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ETF Trading Gold Oil and the Index

December 9th, 2009
Etf trading has made it so easy for traders and investors to get maximum exposure to the entire market without the high fees of mutual funds and manager. There are now etfs covering almost every investment type whether it’s stocks, indexes, sectors, commodities, bonds, real estate, currencies etc…

In this short report I will quickly show a few charts on what is happening for precious metals and energy.

HUI – Gold Stock
This monthly chart of the gold stocks index you can see how easy it is to trade the market and avoid large sell offs when using technical analysis. Currently gold stocks are in a bull market, testing the 2008 highs. Until we are proven wrong buying stocks after a pullback is a winning strategy.

Gold Stocks Trading

Gold Stocks Trading

Trading the GLD ETF
We have been in the GLD etf for a few months as we ride this bull to new highs. This chart clearly shows how buying dips in a bull market can really pay off. I do have certain criteria which must be met before buying dips so I know the odds are in my favor.

Gold ETF Alert

Gold ETF Alert

ETF Trade Silver
Silver along with gold and oil are looking ready for an oversold bounce. I don’t think prices will jump and rally higher right out of the gate but eventually I feel the will head higher.

SLV Trading Newsletter

SLV Trading Newsletter

Crude Oil Fund Trade
Crude oil looks prime for the picking. It is currently oversold and testing 2 support levels. The downside momentum is still strong so this selling could last another 1-2 days but I’m expecting it to soon.

This is not a low risk setup. This is more of a short term aggressive contrarian play. For those of you who like heart pounding plays ?

USO Fund Trade

USO Fund Trade

Natural Gas Fund Chart
Natural gas has been taking its time to bottom. Virtually every bottom picker has been burned this year. I am starting to hear everyone get more bearish on it again which is great! It should bottom any day then! LOL….

Seriously it cannot get much more bearish for gas. We don’t have enough space to store it and companies are finding more natural gas in the ground every day. Because it sounds like a terrible investment it must be getting close to a bottom. If this is the start of a flat basing pattern, then I expect it could drag out for a few months before actually making a nice move up.

UNG Nat Gas Trend

UNG Nat Gas Trend

Dow Jones DIA ETF
The Dow looks similar to gold and silver. I feel we are ready for a 1-2 day bounce then we go a little lower to shake traders out of the market before heading higher.

DIA ETF Trading

DIA ETF Trading

ETF Trading Conclusion:
Gold stocks and the broad market are in a bull market. The recent pullback has many traders worried. I think this an opportunity to bet into some positions before the next rally. Buying the dips in a bull market is a low risk trade until proven wrong. I think we still have more of a pullback yet but then we could have a very profitable year end Xmas rally.

Natural Gas is just bumping along bottom I think. Not expecting any trade for a few weeks anyways.

Crude Oil looks like its ready for a move whether it is a 1-2 day bounce or the start of a new leg higher. If you loot at late Sept you can see USO broke down on heavy volume shaking most traders out of their positions just before the next leg higher, and this is what I feel it is doing now. Only time will tell.

Let’s see how the second half of this week unfolds.

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Chris Vermeulen
www.TheGoldAndOilGuy.com

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Monday Dec 7th – Afternoon Update

Gold is making a come back as of this writing. the US$ is weakening. Great to see.

Silver and Oil continue to sell down as momentum from Friday’s selling carries over.
Natural gas is having another bounce today on big volume. It is trying to bottom down here but we have seen all bounces and rallies halted as sellers push prices lower.

Last week we locked in 11% return on a portion of our GLD trade. Our ANI.V trade is still doing very well as it is consolidating the large move up in the past few months and continues to drill test holes for gold.

