Gold Trend forecast For 1st Quarter 2012

Over the past five months gold has fallen sharply and is no longer headline news which it once dominated back in 2011 when it was making new highs every day. The shiny metal has been under pressure because traders and investors started to pull some money off the table to lock in gains. Gold prices had surged so quick most advanced traders knew that final high volume surge was not sustainable. But the main reason gold topped out in my attitude was because the US Dollar index had place in a bottom and started to build a base. As we all know a rising dollar typically means lower stocks and commodity prices.

I have posted some charts below covering gold in detail using multiple time frames. The weekly which is long term, daily which is the intermediate trend and the 4 hour chart which shows gold momentum and intraday action. At the very bottom I talk about the US Dollar and what is happening with that.

To get more information on the gold trend, CLICK HERE

Gold Weekly Long Term Trend Analysis

The weekly chart is not the most exciting time frame to follow as you will grow ancient watching it. That life said it is crucial for understanding the long term trend, price and volume analysis.

Below you can see that gold’s recent pullback has been a 3 wave rectification, which is a habitual pullback for any investment. But taking into account the rally from 2008 – 2011 I feel this pullback will have one more low place in before bottoming out. This would make for a 5 wave rectification much like what happened in 2008.

To get more information on the gold trend, CLICK HERE

Daily Chart of Gold Showing the Intermediate Trend

The daily chart allows us to see gold intra-week price action and use the 150 moving average which is my preferred daily moving average. As you can see we are getting a similar pullback as 2008 with gold now trading under the 150 MA.

I want to see gold make another lower low in the next 2-3 months. If that happens I feel it complete the rectification and trigger a strong multi month or multiyear rally in gold.

4 Hour Intraday Chart of Gold

The 4 hour chart of gold allows us to see all the intraday price action which would normally not be seen with a daily chart. It also gives us enough data to build our analysis upon.

My preferred setup for gold which I feel if happens will trigger major export in the yellow metal. If/when we get a rally in gold would also likely mean some more economic uncertainty has entered the market either from within the USA, Europe or China…

Weekly Dollar Index Long Term Analysis

The dollar has the potential to rally to the 87 – 88 amount before putting in a major top. For this to happen we will need to see the Euro crumble (both currency and countries divide) in my attitude.

If you look at the weekly chart of gold and this chart of the dollar index you will notice that gold topped when the dollar bottomed. Over the past couple year’s gold and the dollar have had an inverse relationship to each other.

With all kinds of crap about to hit the fan overseas I reckon it’s very possible gold will rally with the dollar. Reason life there is way more people overseas who want to unload their euro’s and with all the negative talk and doubt with the US Dollar individuals will naturally want to buy more gold.

Weekend Trend Trading Conclusion:

In small, I expect a bumpy ride for both stocks and commodities in the first quarter of 2012. With any luck gold will pull back into my price zone shaking the majority of small term traders out just before it bottoms.  And we will be positioning ourselves for a strong rally export into their panic selling.

To just touch base on the general have a supply of market quickly. I have a very bearish outlook for stocks. If the dollar continues to rise it is very likely the have a supply of market will fall into a bear market. So I am VERY cautious with have a supply of at this time.

To get more information on the gold trend, CLICK HERE

If you want to receive my Weekly reports, updates and trading education videos each week join my free newsletter here: www.GoldAndOilGuy.com

Chris Vermeulen

DOW FUTURES – HOW YOU CAN PROFIT WITH DOW FUTURES MARKETS

Dow futures are an alternate way to invest in the 30 stocks of the dow. However, if you had bought all 30 stocks in the dow, you’d get all the dividends. Hence the “price” of the future is reduced to account for theseries of dividends. Until the futures contract expires.

