Daily Market Trades Archives - Page 18 of 20 - Gold & Silver Stocks Newsletter

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Gold, Silver and Oil Out Perform their Equities?

Since the market crash in late 2008 we have seen investors favor quality stocks that pay dividends and have steady earnings. Fast growth companies and equities with physical resources like commodities have also done well.

Let’s examine the monthly charts of gold, silver, oil and natural gas – and observe how they have traded in comparison to their mining equities

Gold – Monthly Chart
Looking at the monthly chart as far back as 2004, we see that gold has formed the same patterns repeatedly. This has created a stair step pattern and allows us to calculate measured moves and a time frame for this to take place.

As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.

Investors around the world are buying gold because it is a physical product which has been proven to hold its value.

Gold Newsletter

Silver & Precious Metal Stocks – Monthly Chart
Silver and PM stocks have been trading in tandem since 2004 and we can see this by looking at a price performance chart of both silver and the HUI index. The interesting part is that the physical commodity silver has held its value better than the stocks during corrections.
Apparently investors prefer tangible investments over stock certificates of mining companies in periods of increased volitility. Lower risk is in the commodity.

Silver Newsletter

Oil – Monthly Chart
Crude oil has held its value over energy stocks for the majority of the time since 2003. And currently, investors are more comfortable holding oil as a safe investment over energy stocks.

Oil Newsletter

Natural Gas – Monthly Chart
Natural gas is the energy sector’s underdog in my eyes. The world has found so much natural gas in the ground and discovered cost effective ways to collect gas that it will continue to see investors move away until inventory start to deplete.

Natural Gas Trading

Commodity Trading Conclusion:
Investors around the world continue to put money into gold which is a universal hedge against inflation. The broad market appears to be trading at a major resistance level. Tops in the market generally take a much longer than to reverse directions than market bottoms. We will not knot for sure if we are entering a top for a couple months as the charts unfold. Now that commodities are trading back at reasonable levels I think they will hold up better than equities if the market starts to correct.

We continue to enter low risk setups and trade with this strong up trend but are aware that we must be protected and focus on the lower risk plays.

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Chris

November 22, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Precious Metals & Energy ETF Trading Report

So far this week has been generous with our commodity ETFs moving higher, other than natural gas which is clearly in a bear market. Each of the commodity ETF trading charts below is at a different stage and it will be interesting to see how things unfold in the coming weeks.

Trading ETFs is very rewarding when done properly and using multiple time frames for timing your entry and exit points is crucial. My main focus is on the weekly and daily charts but I use a 30 minute intraday chart when the time comes to actually pick an exact buy or sell point. Below I have provided both the weekly and daily chart so you can see how the same ETF looks completely different on the two time frames.

GLD ETF Trading – Weekly & Daily Trading Charts
The weekly chart a nice multi month rally but is now starting to go parabolic (straight up). When this happens I start tightening my stops so that I can lock in maximum gains. Now jump over to the daily chart and notice that gold has rallied longer than the previous move in early October. It looks overbought and ready for a pullback. Pullbacks on strong rallies like this tend to be hard and fast as stop orders get triggered sending prices tumbling down on heavy volume. My general thought is 5 days up in an investment is given back in 1 down day. This is why I scale out of positions when they are looking long in the tooth and ready for profit taking.

Gold ETF Trading Newsletter

SLV ETF Trading – Weekly & Daily Trading Charts
Silver had been under performing gold for several weeks but made up some nice ground this week. Gold and silver tend to trade together so if gold pulls back I figure silver will also. That being said the weekly chart of silver looks ready to rocket higher for another week or so.

Silver ETF Trading Newsletter

USO Fund Trading – Weekly & Daily Trading Charts
While gold and silver have been moving higher oil has been flagging sideways taking a breather. Both the weekly and the daily charts are aligned for a nice move higher if the trend and charts follow through on their patterns. We could get some tradable action in the next couple days.

