Monday, February 28, 2011

Gold, Dollar, Stocks & Sentiment at Major Pivot Point

So far 2011 has been an interesting to say the least. Stocks and commodities have been jumping around with high volatility generating mixed trading signals. This choppy price action typically indicates trends are in their late stages. The late stages of a trend is very difficult to trade because volatility rises meaning larger day to day price swings, and at any time the price could either drop like a rock or go parabolic surging higher in value. Generally the largest moves take place during the final 10% of trend, but with a sharp rise in price keep in mind the day to day gyrations are much larger than normal, hence the false buy and sell signals back to back on some investment vehicles.

Taking a look at the charts it’s clear that we are on the edge of some sizable moves in both stocks and commodities. It’s just a matter of time before a correction is confirmed or this current pullback in stocks is just a dip (buying opportunity). I am in favor of the longer term trend at work here (bull market) but it only takes a 1 or 2 bid down days and that could change.

SPY (SP500 Price Action) – 60 Minute Chart
This chart shows intraday price action with my market internals. It is signaling a short term bottom within the overall uptrend on the equities market. The big question is if this is a just an opportunity to buy into this Fed induced bull market or the start of a larger correction?

Currently I am bullish but the next couple trading sessions could confirm my bullish view or a correction could be unfolding. Until then, we must remain cautious.


Price Of Gold – Weekly Chart
Gold has staged a strong recovery in the past four weeks. But it has yet to break to a new high. I do feel as though it will head higher because of the way silver has been performing (new highs). But it is very possible we get a pause for a week or two before continuing higher.

Because of the international concerns in the Middle East both gold and silver should hold up well even if the US dollar bounces off support. But, if the US dollar breaks down below its key support level we could see stocks and commodities go parabolic and surge higher in the coming months. It’s going to be interesting year to say least…....


Dollar Weekly Chart
This long term view of the dollar shows a MAJOR level which if penetrated will cause some very large movements across the board (stocks, commodities and currencies).

In short, a breakdown will most likely cause a spike in stocks and commodities across the board which could last up to 12 months in length. On the flip side a bounce from this support zone will trigger a pullback in both stocks and commodities. This weekly chart is something we must keep our eye on each Friday as the weekly candle closes on the chart.


Weekend Trend Report:
In short, 2011 has been interesting but trading wise it’s has yet to provide any real low risk trade setups which I am willing to put much money on. There are times when trading is great and times when it’s not. It all comes down to managing money/risk by trading small during choppy times (late stages of trends), and times when we add to positions as they mature building a sizable portfolio of investments which I think will start to unfold over the next few months.

I continue to analyze the market probing it for small positions as this market flashes short term buy and sell signals. Last week we say a lot of emotional trading and that typically indicates large daily price swings should continue for some time still so keep trades small and manage you positions.

You can get our FREE Weekly Analysis here at The Gold and Oil Guy.Com


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Sunday, February 27, 2011

The SPX, Crude Oil, Silver & The Geopolitical Risk Trade

While this week was shortened due to the President’s Day holiday, it has been quite a ride for traders and investors. The 24 hour news cycle certainly intensifies current market conditions as any news focusing on oil or the Middle East protests moves markets. Thursday the International Energy Agency came out and indicated that the expected drawdown in crude oil supplies coming from Libya was being exaggerated. Immediately upon the release of this information light sweet crude oil got hammered and stocks rallied from day lows.

By now most market prognosticators and the punditry will be out declaring that oil prices are going to continue lower and equities are on sale and primed for a snapback rally. I’m not sure that it is that easy. Mr. Market makes a habit of confusing investors with mixed signals. One thing is certainly clear from the recent price action, rising oil prices are not positive for equities here in the United States. What is also clear when looking at the Massachusetts Institute of Technology’s (MIT) version of inflation data (http://bpp.mit.edu) for the United States, it becomes rather obvious that inflation continues to ramp higher in the short term and also on monthly and annual time frames.

If inflation continues to work higher, it would be expected that light sweet crude oil futures prices would work higher as well. The dollar index futures have been selling off while oil and precious metals have rallied until the IEA news came out on Thursday. What should be noted from the recent uncertainty in the marketplace is that the U.S. Dollar Index futures did not rally. This is the “dog that didn’t bark.” During recent periods of market uncertainty such as the European sovereign debt crisis, the U.S. Dollar was considered a safe haven. This most recent market uncertainty caused by political instability in the Middle East has seen the U.S. Dollar Index futures sell off while gold and silver rallied as investors looked to the shiny metals for safety.


