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Guest Post: Technical Setups On Gold, Silver, Oil & Natural Gas ETF’s
Submitted by Chris Vermeulen of www.TheGoldAndOilGuy.com
April 7th 2010
This week has been playing out as expected with prices grinding their
way higher and lots of sharp intraday sell offs and rallies which is
indicative of a market getting toppy.
Seems like the masses feel as though they are getting left behind
which is why we are starting to see the panic buying in the market (new
money buying at these lofty overbought prices).
Each time there is a new intraday or daily high on the major indexes
there is a renewed bullishness created as breakout traders and novice
traders buy into the market hoping for the next surge in price. It is
these volume surges of new money entering the market which the big guys
(smart money) are selling into. You can see it clear as day light on
the intraday charts as new money gets sucked into the market new high
and then 2 minutes later larger waves of selling hit the bids. I did
explain and show a chart of how this looks to members of the FuturesTradingSignals.com today.
We have some very exciting times ahead and it’s just a matter of
letting the market unfold over time as we take advantage of these
carefully measured low risk setups.
On to the charts….
GLD ETF Trading – Gold Exchange Trading Fund
You can see how this chart has evolved from pattern to pattern as it bottomed over time.
Today we had a breakout and I expect to see a pullback which is
normal when prices gap up and breakout of a pattern. An entry point
would be considered on a pullback if the proper criteria are met.
SLV ETF Trading – Exchange Traded Fund
Silver has always been much more volatile than gold which is why the
pullback early this year was so strong and why the recent rally has
also covered so much ground. As you can see silver has broke out above
resistance but is now looking overbought. A pullback in precious metals
is expected, or a pause at least.
.
USO Crude Oil Fund
Oil has made a nice move higher the past week but I feel it will
pullback also in the coming days for a breather. There are a couple
sizable gaps to fill all the way back down to $40.50.
UNG Natural Gas Fund
This natural gas chart looks very interesting. In the chart I am comparing the 2009 low to today’s price action.
From looking at the chart, natural gas is way oversold and in dire
need of a relief rally. As you can see the sharp rallies which occurred
just before both the 2009 and the current possible bottom look
identical. This type of price action is very common to see.
Let me explain: When an investment is this over sold, meaning it has
sold lower for weeks if not months, then there is a large growing
number of traders looking to pick a bottom. Once these traders see
prices start to move higher they all jump in thinking its “The Bottom”.
Some times it is but more times than not it’s just a suckers rally.
General rule is, if everyone can see it, then its most likely not
going to happen.. this is also part of the reason the major indexes
keep going up. It looks like a great short and a tone of traders are in
cash waiting to take advantage of the drop. But the market will keep
pushing higher until fear its not going to pullback. That’s when the
new money buys back in fueling the GRIND higher.
Anyways, so after all the bottom pickers jump on the train and there
are not any more buyers and the price tends to drift lower scaring
these traders back out of the position. Eventually a new low is made
and everyone is shaken out of the investment. The crazy part is that
just as they get out, the price usually turns around and does exactly
what they new was going to happen –Go Up.
Most traders have the direction correct, it’s just their timing is
off. My general rule is when I see something I wait another bar,
sometimes I keep saying that to my self after each new bar until I am
confident in the predicted move or price I can get into the position at.
Mid-Week Trading Conclusion:
In short, the bull market continues to grind its way higher.
Unfortunately we cannot do much until there is some type of correction
because buying way up here after a 2 month rally is outside of my
comfort zone.
I foresee a 3-5% correction starting any day now so I am keeping my gunpowder dry.
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If the dollar goes to 83, will these prove to be false breakouts?
Ring around the rosies, pocket full of posies, ASHES, ASHES, ALL FALLS DOWN!
As the price of gold becomes more unmanageable for the Cartel, expect the ETF sales pitches to get really shrill.
I'd bet those guys are loading mining stocks behind the scene to HEDGE THE INEVITABLE SHORT SQUEEZE EXPLOSION ON GOLD / SILVER.
Very helpful analysis, especially on nat gas. Thanks!
Gas has also suffered greatly lately from over-hyped and probably not-what-it-is-made-out-to-be news of "massive new supplies" in, you name it - Montana, North Dakota, Nebraska, shale fracking, stories of sub-$2 gas prices, etc., etc., most of which is panic and hype.
Very likely we are near the bottom now that that news alone is subsiding...
Speaking of longer term bottoms. It appears RJA is slowly building a bullish posture.
