Buy Wholesale, Sell Retail. Repeat.

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This happens over and over again. It's incredible.
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Thank you True Strength Index (TSI) indicator.

S&P 500 - Cover Your Ears

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I was taking a walk in the forest this morning, enjoying the pleasant tweeting of birds and musing at the occasional squirrel that would flitter by, when my eyes caught a glimpse of men, far off in the distance, wearing red flannel shirts and heavy blue overalls. The more I strained to see them I began to hear the faint sound of a chain saw......and saw some gray smoke kinda floating in the air beside them. Hummm.... I guess they are loggers - earning a day's wage cutting down the beautiful tall evergreen trees in the forest.
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But as I neared closer to them, I began to make out their faces. Gee, they looked familiar.
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I've see these guys before. Somewhere. I just know it. But I am just not sure where.
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They kinda remind me of this bunch of institutional money managers I once watched at the floor of the NYSE. Nah.  Could not possibly be the same guys. Impossible.
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The sound of the chain saws grows louder as I continue nearer.  Then, all of the sudden, the sound just stops. Curious.
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Incredible - the men are covering their ears with their hands. I see several crouching down, others scurrying to take cover behind their huge truck. Heck, what is going on?
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Maybe a tree is about to fall?
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Yes, I'll betcha that's it!
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Then I hear a loud cry from the man with the shiny gold hard hat - he obviously does not do any work as his hands are too clean, his clothes too perfectly pressed.
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Timberrrrrrrrrrrrrrrrrr!!!!!!!!!!

Gold's Expected Crawl and TSI (25,13)

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I just wanted to write a quick post this evening to call attention to a couple of subtle phenomenon of gold's intermediate cycle conclusions. We should be able to use this knowledge to help ride this bull down to the bottom of this correction and jump back on the long side of the A-wave.
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Before I get to these two phenomenon, I just wanted to express what my study of gold in the past few weeks has taught me.  And it is this: people's emotions, call it sentiment if you wish, lead them to act in rather predictable ways.  For us in the stock market, it's the old swing from optimism to dispair, fear to greed, and overconfidence to flight.
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In the case of the parabolic, for example, when it tops, it explodes. That is, when bullish sentiment reaches a peak and the consensus agreement is that this investment is the surest way to make easy money ever invented, the market runs out of buyers, sentiment turns to panic and the elephants cannot get out the door fast enough.  In fact, it takes several days for the smartest ones to get out....and the rest are left behind wondering what just happened....why their AGQ was $400 and in the blink of an eye it is now less than $200.
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Then, predictably, optimism is the emotional cure for disaster.  Things will get better.  And price rallies for some time as nerves begin to sooth. Sometimes, if fundamental conditions are just right, this rally can dally along for a few months - maybe even coming close to the previous high. In any event, more elephants get restless being stuck in a position that is under water, so they hold their breath and run.  Price collapses.
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What do you suppose will happen next? Well, chances are good that the elephants still in the room will figure the one's who left were traitors or some such nonsense.  Maybe even decide to double down at these good prices and wait it out.  So price creeps higher and now makes a bear flag under what was previously a reaction uptrend line.
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But going without bread and water for a long time is getting really uncomfortable.  Several days of this and some more elephants bolt for the door. Then a dozen, then a hundred. It becomes a stampede of sorts, but they cannot all get out.  And why can't they get out, you ask? Well, I don't know.  It's human nature. Maybe we could call it denial. Maybe character. Beat's me.
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So price drops precipitously but most that have been left behind manage to cling to a little line on the chart.  Like this line is going to save them or something. It's called the 50 dma. And this brings us now to where we are in the current story.
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Price will crawl along the 50 dma, maybe even close above it a day or two.  You know, it's that optimism thing, right? Everything is going to be OK. Just say that to yourself over and over again.
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Sadly, we know how the rest of the story plays out before it happens. More elephants lose optimism - having been told that story about 2 or 3 times too many already. And the final race to the door begins, and continues, until there is no one left behind who really cares. And that is the bottom in price.
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The other observation I wanted to offer in this post is the uncanny accuracy of the TSI (25,13) to get very close to the exact bottom of each intermediate correction. I encourage you to put it on your chart and see for yourself.