So what do all of the mixed signals relating to financial markets really mean? It’s simple, the U.S. economy is not on solid ground, rising oil prices will damage the economy, the world does not necessarily view the U.S. Dollar as a safe haven, and inflation is rising. With all of that being said, what if this is just the beginning of a major rally in energy and the metals? What if prices are going to pull back to key breakout levels, test them successfully, and probe to new highs? As can be seen from the chart above, the U.S. Dollar Index is poised to test recent lows. Should price test the lows and breakdown, oil and the metals could rally in lockstep in a parabolic move.

The daily chart of light sweet crude oil futures illustrates the breakout level that oil prices surged from.


I am expecting a test of that level at some point in the near future. If that level holds, oil prices could be poised to take off to the upside. If prices were to move considerably higher it could place downward pressure on equities and would correspond with the U.S. Dollar cycle lows which are expected by most sophisticated analysts sometime this spring. The intermediate to longer term fundamentals in the oil space are strong and technical analysis could also affirm higher prices very soon. If we see the key breakout level hold and a new rally takes shape on the heels of a lower dollar, the equity market could be vulnerable.

The next few days/weeks are going to prove critical as a lower dollar could change everything. A quick look at the silver futures daily chart illustrates the key breakout level which will likely offer a solid risk / reward type of setup.


As can be seen, silver has had a huge run higher and has broken out to new all-time highs. Gold has moved higher but has yet to breakout and could play catch up while silver consolidates. Longer term I remain bullish on precious metals and oil, but volatility is likely to increase in both asset classes going forward, particularly if inflation continues to increase. Patience and discipline will be critical in order to enter positions where the risk / reward validates an entry.

As for the equity market, it remains to be seen what we will see next week. I am not convinced that the issues in the Middle East are over and that oil is going to come crashing back down to previous price levels. Oil has broken out and if the breakout levels hold I would expect a continuation move higher. If we see price action in oil transpire in that fashion, equities will be for sale and prices could plummet tremendously.

I will be watching to see how much of the recent move lower is retraced. If we see a 50% retracement and prices rollover the S&P 500 will likely be magnetized to the 1275-1285 price range. If that price level is tested and fails, we are likely going to see a 10% correction and potentially more. The daily charts of SPX listed below illustrate the key Fibonacci retracement levels as well as the key longer term price levels that could be tested if prices rollover.



While lower prices are possible, if we see a retracement of the recent move which exceeds the 50% retracement level in short order prices will likely test recent highs and begin working higher yet again. The price action on Friday and next week is going to be critical to evaluate as many traders and market participants are going to be watching the price action closely looking for any clues that might help indicate directionality.

For right now, I am going to be patient and sit in cash and wait for high probability low risk setups to emerge. As I have said many times, sitting on the sidelines can be the best trade of all!

Get More Trade Ideas J.W. Jones visit Options Trading Signals.Com


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Friday, February 25, 2011

High Oil Prices Have Fund Managers Moving Into "Risk Off" Mode

Let's ask ourselves "what is the true cost of oil". Economists are furiously downsizing their economic growth forecasts for 2011 in the wake of the oil price spike, both for the US and for the world at large. Since last week, West Texas crude prices have soared $12 from $86 to $98. Each $1 increase in the price of oil jumps gasoline prices by 2.5 cents. Each one cent rise in the cost of gasoline takes $1 billion out of the pockets of consumers.

If oil stays at this price, it removes $30 billion from the pockets of consumers. At $110 a barrel, it short changes them by $60 billion, or 4.1% of GDP. Subtract this out from even the most optimistic GDP forecasts for this year, and you end up with negative numbers. That, my friends, is what they call a recession. If you wonder why hedge fund managers have lurched into an aggressive "RISK OFF" mode, are throwing their babies out with the bathwater, and why the volatility index is spiking to three month highs, this is why.



Posted courtesy of our partner John Thomas, "The Mad Hedge Fund Trader"


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Wednesday, February 23, 2011

A Short Gold Position Could Pay Off With This Scenario

In this 4 minute video we explain exactly what we mean by a "short gold position." It does not mean we are bearish on gold, however the scenario we point out in this video could make money by being short gold and long another important market.

The video points out what the scenario is, and which market you should be long in, against a short gold position. This is an interesting twist and a video you shouldn't miss.

As always our videos are free to watch and there is no registration required. Please feel free to re-tweet this video on Twitter or share this video on Facebook. Also take a minute to leave a comment and let us know what you think about the video.

