Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[PolarBear]

Weekend Gold, Silver, Oil & Index Charts

Three weeks ago on February 5th, we saw an extremely high level of fear in the market with selling vs. buying volume at a 9:1 ratio.  We note that in 2009 this extreme level of fear occurred at the bottom of each significant pullback.

Since this panic selling low in February 2010 we have seen stocks and commodities work their way higher, which we expected. Overall the broad market looks as though it’s trying to make a move higher.

Below are some ETF charts of gold, silver, oil and the indexes.

GLD Gold ETF – Daily Trading Chart
Gold lead the market higher in 2009 and also lead the market lower in December of 2009. It looks as though gold could be starting a new trend higher.

You can see the clean breakout of the down channel and then a test of the channel at support.  This type of price action also forms an inverse head and shoulders pattern for those who like trading patterns.     This is very bullish price action.


SLV Silver ETF – Daily Trading Chart
Silver has much of the same chart features as gold, but is slightly skewed.  This is not particularly surprising though, as silver virtually always behaves with less defined chart patterns due to its characteristically funky price action.


USO Oil Fund – Daily Trading Chart
As with gold and silver, oil’s trading chart has formed a pivot low also, but the trend line is much steeper than what I am looking for.  I prefer a flatter trend line as price growth is more sustainable.

As you can see in on the USO chart, back in December price rallied at almost the same angle as is currently the case, and then notice what happened.  Once the momentum died out the price dropped straight back down.  I call steep trends like this a Parabolic Rally.

Scroll up and look at the first chart (GLD) and observe the parabolic rally going into December.  It too suffered a sharp drop straight back down when momentum died out.


Stock Indexes – SP500, Dow Jones, Russell 2000
Last week the market sold down the first half of the week, then bounced back up forming a possible pivot low. The daily chart for these indexes look virtually the same as the GLD, SLV and USO charts above for the past 5 trading sessions.

But, one little thing has me concerned….
When looking at the 5 minute intraday charts (posted below) you can see at the very last minute before the market closed HUGE selling volume flooded the ETFs.  The market ended up losing all of its gain for the day.

With any luck this was just end-of-the-month hedge, mutual fund, etc. portfolio rebalancing.  But I am somewhat concerned that more of this selling could step back into the market Monday or Tuesday.


Weekend Trading Conclusion:
Overall, last week started on a negative note but ended strong after forming a reversal pattern.

It looks as though stocks and commodities have formed an ABC retrace pattern and are now ready to move higher.

How much higher you ask?

Well, I believe 2010 is going to be a traders market. I envision an 8-12 month sideways consolidation (large bull flag) forming. If this materializes then buying on over sold dips, as we did on Feb 5th, and scaling out on strength at resistance levels will be our goal in the coming months.

A bunch of 4-8% trades is what I’m figuring, but with leveraged etfs we can double and triple those type of returns.  Now that is something to anticipate with delighted optimism!

If you would like to receive my free weekly trading reports please visit TheGoldAndOilGuy at: www.TheTechnicalTraders.com

Chris Vermeulen

[PolarBear]

Gold & SP500’s One Candle Rebound To Riches

It’s been a great year for trading!
So far February, last week and this week have being absolutely amazing for both swing traders and intraday traders.

On February 5th we had extreme panic selling with nearly 35 sell orders for every 1 buy order on the NYSE. That extreme panic and dumping of shares was the day we jumped into the market and we nailed the bottom.

As my trading buddy David Banister from ActiveTradingPartners would say “Buy When They Cry!” and that is exactly what subscribers did. Since then our gold, silver and the index funds have been moving up nicely.

I would like to note that there were several more technical reasons why we jumped into the market that day but I won’t get into the nitty-gritty cause this mid-week update would be a trading book…


Explanation of What happened Last Week & This Week
Ok this may get a little confusing but try to stick with me here…

If you recall last Wednesday’s mid-week report which was called “Gold, Silver & Stock Indices on the Verge of Rolling Over”, I talked about how I was bearish on the overall market. This report has a bunch of detailed charts explaining what was most likely to happen next and some trading.

Well, the market played out just as we had expected. The market dropped 1.35% in over night trading and the following trading session providing intraday traders using ETF’s, Futures or CFD’s a net profit between 1.35% to over 100% return within 17 hours of entering a trade depending on which trading vehicle you used. Check out how this trade was executed by reading my report titled “How To Use Multiple Time Frames For Setups” which I send out the next day. Understanding how to trade using different time frames is a must for all traders and this report shows you how.


Now here is the part that has thrown a lot of traders off
Just to recap, I posted an extremely bearish report saying the sky is falling on Wednesday. Thursday morning the market moved down as expected, and then late Thursday afternoon I sent out a trade alerts to buy a bunch of precious metal and stock etfs.

I understand why emails flooded my inbox that afternoon…. Everyone wanted to know how I can say the market is falling then turn around and buy the very next day.

It’s actually a really simple answer. “I don’t fall in love with my positions” and “I re-evaluate the market after each new candlestick on the chart”.

Trading is not an easy task, that we all know. The market tests and bends my brain to the limit on a regular basis and if one cannot control their emotions and stick with a set of trading rules, then you will eventually lose all your money.

I have placed thousands of trades in my lifetime and pulling the trigger to get in and out of a position does not phase me anymore. But the problem is most people don’t want to exit a losing trade because then they are proven wrong and most people hate being wrong. If that’s what you are feeling, then you need fix it or get out of trading.

My general rule is “when in doubt, get out”. I would rather watch a trade move without me knowing I had it right, than be stuck in a losing trade, saying to myself, “Why the hell did I get into this trade?”

Re-Evaluating the Market or Your Investment
After each new candle is formed on a chart it is crucial to re-evaluate the charts. In other words if your main focus is to trade the daily chart then you better re-evaluate the strength of the chart each day and also check the 1 hour intraday chart for possible bullish or bearish patterns.

