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SP500 Pierces, Bonds Rally, Dollars Fall Out the Window

Sept 23, 2010
It’s been a wild ride the past few days. Now, thanks to comments from Obama and FOMC, it seems like everyone is waiting to see what the market will do from this pivotal point onward.

Since the market topped in April and has since been trading sideways in this rather large range, everyone has small positions at work but waiting for a decisive move before fully committing to one side. There could be a few opportunities in the coming days using bonds, the dollar and the SP500 if all goes well which I explain below.

Lets take a look at the charts…

SP500 – SPY ETF, Daily Chart

There has been a lot of talk about a sharp rally if the SP500 could break the 1130 level or the neckline everyone is talking about. Well this week Obama was on TV and the market rallied into that, then again after. I don’t really thing investors or traders were buying things up as he said the same boring stuff he always says without anything new. I feel there could have been another force at work, which we can discus another time .

Anyways, the market pierced those resistance levels and I’m sure a ton of traders have switch their view on the market from bearish to bullish. While I prefer to trade with the trend I can’t help but feel this market is still range bound, which is why I am still bearish at these shakeout levels. The SP500 did break resistance BUT the following candle did not close above the breakout candles high to confirm the move.

That said, the market is now trading back down at support and the next couple of days I’m sure will shed some like on the direction.

20 Year Bonds – TLT Fund, Daily Chart

We have seen the bond price pullback in a bull flag formation. It touched support before bouncing to break short term resistance as it looks to have started another rally. The chart below overlays both the candlesticks of the bond price and the SP500 which is the white line. You will notice they have an inverse relationship. If bond prices continue to rally then lower SP500 could start to rollover.

US Dollar – UUP Fund, Daily Chart

The dollar has fallen sharply the past 10 trading session and it looks to be oversold for a couple reasons. The past couple days the price has dropped straight down and gapped lower. This recent drop has reached a gap window which will act as support and could provide a tradable bounce in the coming days depending how things unfold.

Mid-Week Market Analysis Conclusion:

In short, the SP500 is flirting with resistance and has yet to confirm the breakout. Bond prices look to be headed higher which will makes me think equities could start to sell off any day now… It’s also important to note that the big banks GS and JPM shares have been under pressure and they tend to lead the broad market. Another point to add is the fact the oil has not rallied even though the dollar dropped like a rock? What happens if the dollar bounces? Could oil finally start its next leg down?

Gold and silver continue their steady grind up. The price action reminds me of the 2009 Nov –Dec move. Once that train de-rails its going to have a sharp correction…

You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 3-5 investments at a time, I’ll be covering only 1. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis as it allows me toe get more into across to you quicker and is more educational, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of traders and they will receive direct personal responses regarding trade ideas and analysis going forward.

Let the volatility and volume return!

Chris Vermeulen
www.TheGoldAndOilGuy.com

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SP500 Fakeout & Market Trend

Sunday Sept 20th,
I think it’s safe to say that everyone knows the markets are manipulated… but during options expiry week we tend to see prices move beyond key resistance and support levels during times of light volume which triggers/shakes traders out of their positions.

Trading during low volume sessions Pre/Post holidays for swing traders or between 11:30am – 3:00pm ET for day traders tends have increased volatility and false breakouts. This happens because the market markets for individual stocks can slowly walk the prices up and down beyond short term support and resistance levels simply because there is a lack of participation in the market.

SP500 4 Hour Candlestick Chart

That being said, the chart below of the SPY (SP500 ETF) shows that last Thursday, (the day before Friday options expiry) the put call ratio was showing extreme bullishness. I also mentioned that we should expect a pop of 0.5 -2% in the next 24 hours as big guys will try to shake everyone out of their short positions (put options).

The put/call ratio indicator at the bottom of this chart is a contrarian indicator. When it shows that everyone has jumped to the bullish side, the big money knows its about time to change the direction so they can cash in at premium price levels.

SP500 60 Minute OptionsX Chart of the Week

If you look at the volume at the bottom of the chart you will see there are times where this virtually zero volume trades. The yellow high lighted section shows the overnight price surge which is very easy for the big guys to push higher as everyone sleeps.

Here is what they are doing. The light volume makes it easy to manipulate so they push it higher until key resistance is broken, then everyone who was short and had a protective stop in place will have their order executed. As the price rises, more and more stops get triggered. Also, with the rising number of traders becoming bullish from the previous session have buy orders to go long if key resistance is broken. This causes a virtually automated rally to unfold, but once the orders/buying dries up, the big guys start selling their positions at premium prices, pushing the price all the way back down to where the market closed the previous day.