Oil ETF Trading Newsletter

UNG Fund Trading – Weekly & Daily Trading Charts
Natural gas is really starting to slide. Wednesday UNG dipped below the Sept low of $8.94 by a couple cents then moved up into the close. Overall it’s not bullish. This could be the start of a waterfall sell off which is a sharp heavy volume sell off that lasts 3-5 days.

Natural Gas ETF Trading Newsletter

Commodity ETF Trading Conclusion:
To sum everything up the gold and silver ETFs are on fire as they continue to surge higher. Being ready for a sharp reversal is important if you want to lock in gains on a portion of your position.

Crude oil is taking its time but looking ripe for a breakout higher. We continue to watch for some action.

Natural gas continues to get pushed down and it’s not looking good for higher prices anytime soon. We are waiting for a shorting opportunity or an oversold condition to play a 1-5 day bounce.

Quick Trading Tip: If you have a position which has done well and has moved up for an extended period of time be sure to draw some trend lines and tighten your stop, or set a stop, under a tight trend line. Sell some of your position (25-50%) to lock in gains and let the core position continue to mature. If you get a pullback to a support level (previous breakout level) you can buy back your other part of your position at a lower price.

If you would like to receive my Free Trading Reports, please optin to my newsletter.

Chris Vermeulen

Disclaimer: I currently own the GLD ETF.

November 18, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

How to Trade ETF Fund for Gold, Silver, Oil and Natural Gas

So far this week has been slow in regards to commodity etf funds. Gold continues to shine while silver refuses to make a move higher. Crude oil has a nice bull flag and we are waiting for a breakout and setup while natural gas continues to see selling pressure.

ETF Trading Tip: Waiting for these exchange traded funds to generate low risk setups and watching our current positions mature is the boring part of trading. It’s these slow times when traders get bored and start taking more risk by entering positions that do not have clear entry and exit points. Not having clear entry and exit points will lead to traders holding on to losing trades and not taking profits on winning trades. Be sure you enter positions which you know where you should get out if the trade goes against you and where to take some money off the table if it rallies higher.

GLD ETF Trading – Daily ETF Chart
The gold etf fund looks to be in rally mode which means when traders start to take profits we should see a sharp reversal down.

ETF Trading

SLV ETF Trading – Daily ETF Chart
Silver has been under performing gold for several weeks now. I think this is because gold is the safe haven of choice be traders and investors. That being said silver generally leads gold so this is giving me a red flag. A larger correction in precious metal ETF prices could be just around the corner. But until we see a technical breakdown on the charts we are staying long.

Trading ETF Funds

USO Fund Trading – Daily Fund Chart
The USO oil fund broke out a few weeks ago from the large pennant pattern. The price has been flagging for about 3 weeks now. It looks like we are getting close to a low risk setup so I am keeping a close eye on this fund.

ETF Trader

UNF Fund Trading – Daily Fund Chart
Natural gas continues to under perform the rest of our commodities. This fund is starting to look like another good by point but we need a few things to fall into place before that happens. Let’s not jump the gun because this fund is still in a bear market. Waiting for a setup.

How To Trade ETF Funds

ETF Trading Conclusion:
We continue to wait for trading opportunities to unfold. We focus on taking advantage of low risk setups and avoiding times the market when things are choppy and unclear.

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Chris Vermeulen

November 11, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Commodity Newsletter for Gold, Silver, Oil and Nat Gas

Everyone is talking about commodities as the place to be in the coming months. I tend to agree, but it is still important to know where each commodity is trading to maximize returns and reduce risk.

That being said we are also seeing money flow out of the small cap stocks and into the large cap blue chips Stocks. These companies prove year after year that they are profitable and that’s where investors have been putting their money the past couple weeks. This can be seen by simply looking at the Dow Jones Industrial Average and the Russell 2000 index as the Russell has dropped in value much more than the Dow. But if we see the market turn back up and make a new yearly high in the coming weeks, small cap stocks will most likely provide explosive opportunities for traders.