On the other hand, if you are an intraday trader focusing on trading the 1 hour chart, then you better be evaluating things every hour, and also check the 5 or 10 minute charts for patterns to keep an eye on price and volume action.

Below are daily charts of some ETF’s I trade showing how we have been trading the market. You can see February 25th the market reversed to the upside and that is when we went long again as prices formed an outside reversal candle and these funds have been moving higher ever since.


Mid-Week Trading Conclusion:

In short, it’s been a great start to the year with the market performing within its regular trading patterns between fear and greed.

I believe 2010 is going to be very tough for individuals who do not fully understand the market and how to manage risk. I figure the market is about to top in the next week or so then start to head lower. 2010 will most likely trade in a large sideways range for 8-10 months and maybe even longer. Being able to spot market reversals and trade them actively is were the money is this year. No grand slams, just a bunch of single base hits.

I would like to see the market rally and makes new highs but I am ready for what ever the market dishes out in the coming months.

I hope this report helped you to understand that trading is an active sport and being able to change directions one day to another is just part of the game.
If you would like to learn and trade at the same time I will be launching a service where I provide all my personal trades and analysis for your to follow along in real-time. Members will receive all my intraday and swing trade alerts for indexes and commodities Futures allowing you to trade which ever vehicle you want whether it’s an ETF, Leveraged ETF, Futures Contract or CFD. This way your timing is accurate and you can trade which ever investment you are comfortable trading with.
There will be a 24/7 chatroom allowing us to trade around the clock when setups arise. Also, members can swap ideas, ask me questions, make new trading buddies etc… There is even a squawk box feature! I can talk live with audio to everyone in the chatroom to the site can hear me for important news or trades alerts.
All trade alerts are instantly posted in the members area, chat-room and sent via email making it one of the most powerful trading services I have seen available online.
If you are interested please fill out the form to be notified for this service which will start the last week of March or the first week of April. It will have limited availability to keep it personal.
If you are interested check our my Trading Alert Services at www.TheTechnicalTraders.com

Chris Vermeulen

[PolarBear]

How Much Higher for the Indices, Gold and the Dollar?

Last week was exciting as we saw stocks and gold close above the February highs which confirms we are in a new up trend. The question everyone is wondering is:

How far will this market go before rolling over?

This is a tough question but we can get a good feeling about the risk and if it’s worth putting money to work or not at this point. Here are my quick points and thoughts about the stocks indexes at the current price (March 5th closing price).
•   The market is extremely overbought on the hourly and daily charts. Buying here is just chasing prices around, and that is a net losing game.
•   Small Cap stocks have been on fire making a new higher for the year. This is very bullish but again buying here carries too much risk because after such a sharp price appreciation, we can see it all be given back just as quick.
•   Volume over the past three weeks has been below average and when I see higher prices on declining volume I expect prices to drop very quickly once the thrust upwards ends.



Stock Market Indexes – 21 Trading Days
Here is a simple chart showing the past 21 trading sessions. It compares the Nasdaq, NYSE, Russell 2000, Dow Jones, SP500, and Amex indexes.

As you can see the Russell 2000 (small cap stocks) and Nasdaq (tech stocks) have been on fire the past couple weeks while the solid large cap stocks lag.

Are The Small Caps Stocks Telling Us Something?
Its means investors and traders are confident enough to buy higher risk companies. This is good for the overall market because small cap stocks tend to lead the market in both up and down trends. What has me concerned is the low volume rally, which I don’t like.

One thing to note is that small cap stocks tend to do well during times when the US Dollar is rising. This is because they are not multinational dealing with currency exchange. So this small cap stock rally has me wondering if the US Dollar is about to continue its up trend or if investors really are comfortable with buying riskier stocks?


GLD Gold ETF – Daily Chart
Gold gained some ground last week but the majority of the money seemed to flow into small cap stocks. But take a look at this bullish chart.

This is a text book bull flag pattern complete with and ABC retrace, trend line break, and reversal candle off of a support zone. I am bullish on gold long term but think we could see prices rise a couple percent from here but will trend sideways/down for the next 2-3 weeks to digest the recent move up.


US Dollar Index – Weekly Chart
I have posted this chart several times in the past few months with 83 being a key resistance level. The dollar’s recent price action is very bullish and it is flagging just under this key resistance level. I feel the price is heading lower from here but only time will tell. A breakout to the upside will put a lot of pressure stocks and precious metals.


Weekend Trading Conclusion:
Last weeks strong rally into the close will most likely carry over into Monday and possibly Tuesday. The reason being is simply because retail traders and investors (John Doe’s) get excited when they see higher prices, thus it attracts more money into the market.

In short, I feel the market is overbought.  All indexes are trading at resistance other than the Russell 2K index, and volume is below average. I am going to wait and see how things unfold this week before thinking about getting committed to any more long positions. If anything I will be looking to short the market using the intraday charts for a quick trade. Again low volume rallies that are overbought tend to snap back very quick on an intraday time frame providing a 1-4 hour trade.

Get My Free Weekly Trading Reports: www.GoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

Gold, Silver, Oil and Natural Gas Mid-Week Trading Charts

So far this week has been pretty slow.  Large cap stocks continue to lag the market which can be observed by looking at the Dow Jones Industrial Average which still has room to move higher before breaking the January high.

One important thing to note is that volume has picked up this week considerably - particularly on the SP500 and OEX. It’s difficult to say if this volume is a good sign or not.

A lot of stocks and sectors are trading near their January high and this gives traders a reason to unload shares. On the flip side, the several sectors and indexes have broken their January high and this triggers a surge in volume as breakout traders try to take advantage of the new high and momentum. So you can see how the surge of volume is not a useful indicator right now.

Here are some charts of what I think we could see in the coming weeks.

US Dollar Index – Daily Trading Chart
I follow the US dollar index very closely simply because it affects the prices of stocks and commodities. I used a line chart below in order to take out the daily candle stick noise which made it very difficult for our eyes to pick up this pattern.

