Stocks/PMs/US$/China – Harry Dent?
Trader Scott’s Market Blog
January 29, 2017
So the Dow traded above 20k, whoop-de-doo. The sentiment currently about the stock market is, frankly, weird. The one side claims the “Trump Bull Market” is because of all the great policies which he has up his sleeve (will supposedly roll out over time). And the other side continues to claim the stock market is a bubble and is about to crash. I’ve been vehemently disagreeing with the crash thesis for years, and continue to believe the stock market is in a secular bull market. This bull market will head massively higher, based on a much lower US$ eventually. But since I never buy into strength, especially at all time highs, it’s just about patience for the next big selloff in the general market. And for the stock market bears out there, sorry but Harry Dent is once again on crash watch, as he lays out his reasoning inthis unintentionally humorous videowith Alex Jones. The video is almost as entertaining as the Seinfeld episodes featuring “Art Vandelay”.The problem with Mr. Dent is that he’s been on stock market crash watch for years. But the good news for gold (long term), is he is as bearish as ever. Harry’s out with a new book about bubbles, and he sees alot of them, like in China. While they certainly have plenty of problems, I do not share in the belief about a bubble there, but certainly do agree about their debt problems. These debt problems and related currency problems will potentially, for me, provide a great position trade entry point. And BTW, when did it become trendy to believe every market which has had a big rally is a bubble and has to crash. I just don’t get it, to me there is not one global stock market that’s a bubble, overextended, sure, overvalued, maybe, but since when do those two traits automatically equal crash time. Just because a market has rallied alot and some folks havemissed the whole rally, does not mean it’s going to crash. The other side of it, is there are people who feel it is absolutely stupid from a risk standpoint to buy stocks into all time highs and which also have not had a big selloff in a while to “reset” the risk levels. That’s a “legitimate” reason to avoid the stock market, or any market for that matter with these traits. We can’t fight the trend, I learned that the hard way many years ago too many times. It’s much simpler, less stressful, and less frustrating to just accept the trend, no matter how absurd it may seem to do just that. And certainly not that everyone does this, but it occurs way too often – people who miss a big rally feel the move higher is not “legitimate” because they’re not in. Instead of (possibly) accepting what’s going on (the trend), and then just waiting patiently for the next great buying opportunity. Of course this assumes there was not a major high in the interim. Currently with Dow 20k, whoopee, there are alot of people who now feel it’s “confirmed” the market is going higher and are plowing in.So currently it’s just about attempting to identify the hated or ignored groups, which are potentially showing signs of wanting to turn. Or the groups in relatively new uptrends like PMs, even commodities in general.
So here is theChinese stock market. Where’s the recent bubble? The real bubble in 2007, yes, and it will take years to work off, but it’s closing in on ten years now. The ridiculous bubbly move into the 2015 high, yes. But markets are often doing these bubbly moves – a bubbly move is much different from a bubble. A bubble in global government bonds, especially in Europe and Japan, with negative interest rates for Pete’s sake – there’s the bubble of all bubbles. The idolotry of central bankers and a complete belief in their magical powers and omnipotence – there’s a bubble. Global stock markets, even the euphoria in the US shares right now – no. And many, certainly not all, of the people who believe in a stock market bubble – then what the heck was this explosion in silvercalled? How many of the folks who are super bearish on stocks will admit what silver did was at least bubbly? With few exceptions, I’ve never heard any silver permabulls admit that. But once again, it was almost six years ago, and silver has done alot of good work since then. As to silver currently, here is anupdated chartof this previously posted chartfrom about 3 months ago, showing my own short term trading and longer term buy areas. The older chart is from thispost. Those zones were used to do a few trades – a futures buy into the new lows three months ago,selling that position three weeks later, and after talking about using silver below $15.75-80 as a good long term physical buy entry point, it finally did that a couple of times last month. The bigger backups in PMs continue to be the time to step up, as more volatility in this first quarter of the year unfolds.
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.
January 31, 2017 @ 2:04 am Easy Al
The latest Commitments of Traders report on gold future shows a very significant increase in “spreading”. It seems reasonable to conclude that a high spreading number indicates that gold futures traders are very uncertain about the direction the gold prices are heading for. The article linked below suggests that a big move in gold will likely take place in a foreseeable future, although the direction of the move is not clear (from the spreading alone). What is your view on this matter ? Thanks.
The link of article is http://seekingalpha.com/article/4040777-gold-entered-uncharted-territory
January 31, 2017 @ 8:59 am traderscott
It’s good if they’re confused, spreading activity will continue to increase longer term as the bull market moves along. The COT is showing overall an increase in both long and short positions at the same time. While I certainly wouldn’t buy now, the big backups this quarter will be the buying opportunities. My post about the different buy points in a bottoming process is a favorite of mine. People will look back in a few years and say – Oh, I see what he meant.
February 1, 2017 @ 8:35 am PRice
Could you link to the above-mentioned post? Thanks!
February 1, 2017 @ 8:43 am traderscott
Sure. This post is the first one, and this post is the update.