Tuesday, August 30, 2011

Adam Hewison: Is The Market Ready For A Rally?

The equity markets put in a very strong performance yesterday, pushing to their best levels since August 5th. We would not be surprised to see this very overbought market possibly rally to the 1230 area and 1250 zone.

The gold market once again bounced over the $1,800 an ounce hurdle and is currently trading at $1,822. This market needs to regroup further if it is going to challenge the $2000 level. The trend is in a positive mode despite the recent $200 pullback.

Crude oil is now very much overbought and approaching the upper levels of the Donchian trading channel. We expect that this channel and the fact that this market is overbought will provide enough resistance to any halt any further upside action.

The dollar index continues to bounce off the support level of 73.50 which we have outlined on numerous occasions. Currently this market is trading at 74.00. The CRB index has rallied quite dramatically after making a low on August 9th. This market is largely reflective of the move in crude oil.

Now, let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 70

The S&P 500 index rallied to its best levels since August 5th. However, this market is heavily overbought and we still view the longer term trend, based on our monthly Trade Triangle, as negative for this market. We would not rule out a potential rally to the 1230 level or even the 1259 level, both of which represent Fibonacci retracements. You may remember that the 1250 area was key support in this index. It would not be unusual for the market to go back up and test this level now as resistance.

SILVER
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trend = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 85

The silver market is definitely the stepchild of the metals market and would appear to be regrouping around the $41.00 level. Both of our intermediate and long term indicators are friendly to the silver market and we would not rule out further strength in the near term. The Williams % R indicator is trading around –50 and it is neither oversold nor overbought at this time.

GOLD
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 85

The gold market appears to be settling down around the $1,800 an ounce level and with our intermediate and longer term indicators still positive, we must remain in the bullish camp for now. It would appear as though the $1,770 level should provide some support on any pullbacks in this market.

The goal market is in the mid range of its major oscillator, the Williams % R, and therefore is not giving us any clues as to its next swing direction. We would imagine a move over $1,850 will be a very positive indicator for gold. Both intermediate and long term traders should maintain long positions with money management stops in place.

CRUDE OIL
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 65

Please note that our comments are based on the October contract. The 89.19 level we mentioned yesterday was enough to stop the current rally today. The crude oil October contract is very close to the top of the Donchian trading channel. On top of that, the market is extremely overbought and we would not be surprised to see a pullback from current levels. At the present time our long term indicator is negative and our short term weekly Trade Triangle is positive, sending a mixed picture for crude oil. However, the longer term monthly Trade Triangle must be given more weight then the two shorter term ones.

DOLLAR INDEX
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 60

Once again the dollar index bounced from the support level at 73.50. The market traded over the 74 level after finding support at 73.50. With a Chart Analysis Score of –60 we would want to trade this market using our Donchian Trading Channels and our Williams %R indicator. The index remains below its 200 day moving average while our longer term Trade Triangle remains positive.

REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 60

This index has put in a good performance largely through the move up in crude oil and other commodity type markets. At the moment our indicators are mixed, indicating the absence of a strong trend in either direction. The CRB index is overbought and also at the top of the Donchian trading channel.

We would not be surprised to see some profit taking coming in to this market and a pullback from current levels. Our bias is towards inflation in the future, but I’m expecting to see more of a two way market in this index in the next week or so. Intermediate and short term traders should be out of the market and on the sidelines at the present time.


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Monday, August 29, 2011

What is Next For Gold and the SP 500

Two of our partners, J.W. Jones and Chris Vermeulen, have partnered to give us special insight on how they are trading this market and how price action in coming weeks will offer clues about what lies ahead for U.S. equity markets......

Now that Mr. Bernanke’s speech is old news, what was the financial media thinking exactly? A significant number of financial writers have been anticipating discussion of QE III or QE III Lite which clearly were never even on the Fed Chief’s radar this week. The focus of the Jackson Hole Summit was how to achieve long run growth, not conduct discussion of monetary policy.

QE III will not be discussed openly until the next FOMC meeting in September, which noticeably was extended to two days. Besides the extension and the Fed Chairman’s prediction of growth in the back half of the year, the remainder of Mr. Bernanke’s speech was nothing more than a brief synopsis of what he has already said in the recent past.

While Chairman Bernanke focuses on the U.S. economy, I have been more inclined to monitor the action across the pond. Price action in Europe is having a major impact on financial markets here in the United States. Traders are monitoring credit default swap (CDS) spreads on European sovereign debt as well as on domestic and European banks.

Recently U.S. banks have seen the CDS swaps on their debt rising indicating that the marketplace believes their debt is a greater risk to investors. While the price action is nowhere near the 2008 & 2009 levels, current prices are relatively consistent with what was seen during the correction in the late spring of 2010. While there is no reason to panic at this point, this is a trend that I will be monitoring closely going forward.

