Equities and Precious Metals are on the edge of another rally and it could start as early as tomorrow.
On March 13th I posted some of my analysis online showing how the market was trading at a key pivot point and that a sharp price movement was about to unfold. I also provided everyone with the direction in favor which played out perfectly catching a 4.5% in three days.
As of today we are getting the same setup I saw on March 13th, but this time it’s pointing to higher prices. Take a quick look at the charts I was looking at for both the SP500 and gold and you will notice that the SP500 and gold both moved to the support levels before starting to bounce: http://www.thegoldandoilguy.com/articles/it%E2%80%99s-do-or-die-week-for-equities-and-gold/
While we caught the move down on the SP500 playing the SDS Double leveraged inverse fund we did not take part in falling gold prices. Reason being, there is so much fear in the market and the amount of surprise news popping up each week I don’t think shorting precious metals is a safe call. Rather I am looking for a pullback to cleanse the holders of the commodity then I will buy once price confirms the continuation pattern has completed.
Now, stepping forward to this week’s price action
SPY Daily Chart
We can see in the chart below that price is currently testing a key resistance level. Before the week is over we could see some big price movement equities. I need to see what happens tomorrow but I have a feeling we could see a breakout to the upside for a long position.
Gold Miners Fund Daily Chart Gold stocks have be under performing the price of bullion for a few months but it looks as though they could be starting a sizable rally. If gold stocks continue to move sharply higher out of this pattern, then it’s a positive sign that gold and silver bullion will both continue to move up.
Gold Daily Chart Gold is testing a key resistance level and if it breaks above this pattern then expect much higher prices. I can see GLD moving up $5 from this level and gold futures moving up $60 per ounce fairly quickly.
Mid-Week Trend Report: In short, stocks and commodities may have shaken the weak positions out of the market during the recent pullback in price. Things could be ready to start another multi month rally and trade setups. Keep your eyes on the charts…
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-03-23 22:14:382014-03-10 06:59:06Another Do or Die Point for Equities & Gold – Get Ready!
Trading with multiple time frames – Every now and then it’s always a good idea to look at some different time frames to be sure you have a solid understanding for the longer term trends in play. I will admit that it’s easy to get caught up in trading the shorter time frames like the 1, 10, and 60 minute charts especially when there are large intraday movements. But every night you must reset your thinking by looking at the bigger picture.
Below are weekly and daily charts which I think provide a big picture view of things.
SPY – SP500 Index Fund – Weekly Chart
You will see that in both 2009 and 2010 we saw a 5-8% correction down to the key moving averages. I feel that we are in store for a similar pullback in 2011. After that we will most likely continue higher.
US Dollar Index – Weekly Chart
The dollar is trading down at a key support level which I am keeping a close eye on. If we get a close below this trend line then we should see the dollar sell off sharply which in turn will trigger another leg higher in commodities across the board.
Crude Oil – Weekly Chart
Crude oil has really taken off because of the fears coming out of the Middle East. From the looks of it the next key pivot level is the $110 level.
Gold – Daily Chart
Both gold and silver have made new highs but after such a run I expect we see a quick pullback before they go higher. Gold and silver are the two investments I think everyone should hold a core position for the long run no matter what happens to the price. But, if we do get a nice quick pullback into the key moving averages then I think it’s a great spot get involved with more money.
Mid-Week Trend Report:
In short, I am bullish on stocks and commodities and bearish on the dollar and bonds. The one issue I see going forward is that if the dollar breaks down it will most likely help boost oil prices which in turn puts downward pressure on stocks… So depending on how things unfold in the Middle East and a falling dollar, we may not see higher stock prices. Some individuals are forecasting $150-220 per barrel and I know if it gets back up there it will definitely slow the economy and stock prices down…
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-03-02 22:33:042014-03-10 07:00:42Gold, Silver, Oil, SP500 & the Dollar Long Term Trends
Yesterday I pointing out how any weakness would most likely get bought back up into the close ahead of Obama speaking and we did get that. I also figured today the market would hold up or close positive also (post Obama) so the general public thinks and feels good about the USA and the financial markets.
Well today the market just happened to gap above yesterday’s key resistance level ans we all know that once we are above resistance be becomes support. After the gap up this morning the SP500 pulled back to this new support level which happens to be Friday’s, Mondays and Yesterdays high then it bounced, actually rallied up on solid volume almost like someone was making a point that this market is going up today and not to mess with it…
Personally I don’t get worked up over market manipulation because of two reasons:
1. There is Nothing you can do about it 2. If you see it and understand the idea behind it, then you can make really good money day trading it.