The chart shows a possible head & shoulders pattern and if that is the case then we should see the dollar start to slide lower.  In turn, this would boost stocks and commodities. This is the fuel that I think could really move the market sharply higher in the coming weeks.


GLD Gold ETF – Daily Trading Chart
The price of gold looks to be setup for a nice bounce off support and the timing could just work out if the US Dollar starts to drop over the next few days. There could be a low risk setup just around the corner.


SLV Silver ETF – Daily Trading Chart
Silver has held up well but today’s reversal candle to the downside scares me a little. The odds are that silver will carry this strong momentum selling down for another 1-2 days. Again, with any luck, it will test support and the US Dollar will start to slide lower.


Crude Oil – Daily Trading Chart
Oil has had a great run the past month but as you can see it’s currently trading at the top of a large trading range. I would like to see a sideways move before it takes another run at the $84 level, but the 7 day bull flag that formed two weeks ago may have been enough to maintain the upward momentum. Again, if the Dollar drops we will see oil rally.


Natural Gas – Daily Trading Chart
This chart is actually very attractive looking. Even if you do not understand how to read charts I think it’s safe to say this one is a no brainer 

I will be closely watching for a potential low risk setup in the coming days.


Mid-Week Trading Conclusion:
In short, stocks and indexes are trading at resistance levels with many of them making new highs and that is great to see.

A lot of things are trading in limbo waiting to see what the US Dollar is going to do. Several months ago I posted some charts showing that 81 would be a key resistance level for the dollar. If it broke above that then 84 would be the next key level to watch. So we just have to wait and see… the hardest part of trading is the waiting.

Gold, silver, oil and natural gas all look like they could continue higher in the next few days if things unfold that quickly. But the market always finds a way to drag out moves so we could still be a 2-3 weeks away.

I hope this report helps give you an idea of where things are at in the market.

If you would like to receive my Free Trading Reports and Analysis be sure to visit my website: www.GoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

Are Crude Oil & Natural Gas about to Explode?

Last weeks price action unfolded just as we expected. Money poured into stocks with the focus being on small cap, banks and technology stocks.  The fact that these sectors are showing strength while utilities, health care and consumer staples lag is a good sign that investors are once again taking risks in the market.

Because investors and traders are bullish on the stock market again the money flow into the safe havens like precious metals and energy has decreased.  I believe this is the reason stocks moved up last week while precious metals drifted lower.

Below are weekly charts (Natural Gas, Crude Oil and the Dollar) showing what I think is most likely to happen in the next few weeks and what should fuel the fire.

Natural Gas – Weekly Chart
Natural has been out of favor for the past 3 months with most of the selling happening recently as seen on the chart. In my opinion natural gas is over sold and about ready for a bounce.

The price of NG is now trading at a key support level but until the selling momentum stops and reverses back up I would steer clear of this commodity play. Natural gas is known for taking peoples money time and time again so trade this commodity very carefully.


Crude Oil – Weekly Chart
Crude oil has been trading in a channel for several months and is now testing the upper level. If we see the US Dollar drop in the coming weeks then I expect oil to surge higher along with natural gas. If oil breaks out then I expect to see the $90 level reached within a month.


US Dollar Index – Daily Chart
The US Dollar has put in a very nice bounce/rally since the low in November 2009.  Last month the dollar finally reached a key resistance level of 81.  I have been talking about this major resistance level since January as the Dollar would find it difficult to break above this level.

There is a strong chance we could see 78 reached which is the measured move down.  If we get follow through selling next week then I would expect 78 to be reached within 1-2 weeks and over the next few months we could very well test the 2008 low of 72.50.


Natural Gas – It’s the Season
Natural gas’ seasonal price action shows that the price tends to strengthen between February and April. So with NG at support and we are in March you can guess what I’m thinking… higher prices are where the odds are pointing.


Crude Oil – It’s the Season
It’s the same story as natural gas above….
Higher prices seem to be where the best odds are.


Energy Trading Conclusion:
As a technical analyst the above charts are pointing to higher prices in the coming weeks for natural gas and crude oil, which is exciting for us all.  BUT when things are this perfect looking we must be very cautious as the market has way to suck traders into these “perfect setups” and spit us out a couple days later for a nasty loss.

Understanding how the market moves is crucial for avoiding and/or minimizing losses when trades go against us.  That is why I continue to wait for my signature low risk setup before putting any money to work.

My focus is to take the least amount of trades possible each year, only focusing on the best of the best setups. My low risk setups require risk downside risk to be under 3% for the investment of choice. and the broad market needs to be showing signs of strength as well.  I use several different types of analysis to confirm if a setup has a high probability of winning and those which do are the trades I take along with my subscribers.

It is very important to wait for the market to confirm a move higher before taking a position when there is this type of setup.  The market could go either way quickly and jumping the gun is not a safe bet.

If you would like to receive my Free Energy Trading Reports, please visit my website: www.GoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

Video on How to Day Trade Spot Gold & the Indexes

Last week was an exciting one for intra-day traders who follow the spot gold and major stock indexes.  Actually, since early November 2009 the market has been performing very well for us.

As we all know the market is consistently changing its price patterns and momentum from up, sideways to down, which in turn affects everyone’s trading results for any given month.

For swing/position traders who trade using the daily charts they will find some months will favor trend trading strategies, while other months favor short term range bound strategies, and other months that just are not good for trading at all like last November and December.

During extremely choppy market conditions such as we saw last November and December, the market was up an down like a yo-yo.  Swing/position traders had a tough time making money, and speaking for myself, once the market gets like that I patiently sit in cash or hold very small positions.

The good news is that when the market become choppy and swing traders are having a tough time making money (which is fast intra-day up and down movements), day traders come out of the wood work like fire ants. There are crazy amounts of money made and lost during high volume intraday trend reversals and pattern breakouts.


