mysmp.com - Day Trading & Stock Trading Strategies

Trading Commodity Update for GLD, SLV, USO & UNG

TheGoldAndOilGuy — Mon, 29 Jun 2009 07:23:17 -0500

Last week commodities moved higher as investors started buying into the recent pullback in prices. This is a healthy sign for the overall market. This is a quick update for gold, silver, oil and natural gas short term traders.

GLD Gold ETF Trading Chart

Gold has provided us with two great trades this year. Both trades lasted only a few weeks and we locked in profits on technical breakdowns. Many of you have been asking when we will get a short signal (make money in a down market). Well, I don’t like shorting a commodity that is in rally mode. KISS is my mentality and trading only with the major trend is what I focus on.

For those of you who want to short gold (DZZ Ticker) may do so at your own risk, I recommend waiting for an extended rally of 10+ percent in price before you start looking for a technical breakdown to short. The quicker prices rise, the higher chance that a technical breakdown will provide a quick shorting opportunity. Locking in profits within a few days is crucial. In a bull market pullbacks in price are generally quick and short lived.

SLV Silver ETF Trading Chart

Silver and gold generally move in the same direction. These precious metals are looking ripe for a low risk setup. What I am looking for is momentum to turn up along with a reversal candle pattern. We continue to wait.

USO Oil ETF Trading Chart

Oil has had a solid move the past 2 months. This chart is starting to look a little bearish and if what I am seeing is correct for the short term then we could see oil slide lower this week. But in the event prices rally we could get a buy signal within 5-10 days if all goes well.

UNG Natural Gas ETF Trading Chart

Natural Gas has been drifting sideways for over 2 months now. Everyone is excited to catch this reversal when prices start to head north again. Seems like most people are long UNG already from what I gather because of the fear of missing the next big rally.

To be honest I have that fear as well but I do not let it control my trading. As usual I follow my simple trading model and trade when risk is low and the odds are on my side. One thing that traders should remember is that UNG (Nat Gas) looks to be bottoming from a very big sell off. If in fact prices are reversing there will be plenty of opportunities to buy it still. Even though I am really excited for this trade, I continue to wait for my time. I would like to see the momentum breakout and start moving higher before I buy anything.

Commodity Trading Conclusion:

Looks as though money is starting to flow back into commodities. With any luck we could have some buy signals this week. GLD and UNG have the best looking charts for a buy signal currently.

As usual I wait for the trades to unfold and come to use. Keeping risk low, scaling out of trades to lock in profits where there is a technical breakdown and allowing our core position to run for larger gains is my focus. I don’t forecast prices I just analyze prices and prepare for what two scenarios will most likely occur within a couple days.

If you would like to receive my Free Weekly Trading Reports or my Trading Signals please visit my website: www.GoldAndOilGuy.com

Chris Vermeulen

S&P 500 Update

adam_hewison — Thu, 25 Jun 2009 10:40:36 -0500

This is just an update on using the internal forces of the market to time new positions. In this short video we look at the internal workings of the S&P 500 index.

We will be using in this example the free technical tools to help time a position. The number one tool we will be using is the Fibonacci retracement tool which just comes in beautifully in this example.

The second tool we are using is the Welles Wilder parabolic SAR. This tool is very useful for confirming entry and exit points when combined with our Fibonacci retracement tool.

The last tool is the MACD or as it is commonly called the MAC-D. This tool once again can help in timing the entry point using an intra-date chart.

Enjoy the video.

The video is free to watch and there is no need to register. I would love to get your feedback about this video on our blog.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Commodity Trading Report - 6/24/2009

TheGoldAndOilGuy — Thu, 25 Jun 2009 07:36:08 -0500

In the past, commodity trading was only available to trader with large accounts, high risk tolerance and a good understanding of how the futures market works. During the past 7 years with commodities making incredible moves and gaining attention from the media, several exchange traded funds (ETF’s) have been created allowing everyone to take advantage of the commodity market.

Gold was the first commodity back in 2002 which really made traders and investors want into the commodity market. Silver was followed shortly after in popularity, then crude oil and natural gas. While most commodities were on fire these are the ones that the media took a hold of and make them well known to everyone as prices soared month after month.

