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Financials, Oil & Gold on the Move

Most traders I have been talking with are feeling the same thing. Something big is brewing for the equities market but most do not want to get heavily involved until there is a clear direction. The broad market has been consolidating for almost 3 months and it’s important to remember that the larger the consolidation the bigger the move.

Also the biggest and best moves come from failed patterns. So is the big head & shoulders pattern on the SP500 which everyone is yelling about (the sky is falling) really going to happen or is this the BIG fake out? Only time will tell, either way no matter which way it goes I will be sure to catch some of it.

Below area few charts pointing out patterns and trends which could provide some opportunity in the coming days or weeks.

XLF – Financial Sector ETF
Financials play a large roll in moving the major indexes so if this reverse head and shoulders patter breaks out to the upside then the indexes should rally and XLF etf could reach its measured move of $16.50.

USO – Crude Oil Fund
Crude oil almost looked like it was going to breakout and mover higher this week but sellers jumped in sending it lower once again. The daily chart shows a large bearish pennant which is known as a continuation pattern. So it looks as though we should see lower prices for oil.

GLD – Gold Bullion ETF
Gold has been sliding lower for several weeks now and it looks to be showing selling exhaustion. The 5th wave down with the volume spike indicates panic selling as investors cannot hold onto those positions any longer and exit. This is a bullish sign for gold. Also we are seeing gold fall deep into a support level along with the 200 day moving average.

Mid-Week Financial, Oil and Gold Trading Conclusion:
In short, the equities market is in limbo until a clear trend is established. If the financial sector breaks out to the upside then we should see a sizable rally. As for oil it looks to be trading in near the middle of its range but is still in a down trend overall. Gold is almost looking ready for a bounce but I am waiting for more confirmation before jumping on the wagon.

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Chris Vermeulen

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How To Be Positioned for SP500, Gold & Oil

The second half of last week we saw some strong price action in the equities market. The SP500 broke through the 5 and 50 day moving averages closing the week just under key resistance levels. The SP500 futures will find resistance at the June high $1099.25, $1100 which is whole number then at $1103 which is the 200 day moving average. Each of these are clumped together making it really just one solid area which sellers will be waiting to short the market.

The market momentum and internals are looking strong for the equities market overall. With last weeks strong close we have seeing the percentage of stocks closing above their 50 and 200 day moving averages surge from 40% to 68% from the previous week. Stocks closing above their 20 day moving average jumped from 40% to 82% from the previous week. Seeing this type of shift in the market Momentum is generally a bullish indicator.

From a quick glance at the internals it looks as though Monday will trade flat/negative for the session. Reason being is that the NYSE Advance/Decline line is telling us the market is overbought when looking at a short term time frame. I would expect some selling Monday or possibly we get a gap up, then a sell off early in the session while the market digests last weeks strong closing.

Gold

Bullion has been giving mixed signals for while now. It looks like there has been a possible ABC retace, but on the other hand it looks to be forming a stair step pattern lower (series of bear flags). Until we get something more concrete from the charts lets just keep our eye on it for now.

Crude Oil

The past month we have seen oil form a bear flag which generally leads to lower prices. That said oil continues to grind its way higher closing at a key resistance level. This could be a possible double top before heading lower or we could get a breakout and rally this week. I know that does not sound helpful but remember oil is very sensitive to weather (hurricanes), US Dollar and geopolitical events making it much more unpredictable than one may think. That said I am not trading it right now.

Pre-Week Trading Warm Up:

I feel the equities market has some strength behind it. But we must see the SP500 futures contract close strongly above the $1103 area. With the market overbought and trading at resistance I am favoring some early weakness Monday

As for the gold and oil, I am just going to keep an eye on them. I’m just not feeling/seeing the patterns which I find tradable at the moment for a low risk setup.

Quick Trading Tip: I try to always analyze and trade the market the way which has always worked for me. Keeping my emotions in control and filtering out as much news, events and opinions as possible so I can think clearly while I focus on my low risk setups. The past couple months have had big news and events unfolding making it harder for traders to stay focused. It is crucial for traders to step back and clear their heads from all the news, hype and opinions shared across all the mediums and just look at a simple chart analyzing the price, volume and trend.

If you would like to receive my Free Weekly Trading Reports or my ETF Trade Alerts be sure to visit my website at: www.GoldAndOilGuy.com

Chris Vermeulen

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Back 2 Back Reversals for the Stock Market

The market continues to become quicker and fiercer as it move up and down 2+% on a regular basis This week we have seen some wild price swings due to earnings, events and the Fed’s which just makes trading that much more intense.

