New Video: Why Gold Will Not Make New Highs or Lows This Year

Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.

While we recognize that gold is one of the few commodity markets that people are really passionate about, the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, we want to discuss our interpretation of the markets cycle.

After spot gold made an all time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.

Here is the dirty little secret about the gold market. It can be a horrible investment and here's why:

Gold first started trading in the 80's and when gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros, the guys who made their living trading. As a result, gold hit an all time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. We don't know what your timeline is, but 25 to 30 years is an awful long time to get even again.

So what is really happening in this market?

Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.

Based on the declining value of world currency against gold you might ask "why isn't gold trading at $2,000 or even $3,000 an ounce"? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.

So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.

Here is what we've been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you're interested in the next big move in the gold market.

Before gold can move higher it needs to create what we call an "energy field". The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80's mentioned earlier.

The energy fields we have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.

With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.

To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.

On the on the upside we will also be looking for gold to make a natural cyclic high in October or November of 2011. It's impossible to predict the future with any degree of accuracy, however when we look at the cycles in gold this reads as a pretty good bet.

No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.

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As we always discuss, in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.

So just click here to watch today's new video and as always the video is free to watch. Please take a minute to leave a comment and let us know what you think about the direction of this gold market.



Also watch....The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010



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Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Market Commentary For Monday Evening

Crude oil closed up $2.26 at $82.26 a barrel today. Prices closed nearer the session high today amid a weaker U.S. dollar index and higher stock index prices. Crude oil bulls have the overall near term technical advantage and regained some upside momentum today. The next upside price objective for the bulls is producing a close above solid technical resistance at the March high of $83.47 a barrel.

Natural gas closed down 0.2 cents at $3.928 today. Prices closed nearer the session low today and set another fresh contract low. Bears have the solid overall near term technical advantage. There are still no early technical clues that a market bottom is close at hand. Prices are in a three month old downtrend on the daily bar chart.

The U.S. dollar index closed down 40 points at 81.57 today. Prices closed nearer the session low today on profit taking pressure from recent gains. The bulls still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 83.00.

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Phil Flynn: Range Bound

We can talk about upcoming data from China or relief that the Greece crisis seems resolved for the moment but the truth is oil is still locked in a range. This is a market where the bullish and bearish forces have been in a stale mate and a quagmire of epic proportions. For every bullish argument there is a bearish argument to counter it as crude oil waits to find a definitive direction.


Overnight oil seemed to be getting some support from geopolitical events as well as what some say is the expectations of strong economic data coming out of the US and China. A terror attack on a Moscow subway and a story about a Saudi ship firing on a ship from the United Arab Emirates are just as astonishing as the report on Friday that a North Korean Snipe supposedly sunk a South Korean ship that was later denied. Strong demand hopes have been tempered by rising yield in the long end of the treasury markets raising fears that interest rates will have to go higher. Oil has a lot on its plate and is keeping the market in lockdown.

OPEC put off its next meeting until October but at least one OPEC member seems to be optimistic about the future. Dow Jones reported that Shokri Ghanem, chairman of Libya's National Oil Co said that OPEC would raise production in October if the world economy picks up. Ghanem says that, "If the economy improves, demand picks up and prices go up; that will add pressure on the economy and OPEC will take action. In October the situation will be examined and action will be taken accordingly. Ghanem told Dow Jones that, “Change of OPEC production level is a more complex process--it follows the market but it looks at supply and demand, and whether the market is being driven by fundamentals, geopolitics or psychological factors as well as the plans for production from other member countries," he said.


Bloomberg News Margot Habiby reports that oil producers and consumers, trying to avoid a repeat of the $115 a barrel price swing in 2008, will seek a “broad agreement” on improving market transparency and curbing volatility, according to the International Energy Forum. Habiby says that, “The IEF wants greater sharing of information on supply, demand, production and futures market trading, and greater cooperation on forecasting by groups such as OPEC, the IEF and the International Energy Agency," he said ahead of the IEF meeting in Cancun. A must read on Bloomberg.


You can reach Phil at pflynn@pfgbest.com and be sure to watch him every day on The Fox Business Network.

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How to Find Market Tops for Gold & the Dow

Last week the general market continued to grind its way higher for yet another week. Overall I feel the market is very much over bought. We all know the market can stay in extreme overbought levels for extended periods of time making it very difficult to pick tops.

This is the reason I do not try to pick tops, but rather wait for a top to form before putting my money to work. While a bottom can be made in 1 day, tops tend to take days and some times months to complete.

