Market Update and An Unconventional Approach to Charts

Trader Scott’s Market Blog

First, quickly about my unconventional approach to charts.
There is only one reason, that I use charts – and that is to identify and to judge the ongoing battle between supply and demand. And I biasedly believe that my method is the best way to achieve this.
This method shows the true, non-manipulated, up to the second supply vs. demand situation. One reason that this is so important relates to the TREND of the market. In an UPTREND, the
demand overwhelms the supply and visa versa for a DOWNTREND. That’s the simple definition.

And FYI, when you hear supposed chartists talking about all of their ridiculous, pretty little chart patterns like double bottoms, head and shoulders tops, wedges, etc., just ignore it. It’s virtually useless.
And when you hear people say that if a market goes below a certain price, then it’s automatically bearish, just ignore that also.
In fact (and I’m sure Andrew can appreciate this), I love buying into that exact scenario when most everyone else is selling, because they believe the market supposedly broke support, so they’re now bearish.
I will go more in depth about these topics in an upcoming blog post with charts included.

Now to markets – bonds, stocks, PMs, commodities and lastly US$.

My pre and post Brexit positioning has changed very little – a big investment position in US Govt. Bonds (purchased 16 years ago, when yields were way, way higher than today),
a big investment position in PMs,
a position in agriculture which I’m looking to add to,
and lots of US$ cash instruments.
And a small trading position short the QQQ ETF, which is currently a losing position for me.

To Bonds – even tho the massive global bubble continues to inflate, I have continued to repeat “Do not short bonds, except for a short term trade.” At the same time, anyone who buys bonds now as an investment is insane. The negative interest rates (what an asinine oxymoronic term) are allowing governments and central banks to continue to be completely reckless.
While I do not believe that negative rates are coming to the US, I will repeat that the next brilliant idea is true helicopter money by Q2 of 2017. I hope that I’m wise enough to exit my bond position before this volcano blows sky high.

I’ve often stated my wild bullishness in stocks since the generational low in stocks in March 2009, but I absolutely would not be buying stocks as an investment currently. I currently have a short position, which I will look to add on to under certain technical conditions. Specifically if the volume greatly expands on the next sell off, then I’ll short into the following rally. If that does not occur, I’ll probably exit and step aside for a bit. But I do expect to see two outstanding buying opportunities – this Fall and next Spring.

As to PMs, do I need to repeat what I’ve been saying since mid-December 2015 with gold under $1050: just ignore everyone and use price weakness to buy. Would I buy now? Absolutely not.
I’m waiting for my own type of entry point.
And I am going to be writing about the 1976 – 1980 bull market – we should expect to see some similarities, but with a couple of main, but bullish, differences.

Last year I wrote several times about my belief that we’d see a major low in commodities in the Spring of 2016. We had that great buying opportunity, when I specifically recommended the RJA ETF for agriculture.
And I also believed that we’d see another shot to buy later in 2016. For anyone looking to buy agriculture, I can’t give a specific price, but look at the support area on a chart and use that as your buy zone into price weakness.

Lastly, I remain quite bullish on the US$, but I do expect a huge pickup in volatility in currencies next year and a very major and also possibly THE final top in the Dollar. But I am a buyer of Dollars into weakness for now.

'Trader Scott – Market Update and An Unconventional Approach to Charts – July 20, 2016' has 1 comment

  1. July 22, 2016 @ 8:11 pm Randal Magnuson

    Thanks Scott for the overview of how you see things and how you’re proceeding from here. It helps to see how your reading things, it’s interesting to know that much of your conclusions are based monitoring liquidity (supply and demand) and not the headlines in the news, as your other blogs indicate. I look forward to trying to learn such skills myself. Thanks for sharing.


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