This week has been playing out as expected with prices grinding their way higher and lots of sharp intraday sell offs and rallies which is indicative of a market getting toppy.

Seems like the masses feel as though they are getting left behind which is why we are starting to see the panic buying in the market (new money buying at these lofty overbought prices).

Each time there is a new intraday or daily high on the major indexes there is a renewed bullishness created as breakout traders and novice traders buy into the market hoping for the next surge in price. It is these volume surges of new money entering the market which the big guys (smart money) are selling into. You can see it clear as day light on the intraday charts as new money gets sucked into the market new high and then 2 minutes later larger waves of selling hit the bids. I did explain and show a chart of how this looks to members of the FuturesTradingSignals.com today.

We have some very exciting times ahead and it’s just a matter of letting the market unfold over time as we take advantage of these carefully measured low risk setups.

On to the charts….

GLD ETF Trading – Gold Exchange Trading Fund

You can see how this chart has evolved from pattern to pattern as it bottomed over time.

Today we had a breakout and I expect to see a pullback which is normal when prices gap up and breakout of a pattern. An entry point would be considered on a pullback if the proper criteria are met.

SLV ETF Trading – Exchange Traded Fund

Silver has always been much more volatile than gold which is why the pullback early this year was so strong and why the recent rally has also covered so much ground. As you can see silver has broke out above resistance but is now looking overbought. A pullback in precious metals is expected, or a pause at least.

USO Crude Oil Fund

Oil has made a nice move higher the past week but I feel it will pullback also in the coming days for a breather. There are a couple sizable gaps to fill all the way back down to $40.50.

UNG Natural Gas Fund

This natural gas chart looks very interesting. In the chart I am comparing the 2009 low to today’s price action.

From looking at the chart, natural gas is way oversold and in dire need of a relief rally. As you can see the sharp rallies which occurred just before both the 2009 and the current possible bottom look identical. This type of price action is very common to see.

Let me explain: When an investment is this over sold, meaning it has sold lower for weeks if not months, then there is a large growing number of traders looking to pick a bottom.  Once these traders see prices start to move higher they all jump in thinking its “The Bottom”. Some times it is but more times than not it’s just a suckers rally.

General rule is, if everyone can see it, then its most likely not going to happen.. this is also part of the reason the major indexes keep going up. It looks like a great short and a tone of traders are in cash waiting to take advantage of the drop. But the market will keep pushing higher until fear its not going to pullback. That’s when the new money buys back in fueling the GRIND higher.

Anyways, so after all the bottom pickers jump on the train and there are not any more buyers and the price tends to drift lower scaring these traders back out of the position. Eventually a new low is made and everyone is shaken out of the investment. The crazy part is that just as they get out, the price usually turns around and does exactly what they new was going to happen –Go Up.

Most traders have the direction correct, it’s just their timing is off. My general rule is when I see something I wait another bar, sometimes I keep saying that to my self after each new bar until I am confident in the predicted move or price I can get into the position at.

Mid-Week Trading Conclusion:

In short, the bull market continues to grind its way higher. Unfortunately we cannot do much until there is some type of correction because buying way up here after a 2 month rally is outside of my comfort zone.

I foresee a 3-5% correction starting any day now so I am keeping my gunpowder dry.

Check out my ETF Trading Signals at www.TheGoldAndOilGuy.com

Chris Vermeulen

Last week ended on a positive note with stocks and commodities pushing higher into Friday’s close. The market overall is looking very unstable here and this week I figure there will be some big price movement.

Below are the charts on the DIA, GLD, SLV, UNG and USO funds so you can get a feel for the trend and additionally what I am looking for this week with respect to prices.

DIA – Daily & 60 Minute Chart
The Dow, along with the other indexes, has formed a bear flag and can be seen on the daily and 60 minute intraday charts below. This price pattern is a negative one and points to lower prices in the coming week.

If we get one more thrust down I figure it will spook the rest of the weak hands which in turn is a setup for a very nice multi week rally. If this flag turns into a rally then we will simply wait for a pullback and buy when there is a low risk setup.

GLD – Daily Chart
Gold has been doing much the same as the over stock indexes and I feel the same will happen here. We could see price rise for another day or two as it tests our blue resistance level before heading lower.