Day Trading Spot Gold – YG J0 Gold Mini Futures Contract
Here is a quick video I did of my trade in gold on March 9th.  This video shows a trade using the 5 minute spot gold chart profiting $6.00 per ounce with minimal downside risk. Depending on what you use to trade gold - Futures Contract, ETF or CFD - you could have profited $600-$2,400 in less than 2 hours.

This is the second video I have ever done so it’s nothing fancy by any means. It will take me a few more videos to get a good understanding of them as I do plan on doing weekly videos in the coming weeks and will be sure to make them more exciting.

Day Trading Video Link:

day trading gold, spot gold futures trading, gold newslette

Day Trading the Index – DIA Exchange Traded Fund
If you watched the gold video above you will see how I day traded spot gold in the morning and why I used futures as my investment vehicle. That being said, anyone could have traded the GLD or DGP gold etfs.

Only a couple hours later I saw a great Head & Shoulders pattern on the broad market indexes.  Taking a step back, my chart analysis has been telling me to look for a reversal pattern on the broad market as I feel it is over bought, and I still do…

So when I saw gold roll over then a reversal pattern on the Dow Jones Index, I decided to take a short position.  Also, I noticed the price reverse down off the right shoulder.

This time, I traded the DIA etf  just because it is where I saw the pattern develop first and because I have a thing for DIA (I just like trading it).

So once the price reversed down off the right shoulder with the long red candle I went short at $106.07 with a first target at $105.85 to sell half of my position, and then move my stop to break even on the balance of my position. I ended up pocketing just over 25 cents per share in gains which does not sound like much but because day traders get 4:1 and some brokers allow 10:1 leverage you can trade large amounts of shares for these quick trades.

Trading the DIA I focus on 500 or 1000 shares per trade depending on how I feel about the trade. This particular trade I did 1000 shares pocketing $250 profit within 70 minutes.

*Trading Tip*
If you see a Head & Shoulders pattern with a neckline angled up (see chart below), then you should focus on trying to short the top of the right hand shoulder (the first reversal candle).  The key here is to be short before the index (or any investment) breaks the neckline.

Once a neckline is broken a large surge of sellers should rush in as everyone jumps out of their long position.  Also, this is the point when aggressive traders start taking a short in order to take advantage of the breakdown and price depreciation.

So if you see a right shoulder drifting higher into resistance with that bearish looking flag, be ready to short once you see selling volume pick up and a drop in price.
 


Day Trading Spot Gold and the Indexes Conclusion:
Well I hope this short report helps you to take advantage of the market using different trading strategies and time frames. Every day and week is different and I jump around from trading 60 minutes charts, 4 hour, daily and the occasional 5 minute charts like the ones above.

I try to stay away from the 5 minute charts simply because they move so fast, and the shorter the time frame the smaller the potential. But some days favor it so I just take what the market gives me and that’s all we can do.

On another note,  if you are interested in my new high-end trading service that trades all the setups in real-time, I will be launching this service with my personal trades and analysis for you to trade alongside me!

You will receive all my intraday and swing trade alerts for indexes and commodities allowing you to trade which ever vehicle you want - whether it’s an ETF, Leveraged ETF, Futures Contract or CFD. This way your timing is accurate, your downside risk is carefully calculated and you can trade which every investment you are comfortable with

There will be a 24/7 chat room allowing us to trade around the clock when setups arise. Also, members can swap ideas, ask me questions, make new trading buddies etc… There is even a squawk box feature! I can and will talk live with audio to everyone in the chat room for important news, trades alerts or questions.

All trade alerts are instantly posted in the members area, chat-room and sent via email making it one of the most powerful trading services I have ever seen available online.

If you are interested please fill out the form to be notified for this service which will start the last week of March or the first week of April. It will have limited availability to keep it personal. Form is at the bottom of my webpage: www.TheTechnicalTraders.com

Chris Vermeulen

[PolarBear]

Technical View of What’s Next for Precious Metals, Stocks & the Dollar

Last weeks price action unfolded just as we expected. Money poured into stocks with the focus being on small cap, banks and technology stocks.  The fact that these sectors are showing strength while utilities, health care and consumer staples lag is a good sign that investors are once again taking risks in the market.

Because investors and traders are bullish on the stock market again the money flow into the safe havens like Gold and Silver decrease.  I believe this is the reason stocks moved up last week while precious metals drifted lower.

Below are three charts (Dollar, Gold and Silver) showing what I think is most likely to happen in the coming week or two.

US Dollar Index – Daily Chart
The US Dollar has put in a very nice bounce/rally since the low in November 2009.  Last month the dollar finally reached a key resistance level of 81.  I have been talking about this major resistance level since January as the Dollar would find it difficult to break above this level.

Take a look at the daily chart below.  You can see a head & shoulders pattern and a neckline which appears to have broken late Friday afternoon.  There is a strong chance we could see 78 reached which is the measured move down.   If we get follow through selling this week then I would expect 78 to be touched within 5-10 days.


GLD & SLV ETF Trading Charts
Precious metals have been moving very well for us recently. From looking at the charts using technical analysis we were able to catch the Feb. 5th low and also the Feb. 25th low on a several ETF’s.

As you can see from the GLD and SLV charts, both metals are not in an uptrend showing bullish chart patterns and trading at support. If we see the US Dollar break down next week then be ready to go long gold, silver and stocks.


Precious Metals, Stocks and the Dollar Trading Conclusion:
As a technical analyst the above charts are pointing to higher prices in the coming day’s which is exciting for us all.  BUT when things are this perfect looking we must be very cautious as the market has way to suck people into setups like this and spit them out a couple days later for a nasty loss.

Understanding how the market moves is crucial for avoiding and/or minimizing losses when trades go against us.  That is why I continue to wait for my signature low risk setup before putting any money to work.

