Gary at 1:21 PM
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Chart patterns
http://bp3.blogger.com/_V7Pddp58Py0/Rm1sK5e1VhI/AAAAAAAAANc/5y0f9fxfEUU/s400/SLW+H%26S.png
http://bp3.blogger.com/_V7Pddp58Py0/Rm1sK5e1ViI/AAAAAAAAANk/XKa9dykMkrA/s400/SLW+pattern.png Several weeks ago when I got into my small call position on SLW an investor on another blog made the comment that SLW was forming a head and shoulder pattern and so he would not consider buying this stock. Sometimes it is tempting to go ahead and complete a chart pattern in our heads and make investing decisions based on what we're "pretty sure" will happen. However Jack Schwager of "Market Wizards" fame notes that there is no evidence that chart patterns in general improve the odds of investors making a winning trade. As we can now see SLW did not break down out of a head and shoulder pattern. A 50/50 odds of something happening is not a great way to invest. You might as well just flip a coin.
Posted by Gary at 8:36 AM
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COT short signals
http://bp1.blogger.com/_V7Pddp58Py0/Rm1i9Ze1VgI/AAAAAAAAANU/qHwTrRp8OY8/s400/S%26P+mistake.png
I've mentioned in the past that the only large losses with the COT have come on the short side. Here is the last one. In Mar. of 03 the commercials went long almost exactly at the beginning of this bull market. Then at the end of June they reversed to a huge short position in one weeks time. I suspect they thought the rally was just going to be a short counter trend affair. When the market didn't start to head back down they quickly figured out something was different and removed the large short position towards the end of Sept. So yes the COT does get it wrong from time to time. However unlike the emotional retail trader when the big boys are wrong it doesn't take them to long to figure it out and fix the problem. This is why I'm careful when I take a COT short signal. I want as many odds in my favor as possible before shorting the market.
Posted by Gary at 7:57 AM
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Divergences in the S&P
http://bp1.blogger.com/_V7Pddp58Py0/Rm1HWZe1VfI/AAAAAAAAANM/zK3p6RzFT0c/s400/spx.png
Last month I noted that intermediate tops are usually accompanied by momentum and money flow divergences on the weekly charts. You can see in the above chart that the S&P is just starting to show divergences. Of course this doesn't mean the fall is imminent. The last intermediate top these divergences lasted 16 weeks. The market is just starting to lay the groundwork for a coming decline. Now we need to see the market continue up as these divergences grow and the commercials start to short the market, eventually they will get to an extreme level.
Posted by Gary at 5:58 AM
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Saturday, June 9, 2007To short or not to short that is the question
http://bp2.blogger.com/_V7Pddp58Py0/RmscSJe1VeI/AAAAAAAAANE/Sv8neZ4GpPI/s400/pcu.png I'm going to talk just a bit about shorting today. Once an investor becomes experienced enough the question or should I say the temptation to short will come up. Shorting can be a very valuable tool. It allows an investor to profit when markets are falling and make money when everyone around you is losing theirs. However there are pitfalls to consider when shorting. The 2 biggest of course revolve around the fact that the most you can win by shorting is 100%. So if you score a home run and the company goes bankrupt you double your money. The bigger downside is that the risk is infinite. Stocks can go to the moon. In your favor, markets fall faster than they go up so you see the gains much quicker if your short call is correct. Lets take a look a PCU. Lets say you think this company is a dog so you short it. Maybe it is a dog. But for you to even make 50% this stock is going to have to really fall apart. This just doesn't happen that often to good companies. Some kind of sea change would have to occur for a company like this to lose 50% of its value. For it to go bankrupt and go to $0 would take some time don't you think?
However it only took this outstanding copper miner 5 months to double in price. So you tell me is it better to take the risk and short for a 10 to 20% profit or just have a little patience and hold on for the big money? There's a reason most traders don't short and it's not because they don't know how. It's because the returns don't necessarily match the risk. That being said I definitely do take short trades but I want the "Boys" in the COT shorting with me before I do it.
Posted by Gary at 2:31 PM
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Friday, June 8, 2007COT report for June 8
The Commercials are still long. Which of course means the recent sell off was probably just a wave of profit taking. Remember panic always creates opportunities. There were some interesting developments in this weeks report and I will be covering them in the market summary for subscribers later this evening. I'll also have a few thoughts on how to spot bottoms. Anyone wishing to recieve the COT spreadsheets or become a subscriber just e-mail me a request. The address is on the lower right hand side of the home page.
Posted by Gary at 6:04 PM
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Thursday, June 7, 2007Could the Fed be looking for a reason to cut?
http://bp3.blogger.com/_V7Pddp58Py0/RmjInJe1VdI/AAAAAAAAAM8/NyPQ5PCOaeI/s400/Nasdaq.png First I want to show you something from the Nasdaq bubble. Two 12% drops right in the middle of one of the greatest parabolic runs. Neither one of them stopped the Tech train. So far the S&P is down 3% for the week. Just something to think about. I don't think the selling is quite done yet but I also don't think this bull is done yet. At least not until the COT gives me confirmation. So investors have a couple of options. Hopefully you are already familar with position sizing or at least paid close attention to my rant last night in the daily update. If so 3% isn't hurting you. However there's no need to hold on for 12% just in case that's what we're in for. First off you can just ignore the noise and wait for the COT to give you a signal or you can cut back on your size some so that if the decline does continue for a while it won't hurt you. I'm going to be looking for some kind of bottoming action before I put on my leveraged position again (which btw wasn't very much leverage).
Now I want to talk about something that I've been contemplating yesterday and today. This will sound a bit like a conspiracy theory and I may be entirely off base. So feel free to totally ignore what I'm going to say. Last year the Fed needed to stop the rate hikes. However gold was at $725 an oz. and oil was over $70 a barrell. How could they possibly stop hiking and still claim to be fighting inflation. They couldn't without some how bringing down commodity prices. Well the Fed raised one last time, while Goldman rejiggred the CRB to decrease the weighting of gasoline which caused massive selling of gasoline futures in index funds that have to match the Goldman weighting. At the same time I'm guessing we got a wave of central bank selling of gold to bring down the gold price. All in all they accomplished what they needed to do. They crashed the commodity markets allowing them to show that inflation was retreating and they could now stop raising rates. Well what's happened in the mean time. The housing bust has steadily gotten worse. Not good for potential voters next year. Gold was back up to $690, oil is touching $67 and gasoline has been as high as $2.43 in the futures market. The fed has been talking tough the whole time but what have they done? Not a damn thing, that's what. Well now GDP came in at .6% this last quarter and housing is showing no signs of improving. In my opinion the Fed needs to cut rates again but it can't do it with commodities where their at. They need to trigger a deflation again to give them cover to cut. Could it be that the Fed is selling treasuries into the market to raise rates and trigger enough of a scare to allow them to cut rates? I don't know. If anybody here does know where we can find out what the Fed is doing in the credit markets please post and let us know. I have a feeling we may be in store for another episode like last year. But if the goal is for the Fed to eventually cut rates that would explain why the COT is so bullish. Perhaps the smart money knows that the Fed only needs the markets to come in 6-8% again before they turn on the money spiggots. This week the S&P was up 12 points from last week and the NDX was up 33 points. If the COT still increases their longs then I've got to believe the big boys know something we don't. Again this is all just speculation so feel free to ignore everything I just said...except the part about the 12% drops in parabolic runs and position sizing. LOL
Posted by Gary at 8:04 PM
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Thursday, June 7, 2007VTO trade on the DOW
http://bp0.blogger.com/_V7Pddp58Py0/Rmf2vpe1VZI/AAAAAAAAAMc/Dazy8K-S7YA/s400/DOW+VTO+04.png
http://bp1.blogger.com/_V7Pddp58Py0/Rmf2v5e1VaI/AAAAAAAAAMk/inppGDjS3fM/s400/Dow+VTO+05.png
http://bp1.blogger.com/_V7Pddp58Py0/Rmf2v5e1VbI/AAAAAAAAAMs/S10tAMzthm4/s400/dow+VTO+06.png
http://bp2.blogger.com/_V7Pddp58Py0/Rmf2wJe1VcI/AAAAAAAAAM0/5SYWNcoNe00/s400/dow+VTO+07.png While the VTO trade was designed to be used on the Q's I suspect that it will show very similar results if used on the spiders or diamonds. If an investor was willing to continue to hold especially if the COT was giving a buy signal as it is now then every signal would have produced a winning trade. Since the Dow didn't actually close below the 30 (However the DIA did close below 30) level it would be up to individual investors if they want to take the trade this morning or wait to see if the Dow can close down again today. I think I've shown that panic selling has never made anyone any money. However buying when the sheep panic has created billionaires. Do you want to be a sheep or the wolf?