In short, the big guys shook the majority of traders out of their positions Thursday night and pocketed a ridiculous amount of money. Crazy part is 99% of the public don’t even know this type of thing is happening while they sleep.

SP500 OptionsX Intraday Price Action

I thought I would show this chart as it shows the selling pressure in the market. What I find interesting about this chart is the fact there was more selling volume during options expiry week, but the prices continued to move higher.

From watching the market internals I saw the majority of traders go from bearish to bullish by the end of the week, and this really gave the big guys a huge advantage in my opinion. Each session selling volume took control with the big guys unloading bu the low volume afternoons naturally brought prices up again as more and more traders became bullish each session. This happened all week and Thursday night it looks as though they let the price rise allowing the key resistance level to be broken which caused a surge of buying which they could selling into. So what’s next…

SP500 / Broad Market Trading Conclusion:

In short, the market looks toppy and if all goes well, last weeks overnight shakeout just may have been a top. This week will start off slow and most likely with light volume until Wednesday. During light volume times, keep trading positions smaller than normal and remember there is a neutral/upward bias associated with light volume.

You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 2-4 investments at a time, I’ll only be covering only one. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis per customer’s request, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of newsletter traders and they will receive direct personal responses regarding trade ideas and analysis going forward.
Let the volatility and volume return!

Chris Vermeulen
www.TheGoldAndOilGuy.com

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Precious Metals Equity Index Form a Triple Top, What’s Next?

Wed Sept 8th, 2010
I am going to step out on a limb in this report and cover what I think to be an intermediate top in the precious metals sector. Everyone I speak with and from the hundreds of emails I get I would say the vast majority are bullish on gold and silver. That being said, I feel we are 3-8 days away from a pop and drop in the price of gold.

Below are my explanation and charts of what I think is unfolding.

HUI – Gold Bugs Index

This chart tracks a basket of gold companies and can be used as a leading indicator for gold bullion at times. This index tends to lead the price of gold before rallies and also during declines. I have seen this lead by a few hours and even up to 7 days. I find it out perform when gold is about to rally, and under perform when gold is topping or about to start another move down.

It looks as though we are forming a triple top which also happens to be at a previous 2009 resistance level. Each time this level has been reached sellers take control and send the market sharply lower. There have been several long upper wicks formed in the past few sessions telling me that buyers are pushing the price up, but sellers hit the sell button pulling the market right back down. If this triple tops plays out, I would expect a multi month correction to take place.

UUP – US Dollar ETF

The US Dollar looks to have found support at the March/April lows and has put in a very solid rally. If the chart pattern is correct then it looks as though the dollar will breakout to the upside and run to $24.75 area. The relationship between the dollar and the precious metals sector is generally inverse, meaning if the dollar rallies both gold and stocks should fall.

GLD – Gold Bullion ETF

The chart of gold has identical patterns no matter if it’s this ETF or spot gold price. So this analysis goes for both ETF and gold bullion prices. Anyways, the past two times gold rallied for this length of time without any sizable pauses we saw the price of gold drop $70 per ounce, and $140 per ounce which is equivalent to $7-$10 drop on this GLD fund which is a decent size move.

The chart is screaming of a nasty correction to occur any day now. With gold testing the June highs I feel its only days away. What I am looking for is a pierce of the June high. That will suck in the rest of the bulls as they jump on the band, and cause all the shorts to cover their positions. This causes a pop, and once buying starts to dry up, the big money will start to sell down the price to trigger the stops and start a multi day waterfall sell off.

With the declining volume as the price grinds its way higher it tells me fewer individuals want to buy in at these high prices. Once the price starts to slide it will cause the stops to triggered. And because there have not been any substantial pullbacks along the way, there is a larger number of stops sitting in the market waiting to get hit.

Mid-Week Precious Metals Trading Report:

In short, I feel precious metals are on the verge of a sharp correction which may only last a few days, but the drop will be substantial. I still think we could see a few more up days or sideways session before this happens as the June high for gold bullion should be penetrated before the market truly reverses back down.

Anyone long gold, silver or PM stocks should be thinking of tightening their stops and for the gold bugs to mentally prepare them selves for a correction.

