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Gold Stocks, SP500 & the Dollar – What’s Next?

Investors around the globe are concerned with the economic outlook, not only with the United States but with virtually every country. This has caused not only investors but banks and countries to start buying gold & silver in order to be protected incase of a currency melt down in the coming years. The price of gold continues to rise because investors are not selling gold, instead holding it for long term gains/profits.

While the majority is concerned about the eroding economy, we have seen the opposite in the financial market. Gold and equities have risen… That being said the volume in the market remains light simply because the average investor is no longer putting money into the market for long term growth. Instead individuals are now focusing on saving and paying down debt.

That being said we all know light volume market conditions allow Wall Street powerhouses to bid the market up. Not to mention with quantitative easing taking place I’m sure that has also helped the market of late. While we don’t know for sure that QE is taking place as we speak, the sharp drop in the dollar and strong move up in gold are pricing this into the market.

Let’s take a look at some charts…

HUI – Gold Stock Index

This long term monthly chart of the HUI index provides valuable trading signals for both gold stocks and gold bullion. As you can see below this index is trading at a key resistance level after forming a bullish 3 year Cup & Handle pattern. The next 1-2 months for the precious metals sector will be interesting as it tries to break above key resistance. I would really like to see the HUI:GLD ratio break to the upside to confirm if the breakout occurs.

SPY – Daily Long Term Trend

The broad market looks to be forming a short term topping wedge. If this is to occurI expect it to take several weeks to play out. Looking at the chart if we use Fibonacci retracements along with trend line support we can get a feel for where this pullback should correct to.

That being said the broad market breadth and internals seem to be holding up indicating higher prices over the long run. While the short term price action is overbought and I expect a pullback to form, my analysis is pointing to higher prices as we go into year end.

UUP – US Dollar Daily Price Action

Although the majority of investors have a bearish outlook on the economy, we have seen a large price appreciation in equities and precious metals. This is largely due to the fact that the US dollar is quickly getting devalued. Simply put, as the dollar drops, it helps boost commodities and stock prices.

While a rising stock market is great to see, at some point the dollar will become so cheap that it will start to have a very negative affect on the US economy, commodities and stocks. Being from Canada it has always been more expensive to take holidays in the United States, and I remember paying $1.50-$1.70 for every $1 green back. But now the dollar is almost at par making holidays very affordable. The big question/concern is when will they ease off on the printing? At the rate which they are printing the greenback will be at par with peso… well not that extreme but you get the point Eh!

Weekend Market Conclusion:

As we all know the market has a way of making sure the majority of traders miss major turning points. The saying is, “If the market doesn’t shake you out, it will wear you out” and it seems we are getting the later…

The never ending grind higher in precious metals has not had any big shakeouts, rather its wearing out any short positions before rolling over to take a breather. As for the stock market, we are getting much of the same thing as the market grinds higher day after wearing out the shorts before rolling over.

That being said, there is more at work here than just regular market movements. With the light volume in the market we know there is price manipulation and QE (quantitative Easing) which is helping to boost prices and exaggerate market movements.

I’d like you to have my ETF Trade Alerts for Low Risk Setups! Get them here: http://www.thegoldandoilguy.com/specialoffer/signup.html

Let the volatility and volume return!

Chris Vermeulen

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Are Gold & SP500 Topping Out Here?

Prices continue to churn as traders and investors try to figure if they want their hard earned dollar in cash or investments. The market is very jittery simply because no one wants to get caught on the wrong side of the market if it makes another 30-40% move, which is why we are seeing money rotate in and out each with very little commitment and follow through. Until a major trend looks to be in place most investors will not me holding many positions over night or through the weekend.

Here are a couple charts on what I think is most likely to happen in gold and the sp500.

GLD – Gold ETF Daily Chart

Last week we saw gold move higher by 1% but I cannot help but think a sharp sell off is only days away from being triggered. Either we get a another pop into resistance which would eventually trigger a wave of sellers and cause a sharp drop or the price of gold will drift lower to eventually break a key support level and trigger stop orders. Once the stops start to get triggered I would expect follow through selling for a couple days which will pull the price of GLD back down to the $113-116 area.