Posted by Gary at 5:13 AM
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Wednesday, June 6, 2007The start of the big one or just another normal pullback in an overbought market
http://bp1.blogger.com/_V7Pddp58Py0/Rmd6r5e1VYI/AAAAAAAAAMU/43ZRhMIlJio/s400/spx.png The market is now in the process of working through another pullback from overbought levels. Is this the start of the big one or is it just a minor correction? If you are a bear my first question is what is your signal to cover your shorts? You do have a plan don't you or are you just flying by the seat of your pants. Flying by the seat of your pants isn't typically a very profitable way to invest I'm sorry to say. So lets take a look at the odds shall we. First off odds number 1 the COT is showing the most bullish signal since 2000. If you take away the short signals then the odds of a profitable trade from a COT long signal are almost 9 to 1. Those are pretty hefty odds to fight against. Next every intermediate rally so far in this bull has lasted 21-32 weeks so far. This rally is only 11 weeks old. Again pretty rough odds to fight. Next, every intermedite rally has topped out with major momentum and money flow divergences on the weekly charts. There are none yet. No help there. The historical data for the last 110 years show an average gain of 34% for final legs up in bull markets. 3 days ago the S&P was up 12% for this leg out of the Mar. bottom. Still a bit short. The final legs up last on average 6 months and 6 days this rally is only a little over 2 1/2 months old. Quite aways to go yet before we even get close to average. Sorry I'm not helping yet. The third year of a presidential cycle has on average produced a 26% gain in the markets. As of 3 days ago the market was only up 9% for the year. Hmm still not what we're looking for. As of today the S&P is down a whopping 1.23%. It is possible that you have caught the exact top in this bull market but I think I've shown that the odds are way against you. I prefer to trade with the odds and I certainly won't be fighting the kind of odds I've just laid out for you. Seems more likely that we just got another buying opportunity. BTW I've mentioned in the past that I think there is a good possibility that we could see a major bottom in Oct. Oct. would satisfy the historical data. The rally would have a chance to mature and Oct. has historically had some of the most hostile declines in history. Keep in mind this is only a guess because nobody can see the future.
Posted by Gary at 8:24 PM
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Tuesday, June 5, 2007COT long signal in natural gas
http://bp3.blogger.com/_V7Pddp58Py0/RmYispe1VUI/AAAAAAAAAL0/B2KH8iJi_lw/s400/nat+gas.png
http://bp3.blogger.com/_V7Pddp58Py0/RmYispe1VVI/AAAAAAAAAL8/8LjEt-f1Wzg/s400/swn.png
http://bp0.blogger.com/_V7Pddp58Py0/RmYis5e1VWI/AAAAAAAAAME/jYcoi3LnQ44/s400/chk.png
http://bp0.blogger.com/_V7Pddp58Py0/RmYis5e1VXI/AAAAAAAAAMM/Ig_7SYu2Hoc/s400/cnx.png As you can see the COT long signal has been accompanied by higher prices in natural gas and in natural gas stocks. The COT reports aren't always correct but they do give the little guy a definite edge in the marketplace.
Posted by Gary at 7:57 PM
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Gold stocks
http://bp0.blogger.com/_V7Pddp58Py0/RmV_YJe1VMI/AAAAAAAAAKk/KdkpFH67JrA/s400/hui.png The gold stocks are still in an up trend, making higher highs and higher lows. The recent move out of the bottom was the strongest so far this year.
Posted by Gary at 8:20 AM
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Gold Bull Market
http://bp3.blogger.com/_V7Pddp58Py0/RmVXY5e1VLI/AAAAAAAAAKc/sPf8kbdcss8/s400/Gold.png Let me show you how Bull markets work. Notice in 05 gold traded sideways for almost a year. This is the "wear you out period". This is were you sit and watch other sectors take off, eventually get fed up and jump ship to one of the momentum sectors just as that sector tops and of course that's when gold takes off and leaves you behind. Now if you had the patience to hold thru the dull times then the bull will throw another curve at you. Scary violent corrections that try and shake you out. The long term trend is up. We appear to be in another "wear you out period". Will you hold until the next rally or will you let the bull shake you off?
Posted by Gary at 5:29 AM
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Monday, June 4, 2007What does this portend for the ole gas tank? ouch!
http://bp1.blogger.com/_V7Pddp58Py0/RmRhJS-WfiI/AAAAAAAAAKU/_VH8xcko83A/s400/oil.png Tehnical rule #1 says we could see $83 oil this summer if oil can breakout above the consolidation level. If the commercials reduce their shorts a bit this could become reality. Ouch, that will hurt at the gas station.
Posted by Gary at 11:57 AM
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Sunday, June 3, 2007A history of parabolic moves
http://bp1.blogger.com/_V7Pddp58Py0/RmLD9y-WfeI/AAAAAAAAAJ0/Z0sD3r_9nNA/s400/Nasdaq+parabolic+rise.png
http://bp2.blogger.com/_V7Pddp58Py0/RmLD-C-WffI/AAAAAAAAAJ8/3VGfHiU_2mw/s400/dow+parabolic+rise.png
http://bp2.blogger.com/_V7Pddp58Py0/RmLD-C-WfgI/AAAAAAAAAKE/tPvtgO1_qoQ/s400/gold+parabolic+rise.png
http://bp3.blogger.com/_V7Pddp58Py0/RmLD-S-WfhI/AAAAAAAAAKM/mI4_HKPK1Tk/s400/Copper+parabolic+rise.png
Notice some striking similarities when markets start trading parabolic. They all seem to trade up roughly 68% of the time. The smallest gain was 25% for the Dow in 87. The largest was the Nasdaq and Copper at roughly 80%. The time span was 2 months for the metals to 5 months for the Nasdaq. The take away here is that these kind of moves produce big gains quickly. The S&P has been rising 68% of the time since the Mar. bottom and is now trading in a pattern similar to other parabolic moves. However it is only up 12.8% as of Fridays close. If it just matches the weakest rise, the Dow in 87, then we should at least double the gain so far. That implies another 175 points on the S&P. Keep in mind anything can happen. The pattern could abort next week. Just something to think about if you are contemplating shorting this market at these levels.
Posted by Gary at 6:35 AM
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Saturday, June 2, 2007Is it time for the market to change character?
http://bp2.blogger.com/_V7Pddp58Py0/RmJF-C-WfdI/AAAAAAAAAJs/HnPnIV3R-20/s400/SPX.png Keep in mind that this is just a thought I've been toying with so I definitely wouldn't trade on what I'm about to say. For the last year the market has been in a runaway move to the upside seperated by the correction in Feb/Mar. The corrections have all been uniform. Roughly 25-30 points each. The rally out of the Mar. bottom has followed the same pattern so far. We are currently nearing an area where we have typically gotten one of these corrections. What I'm starting to wonder is that maybe this pattern is now too obvious to everyone. There is very heavy shorting in the Q's right now. Could the market be banking too heavily on a "normal" correction? If all of a sudden we don't get it and the market changes character and keeps rising here all of those shorts covering could spark a parabolic rise. Just something to think about if you are trying to time the corrections.
Posted by Gary at 9:30 PM
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Ted Butler on Silver
interview with Ted Butler:
silberinfo:At the end the question: Where do you expect the price of silver to be at the end of the year 2007?
Ted Butler:This is a question I try to avoid because it is in the time category, which means it’s just a guess. It depends on the manipulation and the status of the concentrated short position. So let me answer it this way – when the manipulation ends and the shorts lose control, we’ll hit $50 or $100 in a relative blink of the eye.
This is exactly why I don't try to trade silver. Buy and hold is much safer.
Posted by Gary at 2:04 PM
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Breakouts everywhere
http://bp3.blogger.com/_V7Pddp58Py0/RmGL-i-WfYI/AAAAAAAAAJE/Fnt6Yo1h3lQ/s400/Nasdaq+Breakout.png
http://bp0.blogger.com/_V7Pddp58Py0/RmGL-y-WfZI/AAAAAAAAAJM/UrH_iY_toKE/s400/dax+breahout.png
http://bp0.blogger.com/_V7Pddp58Py0/RmGL-y-WfaI/AAAAAAAAAJU/P_CTRDRU3ns/s400/Cac+Breakout.png
http://bp0.blogger.com/_V7Pddp58Py0/RmGL-y-WfbI/AAAAAAAAAJc/6wAZPa-J9t0/s400/Ftse+Breakout.png
http://bp1.blogger.com/_V7Pddp58Py0/RmGL_C-WfcI/AAAAAAAAAJk/7Sy4DMg1oLE/s400/Nikkei+Breakout.png
There are breakouts from sideways consolidations everywhere around the globe right now. Investors need to ignore all the negative "BS" that the markets are "tired" and need a rest, etc., etc. This is not to say that next week things couldn't turn around on a dime. There could be a major terrorist act, natural disaster, major political plunder or any number of things that could influence the markets. However you can't invest on what might happen. The best we can do is trade on what is happening. Right now the markets of the world are trying to tell anyone who's listening that they want to go higher. Don't be afraid to listen to what they are saying.
Posted by Gary at 8:23 AM
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Watch what the Fed does not what it says.
From Minyanville. The Fed is going to talk a good game about combating inflation, but in the end there’s not a darn thing it’s going to do about it. The truth of the matter is there is nothing the Fed can do but talk:
One has to watch what the Fed is DOING, not what it is saying. The Fed has sat on its hands since last August, all the while saying how deeply concerned it was about inflation as the equal-weighted CRB (CCI) made two new all-time highs during the same period and the trade-weighted dollar made new lows on a nearly daily basis.
