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Commodity & Index ETF Trading Strategy

May 9, 2010
As we all know, last weeks stock market blip/mini crash was very emotional for those of you watching or trading it live. A lot of money changed hands last week and you either lost a bundle or made a bundle…

I did send out some charts and a video on Thursday night about the market crash/recovery if you have not seen it. It’s called “Stock Market Micro Intraday Crash Shows Us Where The Safe Havens Are”.

Below are my ETF charts for the commodities and index I actively follow and trade.

GLD – Gold Bullion ETF – Daily Chart
GLD is a great ETF to trade as it generates 10-20 quality low risk setups each year for subscribers. The chart clearly shows the large rally in late 2009 and the correction as it formed patterns moving from a down trend – base – and back to an uptrend.

ETF Trading Strategy

$USD – US Dollar Index – Monthly Chart
This weekly chart I think shows some serious potential for gold and silver prices. The US Dollar is now trading at a key resistance level which I think it will have a tough time moving higher. The dollar has been moving up for several months and looks ready for a pullback or at least a pause. If the dollar starts to roll over in the next few months then we should see gold and silver move substantially higher.

ETF Trading Strategy

SLV – Silver Bullion ETF – Daily Chart
Silver like gold bounced off a key support level last week as investors started to buy silver as a safe haven. Gold moved up sharply on the day of the intraday market crash while silver traded sideways for a day before joining the party. The following day investors starting buying up silver because it was lagging its big sister “yellow Gold”.

ETF Trading Strategy

USO – Oil Fund – Daily Chart
Several weeks back I posted this chart showing how volume was drying up as oil tested resistance on declining volume. This indicated to us that once/if the price started to roll over it would trigger a sharp sell off as short term traders who bought in anticipation of a breakout to the up side sold out of their positions once support was broken. This is what caused the heavy volume and sharp price drop.

ETF Trading Strategy

SPY – SP500 INDEX Trading ETF – Daily Chart
It’s tougher now to read the index charts as last weeks heavy volume market crash could be seen in two very different ways…

One – We are starting a correction and had a jump start with the human error of selling billions of dollars worth of investments instead of millions prematurely pushing pulling the market down to a level where I think it should/will test again before moving up.

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Two – This extremely heavy sell off is just the start of what is to come…

Since the government owns the largest banks and the banks are unloading/selling massive amounts of shares calling it an error how do we know it’s not a scam for them to completely short the market in anticipation for a collapse which would make them unheard of amounts of money as the market drops… It is tough to trust anyone sitting up there in those power positions after everything they have been caught for already…

I personally think we could see lower prices in the coming month then the market will bottom and we will see new highs for 2010.

ETF Trading Strategy

Weekend Commodity & Index ETF Trading Strategy Conclusion:
Stepping back and looking at the above charts it looks as thought we could see stocks and commodities digest the recent moves. In short, gold and silver have rallied strong and now trading near resistance. Oil dropped last week and is now trading near a key support level. I feel it the market will trade sideways and stabilize before for a while as the SP500 had that crazy drop last week and now the market is in shock. I figured it would see 3-4 weeks to reach those prices yet it happened in 1 day so now the market could do very little for 3-4 weeks…

The US dollar is something we will be watching more closely because it’s trading at key resistance level. In the past it has taken a month or two for a rally to roll over and head back down. This could play out very nicely if the dollar tops and the rest of the market trends sideways to digest the recent moves. Once the dollar starts to fall it will provide fuel for the next rally in both stocks and commodities.

If you would like to receive my ETF Trading Strategy and Trading Signals Please check out my website: www.TheTechnicalTraders.com

Chris Vermeulen

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Stock Market Micro Intraday Crash Shows Us Where The Safe Havens Are

WOW…. Now that was an exciting day in the market!!
This day will be talked about for years to come and the individual who hit the wrong button (“B” for billion instead of “M” for million) to sell billions instead of millions will have a tough time finding another job… Maybe this person can do commercials for Microsoft Windows showing how one simple key stroke can crash a system… lol

On a more serious note, a member in the chat room had a good point… Who would create a program that can not only bankrupt the company in one key stroke but also crash the entire broad market in 10 minutes losing millions of investor’s hard earned money??

