The Esteemed WSJ Believes Commodities are Now Bullish

 

 

 

Trader Scott’s Market Blog

March 8, 2017

 

 

This website had a few issues with some posts disappearing a few days ago as a few of you noticed, so here’s the re-post:

The commodities market for awhile has been concerning to me. There are too many confident new bulls. I did the post about markets at extremes on Dec. 12th. Copper was one of those markets, and along with crude oil, they are worrisome. For example, the futures speculators are very long these markets, along with silver. And there is a large consensus continuing regarding the confidence in Mr. Trump’s policies bringing good times back for the US economy. I don’t share those views. Commodities are still very bullish long term, but it’s the nearer term which is the problem. And now that commodities have been in a secular bull market for over a year, the esteemed WSJ is just now recognizing it. That’s also quite concerning.

“The three-month correlation between commodities and stocks recently fell to the lowest level since September 2008..”

And they claim that this is “reinvigorating” the “long-beleaguered” commodity market. Have they lost their minds? Have they not noticed that oil has more than doubled from its’ low, and base metals have soared, etc? So they are claiming since this useless correlation is low, then it’s somehow bullish? Where do people come up with this stuff? And their brilliant analysis about this correlation, claiming it’s bullish, was a superb timing method in September 2008. This popular commodity index, DBC, fell almost 50% over the next 6 months into the big low in March 2009 after their great discovery of this correlation. Not only that, but the stock market also cratered into its’ March 2009 low after their “bullish” correlation low levels. So they both cratered together and then stocks and commodities bottomed on almost the same exact day. What kind of a useless correlation is that? It sounds like it’s more bearish than bullish to have the correlation breakdown. And it certainly is not bullish, that they just came up with this conclusion. Just remember, this is the same esteemed WSJ who, 3 days from the secular bottom in December 2015, came out with an article claiming the Fed raising interest rates was bearish for gold. So you see why their brilliant analysis is concerning.

 

 

 

 

About

Trader ScottTrader 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.

 



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'Trader Scott’s Market Blog – The Esteemed WSJ Believes Commodities are Now Bullish – March 8, 2016' have 97 comments

  1. March 8, 2017 @ 5:58 pm Jon

    Looking at the XAU gaps at 77.42 and 74.58. Looks like a retest of 1198 Au and 17.07 Ag…

    Reply

  2. March 8, 2017 @ 7:13 pm Jon

    Scott, I know you don’t put much credibility in seasonals, but I found this link on the Acting Man website from Dimitri Speck thats uncanny. Go cycles and check out what gold did in the 2016 election year and what it’s doing post election. Looks like the low should be struck soon then a major upthrust- maybe post FED meeting.
    http://www.seasonalcharts.com/

    Reply

    • March 8, 2017 @ 9:07 pm traderscott

      To make certain of not missing something, I went back to 1998 to look at the mid-March cycle low, and what I come up with is a bit different than what is out there. I’ll post it over the next few days.Sometimes it’s awesome like in 2010 and 2011, and sometimes it’s horrible like in 2008. Granted this is a small study, but the reason I chose these dates rather than going back is apples to apples – a big accumulation area, and then an uptrend, with accumulation/uptrend for part of it. Seasonals just based on a season is not how I would do these studies, but everyone can decide from it. And a rally would be used by me to cut back, unless there is a more solid area formed in here first.

      Reply

  3. March 8, 2017 @ 7:27 pm Easy Al

    Interesting comparison of gold and GDX pull backs in 2017 so far to their counterparts of 2016 .

    http://king1eye.blogspot.com/2017/03/gold-pulls-back-grow-some-cajones.html

    Reply

    • March 8, 2017 @ 8:20 pm traderscott

      The 2016 rally in miners was with a rallying stock market. The stock market and commodities currently are concerning to me. There is too much complacency around and also confidence in one human being. I want to have confidence after a big selloff, not at all time highs like stocks, or 20 month highs like oil (was) or copper (was). We have huge elections next month, a ton of confidence in one human being, and buffoonish confidence in the Fed idiots. I literally am reading that the always wrong Wall Street economists are now claiming that they are not worried, because the fed wouldn’t be raising rates if they (the Fed) were not confident in the economy. What kind of analysis is that? They are channeling the Fed? Well then why do they (economists) even have a job? Let’s just sit around and wait for the Fed to decipher everything for us. I did a post called The Fed is Now Confident, which did OK at Zero Hedge, but not on this website. I believe it’s a mistake to not understand that when the Fed is CONFIDENT, that is not bullish. I believe I will do an updated version of it. Point is a weak stock market without a super strong gold market is not bullish for miners.

      Reply

      • March 8, 2017 @ 8:47 pm Easy Al

        If I were one of board of governors of the Fed, I would vote to increase rate in March too. The fact is that the Fed really wants to “normalize” the short term rate. However, they also worried a similar replay of 1937-1938, which partly explains that they waited for year for the second raise. The rise of stocks, bond yields, business confidence and (government doctored) inflation rate since the election is a God-given opportunity to them. The political backlash is now much smaller than last year if a few 25-basis-point increases reveal a massive mal-investments made in the ZIRP environment, the liquidation of which results in a recession. When they are attacked, aunt Yellen, like Sir Prints-A-Lot, can always point out that the market is expecting them to do it.

        Reply

        • March 8, 2017 @ 9:14 pm traderscott

          Boy, at this point, there are numerous choices for the title Sir Prints-A-Lot.

          Reply

          • March 8, 2017 @ 9:29 pm Easy Al

            As much as I dislike Sir Prints-A-Lot, he is the only Fed Chair in last 30 years, who understands the role of gold. He just sold his soul when he was in power.

