When to be Bullish and Bearish
Trader Scott’s Market Blog
October 12, 2016
Permabulls and permabears are usually obsessed with rigging/manipulation of markets. They can’t fathom that their certain market could ever go down (for a permabull) or go up (for a permabear). Markets go up because the demand has overwhelmed the supply. (And the reverse for markets going down.) So another way to state this is: in a bullish supply/demand situation (bull market), the strong hands are in very firm control of the market.That is the only “reason” why prices are going up. There are many factors which affect supply and demand. But I generally focus on judging that supply/demand situation by itself, rather than going into the exteriorfactors which affect supply/demand. In other words, I’m just trying to grasp what that current, real- time situation is. Some people are very good at also judging those exterior factors which affect the supply/demand situation. And if those folks are successful at it, then that’s great. It doesn’t matter what someone else’s method is, I just care if they are consistently profitable. But one thing I’m sure of, to be consistently profitable in markets, we all need some method to decipher the true supply/demand situation. And do not rely on some other entity’s claims as to what the true supply/demand situation supposedly is, we need to have a method which relies on ourownreading of this delicate, intricate balance.
So in a bull market the bullish supply/demand situation generally stays in force. But, there are some shorter term reversals of that supply/demand situation (some transfer of shares from strong hands to weak hands), which is when you get the short term tops. And yes, it is normal for a market to have a correction. If you’re a good trader, those shorter term tops are where/when you can either hedge or take, at least, partial profits. But for most folks the total focus should be to wait for the selling waves to take hold and play out for awhile before buying/adding on. NEVER buy into short term strength. These are the things which should be our focus.
And the following quote from one of the greatest traders of all time, Jesse Livermore, sums up this discussion beautifully. The quote from about 90 years ago is taken from Edwin Lefevre’s classic, “Reminiscences of a Stock Operator” (and what exactly is a stock operatoranyways?):
“Obviously the thing to do was to be bullish in a bull market and bearish in a bear market. “
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.