Monday, January 31, 2011

Precious Metals and the Dollar’s Next Big Move Part II

We have seen some exciting moves in the market and with the market sentiment so bullish it should make for a sharp selloff in the coming weeks. Meaning everyone is overly bullish and owns a lot of stocks and commodities therefore the market should top and leave them holding the bag while the smart money runs for the door. The market will not bottom until all of these individuals holding the bag finally cannot take the pain of losing any more money and once we see them panic and sell them all at once only then will we be looking to go long again.

The past couple weeks I have been bombarded with emails asking if gold and silver have bottomed and if they should be buying more on these pullbacks. Those of you reading my work for the past few months know that my analysis clearly has shown how both gold and silver have been topping out. There have been strong distribution selling and price patterns on the charts are also clearly signaling a top was near.

A couple weeks ago I posted an important report covering gold, silver and the US Dollar and where the next big moves will be. Well it’s time for another update on Gold, Silver and the Dollar as they have come a long way from my last report.

Ok let’s move on to today’s charts…

Silver Daily Chart
Silver has formed a very nice looking top and it is now trading under its key moving averages. It is also currently testing a key resistance level after Friday’s bounce on the back of fears in Egypt. Unless something happens internationally I figure silver sill continue its trend down.


Gold Daily Chart
Gold futures are doing the same as its little sister (silver). I feel the general public is still very bullish on metals and before we see higher prices (new highs) the market will have to shake the majority out of their positions first. At this time gold looks like it should test the $1285 level. Depending on how long it takes to get there and the price action it forms in the following days that outlook could change but expect sellers to step in at the $1350-1355 area.


US Dollar 2 Hour Chart
The dollar has been grinding lower the past two weeks forming a falling wedge reversal pattern. It’s also important to note that on the daily chart the dollar tested a key support level last week. This should be an interesting week for the dollar and the rest of the market simple simply because when the dollar makes sharp movements it pushes the price of stocks and commodities around in a big way.

I am looking for a multi week rally in the dollar possibly longer but with small pauses or corrections along the way.


Pre-Week Metals and Dollar Trend Analysis:
In short, I feel gold and silver are nearing a short term resistance level and will find selling pressure in the coming days only to continue on their journey down for a few weeks. The dollar on the other hand broke out of its falling wedge on Friday and could have a strong rally for 2-3 days. I feel most traders and investors have been shorting the dollar for two weeks straight, so once they realize it’s going higher there will be a ton of short covering and the dollar should rip higher.

This shift in the Dollar from down to up has a direct effect on the SP500 and subscribers of my newsletter are going to take full advantage of these next big moves in the market. Just Click Here if you would like to get my daily newsletter and trading analysis and trade exactly what I am trading.

Chris Vermeulen


Share

Sunday, January 30, 2011

Amazon Plunges And Trade Triangles Save The Day

Amazon shares fall 9.5% and the company’s founder reduces his holdings.

Amazon.com (AMZN), which posted its quarterly earnings on Friday, disappointed many investors with slipping margins. The market reacted quite dramatically with shares of Amazon skidding downhill for a loss of 9.5%. MarketClub members did not have to sit through this downturn as we exited Amazon on January 21st, some five days before the report. How did we know the report was going to bad? The truth is we didn’t know, but our “Trade Triangle” technology recognized that something was amiss and alerted members who follow Amazon to exit pronto.


As the graph will show, we have had two trades since September 1st of last year and in both of these trades we were successful, giving us gains of $36.85 a share. Our long term indicator continues to be positive on Amazon, but for now intermediate term traders should be on the sidelines counting their money and waiting for a better opportunity to re-enter this stock.

Another worrying concern is what Bank of America/Merrill Lynch said today, “Owning the stock here requires trust and patience. We have seen Amazon go through investment cycles before and believe investment in growth is the right long term strategy for the Internet.”
Not exactly a ringing endorsement in my opinion.

Well, forget trust and patience. We prefer to trust our “Trade Triangle” technology as it has consistently proven to be successful. Our “Trade Triangles” produced just 2 trades in Amazon since 9/1/10. Producing a very respectable 47% return in just five months. If you’re not already a MarketClub member, you should seriously look into our “Trade Triangle” technology. It will help get you into the markets at the right time and out before everything starts to slide.