Meanwhile, this same Fed has gone on numerous coupon passing binges during the same period (which are permanent injections of fresh confetti into the banking system that can then be levered up 20 to 1 or more). M3, according to those that have reconstructed it, it is running at around 13%. Does that sound like the actions of a Fed that is truly concerned about inflation? Where are the rate hikes? Where are the drains of liquidity from the system? You’re not seeing any of that.
The Fed is going to defer to the politcal machine just like it always does.
Can you say higher gold and silver prices?
Posted by Gary at 6:28 AM
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Friday, June 1, 2007COT report for June 1
The COT is still long. No surprise there!!! The weekly summary and updated spreadsheets should be out by 7pm PST. If you are a paid subscriber and haven't received them yet let me know. If you want to subscribe to receive the updates and summary, e-mail a request to gsavage4997@cox.net . Its been brought to my attention that some people are having trouble with paypal. If you would prefer to subscribe by check make a note of that when you send your request. Have a great weekend.
Posted by Gary at 6:36 PM
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Thursday, May 31, 2007Trendline break buy signal
http://bp2.blogger.com/_V7Pddp58Py0/Rl-Fyy-WfWI/AAAAAAAAAI0/PXGJ-UeQHwg/s400/silver.png
http://bp3.blogger.com/_V7Pddp58Py0/Rl-FzC-WfXI/AAAAAAAAAI8/61U9sAxNa_0/s400/%24hui.png Just as you can use a break in the trendline as a sell signal you can also use it as a buy signal. In the first chart you can see where silver broke the trendline. Coupled with this weeks very bullish COT report for silver. This looks like a pretty good setup to buy or add to (if you're already a precious metals investor) your silver position. In the second chart you can see the same signal for the PM miners. One thing to take notice of is the large % move in the HUI. Normally the mining stocks will lead a move up in the metals and thats exactly what's happening today. I've also pointed out a great example of a 2b reversal on the HUI chart.
Posted by Gary at 7:33 PM
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When to sell?
http://bp1.blogger.com/_V7Pddp58Py0/Rl8_oi-WfTI/AAAAAAAAAIc/OlVjGpkSh-Y/s320/trendline+sell+signal.png
http://bp2.blogger.com/_V7Pddp58Py0/Rl8_oy-WfUI/AAAAAAAAAIk/Ztn1LbUPArM/s320/FCX+P%26F.png
http://bp3.blogger.com/_V7Pddp58Py0/Rl8_pC-WfVI/AAAAAAAAAIs/kIJV2IVuaIs/s320/spx+sell+signal.png Knowing when to sell is probably the most difficult thing to learn in investing. The rule is let your profits run. So how do we know when the run is over?
The first chart demonstrates a sell signal generated by a trend line break. The next chart is a point and figure chart of FCX the bullish price objective was met at $71. That is your sell signal. The third chart demonstrates the sell signal in Feb. accompanied by a COT sell signal. My experience has been that there just isn't anything that compares over the long haul to following the COT buy and sell signals. But here are a couple of options. As you may have noticed the VTO and bollinger band systems that I have described in the past all had very well defined sell rules. Before you enter into a trade know what your sell signal will be along with your stop loss level.
Posted by Gary at 2:34 PM
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Saturday, June 2, 2007Is it time for the market to change character?
http://bp2.blogger.com/_V7Pddp58Py0/RmJF-C-WfdI/AAAAAAAAAJs/HnPnIV3R-20/s400/SPX.png Keep in mind that this is just a thought I've been toying with so I definitely wouldn't trade on what I'm about to say. For the last year the market has been in a runaway move to the upside seperated by the correction in Feb/Mar. The corrections have all been uniform. Roughly 25-30 points each. The rally out of the Mar. bottom has followed the same pattern so far. We are currently nearing an area where we have typically gotten one of these corrections. What I'm starting to wonder is that maybe this pattern is now too obvious to everyone. There is very heavy shorting in the Q's right now. Could the market be banking too heavily on a "normal" correction? If all of a sudden we don't get it and the market changes character and keeps rising here all of those shorts covering could spark a parabolic rise. Just something to think about if you are trying to time the corrections.
Posted by Gary at 9:30 PM
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Ted Butler on Silver
interview with Ted Butler:
silberinfo:At the end the question: Where do you expect the price of silver to be at the end of the year 2007?
Ted Butler:This is a question I try to avoid because it is in the time category, which means it’s just a guess. It depends on the manipulation and the status of the concentrated short position. So let me answer it this way – when the manipulation ends and the shorts lose control, we’ll hit $50 or $100 in a relative blink of the eye.
This is exactly why I don't try to trade silver. Buy and hold is much safer.
Posted by Gary at 2:04 PM
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Breakouts everywhere
http://bp3.blogger.com/_V7Pddp58Py0/RmGL-i-WfYI/AAAAAAAAAJE/Fnt6Yo1h3lQ/s400/Nasdaq+Breakout.png
http://bp0.blogger.com/_V7Pddp58Py0/RmGL-y-WfZI/AAAAAAAAAJM/UrH_iY_toKE/s400/dax+breahout.png
http://bp0.blogger.com/_V7Pddp58Py0/RmGL-y-WfaI/AAAAAAAAAJU/P_CTRDRU3ns/s400/Cac+Breakout.png
http://bp0.blogger.com/_V7Pddp58Py0/RmGL-y-WfbI/AAAAAAAAAJc/6wAZPa-J9t0/s400/Ftse+Breakout.png
http://bp1.blogger.com/_V7Pddp58Py0/RmGL_C-WfcI/AAAAAAAAAJk/7Sy4DMg1oLE/s400/Nikkei+Breakout.png
There are breakouts from sideways consolidations everywhere around the globe right now. Investors need to ignore all the negative "BS" that the markets are "tired" and need a rest, etc., etc. This is not to say that next week things couldn't turn around on a dime. There could be a major terrorist act, natural disaster, major political plunder or any number of things that could influence the markets. However you can't invest on what might happen. The best we can do is trade on what is happening. Right now the markets of the world are trying to tell anyone who's listening that they want to go higher. Don't be afraid to listen to what they are saying.
Posted by Gary at 8:23 AM
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Watch what the Fed does not what it says.
From Minyanville. The Fed is going to talk a good game about combating inflation, but in the end there’s not a darn thing it’s going to do about it. The truth of the matter is there is nothing the Fed can do but talk:
One has to watch what the Fed is DOING, not what it is saying. The Fed has sat on its hands since last August, all the while saying how deeply concerned it was about inflation as the equal-weighted CRB (CCI) made two new all-time highs during the same period and the trade-weighted dollar made new lows on a nearly daily basis.
Meanwhile, this same Fed has gone on numerous coupon passing binges during the same period (which are permanent injections of fresh confetti into the banking system that can then be levered up 20 to 1 or more). M3, according to those that have reconstructed it, it is running at around 13%. Does that sound like the actions of a Fed that is truly concerned about inflation? Where are the rate hikes? Where are the drains of liquidity from the system? You’re not seeing any of that.
The Fed is going to defer to the politcal machine just like it always does.
Can you say higher gold and silver prices?
Posted by Gary at 6:28 AM
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Friday, June 1, 2007COT report for June 1
The COT is still long. No surprise there!!! The weekly summary and updated spreadsheets should be out by 7pm PST. If you are a paid subscriber andbeen brought to my attention that some people are having trouble with paypal. If you would prefer to subscribe by check make a note of that when you send your request. Have a great weekend.
Posted by Gary at 6:36 PM
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Thursday, May 31, 2007Trendline break buy signal
http://bp2.blogger.com/_V7Pddp58Py0/Rl-Fyy-WfWI/AAAAAAAAAI0/PXGJ-UeQHwg/s400/silver.png
http://bp3.blogger.com/_V7Pddp58Py0/Rl-FzC-WfXI/AAAAAAAAAI8/61U9sAxNa_0/s400/%24hui.png Just as you can use a break in the trendline as a sell signal you can also use it as a buy signal. In the first chart you can see where silver broke the trendline. Coupled with this weeks very bullish COT report for silver. This looks like a pretty good setup to buy or add to (if you're already a precious metals investor) your silver position. In the second chart you can see the same signal for the PM miners. One thing to take notice of is the large % move in the HUI. Normally the mining stocks will lead a move up in the metals and thats exactly what's happening today. I've also pointed out a great example of a 2b reversal on the HUI chart.
Posted by Gary at 7:33 PM
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When to sell?
http://bp1.blogger.com/_V7Pddp58Py0/Rl8_oi-WfTI/AAAAAAAAAIc/OlVjGpkSh-Y/s320/trendline+sell+signal.png
http://bp2.blogger.com/_V7Pddp58Py0/Rl8_oy-WfUI/AAAAAAAAAIk/Ztn1LbUPArM/s320/FCX+P%26F.png
http://bp3.blogger.com/_V7Pddp58Py0/Rl8_pC-WfVI/AAAAAAAAAIs/kIJV2IVuaIs/s320/spx+sell+signal.png Knowing when to sell is probably the most difficult thing to learn in investing. The rule is let your profits run. So how do we know when the run is over?