For now, I continue to believe that equity markets will rally in coming weeks as conditions are extremely oversold. The price action so far today makes sense as the wild price swings helped flush out weak hands that were long. Consequently, the snap back rally pushed shorts into stop levels as well.

A significant move lower does not seem likely at this point, but a retest of the recent lows is possible, if not probable. I would remind readers that stock market crashes generally happen within the context of an oversold market. While the likelihood of a crash is remote, it is still possible and tight risk definition in this environment is warranted regardless of which side of the tape a trader is playing.

One price chart that I have been watching closely is the German DAX. The German DAX is presently a thermometer for traders to monitor the situation in Europe. The reason the German stock market index is so important is due to the financial strength of Germany within the Eurozone. Without Germany, the Eurozone would crumble in on itself and the Euro currency would be in trouble. Recently Germany’s equity markets have been crushed and the daily chart below illustrates the recent carnage:


Another metric I monitor regularly is market momentum. The chart below illustrates the number of domestic stocks trading above their 200 period moving averages. As can be seen below, the U.S. equity market has not been this “oversold” since back in 2009. Chart courtesy of Barchart.com.


In my previous article posted back on August 18th, I discussed the likelihood for stocks to pullback and put in some form of a basing pattern. I wrote the following statement in that article:

“It is entirely plausible that Mr. Market thrusts lower from here to shake out longs. If that scenario plays out it could potentially carve out a double bottom or another basing pattern which would give active traders another entry point to get long.”

Since August 18th, we have seen the S&P 500 push lower and there is a double bottom on the daily chart which is capturing quite a bit of attention in the trading community. I would also draw your attention to the wedge pattern that is also present. A breakout higher or lower out of this wedge pattern will be the clue that will indicate Mr. Market’s short term price direction. I continue to believe we will see a breakout higher, but a retest of the lows is always a possibility. The daily chart of the S&P 500 Index is shown below:


In the short to intermediate term, I believe we will see higher prices and a test of the key S&P 1,220 area or possibly a re-test of the key S&P 1,250 price level which corresponds with the March 2011 pivot lows. Additional resistance would come in around the 1,260 – 1.270 area which marks the neckline of the recent head and shoulders pattern which triggered the selloff in the S&P 500. The daily chart of the SPX below illustrates the key resistance areas:


Gold Analysis
My most recent article argued that gold prices were going parabolic and that a pullback was likely. We have seen a major pullback in gold prices. Admittedly, I was about $200 an ounce early on my call, but members of my service were able to capitalize on an option trade that captured 32% based on maximum risk through the use of a double calendar spread. While my timing was not precise, the juiced volatility in the GLD options allowed me to roll contracts forward and make additional adjustments to produce a strong gain for the service.

Some traders argue that gold prices are going to rally back sharply in short order, which I find hard to believe. Instead, I am of the opinion that we could see additional downside in the weeks/months ahead in gold prices. There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff. The daily chart of gold is shown below:


While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme.

While I believe stocks will rally in the short to intermediate term, I am of the opinion that we have officially entered the next phase of the bear market. The next wave lower in stocks is going to be just as severe as the likely rally in gold.

The reason I believe gold will rally is primarily due to future weakness in Europe. If European banks have a credit crisis, a sovereign nation unexpectedly defaults, Germany leaves the Eurozone, or a currency crisis transpires gold prices should soar while U.S. equity prices tank.

While it is far too early to make that determination, if the S&P 500 puts in a lower high on this next advance higher and consequently takes out the recent lows on a selloff, the bear will be in full swing and gold prices should take off. The chart below illustrates my expectations for the S&P 500 in the future:


The next few weeks are going to be very telling about the future in domestic markets. Is this just a correction that pushes stocks higher by the end of the year, or is this the beginning of something far worse?

For now I am going with the latter, but price action in coming weeks will offer clues about what lies ahead for U.S. equity markets. Right now this is nothing more than speculation, but the next few months should be very interesting. Risk remains exceedingly high.

Check out J.W. Jones site at  Options Trading Signals.Com for a 24 hour 66% off coupon. And sign up for Chris Vermeulens unique services at The Gold and Oil Guy.Com

Sunday, August 28, 2011

Borrowing From Warren Buffett.....a Good Thing?

The major spin last week was the fact that Warren Buffett lent Bank of America $5 billion. But Warren is no fool, who wouldn’t want to get 11% on their investment guaranteed. Well, that’s pretty much what Warren got with Bank of America.

