Sentiment Speaks: Stock Market And Gold Investors/Analysts Have Huge Egos

Jun. 05, 2017 8:00 AM ETGLD, IAU, PHYS, SGOL, UGL, DGP, GTU, UGLDF, GLL, DZZ, GLDI, OUNZ, DGL, DGZ, DGLD, GYEN, GEUR, UBG, QGLDX, GHE, GHS, GLDW, PHYS:CA132 Comments

Summary

  • Price action over the prior week.
  • Anecdotal and other sentiment indications.
  • Price pattern sentiment indications and upcoming expectations.

Price action over the prior week

Last weekend, I summarized my overall perspective in the metals complex as follows:

So, while my bigger perspective in the complex remains bullish, we may need a few more weeks of patience before this potential rocket gets ignited.

Anecdotal and other sentiment indications

For those of you who read my article posted yesterday, I am curious how many of you were so certain you were "smart money?" But, as the title of this article states, most investors have huge egos and you may be surprised as to why I say that.

As I have said so often, there is no holy grail in the market. Rather, one must approach markets based upon probabilities because there are no certainties in the market. Moreover, one must realize that markets are non-near creatures, and you must have an analysis methodology which applies to such an environment.

Yet, most investors will review the same linear, backward looking market statistics over and over, and then scratch their heads when the market does not comport to their perspectives based upon such linear paradigms. Here is an example from a comment to one of my articles last week:

"The stock market seems absurdly overpriced to me. Margin debt is very high. P/E ratios are very high. . . it is quite clear that the stock market has decoupled from reality"

Well, one has to ask "whose reality?" It seems that if people do not understand something, they either call it a name, make fun of it, or simply discard it as completely foolish or "decoupled from reality." And, yes, I have faced this quite often in the comments section from those who do not understand Elliott Wave analysis.

This past weekend, I read another article wherein the author noted his perception of a "ridiculous disconnect. In short: stocks are out of control. . . Long story short, Friday plunged us even further into the equity disconnect twilight zone. . . . Of course, the valuations don't make any sense either . . . It is quite literally out of control."

But, if the market is not making sense based upon the prism through which one analyzes the market, maybe it's time to consider that the prism does not work in understanding the market? I mean, isn't that what this person is saying? He views the market as being in a "ridiculous disconnect," in the "twilight zone," not making any sense, and "literally out of control." Yet, there is no consideration for the failing of the methodology or paradigm being used to come to those "reasoned conclusions," which then resigns him to name calling.

Price is truth in the market. As Jesse Livermore would say, "A prudent speculator never argues with the tape. Markets are never wrong, opinions often are."

Now, if you believe the market has "decoupled from reality," then I can assure you that it is your ego talking, and not your analysis. What you are saying is that because YOU don't understand what the market is doing, then it must be crazy. However, an astute investor would be searching for what does make sense in the market, especially when the commonly followed paradigm does not.

So, no, you are not going to identify a market top based upon margin debt, P/E ratios, or any of the other commonly followed matrices. And, no, you are not going to identify turns in gold based upon market news or a Trump tweet. That is because these are not controlling the market.

Will you resign yourself to calling the market names when it moves opposite your expectations? Or, will you attempt to identify what has been tracking the market rather well? And, that is why these articles are entitled "Sentiment Speaks." Are you willing to put your ego aside and listen when sentiment is clearly speaking?

Price pattern sentiment indications and upcoming expectations

At this point in time, I cannot say my expectations in the complex has changed. My primary expectation is still to see downside consolidation in the overall complex. The only thing that would change my mind at this point is a strong move in GDX through the 24.65 level, and/or GLD breaking strongly over its April high. Barring those occurrences, I still expect the next week or two to see pullbacks in the overall complex.

Housekeeping Matter

Lastly, it seems that Seeking Alpha has changed the way they tag articles. So, while my articles used to be sent out as an email to those that follow the metals complex, they are now only being sent out to those that have chosen to "follow" me. So, if you would like notification as to when my articles are published, please hit the button at the top to "follow" me. Thank you.

This article was written by

Avi Gilburt profile picture
69.19K Followers
The #1 Service For Market and Metals Direction!
Avi Gilburt is founder of ElliottWaveTrader.net, a live trading room and member forum focusing on Elliott Wave market analysis with over 6000 members and almost 1000 money manager clients. Avi emphasizes a comprehensive reading of charts and wave counts that is free of personal bias or predisposition.

Avi is an accountant and a lawyer by training. His education background includes his graduating college with dual accounting and economics majors, and he then passed all four parts of the CPA exam at once right after he graduated college. He then earned his Juris Doctorate in an advanced two and a half year program at the St. John’s School of Law in New York, where he graduated cumlaude, and in the top 5% of his class. He then went onto the NYU School of Law for his masters of law in taxation (LL.M.).

Before retiring from his legal career, Avi was a partner and National Director at a major national firm. During his legal career, he spearheaded a number of acquisition transactions worth hundreds of millions to billions of dollars in value. So, clearly, Mr. Gilburt has a detailed understanding how businesses work and are valued.

Yet, when it came to learning how to accurately analyze the financial markets, Avi had to unlearn everything he learned in economics in order to maintain on the correct side of the market the great majority of the time. In fact, once he came to the realization that economics and geopolitics fail to assist in understanding how the market works, it allowed him to view financial markets from a more accurate perspective.

For those interested in how Avi went from a successful lawyer and accountant to become the founder of Elliottwavetrader.net, his detailed story is linked here.
Since Avi began providing his analysis to the public, he has made some spectacular market calls which has earned him the reputation of being one of the best technical analysts in the world.

As an example of some of his most notable astounding market calls, in July of 2011, he called for the USD to begin a multi-year rally from the 74 region to an ideal target of 103.53. In January of 2017, the DXY struck 103.82 and began a pullback expected by Avi.

As another example of one of his astounding calls, Avi called the top in the gold market during its parabolic phase in 2011, with an ideal target of $1,915. As we all know, gold hit a high of $1,921, and pulled back for over 4 years since that time. The night that gold hit its lows in December of 2015, Avi was telling his subscribers that he was on the phone with his broker buying a large order of physical gold, while he had been accumulating individual miner stocks that month, and had just opened the EWT Miners Portfolio to begin buying individual miners stocks due to his expectation of an impending low in the complex.

One of his most shocking calls in the stock market was his call in 2015 for the S&P500 to rally from the 1800SPX region to the 2600SPX region, whereas it would coincide with a “global melt-up” in many other assets. Moreover, he was banging on the table in November of 2016 that we were about to enter the most powerful phase of the rally to 2600SPX, and he strongly noted that it did not matter who won the 2016 election in the US, despite many believing that the market would “crash” if Trump would win the election. This was indeed a testament to the accuracy of the Fibonacci Pinball method that Avi developed.


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Disclosure: I am/we are long PHYSICAL METALS AND VARIOUS MINING STOCKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have short term hedges on my long positions.

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