  4. March 9, 2017 @ 1:37 pm Easy Al

    So quiet here today.

    Reply

    • March 9, 2017 @ 2:11 pm traderscott

      Working on the other site today Easy Al, and traded in and out of IPI. Did you see the the spring in IPI below that 1.75 we talked about.

      Reply

      • March 9, 2017 @ 2:35 pm Easy Al

        I was not paying attention to IPI today. But I know that you have something to do with the 13% swing today.

        Reply

        • March 9, 2017 @ 2:40 pm traderscott

          Funny, but I did not short it, so someone else is to blame.

          Reply

        • March 9, 2017 @ 2:50 pm traderscott

          BTW, it’s pretty humorous that EVERYTHING is down today, except for the Euro. How did that happen.

          Reply

          • March 9, 2017 @ 4:42 pm Easy Al

            Both HUI and DAY have dropped below their closings values of December 30. The PM miners, on average, are in red for 2017 so far.

            People are anticipating a strong non-farm payroll numbers tomorrow.

  5. March 9, 2017 @ 2:02 pm Easy Al

    Scott,

    This column at zerohedge has a different view on the increase of metal price and suggests to short base metal miners.
    http://www.zerohedge.com/news/2017-03-09/it-appears-china-has-sent-world-prodigious-false-reflation-signal

    It is one thing for Chinese speculators to drive up metal price with futures and options. It is entirely different for the users of metals to stock up huge inventories. A few years ago, we read a lot about so-called ghost cities in China. A lot of Westerner forgot that they were entirely new cities and people would not moved in until basic infra structure was ready. It is different from the West where new houses and stores in the board of existing cities so that people can move in on individual basis.

    Reply

    • March 9, 2017 @ 2:38 pm traderscott

      I agree, but certainly wouldn’t short them right now as a bigger picture trade. There was a nice gap daytrade in XLE short today, but would be much smarter to wait for rallies first. There is the threesome right now, copper, oil, and silver that are loaded with bulls. It’s quite concerning. But I’ve been concerned about oil for about 6 months (archived), and was wrong until the last week. I’ve also been concerned about FRAK and JNK for about 6 months (archived) – and wrong until this week. I did believe we’d have a secondary test of the Feb. 2016 low in oil in this Feb/March time frame, so we’ll see. But it got even more overdone in the meantime. So remember, I wrote that post about the Fed being confident for a reason. I’m working on an update to it – the Fed being confident is not reassuring. Having said all of this, the stupid # tomorrow can change markets for a bit – no guesses on the #, but things are overdone to the downside now. As far as silver, it’s at the 50% level, and has taken out the “psychological” 17, but I am not buying silver. The 16.60 is a better support. Back in December silver was very interesting to me, not now. Some bulls are being taken out. And this is not manipulation.

      Reply

      • March 9, 2017 @ 2:54 pm David

        Looks like a bear market in silver with a dead cat bounce from my
        Ragged arm chair,.

        Reply

      • March 9, 2017 @ 4:47 pm Easy Al

        If it is up sharply, then the shorts ( commercials) are running for covers. If it is opposite, it is manipulation. You have perfect explanations for every move.

        Reply

        • March 9, 2017 @ 5:22 pm traderscott

          Exactly. Along with the “commercial signal failure” and the “Comex default” crap – always right at the highs – always. My Andrew Maguire post was on 2/26. The high in silver was 2/27. He claimed there would be a “commercial signal failure” and a “reset” within 90 days – right at the highs. Even if he’s right, which he’s not, how in the world can he have misled people right at the highs. Why didn’t he convince people to buy, with his scare tactics, in mid-December – at the lows in silver. Why does this stuff always come out at the highs. Once again, i continue to wonder, are these kind of guys actually the “bullion banks”? They can’t be wrong this often by happenstance.

          Reply

  6. March 9, 2017 @ 2:57 pm traderscott

    So now the whole world is CONFIDENT, because Trump is confident, his policies are awesome, and the Fed is confident.

    Reply

    • March 9, 2017 @ 3:19 pm David

      Yup, they are building bigly, like no tomorrow in my town with vacancies everywhere.

      Reply

      • March 9, 2017 @ 3:28 pm traderscott

        David, people talk about the Fed distorting everything. What about the Trump election. We even have the stooped clocks Celente, Dent, etc., who all of a sudden turned bullish because of Trump. What the heck is going on out there.

        Reply

        • March 9, 2017 @ 3:56 pm David

          Companies think like Wendy’s along the lines if they can build a bigger, fancier, newer building with nice high rent administration offices all the while cutting labor costs and cheapening the food they will attract more business. Even the trinket peddling zombie malls are getting in on the action.

          Reply

  7. March 9, 2017 @ 3:30 pm traderscott

    The bearish articles are starting to come out – not a bottom indicator, but helpful.

    Reply

      • March 9, 2017 @ 5:08 pm traderscott

        Thanks Easy Al, I missed that one – so yes a bull and a bear. “A major signal just triggered” – why do people say that. Markets are probabilities and risk. That is it. There are just opportunities, no signals. And when you put that pressure on yourself, then you usually put on way too big a position.

        Reply

        • March 9, 2017 @ 5:11 pm traderscott

          Meaning signals are predictions.

          Reply

          • March 9, 2017 @ 5:39 pm David

            By expiry day a head and shoulders pattern will be painted and that will signal something.

    • March 9, 2017 @ 7:21 pm Easy Al

      The italic text is lifted from one of the comments in the commentary field of the article linked below.