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Tuesday, February 22, 2011

Netflix: An Extreme Example of an Open Interest Volume Trade

“I love the smell of napalm in the morning” Lt Col Bill Kilgore, Apocalypse Now

From guest blogger and analyst J.W. Jones......

One of the opportunities available to the knowledgeable options trader is the ability to capitalize on major price movements while maintaining an acceptable risk profile. These opportunities are particularly attractive when they occur late in the options cycle because of the rapidly accelerating decay of the time premium of options. In appropriately structured positions, this time decay can be a wind at your back as the time premium relentlessly goes to zero at the closing bell on options expiration Friday.

Let us consider the recent opportunity presented during the current options expiration week by NFLX. As an aside, for those of you who have read my columns before, remember that we recently discussed an earnings trade on this underlying. Lest you think my screen is stuck on this underlying, remember that not all vehicles exhibit adequate liquidity for options trading.

NFLX is a prime example of such a stock with huge Open Interest (OI), tight bid/ask spreads, and tremendous daily volume. These are the types of vehicles that work best for option trading. Beware of options with little liquidity, they can lead to “Hotel California” syndrome; you can check in but you can’t check out.

But I digress; let’s return to the situation in NFLX. This past Monday, the beginning of the February options expiration week, NFLX gapped up and reached an intraday high of $247.55, a price which represented an all time historic high for this stock. The chart is displayed below....


As is always the case in options trades, it is important to consider the reaction of the implied volatility to this price spike. As shown in the chart below, the rapid price rise resulted in a volatility spike. The at the money options went from an implied volatility (IV) of 34% at market close Friday to an IV of 44% at market close Monday. As another aside, many option traders consider that IV is inversely correlated to price. This current reaction demonstrates the more accurate view that IV is more closely correlated to the velocity of price change.


These factors together with my prognostication that this spike in price was, at least for the short term, not sustainable led to the initiation of a high probability trade. The structure of the trade was that of a put butterfly constructed with a bearish directional bias. The essence of the trade was twofold:

1. I expected downward movement in the price of NFLX.
2. A dual impact on the time premium sold within the butterfly.

This hypothesized dual impact would be both time decay into expiration and decreases in IV as the unsustainable price velocity slowed. The structure of the trade implemented Monday afternoon and its expected P&L behavior is graphed below.....


Pay particular attention to the lowest broken line; this represents the P&L characteristics at the time the trade was initiated. Using the options expiration break even points as stops, the point at which the solid red line crosses the 0 point, a potential risk:reward in excess of 1:7 is possible.

Over the next 2 days of market action, the prediction of a decrease in price came to fruition. At market close Wednesday I removed half of the trade and captured a return of 32.6% on invested capital. The remainder of the trade remains in place and currently shows a profit of around 40% on invested capital.

One of the important functional characteristics of option positions in general is the extreme dynamic nature of their profitability. It is for this reason that it is often wise to remove part of a profitable position in order not to suffer economic loss, and, more importantly, the damage to emotional capital from allowing a winning position turning into a loser.

When considering the dynamic nature of option positions, one of the fastest potential movers is a butterfly at expiration. As the position approaches expiration, the rapid decay of time premium results in extreme sensitivity to price movement. Butterflies turn from gentle creatures lazily flapping their wings in the breeze to man eating dragons as expiration approaches. Be prepared to slay the dragon before he can take your hard earned profits.

Get More J.W. Jones Trade Ideas at Options Trading Signals.Com......


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Saturday, February 19, 2011

Technical Formations Made Easy

This particular technical formation has been around for years and continues to produce good profits for traders who can spot it, and better yet, take advantage of it.

In this new short video we are going to share the market, the pattern, and a price projection where we think this market is headed based the MarketClub Trade Triangle technology.

We hope that this educational video will help you spot this very same technical formation in the future. The video is extremely short and will only take a few minutes of your time, however, the lesson is priceless.

As always our videos are free to watch and there are no registration requirements. Our only request is that you tell your friends about The Stock Market Club by Tweeting and sharing this post on Facebook and other social networking sites. We would also enjoy hearing from you, so please feel free to comment here about this video.

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Tuesday, February 15, 2011

Do You Know Where to Find our Stock Market Club Webinar Archives?

MarketClub webinars are a great free, educational and sales tool that allows users interact with Adam. Not everyone can make it to the live webinars whether it be because of the user limit, scheduling etc so I wanted to make sure you knew where you could find our webinar archives.

