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The Gold Sector & Most
by Chris Vermeulen
The Gold sector has been performing
relatively well over the past month. The price of gold has broken trend line
support but is still holding horizontal support and forming a bull flag. Gold
stocks and the broad market have been performing well and that has boosted the
price of gold stock. Gold bullion has been under pressure, because money is
being pulled out of physical gold and put to work in equities, which provides
much more potential than gold at current levels.
HUI vs. Gold Weekly Chart
This chart is crucial to follow.
Trading with this trend will greatly help improve your success for trading gold
and equities. HUI/Gold ratio chart has broken higher to a new multi month high
and is now testing support.
HUI Gold Stocks Index Daily Chart
Gold stocks have bounced off support
and broken higher but are not looking for support to test the breakout. The
trend line, 200 & 50 moving averages could provide support as different types of
traders use different indicators to generate buy and sell signals. With so many
clumped together I hope we get a nice rally higher in the near future.
Gold Bullion & GLD Fund Daily
Gold has been under some pressure in
the past months and its because investors and traders are starting to move some
money back into stocks. Gold did break our trend line support but is now at
horizontal support and forming a bull flag. We will see what happens this week,
as we could get a breakdown or a bounce.
Gold Miners Bullish Percent
Indicator Daily Chart
The bullish percent index calculates
the percentages of stocks in a sector, which are on a Point & Figure Chart buy
signal. It is used to determine overbought/oversold conditions. Using an
index/sector fund cannot be applied directly to individual stocks but rather to
the entire sector.
The bullish percent indicator is one
very powerful tool for swing trading intermediate trends. It works well with
every sector, especially the gold and energy sector. The key here is to trade
with the trend and enter on pullbacks with low risk buy signals. Trade the
opposite in bear markets. I used this for a buy signal in December and prices
had a 16% rally. These are the exact types of trades I wait for in gold and
energy. I like to catch a few of these each year, which makes up the majority of
my gains. I use several other charts to confirm buy and sell signals along with
my strict money management rules for not taking trades if risk is over 3%.
Sometimes, depending on the market
condition, I will scale in and out of positions using this chart. Accumulate on
Wave Bottom Zone and scale out, when the sectors is at the Wave Top Zone. This
strategy can carry some big drawdowns, but has performed well for my retirement
The Gold Sector Conclusion:
Gold stocks have been holding up,
which is good for the price of gold bullion. The gold sector had a nice pop a
couple of weeks ago and the market is still digesting that move. Gold is trying
to hold horizontal support and with any luck we will see higher prices this
week. The broad market appears to be overbought and if we see the broad market
roll over, it should boost gold and gold stocks higher as a safe haven.
The Gold Miners Bullish Percent
index chart is at levels, which were previous tops so that worries me. But this
chart can stay at those levels for a long time in strong trends, which is why I
focus on several other charts and indicators to help time the sector.
If you would like to receive my
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