I have pointed out yesterday that this market only gives you a brief moment to take profits before it starts going wild shaking traders out of positions. This increased volatility is caused from a couple of things:

1. Traders/Investors know the financial system is still riddled with unethical practices/manipulation. This causes everyone to be extra jumpy/emotional and causes volume surges in the market as the herd starts to get greedy or fearful.
2. Volume overall on the buying side of things just isn’t there… I see some nice waves of buying but it doesn’t move the market up much… then it only takes a small wave of sellers for the market to drop… Investors are just scared to buy stocks and that is not a good thing…

I keep a close eye on the buying and selling volume for the NYSE as it tends to help pin tops and bottom within a 2-3 day period. In short when we get panic buying meaning 75%+ of volume is from buyers then I know the general public is jumping into the market buying everything up and that’s when the smart money starts to scale out of their position selling to these retail investors. These retail investors are buying on news and excitement much like what we are seeing now with earnings season. Stocks have run up for 5-10 days, as the smart money buys in on anticipation of good news, then the earnings are released which are better than expected and the stocks pop and drop. Well the pop higher on BIG volume are all the retail investors buying and are generally the last ones in. The smart money is quickly selling into this buying surge so they end up getting out at high prices.

My point here is that in general I see 4-6 of these panic buying or selling days a year which I find are tradable. The crazy part is that we have seen 11 of these panic days (both buying and selling) in just 8 weeks… We are seeing more selling than we did at the bottom in 2009! Something big is about to happen and I want to make sure we get a price of it once the moves starts.

Anyways, below is a chart of the SP500 showing how its trading under some key resistance levels. Today the market gapped up testing the 50 day moving average and above the 5 day moving average then sold down very strongly during Ben Bernanke’s speech. This is not a good sign for the overall health of the market.

On the commodities side of things we are not seeing much happening with gold or oil at the moment. Gold is still in a short term down. And gold took an $8 drop today when Ben Bernanke said inflation would remain low for an extended period of time.

As for crude oil, yesterday afternoon I pointed out to members that oil had a big run up on virtually no volume Tuesday and it would most likely give back those gains today. We saw this today with oil dropping from $78 down to 76.50 per barrel. Overall Oil looks like it wants to go higher but has some work to do before that can happen.

Mid-Week Trading Conclusion:
In short, the market remains choppy and we are getting more than normal news/events which are moving the market and this is causing extra noise and volatility for traders. Cash is king during volatile times and if you are doing some trades be sure to keep the positions small for another month or so.

If you would like to receive my detailed trading analysis and alerts be sure to checkout my websites at www.TheGoldAndOilGuy.com or www.FuturesTradingSignals.com

Chris Vermeulen

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Gold, Oil and SP500 Trading Patterns

It was an interesting options expiration week for equities that’s for sure. We saw some very choppy price action with large waves of buying and selling as the bulls and bears fought for control.

Both Gold and Oil closed lower for the week which is not a good sign considering the US Dollar dropped like a rock along with them.

Below are a few of my charts

GLD – Gold ETF Price Action

Gold continues to pull back from the June highs. It looks as though it could form an ABC retrace pattern if the July 7th low is broken. If $1085 is broken we should see gold drop to $1165-75 level. On the GLD etf that would be around the $112.50 – $113.50 level. That should shake out the majority of weak positions and start to rally towards the $1250/60 level.

Crude Oil – USO Oil Fund

This is a weekly chart of oil which clearly shows how selling volume has risen and the trend since 2009 has gone up, sideways and is now heading back down. The bear flag forming on this weekly chart looks about ready for another leg down. Once that occurs we could see a test of the 2009 lows.

Using some inter-market analysis crude oil tends to move in the opposite direction of the US Dollar. From a quick glance at the dollar chart is looks about ready to bounce which will send oil sharply lower. It will be interesting to see how this unfolds over the next 2-3 weeks.

SP500 – SPY Index Fund

Friday we saw some the SP500 sell off on heavy volume after testing its 50 and 200 day moving averages which are key levels for trading and investors to take profits or add to their short positions in hope for another multi day sell off.

That being said, there is still a good change of higher prices and for all we know this could be the start of another multi month rally. While I am more inclined for us to play the down side this week I will not have a problem taking a long position if we start to see the market internals and breadth improve alone with bullish price action. I monitor the 60, 30 and 10 minute charts which allow me to get a feel for the overall short term trend and strength.

Weekend Trading Conclusion:

Overall it looks like we could have a couple more days of weakness for stocks and commodities. The US Dollar is very much oversold and as of this writing it looks like its starting a small bounce. A rising dollar tends to put downward pressure on gold and oil along with the large multi national companies.