Below is some analysis on gold, silver, natural gas and oil

GLD ETF Trading – Weekly Trading Chart
By looking at the weekly chart of gold we can see two simple things.
1 – Each breakout is happening quicker as money continues to move into gold.
2 – This step like pattern (bull flags) is very powerful and can continue for a very long time.

GLD ETF Trading – Daily Trading Chart
This chart shows the same price action but on a daily chart. It also shows one way to find and trade low risk setups for the GLD ETF traded fund.

Gold Newsletter

SLV ETF Trading – Weekly Trading Chart
Silver ETF trading has not been as exciting. Silver has yet to breakout above the 2008 high. It is actually trading at a major resistance level and still has some work to be done before looking really bullish in my eyes. This is acting like major resistance level for two main reasons.

1 – It is testing the 2008 highs where a lot of traders bought silver over a 5-6 month period. There are a lot of sellers to flush out before moving higher.

2 – The drop in silver price in late 2008 was so scary for investors who bought at $16-20 that they cannot believe they are getting their money back. I think this is making a higher volume of investors sell their positions at break even because they just want out after seeing 50% loss at one point last year.

Silver Newsletter

UNG Fund Trading – Daily Trading Chart
UNG has been sliding lower and lower since hitting its head on resistance back in October. The gap down on Friday is bearish indicating traders are starting to panic out of UNG and willing to get out at any price.

Natural Gas Newsletter

UNG Fund Trading – Natural Gas Seasonality Timing
UNG and the seasonality chart seem to be spot on for timing the price of natural gas. Keeping an eye on seasonality and general market seasonal patterns can really help improve ones performance. It may be better to trade stocks or commodities, or maybe just carry more cash depending on the timing and situation the market is in.

Natural Gas Newsletter

USO Fund Trading – Daily Trading Chart
USO has broken out from its large multi month consolidation from August – early October and is now forming a bull flag. While this flag could last a couple months I have feeling we will see a breakdown or a breakout sooner than later. This is just a gut feel and I will continue to watch and wait for a low risk setup.

Crude Oil Newsletter

Commodity Trading Newsletter Conclusion:
To sum up next weeks market action I feel it will not be anything to write home about. Gold and silver will most likely trade sideways or up, natural gas should continue lower and crude oil should trade sideways. With any luck stocks will continue to rally and test the highs once again.

GLD ETF continues to be our investment of choice as it provides the more accurate low risk setups time and time again. With any luck we could get some low risk setups this week but I am not counting on it.

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Chris Vermeulen

November 8, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Gold, Silver, Oil & Nat Gas Going Wild!

Nov 4th, 2009
Precious Metals ETF have gone wild the past 2 weeks. Last week we saw gold and silver prices drop sharply as it shook out short term trader’s stop orders before breaking out and moving higher. Also there is a disconnect between the gold and the dollar.

Energy commodities like natural gas and crude oil are moving in opposite directions and look to be picking up speed. Natural gas is losing pressure and oil is on fire.

GLD ETF Trading – Pivot Trading Low
Last week we had our pivot trading low generate another buy signal for gold. Trading pivot lows is a simple trading strategy. I call them low risk setups and take advantage of buying a stock, commodity or currency after a pullback to support and when a reversal candle is formed. This chart clearly shows when you are trading with the trend buying on the dips is generally a low risk play with great up side potential.

Gold Bull Market Pivot Trading Low

Precious Metals ETF Trading – Gold Bullion Takes Control
This is a chart which shows the performance of gold stocks (red), silver bullion (blue) and gold bullion (green). As you can see the past 2 weeks while the market has been selling down precious metals stocks have been hit harder than silver and gold.

Because of the heavy selling in stocks recently the smart money had been going into commodities especially gold bullion. Gold stocks are a great play but this is telling us investors feel safer in physical bullion than stocks.

Gold is the most known precious metal and safe haven which is why it’s holding value better than silver and stocks. This week we are seeing gold become more valuable in several major currencies which means gold is actually making a real move higher.

