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The Logical Fear Trade – Emotions vs. Analysis & Logic

I apologize now for the Christmas colored charts below… Its a lot of red and green but these are the most understood colors for knowing what ranges means (bullish or bearish).

This was a very emotion week for traders. The strong selling Thursday and Friday has traders and investors running for the door and panicking out of positions. While I did close out our long SP500 swing trading on Thursday to lock in a profitable trade, I do feel as though we can re-enter next week a better price.

The only ones feeling pain today are those who do not have enough self-discipline to create rules and trade by them. Again this is talked about in GREAT DETAIL in my new book. If this is you, I recommend buying my book and reading it this weekend as it’s a quick and simple read. There is a paperback version or instant PDF download available: Get Book.

Without self-discipline no amount of courses are trading services will make you a successful trader.

Let’s get technical and jump into the charts…

 

Momentum Index – The Intraday Extreme Overbought/sold indicator

This is an indicator I follow daily to understand how strong the selling is. If it is broad based or sector related. The last two sessions clearly shows is broad based and that the market has moved to quickly in one direction and is primed for a knee jerk reaction bounce.

oversold1

 

Swing Trading Cycles : 3-8 Weekly Overbought/Sold Market Cycles

This is a fantastic tool for timing key pivot lows and highs in the broad market. We are nearing another key pivot low but there is still room for more selling next week.

oversold2

 

Options Traders Are Fearful of Continued Selling

If you don’t know what the put/call ratio is, in simple terms it tells us when the majority of traders are buying put options (expecting stocks to fall, ratio of 1.0+), and when they are overly bullish (expecting stocks to rise, ratio below 0.60).

The chart below shows everyone is leaning towards more selling in the stock market. I use this as a contrarian indicator.

PCRatio

 

The Fear Trade – Shorting Fear with an Instrument that Naturally Loses Value: VXX

There is a lot of interesting way to trade the stock market and once way it through shorting the VXX ETF during bull markets. Instead of buying a long position in stocks, you could simply short the VXX fund. This thing loses value over time because of the way it’s managed/constructed. So logic says, shorting it on bounces can be very rewarding during times when fear is high.

Keep in mind this fund and its underlying index moves FAST with 20-30% percent swings… Trade small position sizes if you ever touch this thing…

 

 

Weekly Technical Trading Report Conclusion:

In short, (pardon the pun) I feel the stock market is setting up for another big bounce. The technicals and longer term trend remains bullish. I trade with the trend until proven wrong. Only then will I change the direction and trade with the new trend.

Get These Reports Free Each Week: www.GoldAndOilGuy.com

Chris Vermeulen
Algorithmic Trader

 

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Gold Market Traders: Metals And Stock Market will Swap Trends – Part II

The two trend reversals everyone has been waiting a year for are about to take place, but they have not yet started.

While I do think 2014 is the year we see gold, silver, miners and many other commodities rally, it is important to follow the trend and wait for a reversal to form before getting overly excited and long commodities.

Each time we see the daily charts form some type of bullish pattern gold market traders become instantly bullish. And each time this happens they get another reality check about their trading technique of trying to pick a bottom.

I just published a book in December which teaches readers how to identify trends and stages in the market – “Technical Trading Mastery – 7 Steps to Win With Logic”. Buying into a bear market rally is not a high probability winning position. Odds favor that sellers will pull the price down and likely to new lows.

This January is one of these times and gold market traders are getting excited and long positions. While the bottom may in for precious metals, buying a bounce in a bear market is tricky and you better have some trading discipline to exit if price starts to sell back down.

Eventually we will see the stock market rollover and breakdown below its support trendline and gold will rally. But keep in mind, some of the largest percentage based moves take place just before a reversal. What does this mean? It means that the stock market could easily go parabolic and rally for a few more weeks, then reverse down sharply. And precious metals would do the opposite, sell off, make new lows, then reverse back up and start a new bull market.

Stock Market VS. Gold – Gold Market Traders Be Aware!

Gold Market Traders - Newsletter

 

Below are a few more charts showing my big picture trend analysis for silver and gold miners.