Also there is a possible head and shoulders pattern forming on this chart which is not picture perfect one but, it’s important to be aware as a neckline break could trigger massive selling and pull GLD down to the $100 area. But that would not unfold for several weeks if not months.

SPY – SP500 ETF

SP500 broke down from the support trendline two week ago and has since been trying to bounce. Last week we did see a two day pop but was given back Thursday. As you can see there is a possible mini head & shoulders pattern forming and the current price is testing the neckline. A breakdown below this should trigger a move to the $102 level.

Weekend Trading Conclusion:

In short, the market is trading at a key support level and this week should be exciting. Looking at several large cap stocks I am seeing bear flags on a large percentage of charts. Seeing these forming makes me think lower prices are just around the corner.

It looks like low risk trading setups are about to start popping up across the board and if we get a powerful trend going into the year end there will be some good money made for those on the proper side.

Receive My Free Weekly Trend Trading Reports and Market Updates at: www.TheGoldAndOilGuy.com

Chris Vermeulen

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How to Trade Trend Line Breakouts

As we all know there is an unlimited amount of ways to trade the financial markets. Each person sees the market in a different way, has different skill sets, trading experience and risk tolerance levels. While some individuals create and use complete systems to make money there are some very basic trading strategies which still work well and require nothing more than basic charting, patients and a little money management.

Let me explain:

SPY – SP500 Index Trading Fund

You can clearly see the longer term trend which is down (blue trendine). But from simply drawing a couple trendlines and looking at the MACD (momentum) indicator you can see there is a possible trend reversal taking place. So far the SPY has broken out of its down trendline with a 4 day pop, and it’s now pulled back down to test support. A close below the trend line or the 50MA would be the exit points if the market did start to go south.

The SP500 is still stuck under major resistance, its 200 day moving average. But is trading above key support levels (20MA, 50MA and Trendline). I can feel the tension in the market between traders and we are about to see a big move once a breakout to the upside or down side is established. At this time its best to be in cash or have a small position with a protective stop in place. Once a trend starts there should be some low risk entry points along the way. If we see a strong reversal to the upside On Monday or Tuesday I would expect big buyers would step in to catch this new trend up.

GLD – Gold ETF Trading Fund

Looking at the price of gold we can see the trend is still down along with the momentum. A breakout would be the first step towards a possible entry point but I prefer to wait for a pullback after the breakout has taken place. Once we get a test of support I look to enter a position once there is a strong reversal candle to the upside. From there I draw a new support trend line from the previous low and connect it to the new pivot low (bottom of reversal candle). That becomes my new protective stop.

Gold still has some work to do before I would even be interested in taking a long position for a swing trade. But on a short term time frame (intraday charts) gold looks to be forming a low risk setup which I hope unfolds for my subscribers this week.

USO – Crude Oil Trading Fund

Oil has been trading in a large bearish pennant for the past 2 months and it is nearing the apex of this pattern. The longer term picture of oil is bearish but the most recent dotted trend line and the 20/50MA crossover is signaling some strength. Also the momentum for oil is positive and that helps support the price also. Again if this was to breakout to the upside I would wait for a low volume pullback to test the breakout level, then enter on a reversal back up.

Oil is one of the more challenging commodities to trade because it is affected by the US Dollar, Political Events, and Weather. In short, even if you had the analysis and timing correct there are other factors which move the price of oil on a regular basis that could quickly turn the trade against you. That being said, keep trades small when trading oil.

How to Trade Trend Line Breakouts Low Risk Trading Setups:
In short, trading can be complex, simple or somewhere in between. You can spend 14 hours or 20 minutes a day analyzing it depending on what investments you trade, whether you’re trading full time or just checking up on longer term investments.

This analysis and basic strategy shown above can be profitable if followed correctly and works for stocks, commodities and indexes. It’s just to show how simple one can swing trade the market using very basic analysis. Personally I use a much more complex strategy incorporating 15+ other data points which allows for precise entry and exit points.