Gold Bullion, Silver Bullion, Precious Metal Stocks

USO ETF Trading – Breakout & Bull Flag
Crude oil has had some great breakouts this year and it looks like we are about to get another buy signal shortly. We had a breakout in Oct from the large pennant and are now flagging which is very bullish. We could see USO reach $50 in the next month or two.

Crude Oil Bull Market Breakout

UNG ETF Trading – Pivot Low or Waterfall Sell Off?
Natural gas is at a crucial level for a higher low bounce or another massive panic sell off. Trading right now with UNG is a 50/50 shot so we will just have to wait and let things unfold more before taking any action.

Natural Gas Pivot Low Bear Market

The Stock Markets, Precious Metals & Energy Trading Conclusion:
The market is starting to feel a little squirmy as it tries to find support. Small cap stocks continue to get crushed while blue chip (large cap) stocks are holding more of their value. Gold has broken higher this week while silver and precious metal stocks under perform their big sister Yellow Gold.

Crude oil is holding up nicely forming a 3 week bull flag and showing signs of life while natural gas continues to get hammered.

The market has been jumpy the past 2 weeks because market participants are very uneasy about the future direction of the US dollar.

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Chris Vermeulen

November 5, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Are Gold, Oil and the S&P500 having a Seasonal Pivot Trading Low?

Nov 1, 2009
The last week of October was something else. Heavy fiscal year end selling for mutual funds seemed to put a damper on good news and push stocks and commodities lower. October is historically a tough month on the US market with mutual funds locking in profits on their books.

Below are some charts showing my analysis on gold, silver, oil, natural gas and the S&P 500 index along with a seasonality chart proving that October has more selling pressure than other months.

Gold GLD ETF – Gold Pivot Trading Low – Daily Chart
As you can see from the chart below we appear to be in the middle of a pivot low correction which can make for some great entry points. The trend is up, gold is oversold and it looks like we had a reversal low last week.

Gold Pivot Trading Low

Silver SLV ETF – Silver Pivot Trading Low – Weekly Chart
This is a chart I posted a couple months ago and so far silver has traded within the trend lines and support & resistance levels I pointed out in early August. Silver still looks bullish as it is trading at a pivot low.

Pivot Trading Low for Silver

Gold Miners GDX ETF – Gold Miners Pivot Trading Low – Weekly Chart
Gold mining stocks appear to be trading near the bottom of the trend channel. The odds are still pointing to higher prices.

Gold Miners Trading Pivot Low

Crude Oil USO Fund – Oil Pivot Trading Low – Daily Chart
This chart of USO is also from a recent post in early October. USO broke out and is now trading at our support trend lines. There was a nice reversal candle last week but the heavy selling across the entire market pulled oil back down.

Crude Oil Pivot Low

Natural Gas UNG Fund – Natural Gas Pivot Trading Low – Daily Chart
Pivot trading low could be close for UNG. The daily chart is telling me we saw the bottom in natural gas back in September as prices collapsed washing out most long (bullish) traders. I figure we will see prices trade between $9-12 for several months as the commodity forms a base.

Natural Gas Pivot Trading Low

S&P 500 Index – S&P 500 Pivot Trading Low – Daily Chart
The broad market looks and feels oversold. This chart uses Andrews Pitchfork analysis to show where short term pullbacks to the middle trend line (middle of trading range) have been a buying opportunity. Deeper corrections drop to the bottom support trend channel. These corrections sometimes form a lower low and lower high that scares traders and inestors out of the market before heading higher.

SPX Pivot Low

S&P 500 Seasonality Chart – S&P 500 Pivot Trading Low
This chart shows the performance for each month over the past 37 years. Simple analysis shows selling pressure in Sept and Oct as mutual funds sell positions to lock in gains for their books each year. This move is generally compounded because seasoned traders know about this seasonal movement and also sell positions and even short the market to take advantage of this at times.