Silver Market Traders - Newsletter

Gold Stock Market Traders - Trend Analysis

 

Gold Market Traders Conclusion:

In short, the precious metals sector is still in a bear market and has not yet reversed to the upside. As you know I don’t pick bottoms or tops which go against the longer term trend. In this case the trend is down for precious metals so I am not trying to pick a bottom.

While I am starting to get excited about the eventual bottom in gold, I am still sitting on the fence with my cash.

If you would like to get my analysis every day and my gold trades be sure to join me at www.TheGoldAndOilGuy.com

Chris Vermeulen

7 Steps To Win With Logic

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Gold Market Traders – New Gold Bull Market Cycle Has Started

2013 was one of the worst years for gold in a generation and the strangest part of it is that this loss came during a time in what should have been a banner year for gold.

When the Fed launched its QE1 and QE2 programs, gold posted huge gains but with QE3, we only had a brief rally in late 2012, it’s been all downhill form there.

The price of gold over the last year highlights just how much Europe has become a powerful driver behind gold vs. the US which has historically been the main mover. When the European debt crisis started a few years ago, people fearing a financial meltdown in Europe put a lot of their money into gold as it was the save haven of choice.

However, with financial and political risk in Europe subsiding, we have seen money leave gold and move into other markets, hence the big outflows from gold ETF’s.

Other factors that have dragged on gold over the last year include falling jewelry demand, the loss of its role as an inflation hedge with deflation becoming more of a concern in some areas, also tax increases on gold imports in India, and the supposedly improving economy in the US. All these contributed to the selling of gold.

Gold and gold stocks crashed last year in the summer. They have since been going through a stage one base. This suggests that 2014 will mark the start of a new bull market for gold, gold mining stocks and commodities. The commodity sector as a whole should be your focus in the coming months if you want to be able to invest in something for longer than a few days or weeks and make a huge amount of money be sure to check out my gold newsletter.

Gold Market Traders & Manipulators Provide Contrarian Bullish Outlook

Gold market traders and manipulators like some of the commercial banks/brokerage firms have been verbally slamming gold, and it turns out many are not as negative as lead us to believe…

Goldman Sachs we all know are the biggest hypocrites. While advising clients to sell gold in the second quarter of 2013, they bought a stunning 3.7 million shares of the GLD. And when Venezuela needed to raise cash and sell its gold, guess who jumped in to handle the transaction? Yup, GS! So while they tell everyone to sell gold, they are accumulating as much as they can without being obvious.

There is a lot more reasons and fundamentals to be bullish on commodities and gold, but that is not the point of this technical based report.

Weekly CRB Commodity Index – Bull Market Cycle About To Start

Taking a quick look at the CB index which is a basket of commodities, it looks as though a breakout above its down trend line will trigger a new bull market in the commodity sector. While this has not yet happened it looks as though it may happen in the next few months.

On stock market that recently broke out of a Stage 1 basing pattern (new bull market) is the Toronto Stock Exchange. This index is heavily weighted with commodity based stocks. I talk about this more in my new long-term algorithmic trading newsletter.

CRB-Bull

 

In this report I want to show you some interesting charts that are pointing to a new gold bull market cycle which looks to be starting.

The chart below of the gold miner’s bullish percent index is often misread by many traders and trade off its information incorrectly. Many for example think this index is based on stocks trading above a moving average which is no correct.

How a bullish percent index is calculated is based on Point & Figure buy and sell signals with each individual stock within the sector and in our case the gold minders ETF GDX.

Gold prices peaked in 2011 at $1923 an ounce when the gold mining stocks index was above 80%. Why is this important? Because gold stocks typically lead the price of gold in both directions, tops and bottoms.

As of today we have the reverse situation with the bullish percent index at 13% and showing bullish divergence from that of gold stocks. This is an early signal that the new gold bull market cycle is turning up and it should not be overlooked.

Also we see the 5th and final Elliott wave pattern forming and we could once again witness another multi year rally in the price of gold.

Gold Mining Bullish Percent Index – Weekly Chart

Gold Newsletter

Gold Miners ETF – Monthly Chart

Gold stocks have not yet broken out to start a rally as you can see in the chart below. But the important thing to note is that the daily chart has formed a mini Stage 1 Basing patterns and could breakout this week to kick start a multi month/year rally.

