Market Update
Trader Scott’s Market Blog
October 6, 2016
Monday morning quarterbacking is a staple in markets. There are always plenty of reasons/excuses given as to why a market is falling. Currently in gold there is talk of bullion bank shorting, falling wedge formations (I don’t know what that even means), raising interest rates, breaking support, etc. I listen to these after the fact reasons/excuses for one reason – for another way to gauge market sentiment. If I’m bullish on a market longer term,then the more negative the better. And while I have continually expressed my concern about the complacency in all markets, that complacency is beginning to be wrung out of PMs. That sets up a better situation for them as we head into 2017.
When I’m overall bullish on a market and also looking to enter either an initial position or as an add on, I try to sync the sentiment (inversely) with when a market is nearing or at a fantastic entry point – price and time.Sometimes things sync up well like gold in December 2015, other times not as well. In the latter situation, it’s better to take a smaller position. We’re beginning the syncing (for me) in PMs. We’re nearing the lower SUPPORT zones that I have cautioned to patiently wait for before entering in bigger size. The sentiment is getting bearish. Thestrong hands/”manipulators” are re-appearing. And while I am very selective and unconventional about how I use TRENDLINES, there is some trendline stuff coming into play. (And no, I don’t freak out when a trendline is broken, in fact it’s usually a good time to go the other way, at least short term). But from a time frame perspective we’re not there yet. So further price weakness will be used to “nibble” until/unless we get to lower buy zones. Then “ideal” time frame or not, I’ll need to step up a bit. And to point out, I don’t buy because I’m bullish, I buy because I’m bullish and the market is at a fantastic entry point. I do notchase a market higher, even if I’m bullish. If it gets away from me, so be it. And I always hold a lot of cash, so that I can take advantage of situations in markets. Right now, it’s way more cash than usual.
The strong hands are very patient. They accumulate over time. They are not averse to averaging down in their long positions. Accumulation is a process, not a single event. But since strong hands trade in such big size, they leave their footprints in markets. We need to respect when/where they show up. They basically create the SUPPORT and RESISTANCE zones with their big size. And they like to enter and exit positions in and around those areas, until they form a new area. We should try and emulate what they are attempting to accomplish in a market.
Tomorrow there is an “economic statistic” which markets are focused on. I have no idea, nor would I guess what that number will show. A pretty smart thing to do is to use any volatility around the “statistic” to your benefit. So possibly putting in a limit bid below the market for an ETF, for example. Or for an individual miner that you have thoroughly researched. Also, this discussion is about the bigger picture view. This is not about short term trading – where there are always opportunities and where the bigger picture usually has little relevance to the short term time frame. I am certainly not espousing a short term focus, so if you have questions about that, you’ll have to contact me.
The charts below for silver and GDX show the buy zones which I am using.
The other charts are for interest rate sectors of the overall market. I am very concerned about those sectors. but, on a shorter term basis they are about to be a bit overdone to the downside. I will wait to see how the next rally unfolds to consider shorting.
Chart #1Silver
Chart #2Silver
Chart #3GDX
Chart #4GDX
Chart #5Real Estate
Chart #6Real Estate
Chart #7Junk Bonds
Chart #8Muni Bonds
Chart #9Utilities
Chart #10Utilities
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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.
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