Dow futures work on 10-1 leverage, or 1,000%. If it is trading at 7,000, a single futures contract would have a market value of $70,000. For every $1 (or “point” as it is known on wall street) the dow jones industrial average fluctuates, the dow futures contract will increase or decrease $10. The result is that a trader who believed the market would rally huge could simply acquire. And make a huge amount of profit as a result of the leverage factor; if the market were to return to 14,000, for instance, from the current 8,000, each. Contract would gain $60,000 in value (6,000 point rise x 10 leverage factor = $60,000). Trading begins on the Chicago Board of Trade at 7:20 a. Eastern time), which is an hour and ten minutes before the stock market opens. That allows trading to take place before the actual stock market opens so reporters and professionals can get an idea of sentiment. Dow futures are a better option than trading individual stocks. There are other advantages of trading the dow futures Dow futures are ideally suited for short-term, leveraged trading. This includes day trading and intra-day trading. The high volume of contracts changing hands each day combined with fully electronic trade execution helps to ensure prompt and reliable order fills. However; while the liquidity and ease of trading these contracts is alluring, they can be a perilous trap for any trader lacking a well thought out, well tested and complete trading system. Additionally, a fundamental understanding of the concepts and rules of trading e-mini dow futures is necessary TREND TV All different types of traders, trading advice and systems can be found on the internet these days, ranging from stocks to options to futures to forex. Some services publish lists of hot stocks to invest in for the long-term. Some give swing trading advice for stocks, options and futures. A few services offer advice and/or systems for trading futures, including e-mini dow futures. Dow futures are easily tradable futures (described previously) based on the dow jones industrial average (djia), which allow for profits based on the point movements (either down or up) of the djia. The cme group’s root symbol for the $5 e-mini dow contracts is. Each contract period has a length of 3 months, so there are four expirations per year – march, june, september and december. The expiration months have symbols, which come immediately after the root symbol ym. Immediately following that is the year symbol. Typically the year is represented as a two digit number such as 08. However, different brokerages and charting services may have slight variations on this system of symbols. The complete symbol for the $5 mini dow is the combination of ym + month + year. Dow futures are an alternate way to invest in the 30 stocks of the dow. However, if you had bought all 30 stocks in the dow, you’d get all the dividends. Hence the “price” of the future is reduced to account for the series of dividends. Until the futures contract expires.

Related Blogs

Equities, Precious Metals and Oil – Updates and Opinion

Here is a update by Chris Vermeulen, respected analyst at TheOilAndGoldGuy.com. He continues with analysis on Equities, precious metals and oil.

It may go against the current opinions of the direction that these commodities are headed but Chris’s analysis is generally very accurate.

Here it is:

December 14th, 2011 at 1:35 pm

Tags: How to trade gold chart, Technical analysis trading
Posted in Daily Market Trades, How To Trade Gold, How to Trade Oil, Oil Analysis, Oil ETF Analysis | Comments Off

So what do you think…will there be a Christmas rally as tradition dictates?

Gold And Stocks In December – Like 2007 and 2008?

Chris Vermeulen of TheGoldAndOilGuy.com gives his analysis.

Thus far in 2011 the overall stock market movement has been much different from what we had in 2010. This year we have seen nothing but sideways to lower prices with wild price swings on a day to day basis. There just has not been any really solid trends to take advantage of this year. Instead we had to actively trade the oversold dips and sell into the overbought rallies to just pull money out of the market on a monthly basis. Last year we saw 3 major rallies that lasted several months making it easy for anyone who bought into the trend to make money if managed properly.

What Will Happen For Gold And Stocks In 2012?

Looking forward to 2012 it looks as though we are going to see some major changes unfold globally that will change the way we do things live our lives. Unfortunately its a very negative outlook but I do have hope that something will be done to perserve are somewhat normal lifestyles. I’m not one to talk doom and gloom, there are enough of those guys out there already so lets stick with the charts and focus on what is unfolding now in the present and how to take advantage of it…

The charts below show what I feel is likely to happen going into the new year IF we don’t get any major headline news in Europe that triggers another selloff.
Intermarket Analysis:

There are a lot of different things unfolding within stocks, commodities, currencies and bonds right now. And it is imporatnt to know that investments are inter-connected in some way. For example, if one investment moves sharply in one direction it will have an effect on other investment classes.

My eye is focused on the US Dollar Index which has recently had a strong run up in price. For the past couple years we have seen stocks fall when the dollar moves up. So with the dollar index now trading at a key resistance level we should see the dollar top out for a few weeks and spark a Christmas rally into year end. After that, all bets are off and we re-analyze…

On the flop side of things, if Europe comes out with major negative headline news we could see the dollar index continue its rally and breakthrough this resistance level. If the dollar moves higher from here we could easily see a multi month run up in the dollar. You do not want to be long stocks if this happens, get short stocks and hold on tight.

Dollar ETF Trading

Gold Daily Chart Analysis:

Here is my positive out look for gold and what I feel is likely to unfold near term. But keep in mind what I just said about the US dollar index above. If the dollar continues its rally and breaks out it could actually put some pressure on gold. I know gold is a safe haven so I do expect it to hold up, but a strong dollar will neutralize a lot of the buying in gold in my opinion.

Gold Christmas Rally

SP500 Daily Charts:

Stocks should have a solid bounce this December if the dollar finds resistance and pulls back in the coming weeks. I am expecting a bounce of 5-10% if all goes as planned.

