Trader Scott’s Market Blog
December 15, 2016
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The only winner from the aftermath of the Fed meeting was the US$. My extreme bullishness on the $ has been laid out in post after post. Too many people continue to fight the uptrend. I will continue to use bigger selloffs in the $ to buy using ETFs. This $ uptrend is the main reason for my view that the $ would keep a lid on any huge gold rallies to start taking out much higher resistance levels until Spring next year – the first chance for a major top in the USD. But for investors to use the big selloffs to buy. Last December my focus was on gold and the miners. I did some selling/shorting of those during this year. And my focus this year would be beginning in late November into December the miners and silver. I have no interest in gold, except as a proxy for the group. Last week in a comment reply, I repeated my approach currently in the PMs:
“It’s the way I accumulate in these areas, meaning to buy into the larger selling waves around support areas. But part of that approach is to sell some into rallies/hedge. This approach won’t work for me without selling some into rallies, and using profits to add on. Building a position. But not trying to pick/guess the bottom. Sometimes we can get very close to the bottom (like the archived December 2015 post) doing this, but that’s not a necessity for this approach to work real well. Until I’m much more certain of a bottom, I will continue selling into rallies. Please look at the posts from the end of last year, when I kept saying we’re not quite there yet. I needed to be more certain, but even then I was allowing for lower lows. The strong hands never attempt to pick bottoms, they build positions as a process and they get out as a process. It’s much less stressful this way. I understand many folks are not going to do this approach. But, definitely the alternative is to buy in tranches. A bit at a time, but using a guide, such as at support, or below support. Layer in, and if possible, layer out. It is a much better approach. I will occasionally put in a bigger order, but I need to see several distinct things first. The lower lows in gold continue to show fading volume, which is generally bullish, but it also means lower lows. That’s because we need a powerful sign of strength first, like a selling climax. We have seen a minor selling climax in silver on 12/02, but that will likely see a retest. You’ve seen my posts where I’m avoiding buying gold itself, only silver and the miners. Gold is the proxy for the group for me. You don’t have to be a trader per se , but even investors should understand some principles of trading. It is very beneficial for timing investments also. But yes, buying in tranches (accumulating) to me is a much better approach. If the market takes off sooner, at least you have a position. This game isn’t easy as you know.”
Gold has to see a powerful selling climax for me to become more aggressive, otherwise I will continue to sell into rallies. The strong hands are not showing up in a big way to buy, they are doing some short covering, but they need to get much more aggressive. Silver again rallied right up into resistance at $17.20. There are a lot of buy stops right above there. The last time I bought silver was November 24th, Below $16 is a good place for long term buys. So I’ll just keep playing this game until a powerful sign of strength comes in and then reassess – but now, using new lows in the miners to cover some hedges and nibble a bit. But, PMs are very bullish long term, we just have to get past this period. Much of the weight will come off of gold with the big problems in Europe, with the breakup and the bank derivatives. Gold and the $ can rally together at times. But for a long time, it’s been my focus to watch gold’s performancevs. all the other currencies. And also, recently a lot of questions came in about the relative outperformance of the miners and silver vs. gold. And the answer was, my concern is the opposite – the underperformance of gold vs. the other two. Until gold starts leading, I’m concerned. So sentiment wise we’re there and it is important, but it takes much more than just bearishness to set a great bottom.
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.