The first chart demonstrates a sell signal generated by a trend line break. The next chart is a point and figure chart of FCX the bullish price objective was met at $71. That is your sell signal. The third chart demonstrates the sell signal in Feb. accompanied by a COT sell signal. My experience has been that there just isn't anything that compares over the long haul to following the COT buy and sell signals. But here are a couple of options. As you may have noticed the VTO and bollinger band systems that I have described in the past all had very well defined sell rules. Before you enter into a trade know what your sell signal will be along with your stop loss level.
Posted by Gary at 2:34 PM
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Thursday, May 31, 2007Silver
http://bp1.blogger.com/_V7Pddp58Py0/Rl7Hty-WfSI/AAAAAAAAAIU/xhTLMsssy2U/s320/slv.png
Silver has held the 200 day moving average and the COT report is getting very bullish. When this one starts to move it can rally violently because silver is a thin market. If you are investing in precious metals you want to be "in" before the move happens or you risk missing it. As I write silver is up .23 in the premarket which would translate into roughly $2.30 on the SLV ETF.
Posted by Gary at 6:03 AM
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People are simply not wired to make smart financial decisions
The distinguished Robert Shiller wrote an article in Forbes recently about how ordinary people can easily hedge their risk against higher prices on things they consume. For example, don’t complain about high gas prices. Do something about it — like buy some oil. It makes perfect sense. However, as Roger Ehrenberg points out it doesn’t work in the real world. Why? Because when it comes to personal finance people will consistently do stupid things. Like individuals buying single stocks because they are so smart and the market is so dumb. Like gamblers making larger bets as they are losing as opposed to shrinking bet size as their assets drop. And these are just two examples of what extensive academic literature has shown is, unfortunately, human behavior. When it comes to economic decisions, we frequently do absolutely stupid things. We just do. And we can't help it. So when Mr. Shiller proposes what is, in effect, an elegantly straight-forward risk management strategy for laypeople I shudder.
I must admit that I have fallen into this group myself many times. Once I started letting the smart money make my financial decisions for me life got much better.
Posted by Gary at 5:45 AM
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Wednesday, May 30, 2007Another "typical" correction
http://bp1.blogger.com/_V7Pddp58Py0/Rl4wSy-WfRI/AAAAAAAAAIM/4YOyQUWrQZ8/s320/spx.png As of today's close it looks like the market has completed another "typical" correction. The COT is extremely bullish. There's nothing to do but enjoy the ride until the big boys tell us it's time to sell.
Posted by Gary at 7:16 PM
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Markets topping?
http://bp1.blogger.com/_V7Pddp58Py0/Rl13v4RL0vI/AAAAAAAAAH8/7r9eLoK5c5I/s320/SPX+divergences.png
http://bp1.blogger.com/_V7Pddp58Py0/Rl13v4RL0wI/AAAAAAAAAIE/BdwL_99Dodc/s320/ticker+sense.jpg
When the market throws a curve ball at you like it appears to be going to do this morning it helps if you take a step back and look at the big picture. Notice on the weekly charts that there has been no intermediate top without some serious divergences in momentum. Thats not happening yet. That's not to say that it couldn't be diferent this time but you have to trade with the odds. The odds are saying we will probably be getting a buying opportunity here. Also intermediate tops are accompanied by bullish sentiment readings, granted ticker sense is only one method but this seems hardly bullish by any stretch of the imagination. Then there is the biggie, the commercials are buying like it's 1999.
Posted by Gary at 6:06 AM
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Tuesday, May 29, 2007Russell
http://bp0.blogger.com/_V7Pddp58Py0/Rlzu74RL0uI/AAAAAAAAAH0/39C_BomJ_1E/s320/Russell.png
As you can see by the above chart the Russell has already broken out of the consolidation area as of today. It would seem to be a positive sign for the market that the speculative small caps are leading again.
Posted by Gary at 8:25 PM
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Q's poised to attempt another breakout
http://bp2.blogger.com/_V7Pddp58Py0/RlzVtYRL0tI/AAAAAAAAAHs/KzocVKJAbwo/s320/q+breakout.png After the failed breakout attempt last week the Q's look poised to attempt another breakout.
Posted by Gary at 6:37 PM
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Money flows
http://bp1.blogger.com/_V7Pddp58Py0/RlwRDIRL0sI/AAAAAAAAAHk/PTWw4VPCS1w/s320/spx+money+flows.png
Quite a few people have pointed out that the money flows are drying up on the daily charts. True but look at what has happened in the past when money flows have tailed off. Quite often the market just needed a breather before powering up to fresh new highs. Another example of why I pay more attention to the weekly charts. There are no such divergences on the weekly charts yet by the way.
Posted by Gary at 4:39 AM
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Thursday, May 24, 2007Point & Figure Charts
http://bp3.blogger.com/_V7Pddp58Py0/RlZH4IRL0qI/AAAAAAAAAHU/8a4gyr8yaMY/s320/S%26P+p%26f.png
http://bp0.blogger.com/_V7Pddp58Py0/RlZH4YRL0rI/AAAAAAAAAHc/XPqn4SSLdaU/s320/Q+p%26f.png Let's take a look at the point and figure charts. The sell off the last two days so far hasn't even been enough to trigger a 3 box reversal. So far the price action this week is just noise. Side note: the bullish price objectives have moved up a bit, the Q's are currently showing a price objective of $57.24 and the S&P is now at $1922. Keep in mind that this doesn't mean that the indexes will trade up that much. However in strong bull moves they quite often do hit their price objectives. The bullish price objective on the Dow was 12,548. As we know the Dow blew thru that and is now 1000 points higher.
Posted by Gary at 7:19 PM
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Parabolic moves
After going over historical statistics it has become apparent to me that parabolic moves tend to produce large % gains. When the Nikkei went parabolic in 89 it produced a 44% gain. The last parabolic leg in 1966 over 100%. The last leg up in the 20's over 100%. The NASDAQ in 99 81%. The gold bull in 1980 over 100%. The gold leg last year 32%. The recent parabolic move in China 60% so far. Of course it is certainly debatable as to whether the US markets have entered a parabolic stage. However the angle of assent has increased radically. The markets are trading up about 70% of the time. Pullbacks have been very slight and usually only last a couple of days. The markers are certainly there. If this market is going to continue into a full fledged parabolic move then history would suggest that we should expect a rather large move.
Posted by Gary at 8:47 AM
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Three the magic number?
http://bp0.blogger.com/_V7Pddp58Py0/RlWU4oRL0pI/AAAAAAAAAHM/B19OLmclcOM/s320/spx+three+trys.png The Dow took three tries to break thru the old high also. Will the next attempt at the old highs on the S&P hold? My guess is yes.
Posted by Gary at 6:35 AM
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Wednesday, May 23, 2007The China Bubble
We have all been hearing lately how the Chinese stock market is in a bubble and ready to collapse any day. Seems everyone is in agreement right? However when you actually think about this a bit a few things don't add up. First off when have we ever had a bubble where everyone knew it was a bubble? In 99 & 00 the vast majority of investors were convinced that we had entered a new paradigm. All that mattered was how many eyeballs saw your website, the money would come, the world had entered a permanently high level of economic bliss, etc. etc. Now lets progress to the real estate bubble. At the top in the summer of 05 we were hearing all kinds of excuses for why the real estate boom was not a bubble, from a scarcity of land (Cramer) to the good old cliche "well real estate never goes down" blah, blah, blah. What I'm trying to get across is that bubbles are characterized by mass denial and ludicrous reasoning for why the bubble is in fact not a bubble. That's not happening yet with China. Everyone seems to agree that it is a bubble. Now lets go back to 99-2000. About half the population was buying tech stocks. The public was in, big time. Same thing for real estate. Everybody buying, multiple houses. ARMS, option ARMS, what ever it took just buy. So recently we've been hearing stories of China opening 300,000 brokerage accounts a day. 2.7 million more accounts opened in 06 than 05. Whew the public is in big time right? Lets say even if China opened 300,000 for every day of this year and we add on the 2.7 million from last year and lets give them 10 million already existing. That means the public in China has roughly 55 million active retail brokerage accounts. Wait a minute the population of China is 1.3 billion, that's billion with a B. That means a whopping 4.2% of the population is now into the stock market. It's definitely heading in the right direction but still a far cry from the 50% that has characterized most of the bubbles throughout history. There just may be a ways to go yet if a really significant portion of the population enters into the fray.