      Good piece. I have owned some form of gold in portfolio and personally since 2001. It has turned out to be a career-killer to be frank. When silver peaked in April 2011 at $50 and gold at $1900+ in September 2011, we all thought the metals would go higher. The disaster performance since then and until December 2015 was so bad. Then as you point out, Fed raised rates in Dec 2015 and gold surged.

      The gains were huge but off such a pathetically low base, how could they not bounce big? And then the failure in 2016 that took place in summer/fall i thought was due to turn the night of election when Trump was looking like winner. The rest is history! Gold gave up gains on 11/8 and then lagged mkt horrifically, setting up yet another major bounce off the lows of December.

      I am so disappointed in this space. I have owned PHYS not trusting GLD but have come back to owning GLD in portfolio because it is liquid. I own CEF as well. I have given up on individual miners (see NGD’s collapse early this year) and have used GDX and GDXJ but they and the group appear to be nothing more than trading vehicles. I do not know how anyone in their right mind could ever trade the leveraged mining Etf’s…foolish.

      I have been using GLD more as a hedge rather than shorting SPY since darn mkt never goes down. I am shocked at how bad the miners have acted in past 10 trading days. It feels like the miners may toss the entire ytd gains which as we both know, come off depressed levels.

      GLD is down on a trailing 12 mo basis! i find that amazing. The market has completely bought into a massive re-acceleration of economic growth, continued $ strength and Trump has yet to pass any economic proposals and is always a “tweet” away from implosion.

      Very frustrating. I’ve been down in dumps about this space before…being contrary has not worked and it is not my nature. I feel like there are valid fundamental reasons to own gold…but geez, the space is brutal

      The article itself is actually trying to point that PM and miners tend to rally after monetary tightening. You can read it here:
      http://seekingalpha.com/article/4052472-woman-golden-gun

      Reply

  8. March 9, 2017 @ 5:49 pm David

    Can someone decipher this? It makes me sea sick.

    “It seems we have now completed a truncated 5th wave in a 5 wave move down in the DXY, which means we have now completed Wave 2 down. Therefore, based upon my count, the dollar will now begin a multi-year bull run.” July 31, 2011
    This meant that, back in July 2011, I was expecting a multi-year 3rd wave rally to take hold. And, since a 3rd wave often targets the 1.618 extension of waves 1 and 2, that gave me a 103.50 ideal target for the 3rd wave in the DXY in this multi-year rally I was expecting.

    http://news.goldseek.com/GoldSeek/1489071449.php

    Reply

    • March 9, 2017 @ 6:57 pm traderscott

      I hear you, Avi’s a good guy, but Elliot Wave stuff is incomprehensible to me also. There are too many ifs. But as long as people are consistently net profitable, whatever works for them is perfect for them.

      Reply

  9. March 9, 2017 @ 6:00 pm Jon

    Fire sale in the miners is over. Now It’s a going out of business sale-everything must go!

    Reply

  10. March 9, 2017 @ 7:14 pm Jon

    Gold will bottom tomorrow at 1193 (50% retrace) and silver at 16.79 (60% retrace). Final miner washout right after phony jobs report as the PM’s react. Just a guess, I’m normally wrong…

    Reply

    • March 9, 2017 @ 7:49 pm traderscott

      Jon as long as you give me a chuckle – who cares if you’re right.

      Reply

    • March 10, 2017 @ 10:41 pm Easy Al

      Jon,

      The lows of gold and silver today were $1204,5 and $16.82, respectively. You nailed them.

      Reply

    • March 9, 2017 @ 8:57 pm Larry

      Scott,
      You want to get rich! Have your new site run only straight, common sense stories by regular guys like yourself. I love to read and learn but some of those sites, i.e. Gold-Eagle and Seeking Alpha, are like watching a game of Calvinball while listening to a Bill O’Reilly multiple guest segment interrupted by commercial after commercial. Freaking tedious!!! The only ones I can really take besides this one is IKN and Insider Monkey.

      Reply

      • March 9, 2017 @ 10:04 pm traderscott

        That’s the approach Larry – to stay unbiased (hopefully), so we don’t ignore the numerous opportunities out there. Not everything has to be about collapses or love affairs with certain markets – just about the most effective ways to navigate markets – opportunities, mixed in with some goofiness. Markets can be boring, at least the daily grind of them – the preparation, planning, research, etc. But the every day boring part is the only way to do the “fun” part, the trading, pretty well. And there are also plenty of big picture ideas, trends, posts – opportunities.

        Reply

  11. March 9, 2017 @ 9:19 pm Larry

    Took a nibble on SRNE today. An interesting company with great people with connections to China, great pipeline & platform, some interesting partnerships and have caught the interest of a bunch of institutional investors. It looks to be setting up nicely. I dunno, no balls no blue chips, right mate!?

    Reply

    • March 9, 2017 @ 9:54 pm traderscott

      Buying support I take it – January lows. So far so good.

      Reply

  12. March 9, 2017 @ 10:41 pm Larry

    Scott,
    What would be your interpretation of that IPI major spike in vol & price at 9:30?

    Reply

    • March 9, 2017 @ 10:55 pm traderscott

      I assume you mean into the highs – since the price had already spiked, and this is on a real short term basis, but that is upthrusting action, with the price spread and volume combo. Short term warning to get out of a short term position, and let someone else “take ownership”. And someone braver than I may step in to short it – with a parameter of possibly the gap open. You can see it better on Potash – same deal at the highs, and then back to gap.

      Reply

      • March 9, 2017 @ 11:24 pm Larry

        yes, into the highs and I was looking at the 1 minute chart. Looking at the IPI 60 minute chart thru 8 weeks, what does it tell you when it looks like a politician on a lie detector? Is that normal action? Sorry if this seems juvenile but I always looked at the market on a broader scale.