Commodities should have a place in everyone’s portfolio in my opinion. And a simple way of doing that is through the use of etf’s. Below I provide some of the most popular commodity funds known today. I have provided my simple analysis to each fund so you can see how commodity trading is like if you know what you are doing or have someone help you along the way.

I have provided two charts of each fund so that you can see the difference between trading a weekly chart and a daily chart. In short the weekly chart moves at 1/5th the speed of the daily. This is a great time frame for most investors if they want to actively manage their accounts catching market trends. The daily chart requires more analysis and trading because the chart provides several opportunities on a monthly basis. This is geared toward a much more active type of trader/investor.

USO Fund – Crude Oil Fund – Weekly Chart

As you can see from the weekly chart below this fund trends very nicely. I focus on price action, support & resistance levels, volume, trend lines and chart patterns to trade these funds.

Back in March there was a breakout to the upside, then a reversal bounce in April providing another excellent point to enter the oil market. Using my analysis I can locate low risk entry points for oil. This chart provided a trade which lasted several months. The exit point was signaled after there was a trend line break this week.

USO Fund – Crude Oil Fund – Daily Chart

The daily chart below shows a close up of the price action and how to take advantage of these funds. Trading the daily chart allow you to really fine tune trades so that you can squeeze out as much profit as possible. Profit taking is generally done on a daily chart trend line break and the core position will be exited on a longer term trend line break such as the weekly chart. This is shown on the chart below.

UNG Fund – Natural Gas Fund – Weekly Chart

Here are two charts of natural gas. This chart shows the longer time frame and overall interest in the commodity. Volume has picked up as traders anticipate a reversal to the upside.

UNG Fund – Natural Gas Fund – Daily Chart

This daily chart is a little tough on the eyes because of the recent volatility. But you can see the price broke out of is pennant pattern 8 days ago and is now testing support again. I expect this fund to move higher but there are several rules and price patterns which must confirm before any money would be put to work. Just because it looks like it’s going higher does not mean its going right now.

SLV Fund – Silver Fund – Weekly Chart

Silver made a nice breakout back in December. We can see that it had a controlled pullback for a couple months earlier this year. The recent rally is now pulling back and testing the support trend line. This has been a 6 month trade if you were trading the weekly chart.

SLV Fund – Silver Fund – Daily Chart

This is another good example of trading the daily chart because it shows all the noise and opportunities for the short term trader.

GLD Fund – Gold Fund – Weekly Chart

The gld gold fund is my favorite to trade out of them all. While is moves the slowest I find it the most accurate. Gold looks to be setting up for a nice breakout later this year if prices hold up and the US dollar continues to collapse.

GLD Fund – Gold Fund – Daily Chart

Short term traders like myself enjoy trading this fund. While gold looks like a buy at this level I do not risk any money until I have a low risk entry point which is calculated buy price action, momentum and volume. Waiting for the setup can be a painful process but not as painful as losing a lot of money on a trade which had a higher risk level.

Commodity Fund Trading Conclusion:

Trading with etfs and other funds really do make investing much easier for individual traders. Not only can we trade commodities but we can rotate from sector to sector or trade indexes if we feel the broad market is going to rally or sell off. There are always trading opportunities available some where. The key is finding a strategy that works with you’re personality type and staying disciplined enough to follow your trading plan.

If you would like to receive my Free Trading Reports or Trading Signals please visit my website: www.GoldAndOilGuy.com

Chris Vermeulen

Gold, Silver, Oil and Nat Gas Active Trading Report

TheGoldAndOilGuy — Thu, 18 Jun 2009 16:04:04 -0500

Gold has provided two excellent trades for us this year; both had less than 3% downside risk. With any luck we will have another trade soon. Gold has been forming a large reverse head and shoulder pattern since early March and currently trying to form the right shoulder. If this pattern completes and the price breaks the neck line at the $99 level we should see a nice rally towards the $120 - $130 level.

The stochastic indicator turned up in the lower reversal zone this week providing more power to Wednesday’s reversal candle. We could see the price bounce here, but until momentum turns back up I will be watching and waiting for a proper low risk setup.

Silver Trading Chart

Silver pulled back just as we expected it would. The stochastic indicator is starting to turn up and the price of silver is near support. I think we will see some sideways/bounce at this level. Again I am not jumping on the train yet. I prefer to wait for the downward momentum to shift to the upside before putting my hard earned money to work.