Posted by Gary at 7:07 PM
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Wednesday, May 23, 2007One reversal day does not a bear make!
http://bp3.blogger.com/_V7Pddp58Py0/RlTfxoRL0oI/AAAAAAAAAHE/QBF1G-zmHq0/s320/dow+400.png
Its happening again. As soon as we get a small pullback in the market everyone who said "I'll be going long as soon as we get a pullback" immediately throws their "plan" out the window and declares the bull run is over. Remember the commercial players don't trade on emotions like all the bears apparently do. The COT says that the big boys are looking to buy your shares. What better way to do it than to get a sharp little pullback to scare out all the weak hands and have them give up their shares at a cheaper price. If you can't control your emotions and stick to your "plan" it's going to be very hard to make money in the markets. Lets just summerize what happened today. The Dow is down 3 days in a row. Hasn't happened very often in this rally. The down days are very slight and on low volume. What happened the last time this senario played out? The Dow proceeded to gain 400 points. The Nas has had one down day after 3 up days. Works out to 75% up days. What have I been saying, the market is trading up 68% of the time. I think the market just decided to take a little profit this afternoon. Where is the catalyst for this market to fall? Does anyone seriously think that just because Greenspan, who's predictions are notoriously badly timed, says the Chinese market could fall that that is the catalyst to turn this market around. Now interest rates are rising, that might be a catalyst but if it is then the big boys don't seem too worried about it. If they aren't worried then I'm not worried.
Posted by Gary at 5:32 PM
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Tuesday, May 22, 2007Patience, a golden quality
http://bp0.blogger.com/_V7Pddp58Py0/RlO1eIRL0lI/AAAAAAAAAGs/YQTUZ6gYg9A/s320/SSEC+1.png
http://bp1.blogger.com/_V7Pddp58Py0/RlO1eYRL0mI/AAAAAAAAAG0/sFUrMIzHjtU/s320/SSEC+2.png
http://bp2.blogger.com/_V7Pddp58Py0/RlO1eoRL0nI/AAAAAAAAAG8/PfSwe8LS274/s320/SSEC+3.png
Someone once said that if you can't envision an asset gaining many multiples in value then you will be unlikely to invest in it. I'll add that if you can't envision your trades gaining substantially in value you will be likely to sell too soon. In the first chart we see the Shanghai index bottoming in July of 05. The Chinese stock market had just lost over 50% of it's value. Sentiment at this time would be black pessimism. So when the market started to rally I'm sure there was plenty of scepticism. How many people do you think had the patience to hold on for a 25% gain? How about a 50% gain. The market was already trading parabolic at this time. I suspect quite a few were taking profits and calling the top or at least a serious correction. Well in the second chart we can see that after a short pullback the market shot straight up to over 2000 in 7 months. That's over 100% gain in a year and a half. This market is getting ridiculous you say it can't keep going. Now it's REALLY trading parabolic. SELL, SELL, SELL. On to chart three. But wait after a sideways consolidation the Chinese market doubled again. Remember good ole technical rule #1? This is why I use the COT report. Here in the US we have a tool that gives us some kind of legitimate sell signal. If the big boys are selling then they are removing the liquidity that the market needs to keep going up. As long as I follow the smart money I won't get impatient and miss a potential run like this.
Posted by Gary at 8:26 PM
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Monday, May 21, 2007Still too many bears
http://bp3.blogger.com/_V7Pddp58Py0/RlIYVIRL0kI/AAAAAAAAAGk/4dr8tIb0CQA/s320/ticker.jpg
Seems like no matter how much this market goes up it just can't convince investors it's for real. It has certainly convinced the smart money. They just keep increasing their long position.
Posted by Gary at 3:07 PM
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Follow up on Is the market rolling over
http://bp3.blogger.com/_V7Pddp58Py0/RlGtVYRL0jI/AAAAAAAAAGc/kBilNAWCfBw/s400/Momo.png I want to point out the hazards again of just using T/A to predict the future. Just last week when the market had the small correction quite a few guru's were pointing out that the market was rolling over. Well now its a week later and the S&P is 30 points higher. T/A can tell you with 20/20 vision what has happened but seeing into the future is still just as difficult as ever without a crystal ball. Does anyone have a working one of those by the way :)
Posted by Gary at 7:31 AM
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Gap trade
http://bp2.blogger.com/_V7Pddp58Py0/RlGWwIRL0iI/AAAAAAAAAGU/jmMWO3hV3MY/s400/gap.png
Here is another short term trade that may signal this morning. When the Q's gap up on Monday morning 99% of the time they fill the gap within the week. If I remember correctly the one time they didn't fill during the week they did fill the gap the next week. At the moment the Q's are trading about .08 above the Friday high. If you are going to play this one with options you will need to let the market settle down before buying puts as the volatility will cause the spread to be too large right at the open. Since there is normally a .03 spread on Q options you might want to let this run and see if the Q's can trade up .15-.20 before buying puts. Keep in mind that this is a very strong market so keep position sizes small in case this just happens to be that 1%.
Posted by Gary at 5:54 AM
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Sunday, May 20, 2007To trade or not to trade a bull part 2
I'm going to revisit this idea because I think it's important right now. Should you try to trade in and out of this bull market? My thoughts are no you shouldn't and here's why. This is one of the longest bull markets in history. There have only been 3 longer. We haven't had one single correction of 10% or more during this entire bull. Fear has been reduced to a minimun. AKA investors are ready to buy any dip. Private equity is taking millions and millions of shares off the market not to mention companies are buying back shares heavily. Now I see where China is going to let banks invest abroad aka even more demand while supply is shrinking. Oh and if the retail investor were to come back in watch out. We are setting the stage for a parabolic run. To my eyes we are already in a parabolic run. When a market goes parabolic it just doesn't give you a chance to get in. So the last thing you want to do is lose your position by trying to get cute. Lately I've watched as we had 2 small corrections and the sentiment went from "I'm going to go long as soon as we get a correction" to "this is the top time to short" in the blink of an eye. This is how bull markets work they have sharp corrections that scare the weak hands out. That is why I watch the COT report. The commercials are not weak hands, they don't get scared out. What they do is buy your shares when you let your emotions take over. Trading takes disipline. Trading emotionally during this run will more than likely just guarantee that you give your money to the big boys. This is a time for logic. The market is strong right now. Make a plan and stick to it. My plan is to hold my long positions until the COT tells me to sell. Period
Posted by Gary at 9:52 PM
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Trading suggestions
A few of the "subscribers" have requested that I post some of my "trades" I'm sorry to say my method of investing is going to be very boring to most. Here are my 2 trades. I buy and hold silver and gold. The actual metals. When I get a COT long signal I normally buy the Q's or the SPY and hold till I get a COT sell signal. When I get a sell signal I short the Q's until I get a buy signal. Pretty boring, but then again I'm not really looking for excitement I just want to make money. Actually I want to spend as little time thinking about investing as possible. (I should have thought of that when I started this blog). I do enjoy helping others learn investing though so I don't mind that much. You could also substitute the the Diamonds for the Q's or spiders. Every once in a while I will take a trade in an individual stock. When I do, I use deep in the money options with a delta of 85 or greater. SLW is just such a trade. If an investor wants to trade individual stocks my suggestion would be to go long commodity plays as long as the COT is in long mode and exit when the COT gives a sell signal. In case anybody hadn't noticed we are in a long term commodity bull market. Joel Greenblat has a great site for finding undervalued stocks. Coincidentally most are commodity plays. here is his site for any who are interested.
Posted by Gary at 9:22 PM
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Saturday, May 19, 2007Trendlines?
http://bp0.blogger.com/_V7Pddp58Py0/Rk7f2YRL0hI/AAAAAAAAAGM/49jKG-OTltI/s400/trendlines.png I'm going to show you the problem with drawing lines on a chart. I've often seen these trendlines used as a reason why the rally is or has topped out. As if somehow the stock market, which is just humans buying and selling stocks, are supposed to know that a line on a chart is bumping up against another line drawn on a chart and therefore they should quit buying. Trendlines get broken during bull markets. Another reason I follow the COT report. I'll look for this rally to be done when the big boys start selling not when a line on a chart touches another line.
Posted by Gary at 4:29 AM
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Friday, May 18, 2007weekly market summary
http://bp3.blogger.com/_V7Pddp58Py0/Rk5Y9IRL0dI/AAAAAAAAAFs/mSLR5lOl9QI/s400/dow.png
http://bp0.blogger.com/_V7Pddp58Py0/Rk5Y9YRL0eI/AAAAAAAAAF0/V-4vqqzQypI/s400/ndx.png
http://bp0.blogger.com/_V7Pddp58Py0/Rk5Y9YRL0fI/AAAAAAAAAF8/803cm7kCcNA/s400/spx.png
http://bp1.blogger.com/_V7Pddp58Py0/Rk5Y9oRL0gI/AAAAAAAAAGE/uZ5-Fdr_gQU/s400/trans.png
Well with all the negative hype in the media this week the market did just what many expected, it was up strong. I suspect this will continue. Believe me CNBC knows that the longer they can keep the public out of this market the longer this rally will last. I had to laugh when I saw that Eric Bolling on Fast Money was short Nasdaq and S&P futures. I'm going to take a guess and say he owns 1 of each just so they can post it in the full disclosure. This is one smart trader and he knows you let profits run. I really don't think Eric Bolling will be trying to play the amatuer's game of picking a top. On to the markets. All the indexes are looking very strong. I don't see any divergences in momentum or money flows yet. Of course if you've been following the blog you know that the direction of the big money via the COT report trumps everything else (at least for me) They're still long BTW. Another important consideration is that the Transports are also participating, a Dow Theory plus. All in all I just don't see any cracks in this bull yet.
