Are Gold, Silver, Oil, Natural Gas and the SPX Peaking?

By Chris Vermeulen

The market continues to whipsaw traders out of positions as volatility rises. I mention a few charts to explain where each of these commodities is trading.

My Gold Stock Breakout Model – Monthly Chart

I use this chart to keep my big picture trades on the right side of gold. I found that gold stocks tend to lead the price of gold so watching this gold stock index on the monthly, weekly and daily charts can provide me with short term tops and bottoms for trading gold bullion, GLD or DGP exchange traded funds.

The monthly chart clearly shows the rally in stocks has now sold back down to my resistance trend line. If we do not get a rally this week in gold stocks, then I think we could see gold trade sideways or down for several months.

Click to enlarge:

GLD Gold ETF Trading Fund – Newsletter

The daily gold bullion fund shows the recent price action and what I think could happen in the coming weeks. In the past couple days gold has moved to a short term support level where I think we could see buyers step in.

We took some profits near the high and continue to hold a core position until we have another technical breakdown or new setup to add more to the position again.

Click to enlarge:

SLV Silver ETF Trading Fund – Newsletter

Silver is in the same boat as gold. We have taken some profits and are still holding a core position with protective stops in place just in case the market does head lower from here.

Click to enlarge:

USO Crude Oil Trading Fund – Newsletter

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.

Click to enlarge:

UNG Natural Gas Trading Fund – Newsletter

Natural gas has really come back to life. I mentioned on September 2^nd 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 overhead 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.

Click to enlarge:

SPX Index Trading – Active Trading Partners

I thought that I would show a quick picture of the SPX because it shows the psychology of traders and how it repeats itself 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.

Click to enlarge:

My Market Trading Newsletter 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.

Original article

Comments

[ManAboutDallas:]

No, no, no, no, YES!

Sep 29 06:56 AM

[jimbo's gra...:]

"Silver is in the same boat as gold. We have taken some profits and are still holding a core position with protective stops in place just incase the market does head lower from here."

No, no, no, YES indeed. These so called "experts" are nothing of the kind. Two weeks ago Silver was headed for $20, $30, $40 an ounce but a dollar drop and suddenly silver is "correcting" itself and has seen the top. What a bunch of donkey's behinds! I just wish one of them would have the balls to say "stick with silver because its going to $20+ by year's end" and then stick with that statement. That's my personal advice. Silver is a "goldmine" of opportunity now. This week we have confidence in the dollar, next week we won't. Bottom line is our government has put too much paper in the system and it will drop in value. That's when people go running for metals for safety but by then it will already be up into the 20s or 30s and people like me who have had unwavering confidence in Silver will be smiling. Now is the time to buy Silver and or those of us who do so, what a very nice Christmas it will be!

Sep 29 09:43 AM

[GMiki1:]

Even if silver doesn't rise spectacularly by Christmas, it will. And definitely how ridiculous the minute-by-minute traders are. Unless you really need cash, stick with silver AND gold. Because the dollar will drop.

Sep 29 10:46 AM

[The Recusant:]

There is a strong possibility that gold and silver will head downward. And the cause is not the lack of confidence in it as a safe haven but the manipulation of it by the banks and their massive shorts on the metacommodity and interbank loaning of gold. Gold, and the assumption that is serves as a historic de facto currency, is an anathema to the banks' paper promises and the governments ever-increasing currency printing.

The interbreeding of banks and government can only be ended by the establishment of a gold currency standard that cannot be eroded by asset bucket games or future paybacks.

There is something terribly wrong with our country. End it...buy gold.

Sep 29 12:27 PM

[tripleblack:]

I own silver and SLV, and I believe it will indeed outperform gold for a while, moving back toward something more akin to its historic value ratio with gold. This will happen whether gold goes up, down or sideways, so the effect will be that silver will gain in more different scenarios than Gold until an equilibrium is once more achieved.

I am also watching platinum and paladium closely. If South Africa's political situation changes, or labor troubles occur, this could strongly affect those prices. An investment in the Canadian or American producers might be a good move in that case, if not the metal itself of course.

Finally, the inevitable bite of inflation will propel these investments, sooner or later (I would say starting in about 4 months or so).

Sep 29 02:54 PM

[Laurence Hunt:]

I believe the author has a good chance of being right on the short-term trends, but my own thinking is that one can become lost following the short-term trends and miss the primary trend. In short, bull markets get overbought and run. I for one don't want to be on the sidelines when that occurs, whether tomorrow, next week, next month or (I don't think it will be that long...) next year.

Sep 30 02:49 AM

[mbkelly75:]

I hold both Gold and Silver in my portfolios by investing in CEF. This Canadian Closed End Fund owns both of them and keeps them balanced so they make money from one getting ahead of the other. I did this for years myself, and this is just easier for me right now. CEF is up 18% since I bought into them last December and that is good also. They are clear, transparent and a good way to have both in your portfolio in an easily tradable form. They even pay a dividend (a very small, annual one - but still a dividend) instead of charging me a holding fee. I will continue to hold them as a part of my portfolio for this purpose.

Sep 30 02:07 PM