Trading Commodity Update for GLD, SLV, USO and UNG

By: Chris Vermeulen | Mon, Jun 29, 2009
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Last week commodities moved higher as investors started buying into the recent pullback in prices. This is a healthy sign for the overall market. This is a quick update for gold, silver, oil and natural gas short term traders.

GLD Gold ETF Trading Chart

Gold has provided us with two great trades this year. Both trades lasted only a few weeks and we locked in profits on technical breakdowns. Many of you have been asking when we will get a short signal (make money in a down market). Well, I don't like shorting a commodity that is in rally mode. KISS is my mentality and trading only with the major trend is what I focus on.

For those of you who want to short gold (DZZ Ticker) may do so at your own risk, I recommend waiting for an extended rally of 10+ percent in price before you start looking for a technical breakdown to short. The quicker prices rise, the higher chance that a technical breakdown will provide a quick shorting opportunity. Locking in profits within a few days is crucial. In a bull market pullbacks in price are generally quick and short lived.

SLV Silver ETF Trading Chart

Silver and gold generally move in the same direction. These precious metals are looking ripe for a low risk setup. What I am looking for is momentum to turn up along with a reversal candle pattern. We continue to wait.

USO Oil ETF Trading Chart

Oil has had a solid move the past 2 months. This chart is starting to look a little bearish and if what I am seeing is correct for the short term then we could see oil slide lower this week. But in the event prices rally we could get a buy signal within 5-10 days if all goes well.

UNG Natural Gas ETF Trading Chart

Natural Gas has been drifting sideways for over 2 months now. Everyone is excited to catch this reversal when prices start to head north again. Seems like most people are long UNG already from what I gather because of the fear of missing the next big rally.

To be honest I have that fear as well but I do not let it control my trading. As usual I follow my simple trading model and trade when risk is low and the odds are on my side. One thing that traders should remember is that UNG (Nat Gas) looks to be bottoming from a very big sell off. If in fact prices are reversing there will be plenty of opportunities to buy it still. Even though I am really excited for this trade, I continue to wait for my time. I would like to see the momentum breakout and start moving higher before I buy anything.

Commodity Trading Conclusion:

Looks as though money is starting to flow back into commodities. With any luck we could have some buy signals this week. GLD and UNG have the best looking charts for a buy signal currently.

As usual I wait for the trades to unfold and come to use. Keeping risk low, scaling out of trades to lock in profits where there is a technical breakdown and allowing our core position to run for larger gains is my focus. I don't forecast prices I just analyze prices and prepare for what two scenarios will most likely occur within a couple days.

If you would like to receive my Free Weekly Trading Reports or my Trading Signals please visit my website: www.GoldAndOilGuy.com

 


 

Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
- OEC OpenECry
- The Fox Group
- Dorman Trading
- Vision Financial

He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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