USO Oil Trading Chart

Oil has been on a crazy run since the breakout back in May. The oil price is currently at a pivot point and could go either way quickly. A break of this support trend line will trigger speculate traders to sell and that will sent oil tumbling quickly. Those of you long oil should be ready to jump if we see continued weakness. If you are a long term oil bull, then taking some profit at this level and still holding a core position could be a good idea. You can always buy back the shares you sell and if we see lower prices you will benefit even more.

UNG Natural Gas Trading Chart

UNG made a breakout this week from its pennant formation. Volume is telling us that this could very well be the start of a trend reversal (higher prices). This trade setup carried a high risk level which was 12% on Monday. I focus on trades with 3% or less so I was not buying on this breakout. Instead I am waiting for a consolidation which should provide us with a low risk setup in the near future.

Trading Conclusion:

This month commodities are under selling pressure along with most stocks. I continue to wait for the charts to generate low risk buy signals for these funds. On a side note we may get some trading signals for some other sectors which are becoming hot like the biotech and health care funds. I will keep you posted.

If you would like to receive my Free Weekly Trading Reports or my Trading Signals please visit my website at: www.GoldAndOilGuy.com

Chris Vermeulen

Did the S&P 500 Make a Top?

adam_hewison — Wed, 17 Jun 2009 08:50:04 -0500

With the S&P 500 falling to a fresh two-week low, the big question is this a correction, or the start of a major trend on the downside?

I have just finished a short video that details many of the key concerns that we have for this market. If you have not seen our videos before you may enjoy this one. This video does not require a plug-in.

The video is free to watch and there is no need to register. I would love to get your feedback about this video on our blog.

Click Here to Watch Video

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

The Ord Oracle - 06/16/2009

tim_ord — Wed, 17 Jun 2009 08:30:48 -0500

Over the last couple of weeks there have been several divergences showing up. Annual new highs new lows ($NYHL) made lower highs as well NYSE McClellan Oscillator made lower highs as Spy made higher highs. The NYSE McClellan Summation index did not confirm the breakout of June 1 when the SPY jumped above the 5/8 high which also was a negative divergence. The last two days down in the SPY did not show an increase which we would have like to seen to show energy had switched to down but not every turn in the market shows ideal technical behavior The market produced a gap down yesterday (94 on SPY) and that gap may act as resistance. We are short the SPX at 883.92.

We showed this chart last week and have updated it to tonight’s close which is the ratio between the Nasdaq Volume to the NYSE volume. When this ratio reaches this high intermediate term tops have formed in the past and we think it is telling the same story now. The second window from the bottom is the RSI. We have drawn blue trend lines on this chart. When the RSI falls below 50 it implies a top was seen. Today the RSI closed at 48.41 and has triggered a bearish sign. Bottom window is the 20 EMA of the Tick index. Normally the Spy follows the direction of the ticks. The ticks have been moving lower for the last month as the SPY moved modestly higher and did show the buying interests were leaving the market. Over the last few days this indicator hit new recent lows and suggests the buying interest is turning into selling interests and a bearish sign. Today’s push to new recent lows on the Ticks suggests the market has topped out. When the Ticks get below “0” then a bounce could occur. Today’s 20 day EMA of the tick closed at 124.50 and not below the “0” line yet. In general we expect the Market to work lower into July or August.

Below chart is courtesy of www.etfinvestmentoutlook.com. The McClellan Oscillator is an Advance/decline line indicator. Yesterday it hit a new recent low and is showing most stocks in GDX are declining. Also the McClellan Summation index had a bearish crossover yesterday and triggered a sell signal and implies a consolidation that may last several weeks. Previous sell signal by bearish crossovers of the McClellan Summation index with the 20 EMA appeared at the July 2008 top and the February 2009 high (see chart above). This pull back could last in July and maybe August. Physical Gold and the Gold ETF (GLD) may find support near 900 and 90 respectively and we will be holding our GLD positions that were bought at 89.

