Trader Scott’s Market Blog
September 20, 2016
The two main things in a chart that I’m interested in are the price and the volume–and the intricate relationship between the two. That’s how I determine the TREND of the market and also how I identify the SUPPORT and RESISTANCE zones. The things that I have mentioned so far are most of the tools that you need to use charts for the purpose of being successful in markets. I like to keep things as simple as possible. I use no modern day technical analysis. I don’t even understand it. But maybe that’s because I suck at math. But I do understand/respect RISK.And more specifically when/where I should be considering entering a market and when/where I should be considering exiting a market (profit or loss). When a market, stock, etc. is retesting a major (or minor) SUPPORT level it is perfectly normal to see a surge in volume. That’s because of the situation at all SUPPORT (and RESISTANCE) levels where shares go from weak hands to strong hands at SUPPORT (and visa versa at RESISTANCE). However the surge in volume mustbe relatively less than the previous time that it traded at SUPPORT. If it is greater stay away for now. If it is much, much greater – run away.
Gold stocks are mainly affected by the gold price. However, at times they can be affected by the overall stock market. And just to confuse us more, that effect can be a positive correlation to the stock market’s performance or at times a negative correlation. So once again, I try to keep things simple. I have no idea which of those effects is going to have the most control at any given time. But, as I’ve mentioned numerous times over the last 9 months, I am wildly bullish on the miners over the LONG TERM. So in a bull market/UPTREND I want to be long. And I want to stay long until the UPTREND starts giving off warning flags that it’s over. So for those of you who own little or no gold stocks, the attached chart shows where you should be entering a long position in GDX. And with the potential for volatility post Fed meeting, you should consider entering buy limit orders below the SUPPORT zones that I have drawn in. If the market trades down and fills your order, great – if not, be patient for the next opportunity. I have a large INVESTMENT position in gold stocks and I’m not going to get cute with that position and outsmart myself. I have no short term positions in the PMs at the present time. I will look to my SUPPORT areas for buying opportunities – that is buying into “broken SUPPORT” zones. The charts for GDX, gold and silver are attached and annotated.
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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.
September 21, 2016 @ 11:11 am Suzy
Wow, Scott, thank you for those detailed charts, they are priceless!!!