I will keep this short with my Cole Notes Version on a few opinions of mine.

Banks – Good for taking your money and crashing the markets

All we have heard about in the past year is bank this, and bank that…. They take our money, bet on crazy investments, lose it, then get free money from the Feds to replace that lost money and they keep it for them selves….

Well today the market crashed because of a bank which should not be a surprise after everything else they have messed up. But to add more to the fire I had a lot of subscribers and followers today tell me they tried to trade with their brokers and they could not get orders to be executed. When I asked these individuals who they are using I got the same response… They were trading through a bank… This really makes my upset as I hate watching the bad guys (banks) keep winning/taking everyone’s money…..

Stock Market Circuit Breakers Failed

I find it amazing how the financial system has circuit breakers to protect investors from a market crash yet today they did not get triggered…

Rule is (and dumb one in my opinion) is that a circuit breaker (halts trading on the stock market for a set period of time) can only be triggered before 2:30pm ET. Funny thing is that the crash happened 7 minutes after 2:30. Manipulation???

2-3 Week Market Correction, Corrected in One Day

A pullback in the broad market which normally would have taken a few weeks at the most happened in one afternoon which is amazing really. Don’t get me wrong, I thought what happen today was very interesting, profitable and a lot of fun. But a move this drastic does throw a wrench into everyone technical analysis and it will be a few days before we get enough price action to start piecing this market back together for what looks most likely to unfold in the coming days and weeks.

Gold & US Dollar Rally Together

The past 2 weeks we have seen gold and the dollar move up together. This is very strong for gold. Even if we see the dollar roll over and head south that would help boost the price of gold… The short term charts for gold are looking tired be sure to watch the video below.

Market Video on Today’s Price Action and what’s Next

Click Here: http://www.thegoldandoilguy.com/articles/may-6th-stock-market-crash/

End of week Trading Conclusion:

This week was a crazy one with gold and the dollar moving higher together and the stock market crashing over 9% in one day…

It will take a few days for all this extreme price action to smooth out as we try and grasp if this is a bottom or the beginning of a major meltdown.

If you would like to receive my Trading Analysis and Signals please checkout my website: www.TheTechnicalTraders.com

Chris Vermeulen

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The Moment of Truth Video for Gold, Silver, Oil & SP500

May 5th 2010
It has been an exciting couple weeks with the stock market slowly forming its top before breaking down this week. I have been warning everyone keep tightening your protective stops and to keep new positions small because once prices start to sell off they will most likely drop like a rock.

This week we have seen all the markets around the world breakdown and this indicates that there could be some large waves of selling in the near future. Traders and investors are very bullish on both stocks and commodities and financial market is designed to hurt the largest group of investors possible. So with over 53% of trader’s bullish and only 18% bearish (same readings as the Jan high) it makes for a perfect blood bath in the market catching the majority off guard left holding the shares.

Here is a chart of the SP500 ETF – SPY Daily Chart

You can see from simple analysis these repeated patterns in price and volume.

Video – Gold, Silver, Oil and SP500 Technical Analysis

I have put together a short video covering charts of gold, silver, oil and the broad market pointing out what we must watch for in the coming days or weeks.

Visit this link if you cannot see a video here: http://www.thegoldandoilguy.com/silver-oil-sp500-gold-newsletter-video/

Mid-Week Trading Conclusion:
The broad market is now in the middle of a trend reversal and during times like these we can see wild price swings in stocks and commodities making trading much more difficult. But a few more sessions and we should see things smooth out and provide some great shorting opportunities before the market starts to head back up to make new 2010 highs.

If you would like to receive Gold Newsletter of ETF Trading Signals please visit my website at: www.TheGoldAndOilGuy.com

Chris Vermeulen

I would also like to let you in on a totally free offer ever for investors. Let me introduce you to The Market Toolbox.

My friends at Investing Systems offer a great piece of software called The Market Toolbox and it is a “desktop finance portal”. They have including more information, tools and resources than I have ever seen in a single piece of software.

