Gold – Discounting News
Trader Scott’s Market Blog
November 30, 2016
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This post is going to be a bit heavy with a discussion about the method/the analysis – it’s boring, but necessary at times to discuss. Gold continues to trade in an accumulation area. For a while I have been repeating that trading below $1190 would be the highest probability area when/where we would set up the bottoming process, including a selling climax(es) and a series of re-tests. This area would include the preliminary ending actions (such as Nov.25th), followed by the first big rally which should be sold into. This is what we have seen so far and I am using the big pushes lower to slowly accumulate, mainly silver and the mining shares (and trade within these areas). Then on the next reaction (sell off) we would likely see new lows with the first attempt at a selling climax, which is now what is going on. There are strategies to trade these areas and then to use the profits to accumulate, but the general point is to use the volatility as your friend. And just be patient and only buy into the big pushes lower. Remember all of the good “news” about gold before the election when it was trading over $1305. Well now gold is getting battered by bad “news”, and it is doing its’ job of discounting further news, which is part of what accumulation and strong handed short covering/buying is. When the volume on the re-tests following the the selling climax(es) begins drying up, it shows we’re getting close, so that needs to be watched. It’s generally what I kept talking about late last year in my outlooks sent in to the radio show, The Real World of Money with Andrew Gause (before I started writing the blog). So here’s last September and November. And then in December, when I believed it was finally time to really step up to the plate. A bottom in markets (accumulation) is a process, not a singular event. It includes distinct singular events, but each one is all part of the process. And each step has its’ own meaning and strategy to use. Patience, as always in markets, is required.
Addendum: I have received several questions the last few days, so there are two posts which might be helpful – selling/shorting gold over $1305 from November 1 and my approach to marketsfrom November 24.
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.
December 1, 2016 @ 2:40 pm frank
December 1, 2016 @ 2:41 pm traderscott
Great Frank. Thanks for reading.
December 1, 2016 @ 4:00 pm David V.
There is an apex forming on top of the fib line for GDX, in a downtrend market then in all probability we can expect another sell stop hunt is eminent? Or does the low volume suggest an up thrust? From what I’ve gathered this is analogous to banging on the door.
December 1, 2016 @ 6:01 pm traderscott
I’m sure there are plenty of stops below the market David, as we’ve been trading in this range. But my approach is still the same in here for now. Buying into weakness and selling a chunk into rallies, and doing some hedging – but with the intention of accumulating. I understand the apex, but stuff like that is hard for me to work with. The low volume is generally a result of being in this range. Volume is super tricky to work with as it revolves around several factors, like the trend going into the range, if it’s under accumulation, where we are in that accumulation, etc. And the 22 1/4 is a large resistance area for now. So we kind of have where we’re at short term.
December 1, 2016 @ 5:00 pm mark
Scott, do you think we could have a big down day in Gold after the fed raises rates this month to scare out people followed by the rebound perhaps on the same day or days after?
I did initiate my first buy in the RJA. It’s been a while since I traded but the old habit of buying in 3’s apparently is fixated in my head…:^
December 1, 2016 @ 5:50 pm traderscott
The markets are all expecting a rate increase at this point Mark. That doesn’t necessarily tell us what’s going to happen that day, as we need to see where we are technically then to see if a set up is there for us. But at this point the “surprise’ would be no rate increase. So let’s get closer and I’ll talk about it then. Gold needs to get itself in a solid condition technically, and it can withstand news better, possibly setting up a “spring”.
And be patient with RJA, it’s really early next year when we should see the beginnings of a more powerful market. But buying weakness now in anticipation is a good strategy. It’s been my strategy off and on throughout the year.
December 2, 2016 @ 8:29 pm The Seer
Just a sense that miners will go up next week after Italy and Austria referendums and Tuesday new Sharia Law
approval for gold purchasing. I think metal was taken down hard in order for it to just go up to par value
again after this news and another rise after interest rate raise. Just my 2 cents. They could also fake out
on January 2 -3 a big rally and then shake everyone down on the 4th and block a repeat of first quarter 2016.
December 2, 2016 @ 8:38 pm traderscott
As the old saying goes “They take ’em up to take ’em down, and they take ’em down to take ’em up”, or something like that.