A few things really stood out to me when looking back on last week’s price action.

1. Gold (GLD Fund) was only up 0.29% for the week while the gold mining stocks (GDX Fund) was down over 3.5%. This strong divergence really has me concerned about the price of gold in the near term. Gold stocks generally lead gold and if they are down 10x more than gold last week, we better watch out....

2. The US Dollar broke out and started to rally posting a gain of 1% for the week. It is definitely weird to see gold move higher when the US dollar is rising…

Gold GLD Daily Chart

Gold has been trading sideways/down since December. I see this large 5 month pullback as a bull flag and expect to see much higher prices for gold long term. But I don’t count my eggs before they hatch, so I continue to focus on the daily and intraday chart patterns for low risk trading opportunities.

Friday we saw gold close very strong for the day. It looks very much like a reversal candle but with the price trading under the mini head & shoulders neck line and with the US Dollar in rally mode again, I don’t think the stars are aligned enough for me to put money to work just yet.

Gold is currently trading in a major congestion zone. Until there is a breakout of this zone, I think setups will not be very accurate.



Dow Jones Industrial Average vs. NYSE New Highs Divergence – JANUARY

This chart shows the January 2010 peak in the stock market. As you can see prices became choppy with strong up and down movements before we saw the sharp drop.

Also note the NYSE new highs line. As the market became choppy new highs began to drop quickly. This indicated the market internals were weakening and led to an 8% drop over the next couple weeks.



Dow Jones Industrial Average vs. NYSE New Highs Divergence – MARCH

This chart in my opinion looks much the same as January. You can see the Reversal candle from the February lows and the strong rally to the current price, as of Friday.

Notice how the market is getting choppy. Also last Thursday the Dow gave us a reversal candle. But this time the reversal candle is to the down side.

Also note the NYSE New Highs line. It has dropped sharply indicating the market internals are weakening once again.

This is what trading is all about… finding things that are out of whack and waiting for a low risk setup in order to make a profit.



Weekend Trading Conclusion:

In short, the stock market is over bought and about to roll over. I do understand that this grind higher could last another week or so, which is why I am focusing on short/quick intraday movements like Friday’s SP500 Intraday Low Risk Setup, and not buying etf funds to hold for a few weeks. Most of you know I do not chase prices higher simply because down side risk increased when buying into an over extended rally.

I feel gold, silver and oil will move together and at this time, I don’t like their charts for trading. With any luck we could get some setups this week, but not counting anything just yet.

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Crude Oil Rises the Most in Five Weeks as Dollar Weakens Against Euro

Crude oil rose the most in more than five weeks as the dollar fell on European Union plans to help Greece and on signals that economic growth will accelerate. Oil topped $82 a barrel as the greenback dropped following an International Monetary Fund and European Union pledge to help finance Greece’s debt. A weaker U.S. currency bolsters the appeal for raw materials as an alternative investment. Consumer spending in the U.S., the world’s biggest energy consuming country, climbed in February for a fifth consecutive month.

“The resolution of the Greek crisis is giving oil a boost,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is weaker, which is helping all of the commodity markets today.” Crude oil for May delivery rose $2.13, or 2.7 percent, to $82.13 a barrel at 9:49 a.m. on the New York Mercantile Exchange. Futures are heading for the biggest gain since February 16. Futures touched $82.25, the highest since March 18.

Prices are up 3.5 percent in the first quarter, peaking at a 15 month high of $83.95 a barrel on Jan. 11. Leaders of the 16 nation euro region endorsed a Franco-German proposal for a mix of IMF and bilateral loans at market interest rates on March 26, while voicing confidence that Greece won’t need outside help to cut its deficit, the biggest in the 16 nation euro region. The dollar fell to $1.3457 to the euro, down 0.4 percent from $1.341 on March 26. The dollar index, measured against six major currencies, dropped 0.4 percent today to 81.364.....Read the entire article.

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Crude Oil Climbs From Two Week Low on Speculation Energy Demand Recovering

Crude oil rose for the first time in four days on expectations fuel demand will increase as the global economic recovery gained momentum and receding concerns over Greece’s debt crisis bolstered the euro. Oil climbed in New York the dollar fell against the euro following the International Monetary Fund and European Union pledge to help Greece finance the 16 nation region’s largest debt. Investors buy commodities as the greenback declines to offset inflation concerns and as an alternative investment.