SLV – Daily Silver Chart
Silver has formed an interesting pattern the past few months and has now broken down. Silver’s chart continues to look weak as it drifts up to test resistance with a bear flag pattern that points to lower prices in the coming days, much the same as gold.

UNG – Daily Natural Gas Chart
Sorry for all the lines on this chart. It looks like a mess, I know, but it does show a possible trend change in UNG.

The trend has been down for over a year but now it looks as though it’s forming a reverse head & shoulders pattern and possible bull flag. These two patterns point to much higher prices in the coming months.

Natural Gas seasonally rallies in mid February into mid April. So this could be something we could catch for a multi month play. I may provide a stock to trade this rally in gas in addition to the ETF fund in the coming days or weeks, when ever this play unfolds.

USO – Daily Crude Oil Chart
Oil has been selling down very strong for the past 6 weeks but it is now trading at a key pivot point. Oil looks as though it’s trying to bottom here and in the next 1-2 weeks I think the energy sector will provide some great trades.

Weekend Trading Conclusion:
Overall, the market and metals bottomed last week or they have another leg down which I expect would happen this week if that’s the case. The charts are pointing to lower prices still. If the market does rally then we will simply watch the breaking and buy the pullback in 1-2 weeks once there is a low risk setup.

I hope everyone had a great weekend and valentines day. My daughter Mirabelle was born this weekend on Feb 14th (Valentines Day). Everyone is healthy and happy!

You can get my weekly trading report sent via email to your inbox if you visit my website: www.TheGoldAndOilGuy.com

Chris Vermeulen

The stock indexes have been trading very choppy making it difficult for swing/trend traders. It’s during times like this when seasoned traders rise above the herd of average traders.

If you only trade one strategy like swing trading or trend trading then you are likely finding it difficult to make money right now. On the other hand, day traders are having a blast right now as they take advantage of the powerful intraday rallies and sell offs.

I personally like swing trading but during times like this, when I know it will not work, I have to switch my strategy to day trading and focus on the 60 minute and 5 minute charts.

SP500 Index Fund – Intraday Setup
I posted this chart earlier this week and I want to be sure everyone takes something away from this chart as I believe it shows a perfect low risk setup for shorting the market, or you could buy a reverse fund which goes up as the market moves down.

At first glance this chart is noisy, but if you simply focus on the all the different color analysis separately you will notice how simple trading can be and what you should be looking for.

Red Analysis:
1. Overall market trend is down so we are looking for a short trade, signs of weakness.
2. First we see a light volume test of the previous high set earlier in the day. The low volume indicates there are not many participants in the move up and that is a weak sign.
3. Between 14:30- 15:30 we notice the price start to drift higher on very light volume. Also, the price moved up into a resistance level. This to me is a perfect setup.
4. You would sell short or buy a reverse index fund at this point hoping for the market to start selling. You could also wait until it started to drop before taking a position but when a chart looks this good I try to get in at the highest price possible.

Blue Analysis:
1. The price starts to drop forming several small bear flags going into 14:30 before bouncing. Also note the volume began to rise as more selling was happening. This tells us that trading activity is predominately selling and that we should also focus on shorting when the time is right.
2. Again, the price starts to drop forming several small bear flags going from 15:00 – 15:45 before bouncing. Also note the volume began to rise as more sellers took part in this short term trend.

Black Analysis:
1. This shows more or less the resistance level, area to short the index and the nice trend down.

Gold GLD ETF Trading
Gold has been under selling pressure since early December. That powerful drop and the chart pattern it has formed will generally resolves itself after an ABC retrace pattern. I have drawn this on the chart which is what I think will happen in the near term. This daily chart of GLD ETF has a small 4 day bear flag and bearish reversal candle which is pointing to lower prices in the near term.

Silver SLV ETF Trading
Silver has a funky looking chart. It has formed a large megaphone pattern and possible head & shoulders pattern. Both are bearish and if we use the Head & Shoulders to calculate where silver could end up trading if it continues to break down, then $14.00 would be a level to look for a bounce.

Natural Gas UNG Fund
The natural gas fund UNG has been in a down trend for over a year and the recent drop looks to be the start of another sell off. This could possibly form a reverse head & shoulders pattern with this drop moving UNG down to the $8.75 – $9.00 area. We will have to wait and watch things unfold for now.

Crude Oil USO Fund
USO looks to be trading at support. I am inclined to patiently wait another session before possibly taking a position.

