Market Update

Trader Scott’s Market Blog

November 3, 2016

This blog, for quite a while, has chronicled my bearishness on global stock markets, and some specific sectors were identified as such at much higher levels than where they are now. The stock market went to more new lows today. For a few months, I kept talking about the coiling markets and how range compression always leads to range expansion – ALWAYS. And we are now seeing what I meant by that. Almost everyday I kept running this chart of the IWM. We are now in the range expansion phase, but we ain’t seen nothin yet. Both the volatility and the volume have picked up and are following the prices lower. That’s bearish. But neither the volume, nor the volatility are warning of any climaxing event/ending action. We’ll see over the next few days. I expect much lower lows eventually, but the market is getting quite oversold currently. So as a trader (it’s my mentality) – having short positions makes me edgy and uncomfortable. And, after a market has come down quite a bit over a short period (nine days straight), I always remember what one of my wonderful mentors used to say to me as a young floor trader: “Kid, I’m so bearish, I can’t see straight.”In other words, he was so bearish (and biased), that he needs to cover some short positions to be able to think straight again. (So you need to know my own bias.) So that’s what I did today, even though my bias is bearish- I covered some short positions. That is just pure trading skills. It’s not a “prediction” of an impending rally, it’s just a way to book some profits and to reduce risk. It’s how we survive markets, and it’s also why I rarely ever hit home runs. But after 25 years at this, I’m still around – which is my only goal. And no matter what the idiotic “employment” number is tomorrow, I would expect an attempt at a short covering rally. I still have short positions and will use rallies only to add on (re-short). More specifically what I believe has plenty of down side room is the handful of big companies (no specific names will be mentioned) which have been buoying the QQQand here’s a shorter term QQQchart with support and resistance.

And PMs, no change in my view and strategy for now – as per yesterday:“So now, I will do some light selling of gold, and likely also do some shorting, if gold trades above a large (for now) resistance area around $1305.” So today November 2, gold did trade above $1305, and I sold some gold and also shorted via GDX.”I am short term cautious on gold currently. And I take a different approach to markets than most people, so any further rallies in gold from here will make me more bearish. Nothing has occurred to change my mind about the big picture bull market in gold, it’s just short term cautiousness. And no change in my view about GDX – the chart shows the short term range and the bigger picture support area.

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.