Price Action Over the Prior Week
The metals have continued to act bullishly over the past week, with silver finally breaking through its important 17.85 level, after spending most of the week consolidating just below it. Moreover, it broke through on strong buying volume, which is what we want to see during a bullish move.
Anecdotal and Other Sentiment Indications
As I have said many times before, markets are not driven by the substance of news or exogenous events. Many social experiments have been conducted over the last 30 years which prove this to be true, despite the public’s belief to the contrary. And, as these experiments have proven, what does control market direction is something we term “market sentiment” or “social mood.”
The prevailing social mood or market sentiment interprets the exogenous events we hear about, and then “spins” that news based upon the prevailing social mood. This is what moves the market. If sentiment is positive, then the market will react positively, even if the news is negative, and vice versa. This is why we often see markets go up on bad news and down on good news, and it makes so many scratch their head, especially if they are looking to “logic” in the markets or if they are looking for directional cues from the substance of the news or fundamentals.
If you need to look to the most obvious recent event which proved this to be true, I have written extensively about how and why most everyone got the move in the market wrong after the election, while we maintained on the correct side of price action the entire time.