Markets/Gold/Bonds

 

 

 

Trader Scott’s Market Blog

January 5, 2017

There has been a tremendous amount of unanimity in markets since the Trump election. We’ve had the Trump bull market in stocks (which bottomed in March 2009), the Trump bull market in the US$ (which bottomed in March 2008), and the Trumpflation rally in yields (which bottomed in October 2011 on the short end). And of course the Trump sell off in PMs, because blah-blah. The point is alot of people were on one side of the boat, but less so now.

The bond market is the biggest market in the world, and it (usually) takes the longest to turn. Each bottom in yields in this massive bottoming process has seen a shortening thrust into the new lows – an overall bearish situation. And there was a surge in yields into last month’s highs. But that was then, now there is tremendous bearish sentiment on bonds, as discussed in yesterday’s post. There is also a big speculative short position, although likely a bit less due to the rally in bonds the last few days, with the biggest push higher in Treasury prices in 6 months. Tomorrow is the stupid “employment” number, and I won’t guestimate the different markets’ reactions to it, but overall this bond rally could be very surprising – which would affect all the other markets, like gold. The rally in the PMs currently is slowly resetting the sentiment (short term), which had gotten ridiculously lopsided. I never buy into strength, so patiently waiting to buy the bigger reactions for adding on to longer term positions is my plan – focused only on silver and the outperforming miners. A weekly close above $1191 would help to build confidence that the next big retest of the lows in gold would be at a higher level. But often these “confirming” levels also begin marking shorter term tops. The bigger resistance is at $1198, and being so close to $1200, then a bit above. This is the silver chart I’ve been running for the last six months with the buy zones marked off.

 

 

About

img_0074bwcrsmTrader 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.



'Trader Scott’s Market Blog – Markets/Gold/Bonds – January 5, 2017' have 13 comments

  1. January 6, 2017 @ 8:14 am Jon

    Looks like Morris has the same outlook as you for gold. http://www.321gold.com/editorials/sfs/hubbartt010617.html

    Reply

    • January 6, 2017 @ 6:02 pm traderscott

      And your comment from yesterday Jon – good job – the low in GDX today was 22.02:
      This looks to be a powerful impulsive move (similar to last February) with GDX blasting right through the 22-22.50 resistance today and breaking above the downtrend line from last August. So maybe a retest of the 22 area starting tomorrow or early next week. Gold is starting to lead silver and January is usually one of it’s best months. Your call for a rally this quarter with retest into summer is looking spot on!

      Reply

  2. January 6, 2017 @ 11:58 am traderscott

    David wrote in yesterday saying he sold some of his miners into strength, which is always a good approach, as he was also buying into weakness. He’s been (rightly) concerned about all of the gaps below the market and how the market had gotten overdone on the upside. I was pleased to see the miners NOT have a strong rally right from the open, as it would have gotten way overdone. So now we can work on filling gaps and re-setting for the next rally. Same thing for the metals (and bonds). Bigger bicture it’s about patience to buy weakness, short term there will be trades setting up.

    Reply

    • January 6, 2017 @ 4:14 pm David V

      Trying to take your trader’s approach to the market, picked up some DUST yesterday and rode it down to GDX’s support (hoping it would close the gap) today for a nice profit. Still not ready to quit my day job yet though, need to get my confidence level up.
      From the Day Traders Bible:
      “Averaging does not come within the province of the Tape Reader. Averaging is groping for the top or bottom. The Tape Reader must not grope. He must see and know, or he should not act.”

      Reply

      • January 6, 2017 @ 4:49 pm traderscott

        You keep doing well planned trades like you have been, and your confidence will be fine. I don’t know what you ended up doing with the trade, but once you’re in it’s usually not worth trying to get every potential last bit out of it. It’s why I talk about entering really well, which you do, and taking profits “too early”. It used to bother me, taking profits too early, but not anymore. When you’re in, you’ve got risk on, not much leeway there. When you’re on the sidelines, it’s just about planning, anticipating, and pouncing. Like a lion, even when they’re super hungry, still waiting for that perfect “entry point”. And tape reading ability will help on all time frames.

        Reply

  3. January 7, 2017 @ 5:39 am nico

    Will we see silver at 25-30 $ in 2017 ? What do you think ?

    Reply

    • January 7, 2017 @ 9:32 am traderscott

      I do Nico. The second half of 2017 is when finally things could start to get a little erratic on the updide in PMs, without once again having a big selloff after a big push higher. It’s about finally leaving this huge accumulation area. I’ve given those areas before, I’ll update in a post if you’d like.

      Reply

  4. January 7, 2017 @ 8:01 am David V

    Where do we go from here CBOT/GC1?

    Reply

    • January 7, 2017 @ 9:29 am traderscott

      Quite a correlation isn’t it David. You know for awhile I’ve been harping on all of the bearishness regarding bonds, the technical position of the bond market, and the potential for quite a rally. I’ve done several posts about trading the rally in bonds. We’ve already had a good bounce in the bond market, and it has certainly helped PMs. I know alot of people aren’t interested in bonds. I don’t know how you do this business without taking all markets into account.

      Reply

  5. January 8, 2017 @ 9:40 am Larry Ducharme

    Hello Scott,
    I have made many of the mistakes that you warn about. I have had my share of disasters, with my biggest weaknesses being emotion (including loving a stock, fear, greed & indecision) listening to the gurus (and they are many), and trying to exactly time the market, that have cost me thousands. However, as the great Chief Inspector Dreyfuss said in the Return of the Pink Panther as he attempted to return from the brink of madness, “Everyday, in every way, I’m getting better and better!”.

    I am relatively new to your blog and have missed many of your important points on entering and exiting the market to maximize my profits. I am in the process of going back into your archives but have not yet found the answer to this question and ask if you can point me to one. How can I determine when the strong hands start aggressively accumulating/distributing a stock?
    Thank you for your time and your help!

    Reply

    • January 8, 2017 @ 11:59 am traderscott

      The point when some kind of ending action comes in Larry, like a selling or buying climax, etc. I talk about those alot. I showed the first ending action in GDX a few weeks ago. At a bare minimum, the retest of the first EA is the first potential entry point from a purely timing basis. In GDX it was on 11/14 at $20.15. That is when the buying/short covering first became aggressive. But the first EA is almost always followed by new lows. So until we see the first EA, the probability of the trend continuing remains. Feel free to ask more.

      Reply


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