10 Days of Stocks and Commodities

By: Chris Vermeulen | Wed, Dec 23, 2009
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It's been a great year as we head into the final few trading sessions. The past several weeks the indexes have not done much of anything which is why we are now in cash.

I feel as though the market is about to change direction abruptly in the coming days or weeks. I feel this way for several reasons:

  1. NYSE, Dow Jones, S&P500 are all drifting higher into resistance levels on the 10 day, 60 minute charts. Light volume tends to favor higher price hence the reason for the holiday rally.
  2. Broad market momentum waves are topping
  3. These same indexes are trading at resistance levels from early 2008
  4. Money flow is indicating large institutions have been big sellers over the past 3 weeks.
  5. US economy I think is worse than most want to think

So take a look at these 10 day charts which clearly show resistance and support trend lines. Each, if broken will lead to a sharp decline. I used ETF's as substitutes for the indexes.

Dow Jones - DIA - Top Chart
SPY - S&P500 - Middle Chart
NYSE - Bottom Chart


Stocks have started to decouple for the US dollar in recent days so I am not focusing much on what affect the dollar will have on the above indexes.

That being said, the US dollar (UUP etf fund) is at a pivotal point. It's either going to bounce off the trend line support level (blue line) and send gold back down to test the previous low, or breakdown through the support trend line. A falling dollar will give gold some power to muscle its way back up to the next short term support level.

Yesterday (Tuesday Dec 22nd) we said gold stocks and silver prices would move higher. I consider gold stocks and silver my leading indicators for the price of gold. Today (Wednesday Dec 23rd) gold stocks and silver shot higher - out performing gold by 7:1 which is very bullish for gold.

Crude oil had a large rally today sending the USO oil fund surging 3.5%, confirming a bounce off our support level 2 weeks ago. It could be warming up for another rally.

Natural gas opened lower but put in a strong session as it trended up all day. This also looks very strong and if prices breakout and follow through next week natural gas could be making a real rally for once.

This is a short trading week with Thursday only a half trading session and Friday being closed for Christmas/Holidays. We will not have any low risk setups this week and because we are sitting in cash, let's take this time to enjoy our family, friends and pets J

Get my Trading Charts, Reports and Signals at my website: www.TheGoldAndOilGuy.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
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- The Fox Group
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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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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/