Seeking Alpha

Chris Vermeulen's  Instablog

Chris Vermeulen
Send Message
Chris Vermeulen the founder of Algorithmic Trading Systems. This automated investing system is designed for individual investors and traders. He is also the editor of the TheGoldAndOilGuy newsletter which is designed for gold market traders providing quality ETF Trade Alerts,... More
My company:
AlgoTrades Algorithmic Trading Systems
My blog:
TheGoldAndOilGuy - Gold Market Traders
My book:
Technical Trading Mastery - 7 Steps To Win With Logic
View Chris Vermeulen's Instablogs on:
  • Top 3 Trading Indicators For Profitable & Simple Trading

    Many investors and traders make the same mistakes assuming that one needs a complex trading system to consistently profit from the stock market. On the contrary, some of the top performing strategies are the ones with the least amount of moving parts and are simple. Because their simplicity they can be easily and consistently followed.

    The methodologies we use for timing the market, picking stocks and option trades are very simple because we focus mainly on price, volume and momentum. These three indicators are the key to success. When these are used together you are able time your entries and exits during key turning points, clearly define risk and reward levels while maintaining a clear unbiased state of mind which allows one to trade almost emotionless.

    As my Trading System Mastery coach (Brian McAboy) taught me, if you do not have a detailed trading plan which a five year old could trade, then you do not have a solid strategy and will have unnecessary losses and emotional stress.

    So here are a couple tips to keep things simple and emotionless:

    (click to enlarge)

    (click to enlarge)

    Our recent trade in Infoblox Inc. (NYSE:BLOX):
    This stock was flashing several signals (price, volume and momentum) that a bounce or rally was likely going to happen within a few weeks. This is a good example of a swing trade based purely on our main indicators.

    (click to enlarge)

    Our Broad Market Outlook:

    Current stock market prices (SPY, DIA, IWM, QQQ) are starting to warn us that a market correction is near. You can read more about this in detail in our last report "Stocks Preparing for a Pullback, Buy Bas News, Sell the Good".

    We all know the market works with the saying:
    "If the market doesn't shake you out, it will wait you out".

    How does this work? Simple really, during down trends and just before a market bottom we tend to see capitulation spikes in selling. These scare the last of the long positions out of the market and suck in the greedy shorts after the move has already been made.

    During an uptrend which is what we are in now the market makes spike highs designed to scare out the shorts and get greedy long traders to buy more. Once again after the move has already been made and likely near the market top.

    If you are the type of trader who always tries to pick tops and bottoms against the current trend then you may like to know this little tip… The largest percent moves typically happen during the last 75% of the trend. What does this mean? It means when you take your position against the trend trying to pick the dead top or bottom you are most likely going to get be caught on the wrong side of the market in a big way.

    Most traders I know based on recent emails have been short the market for 1-3 weeks and many keep emailing me that they are adding more shorts each day because they feel the market is going to top. So me being a contrarian by nature in terms of what the masses are doing, if everyone is still holding on to their shorts we likely have not seen the top just yet. Another 1-2% jump from here should be enough to shake them out though…

    If you like this article join my free newsletter to receive more timely trading insight at:

    Chris Vermeulen

    May 09 1:27 PM | Link | Comment!
  • How To Trade Gold, Silver & Precious Metal Miners

    How to trade Gold and other precious metals related investments is not that complex. But you must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices).

    Since 2011 when gold and silver started another major bull market correction the best position has been to move to cash or sell/write options against your positions to protect your investment until the next trend resumes.

    If you take a look at the chart below of gold you will notice that in 2008 we had a similar breakdown in price which purged the market of investors who where long gold. And if you compare the last two breakdowns they look very much the same. If price holds true then much higher prices are likely to unfold at the end of 2013.

    The key here is for the price to move and hold above the major resistance line. If it can do that then we are looking at a possible breakout to $2600 - $3500 gold. With that being said gold and silver may just be starting a bear market. Depending what the price of gold does when my resistance level is touched, my outlook may change from bullish to bearish.

    Also with last weeks economic numbers getting better in the USA I do have concerns that gold may be starting a bear market but we will not know for several more months yet.

    (click to enlarge)

    How to Trade Gold Daily Technical Chart:

    Major technical damage has been done to the chart of gold. This can be seen as bullish or bearish price action but until price and volume pattern unfolds which puts the odds on the bullish or bearish side I remain neutral. GLD DZZ GLL

    (click to enlarge)

    How to Trade Silver Daily Technical Chart:

    Silver is in the same position as gold. The question is if this is a shakeout or breakdown… SLV SIVR AGQ

    (click to enlarge)

    How to Trade Gold Mining Stocks Monthly Chart:

    Gold mining stocks broke down a couple months ago and continue to sell off. If precious metals continue to move lower then mining stocks will continue their journey down. The chart below made in February and it has in most part played out as expected. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for a new position when the time and chart become bullish. GDX GDXJ SIL

    (click to enlarge)

    How to Trade Gold, Silver and Mining Stocks Conclusion:

    In short, precious metals continue to be in a down trend. While they look to be trying to bottom it is important to remember that the largest moves take place in the last 10% of a trend. So we may be close to a bottom but there could be sharply lower prices yet.

    The time will come when another major buy or short signal forms and when it does we will be getting involved. The exciting part is that it could be just around the corner. If you want to keep current and take advantage of the next major move be sure to join me free newsletter here:

    Chris Vermeulen

    May 06 1:22 PM | Link | Comment!
  • Gold Traders And Investors Get Ready To Rumble!

    On April 12th I wrote a blog post titled Precious Metals Melt-Down, and How To Manage It. I talked about how gold, silver and gold mining stocks have been flying under the media radar for over a year and that they were not catching the attention of traders, investors and the public anymore. I also said it would take some sharp price action (breakdown or rally) for it to be front and center again on TV, Radio and Newspapers.

    But since GOLD (NYSEARCA:GLD) has plummeted 17.5% dropping from $1600 down to $1320 per ounce with silver and gold stocks falling also they are now headline news once again. This move has caused some serious damage to the charts when looking at it from a technical analysis point of view. Below are some basic analysis points that show a new swing trading entry point.

    The Technical Traders Chart Analysis:

    Broken Support - Once a support level has been broken it becomes resistance. Gold is trading under a major resistance level.

    Momentum Bursts - Since the April 15th low, gold has been setting up for another short selling entry point. Remember the market tends to move in bursts of three, seven or ten days then price reverses direction or pauses. It has now been 10 days.

    Moving Average Resistance - Gold has worked its way up to the 20 day moving average which can act as resistance.

    Bearish Inside Bars - This type of chart pattern points to lower prices. When there is a big down day followed by 3, 7 or 10 up days inside the price action of the down bar we can typically expect another sharp drop which tests the recent lows as shown with the arrow on the chart.

    (click to enlarge)

    Gold Short Selling Conclusion:

    In short, gold is setting up for a low risk entry point that should allow us to profit from lower gold prices. Using an inverse ETF like DZZ, GLL or even the gold mining stock inverse ETF DUST could be played. These funds go up in value as the price of gold falls.

    While I expect gold to pullback, I do not think it will make another leg lower. Instead, a test of the recent low or pierce of the low by a few bucks then reverse and start building a bullish basing pattern before going higher.

    Get My Book Free and Learn How To Manage Your Trades, Money & Emotions:

    Chris Vermeulen

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GLL over the next 72 hours.

    Apr 30 9:21 AM | Link | Comment!
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.