DFSH has released a thorough overview of the numerous commercial opportunities it is currently pursuing . This information is precisely what I was given four weeks ago at a 3 hour briefing with the CEO in Florida.

http://www.ds-pa.com/docs/DFSHOverviewNovember2009.pdf

Page 13 of this document states:
“We have been notified by SOMO (the Iraq State Oil Marketing Organization) of a crude oil contract (60 million barrels) to the American Refinery Group and two Fuel Oil Contracts (500K & 3 million MT)”

To put it bluntly, this is a staggering amount of oil that the company has been allocated from Iraq to broker. The fees that DFSH will earn from closing a single contract will be very exciting. I know they are working on some financing to put these contracts together as they require a security deposit (performance bond) for each contract. The contracts are worth several hundred million dollars the deposits are large.

Chris Vermeulen

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Do Stocks and Commodity ETFs Take a Pause or Melt Down?

Dec 6th, 2009
The first half of last week started out strong with stock and precious metal ETFs moving higher. The week ended with less certainty of direction. The energy sector underperformed the market with crude oil and natural gas moving lower.

Below are some ETF charts showing where the broad market and commodities are trading with some analysis showing what could transpire going into the year end holiday season.

DIA ETF – Daily Trading Chart
The DIA ETF that I am using to represent the Dow Industrial Average looks to be over bought and ready for a pullback. The broadening formation indicates volatility is rising and that the bulls are losing control. This pattern occurs in all time frames and in stocks, commodities and exchange traded funds. Remember this pattern when looking at charts as it could save you some money.

Using simple analysis we can see where the Dow is likely to test. With any luck this could happen quickly and be followed by a nice low volume rally going into to the holiday.

DIA ETF Trading

DIA ETF Trading

GLD Gold Exchange Traded Fund – Daily & Weekly Charts
Gold had a huge rally the first half of the week but gave it all back and then some on Friday. I have been warning about this sharp profit taking correction for a few days making sure everyone had tightened their stops or started to trim their positions. We locked in a nice 11.9% gain on Friday as our stop for GLD was triggered.

GLD fund is likely to trade in one of two scenarios this week:
1. Move side-ways after last week’s sell off
2. Or continue moving down as investors and short term traders review Friday’s action and place their sell orders for Monday.

Take a look at the small weekly chart which is located within the daily chart below. We had a very big volume week and a reversal candle indicating a shift in momentum. If we are lucky this could be a quick pause before another move up, but I am thinking gold will need several weeks to gain its footing. Only time will tell, and either way we will be ready.

GLD Exchange Trade Fund Alerts

GLD Exchange Trade Fund Alerts

SLV Fund – Daily & Weekly Charts
Silver had a sharp pullback with gold on Friday but because silver did not have investors tripping over each other trying to buy it like gold, the sell off was much more controlled. Silver breached the lower trend channel line but closed back above it to end the week.

Silver is trading at the lower level of its trend channel and at a support level. There is a good change it will bounce Monday or Tuesday. But until we see what gold is doing at the open Monday morning I would not be jumping into anything at this point.

The weekly chart shows a reversal candle signaling strong selling pressure and this is the reason I would not be buying here. Let’s watch for a few days and see what happens.

SLV Trading Analysis

SLV Trading Analysis

USO Oil Fund – Weekly Charts
Crude oil has been weak the past 2 months as it drifts sideways from the October breakout. Not much to say here other than let’s wait for some action and a low risk setup.

USO Oil Fund

USO Oil Fund

UNG Natural Gas Fund – 60 Minute and Weekly Chart
This year I think natural gas has taken more money from traders than any other fund. Virtually everyone has been burned by this extremely over sold commodity. The 60 minute chart shows three resistance levels. But if you combine all of them there is significant resistance from $8.80 – $9.25. That is the test of the August lows.

We reached the August lows and that is what triggered the bounce and short covering rally 2 weeks ago. We have now seen prices slip below that level on rising volume which is bearish. With prices below this major resistance level I think we will see sellers step in on each bounce to push prices back down.

UNG Natural Gas Trading Fund

UNG Natural Gas Trading Fund

Stocks and Commodity ETF Trading Conclusion:
The broad stock market looks ready for a small correction. That being said the tape does not lie and we continue to see money flow into stocks which is why the dow, sp500 and Russell 2000 are holding up well. These crossed signals are the reason money/position management is so important for traders. Scaling in and out of positions during oversold and overbought conditions is crucial for pulling money out of the market consistently.