“This rescue plan settles down the fears about the Eurozone going into a double dip recession so that’s bullish for crude,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “People feel the dollar will continue to be weak because of the long term policy to keep interest rates low and the money supply high.” Crude oil for May delivery rose as much as 49 cents, or 0.6 percent, to $80.49 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $80.46 at 11:42 a.m. in Singapore.

The contract dropped 0.7 percent to $80 on March 26, the lowest close in almost two weeks, after a report showed the U.S. economy expanded less in the fourth quarter than analysts had estimated. Prices fell 1.2 percent for the week as U.S. crude stockpiles surged to a seven month high and the dollar rose against the euro on uncertainty over Greece’s debt problems.....Read the entire article.


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Crude Oil Weekly Technical Outlook

Crude oil continued to engage in sideway trading below 83.16 last week. More consolidations would still be seen this week but after all, downside should be contained by 38.2% retracement of 69.50 to 83.16 at 77.94 and bring another rise. Break of 83.16 will target 83.95 high. However, note that sustained trading below 77.94 fibo level will indicate that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support instead.

In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart .


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Where is Crude Oil Headed Next Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.





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Crude Oil Market Commentary For Friday Evening

Crude oil closed lower on Friday as it extends this week's decline below the 20 day moving average crossing at 81.34. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain bearish signaling that a short term top is in or is near. Closes below last Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is the 20 day moving average crossing at 81.34. Second resistance is the reaction high crossing at 83.47. First support is last Monday's low crossing at 80.89. Second support is Monday's low crossing at 78.86.

Just click here for your FREE trend analysis of crude oil ETF USO

Natural gas closed lower on Friday as it extends the decline off January's high. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If May extends this winter's decline, weekly support crossing at 3.502 is the next downside target. Closes above the 20 day moving average crossing at 4.424 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.209. Second resistance is the 20 day moving average crossing at 4.424. First support is today's low crossing at 3.923. Second support is weekly support crossing at 3.502.

Just click here for your FREE trend analysis of natural gas ETF UNG

The U.S. Dollar closed lower due to profit taking on Friday as it consolidated some of this week's rally but remains above February's high crossing at 81.70. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this week's rally, the May 2009 high on the weekly continuation chart crossing at 83.34 is the next upside target. Closes below the 20 day moving average crossing at 80.86 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 82.52. Second resistance is the May 2009 high on the weekly continuation chart crossing at 83.34. First support is the 10 day moving average crossing at 81.03. Second support is the 20 day moving average crossing at 80.86.

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Phil Flynn: Greece is Bad. Very, Very Bad!

Trichet trashed Greece. ECB head Jean Claude Trichet read Greece the riot act reversing course on the strengthening Euro and making the world think twice about a happy outcome after this Greek tragedy. Trichet scolded that Euro zone states need to be more responsible. ‘Everything going in the direction of euro zone members shying away from responsibilities is bad in our eyes”. How bad? Well “If the IMF or some other body exercises the responsibility in lieu of the Euro group or instead of governments, it is evidently very, very bad," he said. (Gee I wonder who he’s talking about.)

Trichet also said that the “mistake” of giving false figures must not be repeated. (Mistake? We have people in jail that made that type of mistake.) Trichet warned that Euro Zone countries must not an abandon an inch of their current responsibility (which probably confused many members that are on the metric system. He should have said that they should not abandon 2.54 centimeters of their current responsibility).

Of course that responsibility is to the Maastricht Treaty. You know that the one that led to the creation of the euro currency and also created what is called “the pillar structure of the European Community”. It was also the treaty that says countries belonging to the common currency zone year on year borrowing could not exceed 3 percent of GDP and that a country's total debt could not exceed 60 percent of its economic output.....Read the entire article.


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Crude Oil Is Little Changed as GDP Report, Dollar's Weakening Send Mixed Signals

Crude oil fluctuated after a government report that the U.S. economy in the fourth quarter of 2009 rose less than analysts forecast and the dollar weakened, increasing the investment appeal of commodities. Oil traded within a range of $1.87 a barrel as the Commerce Department reported gross domestic product expanded at a 5.6 percent annual rate, less than the median estimate of 5.9 percent by analysts in a Bloomberg News survey. The dollar dropped as much as 1.1 percent against the euro.

“Since the GDP number came out, the market has struggled a bit” because it didn’t meet the consensus, said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Crude oil for May delivery dropped 14 cents to $80.39 a barrel at 10:26 a.m. on the New York Mercantile Exchange. Futures have increased 48 percent from a year earlier. Oil declined 0.7 percent this week.