Chart of SP500 10 minute chart
As for our dollar position I still like the trade but I will admit that its really starting to drag out (wear us out of the position so we give up on it). Keep in mind that waiting for a trade to breakout and hopefully go in your direction is part of the excitement of trading… The suspense sure keeps are emotion flying high, which is why it is important to only trade position sizes which you can stomach during volatile times. Also the reason we scaled in at first key support and added more on the deeper pullback.
Posted below and in the member’s area is the chart:
Gold and silver have bounced a little and are trading back at resistance where they were in my pre-market video this morning.
Now, take a look at the different indexes below and you will see how the dow of only 30 stocks shows bullishness, while the key indexes for trend and strength are under performing…
As I mentioned a few weeks back, actually just before Christmas.. I figured the market would start to top out the second half of January. It looks as though that is unfolding but remember topping is a process and it become VERY difficult to trade and time and this is why I am taking my time here…Tops and bottoms are designed to suck traders into the wrong side one final time just before price reverses.
On another note it looks like metals are losing some ground here and may go lower… I’m figuring the dollar should bottom in the next couple days at most. Again tops and bottoms are a process and they always take much longer than we anticipate. If the market does not shake you out, it will wear you out..
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-01-26 14:07:392014-03-10 07:58:45Trading Analysis The General Public Does Not Look At
Depending what type of trader you are and what you focus on the most for trading you could be either bullish or bearish on the stock market right now. The charts below show how the Dow Jones Industrial Average is bullish while the Small-Cap Russell 2K is bearish. Options expiration last week really mixed the market up as the market makers and the big money players manipulate stock prices in their favor.
Let’s take a look at the charts…
DIA – Dow Jones Industrial Average Daily Chart
Crude oil has been holding up very well the past couple weeks and that has had an impact on the Dow. Additionally IBM had a huge move up which accounts for almost 10% of the DJIA’s price action. Both these factors have skewed the Dow index to look bullish.
Currently the price is trading above the 5 period moving average after briefly tagging it on Friday and then bouncing higher. Volume has picked up indicating more people are exchanging positions because of a shift in sentiment. Remember the Dow represents only 30 stocks so it does not provide a solid view of the overall market strength.
SPY – SP500 Daily Chart
This index closed below the 5 period moving average with rising volume once again indicating a shift in trader sentiment. The SP500 is heavily weighted with financial stocks and with the financial sector under pressure last week it helped to pull this index down. The fact that it closed below the 5 period moving average is just a warning sign to be cautious. Overall trend is still up in this index.
QQQQ – NASDAQ Daily Chart
As you can see the technology heavy index (Nasdaq), there has been more selling going on. The Nasdaq closed below both key moving averages and is now testing the 20 period moving average which is the line in the sand before I’m bearish on this sector. Tech stocks are typically a good indicator for the overall health of the market and if it does not recover this week or if it forms a light volume bear flag then watch out below.
IWM – Russell 2K Small Cap Stock Index Small cap stocks are usually the first to pullback in the market. As you can see there is a big difference between this chart and the Dow Jones…
Small caps has broken key moving averages and are now nearing the 50 period moving average which I figure will provide a small bounce or pause before crashing through it. But with the amount of selling volume happening in the small caps it could just drop through that level and keep on going. Only time will tell and its best to wait for a low risk entry point before taking a position.
Weekend Trading Conclusion:
In short, the major indexes are giving mixed signals. While the Dow and SP500 are still bullish, we are seeing tech and small cap stocks breakdown. If things work out like they have in the past then the market is truly starting to put in a top. It could still take 5-10 days to play out. Usually the market will get choppy with large up and down days back to back and volatility will rise which can be seen by watching the VIX. I am currently neutral on the market and waiting for a low risk setup to unfold.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-01-23 22:43:292014-03-10 07:59:09The Good, Not So Good, Bad & Ugly on the Indexes
There is a potentially big setup in precious metals sector along with the dollar which looks like its about to unfold. Since mid-October of last year gold started to show signs of distribution selling. Only a month later in November silver started warning us that some big players were taking some profits off the table also. Distribution selling is easy to spot on the charts. In short you will see heavy volume selling accompanied with strong moves to the downside.
Now if we look at the US Dollar chart we see the exact opposite price action. We see sharp rallies during October and November of last year. It’s normal to say that gold and silver move inverse to the Dollar so this price action makes perfect sense.
The interesting thing with the US Dollar is that in Nov-December it rallied breaking through a key resistance level and has been consolidating above support ever since. If this bullish pattern (bull flag) plays out, then it’s just a matter of time before the dollar makes another strong rally upwards, which will put downward pressure on stocks and commodities.