So what does that tell us, (1) that Warren is a very shrewd and hard nosed investor, and (2) Bank of America is in serious trouble, and is willing to pay that kind of interest for new funds. Just think about it, you only get 2% on a 10 year treasury.

It remains to be seen whether or not Bank of America is a good stock. Right now our Trade Triangle technology still indicates that the trend is down and has been for quite some time. If you are a member of MarketClub you can clearly see this on the charts where our Trade Triangles indicate exits or short sales. Sorry Warren, as we do not yet have 5 billion dollars to invest, we are sticking with our tried and true Trade Triangle approach to the markets.

The 4 week losing streak in equities came to an end last week with a positive bounce of 4.74% for the S&P500. With a positive bounce for equities, investors decided gold and silver had rallied high enough and decided to take some money off the table. That action created heavy selling and profit taking in both metals. By weeks end, gold had managed to recover much of its losses and closed out the week with a loss of 1.34%.

Crude oil and the CRB index both rose 2.99% and 1.84% respectively. The dollar index lost ground for the second week in a row, but remains above key support at 73.50.

Now let’s go to the weekly charts and see what happened last week in the major markets according to our Trade Triangle technology.

S&P500: Change for the week: + 4.74%
Monthly Trade Triangles for Long-Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Positive
Combined Strength of Trend Score: = – 75

Silver: Change for the week: – 3.68%
Monthly Trade Triangles for Long-Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = + 85

Gold: Change for the week: – 1.34%
Monthly Trade Triangles for Long-Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = + 85

Crude Oil: Change for the week: + 2.99%
Monthly Trade Triangles for Long-Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 70

Dollar Index: Change for the week: – .76%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = – 55

CRB Index: Change for the week: + 1.84%
Monthly Trade Triangles for Long-Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 70

Here's our week ending video....


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Friday, August 26, 2011

“Day Trading Made Simple” Now Playing on Trend TV

William Greenspan has over 155 consecutive winning months using his “day trading” system. As a day trader since the early 70s, he has walked in the pits of the CBOT and CME practicing his philosophy of making “a million dollars on a million trades, not a million dollars on one trade.”

Greenspan shares his strategy as well as best practices for successful trading on Trend TV

“Discipline. That’s the key to success in so many aspects of life and it’s the main ingredient of any successful trading plan. But, what does discipline really mean to an intraday trader?
Discipline means taking small quick losses and letting your profits ride. That’s the key to all successful trading. Discipline means using stop loss orders on every trade to limit your losses and moving your stop loss orders to protect your profit.

That’s kinda like grooming your position. When you have a profit in a trade, you should take your stop loss order and move it first to your break even point, and then if your trade continues to trend your way, to always protect your profit along the way. Three, discipline means following all the buy and sell signals that your trading plan or system of trade has to offer you.

In all trading you must expect losses and you must accept them gracefully, because it may take only one mistake to wipe out the profits of ten winning trades…”

To watch the full video with William Greenspan, please visit Trend TV. Once you receive your password, you can visit Trend TV anytime and watch new videos as they are added.

We hope you will be able to use Greenspan’s experience to grow your profits and protect you from that one big mistake.

Just Click Here to take advantage of everything Trend TV has to offer!

Thursday, August 25, 2011

The 7 Steps Of Every Market – Ignore Them At Your Own Peril


Step 1: A move begins with the sponsors (smart traders) who have insider knowledge as it relates to a particular stock or market. This information will move a market up or down depending on the insiders’ information. These buyers are smart, very smart, and recognize trading/investment opportunities very early in the markup cycle.
Step 2: Days, weeks, or sometimes months after a move has started, there is a brief mention in the electronic media (radio, cable, TV) or on one of the internet chat boards that a market has moved. The public hears for the first time and begins to get interested, but does not buy.
Step 3: A blurb of information appears in print media. The move also begins getting more exposure on blogs and internet message boards. The public starts paying a little more attention, and will buy a little bit.
Step 4: Wall Street and LaSalle Street brokers go into full hype mode and hawk the market to their customers. The public begins buying in greater volume.
Step 5: A full blown front page article appears about the particular stock or market in one of the major financial newspapers, magazines, or financial websites. This is often six months after the fact and after a market has shown its greatest appreciation. There is often heavy public buying, even a possible frenzy, as all media, brokers, and so called “gurus” start to tout the market.
Step 6: As step 5 gets underway, the sponsors or smart traders begin to move out of the market and take their profits off the table.
The Final Step: The move ends, the market falls, and investors lose money.
Does any of this sound familiar to you? If it does then you know the key rules of engagement in the market. If none of this is familiar to you then learn to recognize these seven steps asap. Your financial life depends on it!!
This is how the markets have worked since the beginning. I hope this insider market tip is of help to you.

