Approach to Markets/Gold
Trader Scott’s Market Blog
November 24, 2016
Thanks to J. from Australia for the idea for this post. In writing this blog,I’m trying to share with you guys/gals how to approach this business in a calm (prepared and confident), anticipatory (having a plan and a method) and professional (having trading skills, such as being adamant about taking profits at times) manner. So to get a better perspective on that, let’s step back to my commentary on gold for the last couple of months and see about the approach outlined above. And contrast it with the approach to gold which most of the gold permabulls have been using over the years, which has cost a lot of people money.
Following the re-test of the selling wave in gold last month I wrote about my belief (concerns) that gold: would bounce into the end of October; would see a secondary top in the first week of November; had gotten itself into a bit of a pickle and would need to be sold and also shorted above $1305; rallying after the election would be quite concerning, as it needed more selling (not buying) to set up a bullish situation – and sell stops would be taken out; would need to get into the latter part of November before seeing the next excellent entry point, and the bearish upthrust in gold on election night made me much more concerned about gold; below $1191 would be the much better area when we would see the bottom begin to form.
So this approach (hopefully) conveys a calmer, more anticipatory approach – in a more professional/business-like manner, while attempting to keep market biases at bay. And also by understanding the need to take profits at times, which has numerous benefits. So while the gold bugs were claiming it would soar after the election, the market was “saying” something completely different. So does this mean we’ll be right every time using this type of approach, of course not. But we will see markedly improved results with much less risk. However, to repeat, taking profits at times is a must, otherwise this approach is much less effective.
So how does this all fit in to where gold is currently. Gold has now gotten itself in a bit of a pickle in the opposite direction. We’re in a time frame at the end of November. We are now below $1191. And as I have stated numerous times, I don’t buy because I’m bullish – it’s bullishness combined with a great set up – that’s how I hone in on a market. A great set up (as I’ve stated numerous times) requires a selling climax. A selling climax shows that the strong hands are getting impatient/weak hands are freaking, and both are becoming much more aggressive – this keeps a solidness to the low areas, to then feel much more confident buying into them with more aggressiveness. And gold currently, sentiment wise and technically, is in an area where a selling climax is very possible. (Also, even though people are getting hysterical about a bond market crash, bonds saw some ending action come in on Wednesday, and are closing in on a bottom.) So I bought some silver on the new lows today, but I’d likely get more aggressive with lower lows. There is a big rally coming, but there will be re-testing, so be careful – and only buy into weakness.
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.