It’s the accumulation and the distribution which truly sets up markets and allows for the trend to take over in markets – it’s what sets up the trends. (We’ll focus on the accumulation, but it’s generally the same idea for distribution. And these accumulation areas can help us on any time frames, we just have to make some adjustments, certainly with exiting strategies.) It’s not the QE and the Trump Tweets, etc. That stuff is all part of the trend. That’s the stupid stuff which people use an excuse to buy, buy, buy. If QE were such a great “reason” for markets to go up, then why in the world would this chart look like it does. The arrow is where Helicopter Bernanke started QE. The QE was directly aimed at the bond market. Yet not only did that experiment in lunacy not cause bond yields (inverse of bond prices) to plummet. Bond yields actually soared. But shouldn’t all of that new high-powered money directed at bonds have caused yields to plummet. Yet yields have instead traded in a big range for the last 8+ years. So QE is not a driver of the trend yet. It’s being used as an “excuse”, basically for the huge turnover in capital – long term “smart money” getting out, long term “dumb money” (like CBs) buying. But QE and its aftermaths will be a driver of the explosion higher in yields – the setup. While bonds are actually bullish intermediate term, that market is an absolute nightmare long term. If it were a stock chart, it would be incredibly bullish. In fact, here is an incredibly bullish chart long term. Gold is in a major accumulation area, just like bond yields are. And if you’re super bearish on bonds, you should be buying gold – on the next selloff, not currently. It’s the huge accumulation area which will drive gold much higher. Just like it’s the huge accumulation area in the stock market from June 2001-November 2011 which has set up this beauty of a bull market. It’s why I’ve been consistent for years in my complete disagreement about a stock market bubble/crash scenario, thus the huge selloffs will be awesome buying opportunities. The stock market can be a fabulous place to build some wealth (and also destroy it).
These areas are where there is a big change in the ownership of a stock or market. But it’s the power of these areas which is so important to understand. At the risk of sounding like a preacher, we must believe – seriously – in accumulation. It can really keep us grounded when all of the mayhem breaks out. For example, last Fall I laid out my road map for gold, in several posts, that we would have a major retest in late 2016, but at a much higher low. That retest was for the December 17, 2015 secular low, when I believed it was time to buy miners. But in the Fall of 2016, in the heat of the selling wave after selling wave, of course even the die hard bulls were giving up. The reason I stayed firm in my beliefs of the selling waves being a “normal” retest, is my belief in accumulation – seriously. Hardly anybody was believing me anymore into those lows, and I was questioning myself. And the very, very high fee “advisers” were all calling for much lower lows. But I just kept coming back to my beliefs. And on the next big selling wave, it will be the same thing to keep me grounded.
you are da man !!!! Have been tracking you for almost 1 year and have seen you make those remarks….only it took me 6 to 8 months to be convinced of what you were saying.
Apart from the great stock recommendations…..and the incredible learning path you are laying out for us….I really appreciate having a seasoned trader for guidance and difficult times ( like last December ) but also knowing that I have someone on my side……
apologies for the corny message….but this is service you are providing is truly appreciated.Making money is only the result here ….the process is equally important and I am finally learning to trade or at least on the path to trade correctly.
So a big thank you !!!!!!
Hey Aamer,
I have to chime in here; your message is so appreciated. I’m so happy to see others benefit from Scott’s expertise as a trader. I owe so much to him myself which is precisely why we became partners in this website. It’s been through our conversations over the years that really set me on the path to success as a trader. I’m not going to say anything else about it because he doesn’t like me to gush over him, but honestly, if it weren’t for him, I would not be making my living as a trader, doing as well as I am 😉
Hi Stevie,
Scott speaks very highly of you and seeing the stock names that have been coming our way I am very impressed and also grateful for the sharing of this info from both Scott and yourself.
Both of you should really consider managing external money……it would be a fantastic opportunity and loads of fun.
speak soon and take care,
Aamer
HaHa–managing other people’s money sounds like too much work for me. I have a hard enough time managing Trader Scott LOL!!!!!!!!!!! On the other hand, I do like the idea of meeting in an exotic location for an investing/trading retreat or something fun like that. That idea needs to be seriously pondered upon 😉
We’re all on the same side now Aamer – not listening to all of the crap out there. I usually feel like it’s myself against the consensus of lazy, biased, emotional clowns with their stupid methods. And I actually believe it’s a healthy attitude, because they all just blindly follow the price, with no context, and no awareness of the trends, accum/dist and supp/res – they only see the price and then extrapolate to infinity. I think you can see now, this business can be done well.
agree thin that its not as important being right on the idea and focus more the trading side of things. This is probably the most important thing I have learned from you…the other stuff i am slowly incorporating in my approach.Will take time as old and bad habits die slowly.
But its great to be on the right track.
Aamer,
“….the process is equally important and I am finally learning to trade or at least on the path to trade correctly.”
I couldn’t agree with you more!!!
Thanks Larry. We now need to plan an investors/ Scott’s fan club meeting at some exotic location next yr.
How about a hippie commune. Then I can sit around all day playing Bob Dylan tunes on my guitar.
Aamer,
I think what Scott is trying to say is that he’s already planned a trip for us to Aruba and it’s on him! What Scott?? NO, I am not crazy!!!
When do we leave?
I don’t even know where Aruba is.