The dollar fell for the first time in four days versus the euro after European Central Bank President Jean-Claude Trichet toned down his opposition to the International Monetary Fund’s involvement in a Greek rescue plan. The U.S. currency dropped 1 percent to $1.3407 from a 10 month high of $1.3273 yesterday.

“People are watching the dollar as they await clear direction from inventory numbers,” Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. Brent crude oil for May settlement rose 14 cents to $79.75 a barrel on the London based ICE Futures Europe exchange.....Read the entire article.


New Video: Dollar Index Going Higher?


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New Video: Dollar Index Going Higher?

It has been a while since we looked at the dollar index, so today we decided to dissect this market and look at it step by step.

What is happening in this market is very interesting and we think you will see in this short video just what we have in mind.

Just click here to watch "Dollar Index Going Higher" and as always, our videos are free to watch and there are no registration requirements. Do you agree with our analysis of the dollar index? Please feel free to leave a comment and let us know what you think.


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Crude Oil Weekly Technical Outlook For Friday Morning

Crude oil is still bounded in choppy sideway trading below 83.16 and intraday bias remains neutral. Nevertheless, even in case of another fall, we'd still expect strong support from 38.2% retracement of 69.50 to 83.16 at 77.94 and bring rally resumption. Break of 83.16 will target a retest of 83.95 high. However, note that sustained trading below 77.94 fibo level will argue that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support.

In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart .

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Where is Crude Oil Headed on Friday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.






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Crude Oil Market Commentary For Thursday Evening

Crude oil closed lower on Thursday as it extends this week's decline below the 20 day moving average crossing at 81.34. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain bearish signaling that a short term top is in or is near. Closes below last Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is Monday's low crossing at 78.86.

Just click here for your FREE trend analysis of crude oil ETF USO

Natural gas closed lower on Thursday renewing the decline off January's high. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If May extends this winter's decline, weekly support crossing at 3.502 is the next downside target. Closes above the 20 day moving average crossing at 4.472 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.262. Second resistance is the 20 day moving average crossing at 4.472. First support is today's low crossing at 3.989. Second support is weekly support crossing at 3.502.

Just click here for your FREE trend analysis of natural gas ETF UNG

The U.S. Dollar closed higher on Thursday as it extended Wednesday's breakout above February's high crossing at 81.70. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends last week's rally, the May 2009 high on the weekly continuation chart crossing at 83.34 is the next upside target. Closes below the 20 day moving average crossing at 80.80 would confirm that a short term top has been posted. First resistance is today's high crossing at 82.48. Second resistance is the May 2009 high on the weekly continuation chart crossing at 83.34. First support is the 10 day moving average crossing at 80.83. Second support is the 20 day moving average crossing at 80.80.

Just click here for your FREE trend analysis of the U.S. Dollar ETF UUP

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Phil Flynn: Big Build Bananza!

Maybe the oil bulls can take some comfort in the fact that oil was unable to close below $80 despite the fact that the euro hit a ten month low and the stock market actually closed lower. (It can do that you know.) Oil prices shook off a mighty crude oil inventory build according to the Department of Energy’s Energy Information Agency. The EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by gigantic 7.3 million barrels from the previous week.

The build was on the back of strong imports which averaged 9.4 million barrels per day which was up a cool 969,000 barrels from last week. Yet draw downs in products kept the oil somewhat supported. The EIA reported a fall of 2.7 million barrels in gasoline supply and a 2.4 million barrel drop in distillates. The drop was inspired in part by strong gasoline demand. The EIA says that gasoline demand rose 2.7%, or 238,000 b/d, to 9.087 million barrels a day which according to David Bird at Dow Jones was the highest weekly level since November 20.

Still year over year demand was down 13,000 barrels per day for the corresponding week a year ago. Bird says that the gain in gasoline led a 504,000 barrel per day, or 2.7%, rise in total oil demand for the week, to 19.336 million barrels per duty which was a two week high.Increasing gas demand usually is a sign that things for consumers are getting a little better and we may see that optimism grow in gas demand numbers first.

Over the last few weeks I have scoffed at strong gas demand numbers but the trend may have to be now taken more seriously. Perhaps the rally in the stock market has been more reflective of an improving backdrop for the economy than we have expected. Assuming we avoid a double dip maybe we can see a better than expected summer driving season. Still that does not mean that retail gas prices will go straight up. With gas production rising we should be close to the seasonal top.