My focus is to take the least amount of trades possible each year, only focusing on the best of the best setups.  My low risk setups require downside risk to be under 3% for the investment of choice when the broad market shows signs of strength, as well.  I use several different types of analysis to confirm if a setup has a high probability of winning and those which do are the trades I take along with my subscribers.

It is very important to wait for the market to confirm a move higher before taking a position with this type of setup. The market could go either way quickly and jumping the gun is not a safe bet.

If you would like to receive my Free Precious Metals Trading Reports please visit my website: www.GoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

28 Day Sector Rotation, Commodity & Index Update

Earlier this week I noticed a pattern in the market throughout an entire trading session that has inspired me to write a short piece on sector rotation.

On Tuesday March 16th, my quote screen was flashing green as sectors reached new intraday highs or 52 week highs. The interesting part was that every sector that was flashing green happened to be in sectors that strengthen at the end of a bull market cycle or strong rally. This would include basic materials, staples, services, utilities and financials.

Today I investigated the different sectors and came across some interesting numbers between the January market peak and this week’s price action as I show in the charts below.
 
JANUARY - ETF Sector Rotation Trading – 28 Day Cycle
I may not explain this well but try to follow me here 

Just before the market rolled over and lost over 9% last January, all the proper bull market sectors were very strong during the previous 28 days. This is normal and a strong sign that market participants were bullish on the overall market.

But the market was overbought; trading volume was light indicating that not many people are willing to buy at these lofty prices. And the VIX (volatility index) had reached an extreme low (a level that has triggered large sell offs in the past). All this means one thing to me. And that is, trade with caution and tighten your protective stops.

General rule, if everyone is buying all the hot stocks at these over bought levels then you can’t help but think its time for the market to roll over and shake them all out.


MARCH - ETF Sector Rotation Trading –28 Day Cycle
The chart of March shows where the sectors have finished over the past 28 days. Notice how similar the sectors have appreciated in price…

I have overlaid John Murphy’s sector rotation image to show which sectors are strongest in a bull market.

Now the interesting part is that it appears to be the setup as in January. My quote system is flashing new highs for the bear market cycle sectors which are the one which have not performed well (Stapes, Services & Utilities) and I have to think the market is about to take a breather or do a swan dive.

Don’t get me wrong, I am not saying we are on the verge of a bear market. I actually think the market is strong and will trade sideways in a large range for most of this year or just continue to trend up.

What I am saying is that these sectors go in and out of favor during smaller market cycles and that can be very useful information.


Sector Rotation Explained
You can learn more about sector rotation from this detailed course How to Profit From Sector Rotation Using ETFs.  This course explains how different sectors are stronger during different points within the economic cycle. The chart above shows the relationships and which of the various sectors should strengthen from the economy. The financial Market Cycle leads the Economic Cycle because traders try to anticipate the economy.

Market Update & Trading Conclusion:
Stock Indexes: The market in my opinion is way over bought on the daily chart and needs a breather. Volume is light, VIX is at the same level we saw in January just before the top and the bullish sectors are firing on all pistons.  You won’t catch me buying up here. Any type of pullback will most likely be sharp and there is no need to put money to work right now.

Precious Metals: Gold and silver had a nice pop this week off of a support level. I did not have a low risk setup as momentum was not on my side at the time of the pop. Also the large gap up on
GLD makes me nervous as gaps tend to get filled. I am just waiting for something to unfold which looks to be a few days away still.

Oil: It has popped higher also and is trading at resistance. As I mentioned in Sundays report, if the USD dollar completes this breakdown then we will see commodities and stocks surge to higher prices and most likely post a nice multi month rally.

Natural Gas: We are seeing natural gas prices dip below support, shaking out traders who had their protective stops set just beneath the previous low. Natural gas is a silent killer as it will shake even the best traders out of the market. I feel natural gas is over sold and ready for a bounce but until I get a low risk setup I remain on the side lines.

If you would like to receive my Free Technical Trading Reports please visit opt-in to my free newsletter here: www.GoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

Weekly Gold, Silver, Oil & Natural Gas Analysis

Last week was nothing special as stock market continued to drift higher on light volume and the Volatility Index (VIX) reaching a new multi year low. This mix of higher prices on light volume, multi year lows in the VIX and an overbought market paints a clear picture to a market technician – Be Ready for a Pullback!

Last Wednesday I sent out a report covering sector rotation comparing the price performance of these sectors from the January peak with last weeks price action. It was very interesting and it pointed to a sharp sell off Thursday or Friday

Here is last Wednesday’s report if you are interested: http://www.thegoldandoilguy.com/articles/28-day-sector-rotation-commodity-index-update/


GLD Gold ETF Daily & 60 Minute Chart
Last week gold gap higher then traded sideways for a few days. I will admit it was very tempting to buy into the move but I stuck with my trading strategy which is to not chase moves which gap in my direction.

Gaps are known to get filled about 70% of the time. What that means in this situation is that the price will most likely sell back down to fill that gap before trying to move higher.

All that said the problem I see now on the daily chart is the possibility of the mini Head & Shoulders pattern breaking down. If gold moves any lower then I would expect a sharp pullback. The measured move would equal a pullback to the $104 area on the GLD chart and the $1070 level for spot gold.



SLV Silver ETF Trading Chart
The silver chart looks much different than gold’s but in reality they are trading in a similar situation. If silver moves any lower then sellers will flood the market and take the price down to the next support level. But if we get a bounce then it should surge and rally almost a $1 per ounce from this point.

Only time will tell as we let this trade unfold with a stop at $16.52.


Natural Gas – Weekly Trading Chart
Natural gas has been selling down for almost 2 months. The chart is starting to show a possible buy point if all goes well in the next few weeks.

What I like about this chart is that we saw a break of a support level and heavy selling which tells me the general herd is getting shaken of their long positions. This extended sell off is now entering a support zone and could provide us with a low risk setup in the next 2-3 weeks.


