JC Parets: Precious Metals Have Shown Major Relative Strength
JC became a Chartered Market Technician in 2008. Fortunately for him, his newly acquired skills helped him catch the 2008 market correction early and he did very well during that period.
He has been bullish for the last year on precious metals, and a part of his thesis was a call for a weaker dollar. However, the dollar index has been flat while gold and silver have shown a great deal of relative strength. If the dollar weakens, that would likely boost the uptrend in metals while if it strengthens that may weaken gold.
Recessions are hard to read in advance, so he recommends investors use the best leading indicator, which is the stock market itself. Watch what the smart money is doing as they will often pull money out the markets if they anticipate a slowdown. Watch for new relative lows in the S&P 500 compared to treasuries, gold, and other asset classes that may be a clear warning sign of a recession.
JC discusses his favorite indicator “price,” as it is often overlooked, and underappreciated. His approach is to keep things simple as every other indicator like momentum, and relative strength is just a supplement to price.
He recommends several authors on technical analysis and investing. He likes the top-down inter-market approach that John Murphy teaches.
Investors should approach investing as a life long learning process and ask questions. It’s essential to embrace new tools and ideas. Risk management is also vital, and learning about human nature by studying behavioral finance will help you to understand markets and yourself.
Time Stamp References:
0:40 – His CMT education and luck in 2008.
2:40 – Bullish on gold and silver since last year.
5:20 – Positioning for a recession.
7:00 – Recession indicators.
8:40 – Favorite indicators.
13:20 – Authors and books on T.A.
15:20 – Keep learning, question and try new things.
Talking Points From This Week’s Episode
• Gold may become a currency story.
• Watch the markets as recessions are lagging indicators.
• The best indicator is the price.
• Look at what the smart money people are doing.
• He lists his favorite technical analysis authors.
• Why risk management is key?
JC Parets, CMT is Founder of All Star Charts and is one of the most widely followed technical analysts in the world.
He specializes in finding the most opportunistic risk vs. reward propositions while at the same time bringing a top/down approach to the marketplace whose wide spectrum is rivaled by few. JC begins with a long-term global macro perspective and then works his way down to the individual sector and industry level before ultimately isolating the stocks that best portray a particular thesis.
In 2008, JC earned his Chartered Market Technician designation (CMT). His work has been featured regularly on Bloomberg, CNBC, Fox Business, ABC, CNN, Wall Street Journal, and many other financial media outlets around the world. You will often see JC as a speaker at some of the top investing conferences and has also been invited to speak at Harvard, Duke, NYU, University of Chicago, and Hong Kong Baptist University, among other institutions, about technical analysis and behavioral finance.
JC received his bachelor’s degree from Fairfield University. He also earned the CMT designation as well as being named one of the top finance people to follow on Twitter by Business Insider.