Tyler Craig: In continuation with my gold fixation of late, I offer up yet a few more observations along with my Labor Day ruminations on coming to terms with being wrong.
I recently recorded the implications for the high volume free fall in the SPDR Gold Trust (NYSE:GLD). Given historical precedent I suspected some of the wind had been taken out of its sails and it was high time for some sideways churn. And yet, here we are a short one week later and the yellow metal is knocking on the door of all-time highs.
Is the current bout of buying a result of Friday’s poor job’s number? Responsive buying to the recent pullback? A re-allocation by those dumping equities over the past few days?
Gold’s move could be attributed to some variation of these factors or none of them at all. The fact is no one knows. Crafting a compelling narrative that pins gold’s move on a singular factor is for writing headlines and attracting eyeballs, not trading. From a trading perspective who bloody cares why it went up? The fact is it did, so react accordingly. The “why”, as they say, doesn’t matter as much as the “what”.
Was the call for consolidation a mistake, an error, a reflection of my feeble forecasting?
I would note two out of the last three consolidation phases in GLD (view here) contained multiple re-tests of the highs before the final breakthrough and continuation of the uptrend occurred. So I’m not ready to abandon my original expectations just yet.
But, suppose GLD does tear through $185 and vault to $200 over the next week in the midst of a non-stop prove Tyler wrong tour. Well, it wouldn’t be the first time nor will it be the last. Fact is I had my pesky compadre “Being Wrong” move into my office and setup shop the first day I started trading. It’s not my ability to banish him from my life that accounts for my progress, but rather my ability to diminish his power. Whereas he used to drop nukes on my account, now his time is spent hounding me with paper cuts.
He does leave me unmolested from time to time, but as soon as I dupe myself into believing my brief respite has turned into permanent separation, he returns, often with a vengeance.
Tyler Craig, author of Tyler’s Trading and owner of TC Trading, Inc. Over the years I’ve educated hundreds of traders through my work with one of the nation’s leading educational firms. I enjoy writing and am a current monthly contributor to the Wealth Intelligence Magazine. My writings have also been featured in Expiring Monthly and frequently show up in the Abnormal Returns Options Newsletter. In 2009 I started Tyler’s Trading to share daily market commentary on stocks and options.