        Reply

        • March 10, 2017 @ 1:04 am traderscott

          Yes it sort of does look like that doesn’t it. Different stocks have different normals. This one is a bit nervous looking, isn’t it – sort of like a politician about to take a lie detector test. Sort of looks like your SRNE. But to “simplify” it – it’s just a trading range. Just like ADMP and you see the gentle rising of the support areas in ADMP – absorption.

          Reply

    • March 9, 2017 @ 11:06 pm Easy Al

      Scott is just kidding you. The 9:30 spike in price volume were really caused by his moved into IPI, just like a really big guy jumping into a small swimming pool.

      Reply

  13. March 10, 2017 @ 6:36 am David

    Philatelist Bill ” if the 10-year Treasury yield breaks out above a key chart level of 2.6 percent a “secular bear bond market has begun.”
    https://www.janus.com/insights/bill-gross-investment-outlook

    Reply

  14. March 10, 2017 @ 7:36 am Nic

    today is the day I buy my first tranche of MUX…hopefully at 2.70…no matter what I will buy some…also get another tranche of CDE in my target zone of 7.20-7.25 ( hopefully lower ) I exited last bit of JNUG yday profitably. Looking for miners to bottom in the next 5 trading days.

    Reply

    • March 10, 2017 @ 7:54 am David V

      Monday morning usually lower yet, patience of Job needed in this market.

      Reply

    • March 10, 2017 @ 8:27 am David

      preliminary support in GDX&J looks ready to break down today, -4% to support and fill the gap?

      Reply

  15. March 10, 2017 @ 8:28 am traderscott

    Without playing the ridiculous game of guess the number, in gold ,or any market, what you want to see for an initial bottom is the explosive type of action. A new low and the big rally, or a rally, then a new low, and then the bigger sustained rally. But no matter, there will be more volatility, so don’t chase the market. Some of you have much lower bids sitting in for miners, that’s a good strategy, rather than guessing and chasing. Nonetheless, silver is still concerning, as is crude oil, copper, and commodities, no matter what the stupid number is.

    Reply

    • March 10, 2017 @ 10:41 am Easy Al

      Hi Scott,

      Are pushing IPI around again ?

      The mining stocks that I wanted to add never dropped to the levels where my orders are. I have some feelings that they might have bottomed yesterday. But I may still have chance on March 15 and 16. If it repeats the patterns of last 2 rate increases, PM and miners should bottom on March 16. If it repeats again, it will be too predictable. However, if enough players believe in it, it will repeat.

      Reply

      • March 10, 2017 @ 11:02 am traderscott

        I see that with IPI, but not trading it today – and just watching markets so far. I do expect more volatility though, rest of this quarter and into next – meaning opportunities. The next rally in gold, and I’ll do some selling – and will likely sell too early like usual.
        Also, on a bigger picture basis, the extrapolators are out again, calling for much lower prices in gold. Remember just 2 weeks ago, the extrapolators were out with silver is a sure bet and it’s headed way higher. So I’m not close to buying silver, but the sentiment by people is turning.

        Reply

  16. March 10, 2017 @ 11:18 am traderscott

    For those interested in the COT report – here is last week’s, with the big jump in weak handed longs. And silver here with the monster long position by those weak hands, though not as huge as last July’s. I’ll post the latest ones this afternoon EST.

    Reply

  17. March 10, 2017 @ 11:42 am Jon

    Liking the action in miners. Looks similar to the Dec bottom. Would like to see a break in XAU to the 77.42 gap-maybe on Monday. Great relative strength in MUX today. The 2.84 low yesterday may have been it.

    Reply

    • March 10, 2017 @ 11:56 am David

      Bob’s using astrological signs to extrapolate.

      http://www.321gold.com/editorials/moriarty/moriarty031017.html

      Reply

      • March 10, 2017 @ 12:12 pm Jon

        He’s pretty savvy..

        Reply

      • March 10, 2017 @ 2:00 pm Easy Al

        It looks like Bob’s call is correct at least for today. It will be interesting to see if XAU and HUI will drop below yesterday’s closing level on March 15 and 16.

        Reply

        • March 10, 2017 @ 2:07 pm traderscott

          It’s about being preparing, being patient, and buying into the weakness – what we have total control over – and then it’s out of our hands.

          Reply

          • March 10, 2017 @ 2:47 pm traderscott

            And the great thing is – that stuff costs ZERO. And people pay $10k or more for some stupid reverse engineered rear view mirror tested complex totally useless “method/system”. It’s the total approach to markets, not the method. When I was a floor trader, the guys who bombed out would often show up back at the exchange trying to sell this elaborate system which they “created”. And there must have been some takers, or why else would they keep doing it. Amazing.

          • March 10, 2017 @ 3:55 pm Easy Al

            What you described is just like many economists in ivory towers (such as Helicopter Ben when he was a professor) attempt to model economy with math equations as if it were physical science. What they forgot is that human is much more complicated than atoms and molecules. Economy, which is really human interaction, is even more complicated than an individual.

          • March 10, 2017 @ 4:21 pm traderscott

            I miss old Chopper Man with his string of 100% wrong predictions about the economy in 2006-2008. And now that clown is raking it in giving his 100% wrong predictions to corporations. You gotta love crony capitalism. And Easy Al, can you imagine the total of the IQ levels in the room when they’re building their stupid permabull econometric algorithms. It would take ten of mine to add up to just one of their IQs.

  18. March 10, 2017 @ 1:05 pm Easy Al

    Scott,

    Are you covering your short on IPI now ?

