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Gold Bonanza!

Le Cartel d’Or Ambushes the Bears

Sat, Sep 20, 2008 - 12:00am

Gold

In a trading Tour de Force, Danielcode clients led by Le cartel d’or and abetted by Financial Sense readers sparked the biggest Gold trading coup in 26 years when in a “man bites dog” story, le cartel proved again what I have known for years, that they are the world’s most savvy traders and not just takedown artists as many think.

In a stunning surprise, engineered while hiding in plain sight, le cartel again relied on the Daniel numbers to pinpoint the natural turning point for this market and after 4 days of accumulation they launched their attack on the shorts, all bunched and looking complacent around the 825 and 860 numbers. Panicked and mauled shorts were forced to close out at higher prices eventually driving the December contract to its DC retracement at 926 on Thursday marking the biggest one and two day rally for 26 years. A single Comex futures contract on little more than $5000 margin earned some part of a massive $188,400 in this soaring historic rout of the bears. Mini contracts are pro rata but just as sweet!

To add some spice to the punch, I published le cartel’s road map, the Danielcode weekly chart in my article for Financial Sense readers last week. Yes, you had exactly the same chart that le cartel used sitting out in the open on Financial Sense for all to see and I know that many of you took advantage of that knowledge to leg into an early position as the weekly DC Gold Trend Chart roared through its sell failure (buy) signal. I even told you that le cartel knew this important DC number.

Here is that chart unchanged apart from the price action, from when I posted it to clients a fortnight ago:

comex gold

What wasn’t published to the public (my members get first and best bite of the apple) was that our proprietary turn indicator T.03 gave buy signals for Thursday and Friday of last week so you could have had a double serve. Next is the daily members chart with the subsequent price action. On the continuous chart the retracement for the spike was at 925.20 against Thursday’s high of 926.

What else is there to say. Like the 17 March high in Gold which only the Danielcode identified for you, nobody else knew these numbers which is not surprising as the Danielcode controls all markets but some are more disciplined than others. Gold is one of the best and knowledge is power in this business.

comex gold dec 2008

Give your broker or financial adviser a call and ask if they knew that 740.20 was the high probability turn for Gold. When they say it was just a fluke (happenstance) ask them to read the rest of this article.

Every major market that I cover, 10 of them all turned within ticks of their DC numbers. Not points; ticks!

Silver

You can see that the bear trap was sprung in Gold only. Silver made the same turn with equal precision but with far less intensity. Still just as perfect if not as dramatic.

HUI

We only got a single T.03 buy signal for this market last Thursday but with the daily low 2 points through the DC number last Friday’s price action told us the signal had traction

amex gold bugs

Equities

If you knew the numbers that would control the equity indices this week you got them from the Danielcode. I don’t mean just Thursday’s number which bought in the turn but Tuesday’s low for the one day rally and Wednesday’s low as well. S&P, Dow, Russell, QQQQ, Australian SPI 200, Oil and T Bonds all turned at their DC numbers.

It made for a fun week as commentators and professionals tumbled over themselves to declare the early part of the week as an unparalleled disaster amidst extraordinary scenes of insolvent companies finally facing the reality that 30 times leverage works both ways. The worst crisis since the great depression was the most commonly used term.

It’s really quite extraordinary that the combined brain power of our best and brightest doesn’t extend to a proper understanding of true support levels. The ignorance of market truth, apparently a global market disease is staggering. In the midst of the hysteria I posted for members:

If you are getting nervous about market action, relax, breath through your mouth and enjoy. Things are going exactly as I have been telling you since December last year. Nothing is new or unexpected. Just overdue. The property shakeout is going to take years and stock markets have much further downside ahead of them but it won't be a straight line and there will be some great rallies on the journey. For traders, this volatility is a gift. Enjoy it all whilst we have it. Volatility comes in waves and oscillates from one extreme to another so enjoy the fun while it is here!! Don't try and second guess the markets; just trade what is in front of you.

That advice together with the Danielcode numbers is all you’ll ever need. The following are the Danielcode members’ charts. Every market turned within a few ticks of its DC number. Far from being a panic this was a tightly controlled exercise in stair tripping down the DC numbers. Calculated, clinical, exact. What a pity that hardly anyone knows and even fewer are aware of what they don’t know. Today the S&P is up another 40 points as shorts run for cover. 110 points in a day and a half. You must know these numbers to trade successfully.

Next week we will look at the how’s and why’s of this week’s thrills. Remember in the euphoria of this rally that nothing has changed. No problems have been solved and few have started to think how they will make profits on substantially less leverage. That’s all for another day.

djia daily

nasdaq

russell 2000 mini ETH

spi 200 index

Oil

crude oil cl2 2008 10

T Bonds too made its high on Tuesday at its appointed DC number and DAX made its low Thursday just 3 points through its DC number. It is up almost 300 points today on short covering and attempts to rid money market funds of their toxic mortgage backed securities.

Bail Outs

Whilst cheers are rising for a Resolution Trust type bail out the facts remain that markets will not return to normal until they find equilibrium. Largely that equilibrium relies on the restoration of sustainable markets in the housing and commercial property area. That can’t happen until house prices return to their long term trend line which tracks 3.3 times earnings. And that my friends is tens if not hundreds of thousands and a very long time away for most properties.

I make this seemingly banal point in juxtaposition to the urgency of ever more expensive fiscal band aids being applied to quell the latest in a long line of disasters. Most of the shadow banking units have found fame and fortune with extremes of leverage. All the angst and indeed apparent panic are highlighting not only how fragile the financial markets have become but we are witnessing a new phenomenon, the power of leverage in a falling market. Morgan Stanley take it as an achievement and some pretense to stability that they have reduced their leverage in the past few months from 30X to 24X. The real problem is that to make the money that the structures require has needed huge leverage. This is essentially the same driver as the mortgage and CDO business.

The asinine assumption that the models and the ratings agencies concurred in was that housing prices were a one way street. Derivatives leverage the truth of that assumption. The fundamental change in market psychology we are seeing at present is being caused by two fundamental factors; the nature of the beast (we all use money and financial services to one degree or another) and the power of leverage. It is precisely that leverage now working against the deal writers and holders just as it worked for them in the past, that is of interest. In past corrections we have seen this uber angst 18 months plus and many more points from the high than we are seeing now.

Leverage is exposing the truth faster. We are nowhere near the final bottom for property and stock markets. Indeed it is many years away. What turns and twists in fortune occur in that journey are rare and marvellous sights. We are indeed fortunate to live in interesting times.

I hope this week’s trading charts have shown you again that markets are highly organised and their turning points predictable. With enhanced volatility and ranges, knowing where the turns will be and entering early is essential. That’s why market turns are the essential for any trade execution.

I invite you to visit the Danielcode website to learn more about this amazing market tool. The next time others panic you will be laughing, enjoying the fun as markets go about their appointed rounds and observing gleefully that markets do what markets do!

Mat 9:29 Then touched he their eyes, saying, According to your faith be it unto you.
Mat 9:30 And their eyes were opened

Copyright © 2008 John Needham

About the Author

Lawyer and Financial Consultant
jneedham [at] thedanielcode [dot] com ()
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