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Mid-Week Charts: Gold, Silver, Oil, Nat Gas and SP500

The stock indexes have been trading very choppy making it difficult for swing/trend traders. It’s during times like this when seasoned traders rise above the herd of average traders.

If you only trade one strategy like swing trading or trend trading then you are likely finding it difficult to make money right now. On the other hand, day traders are having a blast right now as they take advantage of the powerful intraday rallies and sell offs.

I personally like swing trading but during times like this, when I know it will not work, I have to switch my strategy to day trading and focus on the 60 minute and 5 minute charts.

SP500 Index Fund – Intraday Setup
I posted this chart earlier this week and I want to be sure everyone takes something away from this chart as I believe it shows a perfect low risk setup for shorting the market, or you could buy a reverse fund which goes up as the market moves down.

At first glance this chart is noisy, but if you simply focus on the all the different color analysis separately you will notice how simple trading can be and what you should be looking for.

Red Analysis:
1. Overall market trend is down so we are looking for a short trade, signs of weakness.
2. First we see a light volume test of the previous high set earlier in the day. The low volume indicates there are not many participants in the move up and that is a weak sign.
3. Between 14:30- 15:30 we notice the price start to drift higher on very light volume. Also, the price moved up into a resistance level. This to me is a perfect setup.
4. You would sell short or buy a reverse index fund at this point hoping for the market to start selling. You could also wait until it started to drop before taking a position but when a chart looks this good I try to get in at the highest price possible.

Blue Analysis:
1. The price starts to drop forming several small bear flags going into 14:30 before bouncing. Also note the volume began to rise as more selling was happening. This tells us that trading activity is predominately selling and that we should also focus on shorting when the time is right.
2. Again, the price starts to drop forming several small bear flags going from 15:00 – 15:45 before bouncing. Also note the volume began to rise as more sellers took part in this short term trend.

Black Analysis:

1. This shows more or less the resistance level, area to short the index and the nice trend down.

Gold GLD ETF Trading
Gold has been under selling pressure since early December. That powerful drop and the chart pattern it has formed will generally resolves itself after an ABC retrace pattern. I have drawn this on the chart which is what I think will happen in the near term. This daily chart of GLD ETF has a small 4 day bear flag and bearish reversal candle which is pointing to lower prices in the near term.

Silver SLV ETF Trading
Silver has a funky looking chart. It has formed a large megaphone pattern and possible head & shoulders pattern. Both are bearish and if we use the Head & Shoulders to calculate where silver could end up trading if it continues to break down, then $14.00 would be a level to look for a bounce.

Natural Gas UNG Fund
The natural gas fund UNG has been in a down trend for over a year and the recent drop looks to be the start of another sell off. This could possibly form a reverse head & shoulders pattern with this drop moving UNG down to the $8.75 – $9.00 area. We will have to wait and watch things unfold for now.


Crude Oil USO Fund

USO looks to be trading at support. I am inclined to patiently wait another session before possibly taking a position.

Mid-Week Trading Conclusion:
In short, I feel the overall market could bounce including stocks and possibly commodities, but the selling is not over yet in my opinion. The drop we have seen in the past week is the half way mark. So this bounce would be the starting of an ABC retrace for stock indexes. During choppy times I like to be sitting in cash and or day trading for short term profits.

Precious metals do look oversold and ready for a small bounce or sideways move; I do think they will head lower. Too many traders are still holding on to their gold positions and until a large number of them get scared out of their positions, we will not see gold rocket higher.

Natural gas looks like it’s about to head much lower this week while oil looks ready for a solid bounce off support.

We continue to wait for new low risk setups as different investment scenarios unfold.

Get my Free Weekly ETF Trading Reports at www.GoldAndOilGuy.com

Chris Vermeulen

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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

Chris Vermeulen & ActiveTradingPartners Open Service for Public Members

Active Trading Partners launched its brand new trading and investing commentary service on July 15th, 2009. In the short seven weeks since we launched, ATP has produced numerous stocks that have gained, 30, 40, 50, 60, and even 100%. Below are some excerpts from actual ATP research postings on our new service for Partners/Members. Most recently, we recommended JAZZ last Tuesday, 9/1/09 and it has risen as much as 63% in one week.

Are you getting quality advice, market updates, regular follow ups on your positions, and booking gains on an 80-90% success rate? If not, perhaps you should try a subscription to ActiveTradingPartners.com, where we are unmatched in our returns to partners.

We are limited to 200 subscribers and are nearly filled now, so act now. For $249.00 per month you get 8-10 new positions alerted per month, or about $25.00 per alert. With average historical returns of over 20% per recommendation. $10,000 put into each of our positions since the launch would have returned over 100 fold your $249.00 investment per month.

Samples below:

August 4th, 2009- LRR.TO/LRLMF $1.66
…Linear Gold is a micro cap gold stock, and I usually will hesitate to put these on the ATP service, but this one looks like a great value going forward, and I like the chart set up here as well…Shares outstanding are 34 million. That’s a market cap of 58 million Canadian, or less than 2x future projected net cash flows. They have 24 million in the bank, 0 debt currently, and multiple drill projects. They have leverage later on to future gold price increases, and position to acquire other projects/exploration plays. I’m not seeing a lot of downside here.
Results: Linear Gold ran to $2.28 17 days later for a 37% gain.