    Reply

    • March 10, 2017 @ 1:18 pm traderscott

      No position in it. I’m starting to think you are the big gun manipulating IPI, but just using me for cover. You’re like the JP Morgan in IPI stock.

      Reply

      • March 10, 2017 @ 1:28 pm Jon

        Like JPMorg? Ouch…

        Reply

      • March 10, 2017 @ 1:46 pm Easy Al

        When I buy a stock for a short term trade, I always try to check some of its fundamentals. In that way, if my short term trade does not work out, I do not mind to hold it. The balance sheet and fundamentals (over supply of fertilizer) are too shaky for me. It does have a few positive items. Its book value and accounting value (book values plus the carried loss can be used to offset future income) are both multiple times of the stock price. In addition, its CEO Robert Jornayvaz had purchased large quantities of Intrepid Potash stock in the open market earlier. He spent roughly $2.3M in the stock from $7.29 all the way down to $0.84 and back to $1.29. (Type the ticker into the box given by this link to see it : http://www.insidercow.com/)

        The Belarus government recently indicated that it would cooperate with the Russians and Uralkali in making and selling fertilizers as long as the country’s interests are secured. If they work out a way to reduce the supply, I will jump on board. Any new insider buying after a pull back will be positive. The problem is that CEO’s salary has been reduced significantly and he is probably underwater in his purchase.

        Reply

        • March 10, 2017 @ 2:03 pm traderscott

          That’s a nice website, good one to be saved. And IPI stock is trading along with the technical action of the group basically, which is a large reaction. It’s good to have the CEO in there with a stake in the fortunes, unlike so many miners.

          Reply

  19. March 10, 2017 @ 1:47 pm traderscott

    A falling commodity market relative to gold, especially energy, is very beneficial to the miner’s profitability. It’s the relative part which matters. Oil has a boatload of weak handed longs. Silver has flushed out some, so now it’s about technical action and ending action, and weird manipulation claims – I’m in no hurry to buy the metal itself.

    Reply

  20. March 10, 2017 @ 2:48 pm Jon

    Looks like a sos for the miners today. What a bipolar group…

    Reply

  21. March 10, 2017 @ 3:17 pm Jon

    If this is like the Dec bottom, should be retesting Monday-Tuesday. Have your shopping list ready…

    Reply

  22. March 10, 2017 @ 3:45 pm Larry

    Hi Scott,
    Great action with CATB today, luckily on a slow day at work for me. Got in at the open and sold early, $2.35. Hey, I might be catching on to this stuff you’re teaching. Old dog, new trick!

    I ran into an article on one of the sites. The Investor Behavior Project at Yale University has been collecting questionnaire survey data on the behavior of US investors since 1984 “http://som.yale.edu/faculty-research/centers-initiatives/international-center-for-finance/data/stock-market-confidence-indices/stock-market-confidence-indices”. It’s interesting if you want to check it out.)

    Anyway, this was written by Eric Parnell of Gerring Capital. (http://seekingalpha.com/article/4053783-greatest-fool):

    “The Investor Behavior Project at Yale University under the direction of Professor Robert Shiller publishes four different stock market confidence indices for the United State…Consider the U.S. One-Year Confidence Index…. This index is based on a question asked to both institutional and wealthy individual investors that effectively determines the percentage of survey respondents that believe that stocks will be trading higher one year from now. Thus, the higher the reading, the more confidence among respondents that the stock market will be higher a year from now…….Overall, 78% of institutional investors and 79% of wealthy individual investors on average believe that the stock market will be trading higher one year later at any given point in time. But where we are today is absolutely remarkable.

    Among wealthy individual investors, nearly 84% of respondents believe stocks will be trading higher one year from now. This is the highest reading on the individual side since March 2007 just before the outbreak of the financial crisis.
    What about the institutional side? Hold onto your hats. As of February 2017, an incredible 99% of survey respondents declared that the stock market would be trading higher one year from now. This is a reading that implies near unanimity among the institutional investor community. Needless to say, this is the highest reading in the history of the index by a healthy margin.”

    The index starts in 1989, just after the crash of ’88 so you don’t see the effect that the crash caused on the index. Personally, I don’t necessarily believe that when the market drops it will be Armageddon (I reserve that opinion for when the dollar finally blows up and the sheep are looking for their monthly check). All I know is that the higher a ball is when it’s dropped, the greater the distance it has to fall. Looking at that index and comparing it to a 30 year chart of the Dow some of the biggest drops in the Dow were prior to the index being high after a spike. I just think that it is an interesting argument, among others, for being bearish on the Dow near term because a sharp, sizeable drop in the Dow could probably pull the metal stocks down with it for a bit which may give us the ending action we would be looking for. Or am I all wet Scott?

    Reply

    • March 10, 2017 @ 4:27 pm Larry

      Sorry, I meant the crash of 1987.

      Reply

      • March 10, 2017 @ 4:50 pm traderscott

        Yes I assumed so. And I referenced two other sentiment indicators in my post from 3/2:

        And while the stock bull market turns 8 years old on Monday, the sentiment is hitting levels not seen in decades. The Dow had 12 straight record high closes – the highest since 1987, a year which started out well, but ended with a thud. And the venerable Investors Intelligence sentiment survey hit its’ highest level since 1987 also.

        So these things are adding up.