Long GLD at 89 on 4/24/09. Long KRY at 1.82 on 2/5/08. We are long PLM at 2.77 on 1/22/08. Holding CDE (average long at 2.77 (doubled our position on 9/12/08 at 1.46, Sold 5/13/09 at 1.55=6% gain). Bought NXG at 3.26 on 6/4/07. We doubled our positions in KGC on (7/30/04) at 5.26 and we now have an average price at 6.07. Long NXG average of 2.26. For examples in how "Ord-Volume" works, visit www.ord-oracle.com.

Precious Metal & Energy Trading Report

TheGoldAndOilGuy — Mon, 15 Jun 2009 08:50:06 -0500

We continued to see precious metals under pressure last week. The US dollar moved firmly higher on Friday which sent gold & silver plummeting lower. Oil continued to drift to new multi month highs while natural gas moved sideways.

Gold – GLD Fund – Daily Chart

The GLD fund has been drifting lower towards my support trend line the past two weeks. I figure we will have some action as we wait for a bounce off support or a break down through the blue support trend line. Looks like we are a few weeks away from any possible setup in gold/GLD.

Silver – SLV Fund – Daily Chart

The Silver SLV fund has been moving lower in a controlled manor. We could see prices pull back to the $13.50 level this week. It looks like we are weeks away from any possible setup is silver as too.

Energy Sector – Crude Oil & Nat Gas

I have put together three charts to show you what I think is very possible in the near term for Nat Gas prices. The USO (oil fund) and the UNG (Nat Gas fund) have similar price movements. In short these funds move with the price of their underlying commodity (oil or gas). Because these funds must purchase futures contracts which allows the fund to move with underlying commodity there are some issues with price performance. The funds are affected buy Contango (search “What is USO contango” for more info). In simple terms it means the price of the fund loses value over time and does not track the exact same price performance as the underlying commodity.

These funds must purchase futures contracts and because of the popularity of these two funds they are now large enough to move the commodity price when rotating from one future contract to the next on a regular basis. This helps boost the price of the commodity when the fund rolls over to the next futures contract.

That being said we are now seeing the same issues and price pattern we saw in USO happening in the Natural Gas Fund UNG. Check out the charts below.

USO Oil Fund – Before the Rally – January Chart

The USO fund started to become very popular back in January and volume surged to new highs. This was an early indicator that the trend was getting close to reversing. The increase in demand for this fund became so large that it was actually moving the price of oil as it rolled from one futures contract to the next.

UNG Nat Gas Fund – Current Price (Before the Rally)

By simple looking at this chart of gas and the USO oil chart above you will see the similarities. Demand for the commodity fund is incredibly high indicating a change in trend is getting close. This increase in UNG demand forces the fund to buy more Nat Gas futures contracts and the price of gas becomes much more volatile when the fund buys the new futures contract.

It is important to notice what USO (oil) did after this surge of volume and price pattern was broken. This is provided on the next chart of USO.

USO Oil Fund – The Rally – Current Chart

The price of USO dipped one last time breaking down from its pennant sending price sharply lower only to reverse the following week which was the start of this powerful rally we have been enjoying for several months now. I expect we will see something like this happen with the UNG fund as well.

Gold, Silver, Oil and Nat Gas Trading Conclusion:

Stepping back and taking a simple glance at these commodities we are able to tell if we should be taking action or sitting back and waiting for some low risk/high probability setups.

I do like each of these commodities and investment vehicles for short term trading. But I must resist buying them because I like them and stick with my plan to only enter a position when I have a low risk/high probability setup available.

It is easy to create a trading strategy/plan but following it is a completely different story. Once you can follow your strategy, then you’re ahead of 95% of other traders. I will admit, I’m really excited about this UNG setup which looks to be forming, but I am not jumping in and buying it yet. I follow my trading strategy/rules very closely and because of my strict rules and 3% risk style it’s some times painful waiting for an entry. But I have mastered the way I trade and my yearly goal is to have 10-25 trades yielding 2-10% profit each.

If you would like to receive my Free Trading Reports or my Trading Setups please visit my website at: www.GoldAndOilGuy.com

Chris

Commodities Trend Alerts

TheGoldAndOilGuy — Thu, 11 Jun 2009 09:57:27 -0500

The Gold, Silver, Oil & Nat Gas Report

With so much happening in the market, emotions flying high and from being blinded by fear and greed many investors are wondering What do I do now?