I hope my bi-weekly trend reports helps shed some light on the market for you. My trading alerts and frequent updates are reserved only for subscribers, so if you would like more trading analysis, updates and trades please join me at: www.TheGoldAndOilGuy.com

Chris Vermeulen

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Volume by Price Reveals Key Support & Resistance Levels

August 8th
I find it amazing how many traders do not use volume as a factor in their trading decisions. I believe it’s always important to track the volume no matter which time frame you are trading simply because it tell you how much interest there is for that investment at that given time and price level. If you use volume and understand how to read it when located at the bottom of the chart which is the standard way of reading it then your well ahead of many traders and just may find this little volume indicator helpful.

Price and volume are the two most important aspects of trading in my opinion. While news and geopolitical events cause daily blips and in rare occasions change the overall trend of an investment, more times than not its better to just trade the underlying trend. Most news and events cannot be predicted so focusing on the price action and volume helps tell us if investors are bullish or bearish for any given investment.

Below are a few charts showing the volume by price indicator in use. Reading this indicator is simple, the longer the blue bars the more volume had traded at that point. High volume levels become key support and resistance levels.

SPY – SP500 Exchange Traded Fund

As you can see on the chart below and I have pointed out key support and resistance levels using the volume by price indicator. The thin red resistance levels would be areas which I would be tightening my stops and or pulling some money off the table.

The SP500 is currently trading at the apex of this wedge. The market internals as of Friday were still giving a bullish bias which should bring the index up to resistance once more on Monday or Tuesday. From there we will have to see if we get another wave of heavy selling or a breakout to the upside.

GLD – Gold Exchange Traded Fund

Gold has the opposite volume to price action as the SP500. We are seeing a lot more over head resistance and that’s going to make it tough for gold to make a new high any time soon.

USO – Crude Oil Trading Fund

Crude oil broke out of is rising wedge last week and has started to drift back down as traders take profits. Many times after a breakout we will see prices dip down and test that breakout level before continuing in the trend of the breakout. I should point out that there is a large gap to be filled from last Monday’s pop in price and we all know most gaps tend to get filled.

UUP – US Dollar Exchange Traded Fund

The dollar has been sliding the past 2 months and it’s now trading at the bottom of a major support level. If the dollar starts to bounce it will put some downward pressure on stocks and commodities.

Weekend ETF Trend Conclusion:

In short, I feel the market has a little more life left in it. I’m expecting 1-2 more days of bullish/sideways price action, after that we could see the market roll over hard. It’s very likely the US dollar starts a significant rally which will pull stocks and commodities down.

With the major indices and gold trading at key resistance levels, traders/investors ready to hit the sell button, and the dollar at a key support level I think its only a matter of time before we see a sharp snapback. That being said there is one scenario which is bullish and could still play out. That would be if the US dollar starts to flag and drift sideways for a week or so, and for stocks and commodities to also move sideways before taking another run higher. Watching the intraday price and volume action will help us figure out if buyers are sellers are in control this week. Anyways that’s it for now.

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Chris Vermeulen

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Financials, Oil & Gold on the Move

Most traders I have been talking with are feeling the same thing. Something big is brewing for the equities market but most do not want to get heavily involved until there is a clear direction. The broad market has been consolidating for almost 3 months and it’s important to remember that the larger the consolidation the bigger the move.

Also the biggest and best moves come from failed patterns. So is the big head & shoulders pattern on the SP500 which everyone is yelling about (the sky is falling) really going to happen or is this the BIG fake out? Only time will tell, either way no matter which way it goes I will be sure to catch some of it.

Below area few charts pointing out patterns and trends which could provide some opportunity in the coming days or weeks.

XLF – Financial Sector ETF
Financials play a large roll in moving the major indexes so if this reverse head and shoulders patter breaks out to the upside then the indexes should rally and XLF etf could reach its measured move of $16.50.

USO – Crude Oil Fund
Crude oil almost looked like it was going to breakout and mover higher this week but sellers jumped in sending it lower once again. The daily chart shows a large bearish pennant which is known as a continuation pattern. So it looks as though we should see lower prices for oil.

GLD – Gold Bullion ETF
Gold has been sliding lower for several weeks now and it looks to be showing selling exhaustion. The 5th wave down with the volume spike indicates panic selling as investors cannot hold onto those positions any longer and exit. This is a bullish sign for gold. Also we are seeing gold fall deep into a support level along with the 200 day moving average.

Mid-Week Financial, Oil and Gold Trading Conclusion:
In short, the equities market is in limbo until a clear trend is established. If the financial sector breaks out to the upside then we should see a sizable rally. As for oil it looks to be trading in near the middle of its range but is still in a down trend overall. Gold is almost looking ready for a bounce but I am waiting for more confirmation before jumping on the wagon.