Still for oil the dollar remains the key. Yesterday the flight to the dollar helped sink commodities as Portugal’s debt rating was downgraded. The EU members meet today and tomorrow and the outcome of this meeting may be the catalyst for the next big move in commodities. We are still buying breaks and selling rallies at what we project will be the high or low for that particular day. Long term position traders, both bulls and bears, will have their days but until we break out of the larger range there will be mounting frustration. Iron condors may be another way to play a market that is locked in a range. Long term players are just in a rut.

Catch Phil daily on the Fox Business Network. And for buy and sell points across the commodity spectrum, just pick up the phone and call Phil at 800-935-6487.


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Crude Oil Daily Technical Outlook For Thursday Morning

Intraday bias in crude oil remains neutral as consolidations from 83.16 continues. In case of another fall, we'd still expect strong support from 38.2% retracement of 69.50 to 83.16 at 77.94 and bring rally resumption. Break of 83.16 will target a retest of 83.95 high. However, note that sustained trading below 77.94 fibo level will argue that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support.

In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart .


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Sure Looks Like A Top? VIX, NYSE, DOW & GOLD

I think many of you will find this article interesting as I show several different indicators which point to an imminent correction for stocks and precious metals.

Last Wednesday’s report I showed how the current price of the index was almost identical to the January peak from where prices dropped nearly 10%. The report was called “28 Day Sector Rotation, Commodity & Index”. We did get the first sign of toppy market last Friday with the sharp one day sell off as I expected.

Today, one week later we are now that much closer to a 3-8% drop which is shown in the charts below. It’s important to remember that bottoms tend to happen quickly while a market topping is more of a process which is why so many people take big losses trying tip a top.

The market will continue to move up even when it is way overbought. It’s only when extreme levels are reached that tops can try to be played.

The Volatility Index – Measures Fear & Complacency in the Market

While the VIX is not something I follow on a daily basis it is important to keep an eye on it. When extreme low levels are reached we know the market (John Dow traders) are feeling confident and buying up everything they can get their hands on.

I like to trade with the trend but when extreme levels are reached I start looking for a low risk setup to the short side (profit in a falling market) using leveraged ETFs.

As you can see from the chart of the VIX and SP500 below, each time the VIX tested the support level the market made a top. Again the VIX is not a great timing tool but it helps me decide which trading strategy I should focus on (swing or day trading) and if I should be looking to buy or selling the market.



NYSE New Highs-Lows Index

If a chart is worth a thousand words then this chart is worth 2000. It cannot get any simpler that the NYSE new high-low index.

The green line is the SP500 index which is straight forward. The Red line is the number of stocks on the NYSE which have reached a new high.

How strong is the market if is keeps going up while the underlying stocks are getting weaker? Something has got to give and it will most likely be to the down side.



Dow Jones Industrial Average – Daily Trend Chart

This chart adds another layer of clarity. You can see what happened last January when everyone was buying stocks thinking life is good, trading is easy. As my trading buddy David Banister from ActiveTradingPartners.com always says “Buy when the Cry, Sell when they Yell”and that’s what I am looking to do.

Today the Russell 2000 index (small cap stocks) sold down very hard. These stocks tend to lead the market both up and down. So the red flag is up and I am just waiting for the market to show me its hand so we can catch the next big move.

Coles Notes on Chart:
• Market is over bought and in dire need of a pullback
• The length of this steady rally is much longer than a normal rally
• The rate as which prices are rising is much to steep to be maintained
• The market is trading at the parallel trend line
• VIX is tell us people are buying and not worrying about any possible drop
• NYSE divergence is screaming Overbought....



GLD Gold Fund Trading

Gold is still in a major bull market but the recent price action from Dec up until now has been down as gold consolidates the large rally from 2009.

Looking at the chart below you can see the mini Head & Shoulders pattern. The neckline has now been broken and prices are falling. I almost had a buy signal for gold two days ago with the small move up and the candle closing above the previous days high. But because the price was still under the neckline (resistance) I decided to stand aside and live another day.



Mid-Week Gold Newsletter Conclusion:

In short, the market looks very strong but from a technical point of view it’s about to die of exhaustion in my opinion.

Gold, silver and oil I figure will move together which is sideways or down.

I am keeping a very close eye on things hoping prices unfold in a manor which will allow us to spot a low risk setup in the coming days as I would like to catch this drop if it happen. With any luck we could make 10-15% within a couple days using a leveraged ETF.

Just click here to receive Chris Vermeulen's Real Time ETF Trading Signals.


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Where is Crude Oil Headed on Thursday?

CNBC's Brian Shactman discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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