SOLD DAG - $12.78

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I bought and sold this DB Agriculture Double Long ETN (DAG) in about 3 hours and made 1.8%.  Nothing impressive.  I continue to think the positive divergence that gave me a small gain will assist share price higher, but I lost my interest. There are other fish to fry.
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Hey how about that ZSL today? +4.14% today with 20 minutes of trade left to go. It looks to me like it needs to take a breather, TSI wise, but I'll keep holding that trade, just the same.
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My TSI Trading Record has been updated.

BUY DAG @ $12.55

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This is just a little day trade.  I just bought DB Agriculture Double Long ETN (DAG) at $12.55. I have been eyeing various ETFs for a week or more, waiting for something to get a little too out of line. 
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I found one the other day (YINN) and couldn't quite get myself to pull the trigger.  Too bad because it was just a shade higher than $36 and now two days later it is $41.  Anyway, it had the same positive divergence as DAG has now so........
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My TSI Trading record has been updated.
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X Marks the Spot for Gold's Bottom; Silver Update

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Believe me when I tell you I entirely understand that nothing under the sun works 100% of the time in being able to fortune tell the exact movement of the financial markets. Our task as successful traders and investors is simply to do our very best at putting the odds in our favor - fully understanding we will never bat 100%, at least not for very long, and we should be very pleased when we manage to get the majority of trades to go our way.
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Having said that, I hoped it would be encouraging to some readers to again take a closer look at gold's daily and intermediate cycles. This time with an eye on the intermediate cycle top that occurs about every 6 months, and a closer look at what happens after the top is in.
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On this daily chart of the World Gold Index (XGLD) you will notice that I have used an 'X' to mark the spot of each of the recent intermediate cycle bottoms. I also used an 'X' to mark the spot where at least one daily cycle concluded before the final left translated daily cycle (which is also the bottom of the intermediate cycle).
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I'm sure you will notice the relative symmetry of the intermediate cycle tops. Kind of like clock work, don't you think? Also notice how accurately the True Strength Index (TSI) indicator nails the exact bottom usually within a single day or the very day itself.
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Finally, the three preceding intermediate cycles concluded with a left translated daily cycle. This is what we presently have as gold appears to have topped on Day 7 of a 20-28 day cycle.
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And let's take a quick look at silver. The continuous futures contract began trading a little over an hour ago. Traders were very quick to test silver and succeeded in bringing it down to $33.88 in fairly short order.
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BUY ZSL $19.05 -- Silver/Dollar Charts

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This morning I doubled my position in Proshares Ultrashort Silver ETF (ZSL) with this buy at $19.05.  A reader wrote to inquire about the possible upside on ZSL, I got to looking at it, and what I saw convinced myself to buy more.
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In considering the possibilities for ZSL I made this 6 month daily chart and noted some of my observations. At what appeared to be various possible destinations upside, I provide the corresponding low price that XSLV traded that day. I have a general idea how fast and far silver may drop from here and wanted to compare it with the possible price appreciation of ZSL.
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I also drew a trend line on the True Strength Index (TSI) indicator to assess the threat of a trend line break sell signal, and observe that the TSI is not currently making a negative divergence (that is, current TSI reading is higher than the previous high TSI reading of 0.24).
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Also, there are various moving averages that will act as resistance to upward price movement. The 50 dma appears to have been conquered. The 100 dma is overhead at about 23.71 and should ZSL make it to the 200 dma before the correction in silver ends, I estimate that resistance level to be about  39.50.

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Finally, a look at the daily charts of, on the left, the US Dollar continuous contract (DX), and on the right, the Silver continuous contract (SI). The idea is that if the dollar goes up, silver will go down and the challenge is to assess whether it is reasonable to expect this price movement to occur in the near future.
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In brief, these two charts do convince me that the upside expectation for ZSL is reasonable. The silver chart shows that the overall pattern has played out exactly as I expected and wrote about a few days ago. Namely, the parabolic rise blows up, a reaction rally creates a trend line that is finally broken to the downside.  Then a bear flag forms just under the former trend line - which is a second attempt to rally silver price. The previous trend line of the reaction rally acts now as resistance, not support, to upward price movement. Then the bear flag fails with price dropping sharply lower.
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On the dollar side, price is trying to get through the 100 dma. If successful on a closing basis there is a decent chance the dollar could make it to the blue 200 dma overhead.  If the dollar should make it all the way up to its 200 dma, that should be the bottom in this silver correction and definitely a time to sell ZSL.
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My TSI trading record has been updated.
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