January 5, 2017
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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.
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.