Posts

Nat Gas Ready To Pop?

By: Chris Vermeulen – www.GoldAndOilGuy.com

Nat gas (UNG) has recently caught my attention.  While it was in a significant downtrend for the better part of a year it has recently been consolidating right under the $20 level.  A look at the daily chart shows a long move down and then recently a sideways consolidation pattern.  While this is typically a continuation pattern I am beginning to believe think that the next move may be up rather than an extension of the previous down trend.

  • Over the last two weeks there been significant support above $18 and significant volume.
  • The $20/$20.50 level has been tested multiple times and the more tests it undertakes the more likely it is to break.
  • Both the 20-day and 50-day moving averages have turned upwards and UNG is trading above both

 

Natural Gas Trading UNG

Natural Gas Trading UNG

 

If we zoom in a bit and take a look at the hourly chart we are presented with two scenarios

  1. The rising wedge holds and UNG breaks through the $20 – $20.50 resistance level on high volume and a new long term up trend is produced
  2. The head and shoulders pattern within the wedge breaks  downwards and the downtrend resumes

 

Natural Gas ETF Trading

Natural Gas ETF Trading

I’m leaning towards option one but will be waiting for a breakout confirmed with volume in either case.

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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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HUI, GLD, SLV, USO, UNG, SPY Trading Charts

The market continues to whipsaw traders out of positions as volatility rises. I have put together a few charts to show you where each of our commodities are trading along with the SPX (SP500 index).

My Gold Stock Breakout Model – Monthly Chart
I use this chart to keep my big picture trades on the right side of gold. I found that gold stocks tend to lead the price of gold so watching this gold stock index on the monthly, weekly and daily charts can provide me with short term tops and bottoms for trading gold bullion, GLD or DGP exchange traded funds.

The monthly chart clearly shows the rally in stocks has now sold back down to my resistance trend line. If we do not get a rally this week in gold stocks, then I think we could see gold trade sideways or down for several months.

HUI Gold Stock Newsletter

HUI Gold Stock Newsletter

GLD Gold ETF Trading Fund – Newsletter
The daily gold bullion fund shows the recent price action and what I think could happen in the coming weeks. In the past couple days gold has moved to a short term support level where I think we could see buyers step in.

We took some profits near the high and continue to hold a core position until we have another technical breakdown or new setup to add more to the position again.

GLD Gold ETF Trading Newsletter

GLD Gold ETF Trading Newsletter

SLV Silver ETF Trading Fund – Newsletter
Silver is in the same boat as gold. We have taken some profits and are still holding a core position with protective stops in place just incase the market does head lower from here.

Silver SLV ETF Trading Newsletter

Silver SLV ETF Trading Newsletter

USO Crude Oil Trading Fund – Newsletter
Crude oil started to bleed lower last week as the price sliced through the multi month support trend line. Volume shot up as stop orders get triggered on the way down. We finally have a move outside of the pennant formation that has been in place for several months. Now we can start looking for a low risk setup for trading crude oil again.

Crude Oil USO Trading Newsletter

Crude Oil USO Trading Newsletter

UNG Natural Gas Trading Fund – Newsletter
Natural gas has really come back to life. I mentioned on September 2nd that natural gas (UNG) looked like a buy between $9 – $9.50 and it has now rallied 25% since that point. But stepping back and looking at the chart we can see resistance is hovering over head between the $12 – $12.25.

I may send out a setup for a short play if we get one but I feel the heavy sell off in August was the final wave down, flushing out traders. Speculative traders seem to have moved into natural gas and I think they will continue to buy it for some time. Pullbacks will be sharp but most likely followed with more buying as we enter the cooler months of the year.

Natural Gas UNG Trading Newsletter

Natural Gas UNG Trading Newsletter

SPX Index Trading – Active Trading Partners
I thought that I would show a quick picture of the SPX because it shows the psychology of traders and how it repeats it’s self over and over. The black and green waves are virtually the same patterns.

I feel as though the market is ready for a larger pullback than what we had in June/July but my focus will be to buy in the oversold dips and lighten my positions in overbought conditions (scaling in and out of positions) until the trend confirms it has reversed.

SPX SP500 Trading Newsletter

SPX SP500 Trading Newsletter

My Market Trading Newsletter Conclusion:
Gold stocks are pulling back and precious metals continue to move with the overall market action. I do feel that gold and silver will break this relationship and start to move higher in the coming months but until that happens I remain cautious with my positions tightening my stops.

Crude oil is starting to come alive and I am now looking for some low risk setups for energy related funds. Last week’s technical breakdown could provide us with a big move in the coming months.

Natural Gas continues to hold up but is now trading near resistance. Depending how many spec traders there are still lingering around (as most lost their shirts in the recent months), will dictate how much higher natural gas will move. The 25-30% rally in the past month has been very powerful and this could be just the beginning. I am now waiting for another setup that could be a long or a short trade depending on what happens next.

If you would like to get my Bi-Weekly Trading Reports via email please visit my websites at: www.TheGoldAndOilGuy.com for commodities and www.ActiveTradingPartners.com for Stock Trading.

I hope everyone had a great weekend!
Chris Vermeulen