If the smart money is long a sector, it means they expect it to go up in value. But, if they expect something to go down in value, then the smart money would short that sector.<\/p>\n
When I checked the COT report this February, it showed that the smart money was net short a massive number of gold futures contracts. <\/p>\n
In other words, the smart money was strongly bearish<\/a> on gold. And that tends to foretell a dip in gold prices. <\/p>\n And, if the smart money expects the price of gold to drop, they typically short at least 150,000 contracts. I know this from reading the COT report for decades, all throughout my 30+ year career trading the markets… <\/p>\n But, when I was watching the action in gold in December, the commercial traders were net short 302,000 gold futures contracts. That’s an extremely large short position, signaling a uniformly bearish stance on gold prices from the traders who know it best.<\/p>\n The smart money seemed almost certain that gold would go down. The last time they were short over 300,000 contracts was in August 2016 – and the price of the VanEck Vectors Gold Miners ETF (GDX) subsequently dropped from $30 a share to $20 in just a few months.<\/p>\n So, what happened next really caught my attention…<\/p>\n Soon after, in February of this year, the commercial traders took on an even larger<\/em> short position of 338,000 contracts. I’ve never known the smart money to be wrong with that big of a position; early maybe, but not wrong.<\/p>\n A short position this big typically happens right around a short-term top in the price of gold, and right before gold stocks dip in value. <\/p>\n So, I recommended my Delta Report<\/em> subscribers take a short position on GDX – which would profit as gold stocks fell.<\/p>\n Sure enough, a week later, gold stocks sold off hard, and GDX was down nearly 5%. But, thanks to the special technique I applied, the position I recommended was up over 100%.<\/p>\n Eager to take some profits off the table, we sold half our position for a 100% gain in just 7 days. <\/p>\n You see, one of the rules I follow – without exception – is to always sell at least half of a position once we’ve doubled our money. This takes our original money off the table and eliminates the risk of losing money on the trade. It’s like playing with house money.<\/p>\n The day after we sold half of our position, GDX fell another 5%, and we were able to sell the remainder of our GDX position for a 270% gain.<\/p>\n Take a look at the chart…<\/p>\n Our GDX trade made an average return of 186% in just 8 days… during a week that saw the worst one-day point drop in Dow history. <\/p>\n While the rest of the market was losing money, we nearly tripled our investment in a little over a week… all thanks to the special trading technique I’ve mastered throughout my career.<\/p>\n It takes seemingly small moves in stocks… and turns them into massive windfall gains.<\/p>\n![\"\"](\"http:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202008\/20200815-MM-01.png\")
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