SP500 Christmas Rally

Christmas Holiday Rally Trading Conclusion:

In short, we are entering a tough time to trade the market. Volatility is low, there are a few holidays and typically we see volume thin out as December unfolds. Light volume generally favors higher prices for stocks and commodities which is one of the reasons we get the holiday lift in prices.

The recent selloff in stocks is looking overdone to the down side and ready to bounce any day. So I am looking for signals to get long the SP500. Overall risk remains very high as sellers are still in control of the market and because we are looking to put on a trade against the intermediate trend which is down.

On Friday morning myself and my followers exited our short position on the SP500 at the open locking in 13.5% profit. We exited the position because the intraday charts are showing signs of a potential bottom and we want to avoid the tear your face off short covering rally that I feel is just around the corner. Now we are waiting for a another low risk setup and will take action to go long or short depending how things unfold in Europe.

I hope this report helped shed some light on the current market condition for you. Remember you can Get my daily pre-market trading videos, intraday updates , and trade alerts with my premium newsletter: www.TheGoldAndOilGuy.com

Chris Vermeulen

My Commentary: So it seems that it all depends on what the USD does in the runup to Christmas. If it breaks resistance and goes up. gold and stocks go down and vice versa.

Apple Earnings – Which Direction Is The S&P500 Going?

We have a analysis by JW Jones, expert in ETF Options trading. The last hour of trading was intense on Tuesday and then all eyes were focused on Apple’s earnings which were released around 4:30 ET. The initial reaction to the earnings release is negative although as I write this AAPL is bouncing sharply higher in after-market trading on strong volume. To put the final hour’s volatility into perspective, at 3 P.M. Eastern Time the S&P 500 Index was trading at 1,217. A mere 12 minutes later the S&P 500 Index pushed 15 handles higher to trade up to 1,232. Then sellers stepped in and pushed the S&P 500 lower by nearly 12 handles in the following 20 minutes. The price action was like a roller coaster and I was sitting watching the flickering red and green bars in real time with the anticipation of a child. It was the most excitement I have had in quite some time, but please don’t hold that against me. I don’t know whether reading my previous line makes me laugh or cry, but the truth must be heard I suppose. Enough self-deprecation, I want to get down to business with some charts and what is likely to happen in coming sessions. The sell the news event in AAPL has the potential to really change the price action tomorrow. If prices hold at lower levels, the indices could roll over sharply tomorrow. The S&P 500 E-Mini futures contracts are showing signs of significant weakness after the earnings miss by Apple in aftermarket trading. Some other potentially game changing news items came out of Europe where Reuters reported earlier today that the Eurozone will likely pass legislation that will ban naked CDS ownership on sovereign debt instruments. Additionally, Treasury Secretary Timothy Geithner stated this morning that a forthcoming FHA announcement involving a new housing refinance plan was going to be made public in coming days. The statement regarding the new FHA plan helped the banks and homebuilders show relative strength during intraday trading and likely were behind much of the intraday rally.

Relation Of S&P 500 Index (SPX) to S&P E-Mini Futures

I would point out that the S&P 500 Index (SPX) broke out slightly above the August 31 highs before rolling over. The reason that is critical is because the S&P 500 E-Mini futures did not achieve a breakout, but tested to the penny the August 31st highs. I am going to be totally focused on tomorrow’s close as I believe it will leave behind clues about the future price action in the S&P 500 leading up to option expiration where volatility is generally exacerbated. The daily chart of the S&P 500 Index is shown below: If Wednesday’s close is below the recent highs near 1,230 we could see this correction intensify. The price action on Tuesday helped stop out the bears and if we see a significant reversal tomorrow the intraday rally today will have been nothing more than a bull trap. The price action Tuesday & Wednesday could lead to the perfect storm for market participants where bears were stopped out and bulls are trapped on the potential reversal.

