Gold, Silver, Oil, Natural Gas ETF Trading

October 25, 2009

The past week in gold, silver, oil, natural gas and the broad market wasn't anything to write home about. We are seeing controlled profit taking which is making the market choppy. Many traders are getting very bearish on the market which is a good thing in my opinion. According to my market internals, sentiment and volume analysis we should get a shake out (sharp dip) which would make traders exit their positions before the market continues higher.

Some trader's say we are in a bull market, others say we are in a major bear market. Either way the trend is up on the daily and weekly charts and companies are making money. Buying on over sold dips has been very profitable this year. Until I see things drastically change, this is my strategy for the broad market.

Lets take a look at the commodity sector.

HUI - Gold Stocks Index

Recently we have seen money move out of gold stocks but with the majority of them trading at support trend line we could see some fireworks this week.

Gold - GLD Exchange Traded Fund

Gold has been trading sideways as investors and traders digest the previous rally higher. The recent price action looks similar to the September rally and consolidation. Lets hope for a another move higher without getting shaken out of our position.

Silver - SLV Exchange Traded Fund

Silver is in much of the same situation as gold. We are waiting to see what happens here at these support levels.

Crude Oil - USO Exchange Traded Fund

Oil has been making a strong rally after breaking out of is multi month consolidation pattern. We are now looking for some type of pullback or test of breakout for another low risk entry point.

Natural Gas - UNG Exchange Traded Fund

Natural gas is having some trouble breaking out above the multi month resistance trend line. Buying here is a 50/50 bet and I will wait for another entry point before putting our money to work.

Natural Gas, Oil, Silver and Gold Exchange Traded Fund Conclusion

Overall, the market feels ready for quick snapback to shake traders out of profitable positions. I expect a resumption of the up trend as the market slowly creeps higher at a steady pace digesting each rally with sideways movement.

I know many people are shorting the broad market and that is not something I am willing to do yet. Until I see a drastic change, long positions are my bread and butter. Once the market does reverse, there will be plenty of time to play the short side using the Leveraged ETFs.

Commodities are taking a breather but with our support trend lines nearing I expect some movement this week.

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, 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&P500 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. 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. Chris is a graduate of Seneca College where he specialized in business operations management.

Man has had the ability to separate silver from lead for as far back as 4000 B.C.