I think we are inline for a perfect storm going into year end. The market is trading at a pivot low from many different analysis theories. This forms a high probability trading opportunity in the next 2 months if we see prices reverse and start heading higher this month.

SPX Seasonal Trend Pivot Points

Pivot Trading Low Conclusion:
A lot of stocks have taken a real beating this past month as sell orders flooded the trading desks last week. Technology, financials and small cap stocks took is the worst. The sharp drop is not really what we wanted to see but it makes good sense. With those groups posting the largest gains since March it is only normal that money will be coming out of those stocks to lock in gains.

Many traders are starting to panic about another possible market melt down. This negative sentiment is a bullish indicator for higher prices. If everyone is scared and exiting their positions then we must be close to trading a pivot low.

I am still bullish on the market and will be looking for new opportunities if we see prices start to head higher this month.

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Chris Vermeulen

November 1, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Commodities & Stocks Ready to Bounce or Rally?

Commodities and stocks almost look ready for a rally or at least a relief bounce. The market is down over 5% and the normal pullback this year has been 4%. Using technical analysis and inter-market analysis we can see that the market is reaching extreme lows and this usually means we are only a couple days away from a rally.

I work with several market technicians as we all analyze the market a different way and share our work with each other to gain maximum insight on the broad market moves. We analyze momentum cycles, magnetic cycles, volatility levels, support & resistance levels, volume analysis and inter-market analysis.

Each of us has found a formula which works for our individual style of trading. And by combining our work we have found that we can collectively produce some very exciting trading signals for the broad market. We focus on leveraged index funds in order to take advantage of our insights. While nothing in trading is ever perfect, the analysis for timing the broad market is very exciting.

Here are some quick charts on where the market is trading.

US Dollar – Daily Dollar Price Chart
This chart is a no brainer. The trend is down and trading at resistance. If the US dollar reverses back down we will see stocks and commodities move higher.

US Dollar Index Trade

VIX – Daily Volatility Index
Again, overall the trend is down and trading at resistance. As the saying goes “When the VIX is high its time to buy”. Just to be clear, the VIX is low compared to the previous highs set back in 2008 which was around the 80 level. But, if we want to keep things simple for the current trend then the VIX is high for our current market condition. The VIX moves in the opposite direction of the equities market.

VIX - Volatility Index Trade

DIA – Dow Jones Industrial Average ETF Fund
Here is the Dow Jones index fund and it clearly shows that when investors are selling out of their positions and getting scared of a market collapse, volume rockets higher. When we see the price pullback to possible support levels and volume increases that is a time when we should be looking to scale into a long position for a bounce, such as now.

Dow Jones Index Trade

XLE – Energy Sector ETF
You can see that the energy sector is very close to a support level and volume is high. With the US dollar about to reverse back down it will help boost this sector as it is tied in with commodity prices which rise with a falling dollar. I expect we will see a price gap lower and fill this area before moving higher.

Energy Sector XLE Trade

GLD – Gold ETF Fund & Silver
This chart has not changed much from last weeks report. We are getting the drop as expected this week. We could see the gap fill from early October before gold stabilizes.

Silver is in the same situation. Gold and silver move in tandem so we are waiting for a bottom before looking for a low risk entry point.

Gold and Silver Trading Tends

Commodity & Stocks Trading Conclusion:
To keep things short and to the point, I am seeing momentum cycle lows as of today, magnetic wave lows today, and most commodities and indexes trading at support. These observations, coupled with the US dollar at a possible resistance level and market volatility spiking to an extreme high, lead me think a bounce is in the cards.

The market has had an amazing rally so far this year and I feel that we will have a solid year end rally going into Christmas. That being said, the recent sharp correction could form an ABC retrace pattern which means we get a bounce in the next week or so, then one more multi day sell off which will scare even more bulls out of the market. I am going to be scaling out of this oversold play quickly to lock in some gains while allowing a smaller position to ride for larger gains.