Here is a link to our latest webinar from February 9th...."Strategy Trading Webinar"

Here is a link to our "Upcoming Webinar Page". It will update with the latest webinar and information so you can continue to use the same link for your users for multiple webinars. It also has a list of archived webinars so that users can see all past webinars.

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Wednesday, February 9, 2011

Gold Miners Index May Be Warning Us…...

The past couple weeks we have been keeping a close eye the price of gold and the gold miners index. We check to see if its pointing to higher or lower prices in the near future using inter-market analysis, price and volume, along with technical analysis. At this time the charts are still pointing to lower prices in the coming days or weeks.

Taking a look at the daily chart of Gold
As you can see it has formed a bear flag with declining volume and the price has drifted up into a resistance level. This combination typically leads to lower prices. With international fears floating around and the fact that inflation has started does make me a little weary of shorting gold but one thing we have learned over the years is that trading on fundamentals and news clips seen on TV is not a reason to pass on a setup if one forms in the coming days.

The only thing that pays in the stock market is when the price action goes in your favor. This is why we focus on price, volume and momentum while avoiding what others are saying elsewhere. Trading is a numbers game and we put our money on the table when the odds are clearly favoring one direction. Unfortunately we are trading trades against what the masses think and feel is the right thing to do.


Gold Miner stocks are forming much of the same pattern as gold bullion but today (Wednesday) the chart actually put in a possible reversal candle. If this is correct then we should see gold and most likely silver follow suit tomorrow by moving lower and possibly even start a correction.


Gold Swing Trading Conclusion:
In short, gold stocks sold off strong today while both gold and silver closed only slightly lower. When this happens near a resistance zone, with a bearish price and volume patterns I start to look for a shorting opportunity. It has yet to happen and we are not going to jump the gun, but we are waiting for the right opportunity to take advantage of these trading instruments.

Just click here if you would like to subscribe to our daily trading analysis, swing trade alerts and newsletter.


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Tuesday, February 8, 2011

Precious Metals.....Precious Investments You Won't Want to Miss

Gold, silver & rare earth, which has the strongest trend right now? In today's video we will be looking at the gold market, analyzing the silver market, and finally, checking into the rare earth market.

Before you look at the video, you may want to consider doing this as an exercise: Write down which market has the strongest trend, up or down. Then rate the markets. Number 1....Number 2....Number 3.... Once you see the video it will become clear to you how we rate these markets. It might surprise you.

If you're using MarketClub's "Trade Triangle" technology the answer is simple and you'll discover it in a matter of seconds. If you haven't used our "Trade Triangle" technology, this will be a good exercise for you to look and see just how powerful this technology is and how it can help your trading.

We all know that gold has had a big move, but so have silver and rare earth stocks. So what's next? We hope this video helps outline some ideas that you can put to good use in the future.

As always our videos are free to watch and there are no registration requirements. All we ask in return is that you Tweet about us and share this video with your friends. Also, please feel free to leave a comment and let us know what you are thinking. Enjoy the video and every success in trading,

Watch "Precious Metals.....Precious investments You Won't Want to Miss"


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Sunday, February 6, 2011

Are Stocks and Gold Set to Move Higher?

Chris Vermeulen of The Gold and Oil.Com continues to bring us the best market analysis available anywhere. And today he shows us how he is trading this market with one foot in the bull camp and one foot in the bear camp.....

As most sophisticated investors and traders are aware, the U.S. Federal government has run up significant deficits and the long term debt burden is becoming a drain on Gross Domestic Product. That being said, most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary monetary policy begins to strangle growth. While that view point may prove right over the long haul, in the short run most traders are not likely expecting the U.S. Dollar to rally.

The U.S. Dollar is expected to reach a multi year cycle low in the near future. From the cyclical low, I expect the U.S. Dollar to regain a strong footing and work higher against the crowd. This is not to say that the U.S. Dollar will not eventually decline, but financial markets do not work that easily. Shorting the U.S. Dollar is a crowded trade and Mr. Market punishes crowded trades quite often by pushing prices the opposite of what the heard is expecting. Should the U.S. Dollar find a strong underlying bid, precious metals and domestic equities would feel the brunt force of such a move. While it remains to be seen if the U.S. Dollar rallies, if it does it will catch many traders and economists by surprise and the unwinding of the short dollar trade could unleash a wave of buying that we have not seen for quite some time.

Let’s take a look inside the market.....

