The Weak End Trading Report

It’s been a crazy week for stock and futures traders as the market moved up and down like a yo-yo, finally closing down sharply on the week.

Earlier this week I posted a report showing the Volatility Index (VIX) and how it was then trading at an extreme low level which triggered the sharp market corrections. Since that post the VIX has now risen over 30% as traders start selling positions to lock in gains.

Take a quick looks at the Volatility Index chart:



Chart of S&P500 Daily Price Action
Since the low in the volatility index a few days ago we have seen the S&P500 drop over 3.4%. This sharp sell off in equities and ES futures has happened in a very short period of time making the overall market oversold when looking at short time frame of the daily chart. With the market oversold and also trading near a support level I expect we could get a weak bounce lasting 1-5 days before rolling over for another wave of selling.

There are several reasons I feel this will happen:
1. Experience from seeing setups/patterns like this across many different indexes and investment vehicles leads me to believe distribution of shares are now starting to flood the market.
2. The market sentiment surveys are still extremely bullish. What does this mean? Well if almost everyone is bullish, then who is left to buy?
3. As the good old saying goes “Buy the Rumor, Sell the News”. With earning season starting I cannot help but think everyone (smart money) will be selling into the good earnings news as dumb money buys into stocks as they meet or beat earnings. This inflow of dumb money is exactly what the big guys need to unload massive amounts of shares at a premium. Also I would like to point out that earning estimates have been very low that past year which I think has been on purpose for the institutions. This makes it very easy for companies to beat estimates each quarter giving the warm cozy feeling to retail investors (us, the small guys)
4. Also Chares Biderman on Bloomberg pointed out the other day that the market looks to be manipulated by the feds as virtually all the gains have been produced after hours in the futures market.



Chares Biderman Video
The United States in my opinion is much more corrupt than most people think and I don’t really want to get into this rather large and interesting debate at the moment. But Charles Biderman has some very interesting points which fall in line with my thinking about how much of what is happening is really natural and what is completely manipulated in the past 10 months of rising market prices.

Must Watch 5 Minute Video



Quick Technical Chart Update on Gold
I thought this chart may be of interest to some of you as it shows two perfect textbook plays on the 4hr gold futures trading chart.

As you can see the first pattern is a reverse head & shoulders pattern. This is bullish and a breakout above the neckline would signal a buy point. Now if we use basic technical analysis with this pattern we can measure the potential move up by looking reverse head and shoulders pattern. You take the low of the upside down head $1075, and go straight up to the neckline at $1117. That is a total of $42. So if we add that $42 to the breakout point above the neckline then we can have a price target of $1117 + $42 = $1159.

As we can see the price of gold over the next couple days rallied to the $1160 level. Trading is not that easy but that is how it works in general. The hard part is knowing how to manage your trade and I scale out of positions as the price matures reaching short term resistance levels and by adjusting my stops accordingly to lock in maximum gains while minimizing downside risk.

A couple days later the same chart formed a regular Head & Shoulders and has since moved its potential measured move. I m not expecting a weak bounce in gold as with the overall stock market, but I am still not sure that the selling is over.



The “Weak’end Trading Conclusion:
In short, the market was turned upside down this week. Those who follow me should be in cash or mostly in cash as this drop was anticipated a few days ago.

Trading during fast moving markets is much tougher for swing traders as pivot points for indexes and commodities tend to happen during the intraday or during futures trading at night. High volatility like this is fantastic for active traders who focus on shorter time frames like the 4hr and 60minute charts, as opposed to trading just the daily chart and entering and exiting positions at the open and close each day.

I continue to watch the market and plan on providing some of these short term setups on the 4 hour chart using both the GLD etf gold fund and the YG Gold futures mini contract.

If you are interested in Trading Gold Futures and other contracts please just click here to receive my Free Futures Trading Newsletter.

Chris Vermeulen "The Gold and Oil Guy"



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Spot 60 Minute Trends for Gold, Oil, Natural Gas, and Indexes

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 14th. 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.

Just click here to get these Free Weekly Trend Trading Charts Emailed to you.



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Gold Is Heavy But Could Rebound Here

Although December’s heavy sell off in the Gold (and Silver) market confirmed a significant set of monthly and weekly cycle highs, highs that may take this metal some time to meet/exceed, there now appears to be plenty of credible technical evidence to suggest that Gold may be ready to mount a minor rebound rally back up toward the $1,125 to $1,135 price zone. There are a couple of key market analysis tools that we can rely on to see if we can both confirm and then capitalize on a possible swing back up to a major Fibonacci resistance zone. Let’s take a closer look right now.



On December 22, March Gold made a major cycle low on its 78 minute chart at $1,075.20 (See point ‘A’ on the chart. Yes, ‘78’ is close to a significant Fibonacci ratio) and then began to slowly reverse higher. The spread between the 50 and 200 period exponential moving averages (EMA’s) was near an extreme at the time of the dead low but have begun to progressively narrow since then. Along with the narrowing spread (which typically indicates a period of price consolidation), March Gold also managed to make a higher swing low (point ‘B’ on the chart) on December 30, 2009. This higher swing low also permitted the plotting of a major uptrend line (gold dashed line), one that will be a wonderful trend determining assist for both intraday and daily based swing traders in the days and weeks to come.

Higher Lows
Once the first higher low was made (which was also a cycle low) at point ‘B,’ prices accelerated higher, bouncing back lower after colliding with the 200 period EMA (pink rectangle) before forming yet another higher swing low. Not surprisingly, this fresh 78 minute swing low has allowed us to plot a slightly more aggressive uptrend line (blue dashed line), which, if it should hold, is a prime clue that Gold intends to meet and then likely exceed the 200 day EMA (currently near $1,106) on a close. As most technicians know, a close above the 200 period EMA is a bullish development, and one that a zillion traders and money managers use to determine the long term trend for a given time frame. Additionally, if the 50-period EMA (red line) crosses above the 200 period EMA (blue line) a second bullish confirmation occurs, one known as a ‘Golden Cross.’ Traders frequently wait for a pullback toward the 50-period EMA after such a crossover to initiate new long positions. Should we see this crossover occur, that might also be an excellent way to help time a series of daily or intraday (60 or 78 minute) swing trade(s), looking for Gold to move higher into significant Fibonacci resistance.....Read the entire article

Just click here for your FREE trend analysis of GLD


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Is There Something Wrong with the Crude Oil Market?

With the official end to summer, the Labor Day weekend, behind us and the nation's largest energy company investor conference underway, the oil market received several shot in the arm positives last week. Wall Street talking heads had a difficult time understanding what was going on with the price of gold and crude oil futures soaring on the first trading day following last Monday's holiday. Gold futures traded over $1,000 an ounce and crude oil prices jumped by $3 a barrel. The inability of the talking heads to explain the phenomenon left us wondering if we were seeing a global investor reaction to Washington politicians returning to work. Those of us living in Texas have a reaction when our legislature goes into session in Austin. We hold onto our wallets during those few months of the legislative session every two years since that is our peak exposure to politicians inflicting serious financial damage on our wellbeing.....Read the entire article