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Chris Vermeulen

October 28, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Gold, Silver, Oil, Natural Gas ETF Trading

The past week in gold, silver, oil, natural gas and the broad market wasn’t anything to write home about. We are seeing controlled profit taking which is making the market choppy. Many traders are getting very bearish on the market which is a good thing in my opinion. According to my market internals, sentiment and volume analysis we should get a shake out (sharp dip) which would make traders exit their positions before the market continues higher.

Some trader’s say we are in a bull market, others say we are in a major bear market. Either way the trend is up on the daily and weekly charts and companies are making money. Buying on over sold dips has been very profitable this year. Until I see things drastically change, this is my strategy for the broad market.

Lets take a look at the commodity sector.

HUI – Gold Stocks Index
Recently we have seen money move out of gold stocks but with the majority of them trading at support trend line we could see some fireworks this week.

Gold Mining Stocks Trading

Gold – GLD Exchange Traded Fund
Gold has been trading sideways as investors and traders digest the previous rally higher. The recent price action looks similar to the September rally and consolidation. Lets hope for a another move higher without getting shaken out of our positon.

Gold ETF Trading Newsletter

Silver – SLV Exchange Traded Fund
Silver is in much of the same situation as gold. We are waiting to see what happens here at these support levels.

silver ETF Trading Newsletter

Crude Oil – USO Exchange Traded Fund
Oil has been making a strong rally after breaking out of is multi month consolidation pattern. We are now looking for some type of pullback or test of breakout for another low risk entry point.

Crude Oil ETF Trading Newsletter

Natural Gas – UNG Exchange Traded Fund
Natural gas is having some trouble breaking out above the multi month resistance trend line. Buying here is a 50/50 bet and I will wait for another entry point before putting our money to work.

Natural Gas ETF Trading Newsletter

Natural Gas, Oil, Silver and Gold Exchange Traded Fund Conclusion:
Overall, the market feels ready for quick snapback to shake traders out of profitable positions. I expect a resumption of the up trend as the market slowly creeps higher at a steady pace digesting each rally with sideways movement.

I know many people are shorting the broad market and that is not something I am willing to do yet. Until I see a drastic change, long positions are my bread and butter. Once the market does reverse, there will be plenty of time to play the short side using the Leveraged ETFs.

Commodities are taking a breather but with our support trend lines nearing I expect some movement this week.

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Chris Vermeulen

October 25, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Mid Week Gold, Silver, Oil and Nat Gas Trading Report

Commodities so far this week have not changed much. But I can point out a few things for us to watch Thursday and Friday.

Precious Metals – Gold GLD fund – Silver SLV Fund – PM Stocks GDX Fund
We could start to see a shift between the price relationship between gold and the broad market. I pointed this out last week mentioning that gold and silver are starting to hold up in value while stocks sell off on big days. For example, Wednesday’s sell-off in equities did not have much effect on precious metals. This is what we want to see. It means money is moving out of stocks and into gold and silver bullion as a safe haven.

These three charts of GLD, SLV and GDX show Wednesday’s price action as gold and silver moved higher while precious metal stocks sold down with the rest of the market. This is generally a bearish indicator for gold and silver but because I am starting to see this happen more often and traders are ready for the market to top any day, I am seeing this as a bullish indicator. If the market starts to slide I have a feeling investors will be dumping a lot more money into gold and silver.

Gold, Silver, Precious Metals Stocks

Energy – Oil USO Fund – Energy Stocks XLE Fund
We are seeing a similar pattern in the energy sector. Oil had a nice move higher today while energy stocks sold off. Stocks are starting to fall out of favor.

Energy Oil Stocks

Natural Gas – UNG Fund
Natural gas is still in a bear market and trading under a major resistance trend line. This commodity could go either way so I am going to wait for the odds to be more on my side before jumping on board with a long or a short trade.

