666 & 888

Today's intraday high of 888 puts this rally in second place for all time greatest bear market rallies in history. Only the bounce out of the 29 crash was greater. How ironic would it be if the rally started at 666 and ended at 888?

I'm back

I'm back and sort of in one piece :-) After a much needed vacation, I'll be back on schedule starting tomorrow.

Monday Apr. 27th

Just a couple of quick comments before I head back down to the Canyons.

I'm beginning to think that Monday may have marked the last daily cycle low and the short term rally we are seeing may end up being a failed and very left translated daily cycle. We'll just have to see how it plays out as we are still in the timing band for a daily cycle low.

The swing low today on the dollar probably did mark the most recent cycle low. If the dollar continues higher from here it's going to add pressure on the stock market. As if all the negatives I've gone over for the last couple of weeks aren't enough?

It's hard to see in the chart but MACD has now crossed over and is heading higher for gold while the opposite is true for the S&P. I've got to say I would rather buy into a correction that's running out of steam (gold) than a counter trend rally that's starting to fade (S&P).

Finally a look at the gold bull from the beginning. I've shaded the first two phases of the bull market. I think there's a good chance gold is just now starting the third speculative phase. Once gold closes back above $1000 I think it's going to be game on, so to speak.

One thing I did want to point out was the size of the last two C waves. Both were proportional to the preceding consolidation and both lasted at least a year. Notice that both also formed a midpoint consolidation about half way thru the rally. I suspect we will see something similar this time to.

The size of the current consolidation suggests this C wave should take gold to $1500-$2000.

One can fight with the bear market in stocks if they are so inclined but the easy money will always be to just take a position in a bull market and hold on.

Personally I have no desire to try and second guess the volatile swings in the stock market to make tiny profits (if I'm lucky) when I can get rich by just taking a position in the gold bull and holding on.

Heck its a lot more relaxing being outside climbing everyday while I let the bull do it's thing than glued to my computer trying to scratch out a dollar here and there fighting with a bear market.

Besides I guarantee that market timers, even the really good (or more likely lucky) ones are never going to make even a fraction of what one will make by just riding a bull market to completion.

Still climbing

I'm still in UT climbing and currently planning on returning Wed. If I get back early enough I will try to get an update out to subscribers Wed. evening. If not I will be back on schedule Thurs.

I am going to have access to a public computer for most of the day today so I will be able to answer emails and I may post a comment after the market closes today if there's anything worth saying that I didn't already say this weekend.

stocks

As I said in the previous post I'm having too much fun to come home. Seriously, only an idiot would think this is fun, but I do and apparently I am. I may stay an extra day or two as the weather and climbing partners are excellent. The fact that I'm knocking off project after project is also making it difficult to head home right now :-)

Continuing on to the stock market. The first thing I want to mention is the selling on strength data has now reach -620 million. Granted this isn't always a perfect timing mechanism but this kind of selling has almost always led to an intermediate top in the past.

Add to this the fact that insiders are selling 8 times as much stock as they are buying. The current level of insider buying is the lowest in 17 years. If this was the beginning of a new bull market one would think that corp. insiders would be buying stock hand over fist.

Lowry's also is not confirming this rally. Selling pressure spiked higher on Monday's 90% down volume day. Despite the continued rally into Friday, selling pressure is not backing off and buying pressure is not picking up.

I've noted on the third chart that we now have a weekly swing high in place on the S&P. This is one of the first signs to look for at an intermediate top. That being said I wouldn't be surprised if the market were to break through 875 early next week to soak up all the buy orders sitting at that level before rolling over.

We also have a potential 1-2-3 reversal in progress. A failed move to new highs on Monday would signal a 2b reversal. Something to watch for at Mondays close

Needless to say I think any break above 875 is going to be a false break. At the moment I'm leaning towards the counter trend rally out of the March lows either being over or very close to over at this point.

It looks like the market is being held up by the dollar declining into the daily cycle low. That low is due within the next 2 to 3 days. If the dollar continues to rally out of that bottom I think we will have the top for the stock market.

Almost all the short term indicators are again overbought. That also doesn't bode well for continued strength in the days ahead.

Shorts should probably continue to hold. As a matter of fact I think shorts would probably be advised to hold till we get the next weekly cycle low later this summer or or early fall. I don't expect this to roll over quickly to new lows by any means but we probably have seen or are very close to the final top of this rally price wise anyway.

gold

I may decide to stay a few more days so I'm going to put the weekly report on the blog this week. Granted this will be a condensed version as most subs already know what we are watching.

As I noted the other day gold completed the 1-2-3 reversal on Thursday. I've also included a weekly chart. Not only did gold bounce off the 75 week moving average, it also completed a weekly swing low. Actually gold completed a weekly swing low last week.

This was one of the things we've been waiting for as a signal that the weekly cycle had bottomed. I'm also leaning toward this signalling the B wave bottom. If this turns out to be the case then gold should now be entering the next C wave advance. I suspect this will ultimately turn out to be a massive rally. The size of the consolidation from March 08 has become extremely large. WD Gann noted that the size of the consolidation is often indicative of how large the ensuing rally will be.

I expect this one to be huge and probably last at least into the fall if not spring of next year.

This is the time to reread Old Turkey as I suspect quite a few investors are going to lose their position during this rally. Remember bull markets get overbought. Then they get more overbought. Oscillators are not going to be our friend during a C wave rally.

Subscribers know what to look for before taking profits on mining positions. At the moment neither of our two signs are anywhere near the "take profit" level and I doubt they will be for at least a couple of months and probably not for many months. Hopefully this rally can drag out long enough to put us into the long term capital gains bracket before we get the sell signal.

A quick word on the miners, which is where we want to be invested instead of actual gold and silver, as the miners are still hideously undervalued.

The move on Friday suggests that the breakdown from the coil was indeed a false move as expected. We should now see a much stronger and more lasting move in the opposite direction. I expect the miners will make new highs for the move in the coming weeks.

I don't have access to my spreadsheet at the moment but a quick glance at the current COT report suggests that the Blees rating on silver is in the low to mid 90's this week. I can tell you from past experience there's no way I want to be selling silver or anything related to silver when the Blees rating is that high.

There will be no changes to the portfolio this week and I kind of doubt there will be anytime soon.

Just a quick post from the road.

So far it looks like the market is still working it's way down into the daily cycle low.

Gold's close above $900 today completes the 1-2-3 reversal that I mentioned in Mondays update.

I'm planning on returning Monday in time to get out a Monday update.

In the meantime I'm having fun hanging off the cliffs :-)