Download The Desktop Financial Portal

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Another Batch of Trading Setups for the SP500 Are Here

May 2nd, 2010
The past few weeks I have been talking about the SP500 forming a top similar to the January top we saw earlier this year. Well the charts below show exactly what I have been waiting for to unfold and I think the time has come for the market to take a healthy breather before continuing this strong bull market which could last another 12 -24 months before really topping out.

SPY – SP500 ETF Trading Chart

I am showing the SPY etf because that’s a fund most people know and trade, but this analysis is the same for trading futures like the ES M0 Mini SP500 contract.

You can see the similar price action which formed in January and what has happened recently. I feel we are about to see a correction which would last several weeks which is very exciting for us traders.

SPY ES Daily Trading

SPY April Top – SP500 ETF Trading 60 Minute Chart

This chart shows the past few weeks of price action with the market becoming more volatile with waves of selling and buying. This indicates exhaustion and generally leads to a market correction or at least some sideways movement to digest the recent rally before continuing higher.

SPY January Top – SP500 ETF Trading 60 Minute Chart

Take a look at this chart of January….
Very similar price and volume action.

SPY January Sell Off – SP500 ETF Trading 60 Minute Chart

This chart shows the sell off last January and the setups I had when the market reached extremes generating trades with the underlying down trend.

SP500 Day Trading & Swing Trading Opportunities:

I hope these charts help you to see how I read the market and what I am looking for in trade setups. While its easy to see these setups in hindsight it requires a lot of research and experience in-order to time these plays in real-time when emotions are flying high and with BNN, Bloomberg, CNBC and other newsletters all saying different things…

Some words from fellow traders:
“I just wanted to let you know how much I’ve learned from you already. Understanding that you don’t always have to be in the market because another Low Risk Setup is just around the corner tops my list. Keep up the good work.” Matt Brennan, CA, USA

“Hey, Chris!
I really like the way you think and I’m already learning some useful stuff. I tend to be too aggressive, that’s another reason I picked you – I think you have just the medicine I need to learn to be a bit more cautious and to manage risk better. My biggest weakness is jumping the gun. Pretty typical, I guess. Already I can see I will learn to improve from following your lead.” George Faison, VA, USA

If you would like stock market training, how to find low risk setups with great potential along with my trading signals then check out my websites below:

Gold and SP500 ETF Swing Trading Signals: www.TheGoldAndOilGuy.com
 Intraday, Swing Trades and Trading Strategy: www.FuturesTradingSignals.com
Trade Explosive Stocks: www.ActiveTradingPartners.com

Chris Vermeulen

Disclaimer: I currently do not own gold and SP500 ETFs or Futures contracts.

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Gold & SP500 Day Trading Gone Wild & What’s Next?

May 2, 2010
The past couple weeks we have seen sellers control the price of gold. This can be seen on the charts by the light volume drifts up then heavy volume sell selling sending this metal sharply lower. This type of price action provides some excellent intraday shorting opportunities.

On the other hand the SP500 has been doing quite the opposite providing some very profitable intraday buying opportunities for those who have the time to trade during the day.

Below I show a couple of low risk intraday trading opportunities which lasted a couple days providing massive gains, tiny down side risk and immediate price action. But what I think is about to happen in the next week or so will turn the tables with gold providing great buying opportunities and the SP500 with some great shorting opportunities, opposite to what is happening now.

Two Shorting Opportunities in Gold Making 210% Return in 3 Days

The fist two weeks of April gold had formed an excellent mini head & shoulders topping pattern. This is a pattern which I find very profitable when trading the intraday charts.

The first chart is of the 2 hour intraday gold chart spanning 25 days. On this chart gold had formed a mini head & shoulders topping pattern which day traders were able to take advantage of with very little risk.

Once the first wave of selling was finished and gold reached our price target of $1134, we exited our position and waited for another intraday setup. It was only a couple days later when gold has setup for another opportunity to short which an even more potential than the first trade as it had the possibility of dropping to the $1115 level. This would have provided a $40 move in gold washing the market of weak positions setting itself up for another big rally.