Markets Move on Buffetts 5 Billion Dollar Bank of America Investment

The S&P 500 index was higher overnight as news of Warren Buffett buying 5 billion dollars worth of troubled Bank of America preferred stock hit the news wires. Rumors were already supporting the markets as traders suspect Federal Reserve Chairman Ben S. Bernanke may announce steps to boost the economy in his speech tomorrow from Jackson Hole. The overnight move extends this week's short covering rebound.

Stochastics and the RSI have turned bullish signaling that sideways to higher prices in the SP 500 are possible near term. Closes above last week's high crossing at 1206.50 are needed to confirm that a low has been posted. Closes below this month's low crossing at 1103.20 would renew the decline off May's high.

First resistance is the 20 day moving average crossing at 1184.68. Second resistance is last week's high crossing at 1206.50. First support is this month's low crossing at 1076.10. Second support is the 87% retracement level of the 2010-2011 rally crossing at 1047.03.

Monday, August 22, 2011

Adam Hewison: Forget The News If You Want To Trade Successfully!

Many news stories, particularly when it comes to the markets, are basically fed to reporters by folks who have a vested interest in that particular market. I’ve seen this happen time and time again, when information is given to an online anchor or someone else who is on air and reading the latest news. The information that they report, may be not accurate. In the competitive rush to get news online, and be the 1st to break a story, very few stories are ever checked and triple checked.

So we wake up this morning with the potential conflict in Libya over, and Libya’s Colonel Qaddafi’s 42 year reign of insanity has maybe come to an end. Based on that news, the Dow rallies up over 200 points. Let’s see, that little conflict cost the US about 1 trillion dollars, money we don’t have. How could that be good for the market?

Now we are tying the news in Libya to the markets here and the terrible economic conditions that exist, it is a stretch by anyone’s imagination. The truth is, that the markets probably rallied based on a short covering. Many active traders went home with short positions over the weekend. When the markets did not follow through to the downside they quickly covered their short positions and pushed the market higher.

So here’s my advice, do not pay too much attention to the news. Let the market, and the price action give you all the direction you need. Market action is the # 1 item to watch to be a successful trader.

Now, let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

Remember, despite the big call this morning, the major trend is down for the equity markets. Today’s strong rally was probably an opportunity to go short. We see this market going lower.

SILVER
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 100

Our Trade Triangles kicked in perfectly with a buy at 42.20 basis spot. Based on this signal, all traders should be long this market or looking to trade silver from the long side.

GOLD
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 100

Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops. It looks more and more likely that we will get close to the magical $2,000 an ounce. We expect to see professional profit taking and some shorting at that level.

CRUDE OIL 
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90

Despite the knee jerk reaction rally based on the news out of Libya, the trend in crude oil is bearish. Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops. The longer term trend for crude oil is down based on our Trade Triangle technology.

DOLLAR INDEX
Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55
This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of + 55 we would want to approach this market using our Donchian Trading Channels as well as our Williams %R indicator. The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.

REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 100

While our bias is towards inflation, the index is currently indicating that we are in more of a deflationary scenario. We want to remain patient and let our Trade Triangles signal when this market has made a trend change to the upside. Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.


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David Banister: Is Gold on the Verge of a Major Correction?


Just under two weeks ago I wrote about gold likely running to a final top with various levels ranging from 1862 to 1907 per ounce as likely. So far, we bottomed with a pivot at $1730 which I mentioned to my paying subscribers and we have run to as high as $1898 per ounce counting futures trading on August 22nd. What should we expect now as the most likely intermediate trading pattern for Gold?

Clearly, Gold is overbought on traditional technical measures such as RSI, MACD, and Moving Averages and more, so that is one warning flag. To wit, Gold historically pulls back pretty aggressively anytime it has run much above its 20 week EMA line. On a daily chart that stands at about $1730 per ounce, and on a weekly chart around $1580 per ounce. This week marks Fibonacci week #8 from the 1480 pivot lows of a wave 4 pattern I outlined for my subscribers as likely to turn gold higher to 1730 plus. In addition, we are 34 Fibonacci months into this 5 wave Bull Run from the October 2008 $681 lows.

I use Elliott Wave Theory combined with sentiment indicators and other measures to help determine major buy and sell pivots for Gold, and this methodology has been extremely accurate and successful for years. Right now I can count Gold as coming into a final 5th wave thrust to all time highs with sentiment running at huge extremes and technical patterns screamingly overbought. This action in Gold over the last many weeks reminds me of the final blow off top of the NASDAQ in 2000 as it ran from 4000 to 5000 in a few months and exhausted the buyers. This 5 wave pattern began 34 months ago and the final 5th wave usually drags as many taxi cab drivers onto the back of the Bull just in time to dump them off with a bag in their hand and no ride.