I have put together some of my trading charts to help keep the overall picture clear for us commodity traders. My approach is very simple and effective when proper trading/money management is applied. FEAR and GREED are the two most powerful forces in trading and if you cannot stomach your trades when they go south, you most likely are trading to large of a position for your account size. Ok, I will try to stay on topic and not get into the education side of things 

The US dollar has had a massive rally considering the United States is in serious trouble. My thoughts are investors bought the USD as the entire planet started to crack thinking it was a smart investment. Which is could be a great play for the long term but I plan on covering that next week with monthly chart analysis for all these commodities.

I have heard a few analysts on CNBC say the US Dollar has broken its down trend. The question I am wondering is: What time frame are they looking at? The daily chart looks strong but if you zoom out and look at the weekly or monthly chart, we have not even made a higher high yet. Everyone sees the market differently that’s for sure.

The US Dollar – Head & Shoulders, Knees then Toes

This chart shows a perfect head and shoulders pattern which made a text book breakout. To keep this report short and to the point, the USD is at support and I expect we will see a rally higher to the 84 – 88 levels which would complete a larger head and shoulders pattern on the monthly chart. A breakdown from the monthly head and shoulders would most likely start the next major leg lower. The USD could rise here, thus pull the price of gold and silver down temporarily and that is why I have locked in some profits on these commodities.

The Price of Gold – Daily GLD Fund

Gold is currently pulling back from resistance and in my opinion forming the right shoulder which will complete this reverse head and shoulder pattern. Last week I took some profit on my gold position and currently hold a core position hoping prices will hold at my next support trend line. If prices breach that level ($91) then I will exit the balance of my position and wait for the next low risk setup.

The Price of Silver – Daily SLV Fund

Silver is in the same position as gold. I am expecting a pullback for a re-entry.

The Price of Oil – Daily USO Fund

Oil has been on the run since May. Oil had a near perfect breakout/buy signal (Risk was over my 3% risk setup) but many traders took advantage of this signal and are now experiencing massive gains. Tighten stops to lock in some profits and let the rest ride until the next support trend line is breached which will provide more wiggle room for oil to take a breather before moving higher again.

The Price of Natural Gas – Daily UNG Fund

Last week I provided the weekly charts with analysis of all these funds. UNG was the one that really looked exciting. On the weekly charts its very similar if not identical looking to the price action that oil had before it sky rocketing. This chart looks like a spring coiling tightly and getting ready to explode. Only time will tell but keep it on your trading platform!

Trading Conclusion for Gold, Silver, Oil & Nat Gas

In short, the US Dollar is trading at support and could be starting a nice rally to form the second shoulder which can be seen on the monthly chart. If this happens I expect gold and silver will have some selling pressure.

Oil continues to rally and short term traders should be thinking about tightening their stops to lock in some gains on the first sign of a reversal.

Natural Gas looks locked and loaded for a big bang. I’m waiting for my signature setup before jumping onboard as it helps improve the odds of the trade going in my direction after I enter a position.

If you would like receive my Free Weekly Trading Reports or my Real-Time Trading Signals for these funds please visit my website for more information: www.GoldAndOilGuy.com

Chris Vermeulen

The Ord Oracle - 06/10/2009

tim_ord — Wed, 10 Jun 2009 16:57:20 -0500

Below is an interesting chart. The blue chart inside the SPX chart is the ratio of the Nasdaq volume compared to the NYSE volume. When Nasdaq volume surges compared to NYSE volume then a pull back is anticipated in the S&P. Over the last couple of days the Nasdaq Volume compared to NYSE Volume surged to a new three year high. Previously when this ratio reached this extreme the S&P had significant pull backs. This condition also suggests that upside progress on the SPX is most likely limited. In the bottom window is the 20 day EMA of the tick index. This indicator has been moving down since mid April and shows buy pressure is becoming lighter. We are short the SPX at 883.92.

