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Gold, Silver, Oil & Nat Gas Going Wild!

Nov 4th, 2009
Precious Metals ETF have gone wild the past 2 weeks. Last week we saw gold and silver prices drop sharply as it shook out short term trader’s stop orders before breaking out and moving higher. Also there is a disconnect between the gold and the dollar.

Energy commodities like natural gas and crude oil are moving in opposite directions and look to be picking up speed. Natural gas is losing pressure and oil is on fire.

GLD ETF Trading – Pivot Trading Low
Last week we had our pivot trading low generate another buy signal for gold. Trading pivot lows is a simple trading strategy. I call them low risk setups and take advantage of buying a stock, commodity or currency after a pullback to support and when a reversal candle is formed. This chart clearly shows when you are trading with the trend buying on the dips is generally a low risk play with great up side potential.

Gold Bull Market Pivot Trading Low

Gold Bull Market Pivot Trading Low

Precious Metals ETF Trading – Gold Bullion Takes Control
This is a chart which shows the performance of gold stocks (red), silver bullion (blue) and gold bullion (green). As you can see the past 2 weeks while the market has been selling down precious metals stocks have been hit harder than silver and gold.

Because of the heavy selling in stocks recently the smart money had been going into commodities especially gold bullion. Gold stocks are a great play but this is telling us investors feel safer in physical bullion than stocks.

Gold is the most known precious metal and safe haven which is why it’s holding value better than silver and stocks. This week we are seeing gold become more valuable in several major currencies which means gold is actually making a real move higher.

Gold Bullion, Silver Bullion, Precious Metal Stocks

Gold Bullion, Silver Bullion, Precious Metal Stocks

USO ETF Trading – Breakout & Bull Flag
Crude oil has had some great breakouts this year and it looks like we are about to get another buy signal shortly. We had a breakout in Oct from the large pennant and are now flagging which is very bullish. We could see USO reach $50 in the next month or two.

Crude Oil Bull Market Breakout

Crude Oil Bull Market Breakout

UNG ETF Trading – Pivot Low or Waterfall Sell Off?
Natural gas is at a crucial level for a higher low bounce or another massive panic sell off. Trading right now with UNG is a 50/50 shot so we will just have to wait and let things unfold more before taking any action.

Natural Gas Pivot Low Bear Market

Natural Gas Pivot Low Bear Market


The Stock Markets, Precious Metals & Energy Trading Conclusion:

The market is starting to feel a little squirmy as it tries to find support. Small cap stocks continue to get crushed while blue chip (large cap) stocks are holding more of their value. Gold has broken higher this week while silver and precious metal stocks under perform their big sister Yellow Gold.

Crude oil is holding up nicely forming a 3 week bull flag and showing signs of life while natural gas continues to get hammered.

The market has been jumpy the past 2 weeks because market participants are very uneasy about the future direction of the US dollar.

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Chris Vermeulen

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Are Gold, Oil and the S&P500 having a Seasonal Pivot Trading Low?

Nov 1, 2009
The last week of October was something else. Heavy fiscal year end selling for mutual funds seemed to put a damper on good news and push stocks and commodities lower. October is historically a tough month on the US market with mutual funds locking in profits on their books.

Below are some charts showing my analysis on gold, silver, oil, natural gas and the S&P 500 index along with a seasonality chart proving that October has more selling pressure than other months.

Gold GLD ETF – Gold Pivot Trading Low – Daily Chart
As you can see from the chart below we appear to be in the middle of a pivot low correction which can make for some great entry points. The trend is up, gold is oversold and it looks like we had a reversal low last week.

Gold Pivot Trading Low

Gold Pivot Trading Low

Silver SLV ETF – Silver Pivot Trading Low – Weekly Chart
This is a chart I posted a couple months ago and so far silver has traded within the trend lines and support & resistance levels I pointed out in early August. Silver still looks bullish as it is trading at a pivot low.

Pivot Trading Low for Silver

Pivot Trading Low for Silver

Gold Miners GDX ETF – Gold Miners Pivot Trading Low – Weekly Chart
Gold mining stocks appear to be trading near the bottom of the trend channel. The odds are still pointing to higher prices.

Gold Miners Trading Pivot Low

Gold Miners Trading Pivot Low

Crude Oil USO Fund – Oil Pivot Trading Low – Daily Chart
This chart of USO is also from a recent post in early October. USO broke out and is now trading at our support trend lines. There was a nice reversal candle last week but the heavy selling across the entire market pulled oil back down.

Crude Oil Pivot Low

Crude Oil Pivot Low

Natural Gas UNG Fund – Natural Gas Pivot Trading Low – Daily Chart
Pivot trading low could be close for UNG. The daily chart is telling me we saw the bottom in natural gas back in September as prices collapsed washing out most long (bullish) traders. I figure we will see prices trade between $9-12 for several months as the commodity forms a base.

Natural Gas Pivot Trading Low

Natural Gas Pivot Trading Low

S&P 500 Index – S&P 500 Pivot Trading Low – Daily Chart
The broad market looks and feels oversold. This chart uses Andrews Pitchfork analysis to show where short term pullbacks to the middle trend line (middle of trading range) have been a buying opportunity. Deeper corrections drop to the bottom support trend channel. These corrections sometimes form a lower low and lower high that scares traders and inestors out of the market before heading higher.

SPX Pivot Low

SPX Pivot Low

S&P 500 Seasonality Chart – S&P 500 Pivot Trading Low
This chart shows the performance for each month over the past 37 years. Simple analysis shows selling pressure in Sept and Oct as mutual funds sell positions to lock in gains for their books each year. This move is generally compounded because seasoned traders know about this seasonal movement and also sell positions and even short the market to take advantage of this at times.

I think we are inline for a perfect storm going into year end. The market is trading at a pivot low from many different analysis theories. This forms a high probability trading opportunity in the next 2 months if we see prices reverse and start heading higher this month.

SPX Seasonal Trend Pivot Points

SPX Seasonal Trend Pivot Points

Pivot Trading Low Conclusion:
A lot of stocks have taken a real beating this past month as sell orders flooded the trading desks last week. Technology, financials and small cap stocks took is the worst. The sharp drop is not really what we wanted to see but it makes good sense. With those groups posting the largest gains since March it is only normal that money will be coming out of those stocks to lock in gains.

Many traders are starting to panic about another possible market melt down. This negative sentiment is a bullish indicator for higher prices. If everyone is scared and exiting their positions then we must be close to trading a pivot low.

I am still bullish on the market and will be looking for new opportunities if we see prices start to head higher this month.

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Chris Vermeulen