I do this by tightening my stop to lock in a gain on 25-50% of my position, while holding a core position in the event prices continue to rise. This way I make a premium on part of my trade and have my stop moved to break even or higher for the core position allowing it some wiggle room as prices consolidate before the next leg higher.

Gold and silver could go either way quickly this week. We have locked in some good money last week and now we hold our core position. From here I expect the gold and silver to play out in one of three ways:
1. Prices continue higher and we ride our core positions for larger gains.
2. Price continues to correct and we get another low risk entry point to add to our core position, then prices rally.
3. Or, precious metals have a melt down and we take a small 5% gain on our core position.

Crude Oil and Natural Gas are not tradable at this time. We need to see more price action before a high probability setup will develop. Let’s watch and wait these out some more.

If you would like to receive my Free Weekly ETF Trading Newsletter visit my website:

Chris Vermeulen
www.TheGoldAndOilGuy.com

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Tis the Season to Trade the Seasonal Charts, Dow, Gold, Silver, Oil and Gas

Dec 2nd, 2009
The market has had a fantastic week so far for stocks and precious metals. The financial and energy sector are underperforming which is a concern, but we continue to hold our positions and will wait until a reversal to lock in our gains.

Things seem to be lining up for stocks and precious metals to take a breather, which is in line with the Dow Jones Seasonal chart below.

Let’s take a look…

Dow Jones ETF
You can see from looking at the chart the repeated pattern of price rallies, leading to exhaustion and a test of support, followed by another repeat of the pattern. It looks as if the broad market is setup for a test of support which could happen within 2-4 days. Then as we near the holiday prices will start to drift higher. This pattern occurs more often than not as seen on the Dow Jones Seasonal chart below.

Broad Market Holiday Rally

Broad Market Holiday Rally

Dow Jones Seasonal Trends
This chart clearly shows weakness in the first half of December and continued strength moving forward. This has not really happened in the past two years which means we are overdue for continued strength. ?

That being said, the previous two years were bear markets and we are now in a bull market. So the tendency is for buying to continue into year end.

Dow Jones Seasonal Trends

Dow Jones Seasonal Trends

GLD ETF Fund
Gold continues to push higher surprising many of us. It seems as though money is rushing into metals and buyers are not particularly concern about price. While this is great for short term traders and those of us in the trade, we must remember that the faster things go up, the quicker they correct.

Don’t get me wrong, I don’t think gold is going to crash, I just think we could get a 10% correction before moving much higher. Gold is also trading near the upper end of the trend channel and could have a 2-4 day consolidation with the broad market before pushing much higher.

GLD ETF Trading

GLD ETF Trading

SLV Exchange Traded Fund
Silver has been underperforming yellow gold but is still a solid investment. It is also trading near the upper end of the trend channel and could have a 2-4 day consolidation with the broad market.

Silver ETF Trade

Silver ETF Trade

USO & UNG Funds
Oil continues to flag from its breakout back in October. This is a bullish pattern. Last Friday we saw oil open much lower then rally back into the trend channel. This is called an outside day and many times this happens to stocks and commodities as it shakes out the weak traders before starting another rally higher. We will keep a close eye for any low risk entry point.

Natural Gas had a nice rally last week which I mentioned looks a lot like a short covering rally. The price action this week suggests it was and has now made a new low. Today on CNBC it was reported that a new source of natural gas has been discovered. This resource is 20 times larger than the biggest source in the US. Enough gas to last the US over 100 years. This added to the selling on both natural gas and oil today.

Energy ETF Newsletter

Energy ETF Newsletter

Trading Conclusion:
Precious metals continue to perform well and it’s important to note that PM stocks are now moving higher with gold. They have been lagging for some time but are on fire again. Great to see!

