December 27, 2016
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It contiues to be my belief that a major bottoming process in gold started forming in April-June of 2013 and the current technical situation is a retest of the major low from December 2015 (January 2016 for the HUI). Within this there will be its’ own ending action, rallies and retests. Market bottoms are characterized by signs of strength (SOSes). There are different kinds, some to the downside (ending action), and some to the upside with an increase in volume and price spread. And some more subtle, like going to new lows below support and then rallying back, even without a surge in volume, a so-called spring. The ones with more volume are more significant, but these signs add up. I discussed some of these things last week, and in the comments sections, like from December 20th, regarding buying silver, and the SOSes in silver and GDX into the new lows last Tuesday. And just like last year, the relatively stronger individual miners are showing much more impressive SOSes. Last year, my focus was on gold and a few individual miners, and also GDX and GDXJ. This year it’s totally about silver, and the individual miners showing great outperformance to the group. It’s really instructive to go back and look at gold market bottoms in the past – to reinforce that there are different buy points within a bottoming process. And it is a process, not just one day. The light volume today in the miners isn’t a big deal. It will show up again. But the rally today just reinforces the point about stepping up into extreme weakness when it’s there, and when it’s the hardest thing to do.
It’s nice to buy right near THE low, like last December’s low, but we can do very well in markets by buying into any of the lows in a bottoming process. And once again, if we’re not going to sell any into the greedy upthusts, then buying right near the lows is pretty meaningless. There’s so much time spent on where/when to buy, and not nearly enough on where/when to sell. No one gets it right every time, but there are two parts to this business – getting in and getting out. And of course, we need to be patient, but when the opportunity arises the thinking has to stop and we just have to act.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.