Seeking Alpha

Chris Vermeulen's  Instablog

Chris Vermeulen
Send Message
Chris Vermeulen the founder of AlgoTrades.net 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:
  • Safe Haven Play – It Is That Time Again!

    Each year traders try to navigate their way through the financial market and turn a profit. But this is difficult.

    The stock market provides market participants with several opportunities each. With all the holidays and climate changes the market as a whole along with specific sectors typically have seasonal rallies and sell off in price.

    As May approaches many of us are starting to figure out how to play the "Sell in May and Go Away" potential move.

    I cannot help think stocks will start to struggle as indexes test new highs and key resistance levels. The good news is that when money is flowing out of one investment it typically flows into another which provides us with an opportunity to make money.

    Risk capital has been flowing into stocks recently but with the stock market over bought on a short term basis traders will start to protect their capital and move to specific sectors within the market to protect their capital.

    LONG TERM INVESTMENT OPPORTUNITY EXPLAINED - GUIDE/BOOK

    Utilities have been underperforming all year and are not being talked about by anyone. This is a contrarian signal that it will likely become the sector of choice as fear creeps into the minds of market participants.

    The chart below shows price of this sector is trading at the key 200 day moving average which should provide support. Also the bullish chart pattern is pointing to higher prices. XLU

    utilities-sc

    It Is The Season For Utilities!

    The chart below clearly shows where price is trading today and what is likely to happen over the next 2-3 weeks as we enter May.

    (click to enlarge)

    It Is That Time Again - Conclusion:

    In short, US equities continue to be in a long term bull market. It is best to remain net long stocks as the odds of a trend continuing is more likely than not.

    So I feel a great way to get involved in the market here is to get long the utility sector through the exchange traded fund XLU.

    This is just one of many ways to play the market between now and the first week of May… If you would like to learn more or receive my personal trades join my newsletter today www.GoldAndOilGuy.com

    Chris Vermeulen

    Tags: XLU, utilities
    Apr 19 8:18 PM | Link | Comment!
  • Gold Price: Year 2000 All Over Again – How Will You Play It This Time?

    Recently business and financial guru Mark Cuban wrote an article about why this tech bubble is going to be worse than the tech bubble of 2000. This made me take another look at the long term charts again, but instead of looking up the NASDAQ or the tech sector I decided to check out gold mining stocks, gold price and the Dollar index.

    From looking at the price action among the precious metals sector and the dollar it looks and feels like these markets are very close to repeating what happened in the year 2000.

    The chart below is a monthly chart looking all the way back to 1996. I have color coded areas of the chart that represent weak and strong times forgold price. GLD, NUGT, DUST, GDX, GDXJ, UUP

    Gold Price

    Gold Price

    Key Points:
    1. The US Dollar is trading roughly at the same level and trending higher as it was in 2000.
    2. Rising dollar is neutral/negative on commodity prices and resource stocks like gold miners.
    3. Gold price struggled as the dollar rose in value.
    4. Gold stocks fell sharply during the last year of their bear market.
    5. Gold stocks bottomed before physical gold by several months.
    Concluding Thoughts on Dollar, Miners & Gold Price:

    In short, I feel most of the downside damage has already been done to the price of gold. Gold stocks on the other hand could still get roughed up for a few more months before finding a bottom.

    Money is likely to continue rolling into the dollar as a safe haven and this will keep gold and silver prices relatively flat. But once the dollar starts to show signs of increased volatility (top) similar to 2000 - 2001 money will find its way into other currencies and precious metals as the new trade and safe haven.

    Get My Trades In Real-Time: www.TheGoldAndOilGuy.com

    Chris Vermeulen

    Apr 16 9:52 AM | Link | Comment!
  • True Investments VS Speculative In Gold & Oil

    A couple of weeks ago I was listening to an hour-long segment on CNBC with Warren Buffett. He brought up a great point about the type of investments he prefers and the difference between an investment versus a speculative trade. I feel what he mentioned is worth sharing so here it is.

    He stated that he prefers to hold an investment which is earning money and generating cash flow. Meaning he prefers to own equities of companies which generate income for its shareholders versus a commodity which does not generate any revenue.

    While Mr. Buffett said that gold is a commodity everyone should own some of, he also clearly stated that buying a commodity in hopes that someone will pay you more for it later is purely speculative. Lets face it, would you rather own something that paid you monthly or annually a cash dividend or something that might go in in value, but may also lose value?

    Investors and traders are primarily focused on purchasing gold stocks, physical gold via ETF's, gold bars and coins which none of these provide any income the holder. But after doing some in-depth research I have found another way to invest in precious metals and commodities that will not only give you exposure to the gold, silver, and oil sector but it can also generate a monthly income stream to your portfolio.

    Through Gabelli closed-end funds like the Global Gold, Natural Resource & Income Trust (NYSEMKT:GGN), or Natural Resource, Gold & Income Trust (NYSE:GNT) you can get the best of both worlds.

    Each fund is currently providing a 10% annual dividend paid out in monthly distributions. The Fund's investment objective is to provide a high level of current income. The Fund's secondary investment objective is to seek capital appreciation consistent with the Fund's strategy and primary objective. Under normal market conditions, the Fund will attempt to achieve its objectives by investing 80% of its assets in equity securities of companies principally engaged in natural resource and gold industries, and by writing covered call options on the underlying equity securities.

    If you don't know what covered calls - Explained Below:

    A "covered call" is an income-producing strategy where you sell, or "write", call options against shares of stock you already own. Typically, you will sell one contract for every 100 shares of gold or oil stock. In exchange for selling the call options, you collect an option premium.

    With the US stock market slowly nearing a bull market top and with commodities trading at multiyear lows we should eventually see a shift in money flows out of stocks and into commodities. With rising commodity prices resource base stocks should start a new bull market that will send these funds dramatically higher in value while still paying a juicy dividend income.

    In conclusion, if you want to invest in precious metals long-term I think owning an income strategy based around that investment is a great way to add diversification and income to your portfolio. Learn more about trading ETFs, funds and copy every trade I place with my own money at www.TheGoldAndOilGuy.com

    Chris Vermeulen
    Disclaimer: I currently own shares of GGN

    Apr 13 10:12 AM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

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.