Head And Shoulders Pattern Appearing In The S&P 500

Another interesting pattern worth discussing is the head and shoulders pattern seen on the SPY hourly chart. The strong rally to the upside may have indeed negated the pattern, but if prices don’t follow through to the upside in the near term and the neckline of this pattern is broken to the downside we could see serious downside follow through. The hourly chart of the Spider SPY Trading ETF is shown below: Ultimately there are two probably scenarios which have different implications going forward. The short-term bullish scenario would likely see prices breakout over recent highs and push higher toward the key resistance area around the 1,260 price level. The 1,260 price level corresponds with the neckline that was broken back in August that led to heavy selling pressure. Bullish Scenario If we do breakout to the upside, the longer term ramification may wind up being quite bearish as most indicators would be screaming that price action was massively overbought at those levels and a sharp selloff could transpire into year end. The daily chart of the S&P 500 Index illustrates the bullish scenario below: Bearish Scenario The short-term bearish scenario would likely involve a break below Monday’s lows that would work down to around the 1,140 level or possibly even lower. If a breakdown took place, a higher low could possibly be carved out on the daily chart which could lead to a multi-month rally that would likely see the neckline mentioned above tested around the holiday season. The daily chart of the S&P 500 below shows the bearish scenario: There are a variety of reasons why either scenario could unfold. Most of the analysis that I look at argues that the bearish scenario is more probable. However, based on what happened in the final hour of trading on Tuesday and the surprise earnings miss from Apple anything could happen. I will likely wait for a confirmed breakout either to the upside above recent highs or to the downside below the neckline of the head and shoulders pattern illustrated above before accepting any risk. I am of the opinion that risk is exceptionally high in the near term. I am not going to try to be a hero, instead I am just going to wait patiently for a high probability setup to unfold. Until a convincing breakout in either direction is confirmed, I am going to sit on the sidelines. I am quite content just watching the short-term price action without taking on any new risk. For those that want to be heroes or feel they have to trade, I would trade small and use relatively tight stops to define risk. Risk is excessively high! Subscribers of OTS have pocketed more than 150% return in the past two months. If you’d like to stay ahead of the market using My Low Risk Option Strategies and Trades check out OTS at http://www.optionstradingsignals.com/specials/index.php and take advantage of our free occasional trade ideas or a 66% coupon to sign up for daily market analysis, videos and Option Trades each week. JW Jones This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.

We can trade with less volatility with Exchange Traded Funds(ETF) and get the leverage with options.

Dow Drops 400 Points

Today we have a up-to-date analysis by Chris Vermeulen of the precipitous events that have occurred since the latest FOMC meeting and the actions of the Fed, as below.

DOW Dropped 500 Points

Adam Hewison of Marketclub rants on the economy, the administration and the market

What The Dollar, Gold, Oil And S&P is Doing

Investors and traders alike were watching the action unfold across the pond earlier this week. It was seemingly a foregone conclusion that Greece would get the bailout they desired in order to prevent a potentially catastrophic default. The Greek default situation increased volatility in financial markets around the world. In addition to the Greek dilemma, the end of the 2nd quarter and the customary window dressing by institutional money managers only heightened the volatile situation.

For the past week or so I have been sitting in cash, watching the price action and waiting for setups that have defined risk and solid rewards. With the heightened volatility I did not want to get involved because a trade in the wrong direction would wreak havoc with my portfolio. As this week evolved, the validity of those concerns was unquestionable.

Commodity investors have faced some tough price action recently as gold, silver, and oil have traded significantly lower quickly. Now that we have witnessed some heavy selling pressure set in particularly in the silver and oil markets investors want to know where price is heading in the short term.

U.S. Dollar Index

For the past several months I have been monitoring the U.S. Dollar Index futures in order to gauge the price action in commodities and the S&P 500. The Dollar is currently trading at a key support level and the price action in coming days will be telling. While I do not trade solely on analysis pertaining to the Dollar, I do look for setups where an underlying is dramatically impacted by its price movements.

When the planets align, I will take a trade with a directional bias that is supported by the price action in both the underlying that I’m trading and the U.S. Dollar’s price action as well. At this point in time, the U.S. Dollar Index is trading right at a key support level marked by the 20 & 50 period moving averages as well a recent low. The daily chart of the Powershares U.S. Dollar Index Bullish Fund $UUP is shown below:

UUP Daily Chart

Gold & Silver

The recent bounce higher in the U.S. Dollar has been a factor in pushing gold, silver, oil, & the S&P 500 lower. Silver and oil were impacted in the harshest manner, but all four asset classes were negatively impacted. Precious metals tend to weaken during the summer and then pick back up in the fall. However, the selloff in silver the past few months has been breathtaking. For precious metals bulls who entered silver late in the rally the only outcomes were dismal. Late comers to the silver bull market were either stopped out or are currently experiencing significant pain.

While I remain a longer term bull as it relates to precious metals, in the short term I expect lower prices to continue. A major factor in my analysis stems from a longer term standpoint; the U.S. Dollar has likely put in an intermediate to long term low. There are a variety of reasons as to why, but suffice it say that from a market cycle standpoint the Dollar has likely achieved a major low and a reflex rally is likely.