Crude Oil – Weekly Trading Chart
Oil is trading similar to gold and silver. It is trading at a key pivot point and could go either way quickly. I will be keeping my eye on the daily and 60 minute charts for a possible low risk entry point.


Weekend Stock & Commodity Trading Conclusion:
In short, the overall market is trading at level were there is not much to we can do. Day traders are able to take advantage of this price action but not swing traders.

I feel the major indexes have another 1-2 down day left in them before a bounce, but it’s more difficult to gauge the momentum with a cool down period in the middle of it all (the weekend).

The market is on the edge of some exciting moves as I can feel something brewing. With any luck there could be some great opportunities in the coming days.

If you would like to receive my Free Weekly Trading Reports checkout my website: www.GoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

Sure Looks Like A Top? VIX, NYSE, DOW & GOLD

I think many of you will find this article interesting as I show several different indicators which point to an imminent correction for stocks and precious metals.

Last Wednesday’s report I showed how the current price of the index was almost identical to the January peak from where prices dropped nearly 10%. The report was called “28 Day Sector Rotation, Commodity & Index”. We did get the first sign of topy market last Friday with the sharp one day sell off as I expected.

Today, one week later we are now that much closer to a 3-8% drop which is shown in the charts below. It’s important to remember that bottoms tend to happen quickly while a market toping is more of a process which is why so many people take big losses trying tip a top.

The market will continue to move up even when it is way overbought. It’s only when extreme levels are reached that tops can try to be played.


The Volatility Index – Measures Fear & Complacency in the Market
While the VIX is not something I follow on a daily basis it is important to keep an eye on it. When extreme low levels are reached we know the market (John Dow traders) are feeling confident and buying up everything they can get their hands on.

I like to trade with the trend but when extreme levels are reached I start looking for a low risk setup to the short side (profit in a falling market) using leveraged ETFs.

As you can see from the chart of the VIX and SP500 below, each time the VIX tested the support level the market made a top. Again the VIX is not a great timing tool but it helps me decide which trading strategy I should focus on (swing or day trading) and if I should be looking to buy or selling the market.



NYSE New Highs-Lows Index
If a chart is worth a thousand words then this chart is worth 2000. It cannot get any simpler that the NYSE new high-low index.

The green line is the SP500 index which is straight forward. The Red line is the number of stocks on the NYSE which have reached a new high.

How strong is the market if is keeps going up while the underlying stocks are getting weaker? Something has got to give and it will most likely be to the down side.


Dow Jones Industrial Average – Daily Trend Chart
This chart adds another layer of clarity. You can see what happened last January when everyone was buying stocks thinking life is good, trading is easy. As my trading buddy David Banister from ActiveTradingPartners.com always says “Buy when the Cry, Sell when they Yell”and that’s what I am looking to do.

Today the Russell 2000 index (small cap stocks) sold down very hard. These stocks tend to lead the market both up and down. So the red flag is up and I am just waiting for the market to show me its hand so we can catch the next big move.

Coles Notes on Chart:
•   Market is over bought and in dire need of a pullback
•   The length of this steady rally is much longer than a normal rally
•   The rate as which prices are rising is much to steep to be maintained
•   The market is trading at the parallel trend line
•   VIX is tell us people are buying and not worrying about any possible drop
•   NYSE divergence is screaming Overbought…



GLD Gold Fund Trading
Gold is still in a major bull market but the recent price action from Dec up until now has been down as gold consolidates the large rally from 2009.

Looking at the chart below you can see the mini Head & Shoulders pattern. The neckline has now been broken and prices are falling. I almost had a buy signal for gold two days ago with the small move up and the candle closing above the previous days high. But because the price was still under the neckline (resistance) I decided to stand aside and live another day.


Mid-Week Gold Newsletter Conclusion:
In short, the market looks very strong but from a technical point of view it’s about to die of exhaustion in my opinion.

Gold, silver and oil I figure will move together which is sideways or down.

I am keeping a very close eye on things hoping prices unfold in a manor which will allow us to spot a low risk setup in the coming days as I would like to catch this drop if it happen. With any luck we could make 10-15% within a couple days using a leveraged ETF.

If you would like to get my Real-Time ETF Trading Signals please check out my website: www.TheGoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

SP500 & Dow Intraday Charts & Futures Prices at Their Best

The market gapped higher this morning after yesterdays heavy selling. At this time the market (metals and indexes) are trading at resistance on light volume. This tells me people are a little spooked from yesterday and just do not want to buy at these lofty prices.


Stock Market Training Education
I am trying to provide you with more insight and trading tips/education because I know many of you enjoy it. So here is something some of you may find interesting…

Over the years I have found several things which happen repeatedly in the market. I always found it interesting that in an uptrend the market/commodity or stock tends to gap lower at the open the next day. And during a down trend the market tends to gap higher at the open.

Why is this? I don’t know for sure… but my thoughts are that the smart money (big guys & professional traders) manipulate the market using futures to artificially lower prices so they can buy more the at lower prices before everyone else jumps in. It’s similar but in the reverse during a bear market. Prices gap up so they can short more shares at a higher price before everyone starts selling again pushing prices lower.

I could be way off here as this is my personal opinion but I see it happen all the time… so whether I am right or wrong in my theory the fact is this price action happens.


Take a look at the SP500 & Dow Jones Futures Charts:




Market Gap Trading Conclusion:
In short, the market gapped up today (not good)…
I see the dollar is now trading at a short term support level and metals are trading at resistance. So maybe something will come out of this for a short play…

I hope this short reports was of use for getting a feel of how the market moves and what I am looking for in low risk setups.