The Cartel is building shorts. Monthly, weekly and daily all indicate a backtest / smashdown to 1090 level is no implausible. The Cartel is not going to fade away softly. Another Cartel arm wrestle to sub 1100 is likely and the above analysis fits with my suspicions. I'm loading up for a longer term trade (weeks, months) if the 1090 ish level should be reached.
As far as paper certificates and gold bullion — they've been with me for years now — started building a position in March, 2003 — and are long term investments.
God bless them! I'm praying they get this bad boy beneath 1000! Anyone know where I can write them a thank you letter and a request? I think they need to leverage 1000 to 1, to help us build our positions...err... I mean show us there is no inflation...yeah that's the ticket.... :)
Yea, I'm REALLY hoping for the next bout "deflation" to smash the metals down one last time for a big load up. Considering gold has been up every year for the past 8?, it seems that one negative year would scare a lot of weak hands out despite how irrational it would be.
Too many people are waiting for this "last bout" below or at $1000, it will never reach it, because the fundamentals are clearer than ever, and the same people will be forced to buy over 1200 on the breakout.
Agreed, more than likely this will be the case barring any sudden collapse like what was experienced in 2008. People who don't own physical gold or shares will look at the charts and prices and pick some entry point they wish they could have gotten in on and say that they'll wait for it to drop to that point and buy in at that time.
Funny thing is that most people, even if they get that opportunity, won't take it because when it happens all they see is something dropping in price and don't want get cut trying to "catch a falling knife".
Same can be said for when values are skyrocketing. People will buy something hand over fist as long as they see that up-and-to-the-right trend, the last thing they want is to miss out. The recent runup in real estate is a prime example.
lol — a letter !
There was a "signal" on a 15 minute chart just over 5 days ago, wiped from the charts now, with a smash down tail signal to 1092.
I have been wanting a 985 and missed the 1045 dip due to getting toooo bearish.
Hope to be more nimble this time, but the gold bulls are getting giddy, which is usually about ripe for the demoralization the cartel loves to serve.
ETFs are worthless. SLV "has" 9/10s of the world's silver reserves (bought off the COMEX by good 'ol Buffett, then quickly sold to Barclays), is owned by Barclays, and the Rotheschildes own Barclays. They will wait for it to go parabolic, then 'ruh-roh', 'there is nothing in our vault...sorry'.
Do not trust paper. Own physical. Get physical. Get to know that precious "ping!" silver makes. Understand silver. Be silver's friend. Be one with silver. Dip your balls in it. Whatever you have to do. But physically own silver!
I had a dream that silver is operating in a very long term triangle (flag almost) and will eventually break out of it in an absurd fashion. I woke up, drew the triangle, and sure enough, there is one. The point where the lines cross is estimated to be mid 2011. Load up if it pulls back to 15 one more time.
Load up, copy.
Where are you going to put the crap? How many doorstops do you need? Try carrying home four contracts worth from the depository. Go break your back.
Crowns and fillings maybe?
Copy.
I have to agree with you on every point.
I've been reading Chris's updates for quite a while - he's a good guy, pretty solid on his calls. Seems to me that gold's in a very solid uptrend now, probably heading back to December highs. I see a lot of the junior golds in really good uptrending patterns, but maybe due for a pullback with the broader market. Still, looks to me like the place to be.
I keep reading people saying gold's in a bubble, but honestly, I don't think they've seen a real gold bubble. I was new to the markets back in '96 when BreX was the big thing, and remember little penny stocks going from .75 to 11.00. Everybody I talked to had a gold stock to recommend, and people stood around the ticker downtown at lunchtime watching the quotes. THATS a gold bubble. Right now we're not even in the early stages.
I respectfully disagree. I believe gold and silver and oil are consolidating at higher levels, and will move sideways for months to come. Oil of course will move with the increasing possibility of an Israeli attack on Iran's nuclear facilities, but, gold and silver will likely be "managed" until later in the summer or fall.
I suspect it's just about time for a sequence of debt implosions to suck some of the juice out of risk assets and pump some juice back into debt. Back that's just delaying the inevitable rise of commodities and stocks mediated by money printing.
Fair enough. I hope you're right, because the follow-on to a huge gold bull is a massive meltdown. I expect we're going to see at least a moderate correction in the near term in the general market, in which the gold stocks will be hit less than average, and recover better than average. I've found that I'm better off letting the fundamentals confirm the chart moves than the other way around. By way of reference, these are some of the junior golds I'm talking about.