You can learn more about MarketClub by clicking here and signing up for a 30 day risk free trial.


Share

Wednesday, January 26, 2011

The Big Secret Behind Gold's $100 Collapse

The question many investors are asking themselves today is, just what happened to the price of gold?

Did the world change? Did the problems in Europe go away? Did all the states manage to find funding to cover their deficits?

No, none of that happened, but gold still dropped $100.

It's all about market perception and timing, two things we've talked about many times before on the Trader's Blog. I don't know about you, but I remember when gold was over $1,400 an ounce and all I could see on TV where ads from gold companies extolling the virtues of buying gold as it is real money. Since the fall, I expect we'll see fewer of these advertisements on TV and in print. So what did happen to gold?

Well, for starters there were some key technical levels broken. If you're a gold trader, but not a technical trader, you really need to learn how to read charts and see what other traders are doing. A good way to understand that is by taking advantage of our free technical trading course from MarketClub....Just Click Here to get those 10 free lessons.

Secondly, there did not appear to be any other news to drive this market higher. When that happens, markets tend to fall under their own weight, and as many retail investors purchased gold, there was nobody on the other side of the market to support gold.

So the question is, is the move over in gold? That's a tricky one. I want to show you in today's video exactly how we're looking at this very emotional market. Every time we have created a video indicating that there would be some pullback in gold, we were bombarded by the gold bugs saying that we're crazy. When you see a market pullback as much as gold has, you have to have some respect for the market itself.

If we look at the price of gold today at approximately $1,330, it pretty much equates to what happened in the last 30 years when gold was trading at a high of $850 an ounce. If you factor in inflation over the last 30 years, gold is probably lower now than it was 30 years ago. So how good an investment is gold? I think gold is more of a barometer of fear than anything else. Clearly there are other investments in the marketplace that have better returns.

Let's get back to gold and what we think will happen. In this short video we analyze the market using our "Trade Triangles", the Williams%R, and the MACD indicator.

As always our videos are free to watch and there are no registration requirements. If you like what you see please comment on our blog and feel free to Tweet or email your friends. I think there's an important takeaway message in this video, what goes up, must come down. Enjoy the video.

Watch "The Real Reason For Gold's $100 Pull Back"

Share

Tuesday, January 25, 2011

Warning To Options Traders Looking at Netflix Earnings

One of the hardest things for me to remember is not to believe everything I see. I am a sucker for the latest “can’t lose” strategy supported by the experts. This morning I ran across a trade that looked too good to be true. I think it is, but I think it is instructive to walk through the potential hidden land mine. The event is the Wednesday afternoon release of NFLX earnings but there is a hidden trap for option traders using one commonly used earnings play structure.

The construction of the play is that of a “double calendar” spread. The underlying profit engine is an attempt to exploit the routinely seen spike in implied volatility (IV) of the options series most closely following earnings release. In this case, NFLX has weekly options which expire 48 hours after the scheduled announcement.

In order to understand the situation, let’s walk through the components. Just Click Here for the step-by-step analysis and expected price range.


Check Out Our Free Weekly Low Risk Stock Picks


Share

Forget About the Dollar; There are Other Ways to Make Money in the Forex Market

Most people immediately think about the dollar when Forex markets are mentioned. Sadly, the main reason is its declining value against the other major currencies. There are several ways to look at the foreign exchange markets and one of them is to compare other major currencies. For example, you could be looking at the euro against the Japanese yen or any number of combinations in between.

In today's video we will be looking at the Swiss franc versus the Japanese yen over the past 12 months. I'm going to be showing you a very simple, yet very effective, approach that has proven to be 72% accurate in 2010-2011 when trading this particular cross rate.

In fact, using this easy to understand approach, you would have made just seven trades in approximately 12 months. As you can see, this is not a hyperactive approach. However, it will put the odds of making money on your side if you stick to the game plan. As in all trading, having a game plan in foreign exchange is extremely important.

If after watching this video you would like to know more about our trading system and the indicators we use just take us up on our FREE two week trial of MarketClub.

