Market Wizard Warning: There Will Be Total Chaos
Trader Scott’s Market Blog
February 4, 2017
There is an interview with Victor Sperandeo, where he says the Euro is going to die, “people will stop buying US stocks” (not sure what that means), and he is super bullish on gold. Victor is one of the original Market Wizards, and he’s a sharp guy. While it’s unclear to me what his view is about the US share market – a crash or just lackluster performance, I am completely on board with his view about the Euro. Currency prices/values are either relative to each other, or to something else like gold for instance. It’s understandable why so many people are bearish on the US$. The $ sucks, it’s just that virtually every other countries’ currencies are either suckier, or way suckier, like the Euro block. And it’s been part of my reason for being so bullish on gold since believing it was time to buy in December 2015. And from two years agowhyit’s important to continue watching/monitoring gold’s performance against all currencies. For the people who have been following this, gold is slowly, but persistently regaining its’ historical monetary role. It has performed wonderfully against troubled currencies like the Turkish Lira. But goldagainst the Yen (inverse to the $), for instance, is still in sync. That correlation will need to break down, and I expect it to, for gold’s more sustained moves. All gold needs to begin to “surprise” the mainstream, is for there to be big problems with one major currency, not necessarily the US$. It’s how I can be generally bullish on gold and the $ at the same time, although certainly not every single week. I turned cautious intermediate-term on the $ late last year. But the Euro disaster – politically, and banking-wise is still to come. And it’s value relative to the $, is the point. But this year, the $ won’t be the only alternative. We just need to get there first. The interview (edited) is below:
Victor Sperandeo: “What people are underestimating is the upcoming election in the Netherlands on March 15. A month later France is going to hold their election Victor Sperandeo continues: “Greert Wilders, who is running to lead the Netherlands, is going to win that election. He was arrested for making the claim, in a nice way, that Muslims should stay in their own countries and not come to the Netherlands. So he is pissed off and so are many of the people in the Netherlands. And Wilders is going to win that election and get the Netherlands out of the EU. And over in France, Le Pen is now in the lead and she is going to win and pull France out of the EU. The euro is going to go away and each country will go back to their own currencies. So what is going to happen in the aftermath of this, Eric, is complete chaos and world depression! The EU is toast and the whole world is going to feel the effects of the collapse of the EU. As an example, there will be extreme inflation in countries such as Italy. And what is going to happen to the U.S. stock market? People will stop buying U.S. stocks because the whole world is going to go into a depression. There will be absolute chaos starting on March 15 and nobody is talking about it. The populist movement, which are people who have been ……, are moving away from the globalist movement. And when 27 countries get their own printing presses back it will be chaos. I have been tempted to go 100 percent long gold. It’s such a slam dunk that the world is in trouble. The EU was built on France and Germany, so without France there is no EU. Gold will be in extreme demand when this unfolds and that is why the gold market is already firming up. Eric, I promise you there will be total chaos.â€
About
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.
'Trader Scott’s Market Blog – Market Wizard Warning: There Will Be Total Chaos – February 4, 2017' have 14 comments
February 4, 2017 @ 5:20 pm Jon
Yeah, I like Victor (the Italian New Yorker attitude thing). Perhaps he means folks will seek total risk off initially before moving out of bonds back into stocks. Perfect setup for final low in yields and a healthy stock correction. Miners are once again showing relative strength to PM’s with silver leading gold (like last fall). Not good…
February 4, 2017 @ 7:15 pm traderscott
The PMs as a hyper emotional market tend to end moves with a final blast. So that’s what I’m watching and am concerned about the upcoming week. So gold blasting thru this resistance and into the $1245ish (the tradeable low I believe it was Oct. 7th), would be quite a problem. It’s why I keep talking about a bigger backup. Not because it will or it won’t, my point is a bigger backup would really help to solidify gold, NOT weaken it. I really need to feel comfortable with a big position, a solid market increases “staying power”. It’s why I kept repeating right before the election, that we really needed a selloff first, before the rally. The goldbugs at the time were wildly claiming the opposite – the election would send gold to the moon. It was exactly what I didn’t want to see and warned about it well in advance, and said gold above $1305 and I’m selling some gold, and also shorting it. It was not a bullish market then intermediate-term. The gold bugs right now are not getting too cocky, but just wait what a move into $1245 will do to them.
