Gold, Silver, Oil, Natural Gas ETFs - Strategy for the Broad Market

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Includes: GLD, SLV, UNG, USO
by: Chris Vermeulen

The past week in gold, silver, oil, natural gas and the broad market wasn’t anything to write home about. We are seeing controlled profit taking which is making the market choppy. Many traders are getting very bearish on the market which is a good thing in my opinion. According to my market internals, sentiment and volume analysis we should get a shake out (sharp dip) which would make traders exit their positions before the market continues higher.

Some traders say we are in a bull market, others say we are in a major bear market. Either way the trend is up on the daily and weekly charts and companies are making money. Buying on oversold dips has been very profitable this year. Until I see things drastically change, this is my strategy for the broad market.

Let's take a look at the commodity sector.

HUI – Gold Stocks Index
Recently we have seen money move out of gold stocks but with the majority of them trading at support trend line we could see some fireworks this week.

Gold Mining Stocks TradingClick to enlarge

Gold – GLD Exchange Traded Fund

Gold has been trading sideways as investors and traders digest the previous rally higher. The recent price action looks similar to the September rally and consolidation. Let's hope for a another move higher without getting shaken out of our positon.
Gold ETF Trading NewsletterClick to enlarge

Silver – SLV Exchange Traded Fund

Silver is in much of the same situation as gold. We are waiting to see what happens here at these support levels.
silver ETF Trading NewsletterClick to enlarge

Crude Oil – USO Exchange Traded Fund
Oil has been making a strong rally after breaking out of is multi month consolidation pattern. We are now looking for some type of pullback or test of breakout for another low risk entry point.

Crude Oil ETF Trading NewsletterClick to enlarge

Natural Gas – UNG Exchange Traded Fund

Natural gas is having some trouble breaking out above the multi month resistance trend line. Buying here is a 50/50 bet and I will wait for another entry point before putting our money to work.
Natural Gas ETF Trading NewsletterClick to enlarge

Natural Gas, Oil, Silver and Gold Exchange Traded Fund Conclusion:

Overall, the market feels ready for a quick snapback to shake traders out of profitable positions. I expect a resumption of the up trend as the market slowly creeps higher at a steady pace digesting each rally with sideways movement.

I know many people are shorting the broad market and that is not something I am willing to do yet. Until I see a drastic change, long positions are my bread and butter. Once the market does reverse, there will be plenty of time to play the short side using the Leveraged ETFs.

Commodities are taking a breather but with our support trend lines nearing I expect some movement this week.

Disclosure: I currently own GLD, SLV, and UNG