As you likely know I have been working on automating my long term SP500 investing strategy which I call AlgoTrades. I would like to mention that we are taking on new clients to our AlgoTrades automated investing system.
We are very excited to tell you that the doors are currently open for you to become a part of this new way of investing.
To ensure peak performance from our automated trading system and trading results for our clients. We have a limited number of seats available to ensure this. As with any good system, once there are too many clients the profitable edge in the market will no longer exist. As we are trading the system with our own investment capital, we are going to monitor and protect our system.
This system is very exclusive as it can only handle a limited group of clients. Be sure to join today, before we are over subscribed. Reserve your seat to have our system trading a portion of your investment capital.
https://thegoldandoilguy.com/wp-content/uploads/2014/02/images3.jpg5359adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-02-27 09:40:042014-03-04 03:18:48AlgoTrades system is now available for automated investing
The Dow Theory could be in play here with the broad market. When both the Transports (IYT) and the Dow Industrials (DIA) cannot make higher highs and start making lower lows the market has topped according to Dow Theory. We are watching the transports closely because the Dow chart has already made a lower low and now e are waiting for the Transports to do the same. They have both made lower highs if this current rally stalls here. This will be important in the next few weeks to help calculate the markets next major move and if there will be a trend change.
https://thegoldandoilguy.com/wp-content/uploads/2014/02/trans2.png697780adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-02-26 13:58:102014-03-03 13:30:26The Dow & Transport ETF Play – The Dow Theory
I have had a few emails asking about our silver position and why we are not moving our protective stops and taking more profits similar to how we are trading Natural Gas.
These are great questions and here are my thoughts:
Depending on your outlook and trading/investing type you will either be looking at silver as a quick trade to lock in gains, or as a early entry point into silver as precious metals start to form a basing pattern. What you do is up to you as I cannot give individual investment advice.
We/I did take some profits off the table and move our stop up last week for a portion of this position (1/3rd) and we moved our stops to breakeven. As shown in this morning video gold, silver and miners still have a LOT of work to do to build this basing pattern and it may take a few months yet. If you did not watch today’s video then do so for a visual.
I am more of a short term trader which is why I sold 1/3rd of our position last week. My brain/emotions demand I lock in profits when the market gives us a quick move in our favor. That being said, I really like the precious metals sector and feel we are getting in early and at a great price. If this basing pattern holds up and price continues to rally in our favor this year, it means we will be deep in the money on this position and can add a lot more money upon the next setup in gold, silver or miners with less risk because of our profit cushion on this first silver trade.
So I am holding the balance of my silver position with a breakeven stop looking for the longer term trend to pick up speed in the coming months.
Here is a perfect example showing how 3x leveraged ETF funds can lose value over a short period of time while the underlying investment is deep in our favor by 5% and should have our ETF in our favor by 15%). But instead we are under water by a few percent still…
This is a prime example of why I don’t trade 3x ETFs that often. And when you actually run the numbers on how much leverage you actually get with 3x ETFs its actually the same or less than if you just bought a single ETF with the same amount of capital and margin… 3X ETFs require you to have 90% margin, while a single ETF only requires you 30%. It’s a little complicated to crunch the numbers and explain but know that 3x ETFs are nothing special when you do the math for both long term and short term trades.
For example, if you wanted to buy $1000 worth of a 3x ETF, the margin requirements on these fund are 90% meaning you must have $900 in your MARGIN account to trade this position. But if you wanted to trade say a single ETF where the margin is only say 30% for a non levegeage fund, you can technically trade the same position size with the same amount of money WITHOUT the 3x leveraged fund price decay we all know is terrible in these highly leveraged funds.
So if you wanted a position to match the power of the $1000 3x leveraged ETF position but using the single ETF, you would only need to buy $3000 worth of the single ETF, but because its only 30% margin requirement. This may be confusing, the only point im trying to make here is that you can get almost the same trade using a single ETF simply because of the margin requirements between the two types of ETF funds. Most individuals do not realize the crazy margin required for 3x ETFs and its likely the reason most traders get margin calls with trading these funds.
Long story short, if today’s price action is a reversal day it will only take another big down day for us to be deep in the money on our inverse ETFs.
The Next Trading Session Is another Big Sell Off in our Favor – Current Live Trade
This is a continuation of yesterday’s post talking about how we needed another big down day for the ETF catch up to the natural gas price action.
Today Nat Gas is down another 10% and has sent our 3x leveraged ETF fund deep in the money with subscribers traded up over 18% in only a couple trading sessions.
We continue to hold our remaining 1/3rd of our position in DGAZ with a stop 5% in the money in case price reverses hard today or this week.
https://thegoldandoilguy.com/wp-content/uploads/2014/02/ng-Gain.png400596adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-02-25 09:50:132014-03-03 13:33:59Price Erosion of 3x Leveraged Natural Gas ETFs
Both the Canadian and US stock markets are closed today. Futures trading have shortened mixed hours also. Being a holiday and limited trading there is no video this morning.
Taking a look at the futures market we can see trading up another 1.35% today which is great to see. So far out silver position is up over 12% in just a few trading sessions.
Natural gas is no fire once again… up nearly 5% again today and is now testing the recent spike highs in price in which we shorted earlier this month for a net 20+% profit in only a few days. Nat gas actually looks ready to rally even more this time so I am not looking to short it unless we get a picture perfect setup again.
The SP500 (broad market) continues to claw it’s way higher and its trading up 0.25% this morning. We are going to leave the stock market alone until we get a correction in price, then we will review the charts for a possible trade setup.