Gold Market Traders

Gold & Gold Stock Bull Market Conclusion:

If you have been following me for a while, you know I don’t try to be a hero and pick tops or bottoms. We all know that strategy is a losing one over the long run.

Since 2011 I have been a very dormant gold trader. Why? Because the price and technical indicators topped out and confirmed a massive consolidation or bear market was in motion.

With gold, gold stocks and precious metals about to start a new bull market, it is time to get back to trading gold and gold stocks.

You can get my daily gold, silver and gold stock analysis every morning with my gold newsletter and save 50% on your membership by joining today!
Gold Newsletter Special

Get My Gold & Gold Stock Trading Alerts And Save 50% Today! http://www.thegoldandoilguy.com/signup.php

Chris Vermeulen
Get My New Book: “Technical Trading Mastery – 7 Steps To Win With Logic“

7 Steps To Win With Logic

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The Most Important Trading Tool That Money Can’t Buy

This is the last part four of my four part series. The biggest mistakes traders and investors make which costs them time, money and usually self-confidence when trading are laid out in in the information below.

This last mistake is the by far the biggest and hardest problem individuals have. Believe it or not, the best way around it is with the use of algorithmic trading strategies which trades for you simply because we cannot mess things up. This is one of the reason automated trading has exploded in the recent years.

 

The Four Biggest Mistakes

1. Lack Of A Trading Plan – Part I
2. Using To Much Leverage – Part II
3. Failure to Control Risk – Part III
4. Lack Of Self-Discipline – Part IIII

 

 

Mistake #4 – Lack Of Discipline, this silent killer is in all of us!

Over the 16 years in which I have been trading and investing, I have never found a person who has not had discipline issues in their trading career. The brutal honest truth you likely do not want to hear is that you will never succeed at trading if you cannot follow a proven trading strategy and all its rules over and over again.

While some individuals just don’t have enough discipline to trade, most of us fall victim to fear, greed or our ego causing us to break our trading rules and do silly things with our money or open positions.

Lack of discipline is failing to do what you should do in a given circumstance when trading your strategies. We all know how easy it is to break rules from time to time because our gut feeling is so strong against what our trading strategy is doing but it is a huge mistake to intervene.

 

 

How to Avoid Your Lack Of Discipline

There are only three ways that will only help reduce (not eliminate) your lack of discipline.

1. Lose enough money that you now respect the market.

2. You have taken the time to think, create, and test a proven trading strategy that trades within your market philosophy and risk levels. I talk about this in great detail in my book “Technical Trading Mastery – 7 Steps To Win With Logic”.

3. You either automate your trading strategies or subscribe to a Automated Trading Strategy that removes you from the equation.

 

An interesting way to think of trading is not think but react.

The key to defeating your lack of discipline is to create and trade a system that is very simple to execute. And you must have 100% confidence in the system so you do not step in and alter its trading decisions. The key is to react and execute trade first with your proven strategy, and then once you are done you can think about what and why things did what they did all you want.

The last point I want to make, is that if you have your own system it is crucial that you are not tinkering with it all the time. If you keep tinkering with it, then you will never truly know how well it works thus you will second guess its activities and remain an un-disciplined trader.

 

Four Biggest Mistakes Series Conclusion:

My primary goal of this series has been to show you that there really is only one person who can control your success or failures in trading along with everything else in life. That person is you. In the end you are responsible for everything you have done.

The most common pitfall traders fall into is that when something goes wrong, they blame the market for the loss and not himself.

The key in trading is to accept that you will have losing trades and understand that it is part of this business. And when you lose a trade be sure not to allow these bad experiences have a negative effect on subsequent trades.

So the next time you find you self contemplating breaking a trading rule that has proven to work well over the long run for you, know that if you fall off the discipline train you will instantly be categories as one of those 90% of losing traders kind of guy.

I hope that his series has helped you. If you missed the previous parts, scroll up and use the links within this article near the top for Part I, II and III.

 

Here are some important resources for conquering these four biggest mistakes:

1. Read my new book “Technical Trading Mastery – 7 Steps To Win With Logic”

2. Take the Trading As Your Business program

3. Complete the Trading System Mastery Program

4. Build your own Automated Trading System with RIZM

5. Or review my All-In-One Automated Trading System

 

Chris Vermeulen

7 Steps To Win With Logic

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5hrs Remaining Free Lifetime Investing Newsletter Offer

Simply buy the digital version for $12.49, get the book instantly, and share this investing newsletter with your friends and family for years to come! Heck you can split the $12.49 with 13 people and you get it free if they each pitch in a buck!