Posted by Gary at 6:46 PM
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COT report for May 18
The S&P futures are still long.
For any who would like updated spreadsheets and in depth analysis e-mailed every week just use the link under my profile to send me a request. The donation is optional if you feel my efforts help you in your investing and it's worth it then I'm glad I've been able to help. If your a college student on a budget then it's my donation to your education :)
Posted by Gary at 12:43 PM
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GLD
http://bp1.blogger.com/_V7Pddp58Py0/Rk2jP4RL0cI/AAAAAAAAAFk/48XFQt7IfgI/s400/gld.png
Gold is getting oversold. As you can see from the chart over the last year this has been a pretty good level to buy at. Very bullish that it is getting oversold and still holding above the 200 DMA
Posted by Gary at 5:59 AM
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Whats more important? Making money or being right.
Mark Hulbert is right on target with this article. I can tell you from experience that most people would rather for you to be wrong telling them what they want to hear rather than be right telling them what they don’t want to hear. And don’t dare change your mind about a market opinion or strategy. That makes people uncomfortable. And people would rather be comfortable than make money. Again I would urge investors to turn off the TV and quit trying to find bearish blogs to confirm their opinion. Just trade what's right in front of you. This is the strongest bull market since 99.
Posted by Gary at 5:10 AM
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Thursday, May 17, 2007The cause of recession
http://bp1.blogger.com/_V7Pddp58Py0/RkyuSIRL0bI/AAAAAAAAAFc/JOI_lQjBkJ0/s400/oil.png Ever wondered why the real estate bubble popping hasn't caused a recession yet? The media and quite a few bloggers can sure make it sound like it should. The thing is that sub prime mortgages although certainly a problem for some don't affect that much of the population. Oil now is a whole n'other story altogether. The popular belief is that the Fed tightened in 2000 and burst the bubble and sent the economy into a mild recession. Certainly a factor. However one small fact that no one seems to notice is that during that time oil almost tripled in a year. Energy is required by everyone, it's the life blood of an economy. When the price spikes rapidly it sends a shock wave through the economy usually leading to a recession down the road. As long as it rises gradually all is well. Kind of like putting a frog in a pan of warm water. As long as you turn up the heat slowly he will sit right there and boil to death. However if you throw him in the boiling water right off the bat he'll jump right back out. I've said this before, the problem with printing money is it causes inflation. Unless the Fed can figure out a way to keep all that money out of the commodity markets especially oil we're going to have a problem on our hands down the road. We had severe inflation problems and several recessions in the 70's and 80's along with several oil shocks. We we're fighting the Vietnam war and trying to pay for it by printing money. See a pattern here. So keep an eye on oil if we see a spike to $90-$100 this year then bad things could be just around the corner.
Posted by Gary at 12:33 PM
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Wednesday, May 16, 2007Irrational Bull Market?
http://bp1.blogger.com/_V7Pddp58Py0/RkvKBYRL0ZI/AAAAAAAAAFM/B20BxHQVMQU/s400/spx+2007.png
http://bp2.blogger.com/_V7Pddp58Py0/RkvKBoRL0aI/AAAAAAAAAFU/Vj3b8SIAXZg/s400/Nasdaq+1999.png There seems to be a preoccupation with how many days the market has been up vs. how many days down and somehow this is irrational hense the big correction is right around the corner. Compare the chart of the Nasdaq in 1999 & 2000. 19 up weeks to 2 down weeks. The Naz gained roughly 80% in 4 1/2 months. Most of the companies in the index weren't even profitable. That is irrational. Now compare the S&P which is up about 23% in 10 months. Dominated by financials and energy stocks that are making money hand over fist, I'm not sure how the word irrational can be used to describe this market.
Posted by Gary at 8:18 PM
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Wednesday, May 16, 2007Trannies Point and Figure chart
http://bp1.blogger.com/_V7Pddp58Py0/Rkt4mYRL0YI/AAAAAAAAAFE/Inpt3S-tK_c/s400/Trans.png Trannies also in a powerful bull market. Might I suggest that you turn off the TV and quit searching for bearish media articles and instead just trade what's right in front of you. There will be plenty of time to be bearish, just not now.
Posted by Gary at 2:32 PM
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Dow Point and Figure chart
http://bp2.blogger.com/_V7Pddp58Py0/Rkt2GoRL0XI/AAAAAAAAAE8/YmsMiqPWJFM/s400/dow+pF.png After making a long tail up the Dow consolidated back to the 13250 box and since has broken out to the 13450 box and looks poised to put another x in the a 13500 box possibly tomorrow. This is an incredibly powerful bull, fight it at your peril.
Posted by Gary at 2:21 PM
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Runaway move continues?
http://bp1.blogger.com/_V7Pddp58Py0/RksvrYRL0WI/AAAAAAAAAE0/j-_hx2tW0OY/s400/runaway+2.pngUnless the S&P breaks down from here it appears that the runaway move is continuing with another "typical" 25-30 point correction.
Posted by Gary at 9:20 AM
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Gold
http://bp1.blogger.com/_V7Pddp58Py0/RksH_YRL0VI/AAAAAAAAAEs/QXdLcjyKn3U/s400/gold.png
The precious metals bull seems determined to wear out as many investors as possible. Those who could hold on thru the last similar period were rewarded by watching gold rocket from $450 to $725. Nobody ever said riding the bull was easy.
Posted by Gary at 6:29 AM
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Tuesday, May 15, 2007COT sell signals
http://bp1.blogger.com/_V7Pddp58Py0/Rkp5CoRL0UI/AAAAAAAAAEk/_B5IrST1w1U/s400/S%26P+divergence.png I've added the COT sell signals to the chart so you can see how the commercials usually lead any correction by at least several weeks. As you can see on the weekly chart all the corrections have been associated with money flow and momentum divergences, usually both. Also excess optimism as evidenced by penetrating the upper Bollinger band and overbought RSI levels. Until I get a sell signal from the big boys I've got to view any pullback as a buying opportunity. We are in such a strong bull leg and coupled with an extremely strong COT long signal that shorting before a COT sell signal seems very dangerous to me.
Posted by Gary at 8:21 PM
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Q Bollinger Band crash trade
http://bp2.blogger.com/_V7Pddp58Py0/RkpQj4RL0TI/AAAAAAAAAEc/gQWYrT8Xj4Q/s400/bb+trade.png There seems to be some interest in short term trades so I'll post another one. This one is similar to the VTO trade and can also be used for quick front month options plays. The rules: Any time the Q's close below the lower Bollinger band (10day, 1.9 standard deviations) buy on the open the next day. Close the trade on any daily close that's profitable or after 15 days which ever comes first. This trade is also profitable about 98% of the time. Also could be a good entry for long COT positions. Just about any weakness tomorrow should activate this trade. Just another sign that the Q's are starting to get very oversold on a short term basis.
Posted by Gary at 5:29 PM
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VTO Trade
http://bp3.blogger.com/_V7Pddp58Py0/Rkoo-n9lDwI/AAAAAAAAAEU/Smvk0pYxezc/s400/VTO.png The rules for the VTO trade are very simple whenever the Q's close with the 5 day RSI below 30 buy long and hold till the RSI closes above 50. This trade could be used with front month options as they are now priced in penny increments. You can either buy at the close or on the open the next day. I doubt that in the long run it will make much difference. If we do get a close below 30 in the next day or so I will be using the signal to add a bit of leverage to my long position. I will close when the COT tells me to sell.
Posted by Gary at 2:40 PM
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Monday, May 14, 2007Keep it Simple
http://bp1.blogger.com/_V7Pddp58Py0/RkkQhX9lDtI/AAAAAAAAAD8/hfX5i8F6GMY/s400/piggies.png
http://bp2.blogger.com/_V7Pddp58Py0/RkkQhn9lDuI/AAAAAAAAAEE/F9W6ArAdzjY/s400/piggies+2.png
http://bp3.blogger.com/_V7Pddp58Py0/RkkQh39lDvI/AAAAAAAAAEM/EkQhim3dkdY/s400/piggies+3.png Here is a very simple way to determine whether I want to be long or short an index or stock. First thing I do is look at the Point and Figure chart. I want to make sure its in a strong uptrend . Secondly I want to know what the price objective is. Normally I would use a close say 2 boxes below the uptrend support as a stop loss. As long as the price objective is at least 3 times as large as my risk then I would consider the odds in my favor to take the trade. Of course there may also be logical stop loss areas other than the uptrend line on the point and figure chart. For the BKX I would say any close below the Mar 13 low would probably be a logical stop. Next I bring up a weekly chart. Now if I can stand on the other side of the room and tell that the 3-4 year trend is up and the asset is above the 40 week moving average so far so good. Last and least important I will look at the daily chart to see if the stock or index is still making higher highs and higher lows. You can play reversals but you will have to withstand larger drawdowns. I just prefer to have the momentum already heading up myself. Pretty simple. Of course all of this is dependant on having a current COT long signal.
