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Silver, Gold, Oil & the Broad Market
by Chris Vermeulen
I have put together some interesting
charts using the weekly time frame because they provide a cleaner picture of
what to look for in the financial markets over the next 3-6 months.
Silver Weekly Outlook & Technical
Silver is a super charged gold
investment in my opinion. It moves much more freely than gold because so few
investors actually trade/own it. When general investors are looking for a safe
haven they buy gold. Active traders and seasoned investors like to buy silver
because it can post massive returns while gold is bogged down with tens of
thousands of sellers.
I find silver moves in a more
emotional pattern (panic buying and panic selling), and with that comes
volatility for sharp parabolic spikes and fast sell offs.
This chart below is the weekly chart
showing a clean bull flag breakout. Using technical analysis we can calculate a
measured move which is about the $19.50 level. This is done by measuring the
rally from the bottom in October to the top in February. If you calculate this
move again from the high then you arrive at the $19.50 -$20 level.
If we see this price action over the
following weeks, then we will be cautious for a double top pattern. Tightening
our stops will allow us to lock in more profit which is what I like to do when
trading extended moves or if I think we will get a double top.
Silver SLV Trading Fund – Technical
Gold Weekly Outlook & Technical
Gold is doing much the same as
silver. The only real difference is that gold has already tested the high twice
forming a potential double top. If gold prices hold up this week then I expect
we will see new money move into gold with this bullish chart.
Gold had a $300 rally from the
bottom in November, and if we see prices break out above the $1000 level, then
the measured move for gold is $1300. Again this is calculated from the trading
range (low in November to the high in February).
Gold GLD Trading Fund – Technical
Crude Oil Weekly Outlook & Technical
Crude oil trading is a very hot
topic and this weekly chart shows the beginning of a potentially massive rally
which could send energy stocks through the roof again.
Oil formed a cup & handle pattern
and broke out this week signaling a buy point for many traders. The upside
measured move for this is the $75 area, but it could push even higher to the $90
level because the cup & handle pattern is one of the most powerful long term
patterns. Oil has such a big following not to mention it’s extremely over sold
after that crazy sell off the past 6 months, we should see money move into oil.
Crude Oil Trading – Technical
Broad Equities Market Weekly Outlook
& Technical Analysis
I was playing with some charts today
and stumbled across this interesting chart. I found that in a bear market when
the QQQQ (tech stocks) are out performing the IWM (small caps) by 10+% the bear
market rally rolls over and starts another leg down.
I thought the NASDAQ out performing
everything else was unique this year, but when I looked back and noticed this
happens near the top of every bear market rally it got me thinking.
After looking at the recent bear
market I reviewed the last bull market from 2003. I noticed that the IWM (small
caps) out perform tech in the same way during the bull markets. So when small
cap stocks were 10+% above tech, the market would roll over and consolidate
before rallying to make a new high again. Take a look at the chart below.
Broad Equities Market – Technical
That being said the broad market in
my opinion is way over bought and currently at resistance levels. Money is
starting to move into precious metals and other commodities in anticipation of
this over bought market.
Gold and silver both sold off a week
before the broad market started is rally in March. The extreme over sold
condition in equities was obvious to see by professionals locking in profits and
buying stocks which are now up huge in the past 2 months. I think this is what
we could be seeing now but in reverse.
Money is slowly rotating out of
stocks and being put to work in precious metals and commodities. I will continue
to update these trading charts every week.
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Vermeulen is Founder of the popular trading site
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Chris has been a leader in teaching others to skillfully trade in gold, oil, and
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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