The bottom line is Gold is in a 13 year upwards cycle, and we are in about year 10 and it’s due for a likely pause in the uptrend, and certainly a correction of 10-15% would be normal in any massive bull cycle to kick all the bulls and latecomers off the back of the charging Bull. This pause should be a Primary wave 4 consolidation, where 2 and 4 are corrective and 1, 3, and 5 are bullish cycles.

Below is the latest chart on gold, not counting the overnight $1898 highs last night, but you can see that Gold is above the normal pivot high lines where we have seen major corrections over the past 34 month up cycle. A major parabolic blow off rise is of course possible, but hedging long positions and or considering shorting gold for the more aggressive players is advised:


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Chris Vermeulen: Crude Oil and Gold Thoughts....What is Next?


The past few weeks have been fast moving with fearful investors clearly in control. As we all know fear is the most powerful force in the financial market and when the hedge funds and the masses get spooked they all dart in one direction like a school of fish. Watching the charts and volume levels it’s clear that money was/is flowing out of stocks and into precious metals as the risk off safe play. 

To make a long story short, I feel as though Euro-Land is going through something similar to what we (the USA) went through in late 2008 and first quarter of 2009. Keeping my analysis simple and to the point it’s very likely that Euro-Land will resolve their financial issues and their stock markets will bottom in the next month or so… If their market bottoms, so will the US market, which will be perfect timing as the market is currently oversold, sentiment is now turning bearish and we have had a sizable pullback in line with normal bull market corrections.

My thinking looking forward 2-6 weeks is that stocks rally, financials rocket higher, bond prices fall, gold falls and oil rises as it will be a risk off trading environment again. Of course all this would happen after Euro-Land resolves some of their key financial issues. I’m being very optimistic here but we could be nearing a major low that could kick start another massive 1 year rally.

Stepping away from that longer term outlook let’s take a peek at the shorter term trends for oil, gold and stocks.

Crude Oil 60 Minute Chart (1 month view)
The recent price action for crude oil remains bearish/neutral in my opinion. We saw a drift higher into resistance with declining volume then a sharp pullback on heavy volume. This tells me oil remains in a down trend. It may be forming a base which would act as a launch pad in the coming weeks for higher prices but only time will tell and I will update as price unfolds.


Gold 4 Hour Chart (One Month View)
Gold has been performing very well for our entry point but the recent price action is starting to look toppy. Gold and many commodities regularly form this pattern of three wave pushes to new highs just before a sizable correction takes place. I am bullish on gold long term and for a few more weeks, but I do feel as though there will be a multi month correction in the price of gold (Read More) soon so be sure to tighten your protective stops as price moves higher.


SPY ETF Weekly Chart (Two Year View)
The stock market has been hit hard and a lot of damage has also been done to the charts on a technical stand point. The amount of damage and fear that has happening generally takes some time to stabilize and heal before another move takes place. Until Euro-Land resolves some of their major issues the US market will be held hostage and under pressure. So I anticipate several weeks of volatility and wild daily price swings similar to what we saw in July of 2010. This type of trading environment can work very well for options traders (Read More).


Weekly Trading Conclusion:
In short, the market price action is favoring very short term traders (day traders). We are seeing complete price swings which can normally be swing traded happen in just hours… Until we get another extreme setup or stabilization (less big headline news) in the market we will be more of a spectator than a trader to preserve capital.

Consider subscribing to Chris Vermeulens calls so that you will be consistently informed, have 24/7 Email access to me with questions, and also get Gold, Silver, SP500 and Oil Trend Analysis on a regular basis. Subscribe now at The Gold and Oil Guy.Com

Sunday, August 21, 2011

Weekend Video Update: European Sovereign Debt Problems Spill Over into Global Equity Markets


Once again, the problems with sovereign debt in Europe  spilled over into the global equity markets,  and in particular the bank stocks. Europe is “the tail that wags the dog”, and in this case,  it’s the world.
For the 4th straight week, US equities closed lower and under heavy selling pressure.  Gold on the other hand soared to new highs, on fears that the sovereign debt crisis is escalating and getting totally out of hand. (It’s already out of hand).
With world equities coming under pressure crude oil was not immune to the potential of less demand for this commodity. With that in mind crude oil slipped 3.6% for the week.
So there you have it, the trends continue,  and these trends are likely to continue in the near future.
Now,  let’s go to the weekly charts and see what happened last week in the major markets according to our Trade Triangle technology.
S&P500: change for the week: – 4.68%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 100
Silver: change for the week: + 9.76%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short-Term Trends: = Positive
Combined Strength of Trend Score: = + 100
Gold: change for the week: + 6.02%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = + 100
Crude Oil: change for the week: – 3.65%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = – 90
Dollar Index: change for the week: – .77%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = + 55
CRB Index: change for the week: + 2.97%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = – 100


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Thursday, August 18, 2011

The Trend is Your Friend – How True Those Words are Today!

