It’s been a very exciting week so far for gold and SP500 traders as we take advantage of mass crowd behavior. Trading against the masses can be very profitable during certain situations but more times than not it’s a great way to lose money which is why I focus on taking the opposite side of these moves.
This week I decided to do the mid week report in a video format which I think not only saves everyone time but also allows me to get more information over to you. The video shows a low risk gold setup and a low risk SP500 trading setup which I think will open your eyes to some new things.
Last week we took a long position in gold at $1180-85 level buying near the bottom as investors panicked out of their positions. Using market internals, sentiment readings and my own special blend of technical analysis to find these low risk setups which pack a powerful punch when traded correctly.
The chart below shows gold from its bull market in 2009 right through to the current rally, which is making us some decent money. While I am bullish on gold and feel it will eventually reach $1400 per ounce I do think there will be several more opportunities to cash in on gold’s price action as this rally matures… I explain more in the video below.
I hope you enjoyed the video as I showed you some important trading tools for helping to trade extreme conditions in the market. As my buddy from ActiveTradingPartners.com always says “Buy when they Cry, Sell when the Yell” which is exactly what needs to be done in order to profit from the market month after month.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-06-02 21:38:432010-06-02 21:38:43How to Read Market Internals for Trading the SP500 and Gold
May 2, 2010
The past couple weeks we have seen sellers control the price of gold. This can be seen on the charts by the light volume drifts up then heavy volume sell selling sending this metal sharply lower. This type of price action provides some excellent intraday shorting opportunities.
On the other hand the SP500 has been doing quite the opposite providing some very profitable intraday buying opportunities for those who have the time to trade during the day.
Below I show a couple of low risk intraday trading opportunities which lasted a couple days providing massive gains, tiny down side risk and immediate price action. But what I think is about to happen in the next week or so will turn the tables with gold providing great buying opportunities and the SP500 with some great shorting opportunities, opposite to what is happening now.
Two Shorting Opportunities in Gold Making 210% Return in 3 Days
The fist two weeks of April gold had formed an excellent mini head & shoulders topping pattern. This is a pattern which I find very profitable when trading the intraday charts.
The first chart is of the 2 hour intraday gold chart spanning 25 days. On this chart gold had formed a mini head & shoulders topping pattern which day traders were able to take advantage of with very little risk.
Once the first wave of selling was finished and gold reached our price target of $1134, we exited our position and waited for another intraday setup. It was only a couple days later when gold has setup for another opportunity to short which an even more potential than the first trade as it had the possibility of dropping to the $1115 level. This would have provided a $40 move in gold washing the market of weak positions setting itself up for another big rally.
Our first price target was reached at $1147.7 where we took some profits and moved our stop to break-even (our entry price) for the balance of our position. Doing this guarantees the trades will be a winner no matter what happens. As you can see on the chart depending what investment type you trade you would have earned 2.6% – 210% return on your investment.
Gold’s Surprise Rally – Spain Was A Pain
Last week Spain was downgraded causing large selling pressure on the Euro as everyone sold the Euro and moved their money into a safer investment like the US Dollar and Gold. This sent both dramatically higher at the same time. The chart below shows the same 2 hour chart of gold but is zoomed out so you can see farther back and also the most recent rally in gold.
The red arrow on gold shows where gold was most likely to go in the coming days, but instead it rocketed higher on the Euro-land news hitting the wires. Most of the price advance happened within the first 4 hours and since then the price has drifted sideways and grinded its way a little higher.
SP500 Buying Opportunity Makes 135% Gain in 3 Days
During the day on Wednesday I had low risk entry point for day traders on the SP500. The setup is simple really. Tuesday’s panic selling sent the market tumbling in a very short period of time putting the market in an oversold condition. A condition like this provides excellent low risk/instant price movement type of setup.
Take a look at the volume on the chart… Volume on the ES Mini SP Futures contract was not very heavy during the sell offs. But the days following shows strong buying volume indicating big money was buying up stocks at these discounted prices. This is great to see.
60 Minute SP500 Trading Chart
As you can see from the chart below Tuesday’s heavy volume sell off was an almost straight drop. That type of move generally provides a trad-able bounce or drift higher within a few days which tests the level were prices started to drop originally (the breakdown level).
The price of the SP500 drifted up into resistance with declining volume meaning traders are not willing to pay the higher price for the index. This is a sign of weakness and worked out perfectly with our price target of $1205-1206 at which point we took money off the table and moved our stop up to lock in some solid gains if the market did in fact reverse back down after reaching the key resistance level.
Gold & SP500 Trading Conclusion:
Some very exciting times lie ahead as I feel gold and the SP500 are changing short term trend directions. Gold which was down the past month is now headed higher as we are looking for low volume pullbacks to take long positions.
And the SP500 looks ready to take a swan dive to correct/digest some of the monster rally it has put in since the February low. With any luck we will get a nice shorting opportunity to catch some of the move down and then we should be setup for another large rally.
In short, we are looking for gold to dip to enter long and the SP500 to breakdown this week then form a low volume bounce/drift into a resistance level which we will try to short once the bounce loses its upward momentum. I feel we will have a bunch of day trades in the near future along with some great swing trades at the key turning points.
March 26, 2010
The market gapped higher this morning after yesterdays heavy selling. At this time the market (metals and indexes) are trading at resistance on light volume. This tells me people are a little spooked from yesterday and just do not want to buy at these lofty prices.
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Stock Market Training Education
I am trying to provide you with more insight and trading tips/education because I know many of you enjoy it. So here is something some of you may find interesting…
Over the years I have found several things which happen repeatedly in the market. I always found it interesting that in an uptrend the market/commodity or stock tends to gap lower at the open the next day. And during a down trend the market tends to gap higher at the open.
Why is this? I don’t know for sure… but my thoughts are that the smart money (big guys & professional traders) manipulate the market using futures to artificially lower prices so they can buy more the at lower prices before everyone else jumps in. It’s similar but in the reverse during a bear market. Prices gap up so they can short more shares at a higher price before everyone starts selling again pushing prices lower.
I could be way off here as this is my personal opinion but I see it happen all the time… so whether I am right or wrong in my theory the fact is this price action happens.
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Take a look at the SP500 & Dow Jones Futures Charts:
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Market Gap Trading Conclusion:
In short, the market gapped up today (not good)…
I see the dollar is now trading at a short term support level and metals are trading at resistance. So maybe something will come out of this for a short play…
I hope this short reports was of use for getting a feel of how the market moves and what I am looking for in low risk setups.
Have a great weekend everyone. I don’t see anything tradable other than this intraday low risk setup which just broke down as I write this sentence, fun stuff…
Be sure to get notified about my new day and swing trading service I am launching April 6th by entering your email address in the form below:
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2010-03-26 14:33:112014-03-10 09:41:49SP500 & Dow Intraday Charts & Futures Prices at Their Best