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Chris Vermeulen

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How To Be Positioned for SP500, Gold & Oil

The second half of last week we saw some strong price action in the equities market. The SP500 broke through the 5 and 50 day moving averages closing the week just under key resistance levels. The SP500 futures will find resistance at the June high $1099.25, $1100 which is whole number then at $1103 which is the 200 day moving average. Each of these are clumped together making it really just one solid area which sellers will be waiting to short the market.

The market momentum and internals are looking strong for the equities market overall. With last weeks strong close we have seeing the percentage of stocks closing above their 50 and 200 day moving averages surge from 40% to 68% from the previous week. Stocks closing above their 20 day moving average jumped from 40% to 82% from the previous week. Seeing this type of shift in the market Momentum is generally a bullish indicator.

From a quick glance at the internals it looks as though Monday will trade flat/negative for the session. Reason being is that the NYSE Advance/Decline line is telling us the market is overbought when looking at a short term time frame. I would expect some selling Monday or possibly we get a gap up, then a sell off early in the session while the market digests last weeks strong closing.

Gold

Bullion has been giving mixed signals for while now. It looks like there has been a possible ABC retace, but on the other hand it looks to be forming a stair step pattern lower (series of bear flags). Until we get something more concrete from the charts lets just keep our eye on it for now.

Crude Oil

The past month we have seen oil form a bear flag which generally leads to lower prices. That said oil continues to grind its way higher closing at a key resistance level. This could be a possible double top before heading lower or we could get a breakout and rally this week. I know that does not sound helpful but remember oil is very sensitive to weather (hurricanes), US Dollar and geopolitical events making it much more unpredictable than one may think. That said I am not trading it right now.

Pre-Week Trading Warm Up:

I feel the equities market has some strength behind it. But we must see the SP500 futures contract close strongly above the $1103 area. With the market overbought and trading at resistance I am favoring some early weakness Monday

As for the gold and oil, I am just going to keep an eye on them. I’m just not feeling/seeing the patterns which I find tradable at the moment for a low risk setup.

Quick Trading Tip: I try to always analyze and trade the market the way which has always worked for me. Keeping my emotions in control and filtering out as much news, events and opinions as possible so I can think clearly while I focus on my low risk setups. The past couple months have had big news and events unfolding making it harder for traders to stay focused. It is crucial for traders to step back and clear their heads from all the news, hype and opinions shared across all the mediums and just look at a simple chart analyzing the price, volume and trend.

If you would like to receive my Free Weekly Trading Reports or my ETF Trade Alerts be sure to visit my website at: www.GoldAndOilGuy.com

Chris Vermeulen

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Back 2 Back Reversals for the Stock Market

The market continues to become quicker and fiercer as it move up and down 2+% on a regular basis This week we have seen some wild price swings due to earnings, events and the Fed’s which just makes trading that much more intense.

I have pointed out yesterday that this market only gives you a brief moment to take profits before it starts going wild shaking traders out of positions. This increased volatility is caused from a couple of things:

1. Traders/Investors know the financial system is still riddled with unethical practices/manipulation. This causes everyone to be extra jumpy/emotional and causes volume surges in the market as the herd starts to get greedy or fearful.
2. Volume overall on the buying side of things just isn’t there… I see some nice waves of buying but it doesn’t move the market up much… then it only takes a small wave of sellers for the market to drop… Investors are just scared to buy stocks and that is not a good thing…

I keep a close eye on the buying and selling volume for the NYSE as it tends to help pin tops and bottom within a 2-3 day period. In short when we get panic buying meaning 75%+ of volume is from buyers then I know the general public is jumping into the market buying everything up and that’s when the smart money starts to scale out of their position selling to these retail investors. These retail investors are buying on news and excitement much like what we are seeing now with earnings season. Stocks have run up for 5-10 days, as the smart money buys in on anticipation of good news, then the earnings are released which are better than expected and the stocks pop and drop. Well the pop higher on BIG volume are all the retail investors buying and are generally the last ones in. The smart money is quickly selling into this buying surge so they end up getting out at high prices.

My point here is that in general I see 4-6 of these panic buying or selling days a year which I find are tradable. The crazy part is that we have seen 11 of these panic days (both buying and selling) in just 8 weeks… We are seeing more selling than we did at the bottom in 2009! Something big is about to happen and I want to make sure we get a price of it once the moves starts.