The Dow Jones index and several others look ready for a breather. The timing of these overbought charts bodes well for the seasonal December pause before the holiday rally. Time will tell.

Energy and financials are both underperforming the market and without their participation we will not see the indexes move much higher.

Continue to hold precious metals positions but be ready to lock in profits if we see the market reverse sharply. I am watching energy for a play but no setups at this time.

Check out my Free ETF Trading Newsletter:

Chris Vermeulen
www.TheGoldAndOilGuy.com

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The Dow, Dollar & Gold – What Goes Down Must Come Up

This year has been a very exiting time for traders and investors. We have seen a steady climb in prices with controlled pullbacks in the broad market and gold.

Using technical analysis we are able to quickly and accurately make informed decisions just from looking at the charts. In the charts below you will see how simple chart patterns along with support & resistance levels can provide excellent low risk entry points. Also you will see how candle stick charts can be an early indicator for prices to reverse direction.

DIA ETF – Daily
The DIA (Dow Jones Index Fund) is trending higher. By applying some basic technical analysis you are able to time your entry points having the odds in your favor.

In this chart I use two simple forms of analysis. The broadening formation (red trend lines), and horizontal support zones shown in blue.

Broadening Formations: This is when the price becomes more volatile making higher highs and lower lows. I think of it as one of those Megaphones for talking to large groups of people. So when a chart has this pattern it’s virtually yelling at me and I start taking profits or tightening my stops.

Horizontal Support Zones: I like to focus on support or resistance zones which are a little different than most traders. I do not use the top and bottoms of previous waves for these levels. Instead I take the average price then expect the support level to be penetrated somewhat as the level is tested. This is how the market keeps you out of the good trades. I cover this in great detail in my Stock Market Trading Education Course available in January.

Analysis: The DIA ETF looks ready for a pullback to the $99- 100 level.

DIA ETF

DIA ETF

GLD Exchange Traded Fund – Weekly
Gold has been on fire and riding this wave up has been very profitable thus far. Last week a doji candle was formed on the chart and this can signal a change in short term price action.

This chart shows some of the past doji candles and what happened to the price of gold soon after. What this candle is telling us is that the buying and selling pressure is equal. So we know momentum is slowing and we should expect a consolidation or correction.

Because gold has rocketed higher, indeed going almost straight up in the recent weeks, I expect a pullback to be very quick. A drop to the $110 or even the $100 level in the coming weeks is not out of the question, but we all know commodities can go parabolic for several months (straight up). This is why we continue to tighten our stops and keep holding out long positions.

Gold Exchange Traded Fund

Gold Exchange Traded Fund

US Dollar – Weekly
The US dollar has been up and down like a yo-yo in the past 15 months. The chart below clearly shows what has been happening with this currency and what I think we could see very soon.

The blue support zone (73-74) is a key pivot point for the dollar. That being said lets take a look at the chart.

During the time when the price is trending higher July 2008 – Feb 2009 we see lower wicks appear more often. This tells me that sellers pushed the price down early in the week but were then overcome by buyers nearer the end of the week. This is bullish price action. Also the broadening patterns during this timeframe’s tops indicate increased volatility and we know that is a sign of weakness.

From March 2009 – Sept 2009 the trend was down and there are longer upper wicks telling us buyers became over powered by sellers each time the price rallied.

In the recent 3 months we observe lower wicks meaning buyers are moving into the US dollar again. Knowing that there is major support below the current price I have to think the dollar could start to bottom around this level.

US Dollar Trading

US Dollar Trading

Trading Conclusion:
The broad market is becoming unstable and looks like it could have more of a pullback this week. I would not be adding to any long positions until we see the market trading near support. Three out of four stocks move with the market so it is crucial to understand the overall market direction when buying and selling stocks and commodities.

Gold is trading at a level which is fuzzy. The weekly chart is neutral and the daily chart is still on fire as it moves up. All we can do is ride our positions and keep raising our stop prices.