August 14th- CRXX- $1.05
… the “Saucer” chart is bullish because of the general sideways movement over a long period of time. This is a transfer of shareholders from old to new, re-setting a large base for the stock. A break over $1.10 could trigger a run back to $1.34 a recent spike high on good news several weeks ago. Also, there is a huge “gap” at $3.00 a share above. This means there is an air pocket where technically there are no sellers until $3.00. The only sellers will be the traders who bought recently, or buy near term. To say that I am excited by the long term prospects of this merger would be an understatement.
Results: CRXX ran to $1.34 within a few days for a 25% gain. It has since risen as high as $1.92 on September 1st, for a 75% gain in 3 weeks for ATP.

August 18th- VICL- $3.35
…with Federated Kauffman paying $3.63 a share just a few weeks ago for 3 million shares, they brought their total to 5.4 million shares. The stock has drifted down and volume has dropped from a 90 day average of over 1 million to just 350,000 or so a day lately. This normally precedes a shift in sentiment and price movement, quite simply the crowd has moved on.
We have an ATP proprietary “Fibonacci Intersection” on Aug 17th, and to ATP it means the stock bottoms around that time and it’s time to start accumulating positions… A break over $3.40 will probably start a new bull trend in the stock.
Results: On September 3rd, 16 days later, VICL hit $5.40 for a 61% gain

August 20th- SPPI- $6.27
SPPI- …When the stock hit 6.05 earlier this week, it was at the bottom of proprietary indicators I have developed as reliable for pivots. I mentioned earlier this week that I had picked some up at 6.12 and 6.15. This afternoon I was an aggressive buyer at a 6.27 average per share and building a position… The chart appears to be very bullish and very oversold at the same time. If I was to hazard a guess, I would see a move up to 6.80-6.90 again, then a pullback, and then a breakout over 7 with a run.
Results: On September 4th, SPPI hit $9.00 a share for a 43% gain in two weeks.

September 1st- JAZZ $7.29
The stock closed 8/31/09 at $7.29 a share and has been in a general trading range for about 5 weeks now. We also have a 5 day reverse head and shoulder pattern, often a leading indicator of a move up. ATP research would not be surprised to see a move towards $10.00 per share over the intermediate time period.
Results: On September 4th, Jazz soared over $10.00 per share for a 40% plus gain in 3 trading days for ATP

September 2nd- RINO $12.60
…accumulating a position in RINO here in the 12.50-12.90 window. The volume has completely dried up on the stock after the recent run from mid 10.70 to 14.88. The pullback is a typical “B Wave” pullback in an “A-B-C’ move to the upside. This actually retraced a perfect Fibonacci 61% retracement of the recent swing move up… The valuation remains very cheap, the company is very under-followed.

Results: Stock closed at $14.27 the next day as Rodman and Renshaw initiated coverage with a $22 target. 13% return in 24 hours.

Please visit our website for more information: www.ActiveTradingPartners.com
Chris Vermeulen

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Gold, Silver & Energy Commentary Update Wed Morning

PRECIOUS METALS 

February gold closed higher on Tuesday due to short covering as it consolidated some of Monday’s decline. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today’s rebound, stochastics and the RSI have turned bearish signaling that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 844.10 are needed to confirm that a top has been posted. If February extends this fall’s rally, October’s high crossing at 938.80 is the next upside target. First sesistance is last Monday’s high crossing at 892.00. Second resistance is October’s high crossing at 938.80. First support is the 20-day moving average crossing at 844.10. Second support is today’s low crossing at 838.80.

March silver posted an inside day with a higher close on Tuesday as it consolidates some of Monday’s decline. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If March extends the rally off October’s low, the reaction high crossing at 12.230 is the next upside target. Closes below the 20-day moving average crossing at 10.735 are needed to confirm that a short-term top has been posted. First resistance is Monday’s high crossing at 11.770. Second resistance is the reaction high crossing at 12.230.
First support is the 10-day moving average crossing at 10.930. Second support is the 20-day moving average crossing at
10.735. 

ENERGY MARKETS 

February crude oil closed slightly lower on Tuesday due to light profit taking as it consolidated some of the rally off December’s low. Today’s mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. If February extends this month’s rally, the reaction high crossing at 52.95 is the next upside target. Closes above the reaction high crossing at 52.95 are needed to confirm that a short-term low has been posted. Closes below last Wednesday’s low crossing at 36.94 would temper the near-term friendly outlook in
the market. First resistance is today’s high crossing at 50.47. Second resistance is the reaction high crossing at 52.95. First support is the 20-day moving average crossing at 43.96. Second support is the 10-day moving average crossing at 41.94.

Click Here to Read My Special Report: http://www.thegoldandoilguy.com/goldandoilnewsletterjan2.php 

Chris Vermeulen