On different note, today we are excited to announce the opening of doors to our automated trading system for investors. Many of you are already on the waiting list as we have a limited amount of client seats available to have the system traded automatically in your brokerage account and it is first come first serve. Keep in mind today is a holiday with brokers and services are running on a skeleton crew. If you have not taken a look at our automated trading system you can review all the details here: www.AlgoTrades.net
Chris Vermeulen
https://thegoldandoilguy.com/wp-content/uploads/2014/02/silverposition.png401623adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-02-17 08:56:372014-03-03 13:34:41Silver Trade & Automated Trading System for Investors
The SP500 continued to rally and is pushing extreme overbought conditions today. Our net short ETF trading strategy on the SP500 is close to getting stopped out as the trend is on the verge of turning back up if sellers do not step in tomorrow. We are under water on this trade and unfortunately we lose when trends reverse as that is just part of trading. The trend remains down and we could get a miracle tomorrow to save the day. only time will tell.
Natural Gas ETF Trading Strategies: This morning we closed out our natural gas trade for a big profit of roughly 18-20% depending where you entered and placed your stop. I have had a several emails from members wanting to add to their position yesterday, and another bunch today saying they still hold their position in natural gas cause they think price will continue to move in their favor. Technically, closing out our trade today was the proper thing to do. We followed our rules and the trade managed it’s self perfectly. While natural gas could continue to sell down in the long run, wanting to hold your position or add to a trade that is up 40% without any real pullbacks is the sign of a GREEDY trader. General rule is, if you do not take profits on a trade, the market will simply take them back, its that simple.
ETF Trading Strategy for DGAZ Pays out 20% return!
It looks as though precious metal miners and gold are having an impulse wave higher and have turned up. Silver remains in a down trend/basing pattern. I plan to get long this sector on the first pause or pullback. Though we could get long Silver tomorrow using one of our precious metals etf trading strategies.
Chris Vermeulen
https://thegoldandoilguy.com/wp-content/uploads/2014/02/natgasbounce.png394621adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-02-11 16:39:322014-03-03 13:35:18ETF Trading Strategies for Gold, Silver, Miners and Natural Gas
Recent price action in the stock market has many traders on edge. With the market closing below our key support trend line last week, the market has now technically starting a down trend.
While trend lines are a great tool for identifying a weakening trend and reversals in the market, I do not put a lot of my analysis weighting on them.
Most of my timing and trading is based around what I call INNER-Market Analysis (Market Stages, Cycles, Momentum and Sentiment). Using these data we can diagnose the overall health of the market. Knowing the strength of the market we can then forecast short term trend reversals before they happen with a high degree of accuracy.
In this report I keep things clean and simple using just trend lines. During the last three weeks we have seen the price of stocks pullback. And because 2013 was such a strong year for stocks most participants are expecting a sharp market correction to take place anytime now.
So with the recent price correction fear is starting to enter the market and money is rotating out of stocks and into the Risk-Off assets like gold and bonds.
Stocks tend to fall in times of economic uncertainty or fear. These same factors push investors towards the safety trades (Risk-Off) high quality bonds and precious metals. As more money goes from risk-on to risk-off, stocks will continue to fall and the safety trades will rise. The move by investors to select the safety of gold and bonds compared to the volatility of stocks will result in these risk plays to moving in opposite directions.
Let’s take a look at the chart below for a visual of what looks to be unfolding…
How to Trade These Markets:
While these markets look to be starting to reverse trends, it is critical that we understand how the market moves during reversals and understand position/money management.
Getting short stocks and long precious metals in the long run could work out very well, but if you understand the price action that typically happens during reversals you know that the stock market will become choppy and we could see the recent highs tested or possibly even a new high made before price actually starts a down trend. And the opposite situation for gold and bonds. Drawdowns can be huge when investing and why I don’t just change position directions when the first sign of a trend change shows up on the chart.
Price reversals are a process, not an event. So it is important to follow along using a short term time frame like the daily chart and play the intermediate trends that last 4-12 weeks in length. By doing this, you are trading in the direction of the most active cycle in the stock market and positioned properly as new a trend starts.
What I am looking for in the next week or two:
1. Stocks to trade sideways or drift higher for 3-6 days, then I will be looking to get short. Again, cycle, sentiment, and momentum analysis must remain down for me to short the market. If they turn back up I will remain in cash until a setup for another short or long entry forms.
2. Gold remains in a down trend but is starting to breakout to the upside. I do have concerns with the daily chart patterns for both gold and silver, so next week will be critical for them. We will be using some ETF Trading Strategies to take advantage of these moves.
3. Bond prices (not yields) look to be forming a bottom “W” pattern. They have had a big run in the last few weeks and are now testing resistance. I think a long bond position is slowly starting to unfold but if we look at the futures price charts for both bonds and gold, they have not yet broken to the upside and have more work to do. As mentioned before ETFs are not really the best tool for charting but I show them because they what the masses follow and trade.
https://thegoldandoilguy.com/wp-content/uploads/2014/01/Gold-Stocks.png530700adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-02-02 12:24:142014-03-03 13:37:43Is February a Risk-On or Risk-Off Trade: Equities or Gold & Bonds
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.
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.
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.
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.
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!
Below are a few more charts showing my big picture trend analysis for silver and gold miners.
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
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-01-20 10:59:282014-03-03 12:09:49Gold Market Traders: Metals And Stock Market will Swap Trends – Part II
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.
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 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 & 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!
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2014-01-12 13:18:522014-03-03 12:19:40Gold Market Traders – New Gold Bull Market Cycle Has Started