Have a great weekend everyone. I don’t see anything tradable other than this intraday low risk setup which just broke down as I write this sentence….. fun stuff

Be sure to get notified about my new day and swing trading service I am launching April 6th by entering your email address in the form at my website: www.TheTechnicalTraders.com

Chris Vermeulen

[PolarBear]

Gold & Dow Trading In a Congestion Zone

Last week the general market continued to grind its way higher for yet another week. Overall I feel the market is very much over bought. We all know the market can stay in extreme overbought levels for extended periods of time making it very difficult to pick tops.

This is the reason I do not try to pick tops, but rather wait for a top to form before putting my money to work. While a bottom can be made in 1 day, tops tend to take days and some times months to complete.

A few things really stood out to me when looking back on last week’s price action.

1.   Gold (GLD Fund) was only up 0.29% for the week while the gold mining stocks (GDX Fund) was down over 3.5%. This strong divergence really has me concerned about the price of gold in the near term. Gold stocks generally lead gold and if they are down 10x more than gold last week we better watch out…
2.   The US Dollar broke out and started to rally posting a gain of 1% for the week. It is definitely weird to see gold move higher when the US dollar is rising…

 
Gold GLD Daily Chart
Gold has been trading sideways/down since December.  I see this large 5 month pullback as bull flag and expect to see much higher prices for gold long term. But I don’t count my eggs before they hatch so I continue to focus on the daily and intraday chart patterns for low risk trading opportunities.

Friday we saw gold close very strong for the day. It looks very much like a reversal candle but with the price trading under the mini head & shoulders neck line and with the US Dollar in rally mode again I don’t think the stars are aligned enough for me to put money to work just yet.

Gold is currently trading in a major congestion zone.  Until there is a breakout of this zone I think setups will not be very accurate.


Dow Jones Industrial Average vs. NYSE New Highs Divergence – JANUARY
This chart shows the January 2010 peak in the stock market. As you can see prices became choppy with strong up and down movements before we saw the sharp drop.

Also note the NYSE new highs line. As the market became choppy new highs began to drop quickly. This indicated the market internals were weakening and lead to an 8% drop over the next couple weeks.


Dow Jones Industrial Average vs. NYSE New Highs Divergence – MARCH

This chart in my opinion looks much the same as January. You can see the Reversal candle from the February lows and the strong rally to the current price, as of Friday.

Notice how the market is getting choppy. Also last Thursday the Dow gave us a reversal candle. But this time the reversal candle is to the down side.

Also note the NYSE New Highs line. It has dropped sharply indicating the market internals are weakening once again.

This is what trading is all about… finding things that are out of whack and waiting for a low risk setup in order to make a profit.


Weekend Trading Conclusion:

In short, the stock market is over bought and about to roll over. I do understand that this grind higher could last another week or so, which is why I am focusing on short/quick intraday movements like Friday’s SP500 Intraday Low Risk Setup, and not buying etf funds to hold for a few weeks. Most of you know I do not chase prices higher simply because down side risk increased when buying into an over extended rally.

I feel gold, silver and oil will move together and at this time, I don’t like their charts for trading. With any luck we could get some setups this week, but not counting anything just yet.

If you would like to receive my Real-Time Low Risk ETF Trading Signals please checkout my website: www.TheGoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

Gold & Indexes Melt Up Into Earnings?

Gold and the stock market continue to trade within a tight range this week. While the long term trend for both stocks and metals are up, and the charts look bullish I am not buying at this level because the market is over bought. 

Chasing prices higher especially after a run this large is not the right move in my opinion. I did mention last week that we could see stocks continue to grind higher going into earning season which is about 2 weeks away still. I think that could happen, and if the same thing happens which we saw last January with great earnings (which I think we will see again) then watch out for another drop.

In short, if earning are good which they have been and everyone is expecting the same this April, then the typical Buy on Rumor (pre-earnings rally) which is what we have now, and Sell on the Good News in April then all the suckers thinking the market should rally will provide some liquidity for the smart money to sell at a premium.

That being said, if the earning are not good, then people will sell on that news also because the market is just waiting for news to sell… It’s the exact same situation as last time, that’s how I am feeling about it.


Trading Bottoms in the Broad Market
The past few months I have been really focusing on buying dips in the broad market after I see a mini 3 wave correction. I use a mix between price patterns, volume, market sentiment, and market internals and of course years of watching how the market moves and evolves during times of economic expansion and contractions. This is represented on the chart below as the purple line.

This chart below shows one of my custom indicators which have successfully timed intermediate market bottoms 1-2 days before everything started to rally higher. This is one of the reasons we bought into the selling on Feb 5th and again on Feb 25th using ETF’s. 

Because this is a new etf trading strategy and type of trading signal to be used in a bull market I still have to fin tune it a little more because I want to be sure we don’t get shaken out of positions to early which is what happened to a couple ETF’s we got into Feb 5th.

What happened was were buying when EVERYONE was bearish and panicking out of positions making it an extremely emotional time for traders and myself to buy into the market. This is not an easy task… I still have trouble pulling the trigger on these days and some times I just sit back in my chair and with one quick poke from my finger I hit the enter button to buy. My heart pounding just from that… but add few thousand followers on the pile relying on quality analysis and you start to understand what im going though. Not to mention the hundreds of emails with people telling me the market is about to crash, we should be shorting etc… 
Crazy times for sure 

Anyways, I will be provided these new signals for subscribers which is very exciting. Because my focus is on managing risk and keeping it as low as possible this will be a learning curve as I apply it to the service and set protective stops which is very difficult to do during a time of high volatility in the market. We can see the market move 2-4% in one day during these times so if we are trading the TNA 3x leveraged Russell2000 fund we could see our position drop 12% in one day. Bigger risk, bigger rewards as they say.



GLD Gold ETF – Daily Chart
Gold and silver are currently trading in limbo at the moment. It’s tough to say what’s going to happen here which is why I continue to wait for something with a high probability of winning before putting any money to work.

The daily chart clearly shows a multi month bull flag, ABC retrace, Reverse Head & Shoulders, and wedge. All of which are very bullish. It’s just a waiting game as I do not jump the gun on any move because the market has the tendency to catch everyone off guard and I don’t want to be one of them. Been there, done that to many times….