Buy Now: Click Here

This is the last day I am going to promote this newsletter bonus for buying my new book Technical Trading Mastery.

For the past few days I have been doing a special promotion where if you buy my new book you’ll get a free lifetime subscription to my new INNER-Investor Monthly newsletter. Most financial newsletters sell for hundreds of dollars a year so this is the best deal I’ve ever offered and I can’t see how I can offer anything for this low of a price ever again.

This newsletter is going to be sold so if you don’t get it today you may end up buying it next month and have to pay for it, because you are not going to want to miss out when the stock market trend is changing.

So the smart thing to do is take advantage of this offer. It’s a no brainer.

Not to mention the fact that this is a good book and can really help you. That’s besides the point today.
7 Steps To Win With Logic

 

How to Get Your Free Lifetime Subscription

My new book “Technical Trading Mastery – 7 Steps To Win With Logic” is now available for you on my website Order Digital Version Here. In two months the paperback will be on Amazon.com Pre-Order on Amazon.

I am going to tell you about something really special. But first let me tell you about the book itself.

I have been planning to writing an investment/trading book for you for years and believe you will be really happy with it once you get it. Unlike most trading books that are like big encyclopedias full of the same concepts explained in a different way, my book is going to show you a new way to analyze the markets to find low risk trading and investing opportunities. My new style of analysis I call INNER-Market Analysis along with what has actually worked for me over the years are covered in detail.

You will find my process of knowing what to trade, my specific indicators and strategies in the book to be simple, unique, and exciting. Its everything I have used to manage my money and navigate big swings in the market with great success.

This is really logical way of trading not only makes sense but you can implement some of it to your trading literally overnight.

I wrote the book for you to be able to read it in two or three sittings and I share with you my story of becoming a trader which I’ve never shared before. I think that you will enjoy reading it as much as I did writing it for you.

Today is the last day. This is it!

So go ahead and order the book by clicking here.

Chris Vermeulen

,

Last Day for Technical Trading Mastery – 7 Steps To Win With Logic Book Bonus

This is the last day I am going to promote this newsletter bonus for buying my new book Technical Trading Mastery.

For the past few days I have been doing a special promotion where if you buy my new book you’ll get a free lifetime subscription to my new INNER-Investor Monthly newsletter. Most financial newsletters sell for hundreds of dollars a year so this is the best deal I’ve ever offered and I can’t see how I can offer anything for this low of a price ever again.

This newsletter is going to be sold so if you don’t get it today you may end up buying it next month and have to pay for it, because you are not going to want to miss out when the stock market trend is changing.

So the smart thing to do is take advantage of this offer. It’s a no brainer.

Not to mention the fact that this is a good book and can really help you. That’s besides the point today.

How to Get Your Free Lifetime Subscription

My new book “Technical Trading Mastery – 7 Steps To Win With Logic” is now available for you on my website Order Digital Version Here. In two months the paperback will be on Amazon.com Pre-Order on Amazon.

I am going to tell you about something really special. But first let me tell you about the book itself.

I have been planning to writing an investment/trading book for you for years and believe you will be really happy with it once you get it. Unlike most trading books that are like big encyclopedias full of the same concepts explained in a different way, my book is going to show you a new way to analyze the markets to find low risk trading and investing opportunities. My new style of analysis I call INNER-Market Analysis along with what has actually worked for me over the years are covered in detail.

You will find my process of knowing what to trade, my specific indicators and strategies in the book to be simple, unique, and exciting. Its everything I have used to manage my money and navigate big swings in the market with great success.

This is really logical way of trading not only makes sense but you can implement some of it to your trading literally overnight.

I wrote the book for you to be able to read it in two or three sittings and I share with you my story of becoming a trader which I’ve never shared before. I think that you will enjoy reading it as much as I did writing it for you.

Today is the last day. This is it!

So go ahead and order the book by clicking here.

7 Steps To Win With Logic

Chris Vermeulen