        Reply

    • March 10, 2017 @ 4:45 pm traderscott

      It is a big concern of mine, because you’re right and the theories are wrong. A very weak stock market is possibly bullish for gold itself, but not for the miners. Just look at the Dec 2015 low in gold, but Jan 2016 low in miners. And BTW that was a #2 spring in January. So they were dragged down with the stock market. I was concerned about that for late 2016, but that didn’t happen, and gold and miners bottomed together, with no lower low retest. Yes, margin of error always needs to be considered with positions. Once again, the best way to deal with that issue is by never putting on a full position from the start, and IMO never putting on a huge position – ever. It works for some people, like Tom Baldwin, nice fella BTW. But Tom is a freak of nature, and he was purely a trader. Most humans can’t deal with huge positions, because the $ signs become too big of a psychological/emotional factor. But the point is, yes, it is a concern. There are several important sentiment indicators which are concerning now. The one you referenced is very interesting. Thanks for posting Larry.

      Reply

    • March 10, 2017 @ 10:57 pm Easy Al

      Larry.

      I just check your CATB. It has only 10.2 million shares in float. Normally, it only trades about 624 k shares per day. Today, 59.4 million shares were traded. It means that each shares in float got turned over about 5.8 times today. I can not find any news on why such big turn around.

      Reply

      • March 11, 2017 @ 4:32 am Larry

        Hey Al,
        It’s 4 in the morning and I don’t have anything else to do so this might be long. Bear with me!! Besides, it’s the weekend, eh mate!
        The price of CLDX shares had a nose bleed dive in January after a mid stage study didn’t meet it’s primary endpoint. That drop is what made me take notice of it. The only “real” news is a press release from their website that states, “Market close on Thursday, March 16, 2017. Jill C. Milne, Ph.D., Chief Executive Officer, will host a conference call and webcast at 4:30pm ET to provide an update on corporate developments and to discuss fourth quarter and last year’s financial results.
        One of the drugs they’re working on is called Edasalonexent (CAT-1004) which treats Muscular Dystrophy. This is from their website: “Edasalonexent is currently being studied in the Phase 2 MoveDMD® Trial. The FDA has granted edasalonexent Orphan Drug, Fast Track and Rare Pediatric Disease designations for the treatment of DMD. The European Commission has granted Orphan Medicinal Product designation for edasalonexent for the treatment of DMD.”
        The Orphan Drug designation, which has special perks for the drug company, was given prior to the drop. So that had nothing to do with the spike today. My guess is it’s a rumor thing having to do with the announcement Thursday to “provide an update on corporate developments”. Who knows what the developments will be!
        Anyway, I always check pre-market action and saw it was moving. Got in at 1.65 with a tight trailing percentage stop and got out at 2.35. In and out! It topped at about 2.75 so I was early. It left a mad gap and dropped a ton at the end of the day so Monday may be interesting, who knows.
        Really Al, this was s**t luck for me today. Slow day at work so I was able to monitor it and figured, what the hell. Make up for the beating I took on some of the mining stocks of late. This trading is new to me but I’ll tell you what, I’ve learned more on this site just reading the comments from guys like you. And as far as Scott is concerned, he D-O-E-S! have patience! He’s also committed to what he’s doing and I like his attitude.
        Anyway, good morning.

        Reply

      • March 11, 2017 @ 11:01 am traderscott

        Larry you’re just having a totally unbiased view of things. That will serve you very well. Yes Bob was pointing out there is a really good chance for a good opportunity here. And to not be an extrapolator, because of the recent selling wave. Markets are never about certainty, always about uncertainty. That’s why you take profits, because who knows how many rallies and reactions make up a bottom or top. Just look at NUGT this week, all of the little springs in the trading range. It’s layering in and out within any time frame. Look at the last five years in GDX, all of the possibilities to be layering in and out, but holding on to some on the long side, for a huge bottom. But in the meantime, not being as frustrated by all of the waiting and waiting. I do believe the miners are in a massive accumulation area, and second half 2017 really kicks in, but there is going to be lots of volatility (opportunities).
        And your CATB, good job. You see all of the SOSes throughout February – so you just wait for your opportunity, which you did.

        Reply

        • March 12, 2017 @ 12:22 am Larry

          Scott,
          I totally see your point about what Bob’s point was and he has made a big contribution to the gold mining industry with his articles and promotions of certain companies. I’m not a deep thinker like he is, so I may be all wet (and not from being in a pool). However, what interested me was when he fininshed his article off with “everyone back in the pool”. He didn’t seem to leave that third option open. He may be right, and God bless him if he is! But hey, who knows, if everyone listens to him and jumps in and the down trend does continue and GDX does fill in those gaps maybe that will be that good climax you’re looking for to reverse the present trend.
          “Patience and Fortitude” was very good advice a very good high school teacher used to tell us 45 years ago. “Determine and Respect the trend of the market” is something I just learned. Me thinks to apply both.
          Thanks for your feedback on CATB. I’ll go back to February and study those SOS points. Still an area of weakness for me.

          Reply

      • March 11, 2017 @ 2:53 pm Easy Al

        Larry,

        I second to Scott that you have totally unbiased view. Since I am long in miners, I have to admit that I did not even notice the “or accelerate in the direction they are going” part.

        Back to CATB, that each floating share, on average, got turned over 5.8 times in a day shows that nearly all players got in or out yesterday were not investors but pure ultra-short term speculators. I also noticed that the volumes of leveraged ETFs of miners (JDST, DUST, NUGT and JNUG) are many times of the volumes of miners themselves. This kind of wild speculation is a classical indicator of the late stage of a bull market. In comparison with the mania of internet and high tech stocks of late 1990s and early 2000s, the recent speculative volumes in miner ETFs is at least an order of magnitude greater. The big difference, however, is that the increase in the price of miners or ETFs, leveraged or un-leveraged, is nowhere close to the speculative gains in internet stocks of late 1990s. Some of the big volume increase certainly has something to with the big reduction in the cost of trading.