Mid-Week Trading Conclusion:
In short, I feel the overall market could bounce including stocks and possibly commodities, but the selling is not over yet in my opinion. The drop we have seen in the past week is the half way mark. So this bounce would be the starting of an ABC retrace for stock indexes. During choppy times I like to be sitting in cash and or day trading for short term profits.

Precious metals do look oversold and ready for a small bounce or sideways move; I do think they will head lower. Too many traders are still holding on to their gold positions and until a large number of them get scared out of their positions, we will not see gold rocket higher.

Natural gas looks like it’s about to head much lower this week while oil looks ready for a solid bounce off support.

We continue to wait for new low risk setups as different investment scenarios unfold.

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Chris Vermeulen

Tags: Chris Vermeulen, etf newsletter, gld etf trader, Gold Newsletter, index trader, slv trader

The commodity futures charts and gold precious metal stocks have be trading with increased volatility as they bounce between support and resistance levels on the daily and hourly charts.

This report is focused more on technical analysis and charts so that I can show you what I feel these commodities are lining up to do.

GDX ETF – Daily Trading Chart
I posted this chart Monday afternoon to members as a short educational piece and to give warning to those where were currently in short term long positions. This chart clearly shows that when the short term trend is up and we get a black candle (Pop & Drop) the odds tell us that we should see lower prices over the next 24 – 48 hours for silver and gold.

This type of price action may look easy to trade, which it is, but only day traders and even better yet futures traders, can make the most when these setups occur. It doesn’t get anymore exciting than Trading after hours with commodity futures.

The nice thing about trading futures is that charts run around the clock 24 hours a day so you do not get price gaps that miss most of the short term low risk plays. Investment vehicles on the NYSE are limited to trading from 9:30am – 4pm and that really does cut down in the amount of low risk trade setups we get on a monthly basis.

Silver Commodity Trading Contract YI – Daily Chart
Silver has been tougher to trade than gold recently. Percentage moves are much larger with silver adding more potential risk to buyers and sellers. In addition, silver is not trending strongly like its big sister gold and this adds another level of difficulty. Profits should be taken quickly during this type of price action.

Silver Futures Trading

Gold Futures Trading YG Contract – Hourly Chart
Gold is my favorite and most profitable investment vehicle. I trade gold using the GLD etf and futures. Last week I wrote about this key resistance level and how I was waiting to trade until the Friday unemployment numbers were out and to see how the market reacted before putting our money to work. Over the weekend the bullish sentiment caused gold to gap above that key resistance level but has sold back down after beginning the new week.

The chart below shows that I am neutral/bearish for the next few days. Heavy selling and the small bear flag is warning me of lower prices. The natural tendency for gold is to drift higher through the night from 6pm EST – 4am EST, so we could see higher prices in the short term but what happens in the following 1-3 days will set the tone for gold.

Gold Futures Trading

Crude Oil Futures Trading CL – Daily Chart
Oil has pulled back the past few days and is now trading near a support level. I feel it is over sold and could bounce the second half of this week and I will keep my eye on it for members.

Crude Oil Futures Trading

Natural Gas Futures Trading NG – Daily Chart
Nat gas is the most deadly commodity I know for the uneducated trader. The price swings are wild and WILL trigger you stops no matter where you put them almost. The whipsaw action always seems to form a Mega Phone pattern which means there are higher highs and lower lows during key pivot points forcing shorts to keep coving their positions and longs to keep getting stopped out as they try to protect their down side risk.

I rarely trade Natural Gas because of this. The stats I’ve heard are that almost everyone who actively trades natural gas will lose their money within 3 months. Yikes! So this is why I am so picky trading it.

The current price of NG is trading in the middle of is range. Entering a trade here is 50/50 and just not worth the risk.

Natural Gas Futures Trading

Commodity Futures Trading Conclusion:
There are not too many exciting things in the market right now. We continue to watch stocks and commodities work through their patterns and cycles as we just jump in and out of the market when the timing is right. It’s like a large game of double Dutch skipping, just have to time the monitor the patterns, speed and cycles so you lower the odds of getting hit.

If you would like to receive my Free Weekly Trading Reports, please visit my website.

Chris Vermeulen
www.TheTechnicalTraders.com

Tags: crude oil futures trading, futures trading, gold futures trading, natural gas futures trading, silver futures trading

Welcome back everyone! It’s time to buckle up and get ready for another exciting year of trading.