Take a look at the charts below…
US Dollar Daily Chart
The 50 period moving average has provided key support/resistance levels for the previous trends and if it holds true going forward then we are not far from another rally in the dollar.
Gold Futures Daily Chart
Gold moves inverse to the dollar so if we get a higher dollar then look for gold to have a stair step pattern lower.
Silver Futures Daily Chart
Silver looks about ready to do the same thing as gold.
Precious Metals and Dollar Trading Conclusion:
In short, we could see a major shift in momentum from up to down in both precious metals and the equities market. Keep in mind the market has a way of dragging out patterns/moves so while the chart looks bearish and I think a reversal is near, things could just chop around for another month or so before a definitive breakout is made. Choppy market conditions are great for trading options but no short term trend traders like myself. This is why you don’t want to anticipate moves (pick a top). Currently I am neutral on metals and the dollar waiting for a setup which must have clear risk/reward characteristics.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-01-12 22:45:542014-03-10 08:00:22Precious Metals and the Dollar’s Next Big Move
This has been an interesting week for traders and investors as precious metals melt down on the back of a rising dollar. Equities on the other hand bucked the trend and moved higher as they get bought into earning season. Once the earnings start to be released we should see the market get sold on the good numbers and retail traders will buy into the good numbers as the smart money selling their shares while there is liquidity in the market.
Speaking of pullbacks, I have been talking about silver and gold forming a top. A couple months ago in November I saw the first warning sign of distribution selling in the precious metals sector. There was a large drop in price with heavy volume which is a warning sign that the BIG MONEY is starting to roll out of that crowded trade (precious metals). The thing with tops is that they take a long time to form and become very choppy.
Since the November highs both silver and gold have more or less traded sideways. They never really went much higher and that’s because the big money is distributing their shares to smaller investors slowly overtime (retail buyers/average Joe’s). They try not to scare investors off so they sell their positions in chunks. What most people do now is that these sellers want higher highs to forming because once a new high has been created everyone become bullish again buying more on the breakout. It’s these waves of bullishness that the big money sells into which is why you see heavy volume after a new high has been formed.
Let’s take a look at some charts….
Silver Daily Chart
The silver chart clearly shows the bull market (markup phase) and also the distribution phase taking place now…. If things go according to plan then choppy/lower prices should take place in the coming 1-4 months.
The past 12 months it seems like everything has been a dollar based play. Meaning if you were to pull up a 1 minute chart of the dollar and a 1 minute chart of the SP500 or Gold, you would now that when the dollar moves up stocks and commodities go down and vise-versa. That being said the SP500 has started to move up with the dollar in the past month so there is a shift happening but it’s a slow change and is not much of a concern for gold right now.
If the dollar starts another leg higher it will make for good timing as market sentiment is at an extreme and earning season is here. That typically means lower prices in stocks and commodities.
Mid-Week Silver, Gold and Dollar Trading Conclusion:
In short, in the next 1-4 weeks I am bullish on the dollar, and bearish/neutral on stocks and commodities. The reason I’m neutral is because I don’t like to short things in a bull market phase as they can keep going up much longer than we think at times. Rather hold my strong positions and wait for a correction to buy/add once I feel the selling momentum has stopped later this year.
I would not be surprised if we get a 4-10% drop in the next few weeks in both stocks and commodities, but until I see a clear roll in price I will not be looking for any trades to the down side. I’m not in a rush to pick a top/short the market but if we get a setup we will take a small position to play a falling market. Be sure to visit the link to today’s video which is posted in the gold chart section above.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-01-05 21:13:392014-03-10 08:01:05How to Play the Current Silver, Gold and Dollar Reversal
I hope everyone had a great holiday and new years!
It’s time to reset our profit counter to zero and start looking for new profitable trades along with managing our current open positions on our small cap stocks which we continue to hold with gains of 66%, 35% and 10%.
Last year was a tough one as the stock market chopped around in a very large range giving off buy and sell signals every week and some times every other day… If you understand how to trade options then these conditions can make you a boat load of money.
Those who follow me or trade with me through my trading newsletter know how conservative I am when looking for low risk setups in both ETFs and stocks. And no doubt agree there were some extended periods of time when we did not have any trades because the volatility on a daily basis was making it the risk higher than what I wanted us to take, thus we waited for setups instead of chasing prices. We still locking in some solid gains with 8 winning trades, but feel we can better this year especially if we get less chop and more of a trending market.