        In 1999, as Sir Prints-A-Lot reversed the rate cuts that the Fed did to save Wall Street from LTCM and Russian default crisis, the tech/internet stocks ran into trouble in early fall of 1999. Sir Prints-A-Lot then halt the rate hike and injected $30-$40 billion into the banking system to prevent any potential interruption of computers due to Y2K. That amount of high power money doubled or tripled some internet and semiconductor stocks in less than 3 months and the Nasdaq composite was up over 70% in 1999. I remember that Bill Fleckenstein was very bitterly criticizing how irresponsible and reckless Greenspan was. As 2000 started, Sir Prints-A-Lot took out the high power and resumed his rate hike. The high tech/internet stocks, ignored him and continued to move up. In Feb 2000, some young CEOs of internet companies, and their Wall Street cheer leaders (remember Tom Galvin ?) explained how internet stocks would immune from Sir Prints-A-Lot’s tightening because they got their funding from venture capital firms. The rest, of course, is history. Aunt Yellen is repeating what Sir Print-A-lot was doing about 18 years ago. We will hear hear a lot from current cheer leaders on why the tightening does not matter as the rate is still very low. While this may be true at the present time, I doubt that 3-4 additional 25 basis-point move after March 15 will not have any significant consequences. The auto subprime loan and the auto sector itself are ones to watch.

        Reply

        • March 12, 2017 @ 1:49 am Larry

          Hey Al,
          I appreciate your insight into CATB movement on Friday. I helps to understand the “Why’s” of the market and crazy moves like that. I’m not in love with the company, although they are working on a worthwhile project. Their pipeline doesn’t seem that deep. It’s kind of iffy and if that product continues to get bad news, it will go way lower. Interesting action tho.

          Yea, I remember the crazy tech stock 90’s. I had a few friends that got hurt big, a few of them worked for tech companies like EMC and Data General. I had a customer back when I owned a machine shop during the tech boom that lost a good part of his IRA and he was close to retirement. He kind of went nuts and believed all of the hype and the gurus. He died a few years after so he didn’t see it rise again. Isn’t there a saying about the graveyard is full of investors that were right. I dunno. And it goes to show you that when those dicks running policy say it changes, they don’t give a rats behind who gets hurt.

          As far as the rate hikes go I can’t say exactly what will happen. I just know a lot of people who are overextended on their houses and credit lines and they are hurting. I also know alot of people who are retired and would hurt if the market went down. In both cases, less money going into the economy as a whole can’t be a good thing. I tend to look at the local restaurants and stores. How bad it gets will be determined how the administration in office handles it. And I think it will come overnight. Back in 1991, we had a Credit Union crisis in Rhode Island when the guvna closed the credit unions. All it took was 1 crooked banker to show the cracks in the system. People, including my mother, couldn’t get their money out for months. Not a fun thing. Personally, I think Trump is the best person to be there. That’s my own opinion, I have my reasons but I don’t argue with anybody about them. It just is what it is.

          Al, I think we are in uncharted territory. I started seeing this when I started out in a machine shop in 1978. We were buying Brown & Sharp Micrometers that were made in Providence, RI because we didn’t want the junk Japanese Mitutoyo. Well now the Mitutoyos are not junk anymore and Brown & Sharpe stuff is made by the Swiss.

          I just think the next year or 2 will be most interesting and I have a house in Maine for long vacations to prove it.
          And remember, spring forward-fall behind (that’s in no way a market prediction nor is it a hot new system!)

          Reply

      • March 13, 2017 @ 8:25 am PRice

        Bob’s math in the opening paragraph wasn’t correct. Coin flips are independent events. The previous outcomes don’t have anything to do with the current outcome.
        Gold’s daily closes may or may not be independent events. To be mathematically correct, Bob needed to make a case for gold’s daily closes being dependent events before he presented the math.
        Combine that with the moon phase comments, and it’s signs of a belief system overwhelming Bob’s thinking. He certainly knows better, so something else must be going on in his life.

        Reply

        • March 13, 2017 @ 9:35 pm traderscott

          Keep buying super well, and selling too early – it’s a killer combination – you will find out over time why it is. It has to do with risk. And good trading BTW – with no biases.

          Reply

  23. March 12, 2017 @ 12:32 pm Larry

    Al,
    Another Biopharma that I’m watching is SRNE. Trust me, I wasn’t a big bio or ag or energy anything until Scott’s assertion that they should be something to watch (I do like how that guy thinks; yugh fan) and I’m not hyping it although I have taken a small position and will continue to add when I damn well feel like it cause this IS ‘Merica and we are free, right AL?!

    So I start looking at different companies using a patented and proprietary method that I developed in my sharp and overdeveloped mind; what one thing has affected my life (ok, so the method is simple but then again, to be honest, so is my mind). Well the answer; DISEASE! (I know, but that’s how I think). Then what diseases have affected my life during my time on earth?

    Well the first was muscular dystrophy. My father was involved, as a firefighter, with MDA. I was about 5 when I first saw a couple of brothers who had it. They were older and in the last stages so it wasn’t pretty so it made an impression. Every labor day we got to stay up all night to watch the Jerry Lewis telethon to see how much the IAFF raised for the cause (my father actually met Jerry Lewis at a MDA conference back in the 60’s I think it was, said he was a “g*d da*n jerk”, but I don’t want to speak ill of the dead. Wait, Jerry Lewis IS dead right?!) Anyway, long story short, that’s was how I ran into Celldex and why it was on my radar. That and the fact it was located less than 50 miles from me (I told you, my mind is simple.)