Major Index Price Action Over The Past 12 Trading Sessions – Bearish
Below is a table showing the main indexes used for tracking the market. The interesting thing about this data is that the indexes which typically lead the market have been deteriorating for the past 12 days and no one has noticed.

In short, the Nasdaq, Russell and Dow Transport indexes typically lead the market

Every radio station and business channel covers the Dow and SP500 indexes therefor the general public hears the market performance based on the those indexes. The problem here is that the Dow only consists of 30 stocks and the SP500 only holds the top 500 companies which is not a full view of the overall market because there are thousands of stocks listed on the exchanges.

The analysis below can be taken two ways depending which boat you are in… which I will explain in just a minute. The way I see things is a bit of both, I’m not really in or boat or the other....rather I have one foot in each because I have seen the market do things which support both sides (manipulation and measured technical moves) during my 14 years trading.

Ok here are my thoughts/opinions/forecasts.....

Idea #1: Dow and SP500 indexes which 99% of the public use to gauge the market are moving higher on light volume. I feel because these indexes hold the stocks which everyone knows and is comfortable buying that this is the reason why they keep going up while the rest of the market silently erodes. It’s the simple thought that big money is moving out of leveraged positions (small cap stocks, transports, technology) in anticipation of a market correction, and the Average Joe continue to buy into brand name stocks boosting the Dow and SP500 thinking things are peachy.

Idea #2: We all know there is market manipulation, the question is how much of the price action is manipulation and how much is real supply and demand? No one will ever really know and that’s just part of the market and trading we have to deal with as traders. But I know there are traders out there blaming the Feds, POMO, and PPT for pushing the market up month after month. So the question is if these invisible forces manipulating the top 30-500 stock prices by buying them up which naturally boosts the Dow and SP500 indexes to keep everyone bullish on the market?

My thinking is that it’s a bit of both and that a correction is just around the corner.


Gold Miner Stocks Underperform Gold – Not a good sign
Gold stocks today (Wednesday) underperformed the price of gold and are also forming a bearish chart pattern. If this plays out then we can expect another sizable pullback in both gold stocks and the price of gold because this index typically leads the gold.


US Dollar Multi Year Support Trendline
The US Dollar is trading down at a key support level and if we get a bounce and possibly even a rally then we could see a sizable correction in stocks and commodities across the board. As we all know everyone is shorting the dollar, buying gold and buying food commodities…. So it makes sense that all these crowded plays are about to see a major shift. Now this is just my contrarian point of view and those of you who follow my work know I’m not bias in my trading. I just take the market one day or week at a time and play the setups. But you must step back and look at the larger picture and at least give it some thought....


Concluding Thoughts:
In short, the major indexes are moving higher on light volume which is not a strong sign, and other key indexes are pointing to lower prices. The question everyone wants to know is how low will this correction be? The answer to that is that you must play the trend as you never know if a trend will last 2 days or a year. I take the market one day at a time continually analyzing price action.

If you would like to get my detailed reports and daily videos covering my analysis please sign up for my newsletter at The Gold and Oil Guy.com

Chris Vermeulen


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Wednesday, February 2, 2011

Are Stocks and Gold Still Headed Higher?

From Chris Vermeulen, at The Gold and Oil.Com.......

As most sophisticated investors and traders are aware, the U.S. Federal government has run up significant deficits and the long term debt burden is becoming a drain on Gross Domestic Product. That being said, most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary monetary policy begins to strangle growth. While that view point may prove right over the long haul, in the short run most traders are not likely expecting the U.S. Dollar to rally.

The U.S. Dollar is expected to reach a multi year cycle low in the near future. From the cyclical low, I expect the U.S. Dollar to regain a strong footing and work higher against the crowd. This is not to say that the U.S. Dollar will not eventually decline, but financial markets do not work that easily. Shorting the U.S. Dollar is a crowded trade and Mr. Market punishes crowded trades quite often by pushing prices the opposite of what the heard is expecting. Should the U.S. Dollar find a strong underlying bid, precious metals and domestic equities would feel the brunt force of such a move. While it remains to be seen if the U.S. Dollar rallies, if it does it will catch many traders and economists by surprise and the unwinding of the short dollar trade could unleash a wave of buying that we have not seen for quite some time.

Let’s take a look inside the market.....

Major Index Price Action Over The Past 12 Trading Sessions – Bearish
Below is a table showing the main indexes used for tracking the market. The interesting thing about this data is that the indexes which typically lead the market have been deteriorating for the past 12 days and no one has noticed.