Our first price target was reached at $1147.7 where we took some profits and moved our stop to break-even (our entry price) for the balance of our position. Doing this guarantees the trades will be a winner no matter what happens. As you can see on the chart depending what investment type you trade you would have earned 2.6% – 210% return on your investment.

Gold Short Intraday Trading

Gold’s Surprise Rally – Spain Was A Pain

Last week Spain was downgraded causing large selling pressure on the Euro as everyone sold the Euro and moved their money into a safer investment like the US Dollar and Gold. This sent both dramatically higher at the same time. The chart below shows the same 2 hour chart of gold but is zoomed out so you can see farther back and also the most recent rally in gold.

The red arrow on gold shows where gold was most likely to go in the coming days, but instead it rocketed higher on the Euro-land news hitting the wires. Most of the price advance happened within the first 4 hours and since then the price has drifted sideways and grinded its way a little higher.

Gold Surprise Rally

SP500 Buying Opportunity Makes 135% Gain in 3 Days

During the day on Wednesday I had low risk entry point for day traders on the SP500. The setup is simple really. Tuesday’s panic selling sent the market tumbling in a very short period of time putting the market in an oversold condition. A condition like this provides excellent low risk/instant price movement type of setup.

Take a look at the volume on the chart… Volume on the ES Mini SP Futures contract was not very heavy during the sell offs. But the days following shows strong buying volume indicating big money was buying up stocks at these discounted prices. This is great to see.

ES Mini Trading Strategy

60 Minute SP500 Trading Chart

As you can see from the chart below Tuesday’s heavy volume sell off was an almost straight drop. That type of move generally provides a trad-able bounce or drift higher within a few days which tests the level were prices started to drop originally (the breakdown level).

The price of the SP500 drifted up into resistance with declining volume meaning traders are not willing to pay the higher price for the index. This is a sign of weakness and worked out perfectly with our price target of $1205-1206 at which point we took money off the table and moved our stop up to lock in some solid gains if the market did in fact reverse back down after reaching the key resistance level.

SP500 Day Trading Strategy

Gold & SP500 Trading Conclusion:

Some very exciting times lie ahead as I feel gold and the SP500 are changing short term trend directions. Gold which was down the past month is now headed higher as we are looking for low volume pullbacks to take long positions.

And the SP500 looks ready to take a swan dive to correct/digest some of the monster rally it has put in since the February low. With any luck we will get a nice shorting opportunity to catch some of the move down and then we should be setup for another large rally.

In short, we are looking for gold to dip to enter long and the SP500 to breakdown this week then form a low volume bounce/drift into a resistance level which we will try to short once the bounce loses its upward momentum. I feel we will have a bunch of day trades in the near future along with some great swing trades at the key turning points.

Get My Gold and SP500 ETF Swing Trading Signals: www.TheGoldAndOilGuy.com
My Intraday, Swing Trades and Trading Strategy: www.FuturesTradingSignals.com
You can also Trade Explosive Stocks with me at: www.ActiveTradingPartners.com

Chris Vermeulen

Disclaimer: I currently do not own gold and SP500 ETFs or Futures contracts.

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Spain is in Pain – US Dollar & Gold Are Safe Havens

April 28th, 2010

It’s been an interesting week with Spain being downgraded as Europe debt crisis widens. This has investors looking at the US dollar in a new light thinking that maybe it’s not that bad of an investment after all. This sent the US Dollar higher along with the price of gold so far this week.

The past 7 days we have seen both the US Dollar and Gold rise together which is not something that happens often. With financial crisis’s popping up around the world I think the US dollar and gold will continue to strengthen (with corrections along the way). I think it will take another 12-24 months before another wave if issues arise in the financial markets and until then we just continue to focus mainly on buying the dips and corrections with the occasional short play in the larger corrections.

USD, Gold And SP500 – Daily Performance Chart
Gold Dollar SPX ETF Trading

SP500 – Daily Chart

On April 14th we saw an extreme level of selling which sent the broad market sharply lower. This sell off was followed by value buyers pushing the prices back up to new 2010 highs.