Posted by Gary at 6:43 PM
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Anatomy of a commercial long signal
3/20/07 4783/ .90 %
3/13/07 32718/ 1.16 %
3/6/07 36648 /3.96 %
2/27/07 45724/ 8.03 %
2/20/07 44756 /9.04 %
2/13/07 47003/ 9.94 %
2/5/07 52667 /10.03 %
I've extracted the pertinent data from the COT report from 2/5 to 3/20 during which time the commercials flipped to a long position. As you can see on Mar. 6 the combined net of both the large and e-mini contract showed a huge drop from 8.03% to 3.96%. This was signaling that something big was happening. 2 weeks later on Mar. 20 the large contract confirmed this move by dropping from -32718 to -4783, a huge one week move.
Posted by Gary at 1:36 PM
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Too much negative sentiment
http://bp2.blogger.com/_V7Pddp58Py0/Rkh0r39lDsI/AAAAAAAAAD0/tvAWUvhoAuQ/s400/big_sent.jpg There's still way to much negative sentiment. The time to get worried is when the bullish side of this pie chart is at 45-50%.
Posted by Gary at 7:38 AM
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China
http://bp1.blogger.com/_V7Pddp58Py0/RkhIyn9lDqI/AAAAAAAAADk/nkjLezD08LU/s400/SSEC.png
http://bp2.blogger.com/_V7Pddp58Py0/RkhIy39lDrI/AAAAAAAAADs/AQCF5tpK6GQ/s400/DOW+1900-1950.gif The Shanghai market has reached its price objective on the point and figure charts. So a couple of outcomes are possible. It could crash. This seems to be the popular opinion. However it could also trade sideways for an extended time. This is a scenario that no one seems to be considering. As you can see in the second chart after the devastating bear market ended in 1932 the Dow took off for a 300% gain. So the Chinese markets rise isn’t all that atypical following a severe bear market. Granted the Chinese market didn’t lose 89% of its value like the Dow did in the 1929 crash but it did lose 55%. That’s a pretty severe bear market by any measure. At the time the US was poised to start its run to become the economic superpower of the world. I think China is sitting in the same position as the US was coming out of the great depression. Will they have setbacks? Of course they will but I think in the long term China is just beginning.
Posted by Gary at 4:31 AM
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Sunday, May 13, 2007To trade or not to trade a bull
http://bp0.blogger.com/_V7Pddp58Py0/Rke2nn9lDnI/AAAAAAAAADE/NG8bOZsIblQ/s400/start+of+bull+market.png I'd like to show an example of why I don't try to trade in and out of a bull rally. What we're looking at here is the intial upleg out of the Mar. 03 bottom. The start of this bull market. Now if I was just using technical analysis I would have gotten knocked out of this bull run prematurely. Notice there were many divergences during this rise and one time when the market appeared to be ready to roll over and start making lower lows. If an investor only used TA he would have missed a good part of the nearly 30% run. Sure some can day trade in and out and lock in some profits. However I'm after bigger fish than that. As I've mentioned before the average upleg for final legs up in bull markets is 34%. So until the COT tells me to get out or the Point and Figure price targets are hit then I won't be doing something dumb like loosing my position. In strong bull moves the market can quickly get away from you if you're not in. I've mentioned this about PM before also. The PM are a lot more volatile than the S&P so it's even more important to establish a position in the metals and then just hold on.
Posted by Gary at 6:06 PM
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Saturday, May 12, 2007Runaway Moves
During a runaway move like we experienced from July of last year till Feb 27, notice that all the minor corrections were roughly the same size, about 30 points. We appear to be continuing that move. Again so far the minor corrections are uniform in size about 25-30 points. We want to watch for a correction that exceeds this size by say 20%. Once that happens the odds are good that the trend has changed. However notice how the angle of assent has steepened. We are now starting what looks like a parabolic run north. This is the kind of market action that will bring in the public. I think Feb. 27th was the last serious correction for this bull market. At this time as long as this runaway move continues I have a feeling it won't be long till the public starts to pile in. At the moment I'm hearing and reading quite a bit of negative commentary about how the market needs to take a break. This is not what you hear at market tops. As long as I'm hearing this kind of talk on CNBC I'll know the rally is still intact. Soon though I suspect we will start to hear more and more reasons why this time is different and because of such and such reasons this market is only just getting started. This will be pure BS. This is human nature at market tops. Greed and hope take control and we invent reasons for and why our good luck will continue indefinitely. Does anyone remember all the crazy excuses for why the real estate market was not a bubble and why we had reached a permanently high level that would perhaps level off or slow down but would never in a million years go down. Well if I'm not mistaken real estate is going down. Like I said pure BS. So lets make some money on the way up but lets not lose sight of what is really happening here. Human emotions are starting to over ride common sense.http://bp2.blogger.com/_V7Pddp58Py0/RkaPAX9lDmI/AAAAAAAAAC8/6srBwZx4Ze0/s400/runaway+moves.png
Posted by Gary at 9:05 PM
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Are the Q's rolling over?
http://bp3.blogger.com/_V7Pddp58Py0/RkZPon9lDkI/AAAAAAAAACs/lr00lATryQU/s400/daily+Q%27s+1.png
http://bp3.blogger.com/_V7Pddp58Py0/RkZPon9lDlI/AAAAAAAAAC0/m7dqabkbPww/s400/daily+Q%27s+2.png
Quite a few people have mentioned that the Q's are rolling over. On the short term chart that does appear to be true. However after looking at the second chart you can see the hazard of projecting into the future what you want to happen.
Posted by Gary at 4:34 PM
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Saturday, May 12, 2007Point & Figure Charts
http://bp2.blogger.com/_V7Pddp58Py0/RkXKCn9lDWI/AAAAAAAAAAs/ziiHNSZLfCA/s320/P%26F+Q%27s.png
http://bp3.blogger.com/_V7Pddp58Py0/RkXKC39lDXI/AAAAAAAAAA0/npH3qkV4gyE/s320/P%26F+SPY.png
http://bp3.blogger.com/_V7Pddp58Py0/RkXKC39lDYI/AAAAAAAAAA8/xpQjCn23q00/s320/P%26F+Dia.png
http://bp1.blogger.com/_V7Pddp58Py0/RkXKDX9lDZI/AAAAAAAAABE/IC6l49a9tn4/s320/P%26F+slv.png
http://bp2.blogger.com/_V7Pddp58Py0/RkXKDn9lDaI/AAAAAAAAABM/ccN575sEodY/s320/P%26F+Gld.png
I like to watch the Point and figure charts as they elimanate the daily noise and the support and resistance levels are clearly defined. During strong bull markets the price objectives are often met.
Posted by Gary at 7:03 AM
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Divergences
http://bp0.blogger.com/_V7Pddp58Py0/RkXHIH9lDVI/AAAAAAAAAAk/JMrjwMWM950/s320/divergences+2.png
All intermediate tops so far have been accompanied by divergences in momentum and money flows. That's not to say that this time won't be different and that the market couldn't just fall apart next week. However since no one has a crystal ball the best we can do is see what has happened in the past and plan accordingly. Right now the odds are saying that this rally still has a ways to go. The COT is also saying in no uncertain terms that this rally still has a lot of legs left.
Posted by Gary at 6:51 AM
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Friday, May 11, 2007COT report for May 11
The COT report for this week showed another increase in the net long position for the commercials. The combined net as a % of total open interest remained roughly the same as last week. Another interesting development, 5 more players jumped on the long side and only 1 more short was added. The commercials continue to build larger net long postions as the market goes up. This is very unusual and extremely bullish as the commercials are regression to the mean traders and normally increase their shorts as a hedge against a rising market. I really don't expect to get much of a correction in this market until the big boys start to short heavily again.
Posted by Gary at 8:53 PM
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General trading Rules
General Guides
1. Beware of acting immediately on a widespread public opinion. Even if correct, it will usually delay the move.
2. From a period of dullness and inactivity, watch for and prepare to follow a move in the direction in which volume increases.
3. Limit losses and ride profits, irrespective of all other rules.
4. Light commitments are advisable when market position is not certain. Clearly defined moves are signaled frequently enough to make life interesting and concentration on these moves will prevent unprofitable whip-sawing.
5. Seldom take a position in the direction of an immediately preceding three-day move. Wait for a one-day reversal.6. Judicious use of stop orders is a valuable aid to profitable trading. Stops may be used to protect profits, to limit losses, and from certain formations such as triangular foci to take positions. Stop orders are apt to be more valuable and less treacherous if used in proper relation the the chart formation.
7. In a market in which upswings are likely to equal or exceed downswings, heavier position should be taken for the upswings for percentage reasons - a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100%
8. In taking a position, price orders are allowable. In closing a position, use market orders."
9. Buy strong-acting, strong-background commodities and sell weak ones, subject to all other rules.
10. Moves in which rails lead or participate strongly are usually more worth following than moves in which rails lag.
11. A study of the capitalization of a company, the degree of activity of an issue, and whether an issue is a lethargic truck horse or a spirited race horse is fully as important as a study of statistical reports.
Technical Guides
1. A move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move. Generally, when the second move from the sideways range has run its course, a counter move approaching the sideways range may be expected.