And a big stock market correction would be fantastic for putting some cash into. It’s amazing to me the bifercation in sentiment. You have both sides, and not a big middle. The folks who continue to call for a crash, and the permabulls, or new bulls, who see only blue skies ahead – it’s weird. And from the recent post for what to watch in the first year of a new administration and the stock market January effect. Here is the pertinent – “blah, blah, blah,” and then…. “But if January finishes above the first week’s low, then we tend to see a great buying opportunity in late February-early March. So far this month, the high was January 6th at 19999. And the low was 19775 on January 3rd.”
February 4, 2017 @ 7:43 pm Jon
The short term technicals I’m looking at indicate a dollar rally and PM selloff this week. But, It would not be surprising to see a push above 1225 gold to get everyone long before the selling action. The PM’s acted counter to normal last week based on previous econonomic/FED events so I think the tide is turning. Guess we’ll see..
February 4, 2017 @ 8:08 pm traderscott
Yes Jon, just keep monitoring gold against basically everything else, 2017 is the year – FINALLY.
February 5, 2017 @ 1:17 am Easy Al
Most of the time during the 2001 to 2007 period, the direction of the gold movement were in sync with Euro as it moved from about $0.82 to $1.51. I do not think it is likely that gold will be in sync with Yen for that long. If dollar strengthens and gold drops, the afterward upward moves in precious metals and miners will not only be more powerful and durable (as you suggested) but also much safer to buy metals and miners.
Scott, what is your view on platinum and palladium ? For quite some time in the past, platinum used to be a few hundred dollars more expensive than gold. Recently, however, platinum has been about $200 cheaper than gold. The main industrial use of platinum and palladium is catalysis in auto emission control. The modern gasoline engines have largely switched from platinum to less expensive palladium. About 70% of the annual production of palladium is used in autocatalysis. The diesel engines, however, still use platinum, which accounts for about 40% of the platinum demand. The tough emission standard which recently took effect in China will be a plus for both metals. The big growth of the subprime auto loans in the US can be a short negative for them. Furthermore , if, a decade (or more ?) from now, electric vehicles with reasonable drive distance and short charge time are available with not so high price, the auto demand of platinum and palladium will be reduced. Nevertheless, for next few years, electric vehicles will unlikely have any significant effect on the use of the two metals on automobiles. Based on regress to the mean, it seems reasonable to expect that the price of platinum will move above that of gold. If the regression takes place in the context of bull market of precious metal, one can see the big potential of investing in miners of platinum group metal elements.
February 5, 2017 @ 2:26 am traderscott
Man you really do your research EA and well planned, nice to see. I agree with all of that. I do expect gold, even the miners to an extent, to be currency-like really 2018 and beyond, but H2 of 2017 a bit more “obvious”. Gold is not going to do what I expect without unhitching from all currencies (expect a few, maybe the Ruble, and well down the road the Yuan). And then from the US$. One of my market weaknesses is always looking for something to get concerned about. But the bigger reactions within an uptrend make me feel better about a market, as these will only strengthen a market. I do not believe in the “it must close above x-price before it’s a buy” approach. I really would like to see a reaction in the PMs, before they go much higher. But gold is not listening to me, so we’ll just have to let it do its’ thing. And to really start watching that gold/US$ relationship. We’re hearing a lot more bearish commentary about the $. A 98 handle would be helpful for more bearish sentiment. But once again, the $ is not listening to me.
And yes, platinum is what you say. I do need to talk about it. The electric car thing is way overhyped for now (but it’s definitely a big market down the road, pun intended). You bring up some good issues about demand for the 2 metals, but what about the supply? I’ll pass on palladium, I don’t understand it, but the future supply issues for platinum are not at all certain. I do believe platinum is in a bull market, but now it’s just about waiting for the next good shot at it. Get your miners list prepared. I do not buy into strength, so that is generally my approach.
February 4, 2017 @ 5:33 pm David V
Well that ought to send the $ in the opposite direction they want, with everything priced in the $ they’ll. have to pull a rabbit out of their hat and one out of their sleeve.
February 5, 2017 @ 7:48 am Larry
I have been watching agriculture since you mentioned it a while back, which is when I first started reading your market blog on Radio One, and noticed that WEAT has had the crap kicked out of it for the last 4 or so years. Looking at the chart, it appears that it may have put in a bottom at the end of 2016. My weekly chart shows that since the latter part of December until a few weeks ago it had a good short run but has been pulling back as of late.
