Trader Scott’s Market Blog
November 16, 2016
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And the Trump supporters are now ignorantly and dangerously doing just that. There’s always a “reason”/excuse given after the fact as to “why” a market did this or that. First of all, who cares – how does telling me something after the fact (except for educational/experience adding purposes) help me in any way to make profits in markets. Secondly, if we’re going to now credit Trump with the “surging” stock market, are we going to blame him for a “plummeting” one. And will we blame surging inflation (next year) or 3% ten year yields (late next year) or Euro bank blow ups on Donald. Which brings me to the most important point market wise. Election outcomes do not change trends they just follow them. The trend is in place, the movement, society, economics, business, industry, politics, confidence, etc. So election outcomes are more like confirmation and corroboration rather than change. The change had long ago begun. There will be an upcoming post on this, but what this means for markets is almost a confirmation of the continued loss of confidence in the old institutions – such as central banks (CBs). This will have profound implications for the the massive global government bond market, as CBs will continue to slowly lose control of their bond markets. You can see the tremors occurring and they will just get bigger and bigger over the years. The Trump win didn’t “cause” the recent explosion higher in yields, it only magnified it. I have been doing post after post about the massive distribution area of the long term US Treasury bond (inverted) and I’ve been calling it the most important chart in the world. And the bear market in bonds will finally take hold in 2017. And this, along with the derivatives situation, is what has me truly terrified.
As for PMs, I laid out my scenario a few months ago well in advance of what’s going on now. The better entry zones in price were laid out, as well as my belief that later in November would be a re-test of the December 2015 lows (January 2016 for the miners), but at a much higher low. From those lows there was a first wave advance into the July highs, and since then we needed to go back into a re-accumulation phase to build up the energy to break thru some serious resistance areas on the charts, which have been posted repeatedly. The next up-wave in PMs, the 3rd wave, (and no I am not an Elliot Wave guy, except for very rudimentarily) will likely be accompanied by a new push lower in confidence levels in governments and CBs, possibly accompanied by Euro bank problems/Euro currency problems/US$ strength. If you’re a trader, great, there are always opportunities. But I’ve been trying to urge people – we’re closing in on an INVESTMENT area in price/time, but only to buy into weakness and below support. And it would also be super helpful if the gold permabulls would stop predicting gold would end the year at $2000. They’ve been saying that for 10 years and they won’t shut up.
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 17, 2016 @ 3:09 am MQB
Great Post Scott. As the master of newbie silly trading questions here are two/a few… Can you explain the whole bond bubble thing for us trading simpletons? What is the/a likely endpoint. Presumably anything is possible but this is where you see the big reset or similar coming in?!? How to do you work out entry points, presumably experience, charts and the force. I think that’s it for now. Seasonal wishes to all.
November 17, 2016 @ 4:31 pm traderscott
All bubbles (and all movements in markets for that matter) are psychological events. Bubbles are just hugely magnified. “Everyone” knows you need to own that certain market. And since my view of markets is always about supply and demand, a bubble is basically total ownership of that asset by the weak hands. And understand, plenty of institutional capital is part of the weak hands. A market built upon lots of strong handed ownership is a strong market and visa versa. But all of this explanation is ZERO help in timing markets. It’s just a sort of definition. It’s why I stay after this issue, because for years the repetition of so many folks regarding the bond market crash was basically useless, as it is my belief 2017 is when we finally have to get very concerned. But even then, it’s not likely to “crash” – more of a slow, but persistent increase in yields. And I have no idea about the endgame, it would only be a guess, and that’s of no value to anyone (especially me). I’m more focused on the TREND and the huge DISTRIBUTION process – for the entry and exit points. As far as entry points, that is a very long winded concept, and it took me years to even get decent at it, but I keep rolling it out over time. I know you’ve gone thru a lot of the archives Q, just keep at it.
November 17, 2016 @ 10:58 pm MQB
Yep all makes sense. That’s great Scott. This line helped the penny drop a lot ‘a bubble is basically total ownership of that asset by the weak hands.’ Until next time ;-)
November 17, 2016 @ 3:29 pm David Parker
Dollar has pushed through 100.5 and PMs have turned down now that Yellen has clearly stated that a rate hike is coming in December.
It looks like we are very close to an inflection point and both the dollar and the PMs switching direction.
You have spoken about both the dollar and Gold moving higher in tandem. Although both are mostly inversely correlated, there have been times when both have moved up together like in 2005 and in the first half of 2010.
Where do you the see the final top in the dollar and is there a time frame and price you are looking at right now? After all USD is in a long term bear market and we are in a corrective rally since 2008.
November 17, 2016 @ 4:08 pm traderscott
David, I actually view the $ as being in a bull market/uptrend, but your point is well taken. In old posts, I stated my belief later in 2017 H1 for a top and possibly THE top in the US$. Gold and the $ moving together will likely generally wait for the banking problems/Euro break up. But gold is doing a good job of discounting future $ strength.
November 18, 2016 @ 12:18 am Roman Dudek
Regarding PMs: Would you please explain what lows do you have in mind saying …”that later in November would be a re-test of the December 2015 lows (January 2016 for the miners), but at a much higher low.”… Particularly the ‘much higher low”- is it i.e. May’s low or else?
November 18, 2016 @ 12:38 am traderscott
Since I use gold as the proxy, yes I have said below your May low would be a great entry point. I’ve been running the same gold chart for months showing the better buy zone. But keep something in mind – if you read my December 2015 post. I’m a trader, not an analyst, so as we get closer, I keep trying to hone in by the technical action around the lows. That’s why last December, I said it’s time to start buying. We’re getting closer.
November 18, 2016 @ 2:34 am Roman Dudek
Thanks Scott. One more question. With all this bearishness in PMs lately do you think gold might re-test last December lows since already dropped to around $1205?
November 18, 2016 @ 2:41 am traderscott
These are markets, I’ve seen a lot and anything can happen, but no it’s not my outlook on gold.