    The second disease that had the most impact on my life is cancer. Well, both parents and my brother, his ex-wife and my niece died of cancer and my older sister has been fighting it for 20 years in one form or another. And when I was 7, I had a friend, Brenda, who contracted leukemia and died a year later.

    So, I figured that cancer therapy and treatment was an area that would be well served by any company specializing in cell therapy in regards to the treatment of cancer. That’s where Sorrento showed up (that and it’s located in San Diego and we all know how wicked smaaat those people are). Anyway, they have a great pipeline with 4 of their mAbs drug having completed Phase 3 testing in China (remember, no biases here), their CAT-T drugs in pre-clinical or Phase 1 and their CAR-TNK line in partnership with NantKwest, which is impressive and cutting edge (according to their website, “NantKwest is an innovative clinical-stage immunotherapy company focused on harnessing the power of the innate immune system by using the natural killer cell to treat cancer, infectious diseases and inflammatory diseases. NantKwest is uniquely positioned to implement precision cancer medicine, with the potential to change the current paradigm of cancer care.” Key words for me are “using the natural killer cell” and “potential to change the current paradign of cancer care”. Sounds like Mengele stuff to me, but again I’m being un-biased here and we are in the US of A so we’re safe, right AL? RIGHT AL? AALLLL?)

    Also, the largest investor in SRNE is Patrick Soon-Shiong who in 2016 was reported by Forbes to be worth $9 billion (yes billion) and is the owner of, none other than NankWest. Shiong has great ties to China and basically is a god in the field and in my estimation an outright genius (personally I believe he is a clone using DNA from Steve Jobs and Stephen Hawkins. If you don’t believe me, look it up: https://en.wikipedia.org/wiki/Patrick_Soon-Shiong cause I wouldn’t lie to you. OOpps, I just did!) So, I figured what better friend to have work with you than a young Chinese guuy with great ties to the, what, 2nd or 3rd largest market in the world who is filthy rich and just happens to be a genius in the very field that he is in! That and there is a bunch of Hedge Funds and institutional Investors holding stock and well as a list long list of respectable insiders. So I figured, what the hell. Follow it and if I use my new found powers that I’m developing using the methods (whoops sorry), I mean information I’m learning here it may get interesting and maybe I will turn a profit and get rich and…whoops sorry.

    Anyway, my head is starting to hurt. I love talking about this stuff and it’s Sunday anyway!

    Reply

    • March 12, 2017 @ 1:08 pm traderscott

      Being pretty good with fundamentals combined with having a grasp of the technical “alerts” which can warn of a stock/market coming out of its’ slumber (accumulation) is a great combo. And yes, I’m super interested in biotechs, Whether it will even be a benefit or not, who knows, but the perception will be it is a benefit. I believe it’s a mistake to just be focused on one part of markets or another. There are so many opportunities out there, and the crash mentality isn’t helpful at all. These new technology things, along with the old world real assets are loaded with opportunities. My business partner found this stock ICLD. Where she finds these, I don’t know, but it’s great to have her finding these tradeable, maybe even investable, opportunities for us.

      Reply

    • March 13, 2017 @ 10:13 am Easy Al

      Larry,

      Thank for sharing your and your family’s experience with cancers and disease. I lost my son to brain cancer several years ago. I certainly understand the painful suffering that you and your family and friend going through. If one invests in companies such as SRNE to support their cancer research and can also make money, it will be a greatest thing.

      China has 4 times as many as people in the US and the number of cancer patients is probably more than 4 times of the US. The Chinese government strongly supports cancer research and has less stringent conditions on trial. SRNE is smart to have a Chinese partner and conducts trails in China My brother-in-law, who is a brain surgeon in China. Most of his patients are suffering from brain cancers. He boasted to me that Chinese brain surgeons, on average, are better than their US counterparts because each Chinese surgeon, on average, performs far more surgeries. It did not make any difference to my son because his was diffused when diagnosed and a surgery could not be made.

      Reply

      • March 14, 2017 @ 10:06 am Larry

        Al,
        I’m not trying to Dr. Phil or BS you here so please be patient. Every family goes through trying times. The loss of a child, no matter how old is, in my estimation, THE ultimate worst! I have 4 and they are all still on earth. In 1967 when my brother was killed in Vietnam, my dearest mother and hard-as-a-rock-yankee father experienced what I can only describe as a deep soul-crushing void for the longest time. First and last time I saw him cry. But they never forgot him and got stronger through the years by the love he brought to them. My experience of watching them sink so low and then get stronger by pushing on, even on the days that they didn’t want to get out of bed, taught me to never give up. EVER! There is an old saying that “when you think you are in hell, keep going” because if you stop, give up, then hell is where you will stay. Just the fact that you are on this blog tells me that you gathered strength and kept going and believe me your strength, the strength that I saw in my parents, will inspire people. I did me and still does to this very day. Ima yuge fan!!

        Thanks for the feedback concerning the research going on in China. My bias against investing in a Chinese company is/was based on the government ideology and what seems to be an underlying environment of corruption (I know what you’re thinking; Yea, idiot, like we don’t have any in the good ole US of A!). It certainly isn’t against the people for I find the ones that I know to be kind, bright, tenacious and hardworking. I pulled the trigger on SNRE. Not a lot and maybe a little too early, just enough to remind me that I’m in (kind of like a string on your finger, sounds stupid but that’s the way things work for me). I’ll add more in the future if the fundamentals look good (EA and all that) as I’m looking long on this.

        BTW, I’m really very sorry about your loss.

        Reply


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