“The Stock Market Crash”
Trader Scott’s Market Blog
December 18, 2016
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It is truly disgusting the scare tactics which are used by way too many frauds in this business. And for whatever reason, it’s usually centered on buying PMs to “protect” ourselves. Basically these scare tactics are sales pitches, as if the ridiculous notion that there is any asset class which will provide “insurance” is valid. The only “true” “protection” is to move to all cash and then to take the risk of sitting in a bank or under a mattress. There is no right answer here. All we can do is to mitigate/minimize risk. The way to make sure we lose money is to blindly buy anything due to emotions, like greed or fear. Silver in late 1979-January 1980 or late 2010-April 2011 are great examples of this. And it is baffling to me how anyone can say just buying and forever holding silver which is still 1/3 of it’s January 1980 high can be seriously put forth as a way to “protect” oneself long term. Of course if someone were to look at all markets impassionately and to know there are times when we must sell, then silver becomes a wonderful market to invest in at times.One way, actually the first step, is to buy assets which are truly hated and undervalued. Both of those concepts will help somewhat, but even just basic timing tools will help hone these entry points tremendously. We need a lot of patience to wait for these opportunities to set up, and often we need patience to allow these to play out. But nothing in this business is remotely easy.
The above linked article (scare tactic/sales pitch) is another effort to claim the stock market is a bubble and will have a massive crash. I have been vehemently fighting this claim for years. It’s somehow been promoted since 2009 when we had a massive selling climax in the Fall of 2008-March 2009. This was a huge secular low in stocks as I’ve stated many times. But that does not mean I believe currently this is a great investment entry point into stocks. There will be another one, as any major 30% plus selloff will be a fantastic investment opportunity. In the meantime, there will continue to be trading opportunities.
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 – “The Stock Market Crash” – December 18, 2016' have 11 comments
December 18, 2016 @ 7:08 pm Jon
Rambus posted some extensive TA for PM’s on Goldseek.com. He’s been pretty accurate with his work in the past, and it’s looking bleak for the sector if his analysis plays out. Dollar headed back to 160 and gold -ugly…
http://news.goldseek.com/GoldSeek/1482100163.php
December 18, 2016 @ 7:42 pm traderscott
I looked at it Jon, and he has his point of view. My view of charts is as a guide, not to predict. Let’s let the strong hands guide us. And I’ve been bullish on the $ for years, there are a lot of recent $ bulls around now.
December 18, 2016 @ 9:32 pm David Parker
Jon,
Here is an article Rambus did in the beginning of this year claiming HUI will drop to 54 and GDX to 9. We know what happened next.
http://www.safehaven.com/article/40186/weekend-reportpm-miners-bottomdo-they-ring-a-bell
Scott,
Can you please talk about how you measure sentiment and when do you know a particular asset is now ‘hated’?
December 19, 2016 @ 12:49 am traderscott
So this person was claiming gold stocks were heading lower, while I was buying. Thanks for the link David. Sentiment is subjective, but it’s just by keeping up with all of the chatter. I try not to have a bias and just listen about all markets not just PMs. But more importantly, it has to show up in the trading action in the markets. And most importantly, when the strong hands start showing up in a big way, and the commentary, news, etc. is in total give up mode, especially some of the long time bulls – that’s when it has the most impact. A good contrarian indicator, when the quality buying is showing up in a big way, yet there’s almost unanimity of more falling prices. There are people who do sentiment indicators, but two problems. They’re not helpful for timing until used in conjunction with the technical condition of the market, and these sentiment indicators never take account for the TREND of the market. Meaning in an uptrend the sentiment indicators can get and stay wildly bullish for a long time, and visa versa. And hated is a much longer term sentiment indicator, at least one year, often much longer, of persistently falling prices. Hate is more apathy and acceptance. Gold in 1999 was the best example in my trading lifetime, gold stocks close second. And it was amazing in the Spring of 2009 how quickly people starting accepting stocks were going to continue declining.
December 19, 2016 @ 5:24 pm traderscott
And to add about the stock market – they had been in a trading range since the March 2000 highs, and had basically gone nowhere (on a big picture) for over 10 years. That is what allowed the shorter term “crash” from the October 2007 highs to cause apathy.
December 19, 2016 @ 8:05 am Jon
David,
Thanks for the refresher. He doesn’t really make calls just whats possible based on his analysis (good call at the top in the sector looking back). Some of the “head and shoulders” he shows are a stretch at best, but I do find the symmetry of markets facinating. Here’s another chartist looking for a retest below 1100.. http://news.goldseek.com/GoldSeek/1482100163.php
December 19, 2016 @ 6:48 pm Jon
Wrong link. This is it..http://news.goldseek.com/GoldSeek/1482107424.php
December 20, 2016 @ 10:26 am Adrian
Scott – could you expand a tiny bit on how metals would not provide insurance? Throughout history they have historically kept up well with fiat and wealth preservation. Of course you can’t eat them in a doomsday scenario but financial wise it’s usually a good idea. Of course this is separate from the constant sky is falling mantra.
Going to read your other response now. I also picked up some AXR today – another 12% dip after yesterday’s 8% dip. Lower volume on these large dips. Figured it’s can’t hurt to add some…
December 20, 2016 @ 11:43 am traderscott
Adrian, I don’t share the approach of using markets as insurance. And how too many people buy PMs as “insurance”, but they’re actually buying them because “they’re going to the moon”. Buying a small amount of physical is fine, but only when they’re beaten down. And holding it, but I view it as like having a gun, or flashlights, etc. Viewing gold as insurance against other markets “crashing” is not my view. But buying physical silver currently below $15.75 makes sense. Markets are all about risk. So it doesn’t make sense to me how you can use risk as insurance. The very best insurance is to enter at at least a pretty good entry point, and take some profits along the way. And know when you’re wrong. In other words, your insurance is just doing things the right way in markets. But just buying something because it supposedly will provide insurance doesn’t make any sense to me. And just the overall definition of what is insurance in the real world. But look at the track record of silver or even gold as forever insurance, it’s not very good relative to say the stock market.
And your stock is interesting. Did you notice the big buying on 11/14? At least you’re buying into weakness – always a better strategy.
December 20, 2016 @ 4:20 pm Adrian
Scott,
I’m afraid I don’t understand what I’m looking for. I took a screengrab of 11/14
http://image.prntscr.com/image/f98d1c94f808477595cdb8a7c0847032.png
I see the price moving up buy volume heavier in red. So lots of selling but share price going up…… strong hands? I just purchased a chunk due to the drop of +7% two days in a row. Looking at the silver spot chart itself, it would seem there isn’t much downside resistance. Could take a big plunge still.
Still feeling pain from missing this past jan’s rally. I waited years and got caught up with other stuff. Rather buy on the way down now instead of missing it again.
December 20, 2016 @ 4:44 pm traderscott
Adrian, you should consider using the bar charts instead of line charts: AXR – see the arrow? And again today. It needs to start showing relative strength, but there are bigger buyers stepping up. As far as silver, of course it could go lower, and I do expect it too. But if today’s purchase has a quick huge rally, I will sell at least some. It’s about taking your shots into the better spots, like you did today.