If you would like to get my Low Risk Trading Newsletter visit my services at:
www.TheGoldAndOilGuy.com – ETF Trading – Index, Sectors & Commodities
www.FuturesTradingSignals.com – Futures & ETF Trading – Index & Commodities

Chris Vermeulen

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GET MY FREE WEEKLY TRADING REPORTS DELIVERED IN YOUR INBOX

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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

Be Sure To Join My FREE Weekly Trading Reports:

How To Consistently Profit from the Financial Market

Trading Basics – A Must Read For ALL TRADERS
In order to keep trading as simple and profitable as possible, you must have the proper trading tools in place and understand how to use everything before you actually start trading with real money. There are numerous brokers and trading platforms available and I am only mentioning the ones I like and use myself as they work extremely well for me.

Not every broker will have what you are looking for so follow my guidelines below. Also, not every trading platform will do what you need. So again, read through this info even if you believe you are already setup properly.

What I Trade – Investment Vehicles
While there are thousands of different investment vehicles using ETF’s, stocks, options, and futures contracts, I focus on a small selection which consistently generate high probability trades with exceptional risk/reward levels.

I focus primarily on Gold and the SP500 using their related investment vehicles (ETF’s, Futures contracts and CFD’s). My trading strategy works well with all of these vehicles allowing you to trade the vehicle you are most comfortable with. As you gain experience, though, you also have the flexibility of experimenting with the more aggressive vehicles such as futures and CFDs. For instance, if you are an ETF trader then you simply use my buy and sell signals with the ETFs I follow. If you are currently a futures or CFD trader, or want to begin trading these vehicles, then you simply use the trading information for those buy and sell signals. I have created this service to allow the majority of traders to benefit without sacrificing profits or risk.

If you have a job which requires your time during normal trading hours, futures and CFD’s will allow you to get involved with trades outside of regular trading hours. For instance, if there was a buy signal during the day and you missed it, later on that day or during the night the price could move back into a our trading price range. At that point, you could enter the trade if you were using Futures or CFDs. This second opportunity happens more often than not.

In addition to gold and the SP500, I sometimes cover silver, oil and other commodities and indexes when a low risk setup presents itself. I will also cover some sector ETFs when something looks to be setting up for a sizeable move. Trading different sectors allows us to play off the sector rotation as institutions move money from one group of stocks to another with the changing economy.

Hot commodities and sectors can be identified simply by scanning through the charts during market weakness. I look for sectors which have been basing (consolidating/moving sideways) for several weeks and holding their value while the rest of the broad market is correcting or selling down. These sectors which hold up during market weakness often outperform the rest of the market once the broad market correction has finished.

Stocks in hot sectors can definitely provide some explosive returns which is what we can do also. I like the ETFs because they carry a basket of stocks, some good, some not so good, but overall you benefit from the strength or weakness of that sector. With ETFs, it is possible to take increased position sizes without unduly increasing your risk levels. This allows us to optimize our risk / reward levels without subjecting our capital to the larger price swings that are possible with individual stocks.

How To Use My Trading Signals:
Trading is easy as I provide entry, protective stop, profit targets and exit prices for the ETF’s and futures investment vehicles.

ETF traders do have some restriction regarding when they can buy and sell. Depending on the type of broker you use, ETFs are tradable between 8am – 7pm ET. In order trade the extended hours of 8am – 7pm, a direct access broker is required. If you are not sure why type of broker you have, give them a call and see if you can trade pre/post market hours with ETFs. If you would like more info please read the section on Choosing a Broker.

Time Required to Successfully Trade with this Service
Trading can be a very time consuming job but it does not have to be. I have created a trading strategy and designed this service so that it saves you hours of daily research. Important key market information is condensed into a short daily video and intraday updates keep you in the loop with changing market prices and markets dynamics.

While you can spend the entire day in the chat room, it is not required by any means. All alerts, videos and updates are posted in the member’s area and sent to you via email to ensure you don’t miss any thing. Each week you will also get a chat room wrap-up. This is a PDF file where I take all the important chat room questions and answers and put them in one file. So, you get a concise summary of the best info delivered directly to you – ensuring you never miss key trading tips and education discussed in the chat room.

This service provides 4-10 trades per month. Most of the time I can see a possible trade setup hours and some times a couple days in advance. Therefore, you will know when to be looking for an alert from the service. As long as you have access to your emails through a computer or smart phone you can trade all the signals. Just place your order online or call your broker. You can take advantage of all the trades from just the information in the emails. But if you want to learn a lot about trading, you should view the morning videos and join me in the chat room each day between 9-11am ET.

