Search Precious Metal, Mining
and Financial News
Gold & Gold Equities
and Oil Has a Drop
by Chris Vermeulen
Gold and gold equities have
performed well over the past two months climbing in value as the broad market
drifts sideways waiting for buyers or sellers to step up to the plate. I am
hearing traders in a panic saying they think gold is going to start moving $100
per day and are jumping on the band wagon, and that gold’s going to $3500 per
ounce soon. While that is possible I just don’t see it happening right now and
that we need to jump on the band wagon and chase this high price. I provided
three charts of gold and gold equities to show you how I see things right now.
Gold Bullion Trading Fund – GLD
Gold has been trading up here in
this range for the past 3 weeks and to me it is looking very unstable and toppy.
I expect to see some type of pullback towards our support trend line as profit
takers step. I like to buy during pullbacks but unfortunately we had the news
with the recover/bailout plan and that scared investors and they dumped a bunch
of money back into gold the past 2 days giving gold a nice move higher. This
heightened fear level could push gold higher for a couple days, but a retrace
will eventually have to happen. I also want to point out the huge volume today.
The last time we saw this type of volume was when gold made a huge move higher
and almost marked the high for the previous rally in Sept. I am not reading into
this much but it’s something to note.
Gold Bullion Trading Fund – GLD
Gold Bugs Index – Gold Equities
Gold equities posted a nice move
higher today as they move closer to their ascending wedge pattern. While this is
a bullish pattern and stocks of all types are starting to have buyers push them
higher, I do want to mention that this bullish pattern looks a little weak. As
you can see in the chart it is battling the 200 moving average, momentum looks
to be diverging as well as the stochastic indicator. The one really good thing
gold equities have going for them is that if the broad market is bottoming and
start to move higher which could pull gold down as investors dump their money
into growth stocks, these gold stocks will benefit as investors put their money
into gold stocks as well pushing them higher.
Gold Bugs Monthly Chart
As you can see on the monthly chart,
gold stocks are currently under long term resistance and the 50 moving average.
Like I mentioned earlier gold stocks should perform well when the market bottoms
giving them an extra boost if gold continues higher. I thought that this monthly
chart shows the bearish trend and that gold stocks are at resistance looking
from a distance.
Crude Oil Trading Fund – USO
Crude oil traders continue to see
the downward selling pressure which has haunted oil prices for the past 7 months
as oil hits a multi year low again.
USO Crude Oil Trading Fund
Gold and Oil Trading Conclusion:
Both gold and gold equities are on a
buy signals, if you are long or decide to buy here remember to place stop orders
to protect yourself in case things rollover. Its better to break even or have a
small loss than it is to hold BIG losing position for a long time. You can
always buy it back if things look bullish even if it happens to be the next day.
The broad market is starting to look
like its bottoming as buyers stepped back in today as we reached the bottoms for
the SP500 and Dow. We won’t see a big rally until oil bottoms and turns up
lifting energy stocks, and we need the financial stocks to start moving higher
as well. Once they start moving up then I expect we will see some exciting gains
in stocks as investor will have confidence again. Looking at oil I expect we
will see lower prices over the next week or so as it hopefully flushes out the
last of the sellers.
Because the market looks to be
bottoming I will be looking at some speculative stocks which are showing signs
of strength and have big potential. Most of these stock plays are explosive.
Trades will last anywhere from 3 days to 2 months. The down side risk on some of
these could be 15%, but potential reward will be 25+%. This is a stock pickers
market now and finding the individual stocks at times like this can be life
If you would like to receive my free
weekly trading reports please visit my website.
Vermeulen is Founder of the popular trading site
There he shares his highly successful, low-risk trading method. For 6 years
Chris has been a leader in teaching others to skillfully trade in gold, oil, and
silver in both bull and bear markets. Subscribers to his service depend on
Chris' uniquely consistent investment opportunities that carry exceptionally low
risk and high return. Reach Chris at: Chris [at] theGoldAndOilGuy [dot] com
This article is
intended solely for information purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor before
making any investment/trading decision. No responsibility can be accepted for
losses that may result as a consequence of trading on the basis of this