We hope you find this video informative and educational. As always our videos are free to watch and there are no registration requirements. All we ask is that you let us know what you think by leaving a comment, talk about us on your blog, Tweet to a friend or share us on Facebook.


Watch "Forget About the Dollar; There are Other Ways to Make Money in the Forex Market"


Share

Monday, January 24, 2011

The Good, Not So Good, Bad & Ugly on the Indexes

Depending what type of trader you are and what you focus on the most for trading you could be either bullish or bearish on the stock market right now. The charts below show how the Dow Jones Industrial Average is bullish while the Small-Cap Russell 2K is bearish. Options expiration last week really mixed the market up as the market makers and the big money players manipulate stock prices in their favor.

Let’s take a look at the charts.....

DIA – Dow Jones Industrial Average Daily Chart
Crude oil has been holding up very well the past couple weeks and that has had an impact on the Dow. Additionally IBM had a huge move up which accounts for almost 10% of the DJIA’s price action. Both these factors have skewed the Dow index to look bullish.

Currently the price is trading above the 5 period moving average after briefly tagging it on Friday and then bouncing higher. Volume has picked up indicating more people are exchanging positions because of a shift in sentiment. Remember the Dow represents only 30 stocks so it does not provide a solid view of the overall market strength.


SPY – SP500 Daily Chart
This index closed below the 5 period moving average with rising volume once again indicating a shift in trader sentiment. The SP500 is heavily weighted with financial stocks and with the financial sector under pressure last week it helped to pull this index down. The fact that it closed below the 5 period moving average is just a warning sign to be cautious. Overall trend is still up in this index.


QQQQ – NASDAQ Daily Chart
As you can see the technology heavy index (Nasdaq), there has been more selling going on. The Nasdaq closed below both key moving averages and is now testing the 20 period moving average which is the line in the sand before I’m bearish on this sector. Tech stocks are typically a good indicator for the overall health of the market and if it does not recover this week or if it forms a light volume bear flag then watch out below.


IWM – Russell 2K Small Cap Stock Index
Small cap stocks are usually the first to pullback in the market. As you can see there is a big difference between this chart and the Dow Jones…

Small caps has broken key moving averages and are now nearing the 50 period moving average which I figure will provide a small bounce or pause before crashing through it. But with the amount of selling volume happening in the small caps it could just drop through that level and keep on going. Only time will tell and its best to wait for a low risk entry point before taking a position.


Weekend Trading Conclusion:
In short, the major indexes are giving mixed signals. While the Dow and SP500 are still bullish, we are seeing tech and small cap stocks breakdown. If things work out like they have in the past then the market is truly starting to put in a top. It could still take 5-10 days to play out. Usually the market will get choppy with large up and down days back to back and volatility will rise which can be seen by watching the VIX. I am currently neutral on the market and waiting for a low risk setup to unfold.

You can get my trading videos, analysis and trade alerts by subscribing to my newsletter The Gold and Oil Guy.com

Chris Vermeulen


Share

The State of the Markets

From guest blogger/analyst David Banister.....

I have been forecasting a Mid January top in the SP 500 (Us Markets) for multiple weeks now well in advance. My work had looked for 1285 as a minimal upside rally from the 1173 4th wave lows. The range was 1285-1315, we have been to 1296 but that pretty much should have capped off the rally. Here are some further thoughts:

Copper, Gold, Silver- All topping and rolling over for now. A few weeks ago I began to go bearish on Gold (And with it of course Silver), and the Elliott Wave patterns became very muddy and unclear. This was a warning signal. Also, the inability of Gold to pierce through the 1425-30 highs for a 3rd attempt indicated a triple top failure which I eluded to in an Email bulletin a few weeks back. The Gold, Copper, Silver topping and rollover movements are warning signals to be more cautious. Gold should work down to 1270-1280 eventually, and Silver to 25-26.50 ranges likely.