Issues in the Eurozone are far from over and as time passes I expect the impact of fiscal issues rising in countries like Ireland, Portugal, and Spain to have a major impact on U.S. Dollar prices. If the sovereign fiscal issues in Europe result in a default or even a more mild technical default, the impact will likely be bullish for the U.S. Dollar.

The daily chart of the SPDR Gold TR ETF $GLD and the Ishares Silver Trust $SLV shown below illustrate the key areas which may be tested before the bull market in precious metals continues:

GLD Daily Chart

SLV Daily Chart

I am of the opinion that if precious metals investors are patient an outstanding buying opportunity will present itself in both gold and silver in weeks ahead. Looking at the daily chart of the two shiny metals and identifying key levels that make sense to acquire positions is important in the trade planning process.

I like to have a trading plan in place should my expectations unfold because it removes emotion from my trading. Planning a trade and trading a plan are extremely helpful when investing in volatile markets like silver and gold. In the longer term, I continue to believe that gold and silver will shine, but in the short term more price weakness may be ahead.

Crude Oil

I am a long term gold and silver bull, but the single asset class that I am the most bullish about is energy. Oil prices in the long term have only one direction to go – HIGHER. I realize that a slowdown in the economy will put downward pressure on oil prices, but as the world’s demand for oil increases and the supply level plateaus or decreases oil prices will be forced higher. If the Dollar does rally as I expect, oil prices would likely be negatively impacted and a buying opportunity would be forged.

The daily chart of the United States Oil Fund ETF $USO is shown below with my future price expectations and current key price levels illustrated:

Oil Daily Chart

S&P 500

The S&P 500 is in a very tricky spot for traders. Right now price action is testing the underbelly of a major descending trendline on the daily chart shown below:

SPX Daily Chart

However, if we take a look at a weekly chart note the massive head and shoulders formation that many traders have totally missed. A rally to the S&P 500 1,340 price level would complete the pattern. While head and shoulders patterns have failed several times in recent history, this is a major head and shoulders pattern on the weekly chart which holds more credence than shorter time frames such as the hourly or even the daily charts. The weekly chart of SPX illustrates the head and shoulders pattern.

SPX Weekly Chart

In the short run I think the S&P 500 can work higher, but if I’m right about higher prices for the U.S. Dollar in the future I expect to see much lower prices in the S&P 500 in the intermediate term, particularly if the weekly head and shoulders pattern plays out. If the S&P 500 struggles to breakout above key resistance levels, I will be of the opinion that the bear may have stopped hibernating and an impending recession may be thrust upon us in short order. There are signs pointing in that direction, but right now it remains too early to call.

Conclusion

In closing, my analysis reveals that the U.S. Dollar is poised to push higher, particularly if current support holds. If the Dollar can push above key resistance levels overhead, I expect the resulting price action in gold, silver, oil, & the S&P 500 to be dismal for the bulls.

I will be watching the Dollar closely looking for clues about price action. If I’m wrong and the Dollar breaks to new lows I would expect a massive rally in precious metals, energy, and domestic equities. With the recent price action that we have seen in the U.S. Dollar, I find it much more likely that the U.S. Dollar extends higher in coming weeks. As usual, time will tell.

If you would like to be informed several times per week on SP 500, Volatility Index, Gold, and Silver intermediate direction and option trade alerts…

Take a look at www.OptionsTradingSignals.com/specials/index.php today for a 24 hour 66% off coupon, and/or sign up for my occasional free updates.

JW Jones

How To Protect Your Capital Without Gold

Adam Hewison of Marketclub gives us his opinion of how to protect your capital without needing to have gold.

Today, he published a video to show you how you can protect your capital using something other than gold.

In this new, never before seen, 7 minute video, you will see exactly what we’re looking at and how you can protect your nest egg very easily using tools that you may or may not be familiar with.

It would seem as though the financial markets, particularly certain financial stocks, are incredibly vulnerable. The erratic recovery we saw from the lows in March of 2009 maybe in jeopardy. In fact, with many financial stocks making new lows for the year, it does not augur well for the future.

Also, there’s been a lot of prognostication about the end of America as you know it. “Kiss America Goodbye,” and “The Death of America,” are just a few of the wild headlines that are out there. This video takes you to the next level and offers you a concrete path on what to do to protect your capital and nest egg.

Protect Your Capital

This is a timely article by respected analyst Chris Vermeulen

May 12th, 2011

So be careful of your trading in the next 2 weeks