When the market is moving on light volume I tend to focus on very short term plays to minimize my exposure to volatility. The past couple of weeks have been great for day traders and futures trades as we took advantage of the short term seasonal holiday rally in the broad market and also by shorting gold when bounces reached resistance levels.

This year I will be providing many more trades as I focus more on 60 minute trading charts to scalp the market with low risk quick reward setups. Also I will start providing futures trading analysis and signals for those who want to be more active and generate more income on a monthly basis.

DIA – Dow Jones Exchange Traded Fund – 60 Minute Chart

The Dow has been trading in this range for a couple weeks providing some excellent short plays. Although I tell members not to short in a bull market, there are times when shorting in a bull market looks and feels right. The past month has been the perfect mix for shorting using the 60 minute charts.

GLD – Gold Exchange Traded Fund – 60 Minute Chart

Gold is in a strong bull market but the short term charts have provided over 13 short trades in the past 2 weeks for futures traders playing the bounces to resistance levels. The triangle on the 60 minute chart with declining volume is a continuation pattern of the short term trend which is down.

Because gold is trading near a support level on the daily chart, I am waiting patiently for a perfect setup to go short, or long depending on what happens in the coming hours. I predict lower prices with $102 area for the next support level.

UNG – Natural Gas Fund – 60 Minute Chart

Natural gas is trading at resistance on the daily and weekly charts. This 60 minute chart allows us to take a closer look at the intraday momentum which clearly shows there are more sellers than buyers at this level. I see lower prices in the coming hours/days.

UNG not a good fund for holding positions more than 2 weeks, it does provide excellent trading opportunities for day traders and 60 minute chart setups.

USO – Crude Oil Fund – 60 Minute Chart

Crude oil had a perfect bounce off of a support level on the weekly and daily charts back on the 14^th.  Oil is now trading at a short term resistance level and I feel it will head lower in the coming days. We still need more price action before taking a position. Let’s watch and wait.

Trends of Gold, Dow, Oil and Natural Gas Conclusion:

The broad market and commodities listed above seem to be trading at resistance levels with signs of rolling over. As a technical trader the charts do all the talking and they are pointing to lower prices in the near term which falls in line with my gut feeling that a sharp pullback across the board is lurking in January. Once the big money start getting pushed around again we will know who is in control, buyers or sellers.

Let’s continue to focus on these short term charts to take advantage of any low risk setups which come our way.

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Chris Vermeulen

www.TheTechnicalTraders.com

Last week the market fell into its regular holiday tradition of light volume, as institutions and big traders enjoyed the holidays thus allowing prices to drift higher. We still have one more week of light trading volume before this year and holiday season is officially over.

Trading during low volume times is regularly misinterpreted. Many traders figure they should not be trading this time of the year but from my experience, the last two weeks of the year are amazing for short term swing plays or day trading. The market seems to be much more predictable when the large program traders are not involved.

Also the more speculative plays (small and mid cap stocks) always seem to out perform as buyers bid the prices higher into the light selling volume. This is most likely why we are seeing the NASDAQ and Russell 2000 indexes making some nice gains of late.

Take a look at the charts…

Broad Market & NASDAQ Low Volume Rally

Stock Market Trend

GLD ETF Trading – Daily Chart
Gold prices broke down as expected in early December and are now nearing a possible bottom. The past 3 weeks have provided some very exciting day trades shorting spot gold prices. In the next few weeks I will be starting to provide more spot gold charts and intraday price action for all the international traders and futures traders 

I did not provide the chart of silver as it trades very similar to gold. When the time comes I will provide detailed analysis for entry and exit points for members.

Gold Market Trend

Crude Oil USO Trend Trading
USO fund had a very nice pullback in early December and I pointed out a spec play at $35.50 with targets set at $37, $38 and $40. So far the first two profit taking targets have been reached.

Sorry for all the lines on the chart but sometimes it’s the only way to remember where all the crucial levels are for trading pivot points.

Oil Trend Trading

Natural Gas UNG Trend Trading
Natural gas trades like a bucking bronco. It’s a tough ride if you do not understand market psychology and apply strict money management to your positions.

Last weeks price action closed with a bearish candle after testing resistance twice. We could get a short trade this week depending on what happens from here. Let’s keep our eyes open for a low risk setup.