It’s safe to say some people just do not like being in cash, hence the reason so many want stock picks and trades all the time. But to be flat out honest, I love being in cash or at least holding a good chunk in cash waiting for a high probability opportunity to pop up on my charts before committing my hard earned cash. It’s better to be wishing you were in a trade than to have all your money tied up in losing positions just because you wanted to be active… Because I give you only the trades I am making with my own money, I think that is the reason things are slower paced, unlike some other newsletters in this industry which fire off new trades each day or week just to keep those addicted (wanting stocks picks all the time) happy.
Anyways, 2011 should be a great year for trading, investing and education. Last years fast paced market I know either took your money and got you really frustrated, or you made money and was able to use the difficult conditions to fine tune your trading and money management stills like I did. 2011 feels like it’s going to start out similar to 2010 where we get a move up into mid January, but once earning season starts the market sells off on the good news for an 8-10% correction.
The good news is that after last years fast paced market and my constant refining of my strategy and money management rules, we should be able to catch the majority of the trends this year both up and down using stocks, regular ETFs and Inverse ETFs.
As much as I would like to forecast what I think will happen this year, I have decided to take the market one quarter at a time to keep everyone more in tune with what’s happening now and a glance forward up to 2-3 months.
Take a look my SP500 charts for the next 3-8 weeks below.
SP500 Index – Daily Chart
On this chart you can see that the overall trend right now is still clearly up. But with this current situation I feel one should be on the sidelines waiting for the market tip its hand telling us its headed higher or lower. If it prices start to fall we will look to short the market in order to profit from the correction as long as the market provides an optimal opportunity.
Currently the market sentiment levels are at extreme highs, which is the same as last January and April’s highs. With extreme sentiment, light volume (lack of buyers) and earning season just about to start I cant help but think a nice correction is about to take place which will cleanse the market before the next big leg higher.
If all goes according to plan we should see an 8-10% correction. A pierce of the November low is what I am looking for as that would trigger a lot of protective stop orders and create panic selling in the market. It is panic selling which creates a market bottom. That being said we may not get that large of a correction which is why we must continue to monitor the market closely as my analysis will change with the market.
Jan 2010 SP500 Correction
This time last year the market was in a very similar situation with market sentiment, light volume, and earning season just around the corner…
Its difficult to pick tops because they can stay overbought for an extended period of time, bottoms are a little different simply because fear is more powerful than greed and shows it’s self on the charts once you know what to look for and how to trade it. My point here that you should not jump the gun and start shorting just because you think one is around the corner. I prefer to wait for more of a clear signal that sellers are in control then ride the short term down trend and hope it blows up into the correction I think we are about to see.
During bottoms there are new low washouts, and the same goes for tops, we get several small new highs just before the price rolls over, and that has yet to happen.
Weekend Market Trend Conclusion:
In short, 2011 should have several great plays as I am looking at the SP500, Precious Metals, Oil, US Dollar, Bonds and Emerging Markets for some big moves. You can get my pre-market daily videos, intraday updates along with my stock and ETF trades by visiting my website and joining my newsletter: 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.pngadmin2011-01-02 20:10:382014-03-10 08:01:43How You Trade the Big Trends in 2011
It’s that time again when volume dries up and prices rise into the new year. A lot of individuals are scrambling to prepare for the holidays, even though we had a year to prepare. The big money has already done most of their year end shuffling and will be taking it easy until January.
The market is overbought and sentiment readings are at extreme levels which in the past have been the start of large sell offs and even bear markets. While I am keeping a close eye for a top, there is not much we can do but stay long stocks and commodities until the market tips its hand and distribution selling is in control. The U.S. federal government is the only wild card going into year end that should be on traders’ radars. They have been doing a great job boosting prices in the equities and commodities market, but can they continue to hold things up when the big money and the proverbial herd start unloading positions in 2011?
SP500 Holiday Grind – Daily Chart
This chart shows the slow and steady grind higher that we have seen in the S&P 500. I expect this to continue into 2011 The market in my opinion is on the verge of some serious selling so long positions should be small going forward.
US Dollar On Pause For A Couple of Weeks
This 4 hour candle stick chart of the dollar shows price testing resistance (a previous high). I am expecting to see the U.S. Dollar trade sideways or possibly move closer to the previous high as we enter the new year. A sideways dollar will allow the equity and commodity markets to rise.
Weekend Conclusion:
In short, I think we could see an intraday pullback early this week and then a grind higher. The pullback would shake out some weak positions before the holiday march higher takes place. I typically don’t trade much going into the holiday season and new year. I may put on a small long position if I like what I see forming on the charts, but that would likely be about it. Light volume can be very dangerous to trade because sharp price spikes up or down can occur in a blink of an eye catching traders off guard.
If you would like to learn more about trading while getting trade alerts for ETFs join my newsletter at: http://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.pngadmin2010-12-19 23:50:052014-03-10 08:41:41The Holiday Grind Is Here For 10 Days Only – Are You Ready?
