Active Trader Update for Gold, Silver & Oil

May 14, 2009

This has been a volatile week for the market. Equities sold off Wednesday pulling precious metals stocks with it. Crude oil had a small pullback but energy stocks took a beating.

Gold & Silver Short Term Outlook

Precious metals equities pulled back today for a couple reasons in my opinion.

  • They are currently at resistance and the upper level of the channel
  • The broad market sold off big today and that put some pressure on PM equities

I expect we will see some type of pullback which could last 1-2 weeks and at that point let's hope precious metals rally higher.

Gold Precious Metal Stocks Index - Daily Active Trading Signals

Gold GLD Exchange Traded Fund - Daily Active Trading Signals

Silver SLV Exchange Trade Fund - Daily Active Trading Signals

Crude Oil Trading - Short Term Outlook

Energy stocks have performed very well but now look to be extremely over bought with over 90% of energy stocks having a bullish point and figure chart. I expect we will see some type of pullback here which could last 5-20 days depending on the speed of the pause/correction in prices. Looks like energy stocks could easily fall back to the 50% mark on the bullish percent chart.

Energy Bullish Percent Index - Daily Chart

XLE Energy Fund - Active Trading Signals

Crude Oil Analysis

Active Trading Conclusion

Gold and silver in my opinion should be moving higher because the board market is so over bought and looks like it's about to have a sharp correction. Money has been slowly moving into gold and silver the past 2 weeks. If the broad market continues to sell off here we could see gold prices rise nicely and retest the $1000 mark.

We don't really know how bad the economy really is and if this is just a bear market rally then we could be in for some trouble. I don't think this is the case but it's always a good idea know what could happen. If the economy is about to crash it would demand large amounts of money to be pulled from the market and used to fund business and individuals living needs. This means that banks, investment firms and long term investors will start to draw their investments which would include equities, gold, silver, oil etc… pulling all investments down. I don't really like to think about this but I like to know what could happen so that I can take advantage of market moves going both ways (up and down).

That being said it looks like the market is ready for a pause or correction before it's ready to continue the rally. Short term traders should be locking in some profits.

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several financial hubs like MoneyShow.com.

The symbol for silver ‘AG’ comes from the Latin word ‘agentum’ meaning silver.