Anyways, below is a chart of the SP500 showing how its trading under some key resistance levels. Today the market gapped up testing the 50 day moving average and above the 5 day moving average then sold down very strongly during Ben Bernanke’s speech. This is not a good sign for the overall health of the market.

On the commodities side of things we are not seeing much happening with gold or oil at the moment. Gold is still in a short term down. And gold took an $8 drop today when Ben Bernanke said inflation would remain low for an extended period of time.

As for crude oil, yesterday afternoon I pointed out to members that oil had a big run up on virtually no volume Tuesday and it would most likely give back those gains today. We saw this today with oil dropping from $78 down to 76.50 per barrel. Overall Oil looks like it wants to go higher but has some work to do before that can happen.

Mid-Week Trading Conclusion:
In short, the market remains choppy and we are getting more than normal news/events which are moving the market and this is causing extra noise and volatility for traders. Cash is king during volatile times and if you are doing some trades be sure to keep the positions small for another month or so.

If you would like to receive my detailed trading analysis and alerts be sure to checkout my websites at www.TheGoldAndOilGuy.com or www.FuturesTradingSignals.com

Chris Vermeulen

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Mid-Week US Dollar, Oil, Gold and SP500

It’s been another strong week for equities but are stocks and commodities about to get hit with some selling pressure?

I have put together a short video coving all of these investments but here is my Coles Note Version:

US Dollar:
The Dollar is way oversold and looking ready for a multi day bounce. This will put pressure stocks and commodities.

Crude Oil:
Oil is trading at resistance and with the Fed minutes reported today saying they are some what concerned about the economy still this pulled oil down late in the day. Also if the US Dollar bounces it will add downward pressure to oil.

Gold:
It’s a tough call on gold because it could go either way here… It could be seen as a safe haven in stocks fall in the coming days, or if the US Dollar moves up then it will put more downward pressure to gold. I feel money can be made a breakout to the up side or the down side. Explained in the video.

SP500:
Stocks are overbought across the board making things look toppy. We are seeing good earnings from Alcoa, CSX and Intel but the stocks are selling off on the good news which is a bearish sign for the equities market overall. The SP500 gapped up on Tuesday and has been trading sideways in a tight sideways channel building power for the next breakout. Tension is building and we should see a breakout from this channel tomorrow (Thursday). The Odds are pointing to lower prices but only time will tell.

TECHNICAL MARKET VIDEO:

Cant See the Video? Click Here: http://www.thegoldandoilguy.com/july-14th-technical-market-analysis/

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Chris Vermeulen

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Stock Market Report – What To Do Now!

Another blood bath in the market today but this time it’s a total market melt down with Stocks, commodities, precious metals, and the US Dollar plummeting lower.

Since late April the market has become very unstable with large intraday price swings. Since then it has only gotten tougher and tougher to trade. While there have been some decent setups having caught a few nice SP and gold trades, this is a time when the big money guys step back from the market until the dust settles. Only taking small quick trades to profit from the wild daily swings which happen in a blink of an eye.

Gold, its trading at a key support level now that is dropped $20 to $1220. But this type of selling tends to carry over for a 1-2 days in gold as the rest of the world realizes the drop and they sell out of their position. So I’m not doing much on gold right now. If we get a nice low volume drift up today or tomorrow we could take a short position but going into the long weekend I think cash is the safe thing to do. We could see gold dip to the 1200, 1175, or 1150 area depending on how the rest of the world reacts to today’s sell off.

Oil, it’s in a down trend selling off hard with the US dollar which is not normal. If we see the US dollar bounce I figure oil will take another beating… It could drop to $62 a barrel over the next month or so…

SP500 is WAY oversold, and has been for about a week now. The index went from an uptrend and we bought the oversold dips, but then the market turned into a down trend and shorting the bounces is what we are now looking for. On the short term basis, trading the SP with a swing trade carries a ton of risk. If this is the breakdown of the head & shoulders pattern everyone is talking about then we could see the market drop another 100 points real quick. On the other side of that coin, this week we have seen 90% of volume being selling volume which indicates washout panic selling and tends to be a bottom for a bounce or rally. So you can see how shorting an oversold market is dangerous and why buying a falling knife is also equally dangerous. Waiting for a setup is crucial.

