Gold Daily and Silver Weekly Charts – Winding Up for a Move
Courtesy of Jesse's Cafe Americain
The trick in trading is not to 'predict' in advance which way the metals will break in the short term, or any market for that matter. I have seen plenty of guys waste their trading accounts and their time trying to find 'the perfect system.'
Believe me, if there was such a system, you would not find it. And especially you would not find it on a publicly available site.
The best system is to sit as the house, and make money no matter which way the market goes, and have plenty of advantageous knowledge of the order flows to boot. The US markets are all about the asymmetrical dispersion and control of knowledge. And HFT has taken it to a literally inhuman degree.
Well, absent that exorbitant privilege of insiders, all we can do is trade to avoid the losses, and learn to recognize trends, and play them with some discipline.
Right now gold and silver are not trending, they are consolidating and winding up before they begin another move. I can argue the reasons for a move either way, and unless you are Ben Bernanke and ready to show your hand honestly I am not particularly interested in what you have to say, because you just don't know. And neither do I. This is not a 'natural market.'
But we can hope to find the trend as it begins again, miss part of it, but be sure to hop on board and take it for a ride. For most people, they have neither the time nor the inclination to do this for the short term, and probably even for the intermediate term. They just feed the trading letters and system creators and of course the brokerage firms.
Chat boards are a nice way to spend the time you may have on your hands in socializing, if you have nothing more pressing, but they offer little in the way of constructive trading advice. To paraphrase Dr. Greg House, traders lie. And most amateurs become bitter with their losses. Misery loves company.
Don't get me wrong. Fundamentals still matter in the longer term, and in the lesser covered stocks one can always find the undercovered gem or two, if you have the stomach for the risk and can wade through all the price manipulation and naked short selling that is tolerated, especially north of the US border.
So for now I am long bullion and short stocks, in a pretty robust hedge. I have taken the profits out of miners but am still willing to flip a trade in the case of some unusual deviations from trend. And they certainly happen. Sometimes you just have to wonder.
I am waiting to see which way the market breaks and if stocks continue to move with the metals or if there is a divergence developing. My 'bias' if I have one is to see the metals bounce and rally up to the top of the larger symmetrical triangles, but that is a 60-40 proposition at best. I mean, the market is being rigged, or isn't it? And if it is, probabilities are being written by other than 'the invisible hand' of supply and demand.
I am not trading nearly as frequently or aggressively as in the past because a) I am getting older b) these markets are almost ridiculous. Its like playing cards with the little girls.
If I put in a order for a few thousand shares, the liquidity from a large offered set of multiple positions evaporates instantly and I close on maybe 100 shares. If I offer to buy above market but below ask I get ten 'friends' appearing instantly along with my bid.
There is little genuine liquidity in the equity market. It is mostly a sham, a flash crash waiting to happen unless the ESF intervenes which I am sure they will. At the first sign of real trouble it will collapse like a house of cards.
As for gold and silver, price discovery is buried under a mountain of paper and faux trades. With 100:1 leverage and naked positions dominating the trade, its a bit of game in the short term at best, and not a particularly honest one at that.
Don't exhaust yourself chasing rainbows here. Sometimes the best trade is to stay out of the short term scrums, the wash and rinse cycles, and just ride the macro trends, ignoring the day to day noise. And judging by the shrinking volumes and low open interest, quite a few people are fine with that decision.
The pit crawlers had best start studying origami and advanced airplane design to while away their empy hours, with only phony computer generated order flows and Fed buying programs to light up their screens.