Sometimes we look at other index in the same family to see if the picture is the same. Above is SSO which is an ETF and is the ProShares for double long the SPX. On 6/1 SSO broke above the 5/8 high on reduced volume and implied a false breakout which implies at some point the market will fall back. A close below the 5/8 high will imply the top is in. On the rally above the 5/8 high on the SPY, MACD is making a lower high and showing a negative divergence. At the bottom window is the RSI and it is also making a lower high and is also showing a negative divergence. The NYSE Summation index turned down on June 8 and with today’s negative advance/Decline line, the trend remains down, which implies the SSO is in a downtrend. With negative divergence in RSI and MACD and a low volume break above the 5/8 high, a bearish outcome is expected. I might add that the SPX is running into the 200 day moving average, which is resistance.

Below is the Gold Buy Index (HUI). HUI has been trading in a rising channel since late December 2008. The bottom of this channel may act as support which comes in near 320. Currently the HUI is on a sell signal by the indicators of “10 day MA of RSI”, MACD and “Trend line break of Price Relative to Gold”. We will watch how the 320 level is tested and to see if the MACD, RSI or Price Relative to Gold indicators give bullish signs. Physical gold may pull back to near 900 range and may be a good place to add long positions.

Long GLD at 89 on 4/24/09. Long KRY at 1.82 on 2/5/08. We are long PLM at 2.77 on 1/22/08. Holding CDE (average long at 2.77 (doubled our position on 9/12/08 at 1.46, Sold 5/13/09 at 1.55=6% gain). Bought NXG at 3.26 on 6/4/07. We doubled our positions in KGC on (7/30/04) at 5.26 and we now have average price at 6.07. Long NXG average of 2.26. For examples in how "Ord-Volume" works, visit www.ord-oracle.com.

Gold, Silver & Oil on the Run

TheGoldAndOilGuy — Mon, 01 Jun 2009 16:27:57 -0500

The charts below quickly give you a visual as to where each commodity is trading in relation to intermediate and short term support and resistance levels, chart patterns and trend lines.

Quick Over View

Commodities are on the run. Gold is forming an amazing reverse head & shoulders pattern and is about to test resistance. Silver is shining bright as it continues to surge higher out of a solid bull flag pattern. And crude oil continues to make new multi month highs after breaking out of its cup & handle pattern.

GLD ETF Gold Fund - Weekly Chart – Intermediate Outlook

Gold looks to be nearing the end of this very large reverse head and shoulders pattern which is bullish. I have a feeling we could see gold trade in the upper levels of this chart until August which is generally a very strong time for gold bullion prices. At that time we may see gold surge past $1000 and rally towards the $1200-$1300 mark.

GLD ETF Gold Fund - Daily Chart – Short Term Outlook

The daily chart provides a much closer look at price action. As you can see gold is starting to reach the upper resistance level. I figure we will see selling at that level. I have drawn a dotted blue trend line allowing those with long positions to lock in some profits if we get a technical break down. Personally I like to lock in some gains after a large run. I can always buy it back later and hopefully at a better price with one of my low risk setups.

SLV ETF Silver Fund - Weekly Chart – Intermediate Term Outlook

Silver is on the run with lots of room for growth before reaching major resistance at the $19-$20 level. Chasing the price of silver here is a very risky position. Silver can correct extremely fast. Waiting for a pullback is crucial.

SLV ETF Silver Fund - Daily Chart – Short Term Outlook

As you can see on the silver daily chart, silver is a very fast moving investment vehicle. I expect we will see a pull back to the $13.50 -$14.50 level on a dip.

Crude Oil - Weekly Chart – Intermediate Term Outlook

Oil continues to push higher and looks to be building up speed. I figure we will see $70-$75 per barrel with any luck in the near future.

Crude Oil - Daily Chart – Short Term Outlook

The daily chart is showing we are getting very close to a possible pullback. From looking at the daily chart I see a measured move to the $67.50 level and at that point we may get some type of profit taking/pullback before moving higher.

Gold, Silver & Oil Trading Conclusion:

All three commodities are on fire and will most likely be in favor for some time. We will see pauses/corrections in price along the way. I would like to mention how important it is to trade with the trend (The Trend Is Your Friend). This is because strong trends will continue to trend until demand wanes. During a powerful move trends can last for months before a sizable correction may take place.

All of the technical buy signals for these commodities have performed very and the trends look strong at this point in time.

If you would like to receive my Free Weekly Trading Reports or my Trading Signals Newsletter please visit my website:
www.GoldAndOilGuy.com

Chris Vermeulen