Equities sold off Friday with a slow grind down from 9:30 -4pm never putting in any type of bounce when looking at the 60 minute chart. The SP500 and other indexes are way over sold after Friday and I am expecting some follow through Monday as investors review the charts over the weekend and see what happened on Friday. That should cause another wave of selling in the morning as traders panic out of positions.

It’s going to be an exciting week for sure!

If you would like to receive my trading analysis and trade alerts be sure to checkout my services at: www.TheGoldAndOilGuy.com & www.FuturesTradingSignals.com

Chris Vermeulen

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Mid-Week US Dollar, Oil, Gold and SP500

It’s been another strong week for equities but are stocks and commodities about to get hit with some selling pressure?

I have put together a short video coving all of these investments but here is my Coles Note Version:

US Dollar:
The Dollar is way oversold and looking ready for a multi day bounce. This will put pressure stocks and commodities.

Crude Oil:
Oil is trading at resistance and with the Fed minutes reported today saying they are some what concerned about the economy still this pulled oil down late in the day. Also if the US Dollar bounces it will add downward pressure to oil.

Gold:
It’s a tough call on gold because it could go either way here… It could be seen as a safe haven in stocks fall in the coming days, or if the US Dollar moves up then it will put more downward pressure to gold. I feel money can be made a breakout to the up side or the down side. Explained in the video.

SP500:
Stocks are overbought across the board making things look toppy. We are seeing good earnings from Alcoa, CSX and Intel but the stocks are selling off on the good news which is a bearish sign for the equities market overall. The SP500 gapped up on Tuesday and has been trading sideways in a tight sideways channel building power for the next breakout. Tension is building and we should see a breakout from this channel tomorrow (Thursday). The Odds are pointing to lower prices but only time will tell.

TECHNICAL MARKET VIDEO:

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Chris Vermeulen

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What I See Next for Gold, Dollar & SPX

Last week we saw stocks move sharply higher as traders started to cover their short position which added fuel to an already oversold market ready to bounce. Overall volume was not that strong on the move up which is a bearish sign. On Friday afternoon we saw the SP500 continue to move into the $1075 resistance level on very light volume. This indicates to me that buyers are not willing to pay these higher prices because the market has moved up so quickly and the fact that it’s trading at a resistance level.

I feel the market will gap higher on Monday just like we say on June 20/21 deep into a resistance level and the big money will short the pop sending it sharply lower.

Gold looks to be shifting its momentum from a down trend to an uptrend. It’s forming a reverse head & shoulders pattern which is shown in the video posted below.

Here is My Technical Trading Report Video Covering:

– Gold
– US Dollar
– SP500
– Market Internals
– On Balance Volume

iPhone/iPad Video Format: Click Here

Weekend Conclusion:

In short is looks as thought the market is at a critical pivot point. We could see prices stall out here and continue the down trend or see strong buying step in sending prices higher in the equities market. We need to wait and see what type of price action unfolds in the coming days.

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Chris Vermeulen

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Gold, Black Gold and Equities Technical Charts

July 7th, 2010
It’s been a short but exciting week so far. Investors and traders are have been scratching their heads the past few days as stocks continued to bounce around giving mixed signals. But today was a clear day of short covering from this much oversold market condition.

Below are a few charts showing what I’m currently thinking will unfold in the near future.

Gold Futures Trading – 2 Hour Chart

In the past couple weeks we sold our position in gold at $1255-60 area in anticipation for this sharp drop. The market was kind enough to show us though its price and volume action that a nasty drop was just around the corner. Currently we are in cash waiting for the down trend momentum to stall and reverse before taking another long position in gold. I feel it could still drop one more time, but the chart is giving mixed signals when reviewing the short term charts.

Crude Oil Futures – Daily Trading Chart

Crude has seen a shift in the trend over the past 2-3 months. Selling volume over took the buyers and are now pulling prices down into bear flag pattern which means lower prices still.

SP500 Futures – 60 Minute Trading Chart

SP500 and other major indexes have been selling down the past couple weeks. Tuesday we saw the market gap up very big then sell off. But that surge higher was an early warning sign that the selling momentum was slowing for the time being.

1075 on the SP500 is a key resistance level and a point which many traders will be taking profits and trying to short the market. That will create a lot of selling pressure at that level and only time will tell if we can clear it.

Mid-Week Commodity and Index Trading Conclusion:

It looks as though we are getting the over due bounce in the stock market everyone has been anticipating. The large rally today (Wednesday) has covered most of the ground as it has moved up over 3% today. Overhead resistance looks to be only 2% away before sellers step back in and try to pull the market back down.