Scott, I’ve been dabbling in the market for a number of years trying to catch a few measly crumbs that happen to fall from the table but for the most part have had my ass handed to me. I’m now trying to built my technical skills to better time the entry and exit points.
Anyway, I see what I believe a head and shoulders pattern having formed in weekly chart of WEAT. It also appears that the range in which it is trading is tightening up as are the bollinger Bands. Several of the indicators have turned up and it looks like there is accumulation. Also, the trading platform that I use showed a Strong Pivot Point to the upside on 12-19 which would have been the second bottom on the daily chart.
It looks to me that it wants to pull back some before breaking out to the upside. I’m looking to get in shortly figuring in the $7.05 range and buying stronger if it goes down to the $6.75 range. I see myself going long for the next year as I see, from my research, that wheat futures have turned up.
My question is: am I going in the right direction or is there a major flaw in my assessment?
February 5, 2017 @ 9:07 am traderscott
A couple of things Larry. My belief as per the post from early January 2016, a secular bottom in the commodity market (and PMs). I missed the bottom in base metals in January, but energy and ags (as a group) bottomed over the following 2 months. So to ags, I said my way of investing in ag scoomodities was via RJA in March, not individual ags. RJA had a good run into the summer – sold some and started adding into the weakness later on. And yes, there are several posts mentioning how wheat is really holding the whole ag sector back. So it’s understandable the appeal of WEAT, but I’m not doing it. As far as the TA, the reason for never writing about TA is I don”t use it, abandoned it many years ago. As far as accumulation, absolutely. So if that is the situation, then there are a few approaches, but buying into weakness and layering in (both of which are in your plan already) are the basics of those approaches. Understanding signs of strength are a very powerful tool, and using the weakness afterward to enter. So your approach is good, and there is not a right way. The overall result is the only thing which matters. Just work hard every single day, plan everything out well in advance (which you are) and have conviction in what you’re doing, because a lot of weird things happen in markets on a day to day basis to get us to abandon our original plan, it’s what makes this so tough. I like it.
February 5, 2017 @ 1:00 pm Larry
Scott,
Just out of curiosity, what was your reasoning behind the decision to abandon TA? You don’t use ANY aspect of it?
Thanks for your patience.
February 5, 2017 @ 2:21 pm traderscott
It just didn’t work for me, it was always uncomfortable. Waiting for markets to rally or decline enough to “confirm” things just doesn’t feel right to me. But we all have to do what’s most comfortable for ourselves. My mentor SW was totally clueless about charts, but he was an outstanding trader. It was his trading skills which made him so good. When I started understanding that, it just naturally allowed me to move in another direction. Now it’s mainly support/resistance, accumulation/distribution, and of course the trend of the market. And the method for me is just part of an overall approach, and not to obssess about the method. And really, what’s the point of a method if we’re going to freeze at the most opportune times to enter (or exit). The fear and the greed, which really just understand that and do the opposite. You don’t even need a method then. There is way too much emphasis and focus on the method, and not nearly enough on getting our own psychology to where it can be most effective in markets. Being “comfortable”/automated with buying the scary selloffs and unloading it into the greed, who needs a method for that.
February 5, 2017 @ 9:22 am Jon
Years ending in seven have been troublesome. Then theres this:
https://www.thefelderreport.com/2017/02/03/3-popular-investment-strategies-that-will-look-idiotic-30-years-from-now/
February 5, 2017 @ 9:41 am traderscott
It’s amazing the eerie calmness right now Jon. And the approaches to investing based upon calm, ignoring approaches based upon volatility. What in the heck is this world going to look like after a 5, 10, 25….year bond bear market. It’s scary how little thought has gone into that by 90+% of the investors, and 100% of our “leaders”.
February 6, 2017 @ 1:14 pm The Seer
Great day to accidentally over sleep and wake up to gold and silver up! I am a 100% in person. Real money and in the ground seem to be the safest place to be as the world rebalances from all the corruption . . . . whenever I do get in not at the best spot (no pun) in a miner I know I am with the trend and mistakes will be over in time . . . . patiently relax . . . we are finally moving along. Yes, EU crumbling is going to really shake things up and could detach metal from the $. So glad I do not live in Europe and we need to prevent becoming Europe here.