JIN.TO
SMF.TO
VEN.TO
DGC.TO
TKO.TO
SGR.V
Make of it what you will...
Karma , I disagree, and agree with Huxley on gold generally being in an uptrend right now. My reasons have to do with the logistics of the ‘management’ program, and the technical trends that are manifested by them. I would say any symmetrical Inverse Head & Shoulders pattern has a lot of bullish power stored up in it, so I see a test and possible break of the 1200 level again soon as this inverse H&S is completed (Chris’s charting of it seems like a reasonable resolution of it). Given that a manipulation program was implemented that caused a textbook inverse H&S pattern to form, the manipulators have thereby brought a lot of attention to the resolution of this pattern. Id think when gold decidedly breaks 1150 and closes comfortably in the 1165 range, youre going to have a lot of traders going long to be on board for the resolution of this pattern – i.e. be on board for the testing and possible breaking of 1200. Basically if you are a manipulator and you want to hold a specific level (they last wanted to hold 1225) you don’t want to signal simultaneously via obvious bullish patterns to the whole marketplace when all the bulls should pile on, because you are going to make your line in the sand that much more difficult to hold. I would tend to think you would only allow a near-perfectly-formed bullish pattern to form if you were resigned to give up that line in the sand anyway and therefore didn’t care if you drew the attention of the speculators in the marketplace to that perfect pattern’s resolution . So it would make sense if gold broke to 1275 or so by May, because it would take that much more doing to hold the 1200 – 1225 range as the line in the sand – i.e. because of the pile-on that would occur as everyone in the marketplace see this pattern being resolved. This interpretation of the price action posits something of a ‘lazy’ manipulator i.e. they are resigned to the fact that they will be making a gradual retreat upward in price over an extended period of time, and they aren’t too worried about the the patterns that form on the knock-downs. Said ‘lazy’ manipulator would not try to hold 1200 for 9 months or 12 months (similar to how 1000 was held for 18 months) because a) 1200 doesn’t have the same psychological value and b) it would be too hard or impossible at this point to hold it for that long anyway. So in this interpretation gold might go to 1275 (or -- depending on bullishness of the environment over next 6 weeks – possibly to 1300 – 1350), after which it might get knocked down as much as 150 - 200 points again i.e. down to 1150 – 1200. OR immediately bullish scenario would be the inverse H&S morphs into a cup and handle, whereby we break 1200 to like 1220 again, then pull back for a few weeks to 1180, then breaking 1200 again decisively to the upside and slowly drifting sideways and upwards… 1300 by august, 1500 by end of year.,,, something like that … i.e. very similar to the cup and handle breakout that Gold/Euros has had over the last 4 months
Another scenario would be gold just held in the 1050 to 1200 range by hook or by crook for 5 – 6 more months, as you seem to suggest. I see this scenario as less likely – one reason being that gold would probably have crossed and overshot by $30 a middle level like 1115 about 10 – 15 times by then (that has already happened 7 times from mid November to mid april). Would seem a bit too range-bound and unrealistic a trading pattern for the next 6 months. And why hold that 1200 level? I mean whats the difference between gold 1270 and gold1220 at this point for the larger economy? Also, with the fraud coming undone and the GATA/Maguire/CFTC talk out there, I don’t see the upside of taking a hard line defensive posture here and holding that 1200 – 1225 line for 6 more months just for the hell of it. Then again im not an annoying sociopath who would rather have total collapse a year from now with more harm caused even to myself, than adjusting a little over a few months and having things appear a little worse for a little while.
Ultimately isn't that what TPTB are trying to do? Get the suckers to move money to equities?
Now they have a story with the COMEX/CFTC BS from the last couple of weeks. This seems to me just to be a momentum trade based on that news. Then get people to panic sell once it drops.
Generally I'd agree. But the miners are possibly in their own category. If you look at the history of the 1930's Homestake was a stellar performer while the rest of the market collapsed (that's the only one I've ever seen any history on). Similarly, in the late 70's select miners outperformed the general market in a big way. Tough call, but worth watching. When the general public finally understands what paper money is and how it works, and why something is required to back it, results can be 'interesting' to say the least.
bold call on UNG. next you will be saying FAZ is gonna start flying higher.
1) UNG will go down due to 20% plus contango (regardless of NG going up)
2) the back month- still falling....
play futures... not ETF's that dont work high inventory maket
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Gold is going nowhere but up , not so sure about silver , waiting for a crash in platinum - may take awhile.