News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Opening

Reading the Runes of the Metals Markets

July 29, 2020 - (Gold Market Wire) - The precious metals are pausing for reflection now, having made an impressive upward movement. Our role, in the trading arena, is to try and assess what the recent market movement might tell us about where we are headed. In the immediate picture, we use recent Silver action to carve out a rather obvious parameter. Simplicity shouldn't limit us in any fashion. Yesterday's high/low in Silver gave us a 17.59% swing, which is extreme, even for the periodically wild and crazy Silver market.

....but what is the market actually saying?

One of the things that "Mr. Gold" taught me on the trading desk was that when markets get 'complex' or wild, your best course of action is to counter that, by behaving in a simple manner. Example: the market moves up strongly for a few days... don't chase it! Or...the market has a steep fall... don't expect an immediate bounce back OR a continued decline...wait and be patient. Let time work off the chart damage and then see what the environment looks like.

Right now, Silver, the voice of ranging volatility in the market, can offer us some guidance - in a simple fashion. Yesterday's high was $26.21 and the low was $22.29. Those are the parameters. And so, sure enough, we are right smack on the middle of the two now - at $24.32. We are at the mid-point, because the market is uncertain what to do next. So the middle ground is the most comfortable. What does this mean for trading?

Well, to those of us here, it means that moves down towards the $22.29 level (and Gold equivalent...just use the diff to adjust) should be bought lightly, without margin, and big spikes up should bring profit taking. If the past two trading weeks have taught us anything it's that picking places to short this market is a fool's errand. We are in a major bull market, and we trade only from the long side. Sales are profit takes only...we never open shorts.

The end of month, which is also our end of week, is going to be an important marker technically. Right now the market remains strong, if over-bought. The past two weeks have taught us valuable lessons about measuring sales out over time in rising markets, and the dangers of chasing strength. Our strategy over the past fortnight has been to start selling gradually as we crossed the all-time high. That has worked out well. We hold the core position, as a matter of course, and now look to reposition tradeable length.

Now, for some perspective:

are the bulls getting ahead of themselves?

The bull trend is hardly arguable, but are the perma-bulls getting ahead of themselves from a trading perspective? A decent portion of that answer may lie in Friday's close.

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