ETF trading has made it easy for traders and investors to get maximum exposure to the entire market without the high fees for mutual funds and their managers. There are now ETFs covering almost every investment type, whether it’s stocks, indexes, sectors, commodities, bonds, real estate, currencies etc…
In this short report I will show a few charts describing what is happening for precious metals and energy.
HUI – Gold Stock
This monthly chart of the gold stocks index (AMEX: HUI, Stock Forum) shows how easy it is to trade the market and avoid large sell offs when using technical analysis. Currently gold stocks are in a bull market, testing the 2008 highs. Until we are proven wrong, buying stocks after a pullback is a winning strategy.
Trading the GLD ETF
We have been in the Gold ETF (NYSE: GLD, Stock Forum) for a few months as we ride this bull to new highs. This chart clearly shows how buying dips in a bull market can really pay off. I do have certain criteria, which must be met before buying dips so I know the odds are in my favor.
ETF trade silver
Silver (NYSE: SLV, Stock Forum), along with gold and oil, are looking ready for an oversold bounce. I don’t think prices will jump and rally higher right out of the gate, but eventually I feel silver will head higher.
Crude oil fund trader
Crude oil looks primed for the picking. It is currently oversold and testing 2 support levels. The downside momentum is still strong, so this selling could last another 1-2 days but I’m expecting it to turn around soon.
This is not a low-risk setup. This is a short-term aggressive contrarian play for those of you who like heart pounding plays.
Natural gas fund chart
Natural gas (NYSE: UNG, Stock Forum) has been taking its time to bottom. Virtually every bottom picker has been burned this year. I am starting to hear everyone get more bearish on it again which is great! It should bottom any day then! LOL….
Seriously, it cannot get much more bearish for gas. We don’t have enough space to store it, and companies are finding more natural gas in the ground every day. Because it sounds like a terrible investment it must be getting close to a bottom. If this is the start of a flat basing pattern, then I expect it could drag out for a few months before actually making a nice move up.
Dow Jones DIA ETF
The Dow Diamonds Trust (NYSE: DIA, Stock Forum) looks similar to gold and silver. I feel we are ready for a 1-2 day bounce, and then we could go a little lower to shake traders out of the market before heading higher.
ETF trading conclusion:
Gold stocks and the broad market are in a bull market. The recent pullback has many traders worried. I think this an opportunity to get into some positions before the next rally. Buying the dips in a bull market is a low risk trade until proven wrong. I think we will still have more of a pullback, but then we could have a very profitable year end Christmas rally.
Natural Gas is just bumping along bottom I think. I do not expect any trade opportunity for a few weeks anyways.
Crude oil (NYSE: USO, Stock Forum) looks like it’s ready for a move, whether it is a 1-2 day bounce or the start of a new leg higher. If you look at late September you can see USO broke down on heavy volume shaking most traders out of their positions just before the next leg higher, and this is what I feel it is doing now. Only time will tell.
Let’s see how the second half of this week unfolds.
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Chris Vermeulen
www.TheGoldAndOilGuy.com