Natural Gas Trend

Market Trends Trading Conclusion:
This year has been fantastic for making money, but next year will most likely be much more difficult if we see the market top and head south or trend sideways. The market topping is not an event; rather a process and trend following systems will start having more losing trades than winners as the market momentum shifts from up, to sideways then down.

Don’t get me wrong, I am not saying I think its going to roll over and head south, cause quite frankly no one knows what its going to do from this point forward. This is the reason we are in cash and patiently awaiting new low risk opportunities to place our money. The joy of trading with technical analysis is that you don’t care which direction the markets go because the analysis, if done correctly, allows you to profit in all market conditions using different trading strategies.

The board market, in my opinion, is way overbought due to the holiday rally. But we must remember there is another low volume week as we approach New Years and this could extend the rally more. Smaller trading positions should be used until we enter the New Year and volume steps back into the market.

Gold and silver are in a short term down trend and trading near a resistance level. We could see prices drop quickly or rally from here. So we are letting things unfold before making a commitment.

Oil continues to move higher and last weeks weakening US dollar helped give oil a boost.

Natural gas is trading at resistance and looks ready to head back down. The daily and 30 minute chart did not setup a signal to short Natural Gas, but it was very close.

As usual, I will update on the market and provide daily updates and trades to members.

Free Gold ETF Trading Newsletter

Chris Vermeulen
www.GoldAndOilGuy.com – Gold Newsletter

ETF Trading Gold, Silver, Oil, Natural Gas and the Index

December 9^th, 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.

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.

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.

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 J

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.

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.

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

Things seem to be lining up for stocks and precious metals to take a breather, which is in line with the Dow Jones Seasonal chart below.

Let’s take a look…

Dow Jones ETF
You can see from looking at the chart the repeated pattern of price rallies, leading to exhaustion and a test of support, followed by another repeat of the pattern. It looks as if the broad market is setup for a test of support which could happen within 2-4 days. Then as we near the holiday prices will start to drift higher. This pattern occurs more often than not as seen on the Dow Jones Seasonal chart below.

Broad Market Holiday Rally

Dow Jones Seasonal Trends
This chart clearly shows weakness in the first half of December and continued strength moving forward. This has not really happened in the past two years which means we are overdue for continued strength. 

That being said, the previous two years were bear markets and we are now in a bull market. So the tendency is for buying to continue into year end.

Dow Jones Seasonal Trends

GLD ETF Fund
Gold continues to push higher surprising many of us. It seems as though money is rushing into metals and buyers are not particularly concern about price. While this is great for short term traders and those of us in the trade, we must remember that the faster things go up, the quicker they correct.

Don’t get me wrong, I don’t think gold is going to crash, I just think we could get a 10% correction before moving much higher. Gold is also trading near the upper end of the trend channel and could have a 2-4 day consolidation with the broad market before pushing much higher.

GLD ETF Trading

SLV Exchange Traded Fund
Silver has been underperforming yellow gold but is still a solid investment. It is also trading near the upper end of the trend channel and could have a 2-4 day consolidation with the broad market.

Silver ETF Trade

USO & UNG Funds
Oil continues to flag from its breakout back in October. This is a bullish pattern. Last Friday we saw oil open much lower then rally back into the trend channel. This is called an outside day and many times this happens to stocks and commodities as it shakes out the weak traders before starting another rally higher. We will keep a close eye for any low risk entry point.

Natural Gas had a nice rally last week which I mentioned looks a lot like a short covering rally. The price action this week suggests it was and has now made a new low. Today on CNBC it was reported that a new source of natural gas has been discovered. This resource is 20 times larger than the biggest source in the US. Enough gas to last the US over 100 years. This added to the selling on both natural gas and oil today.

Energy ETF Newsletter

Trading Conclusion:
Precious metals continue to perform well and it’s important to note that PM stocks are now moving higher with gold. They have been lagging for some time but are on fire again. Great to see!

The Dow Jones index and several others look ready for a breather. The timing of these overbought charts bodes well for the seasonal December pause before the holiday rally. Time will tell.

Energy and financials are both underperforming the market and without their participation we will not see the indexes move much higher.

Continue to hold precious metals positions but be ready to lock in profits if we see the market reverse sharply. I am watching energy for a play but no setups at this time.

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Chris Vermeulen
www.TheGoldAndOilGuy.com