Borsa MAX Borsa

Jan. 4 Weekend report Posted on January 4, 2020 by gary Unfortunately we don’t live in a world of free markets anymore. After the Great Recession the world changed. Governments started intervening in stock markets as a way to control the business cycle. If stocks are going up it’s pretty much impossible to have a recession. I think Bernanke learned this lesson back in 2012 as the stock market was rolling over and the economy began to contract. He started QE 3 and got the stock market rising again. The economy righted itself and the bull market marched on. This is about the time the currency wars began and it’s now gotten so bad that central banks virtually control the Forex market. They’ve almost completely destroyed the daily cycles, and even sentiment has for the most part become useless in trading currencies. This is why I will never trade currencies. And we all know the banks have been given free reign to manipulate the metals at will. This is the hand we’re dealt and what we have to play with in our modern markets. Some may think I’m being a bit paranoid, but my trading went to another level once I accepted what was happening and began trying to anticipate it instead of trying to ignore, or to rationalize reasons why it wasn’t happening. With that being said I think next week is a prime candidate for major government intervention. First off I think the ECB will throw everything including the kitchen sink at the euro next week and attempt to turn it back down. If they succeed the dollar will rally. If they can force the dollar back above the 200 DMA they may succeed in stopping the left translated intermediate cycle.

I also think there will be interventions in the stock market Monday morning to prevent it from falling any further. If they can push stocks to new highs it will right translate the daily cycle and that would potentially push the ICL out another full daily cycle to April or early May. This is exactly why it’s dangerous to short stocks no matter what the cycle count is or sentiment levels. We just can’t trust that normal price action won’t be derailed by government intervention. I certainly don’t want to be long with sentiment levels sky high and price stretched far above the long term moving average, but I’m not going to fight the central bank printing press and assume we have to correct just because it’s time, or because sentiment is extreme. The central bank printing press doesn’t care about cycles or sentiment. Now if I’m right about a major currency intervention and stock market rescue, then metals may be set up for a serious attack as well. To be fair it is getting late in the daily cycle anyway (day 36 on Monday) and gold will be due for a DCL pullback naturally. I was only looking for a marginal break above $1565 before the cycle topped naturally, and we are within about $10-$15 of that level at Friday’s close. So maybe we should just look at this as being “close enough” and “time to control greed”. But the fact that the miners were attacked all day Friday as gold rallied over 1.75% is a big red flag IMO that there may be bullion bank manipulation on top of a normal DCL decline ahead for gold. A perfect storm of euro smash and stock market rescue coupled with gold being late enough in the daily cycle to be due for a natural correction anyway and it’s not out of the question that the bullion banks might be able to erase the rally of the last two weeks and smash gold all the way back down to the 10 WMA during the DCL.

This would stop the squeeze and allow them to exit some of those huge short positions. Bottom line: My spidey sense is tingling. I see the potential for multiple government and central bank interventions next week. Usually when I ignore my spidey sense it comes back to bite me so I’m going to take some precautions. This is why I posted the metal strategy on Friday. So while it’s not out of the question that gold could still rally enough to marginally break above $1565 before starting the DCL, it’s late enough in the cycle and there are warning signs that make me think the correct strategy at this time is to take down leverage and ride out the next week or two in unleveraged ETF’s just to be safe. If gold does continue higher we’ll at least have an unleveraged position and we’ll still make money. If it is attacked early next week and the bullion banks do succeed in crashing gold back to the 10 WMA it will be a lot easier to ride out if one is unleveraged. You’ll watch some of your gains given back but not nearly all of them. Then once we get a sign the DCL is finished we can covert back to leverage, and by the time price is back at the highs we will have a lot more money in our accounts. This is exactly what I’m doing in my challenge portfolio. I took profits on JNUG and converted to GDXJ. I also had big gains in my personal portfolio which was in GDX long dated options. I went ahead and locked up those profits on Friday right after I posted the metal strategy. I had plenty of time to weather the DCL, but there’s no sense letting the banks steal a big chunk of my profits if that’s what they are planning. A DCL should knock the bullish percent levels back down a bit as well. They’ve pushed to rather high levels. That’s because many stocks have rallied big coming out of the ICL. The ETF’s on the other hand have been suppressed so we end up with the odd contradiction of a high bullish percent but rather tame ETF’s.

So I think it’s time for a little caution for the next week or two. We made good money on our metal positions. There’s no need to get too greedy and allow the bullion banks to take away a big chunk of those gains if that’s what they are planning. Let’s be happy with our gains for now and plan to get aggressive again once we get a recognizable 1st DCL. Gary