Small Cap Index- The TZA ETF I suggested on TMTF recently had a huge 2 day reversal rally on Thursday and Friday of this trading week. TZA Closed just over 16 and I see it moving to 19-20. We are long also in my ATP advisory service for insurance and gains potential. The Russell 2000 is rolling over first, which makes sense because the sentiment and strong economic rebound from the summer lows has peaked out. Small Caps are likely to correct the hardest in this wave pattern down, and so we shorted them instead of shorting the large caps or SP 500. To wit, this week the small caps dropped 3.5% and the SP 500 only 0.8%.

IBD 100 - The Investors Business Daily top 100 fell 5.4% this week collectively. A quick scan of the charts on those 100 reveals a lot of topping and weakness patterns to me. These would be considered leader small cap and mid cap growth stocks, and suggests further evidence of continuing correction in the markets.

Elliott Wave theory is scoffed at by many investors because they have been led to believe that Robert Prechter is apparently the only person on earth who has a license to use them. I’ll reserve my comments on his abilities, but you can gather that I tend to often disagree with his views and leave it at that. EWT works extremely well in the right hands, and that is why I launched TMTF last year, to share my views and my methods. This has allowed me to confirm summer bottoms at 1040 this year based on the movement from 1120 to 1040 (Which we also forecast). This allowed me to call a top on November 5th at 1225 after going just over my 1220 predictions made weeks in advance. This allowed me to call a bottom 4th wave at 1173-75 and a resulting rally to 1285 in advance. Not to mention April 2010 and January 2010 tops within days. Still think EWT is bunk? Try ignoring those who are biased and trade their biases. I dont trade Gold, Silver, or the SP 500 futures or indexes… that allows me to remain 100% objective and not force wave counts into my personal opinions.

EWT is not perfect, but nor is any forecasting methodology or technical analysis strategy. They all have their flaws. However, I try to blend in a few elements to back up my EW forecasts, so as to eliminate too many mistakes. Sentiment readings for one, and Fibonacci sequences for another.

Bottom line: I continue to be cautious on the markets and believe the SP 500 will drop to 1170-1180 on the LOW END, with 1210-1229 possible as the shallower end of a correction. The Russell 2000 will take the hardest hit, and probably has another 8-9% downside left before a bottom pivot. We remain long TZA to short that index at 3x multiple over at my ATP service. I have not shorted the SP 500 or large Caps on purpose, because I think the best place to short is small caps. I continue to recommend high cash positions for now (Im about 40%) so that you have money to buy into an oversold wave 2 bottom in the markets when it occurs. Gold will continue to correct with a bounce at 1310-1320 areas likely. I see it getting to 1270-1280 though as most likely.

Large Caps are likely to outperform small caps in 2011, as the bulk of the economic trough and rebound have now occurred and been priced in. Gold may struggle for several months but has a shot at hitting $1500-$1515 by years end, but one month at a time. That said, selective stock picking will always have the ability to trounce the index averages, and that is what I do over at Active Trading Partners.com.

Stay tuned!

If you would like to benefit from learning more about my methods, which have been historically accurate, please check us out at Active Trading Partner.com where you can sign up for free occasional reports.

David Bansiter


Share

Thursday, January 20, 2011

Panic Selling Hit SP500 Today, Silver and Gold Are Next!

On Wednesday the stock market bled out with a river of red candles. All of the recent gains vanished in one session. Strong selling volume sessions like this are typically a warning sign that distribution selling is starting to enter the market.

Distribution selling is when the big money players start unloading large positions in anticipation of a market top. They do try to hide it by selling into good news or earnings when the average investors are buying into all the hype of better than expected earnings on the news. As average investors jump into the market because of the good news, this extra liquidity helps the big money players (banks, hedge funds, etc..) sell large amounts of their positions to the eager buyers. This is why the “buy on rumor and sell on the news” saying is kicked around wall street.....

To me, panic selling is typically seen as a bullish sign to enter the market simply because if everyone is/has rushed to the door to sell what they own, then really most of the down side risk has been taken out of the market. That being said after an extended multi month rally and higher than selling volume I look at it more like distribution selling and a shift in momentum.

I feel the precious metals sector will be starting something like this in the near futures, and possibly it has already started as seen in the rising volume on the down days.