Is Trading Experience Required?
No trading experience is required to use this service. If you are completely new, then you will have a very steep learning curve and will need to do some research on-line in order to get caught up with basic trading terminology and to learn how to place orders with your broker.

The good news about not knowing much about trading is that you will not have any bad habits. So learning how to trade properly right from the get go will save you years of frustration and lost money. Educational videos will be provided on how to read charts, find trading signals, how to manage the trade and your money etc…. these videos will teach you everything you need to know. Then you just need to gain some experience trading and that’s what this service does for you. It provides the experience, trades and education all wrapped into one.

Choosing the Right Broker:
Selecting the right broker may seem like a difficult task but if you know what you are looking for, you can easily cut through the clutter of mini franchise brokers lacking quick customer service and poor execution prices. You will also be able to avoid brokers who will not allow you to grow as a trader as you move from ETF’s  Stocks  Options  Futures.

You must be sure the broker you select is a Direct Access Broker. Direct access means you can place your order on ECN’s (Electronic Communication Networks) and you will actually see your order live on the level 2 screen just like a market maker. In short, it makes you a market maker meaning you have full control of your trading and are competing head to head with the market, no middleman, no delayed orders and order execution at the best possible price. This also allows you to trade outside of regular market hours so you can take advantage of pre-market and after hours trading with eligible stocks, ETF’s and futures.

As a trader you will evolve over time so it is very important to keep your doors open for trading other investment instruments. If you are currently trading just stocks or ETF’s, in a few months or years you may want to start trading options, futures or currencies. So select a broker which has these available to ensure capability for your future growth. No one likes to change brokers as it’s a major pain in the butt and time consuming.

I have traded with several brokers in the past and found one broker that truly is great. I use www.InteractiveBrokers.com which not only has excellent customer service (which is a MUST for trading) but they are also a Direct Access Broker, have lighting fast executions, low trading commissions, and allow you to trade EVERYTHING from one account (stocks, ETF’s, options, futures, currencies and warrants). And to make things better, almost every trading platform can integrate Interactive Brokers into their system. This integration enables trading directly through a higher end trading platform like www.eSignal.com.

Interactive Brokers is available in many countries so virtually everyone can use them. There are some exceptions as I don’t think people in Spain can use them but all you have to do is give them a call to find out.

Also, I am an introducing broker for InteractiveBrokers as I help them get new clients. If you open an account with them you can enter my Referral Code: 57135 when signing up with them if you like and it would be greatly appreciated.

CFD Trading
For those of you who are not a US resident, you should be able to trade CFD’s (Contract Of Difference). This is like trading futures so you will be able to trade currencies, commodities, and major stock indexes 24/7. You can now trade some individual stocks with CFD’s using 50x leverage which is exciting. The nice thing with CFD’s is that you can trade 24/7 and you get 50 – 200 times leverage making a $500 – $2500 account VERY POWERFULL. I use http://www.avafx.com/lp/?tag=GoldNOil_En_lp as my CFD broker and they have been made me some great money trading with their platform and I haven’t had any issues getting paid out. I am also an Introducing Broker for them helping to get them clients as well. The link above is my Referral tracking link. Learn about CFD’s on their website.

Choosing a Trading Platform:
I have evaluated several trading platforms over the years as there are lots of great ones out there. There is one trading platform which I really like and believe you should use also. The eSignal platform can do everything and more when it comes to charting, trading, creating and implementing automated trading strategies, and back testing.

I subscribe to the data feeds for quotes and charting on eSignal so I can trade US & Canadian Stocks/ETFs, also the feeds for trading the ES mini (SP500 Futures Contract), GC (100oz Gold), YG (33.3oz Gold) and YI (1000oz Silver).

Myself, I use eSignal and I love it. Its simple to use, looks awesome, allows me to trade directly from the charts as it communicates with my Interactive Brokers trading account and provides all the other capabilities I need and then some.

One of the nice things about using eSignal is that if you choose to use them, I can send you my eSignal Page File so your platform will automatically setup with all the charts and settings I use. This is a great bonus because then we are trading and seeing things on the same page (pardon the pun).

