Gold/Market Update
Trader Scott’s Market Blog
October 4, 2016
As I’ve repeated numerous times recently, like here. I’m extremely concerned about the complacency in all markets currently. To get bullish again (for me), we need to see markets start to discount (lower, some markets much lower, prices) the weird, volatile future directly ahead of us. That complacency is turning into fear in the PMs. That’s good. The strong hands have been “telling” us they want to continue ACCUMULATING/lower prices to add on to their long positions. That will then continue to build a very solid base for much, much higher prices into 2017 and beyond. The main thing which gets me wildly bullish on a market is when I see a huge accumulation area building in a market. That area is continuing to broaden and to strengthen (long term) the outlook for the PMs. The strong hands will attempt to accomplish their buying plans by seeing/forcing lower prices. This will allow the strong hands to cash in their short positions and then use those profits to buy even more. Strong hands are very patient, we should be also. They have good vision. But they also know that buying into selling waves and having great entry points into markets is even more important than their vision. We should emulate that also. We need to learn to buy only when we’re afraid to buy. It took me a long time to learn to use that and turn it into a “weapon”.
We can do dumb things in markets, but if we do dumb things in markets in the direction of the overall TREND, we’ll probably get “bailed out” (but only if we have not yet seen a major ENDING ACTION, like a BUYING CLIMAX). However, if we do dumb things not in sync with the TREND, we’re in trouble. But why not always at least attempt to do smart things – like being patient and emulating/following the strong hands.
So for those who’ve asked, short term in gold, I’m waiting for a short term selling climax to set up a trade. But the overall conditions and time frame are still not great for a great low as we head into a much brighter future for gold in 2017. I’ve included charts of what I’m focused on within PMs – mining shares and silver. I’m waiting for the formation of a short term selling climax, before I begin to do some “nibbling” into retests of that selling climax. I have marked off the buy zones and aggressive buy zones. I would say a good plan would be: for folks with little/no exposure to PMs – use the “nibbling” buy zones for initial purchases. But for those with good exposure, just “nibble” into the weakness, but use aggressive buy zones for bigger purchases. This is a game of probabilities and risk, not certainty. We all need to have ways to lower the risk and increase the probabilities. It doesn’t matter how you do it, I’m just showing you some of the ways that I accomplish it.
And there are 3 other charts attached – utilities, transports, and real estate. Three markets which I am very concerned about.
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.
'Trader Scott’s Market Blog – Gold/Market Update – October 4, 2016' have 3 comments
October 4, 2016 @ 9:38 pm Randal Magnuson
Thanks for the posts and especially the charts, which are lessons in themselves.
Best
Randal
October 6, 2016 @ 3:28 pm munnyhunny
Another thought-provoking read Mr Trader Scott :)
“But the overall conditions and time frame are still not great for a great low as we head into a much brighter future for gold in 2017. ”
How about the occurrence this/final quarter 2016 or thereabouts both of the Gold 13.5 month cycle and the gold 8 year cycle (mentioned eg by Moe Ansari and McClellan Oscillator)? I’ve no idea what would mandate the pattern regularity of such cycles, and for that matter, must admit I don’t know what really drives gold except perhaps interest rates (long term), local currency values and rarer, geopolitical hazard (short term).
BTW there’s a great bit from Jack Schwager in ‘Hedge Fund Market Wizards’, pp35-6 where’s he’s interviewing Colm O’Shea (and where maybe Schwager answers my question above). Schwager made me laugh where he says “There is never any shortage of gold. So gold’s value is entirely dependent on psychology or those fundamentals that drive psychology. … I would base any price expectation entirely on such factors as inflation and the value of the dollar because those are the factors that drive psychology. … Annual production and consumption of gold are always a tiny fraction of supply, maybe around 1 percent, so who cares how much they change. … But how do you differentiate between a correction and a reversal in the market?” O’Shea says in reply “…if the market displays price action that is characteristic of the late stages of a bubble, such as an exponential price rise…” Gold’s price action this year hitherto has been pretty bold especially in GBP, so maybe we’re just having a normal correction – but to be enhanced this time by the mysterious 13.5/8 correspondence?
Please do keep the posts coming!
October 6, 2016 @ 10:09 pm traderscott
Thank you for the nice thoughts. I really enjoy hearing all of the great comments/questions from you guys/gals. As to cycles, I would just say that on a practical basis, they are brutal to try to work with in markets. There is so much “wiggle room”. I actually don’t really use cycles per se. The time frames which I come up with are based upon the internal technical structure of the market. And what drives gold or any market is liquidity flows/supply and demand and also psychology. It is those things which take up the majority of my prep time.