2. Reversal or resistance to a move is likely to be encountered:
- 0n reaching levels at which in the past, the commodity has fluctuated for a considerable length of time within a narrow range
- On approaching highs or lows
3. Watch for good buying or selling opportunities when trend lines are approached, especially on medium or dull volume. Be sure such a line has not been hugged or hit too frequently.
4. Watch for "crawling along" or repeated bumping of minor or major trend lines and prepare to see such trend lines broken.
5. Breaking of minor trend lines counter to the major trend gives most other important position taking signals. Positions can be taken or reversed on stop at such places.
6. Triangles of ether slope may mean either accumulation or distribution depending on other considerations although triangles are usually broken on the flat side.
7. Watch for volume climax, especially after a long move.
8. Don't count on gaps being closed unless you can distinguish between breakaway gaps, normal gaps and exhaustion gaps.
9. During a move, take or increase positions in the direction of the move at the market the morning following any one-day reversal, however slight the reversal may be, especially if volume declines on the reversal.
Posted by Gary at 8:47 PM
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Blog Archive[*]▼ 2009 (53) [*]▼ March (16) [*]Bull vs. Bear[*]Here we go![*]I want to continue my thought process from yesterd...[*]What just happened?[*]Scary you out or wear you out[*]Is it time for the financials to bounce?[*]4 day rule[*]Is the Fed going to do it two times in a row?[*]spam blocker[*]Where to play the rally?[*]Tricky period ahead[*]Gold update[*]Bottom????[*]The market still tied to the dollar[*]QQQQ BB crash trade[*]The mining stocks are starting to decouple[*]► February (18) [*]gold popularity[*]Dollar breakout[*]Silver or gold?[*]Is gold topping?[*]SPX Bollinger band crash trade[*]Golden sentiment[*]"Old Turkey"[*]When the time comes[*]Miners are on the move[*]Crash again?[*]Find the trend[*]gold sentiment and the dollar[*]Dow Theory[*]Oil vs. gold[*]Watch the dollar[*]Stuck again[*]Gold[*]Not a good sign[*]► January (19) [*]Confused yet?[*]Gold long term chart[*]Will we ever regress to the mean[*]Gold:XAU ratio in buy zone[*]Is the golden bull back?[*]The banks went too far too fast[*]Dow Theory nonconfirmation[*]Something for nothing[*]The most important chart[*]possible 1-2-3 reversal[*]Gold[*]Dollar rally back on[*]60 minutes on oil[*]Sell treasuries[*]Unemployment is good[*]"Inflation is coming, inflation is coming"[*]► 2008 (232) [*]► December (24)[*]► November (17)[*]► October (17)[*]► September (25)[*]► August (18)[*]► July (22)[*]► June (18)[*]► May (18)[*]► April (18)[*]► March (13)[*]► February (17)[*]► January (25)[*]► 2007 (258)
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Putting http://321gold.com/images/happy.gif into the precious metals : Home : Links : World Indices : Editorials : Legal
Sunday, Mar 22, 2009 04:40 AM EDT London Fix : COMEXhttp://www.321gold.com/ads/new/rocher.gif www.northernfreegold.com%2F&id=170]http://www.321gold.com/ads/new/northernfreegold.gif www.mirandagold.com%2F&id=208]http://www.321gold.com/ads/new/miranda.gif http://321gold.com/images/b_gold_silver_dollar.gif ... "That Movie" is back by popular request ... here
http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif .
Mar 23 Crisis Systemic failurePatrick J. Buchanan Buchanan
Mar 20 Crisis The Mother of all BellsPeter Schiff 321gold
Mar 20 $$$ Money & Bread!Puru Saxena 321gold
Mar 20 GOLD New Gold UplegAdam Hamilton 321gold
Mar 20 QE Central banks unleash the Nuclear OptionGary Dorsch 321gold
Mar 20 --> Bernanke Inserts Gun In MouthKarl Denninger 321gold
Mar 20 AIG Larry Summers & the Politics of DeflectionWilliam Engdahl 321gold
Mar 20 $$$ A Test of WillsJohn Browne 321gold
Mar 19 --> Pancho Villa rides againBob Moriarty 321gold
Mar 19 $$$ The Mother of All Depressions (MOAD)Bob Moriarty 321gold
Mar 19 Gold Buying Opportunity of a LifetimeDarryl Robert Schoon 321gold
Mar 19 Gold & Treasury Feeder SystemJim Willie CB 321gold
Mar 19 $$$ Caution On Quantitative Easing (QE)Karl Denninger 321gold Must Read
www.321gold.com%2Feditorials%2Fschultz%2Fschultz062907_hsl.html&id=76]http://www.321gold.com/editorials/schultz/hsl_kiss.gif---> lots more here click
www.caseyresearch.com%2Fcrpmkt%2FcrpSolo.php%3Fid%3D129&id=232]http://www.321gold.com/ads/casey/casey032009.gif Mar 13 --> Steal MeBob Moriarty 321gold
Mar 11 LOL The Office BitchBob Moriarty 321gold
Mar 06 L@@K In ProductionBob Moriarty 321gold
Feb 24 Minco Forecloses SterlingBob Moriarty 321gold
Feb 11 CDU Make iron while the fire is hotBob Moriarty 321gold
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Mar 09 SPECIAL SKI REPORT #51: True Gold Stock Bull Obtained? Jeff Kern 321gold
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$$$ The US National Debt...to the Penny PublicDebt
Mar 20 HOT COTs CFTC Commitment of Traders ReportsGoldSilverPlat
Japan TOCOM Prices & Trading Volume tocom.or.jp
www.greatpanther.com%2F&id=107]http://www.321gold.com/ads/new/greatpanther.gif CHARTS --> The $US 2 x 3 Gold Privateer
CHARTS --> Monthly gold prices since 1971 in various currencies WGC
CHARTS 34yr Gold & 40-yr Silver Seasonal - Updated
CHARTS XAU :: HUI :: USERX :: USD
CHARTS Metals Futures Prices Barcharts
SOS Alternative live spot gold at INO :: TBD
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http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_4.gif Mar 19 Hawthorne [web] Updates Taurus Mineral Resource EstimateHGC
Mar 19 Northern Freegold [web] Drills 1.10m 36.18 g/t Gold, 45.35 g/t Silver...NFR
Mar 18 Gold & Gold Stocks During Periods of Deflation & InflationJordan Roy-Byrne 321gold
Mar 18 Cardero [web] Grants Nanjinzhao Extension to Pampa de Pongo Purchase AgreementCDU
Mar 18 Animas [web] Summary & Interpretation of Results to Date... ANI
Mar 18 Goldrea [web] To Advance Gold Projects...GOR pdf
Mar 18 Great Panther [web] 2008 Financial StatementsGPR
Mar 18 Palladon [web] Announces Appointment of New OfficersPLL
Mar 17 Animas [web] Featured in interview w/Mickey FulpKereport audio
Mar 17 Arian [web] Proposal to Vary the Terms of Outstanding...AGQ
Mar 17 First Majestic [web] La Parrilla Receives "Clean Industry Certification"FR
Mar 16 Pediment [web] Featured in interview w/Greg McCoachAUreport
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www.goldrea.com%2F&id=88]http://www.321gold.com/ads/new/goldrea.gifhttp://321gold.com/images/b_economy_market.gif Econ. Calendar EWI http://321gold.com/images/asia.gif AsiaPacific USD
Mar 22 Why Bail Out AIG抯 Creditors?BaselineScenario
Mar 21 Terence Corcoran: Is this the end of America?NationalPost
Mar 20 On the Edge of the VolcanoAlexander Cockburn CounterPunch
Mar 20 Economy: In the Eye of a HurricaneRichard Benson 321gold
Mar 19 Puncturing Deflation Myths - Part 2Daniel Amerman GRE
Mar 19 Firms receiving federal bailouts have unpaid taxes...CNN
---> more internal| external
BEARS: The Daily Reckoning TDR
BEARS: The One-Stop Shop for The Bear Case PrudentBear
BEARS: Daily Market Wrap Up FSO
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http://321gold.com/911/flagbutton.gif Mar 22 Former State Dept Official: Many at Gitmo Are InnocentAntiwar
http://321gold.com/911/flagbutton.gif Mar 21 Israeli Soldiers Expose Atrocities in GazaAntiwar
http://321gold.com/911/flagbutton.gif Mar 20 Is Israel off limits?CapitolHillBlue
---> more War
http://321gold.com/images/b_interesting.gif World Clock APOD Converter Fed
Mar 21 Never said it: 10 famously inaccurate quotesTimes
Mar 20 Ozzy 50c: What's the Difference?Troy Schwensen 321gold
Mar 19 US is Already Bankrupt -Puru Saxena CNBC video
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Mar 02 Escape to Grand Cayman321gold
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"The destruction of the Soviet Union was in fact one of the most counterproductive events in American history. In a world of only one superpower, there remained none left to protect us from our own delusional ambitions."
-posted by Roman Freadman on the Reality Zone. Feb 27, 2009
-> Sep 2008 Gold in the IMF click
-> Fed Funds Rate HSH
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