I am not sure if I will be around for the close today as I’m spending the holiday with my wife and daughter which is much needed. But what I am thinking could happen if the market stays down at least 0.5% lower for the day is an afternoon sell off around 3:40-3:45 when end of day orders, margin calls and the leveraged ETF rebalancing starts to happen. This sell off tends to last 4-10 minutes but it has the chance of triggere a much larger sell off into the close so scale out quickly once some of your position is in the green.

If any of you are day traders then you will know trading between 11:30 – 3:00 is a waste of time in most cases. The best trading is between 9:35 – 11:00, and 3:30 – 4:00pm. That’s when the market makes real moves/trends which are tradable for making real money. Many of you are trading through the afternoon and just churning your account trying to make money but you just paying a lot in commissions and adding more stress and risk to trading than there needs to be. As much as we don’t like to see large moves without us, part of trading is to wait for some good plays and not get sucked into trading the noise in the market…

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Talk to everyone later
Chris Vermeulen

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Market Meltdown & Metal Missiles – SPX, Gold, Silver & Oil

June 30th, 2010
What a nutty week for the equities market! The bleeding has not led up with almost 2 weeks of straight selling. Also we are seeing oil break down with a rather large bear flag and if that happens, which it looks like it will… then hold on tight or cash out of the market!

There has been nothing but negative news for the past month and its not looking like there is much light at the end of the tunnel for a long time still… The only places which people feel some safety is in gold and silver. That being said the market is way over sold here and we could get a bounce lasting a couple days soon. But that bounce will be sold and pulled back down as it looks like a new bear market is starting.

Here are few charts of how I am seeing things in general.

Gold ETF GLD – Daily Chart
Gold has formed a large cup & handle pattern. It has held up well during the recent weakness. But zooming into the intraday charts I do have some concerns about a sharp sell off in the very near future. We recently bought gold at $1226 and sold out between $1255-1260 a couple days later because it’s not just screaming at me as a great buy. I am not a gold bug, I’m a trader who finds low risk opportunities, gets in and out with maximum profits and minimal draw downs spending most of my time in cash. They way I see things is that there is always another trade just around the corner.

Silver ETF SLV – Weekly Chart
This is a weekly chart and goes all the way back to 2008 showing a very large cup & Handle. We could technically still see silver trade sideways for several months before it reaches the apex and is forced to breakout in either direction. The up side potential for a cup and handle pattern is 100- 300% of the height of the cup. So this means $1450 gold and $29 silver using the minimum potential. Now you can see why so many people are buying precious metals… they want a big move… All that excitement and greed could catch up to them if we see a complete market melt down again which will pull EVERYTHING down with it including gold and silver. This is one of the reasons why I cashed out this week near the high.

Crude Oil Fund – Weekly Chart
Oil formed a triple top over the past 10 months and has started to head south. We have seen selling volume drop during the test of resistance which is not a good thing. A heavy sell off from resistance as everyone bailed out of the investment sent oil tumbling and just this week oil started to break down from its bear flag. We are looking at USO to possibly drop to the $25-27 area and oil to drop to the $60-62 level over the coming 2-3 months.

SP500 ETF SPY – Weekly Chart
The SP500 along with several other indexes have formed a head & shoulders patter and appear to be in the process of breaking down through the necklines. If this unfolds then we are looking at much lower prices for stocks. It is important to buy some protection on the down side or get into cash until the dust settles as we can always buy back in, but we cannot get back lost money as easily.

Mid-Week ETF Trading Conclusion:
In short, I really hate to be negative on the market and economic outlook. I know if the market crashes again the majority of individuals who have worked hard, saved money and invested using mutual funds will lose most of their money in a fraction of the time it took to create the wealth, and that is a uncomfortable thought. Nothing worse than just getting to retire then seeing half of your money vanish.

Anyways, the good news is that we can avoid these market crashes and actually take advantage of them using inverse ETFs which go up 2 or 3 times faster than what the market is declining. These powerful trading tools if used correctly can make us a fortune while others are losing their shirts.

Currently I am in cash and have taken a couple scalp short trades taking advantage of the market falling on Tuesday and again today. These trades only last about 10 minutes but generate some fast profits. You can see the short I did yesterday which explains what I saw and when I put on the trade: http://www.futurestradingsignals.com/trading-education/es-mini-scalp-trade-video/

On another note, Tomorrow is Canada Day and I am Canadian so… I will be done around 10:30am ET once the jobs numbers come out and the market trades for an hour incase there is a nice short or long trade for some quick money – eh!

If you would like to get my trading alerts please check out my websites at www.TheGoldAndOilGuy.com or www.FuturesTradingSignals.com

Chris Vermeulen