Let’s take a look at the charts…

AAPL – Apple Stock 10 Minute Chart
Two days ago AAPL shares took big hit because of some medical issues with the CEO, the shares did float back up. But what is important here is the distribution selling which took place after Apple came out with much better than expected earnings. The general public loves to buy good news especially when it’s for a famous company. But large sellers stepped in unloading as much of their position as they could before making it look to obvious.

The average investor listening on the radio or catching snippets on the news do not pick up on these things which is why the big money players can get away with this over and over again.


GS – Goldman Sachs 10 Minute Chart
Goldman came out with average earnings being just above estimates and the share price took a beating with very strong volume.

Distribution selling looks to be entering the market and this is a bearish sign. I would not be surprised if we see the market top out in the next 5-10 trading sessions.


SPY – SP500 10 Minute Chart
Here you can see my green panic selling indicator spiking up much higher than normal dwarfing the past sell off spikes. This makes me think the big money is now starting to unload which will shift the current upward momentum to more of a sideways whipsaw type of price action. Eventually it will roll over and a new down trend will start.

As you can see from this chart the SP500 is trading down at a support level so a bounce is likely going to take place. If in fact today was the first distribution day then the big money should let the price inflate back up to the recent highs and possibly make a new high to help keep investors bullish before the hit their SELL BUTTON again… They like to play these games and understanding them is a key part of trading. Expect choppy price action for a week or two…...


Silver Daily Chart – The Next Wave of Selling?
I look at silver and gold as one… so what I show here is the exact same for gold.

As you can see silver is trading under 3 of its key moving averages and Wednesdays bounce was sold into after testing the 14 and 20 period moving averages.

Take a looking at the bottom of the chart and you can see distribution selling volume as the spikes are all down days. If silver breaks below the $28 level then we could easily and quickly see the $26 and maybe even the $24 level.


The Mid-Week Market & Metals Trading Conclusion:
In short, the financial power players are pulling out all the tricks to shake traders out of their positions. A lot of people shorted the market in the past 2 weeks only to get hung out to dry and most likely stopped out of their short positions for a loss. Fortunately we did the opposite taking another long position in the SP500 ETFS because my market internal indicators, market breadth and simple trading strategy clearly pointed out that the average investor was trying to pick a top by shorting the market. As we all know, the market is designed to hurt the masses which is why I focus on the underlying trends, price action, volume and market sentiment for timing trend changes.

That being said, I still think the market could grind higher and make another new high. But any rally or new high will most likely get stepped on with heavy selling. Expect strong selling days followed by a couple days of light volume sessions where the price drifts back up into resistance levels. This could take a week or two to unfold so don’t jump the gun and short yet. It’s best to see more distribution selling before picking a top.

If you like these trading reports or if you would like to get my daily pre-market trading videos, intraday charts, updates and trade alerts be sure to join my newsletter. Visit The Gold and Oil Guy.Com

Chris Vermeulen


Share

Wednesday, January 19, 2011

Five New Ideas for Energy Markets to make Money With in 2011

2010 was an amazing year for commodity traders so we have to ask ourselves is the top in? Are we now in "bubble territory" when it comes to commodities like oil? And what about energy, do we still have room to run in the energy sector?

In today's short video we are going to show you some of the markets that we are looking at in the energy complex. We're going to be looking at coal, oil, solar and some other large energy companies and ETF's.

As this is a short video, be sure to check in and watch our webinar this Thursday, January 20th at 4pm EST/9pm GMT. You will need to reserve a spot as tour webinars typically reach capacity quickly. Just click here to register for this weeks webinar. As always all webinars are free to attend.

Take a look at what we will be covering in the webinar and check out our new portfolio manager which we will be using extensively throughout today's video. We also have a big surprise which will be announced at the webinar and I have no doubt that you will like. Today's video requires no registration and is free to watch:

Share

Sunday, January 16, 2011

Conquer the Market with the Same Indicator We've Been Using All Week

You only have to watch our earlier videos to see that it has performed very well this week in gold as well as the crude. In today's short video we want to share an ETF that is setting up nicely and should be giving us a buy signal using the same strategy that we used in the earlier gold and crude oil videos.

This ETF which closely follows the Swiss Franc (symbol FXF) is one you may want to take a look at. As you may be aware, the Swiss Franc is independent of the euro zone and is a separate currency that is backed by the Swiss government.

