March 26, 2010
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.
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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.
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Take a look at the SP500 & Dow Jones Futures Charts:
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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 below:
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-03-26 14:33:112014-03-10 09:41:49SP500 & Dow Intraday Charts & Futures Prices at Their Best
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 toppy 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 topping 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.
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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.
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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.
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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…
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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.
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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
Get my FREE Weekly Reports:
Chris Vermeulen
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Day Trading Spot Gold Futures is a touchy subject among traders. You either hate it and think it cannot be day traded for consistent gains or your love it finding its movements very accurate. As most of you know I love trading gold 🙂
I get my fair share of emails from individuals who think trading gold is a complete scam because of manipulation and crazy price action and I completely agree with this group of people. But the entire market is manipulated… so we all just have to deal with it or stop trading and I am not going to do that.
My focus is on price action and volume allowing me to think with a level head and manage my money one candle stick bar at a time.
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Spot Gold Futures Day Trade Video
So here is a short video covering a recent day trade for spot gold futures. Notice in the video I use the gold futures chart for analyzing the market and how I traded with CFD’s during the late night.
The reason I traded CFD’s is simply because you can trade any size position with CFD’s big or small and I like small positions during overnight trades when I am sleeping. Also you get crazy 100-200x leverage trading CFD’s. So I can risk a very small amount of money but have big potential if a trade goes in my favor so for this small move in gold I was able to capture the gains with little risk.
It is important to note that when I have a buy or sell signal in gold, silver, oil, the indexes etc… any related investment can be traded. For example if I have a buy signal for gold the you can trade gold futures, gold CFD’s, gold ETF’s etc…. they all move together at the same time. You pick which investment you are comfortable wil.
Anyways, day trading spot gold is my sweet spot (Pardon the pun) in the market and with my new trader service launching April 6th were I provide every trade I do whether its an ETF, Futures or CFD play members will be able to trade directly beside me in the chatroom which has a live audio squawk box. The service will be very educational as you not only see what and when im trading but can ask me questions and read my weekly educational trading reports explaining closed out trades.
I hope this short video helps you understand that taking every trade the market seems to be giving you does not always need to be taken. The average trader thinks that I am extremely aggressive as I day trade, swing trade and do so some long term dividend plays etc… but really I would consider myself VERY CONSERVATIVE.
I pass on about 70% of the setups I see and wait for something that has ALL the stars aligned before putting my money to work. The market is designed to chew up and spit out gamblers before they even know what hit them. And this is why I site back and watch the blood bath on a daily basis only sticking my hand in when it looks clear.
You will not see me bet the house on any given trade. All I am looking for is a low risk setup. If there is an edge I will take the opportunity to make money whether it’s a quick $50 or a $1500 a day trade setup.
If you would like to receive my Free Weekly ETF Trading Report to your inbox please visit my website: www.GoldAndOilGuy.com
Get Notified about my New Trading Service”
Chris Vermeulen
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March 21, 2010
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
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.
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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.
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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.
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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.
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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
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March 17th 2010
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 financial.
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 opt-in to my free newsletter here:
Chris Vermeulen www.TheGoldAndOilGuy.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-03-17 22:15:462014-03-10 09:42:4628 Day Sector Rotation, Commodity & Index Update
March 14, 2010
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.
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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.
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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 now 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.
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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.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-03-14 13:08:552014-03-10 09:43:06Technical View of What’s Next for Precious Metals, Stocks & the Dollar
March 13 2010
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 day traders.
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 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.
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March 13 2010
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 fill out the form below:
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-03-13 21:59:112014-03-10 09:43:45Are Crude Oil & Natural Gas about to Explode?
March 11th 2010
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.
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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:
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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.
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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?
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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.
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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.
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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.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-03-07 23:51:292014-03-10 09:44:25How Much Higher for the Indices, Gold and the Dollar?