If the market goes up for another couple days then gold should have a small pullback to test support. When the equities market starts to drop again money should flow back into gold and send it higher as the safe haven of choice.

Crude oil broke down late last week and this week it bounced back up to retest the breakdown level. This is common and once complete oil should continue to drop.

The market is still in a strong down trend on an intermediate basis so be sure to lock in profits once your investments reach key resistance levels. If you don’t the market has a way of taking back those gains very quickly in the current market condition.

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Chris Vermeulen

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Gold & SP500 Consistently Profitable Trading Charts

Its been an exciting day with the SP500 breaking below this mornings low using the regular trading hours 9:30-4 for this analysis. As i mentioned before I don’t trade during the afternoon. Most large moves tend to happen between 9:35am – 11:30am, and 3:30-4pm. I did mention at 11:28am this morning in the chatroom that if we saw this mornings low broken then we should see a short drop. Below is a chart of how it has unfolded so far today.

Also in this mornings pre-market video I pointed out how gold looked ready to drop again with the mini head & shoulders patterns and bearish volume levels. We saw a nice drop this morning which is posted in this chart below.

Overall we are waiting for a larger setup using the 60 minute chart and daily charts for some sizable setups. As most of you know I do point out trading opportunities in the chatroomn for those of you who are more active with some experience under your belt. But to be honest these quick intraday moves are just to fast for me to type up an alert, send it out, then have everyone read it and take action if the setup occurs. Those of you who do not feel experienced enough for these quick day trades can just stick with my momentum trades which are based on the 60 minute chart and the swing trades as they come available.

That being said I am looking into some live webinar services so you can view my screen and hear me talk during the morning or afternoon hours depending on the market conditions. I’m not saying this is going to be the way of things going forward but I want to test it out because I do think it will be much better than just a chatroom and we can do more trades over the long run as well.

Chris Vermeulen
www.FuturesTradingSignals.com

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Stock Market Report – What To Do Now!

Another blood bath in the market today but this time it’s a total market melt down with Stocks, commodities, precious metals, and the US Dollar plummeting lower.

Since late April the market has become very unstable with large intraday price swings. Since then it has only gotten tougher and tougher to trade. While there have been some decent setups having caught a few nice SP and gold trades, this is a time when the big money guys step back from the market until the dust settles. Only taking small quick trades to profit from the wild daily swings which happen in a blink of an eye.

Gold, its trading at a key support level now that is dropped $20 to $1220. But this type of selling tends to carry over for a 1-2 days in gold as the rest of the world realizes the drop and they sell out of their position. So I’m not doing much on gold right now. If we get a nice low volume drift up today or tomorrow we could take a short position but going into the long weekend I think cash is the safe thing to do. We could see gold dip to the 1200, 1175, or 1150 area depending on how the rest of the world reacts to today’s sell off.

Oil, it’s in a down trend selling off hard with the US dollar which is not normal. If we see the US dollar bounce I figure oil will take another beating… It could drop to $62 a barrel over the next month or so…

SP500 is WAY oversold, and has been for about a week now. The index went from an uptrend and we bought the oversold dips, but then the market turned into a down trend and shorting the bounces is what we are now looking for. On the short term basis, trading the SP with a swing trade carries a ton of risk. If this is the breakdown of the head & shoulders pattern everyone is talking about then we could see the market drop another 100 points real quick. On the other side of that coin, this week we have seen 90% of volume being selling volume which indicates washout panic selling and tends to be a bottom for a bounce or rally. So you can see how shorting an oversold market is dangerous and why buying a falling knife is also equally dangerous. Waiting for a setup is crucial.

I am not sure if I will be around for the close today as I’m spending the holiday with my wife and daughter which is much needed. But what I am thinking could happen if the market stays down at least 0.5% lower for the day is an afternoon sell off around 3:40-3:45 when end of day orders, margin calls and the leveraged ETF rebalancing starts to happen. This sell off tends to last 4-10 minutes but it has the chance of triggere a much larger sell off into the close so scale out quickly once some of your position is in the green.

If any of you are day traders then you will know trading between 11:30 – 3:00 is a waste of time in most cases. The best trading is between 9:35 – 11:00, and 3:30 – 4:00pm. That’s when the market makes real moves/trends which are tradable for making real money. Many of you are trading through the afternoon and just churning your account trying to make money but you just paying a lot in commissions and adding more stress and risk to trading than there needs to be. As much as we don’t like to see large moves without us, part of trading is to wait for some good plays and not get sucked into trading the noise in the market…

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Talk to everyone later
Chris Vermeulen