Well this week we have seen the same extreme selling volume and the question we all want to know is will there be buyers this time around?
ES Mini & SPY ETF Trading

ETF & Futures Trading Conclusion:

Gold is in a bull market but it was setup for another round of selling but this Spain issue has been a pain. If we had another downward word move on gold to the $1115 – 1120 area it would have washed out the majority of gold bulls resetting it’s self up for a big rally.

The Europe debt crisis has thrown a twist into the picture helping boost the price of gold. Gold could still head lower washing out the weak positions but the picture is fuzzy. Silver did not react much to this news as it’s not really seen as the safe haven gold or the US Dollar are.

As for stock picks and the broad market, it looks and feels like we are about to start a correction. But this week we saw fear in the market again with the VIX and selling volume surging higher to levels which have triggered temporary bottoms in the past. The problem I see here is that some key price levels have been taken out, so the odds are pointing to lower prices in the near future. But Tuesdays panic selling has pushed the market into an oversold condition so we should see a drift upwards for 1-4 days before sellers get active again as they want to sell and short the market at premium prices.

In short, precious metals are not giving any clear price action to take advantage of yet, and the SP500 looks like it’s on its last legs before heading lower for a meaningful correction which should provide a short setup and then a nice long setup once it bottoms out.

If you would like to receive my ETF & Futures Trading Signals check out my website: www.TheTechnicalTraders.com

Chris Vermeulen

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Mid-Week Gold & Oil Trading Report

In my last report I showed some cycles for the price of gold and how they were starting to roll over which would in turn put some selling pressure on both gold and silver this week.

Last Monday we saw gold and silver open higher but both were met with selling for the entire trading session. Since then gold and silver have been drifting higher on light volume with some occasional waves of selling on higher volume. It looks as though gold and silver have started a 5-14 day pause or pullback.

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GLD – Gold Exchange Traded Fund

You can see from the chart below that the price of GLD looks to have bottomed after completing several typical price patterns from the breakdown we saw in December. The recent 4 months have provided a solid looking chart which should help gold take another run at the $1500 mark in the coming months.

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USO Oil Fund

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Crude Oil Futures – 120 minute chart of April 14, 2010

As the saying goes, buy on rumor (expectations) sell on the news. Well the price of oil moved up in the early morning anticipating the news (inventory numbers) at 10:30am ET would be in line with estimates. Then we saw profit taking started 2 hours before the number came out which is normal to see. But traders forecasted 1.4 million barrels as the number but the number came out at -2.2 million which was a big surprise for everyone. This sent oil sharply higher providing traders who caught the breaking news with an easy money trade. This type of action does not happen often so it’s a great little bonus for day traders.

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Mid-Week Trading Conclusion:

In short, metals have had a nice run recently and the charts are pointing to a short breather before the next upward thrust.

Oil is holding up strong on the daily chart and with today’s extra boost in price, its looking like it may want to start a new leg higher if the momentum carries over for a few more days.

We saw the major indexes surge higher on rising volume indicating buyers are in a panic to buy in fear of missing more gains. There really is no reason to be buying at these prices other than trading off emotions in fear of missing more upside. The problem for these traders is that money is made by those who buy dips in the bull markets. Buying over extended rallies is a dangerous game, especially with the market as overbought as this one. The trend is our friend and if we do get a 1-2 day pullback in stocks we could take small position to buy on a dip.

If you would like to receive my ETF Trading Signals please visit my website: www.TheGoldAndOilGuy.com

Chris Vermeulen

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Also, I have been following Neil at http://www.traderreview.net . He’s an ex-broker, gone rogue and running his own newsletter advisory for several years now. And now, his free commentary even gives away currency analysis.

With his free DAILY newsletter, he gives away commentary and insight that most people pay for.

I’d highly recommend you sign up for his free newsletter right now, and you’ll automatically get the report, “What Your Broker Doesn’t Want You to Know”  part of his old broker training. S super fun entertaining read. His daily newsletter has a wealth of information.