We think you'll enjoy this short lesson as it will reinforce the two previous lessons on how to use this indicator. In case you missed our earlier lessons, you can watch the gold and the crude oil videos on the INO Trader's Blog.

As always our videos are free to watch and there are no registration requirements. Feel free to discuss them on the INO blog, Tweet them to your friends, and e-mail anyone that you think could benefit from these educational trading lessons.

Share

Thursday, January 13, 2011

Precious Metals and the Dollar's Next Big Move

There is a potentially big setup in precious metals sector along with the dollar which looks like its about to unfold. Since mid-October of last year gold started to show signs of distribution selling. Only a month later in November silver started warning us that some big players were taking some profits off the table also. Distribution selling is easy to spot on the charts. In short you will see heavy volume selling accompanied with strong moves to the downside.

Now if we look at the US Dollar chart we see the exact opposite price action. We see sharp rallies during October and November of last year. It’s normal to say that gold and silver move inverse to the Dollar so this price action makes perfect sense.

The interesting thing with the US Dollar is that in Nov-December it rallied breaking through a key resistance level and has been consolidating above support ever since. If this bullish pattern (bull flag) plays out, then it’s just a matter of time before the dollar makes another strong rally upwards, which will put downward pressure on stocks and commodities.

Take a look at the charts below.....

US Dollar Daily Chart
The 50 period moving average has provided key support/resistance levels for the previous trends and if it holds true going forward then we are not far from another rally in the dollar.




Gold Futures Daily Chart
Gold moves inverse to the dollar so if we get a higher dollar then look for gold to have a stair step pattern lower.


Silver Futures Daily Chart
Silver looks about ready to do the same thing as gold.


Precious Metals and Dollar Trading Conclusion:
In short, we could see a major shift in momentum from up to down in both precious metals and the equities market. Keep in mind the market has a way of dragging out patterns/moves so while the chart looks bearish and I think a reversal is near, things could just chop around for another month or so before a definitive breakout is made. Choppy market conditions are great for trading options but no short term trend traders like myself. This is why you don’t want to anticipate moves (pick a top). Currently I am neutral on metals and the dollar waiting for a setup which must have clear risk/reward characteristics.

If you would like to receive Chris Vermeulen reports please join his free newsletter at The Gold and Oil Guy.Com


Share

Wednesday, January 5, 2011

How Long Can The SP 500, Precious Metals, & Bonds Rally?

In the fine print of most investment advertisements or in the softly spoken disclaimer at the end of a commercial, we generally read or hear the phrase “past results are not indicative of future performance”. While those exact words may not be written or uttered, something along those lines is found on almost any piece of investment literature or in investment product commercials.

In the 2nd half of 2009 all the way through 2010 a variety of asset classes performed quite well.

Investors who purchased stocks, gold or silver, and bonds anytime in 2009 were handsomely rewarded in 2010 if they held their positions. How long will these assets continue to perform well? How long can gold pump out double digit returns before suffering a bad year? How high can stocks climb when uncertainty seemingly surrounds the marketplace? Price action is never wrong, but history reminds us that a particular asset class does not outperform all other asset classes consistently over long periods of time. Trees do not grow to the sky.

Since 2009 stocks, precious metals, and bonds have all had tremendous performance records. Most economists point to actions by the Federal Reserve as the primary reason because these interventions lowered interest rates to extremely low levels which caused investors to take more risk for better returns. High levels of liquidity paired with low interest rates moved nearly every asset class higher, with stocks and precious metals earning outstanding year over year returns.

With 2011 just starting, will stocks, bonds, and precious metals continue rallying? When looking at probabilities and statistics the odds are not favorable that all 3 asset classes will remain outstanding investments. In fact, it is possible and arguably likely that at least one of the asset classes if not more than one will face headwinds in 2011 and beyond. While Tuesday was only the second day of 2011, precious metals are under significant pressure and the fundamental picture for bonds and stocks is uncertain.

Let me show you just how overbought this market is. Read > How Long Can The SP 500, Precious Metals, & Bonds Rally?


Share