Market Outlook – PMs/US$
Trader Scott’s Market Blog
November 17, 2016
Gold and silver went to more new lows today, which is good and all part of a bigger set up. There are shorter term trading opportunities here, but I’m only going to discuss the investment opportunity in this time frame – into the end of November (with re-tests of the lows) – which most of us should focus on. There will be more selling waves, but the strong hands are starting to come back in a bigger way. I am obsessive about the entry point, most people shouldn’t be. But using the pronounced weakness to buy is very preferable. I have drawn in the exact same buy zones numerous times in gold. And I use gold as a proxy for the whole group. This situation is going to take some time, but we need to ignore the (after the fact) “reasons”/excuses as to “why” gold is going down – such as the $ strength. And the US$ went to more new multi-year highs today. But of course, as the $ is at multi-year highs, now many of the folks who were bearish for years are suddenly finding the “fundamentals” of the $ bullish. There is one guy in particular who has made a fortune (I assume) selling his books about how the Fed can easily weaken the $ at will. Now all of a sudden he’s bullish on the $. So sentiment wise, at least, the $ is beginning to be not as solid up here. Intermediate term I’m still very bullish on the $, but this is a horrible entry point to buy. We’re hearing all of the “reasons” now as to why the $ is rallying, but where were they a couple years ago. The $ has discounted an interest rate increase by the Fed wizards next month. And there are zero central banks who want to see the US$ rally this much, this quickly. But this big rally was inevitable, as there’s just too much upside pressure. And in that linked post, I said the central banks are in big part responsible for the upside pressure on US Treasury yields, due to the defending of their own currencies. That will continue, but in the short term bonds (prices) are very oversold and closing in on a short term bottom – (inverted) above 2.40% on the ten year yield.
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.
November 18, 2016 @ 5:58 pm traderscott
The following is a question from a subscriber:
Gold and silver have made new lows but the GDX has not. Plus the $ has been going up 10 days in a row. Are you expecting (at least) a short pop in PMs?
November 18, 2016 @ 6:02 pm traderscott
I received the above question and here is my long-winded answer:
This is how I have to answer – I actually don’t make “calls” on markets. It’s about risk and probabilities, hence entry point, stops, and taking profits. The 3 parts of every trade. So for GDX, I did some longer term nibbling a few days ago. But I sold a tad and did a bit of a short sale into the rally. That’s not a prediction of anything. But it is my strategy when closing in on what I believe are major turning points. And I suggest reading my posts from Sept., Nov., and Dec. of 2015 for a much better perspective on this topic. It was done in real time. I believe we’re closing in on a great long term buying opp. This is just probabilities. I have taken 1/2 profits on the short sale. All of these profits will go into long term buys into (if) lower prices. But entering exactly right here long or short (as a trade), I would not myself do. GDX is in the middle of a short term trading range. I never initiate a position in the middle of a range. Let it come to you.
And yes, very observant – the $ is getting overdone. And I believe we could see sort of the same situation with the $ now, as we saw with gold on election night – an upthrust thru resistance and then a bigger selloff. It would not likely change my bigger view of a bullish $ though.
November 20, 2016 @ 8:18 am Ying-Fen Chen
Thank you, Scott.
It is great that you also posted your answers to the readers. These answers are very helpful for me, also.
November 20, 2016 @ 11:19 am Randal Magnuson
Pure Gold: “It’s about risk and probabilities, hence entry point, stops, and taking profits. The 3 parts of every trade”….thank you!
November 20, 2016 @ 11:26 am traderscott
Right Randal – it’s just trading, not rocket science.