10 Days of Stocks & Commodities

December 24, 2009
Technical Analyst, Trader, & Founder of Technical Traders Ltd

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:

  • 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.
  • Broad market momentum waves are topping
  • These same indexes are trading at resistance levels from early 2008
  • Money flow is indicating large institutions have been big sellers over the past 3 weeks.
  • 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) 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.

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.

 

India is perennially the world’s largest gold consumer.

Gold Eagle twitter                Like Gold Eagle on Facebook