Search Precious Metal, Mining
and Financial News
Gold, Silver, Oil and
Broad Market Weekend Review
by Chris Vermeulen
Last week was exciting as the broad
market dipped back down to test Hogan’s Bottom again. The market found support
and posted a nice two day rally on increased volume as buyers stepped back into
the market. The two biggest sectors were financials and homebuilders posting
solid gains for the week. It’s important to note that both those sectors had the
largest amount of short selling, it looks like traders started to cover their
short positions, which boosted both those sectors. The market does look like
momentum is shifting to the upside but we could still see prices drift sideways
or even lower for another couple months, as investors need to become more
confident and start investing again.
The Stock Market Barometer – Dow
Index – DIA Fund
I like to look at the Dow for the
overall health of the market, as it has provided excellent information for
trading in the past. As you can see on the DIA daily chart, the price action
seems to be forming a bottoming pattern, which I wrote about last week in my
report Broad Market Is
Bottoming. The daily chart clearly shows the price action is
currently trending sideways and is working its way to the end of this triangle.
Volume picked up on Thursday and Friday, which is nice to see. Also the MACD is
showing bullish momentum and with any luck, the market will breakout to the
Dow – DIA Chart
Gold & Gold Stocks
Gold bullion closed lower for the
week while gold stocks held value after Thursday’s and Friday’s broad market
rally, this tends to pull most stocks higher with it. As you can see on the
daily gold bullion chart, gold is trading at resistance and looking very toppy,
which means it could roll over and come back down to test our support trend
line. Currently gold is over 6% above our support trend line and I am looking
for a pullback and reversal, which will minimize down side risk, so that it is
Daily Gold Chart – GLD Fund
Silver bullion has had a great run
since December. The daily chart shows that the price looks to be extended to the
up side and a pullback could occur any day now. Let’s wait for a proper setup
before pulling the trigger.
Silver Bullion Trading Chart – SLV
Crude oil continues to be under
pressure, as every small rally is met with heavy selling pushing prices lower.
The daily oil chart shows the price is stuck within a descending wedge, which is
a bearish pattern and a break to the down side should be expected. A couple of
bullish things about oil has everyone thinking it’s about to pop higher any day,
which is the fact the MACD momentum has big divergence, stochastic has bottomed
and the fact that the price of oil is down 70% and more than ready for a rally.
That being said there are rumors going around that oil could still continue to
drop to the $25 per barrel level. I continue to wait for low risk setup before
putting money to work in these commodities.
Crude Oil Trading Chart – USO
Both gold and silver currently have
too high of a risk to jump in at these levels. I do hate to watch investments
run away but I hate chasing only to have it roll over on me a few days later.
Waiting for some type of pullback in price, is what I am waiting for. Crude oil
seems to be stuck at this price level and it could go either way really fast
from here. Until a direction is in motion, I will be sitting on the side lines
waiting for a low risk entry point to go long or short.
In a study from Jeremy Siegel a
professor of finance of Pennsylvania the great depression was actually an
advantage to long term investors, as it gave an opportunity to reinvest in high
dividend stocks and funds at prices, which they would never see again. During
the past 200 years, the average stock market growth has be an average of 6.6%
after inflation. 2008 posted a loss of 39.4% loss, which is the 5th biggest bear
market crash in history. The biggest was in 1865 losing 43.1% loss.
Another interesting fact is that the
average dividend on the US stock market is over 3%, which pays more than the
interest rates on long term bonds. This happened once before 50 years ago and we
will most likely not see an opportunity like this again in our lifetime.
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