So far this week we have been seeing fear creep in the equities market. This Wednesday we started to see fear (green indicator) reach a level which tells me to start looking for the market to bottoming. I do follow a few other charts and indicators which warn me of a possible trend reversal (high probability setup) before it takes place but the US Dollar and selling volume are key.
As we all know, when the market is trying to top and roll over it tends to be more of a process than a couple day event. It’s this lengthy topping process which has a lot of choppy price action sucking traders into a position much to early or shakes you out of the position before the market does what you anticipated. Knowing that tops tend to drag out for an extended period of time is critical for an options trader simple because of Theta (time decay)
On the flip side, bottoming is more of an event because it tends to happen after a strong wave of panic selling. Fear is the most powerful force in the market (other than the Fed/Manipulators.. but that’s another topic). That being said, when you know what to look for in bottoms you can generally see the market starting to bottom and prepare for it.
The charts below of the US Dollar Index and the SPY clearly show the inverse relationship they have. Right now it seems everything is directly connected with the dollar… it has been like that for most if the year… I will note that its not normally this clear. Anyways, the dollar is currently trading at resistance which means there is a good chance it will turn back down. So if the dollar drops, then it should boost the SPY (equities market) and put in a bottom for stocks.
Looking at the lower chart of the SPY etf you can see that recent prices have dropped down to a support zone. The important thing to note here is how selling volume is ramping up. This to me means more traders are getting worried and are cutting their losses or locking in gains before it gets worse. We typically see panic selling enter the market near the end of pullbacks. Just like in a bull market where the retail trader (John Doe) is the last to buy into a stock before it falls, it’s the same but flipped in a down trend. The retail trader is the last to panic and sell out of their position before the market bounces/rallies.
Currently the equities market looks to be showing signs that a bottom is nearing. Over the next session or two the rest of this equation should come to light as a tradable bottom or to start playing the down side of the market, only time will tell…
If you would like to learn more and get my trading alerts along with my pre-market morning videos so you know what to look for in the coming session I recommend taking up a subscription with my ETF trading newsletter here: 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.pngadmin2010-12-15 22:56:472014-03-10 08:40:31The Inverse Dollar Relationship, SPX and Fear
This had been an exiting week for traders as the equities market was on a verge of a major sell off. Fortunately, we were watching the market very closely and saw the sentiment and market internals shift shortly after a new low was set last week. That was an early warning for us that a trend reversal to the upside could happen at any hour or day this week.
Wednesday and Thursday’s rallies were on solid volume and the market internal indicators along with market breadth were strong also. There has been a large surge of new highs across the board on the NYSE, NASDAQ and AMEX. These numbers tell me that it’s not just one sector moving the market; instead it’s a broad market advance (institutional buying).
While I don’t typically try to pick major tops or bottoms because of the added risks and lower probability of winning trades, I do tend to spot them forming a few days in advance allowing me to tighten stops and take some profits on positions.
Trend reversals typically have large violent moves near the beginning and end of their life cycle making things not only tougher to trade but potentially more costly. Once I see a trend confirmed with moving averages, volume, and sentiment along with market breadth that’s when I start looking to take positions on pauses or pullbacks to support zones. This greatly increases the odds of winning/making money from the market. There are some really great Options Trading Strategies for taking advantage of these volatility changes in the market which you can get at OptionsTradingSignals.com
SPY Daily Chart:
As you can see the market has clearly broken to the upside above key moving averages after finding support at the 50 day moving average. This rally has some solid volume behind it which I like to see also.
The first 3-4 days of a trend reversal generally post some give moves but after that initial thrust expect a pause or pullback to happen.
SPY 60 Minute Intraday Chart:
We were lucky enough to take profits on our inverse SP500 trade as the market started to give us mixed signals of a possible rally. A couple days later on Nov 26th we saw a major shift within the market sentiment preventing us from shorting the market again.
Two days later the broad market gapped higher triggering protective stops/short covering sparking a fierce two day rally which took the market up to a major resistance level. I do feel as though the market is going higher, but right now, everything is WAY over bought and trading at resistance. Even if the market moves higher for another 2-3 days and breaks this resistance level, it will most likely have a pause, or pullback as it regains energy for another thrust higher.
Mid-Week Trading Conclusion:
In short, it looks as though the trend is now up and the Christmas rally could be gearing up for a good one!
Get my Pre-Market Trading Videos, intraday updates and trade alerts here: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.pngadmin2010-12-02 19:10:272014-03-10 08:41:32Broad Market Reversal – Better Hold On To Your Hat!