The US dollar could start to bottom over the next few weeks. Depending what happens with Dubai this week we could be in for a big bounce in the dollar as investors flock to safety as the US dollar is still the currency of choice if/when other countries start to have a financial melt down again.

If you would like to receive my free weekly trading reports join my newsletter:

Chris Vermeulen
www.TheGoldAndOilGuy.com

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Weak Dollar Boosts Commodities – So What’s Next?

Another fantastic week for precious metals as the US dollar continues its slide lower. Energy commodities like oil and natural gas are having some difficulty finding buyers.

When commodities start to trend they become very profitable for those riding them up or down. But when a short term trend starts to virtually go straight up (parabolic) then we must be prepared for a sharp pullback. Once the price starts to slide I figure a lot of short term traders will begin locking in profits, sending gold down.

I’ve recently discovered the Money Flows table from The Wall Street Journal and I gotta say it’s awesome. My thanks to a trading buddy for bringing this resource as well as hidden gem play – DFSH – to my attention.

The Money Flow table calculates whether money is moving in or out of a stock or ETF on a given day, and whether it is selling on strength or buying on weakness. It also tells you if there are more up or down ticks. Really powerful stuff in my opinion.

For example, the GLD gold fund continued its move higher today as it must follow the underlying commodity. And though the fund traded higher institutions were selling their positions in masse. For every 9 block trades bought there were 100 block trades on the sell side. This is strong evidence that institutions/large traders are moving out of GLD. Indeed, over $161 million dollars moved out of GLD today alone and a total of $251 million dollars in the two days preceding today.

The SPY fund was 12 buy orders for every 100 sell orders. Today alone over $675 million was flowing out of SPY which his CRAZY huge.
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Check out the table: http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow-20091125.html?mod=mdc_pastcalendar

GLD ETF Trading – Weekly & Daily Trading Charts
Gold continues to claw its way higher as trader’s trip over each other trying to buy this shiny investment. The weekly chart clearly shows a parabolic spike. Vertical spikes like this do not last for long, but the largest percentage of the move will be made riding this trend up with a tight stop.

Gold Trader

Gold Trader

SLV ETF Trading – Weekly & Daily Trading Charts
Silver is still trending up but lagging its big sister (yellow gold). The daily chart shows a nice mini bull flag and we could get an upside pop soon.

ETF Trading

ETF Trading

USO Fund Trading – Weekly & Daily Charts to Trade
Crude oil just does not have people participating. The dollar is dropping yet oil continues to be dormant. It has provided several intraday plays as it trades the top and bottom of the trend channel.

Oil Trader

Oil Trader

UNG Fund Trading – Trade the Weekly & Daily Charts
Natural gas really came to life today. It looks like people started to cover their shorts and it just kept running up for the entire session. I mentioned in a previous report that the $9 level could be a bottom and today’s reversal sure makes it look good to the eye. But if this is a short coving rally, prices are still headed lower yet.

Gas Trading

Gas Trading


ETF Trader Conclusion:
Gold continues its incredible rally and we love every minute of it. I keep moving our stops to lock in maximum gains while providing enough wiggle room for more growth.

Silver and precious metals stocks are lagging and that is a concern. The charts look solid but I think investors are not currently willing to pay higher prices for riskier plays which include silver and precious metal stocks.

Crude oil is just drifting lower in a controlled manner. The chart looks bullish but buyers just are not in a panic to buy it right now.

Natural Gas has put in a nice bounce this week. I expect a lot of this is short covering and it could rally to the $10.50 – $11.00 area if all goes well.

The broad market is starting to look and feel over bought. We could see the market continue higher Friday because of the holiday light trading volume which virtually always moves the markets, or whatever investment is HOT, higher. This is because the large traders take time off so there are not a lot of large sellers in the market. But be ready for next week because these nice lofty prices could start tumbling down.

I just want to wish everyone a great holiday!

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Chris Vermeulen
www.GoldAndOilGuy.com

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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

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

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

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

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