We have been on the right side of the markets for quite some time now.  It is in times like these when technical analysis really shines.  It doesn’t matter if you have a strong upward trend in gold or a downward spiraling trend in stocks, technical analysis works.

We feel we have a target rich area for trading opportunities right now.  Some of the best money can be made during periods just like this.  A key to being successful in markets that are having large moves is to be disciplined and follow MarketClub’s Trade Triangles.

So let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011. 
S&P 500
Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100
Today’s action in the S&P 500 is a further reinforcement of the downward trend that has been in place for quite some time.  As we said in yesterday’s comments, you must remember that the major trend is down for the equity markets and strong rallies represent shorting opportunities.  Looking at the weekly charts, a close at current levels would be extremely negative.  The lowest close we have seen on the S&P500 this year is 1119.46.  This is another level to watch carefully.  We see this market going lower.

SILVER
Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Positive
Combined Strength of Trend Score                                    = + 75
Consider these words of wisdom… Do not buy silver because you think it is cheap in comparison to gold.  The market continues to be in a broad trading range without a clear-cut trend at this time. Intermediate term traders should be on the sidelines and out of silver.  A Chart Analysis Score of + 75 indicates a two-way market and a trading range.  Let us be patient and wait for our Trade Triangles to kick in and give us a solid signal.

GOLD
Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Positive
Daily Trade Triangles for Short Term Trends                     = Positive
Combined Strength of Trend Score                                    = + 100
The gold market moved to new highs today taking out the previous high of $1814.41. This last surge in gold was caused by a panicky situation in Europe, especially with the European banks.  Uncertainty over bank stocks pushed many of the European banks and the US banks to the downside today.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.

CRUDE OIL 
Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100
$88.32 was a 50% Fibonacci retracement area, and this level was hit yesterday.  It was enough to stop this market on the upside.  As you know, we have been bearish on crude oil from the weekly Trade Triangle on August 1st at $94.02 a barrel.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.  The longer term trend for crude oil is down based on our Trade Triangle technology.

DOLLAR INDEX
Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 60
Our comments today remain pretty much the same as they were yesterday, as there has been very little directional change in this market.  The 73.50 level continues to act as support for the dollar index. This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of -60 we would want to approach this market using our Donchian Trading Channels as well as our Williams %R indicator.  The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.
REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100
The Reuters/Jefferies CRB commodity index has turned back from the Fibonacci retracement level of 50% at 332.95.   This level was hit yesterday.  While our bias is towards inflation, the index is currently indicating that we are in more of a deflationary scenario.  We want to remain patient and let our Trade Triangles signal when this market has made a trend change to the upside.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.


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As always, we rely on our market proven Trade Triangle technology for catching the big moves.

J.W. Jones: Are Gold and the SP 500 Behaving Logically or Rationally?


Back on August 7th the S&P 500 was in the midst of a panic induced selloff and the bulls were running scared. Prices were collapsing and the bulls were racing to the exits. In the following weeks, piles of money flew out of equity mutual funds as the retail investors rang the register and pulled their money out near the lows which seems to be a regularly recurring event.

While most market participants were clearly panicking, I was sitting back watching the market push lower with complete focus on being ready to initiate long positions near the lows. I sent out multiple warnings to members of my service to raise cash and reduce risk. I sat in cash and watched the madness unfold in real time.

Admittedly I did not expect the selloff to be as severe as it was and unfortunately I did not get involved with any short exposure. However, my focus is always forward looking and opportunities will present themselves again and protecting my trading capital is always my primary focus.

My article that went out August 8th was focused on downside momentum in the marketplace as well as key areas where I expected price action to hold at support. I was expecting the S&P 500 to find support around the 1,130 price level. I will be the first one to admit I am not one for making bold predictions, but I’m not scared to identify key long term support levels which have the tendency to mark bottoms in price action.

While price ultimately undercut my 1,130 target price level on the S&P 500, the following day a giant reversal bar formed which captured my interest and on August 10th I entered long positions with tight stops below the recent lows and members and I were quickly rewarded. I closed the remainder of the trade today and locked in a 32% return based on maximum risk in essentially 1 week using a basic option strategy which levered up my position.