If eSignal is of interest to you just give Jeff Werthman a call as he can help you choose the proper software setup, data fees and also give you the Second Month of eSignal FREE if you tell them I (Chris Vermeulen from TheGoldAndOilGuy.com) referred you.

eSignal Contact for Free Month & Setup
Jeff Werthman
jwerthman@mail.esignal.com
1-800-322-9170

Your Trading Computer and Internet Setup
Computers are very affordable today and seem to come with all the bells and whistles. But you must be careful what you buy. I highly recommend getting a top of the line computer.

The benefits of getting a powerful high end computer is that you can run multiple programs without worrying about your charts lagging or computer freezing. Also your computer will last several years before you need to sell it and get a new one to keep up with newer more powerful programs.

If you are in the market for a new desktop or laptop here are a few things it must have and be able to do.
1. It should have a quad-core processor as eSignal and other trading programs run much smoother with this.
2. You should have 4mb of ram minimum
3. Be sure your tower has a dual video display output or more.
4. Your laptop should have two video outputs for you to run two monitors if you travel.
5. Be sure to run Windows XP or Windows 7 because they are the most stable operating system and all trading platforms work properly on them.
6. I recommend LCD flat screen monitors as they require low energy, are easy on the eyes and you can take them with you to use with your laptop if you have a second home or want to trade while traveling.
7. Battery backup and surge protector – get a large one which can handle your computer, monitors, internet modem and wireless. You should have 10-30 minutes of battery backup time for when the power goes out so you can close out your trades and shut down your computer properly.
8. Internet connections, I use cable because it’s fast and when the power goes out cable internet still works. It’s amazing how my entire town can lose power yet I can continue trading or surfing the web because I am setup for power failures. They don’t happen often but a $150 battery back has paid for its self many times over… and who knows if the power surges would have fried my computers if I did not have the surge protectors….

If you are thinking of getting a new computer you should look at the ones provided at http://www.TradingComputers.com/. If you have seen any pictures of me on my websites then you have seen my computer setup with 6 monitors. My system was purchased from this company. I also have their high end laptop which is extremely powerful and can do everything my big tower computer can do. These computers are designed to trade and will blow the competition out of the water.

I have worked out a deal with them and if you mention my name (Chris Vermeulen) in the “special Instructions” area when ordering online or mention my name when placing an order over the phone they will give you Free Shipping so you will save $50-150.

By: Chris Vermeulen – www.FuturesTradingSinals.com

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Stock Market Trends for Indexes and Precious Metals

This report is a mix of both current market action and educational material on how stocks and commodities trend (move).

Since mid October I have been on the look out for the market to top or make a multi wave correction. The market did top in January and has formed an ABC retrace (3 wave correction).

The question everyone wants to know is, is this market topping out or just a bull market correction?
Well the brutal truth is no one really knows what is going to happen next. So the only way to make consistent profits in the market is to clearly understand the main technical analysis skills (Chart Patterns, Trend Lines, Support & Resistance, and Volume). You must also understand how to manage your money/trades. I scale in and out of positions during key support and resistance levels to keep downside risk low.

One of the toughest parts of trading is “Trading Discipline”. If you cannot take losses easily then trading is not for you. You must be able to exit a trade when your stop level has been reached or you think the trade is starting to go wrong. Holding onto losers will blow up your account very quickly.

Other than those key skills, all you can do is watch the charts and re-evaluate each time a new bar (candle stick) pops up on the chart. Remember to trade with the larger trend of the chart 2-4 times longer than your actual trading chart.

Example: If you trade the 30 minute chart for entering and exiting trades, then you should be watching the 2 hour chart (120 minute chart) to understand the full picture.

Market Trends and Price Movement
As we all know, when the market is trending up we are seeing a series of higher highs and lows and the reverse for a down trend. We also know there are several different ways a market can top before reversing. The charts below show how the market generally moves on all time frames.

The market will top and bottom in 1 of 4 ways which are shown below:
Sideways Trend – A consolidation or triple top
Head & Shoulders – This is a great trading pattern
Double Top – Lower volume rally and sharp selling once high is reached
Blow Off Top/Bottom – This is when volume spikes and the price moves quickly (great for panic trading)

Silver and NYSE Daily Trading Charts
Take a look at the charts below and you will see exactly how the market moves and where the market is currently trading.