Natural Gas UNG Fund

Mid-Week Gold, Silver, Oil and Nat Gas Conclusion:
The market is starting to look and feel top heavy with many indicators and price action patterns giving cross signals. While the market could continue to rocket higher with new money getting dumped in from average investors because of solid 3rd quarter earnings, we must be cautious by tightening our stops and take some profits off the table. Until we get a short term oversold market condition I am trading very conservatively.

Waiting for a good trade is crucial in trading. If you always want to trade and force positions when the market is choppy you end up with lower probability trades.

To receive my free trading reports, please visit my website: www.GoldAndOilGuy.com

Chris

October 21, 2009

Daily Market Trades, Gold ETF Analysis, Oil ETF Analysis, Silver ETF Analysis, Trading Education

Precious Metals, Oil & Nat Gas Trend Charts

Oct 18, 2009
Commodities continue to climb with several commodities making new highs for the year. The equities market continues to push higher with 3rd quarter earnings coming in better than expected. This good news has aroused more investors to put what’s left of their money back into the market which has been the fuel for this recent rally in stocks.

Here is my concern:
The market continued to make a new yearly high last week, company earning are better than expected and more retail investors (average working people) are dumping their money back into the market again because EVERY thing is going up in value and all they need to do is buy something. When it’s this easy to make money in the investment/trading world something drastic usually happens not long thereafter.

Here are a few charts for this week in precious metals and energy.

Precious Metal Stocks – Gold Bugs Trend
Gold stocks have performed well in the recent couple weeks. I figure we will see some sideways price action before another leg higher. The question is how far will this pullback go?

As you can see there are two trend lines which make for solid support levels. I will be looking for a low risk setup around those levels.

HowToTradeGoldStocks

Precious Metal GLD Gold Fund
Gold had a great pop higher the first week of October but now it looks ready for some sideways chop. I tend to look at precious metal stocks as a leading indicator for trading gold so before we put more money to work in GLD I want a buy signal for gold stocks also.

HowToTradeGLDETF

Precious Metal SLV Silver Fund
Silver SLV and gold GLD generally move together with silver being the more volatile of the two on a percentage basis. As you can see from the chart below the support trend lines are much father away from the current price. If you don’t want to give back too much of your gain then raising your stops is a safe call. But if you get taken out of your position you should be looking to get back in at a lower price on the first sign of a bounce/reversal to the upside.

HowToTradeSLVETF

Energy Stocks – XLE Energy Fund
It does not matter which sector or commodity I am following it is important to analyze the stocks for that sector or commodity. These are as close as you can get to a leading indicator for possible trade setups.

In my opinion, it looks like energy stocks are about to have a pullback. The trend is still up, so I am not looking to short, rather I am tightening my stops to lock in some profits if we get a sharp pullback. Then I will be entering long again on the first sign up a reversal back up.

HowToTradeXLEETF

Energy USO Oil Fund
Oil had a great run last week and from the simple analysis above (energy stocks) I have a feeling we could see a quick one day sell off. This is common with USO and buying at the close after a long high volume sell off can provide an excellent trading opportunity.

HowToTradeUSOETF

Energy UNG Natural Gas Fund
Natural gas continues in a bear market rally as it tests our resistance trend line on Friday. I do feel that gas has bottomed and we will see much higher prices in the future. That being said, I still think we need some time for this commodity to bottom (form a base).

Depending on the price action of natural gas this week, we may have a low risk entry point with my trading model. I will keep members posted.

HowToTradeUNGETF

Precious Metals & Energy Trading Conclusion:
In short, I feel the market is ready for a multi month correction, but with solid 3rd quarter earnings, new money is being dumped into stocks and commodities as investor confidence rises. This is extending the rally making it even more over bought in my opinion.

That being said, I will not be shorting the market or stocks anytime soon. This market can continue higher because average investors are putting their money back into the market. If the market does actually top in the coming weeks, there will be plenty of time to short the market using leveraged ETFs. I am still long the market and applying tight stops to my positions.

If you would like to receive my free weekly trading reports please join my free newsletter at: www.GoldAndOilGuy.com

Chris Vermeulen

October 18, 2009