In short, the Nasdaq, Russell and Dow Transport indexes typically lead the market

Every radio station and business channel covers the Dow and SP500 indexes therefor the general public hears the market performance based on the those indexes. The problem here is that the Dow only consists of 30 stocks and the SP500 only holds the top 500 companies which is not a full view of the overall market because there are thousands of stocks listed on the exchanges.

The analysis below can be taken two ways depending which boat you are in… which I will explain in just a minute. The way I see things is a bit of both, I’m not really in or boat or the other....rather I have one foot in each because I have seen the market do things which support both sides (manipulation and measured technical moves) during my 14 years trading.

Ok here are my thoughts/opinions/forecasts.....

Idea #1: Dow and SP500 indexes which 99% of the public use to gauge the market are moving higher on light volume. I feel because these indexes hold the stocks which everyone knows and is comfortable buying that this is the reason why they keep going up while the rest of the market silently erodes. It’s the simple thought that big money is moving out of leveraged positions (small cap stocks, transports, technology) in anticipation of a market correction, and the Average Joe continue to buy into brand name stocks boosting the Dow and SP500 thinking things are peachy.

Idea #2: We all know there is market manipulation, the question is how much of the price action is manipulation and how much is real supply and demand? No one will ever really know and that’s just part of the market and trading we have to deal with as traders. But I know there are traders out there blaming the Feds, POMO, and PPT for pushing the market up month after month. So the question is if these invisible forces manipulating the top 30-500 stock prices by buying them up which naturally boosts the Dow and SP500 indexes to keep everyone bullish on the market?

My thinking is that it’s a bit of both and that a correction is just around the corner.


Gold Miner Stocks Underperform Gold – Not a good sign
Gold stocks today (Wednesday) underperformed the price of gold and are also forming a bearish chart pattern. If this plays out then we can expect another sizable pullback in both gold stocks and the price of gold because this index typically leads the gold.


US Dollar Multi Year Support Trendline
The US Dollar is trading down at a key support level and if we get a bounce and possibly even a rally then we could see a sizable correction in stocks and commodities across the board. As we all know everyone is shorting the dollar, buying gold and buying food commodities…. So it makes sense that all these crowded plays are about to see a major shift. Now this is just my contrarian point of view and those of you who follow my work know I’m not bias in my trading. I just take the market one day or week at a time and play the setups. But you must step back and look at the larger picture and at least give it some thought....


Concluding Thoughts:
In short, the major indexes are moving higher on light volume which is not a strong sign, and other key indexes are pointing to lower prices. The question everyone wants to know is how low will this correction be? The answer to that is that you must play the trend as you never know if a trend will last 2 days or a year. I take the market one day at a time continually analyzing price action.

If you would like to get my detailed reports and daily videos covering my analysis please sign up for my newsletter at The Gold and Oil Guy.com

Chris Vermeulen


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Tuesday, February 1, 2011

Why is Gold Not Going Higher With All of The Turmoil in Egypt?

Despite all the turmoil in Egypt and the Arab world, gold has stubbornly refused to rally. This probably causes great concern amongst the gold bugs and the folks who are bullish on gold. As we have mentioned before many times "perception is more powerful than fundamentals."

While the gold bugs argue that the market is being manipulated, we are more realistic and respect what the market is actually doing. The big question on everyone's mind is: Why are food prices and other commodity markets soaring, while gold is dismally staying down in the $1,330 area?

MarketClub's Trade Triangles are all Red, meaning that the trend for gold is likely to remain negative or at best move in a sideways fashion. Our best estimation at this point in time is that we are going to see more sideways action and probably some recovery from current levels. However, we would like to see some concrete evidence that the market has actually put in a low and that we will see a recovery in this yellow metal in the future.

Although historically our monthly RED Trade Triangles have not been successful in gold. You would have been more successful fading the RED monthly Trade Triangle signal and going long gold.

Before getting, "gung ho" on this approach, you will be better off waiting for a green weekly trade triangle to kick in which would indicate that the market has probably made a low. That is the main reason why, we recommend using the weekly Trade Triangles for trend, and daily Trade Triangle's for timing.

In this short video, we explain what we mean and show you concrete examples of how you can use this strategy to make money. As always our videos are free to watch and there is no registration requirements. Our only request is that you tell your friends, Tweet and Facebook about this article and the video. We would also enjoy hearing from you, so please feel free to leave a comment and tell us where you think gold is headed.

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