Trading Conclusion:
In short, stocks and commodities have been in rally mode for all of 2009. So far this year prices have started to slide forming some bearish looking charts. But it’s not the end of the world by any means. Depending what happens in the next 1-3 weeks we should know if the market is back in rally mode or still in sell off mode.

I am somewhat neutral at the moment and maybe a little bearish because from a technical stand point there are just as many arguments/technical analysis points for prices to move up as there are to move down. When I get in this situation I just site back and wait for a clearer picture before putting my money to work. When In Doubt, Stay Out!

I will update subscribers tomorrow on our current long positions as we need to tighten our stops to lock in more profits. And thank you everyone for your kind words and support for my new daughter 🙂

Get my reports send to your email: www.GoldAndOilGuy.com

Chris Vermeulen

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Gold & SP500 Psychology: They Bail, We Buy

Understanding market psychology is crucial for a trader’s success. But so many people get caught up in the daily market volatility, media coverage and “noise” of the trading environment, it’s almost impossible to not think and trade in agreement with the majority of traders.

However, effective technical analysis allows us to use trends, patterns and other indicators to evaluate the market’s current psychological state. Fortunately, this analysis can both enable us to independently forecast whether the market is heading in an upward or downward trend and do so against the grain of the majority.

It takes a disciplined trader to be able to watch and listen to the market doing one thing, filter out the noise, then do the opposite – all in a controlled manor. To this day I still find myself fighting the herd mentality at times and that is when I step away from the computer and regroup.

I have a simple rule that has saved me thousands over the years. I would rather miss a trade and learn what caused me to get confused, then to take a loss.

Rule # 1 – When in Doubt, Stay Out!


There are two types of traders:

1. Herd Mentality Trader – Someone who trades off fear and greed buying near tops and panic selling out at the bottom with the masses.
2. Black Sheep Trader – A trader who stand out from the masses and trades opposite to the “herd” during extreme levels.

Last weeks market action really allowed us to see which way the masses were moving. The extremely high selling volume and sharp price decline notified us that the market was trading off FEAR. And, last Thursday we actually saw PANIC which tells us the balance of the market (retail investors, John Doe’s, The “Herd”) were exiting their positions.

When we see this happen, it’s generally a good time to start scaling into long positions, as most of the down side has already happened.

I have been talking about an ABC retrace pattern for the indexes and gold for some time and last week we got just that. An ABC retrace is when we have 3 waves which are, down, small up, then another leg down.
In short this wave breaks the uptrend of higher highs and lows, as it forms a lower low telling novice traders to sell and go short. This is what causes the high volume and sharp sell offs.

Below are a few charts showing the 2009 July lows and where we are now, February 2010:

SP500 – Daily Trading Chart

Gold – Daily Trading Chart

Silver – Daily Trading Chart

Oil – Daily Trading Chart

Intraday Price Action – If you want to see some exciting intraday trading charts check out the setups last week: http://www.thegoldandoilguy.com/articles/how-to-trade-intraday-gold-and-sp500/

Market Psychology Trading Conclusion:
Most get involved with the stock market because it looks like something they can quickly learn and start making money from home. But it doesn’t take long before they quickly realize there is more to trading than meets the eye.

While trading looks easy from a glance, in actuality I think its one of the toughest jobs out there.

Why? Well, this is what you are up against:
1. You are trying to predict something that is unpredictable
2. You are trading against millions of other highly skilled traders
3. You are trading against automated computers with complex algorithms
4. You are trading with your hard earned money which causes fear and greed
5. You must accept losing trades as that is part of the business
6. You must trade with a proven trading strategy and follow the system
7. You must understand money management and apply it to every trade
8. You must truly love the market cause it will break you down mentally

I don’t want to say you must be a contrarian, but in reality you must do the opposite of the masses during times of extreme price behavior.

These extremes happen on a daily basis when trading intraday charts and every 4-6 weeks when looking at daily charts. The toughest part is to pull the trigger when emotions are flying high in the market and you are looking to do the opposite. It takes several trades before you even start to get comfortable doing this.

I hope this helps shed some light on market psychology.

If you would like to Receive My Gold Trading Newsletter and Analysis please visit my website:

Chris Vermeulen
www.GoldAndOilGuy.com

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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