Looking good for next week.

Bill:

Today continued the trend of a plurality of buying in the double short ETN (DZZ) over the DGP. In fact, today was the largest yet recorded as far as I can tell. If we add into this extraordinary shorting with the Hulbert Survey mentioned today and the Market Vane's extremely low reading, we have confirmation of a major bottom in the precious metals.

It still smells as though the move up will be related to a massive reflation that will catch the hyperdeflationists totally off guard. By the way, according to Bob Hoye today, the sentiment on the S and P has dropped to a shocking 10%. That is not bearish, either. Isn't the NY Times amazing in its timing. If one would have shorted gold when you, Sinclair and Turk were finally interviewed back in May 2006, you would have had a 20% decline with 2 months and if you bought the Dow after Prechter's first interview with them this weekend, you would be up around 4% in 3 days.

A signal I am cueing in on is to see silver suddenly outperform gold as both move up. The ratio at this extremely high level has to give, one way or another.

With last week and this week being quasi holiday weeks, and next week being an option closeout week, I am expecting some fireworks. For the gamblers you could buy a listed July call which is at or barely over the strike price. But the best play in the markets right now for leverage is to buy calls on the listed golds out to January. If you want some help or suggestions on my honor system, just whistle. Chuck ikiecohenh@msn.com…

One last word on the markets

Hi! I was going to hang up my writings for the week but the more I look at the technical evidence the more I am impressed that something big is in the works. Almost without exception the sentiment indicators, even now, are at major, major low levels. And yet, the preponderance of blogs and opinions are still amazingly bearish. "Head and shoulders," "death cross," "broken support lines," are as common as the opinions as where Lebron is going to choose.

But remember that at turning points the fundamentals either look awful, such as now, or invincible at major tops. Right now the weekly surveys from the AAII and Investors Intelligence collectively have sunk to the same levels as they were in June 2009 when the S and P was at 900, and very close to the March 2009 low of S and P 650. Ditto with the weekly Marketvane poll. This is in stark contrast to the optimistic readings you get if a collapse was at hand. When I put out a sell back at the end of April, the very technical readings were at these levels.

And gold? The Hulbert Gold Survey which is one of the best predictive survey has collapsed from over 37 to under 10 in just one week. Now that sounds like capitulation to me. The Daily sentiment survey is now down to the lowest level since February 2009, and most incredibly the double short and long gold ETNs, or the DZZ--DGP over the past 8 trading days, shows, far and away the most shorting of gold, since they came into existence back in February 2008.

If you put these together, it smells like the reflation of the world economy is here in spite of the palpable fear that a worse version of 2008 is coming to the markets. I realize that this is repetitive, since I have been saying this for the past couple of weeks. But for all of you gold bulls who worry that you won't have enough cash to live on as the metal sinks to $500, stop worrying and realize that things are about to get better, at least for a while. Chuck…

Bill, one more amazing Hulbert number

This should nail the rally since it confirms his gold figures. The move should be imminent in stocks but especially in gold and the shares. Keep your eyes on the HUI here.

Note that his stock market figures came AFTER the rally on Wednesday. Our day is coming soon. Chuck

http://www.marketwatch.com/story/bounce-leaves-bears

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*And the second one is the growing realization that the BIS news is very bullish, which has been brought to your attention in this space by Adrian, CP and others.