Mid-Week ETF Trading Signals Conclusion:
Keeping things short and simple, I think the stock market is in a major bull market. I am not buying anything until we get a pullback of some type. If the market unfolds properly we could have a great shorting opportunity (profit from a falling market) happening any day now, so that is my main focus at this time.

If you would like to receive my ETF Trading Signals please join my newsletter at: www.TheGoldAndOilGuy.com

Chris Vermeulen

[PolarBear]

What to Expect in April for Stocks & Precious Metals

I hope everyone had a great weekend and Easter Holiday!

This is quick update as its Easter Sunday and it’s a time to relax with the family

Below are two charts and my thoughts on what I am looking for in the coming days and weeks.

Gold Exchange Traded Fund – Daily Chart
As you can see the price action of gold has been trading within a few patterns the past couple months. First we saw a nice ABC Retrace correction and now it looks like a possible reverse Head & Shoulders or Wedge pattern is forming.

All three of these patterns are bullish but resistance must be overcome before I will start putting my money to work.


NYSE & NASDAQ Indexes – Daily Charts
We saw the broad market trade sideways for the majority of the week. As usual we had a pre-holiday pop in prices with the week closing slightly positive for stocks. These gains are generally given back the following week as volume picks back up.

The one thing that has me scratching my head is that the major indexes like SP500, Dow, NASDAQ and Russell 2000, all stayed below their previous weeks high. But the NYSE as shown below as the top chart clearly broke out to a new high.

I look at the NYSE as leading indicator and this makes me think we could see stocks grind higher right into earning season. All we can do at this point is wait for more data points on the chart and continue analyzing the market one day at a time.


Weekend Trading Conclusion:
As I mentioned last week, the market is over extended as we enter earning season. The market is in the same situation as we saw going into the January earning season.

I do not think we will have a huge pullback but I think a 3-5% correction is likely in the coming days or week. Once we get a pullback we should see support around the 30 or 50 day moving averages and then see the market head toward new highs once again.

The precious metals sector is getting a lot of attention because of the whistle blower on JP Morgan stating that metals are seriously manipulated with a huge amount of short positions still in place. I think this could be helping this sector and I hope we get a low risk setup in the coming week or two.

If you would like to Receive My ETF Trading Signals please visit my website at http://www.thegoldandoilguy.com/specialoffer/signup.html

Chris Vermeulen

[PolarBear]

Technical Setups on Gold, Silver, Oil & Natural Gas ETF’s

April 7th 2010
This week has been playing out as expected with prices grinding their way higher and lots of sharp intraday sell offs and rallies which is indicative of a market getting toppy.

Seems like the masses feel as though they are getting left behind which is why we are starting to see the panic buying in the market (new money buying at these lofty overbought prices).

Each time there is a new intraday or daily high on the major indexes there is a renewed bullishness created as breakout traders and novice traders buy into the market hoping for the next surge in price. It is these volume surges of new money entering the market which the big guys (smart money) are selling into. You can see it clear as day light on the intraday charts as new money gets sucked into the market new high and then 2 minutes later larger waves of selling hit the bids. I did explain and show a chart of how this looks to members of the FuturesTradingSignals.com today.

We have some very exciting times ahead and it’s just a matter of letting the market unfold over time as we take advantage of these carefully measured low risk setups.

On to the charts….

GLD ETF Trading – Gold Exchange Trading Fund

You can see how this chart has evolved from pattern to pattern as it bottomed over time.

Today we had a breakout and I expect to see a pullback which is normal when prices gap up and breakout of a pattern. An entry point would be considered on a pullback if the proper criteria are met.


SLV ETF Trading – Exchange Traded Fund

Silver has always been much more volatile than gold which is why the pullback early this year was so strong and why the recent rally has also covered so much ground. As you can see silver has broke out above resistance but is now looking overbought. A pullback in precious metals is expected, or a pause at least.


USO Crude Oil Fund

Oil has made a nice move higher the past week but I feel it will pullback also in the coming days for a breather. There are a couple sizable gaps to fill all the way back down to $40.50.


UNG Natural Gas Fund

This natural gas chart looks very interesting. In the chart I am comparing the 2009 low to today’s price action.

From looking at the chart, natural gas is way oversold and in dire need of a relief rally. As you can see the sharp rallies which occurred just before both the 2009 and the current possible bottom look identical. This type of price action is very common to see.

Let me explain: When an investment is this over sold, meaning it has sold lower for weeks if not months, then there is a large growing number of traders looking to pick a bottom. Once these traders see prices start to move higher they all jump in thinking its “The Bottom”. Some times it is but more times than not it’s just a suckers rally.

General rule is, if everyone can see it, then its most likely not going to happen.. this is also part of the reason the major indexes keep going up. It looks like a great short and a tone of traders are in cash waiting to take advantage of the drop. But the market will keep pushing higher until fear its not going to pullback. That’s when the new money buys back in fueling the GRIND higher.

Anyways, so after all the bottom pickers jump on the train and there are not any more buyers and the price tends to drift lower scaring these traders back out of the position. Eventually a new low is made and everyone is shaken out of the investment. The crazy part is that just as they get out, the price usually turns around and does exactly what they new was going to happen –Go Up.

Most traders have the direction correct, it’s just their timing is off. My general rule is when I see something I wait another bar, sometimes I keep saying that to my self after each new bar until I am confident in the predicted move or price I can get into the position at.


Mid-Week Trading Conclusion:

In short, the bull market continues to grind its way higher. Unfortunately we cannot do much until there is some type of correction because buying way up here after a 2 month rally is outside of my comfort zone.

I foresee a 3-5% correction starting any day now so I am keeping my gunpowder dry.

Check out my ETF Trading Signals at www.TheGoldAndOilGuy.com

Chris Vermeulen