Now I find myself with very little exposure and I’m pondering what to do. First of all, a quick glance at the short term momentum charts illustrates that price action is still extremely oversold. However, oversold conditions could worsen further potentially. The chart below illustrates the amount of stocks trading above their 20 period moving averages:

It is obvious that price action in the S&P 500 is clearly oversold and equities have considerable room to rally. However, I would point out that oversold conditions can be worked off as function of the passage of time and not just higher prices. I continue to believe that we will see the S&P 500 test the 1,220 price level and will likely move on to the 1,250 area. If price action can work above the 1,250 price level the neckline of the head and shoulders pattern will act as a key resistance area. The daily chart of the SPX is shown below:


The key levels outlined correspond with major support areas that are either carved out by previous pivot lows or through Fibonacci retracement levels. At the very least, I expect price action in the S&P 500 index to test near the 1,220 price level as it will mark a .500 Fibonacci retracement area.

I would not be at all shocked to eventually see the neckline of the head and shoulders pattern backtested to verify resistance. The head and shoulders pattern that helped propel prices lower is clear when looking at the weekly chart. I first wrote about the pattern back on July 8th and presented the following chart:



It is entirely plausible that Mr. Market thrusts lower from here to shake out longs. If that scenario plays out it could potentially carve out a double bottom or another basing pattern which would give active traders another entry point to get long. I think we are weeks from having a possible test of the recent lows on the S&P 500 as it is going to take the broad marketplace quite a while to digest the selloff and work off oversold conditions as a function of time and/or price.

Price action would be healthier if we pulled back a bit here before attempting to attack the resistance at the key 1,200 price level on the S&P 500. If prices continue to race higher in a short period of time I would consider the price action to be more of a warning that lower prices are around the corner.
While anything could happen, I believe that the S&P 500 will test the recent lows which need to hold desperately. I want to be a bull very badly, but right now unfortunately I cannot be bullish because a variety of indicators and analysis suggests that lower prices may await us.

By now most readers recognize the monster bull market that gold and silver have enjoyed for nearly a decade. I do not intend to provide a history lesson, but during the last equity selloff investors and traders alike fled to Treasuries and the yellow metal for safety while nearly every other asset class sold off. Gold put in a new all time high on August 11th and price quickly sold off.

Since then we have seen gold climb back up and at this point in time it appears to be poised to test the recent highs. Some market pundits say gold is in a bubble while others say prices will work higher. In my estimation as long as the Federal Reserve has loose monetary policy gold prices will continue higher over the long term. At this point in time it does not appear likely that the Federal Reserve will tighten monetary policy until after the election at the very earliest.

Instead of arguing the economics behind gold prices and the inflation/deflation debate, I am more interested in where price action may be headed. At first glance on the daily chart of gold futures it could be said that gold has accelerated significantly higher in a short period of time. There are plenty of traders that believe gold has gotten ahead of itself and desperately needs a strong correction to shake out weak ownership.

Interestingly enough these same traders and investors have been calling for a major selloff in gold for quite some time. While I have written about coming corrections, I have always maintained a long term bullish stance on gold and silver due to the Federal Reserve’s current monetary policy.

Yet again, I find myself expecting to see gold selloff in what could play out as a double top on the daily chart. I am going to be watching the price action closely looking for a possible entry to take advantage of lower prices. At the same time, I am not willing to go charging in until I see some confirming signs that gold prices will head lower.

If gold prices push above the recent highs with additional momentum gold will trade higher yet. The next few days should be very telling as a large move could be setting up in the yellow metal in the near term. The daily chart of gold is shown below:



While the daily chart clearly illustrates the potential for a double top to emerge, the weekly chart has a more parabolic look to it. If a significant correction in the price of gold sets up for traders to take a longer term short trade, then a major reversal or topping pattern should come into focus in the next few weeks.
While a short term trade to take advantage of lower prices in gold might produce some fast money, longer term traders need to be patient and let gold confirm lower prices before getting involved. The weekly chart of gold is shown below:



Ultimately I do believe we need to see a healthy pullback in gold that works off some of the overbought conditions that are present in the price action. If investors continue to view gold as a safety trade it is obvious that prices could continue higher based on uncertainty coming out of the sovereign debt crisis going on in Europe. As of right now, it appears gold could go either way but probability favors the downside.

Logically it would make sense that if the S&P 500 rallied gold would selloff. Unfortunately Mr. Market rarely embarks upon the logical until he has convinced enough market participants to behave irrationally. It should be interesting to see what Mr. Market has up his sleeve this time.

Wednesday, August 17, 2011

Adam Hewison: So Here We Are….In The Middle

So here we are… We’re in the middle of the month, it’s the middle of the week, and the markets are stuck in the middle. Stocks rallied early today, but they look like they are failing now.

