High Volume Resistance Plagues Precious Metals, Crude Oil & SP500

Last week was a relatively strong week for stocks and commodities. Although the SP500 closed slightly lower on the week the price action Friday was strong. The recent pop in commodities has everyone feeling good and bullish again and we all know how the market works… When everyone is feeling good the market has a way of shaking things up.

Below are a few charts showing heavy volume resistance levels that will most likely cause the broad market & commodities to pullback or trade sideways for a few days as buyers and sellers play tug-o-war.

SLV – Silver Bullion ETF Trading
Silver had a very nice pop last week but if you step back and look the recent price action you can see that it’s still trading below the previous major bounce from back in June. It looks as though silver is a little over extended as large percentage moves tend to give back 25-50% of the mover shortly after.

Take a look at the price by volume bar. It shows there has been heavy volume traded at that $19.00 level and the previous time it was reached sellers stepped back in pulling silver down.

GLD – Gold Bullion ETF Trading
Gold is trading deep into the resistance level and struggling to hold up. Last week we went long GLD after the bullish engulfing candle and took profits near the high two days later on Thursday’s price. Although gold is trading at resistance the intraday price action remains somewhat bullish/neutral for the time being.

USO – Oil ETF Trading
The oil ETF broke down from its large multi-month bear flag and is now bouncing up to test that breakdown/resistance level. This could be a possible kiss good bye. I will keep my eye on this commodity as it could provide us with a great shorting opportunity in the coming days.

SPY – SP500 ETF Trading
The equities market has been tried to bottom all week and Friday’s price action looks strong. While the chart looks strong the market internals are telling me the opposite. Last week we saw a gap down and Friday that gap window was filled. With heavy volume resistance just above the current price the odds are pointing to lower prices.

Weekend Equities and Commodities ETF Trading Report:
In short, it looks as though everything is trading just under or at resistance levels. That means sellers will start to enter the market and cause prices to stall (trade sideways/choppy) and or reverse lower.

That being said, with Friday’s strong close for oil and the sp500 I am expecting a gap higher in the morning because traders will review those charts this weekend and enter the market Monday feeling bullish.

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Gold, Silver, Oil & Natural Gas Going Wild!

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.


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.


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.


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.


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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USO, UNG, SPY Trading Charts From The Gold and Oil Guy

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

USO Crude Oil Trading Fund
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.


UNG Natural Gas Trading Fund
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.


SPX Index Trading
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.


My Market Trading 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.

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