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Thursday, October 13, 2016


“Did I just see you pull ‘bacon’ out of the impenetrable bacon box?”
Pulling bacon out of the refrigerator for breakfast and immediately turning around to fix it, behind you like a frickin’ ghost has instantly just appeared out of nowhere, sits the dog with that look on his face of “of course, I get some of this? … Right? … Hello, you listening? … C’mon man, you’re killing me here!!” I didn’t hear him … I didn’t see him … he’s frickin’ nowhere and everywhere at the same time … genetically pre-programmed to be where bacon is.
Well certainly, the “check” cleared sometime yesterday, and like the dog, Mrs. Watanabe bid the price of gold up about $8 and change last night in Asia… “I swear, they can’t help themselves.” Shiny yellow pet rocks don’t eat bacon, but they sure as hell can be expensive.
The news out of China last night was not good for the world economy, and that has put pressure on stock indices and put a light bid under gold. What we have seen so far today [Asia into Europe and then the start of New York] has been light short covering; nobody “reaching” for offers, but the very light dips so far in price are getting bought. The $64,000 question for today is, can the U.S. equities indices [Dow30& SP500] stay above support; a close below 17,992 in the Dow30 and a close today below 2120 in the SP500, and all kinds of technical “bells & whistles” are going to go off indicating lower prices. If in fact equities do go lower today, that should be supportive of gold, but with the risk-parity funds lurking around selling asset classes based on volatility, it’s not necessarily a given.

Of course, it should be a given that the bullion banks would try and take gold lower in New York after the buying spree Mrs. Wantanabe & friends went on last night, and sure enough we got a mini waterfall to within a couple bucks of the low for the day; and then the stock indices started breaking down and gold caught a bid. Trading today directly below.

4 trades today from the algorithm; the first a couple of pennies loser after commissions [semi-rotten fill cuz I’m selling (liquidating) on the way down after the turn], and the last 3 winners that take my profit for the day above $5 per Oz. “Thank you … I’m outta here … take this shit anywhere you want, I don’t care if you take it to 1280!” Given the fact that gold has been a very “rough nut” to crack from the long side the last 3 weeks, capturing approximately $5 per Oz. feels like “limit up”!
Now, what you Newbies out there should be realizing, is that if you follow the rules of the algorithm 2 things will happen; 1) any and ALL losing or scratch trades will be insignificant in the overall scheme of things regarding your account and have a probability of occurrence of less than 3%, and 2) the accumulation of your winning trades will more than easily take care of any scratch trades or small losers. In other words, make a shipload of money without risking anything of significance in regards to the equity in your account. ALL YOU HAVE TO DO IS FOLLOW THE RULES.
And so, looking at the gold chart some 2 hours later, again for the umpteenth millionth time the aqua/red exhaustion lines at RM=1 pick the top almost perfectly. “Seriously kids, what do you want from me? Second day in a row the algo has picked the top with an exhaustion line ‘hit’; I couldn’t plan this if I wanted to.”
I remember many years ago, when I was actively doing seminars, I went through all the original algo rules and highlighted the exhaustion lines, and explained extensively the Gann ‘Square of Nine’ and how cycles work, and the key angles of the cell numbers for exhaustion hits, and then explained my work and how it all tied together, and I got a chart up on the big projector of I think the Swiss Franc, and I see a hand shoot up in the audience of some woman who has a question.
“Yea, how did you know the market would stop at the exhaustion line?” I said, “What do you mean ‘stop’ at the exhaustion lines?” She says, “Well, I’m looking at this chart and the price topped out right at the exhaustion line, so how did the line know it would stop there? What does the line know that I don’t?” And with my next response, I finally see the ‘lights turn on’ in her head. I said, “We don’t have mathematical certainty in trading; what we have is historical certainty; i.e., we can define profitable trading opportunities around historical probabilities. Whatever market algorithm you are using, the RM=1 mode will contain a top/bottom approximately 80% - 85% of the time of all exhaustion moves; RM=2 about 10%, RM=3 7%, & the RM=4 around 3%. What they represent is SPENT ENERGY IN MAKING A MARKET MOVE, and in the real world this represents ACCELERATION [not speed], and as we all know from ‘hitting the gas’ in our cars, as the car lurches forward and ACCELERATES, it uses more and more fuel. Eventually, no matter how much you push the accelerator pedal in the car, the car CAN’T AND WON’T go any faster or ACCELERATE any longer because YOU DON’T HAVE ENOUGH FUEL TO KEEP IT GOING. This is exactly how markets operate with buyers and sellers acting as the fuel. So, given these very high probabilities, doesn’t it make sense that THIS IS PRECISELY THE POINT IN TIME YOU WANT TO SELL?

“Suddenly, I can see her future as well.”
And of course, it’s at this exact moment your guts are telling you this stuff is “going to the moon Alice!” Only it ain’t, it’s the top, and if you don’t get out you sit there wondering why you were so fucking stupid to stay long … until the next time … when you do it again. Never forget why you are here … and it starts with the letter “M”.
Well, the dog got pampered yesterday much to his delight. Got his ears scratched and tummy rubbed by a throng of good looking young ladies, got some treats from the ‘doggie bar’ and then proceeded to run down an aisle, stop suddenly, and dump all over the floor. I look at him and wonder, “How do you pee 27 times a day, eat maybe a half pound of food, and then shit 5 pounds? How are you still alive?" He doesn’t care; so, he’s got some new toys for the beach today and that’s all that matters. I’m soooooooooo outta here. Until tomorrow …
Have a great day everybody!

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