Gold rallied again to test the $1,800 an ounce level. It has now fallen back and looks to be on the defensive. Crude oil has also rallied and is now faltering from a key resistance area. Once again bank stocks look to be on the defensive. I’ll also share a chart pattern in the bank stocks with you that does not look good.
So let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

S&P 500

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 75

Please remember that the MAJOR TREND IS DOWN for the equity markets and that strong rallies represent shorting opportunities with tight money management stops. The Fibonacci retracement zone between 1,223 and 1,253 should halt any further upside action for this index.

SILVER

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 65

Intermediate term traders should be on the sidelines and out of silver at the present time. A Chart Analysis Score of – 65 indicates a two way market and a trading range. Let us be patient and wait for our Trade Triangles to kick in and give us a solid buy or short signal.

GOLD 

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 90

Gold once again moved up to challenge the highs of $1,800 and was pushed back for the time being. This market is beginning to look a little sluggish and if this recent test of the highs fails, it could be a fairly important turning point for this market. We have been indicating that we felt gold was going to make its high in the 3rd quarter of this year and we may have seen the high for the time being. Both intermediate and short term traders should protect profits with tight money management stops.

CRUDE OIL 

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 75

Crude oil has once again moved back inside the Donchian trading channel and has two very important Fibonacci retracement levels to contend with. I am looking at $88.32 (50% retracement) which was hit today and $91.28 (61.8% retracement). For the moment these two levels should stop any serious sustained rally. The longer term trend for this commodity is down based on our monthly Trade Triangle technology.

DOLLAR INDEX

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 60

The 73.50 level continues to act as support for the dollar index. This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of -60 we would want to be approaching this market using our Donchian Trading Channels as well as our Williams %R indicator. The index remains below its 200 day moving average while our longer-term Trade Triangle remains positive.

REUTERS/JEFFERIES CRB COMMODITY INDEX

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 75

The Reuters/Jefferies CRB commodity index is now back in an area that should provide resistance. We are using our Fibonacci resistant levels at 332.95 (50% retracement) and 337.14 (61.8% retracement) as turning points. We want to remain patient and let our Trade Triangles do what they do best.


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As always, we rely on our market proven Trade Triangle technology for catching the big moves.

David Banister: Bears Yelling Fire in Empty Theater


The lows at 1101 were a convergence of Fibonacci weeks, months, sentiment bottoms and VIX extremes along with major insider buying all at the same time.

We rallied up in 5 waves from 666 to 1370 Bin Laden highs.  At that level we had re-traced 78.6% of the entire 2007 highs to 2009 lows, a common turning point.  Since then, we have had a 3 wave decline, also common for correcting a 5 wave move to the upside.  The decline halted at 1101, an exact 38% fibonacci retracement of the 666 lows to 1370 highs.  This is what I call a “fibonacci intersection”. The same thing happened in July 2010 at 1010 on the SP 500, where a huge bottom formed.

The rally since 1101 was a 5 wave rally, this is an early BULL SIGN.


A correction of this 103 point 5 wave rally would be normal, but the lighter the correction the more Bullish.  So far the correction is only 23% of the 104 point rally with a gap fill at 1180.

Let’s review: 13 Fibonacci month’s from the July 2010 bottom to August 2011 bottoms 7 Times in history we had the SP 500 double in a short period of time, and in every case it retraced 27-40% of the price movement from lows to highs. We just retraced 40% of our SP 500 double, historically very high retracement.


At 1101 we had 38% fibonacci ABC correction of the Bull leg from 666 to 1370.
In 1974-77 we had the SAME pattern, which I outlined for everyone last week.

13 Fibonacci weeks correction from the Bin Laden 1370 highs to 1101 lows. 1370 was a 78% fib of the 07 highs and 09 lows. 1101 is a 38% fib of the 666 lows and 1370 highs. Thats what I call a Fibonacci intersection. The same thing happened in July 2010 at 1010 lows.
Insiders with massive buying, corporate buybacks announced.
VIX at extreme levels.


Fear gauges at extreme levels.
5 wave impulsive rally from 1101 to 1204 ensued… now a pullback is due. Same thing happened last summer 1010 to 1130, pullback to1040 in 3 waves, then another 5 waves up.
What am I telling everyone?

Stop yelling fire in an empty theater….

This is options expiration week, trading this week is notoriously difficult…
The Bear case is crowded, the Bull case is not.

I’m leaning bullish as long as I keep seeing this type of confirming price action.
I’m watching 1165 on SP 500 as a pivot low worst case, but as long as we see price action above that I like the set up for a while yet on the long side.

So you say "But Dave, the textbook for Elliott Waves doesn’t agree with you".… good, that’s why I use other indicators!


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