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U.S. Market Update: Gold, Silver, Oil and the Fear Index Trends.

March 20th, 2012 · Chris Vermeulen · 11 Comments

This week may provide some trading opportunities for us if all goes well now that most traders are investors are all giddy about stocks again. Last week we saw money move out of bonds and into stocks and the bullishness vibe in the air reminds of many market peaks just before a 5%+ correction in stocks.

Depending how the SP500 unfolds we may be going long or short equities, long precious metals, long bonds, and our VXX trade may spike in our favor.

SP500 Index Trading

Bonds: After last week’s strong move down in bonds as the HERD moved out of bonds and into stocks it may be providing us an opportunity to catch a dip or bounce in the price of bonds. If the stock market sees strong selling this week money will run back into bonds.

Bond Trading

Looking at precious metals it looks as though gold, gold miners and silver may still head lower this week. The charts are still bearish and pointing to another multi percent drop in value. Gold will look bullish around $1600, Gold miners (GDX) around $48, and Silver around $30 but we need to see one more wave of strong distribution selling for that to take place.

Gold ETF Trading

Crude oil has recovered nicely from its 5 wave correction which shook us out of the trade for a profit. I still like the chart for higher prices but with it trading at resistance and a high possibility of sellers stepping back in at this level I am not getting involved here.

Oil Trading

The SP500 made a new high last night but has run into sellers early this morning taking prices straight back down. The chart in pre-market looks as though we will see lower stock prices later today and with any luck the fear index (VIX) will continue to rise in our favor.

VIX - VXX - Volatility Index Trading

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11 responses so far ↓

  • 1 Lachlan // Mar 22, 2012 at 8:22 am

    Vix looks like it will spike of that bullish flag. Gold after a vicious short term sell off has been trading close to a support zone along with silver and the AUDUSD. Maybe the ASX200 won’t get caught up too much in the drama. I’m ready for some action.

  • 2 Lachlan // Mar 22, 2012 at 8:23 am

    Oil rally spices things up too.

  • 3 Greg Atkinson // Mar 23, 2012 at 10:02 am

    Lachlan I would like to see gold prices drop back near $1000 USD an ounce and oil around $120 USD a barrel. I would then feel that supply/demand fundamentals were in the drivers seat again as opposed to speculative trading & investor fear being the driving forces.

  • 4 Plornt // Apr 11, 2012 at 4:13 am

    System says DJIA will crash in the next 3 months. Just have to wait to see whether DJIA makes new highs before crashing, or continues down and confirms.
    New lows on the DJIA could occur, so be careful.

    All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change.

  • 5 Lachlan // Apr 11, 2012 at 6:06 am

    You came back for a Dow implosion Plornt πŸ˜‰
    I’m keen to see how the Dow behaves in relation to Obama’s re-election considering the Fed supports the Dow. At least I have heard advisers to the Fed vehemently and publicly supporting the supporting of Dow at any cost. The stock market is their sacred cow. This is why I suspect flash crashes from time to time because it helps fund the elevation process by running stops and repurchasing lower. Anyhow I’d probably like a long at 12300 very roughly if it goes there.

  • 6 Plornt // Apr 11, 2012 at 6:24 am

    “You came back for a Dow implosion Plornt”

    Yep not done anything for a while. We all knew this was comming. It’s probably just the first stage; albeit we could make new highs first from any short covering.

    All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change.

  • 7 Greg Atkinson // Apr 13, 2012 at 9:49 am

    I guess we will soon start to see the “Sell in May and go away” articles being pumped out by the mainstream financial media. Having said that I do get the feeling that the U.S. stock market is getting ahead of itself. The rally in shares in the U.S. seems disconnected to how the economy is tracking. Seems to me a lot of investors are counting on the American economy bouncing back very strongly.

  • 8 Plornt // Apr 14, 2012 at 5:19 pm

    Well i’m reluctantly and unfortunately out at breakeven. Very risky to be invested. Will be a sideline participant for an extended duration.

    All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change.

  • 9 Greg Atkinson // Apr 14, 2012 at 6:13 pm

    I am with you Plornt. I don’t trust the official numbers out of China & expect at some point this year we will learn that growth there is below 7.5%. Probably a lot lower if we could see the non-massaged numbers πŸ™‚

  • 10 Stillgotshoeson // Apr 15, 2012 at 10:36 am

    I like to be in the market at all times, it is very rare for me to be 100% on the sidelines.

    Part of my strategy is to read thee economic conditions and put some coin down in the areas I think still likely to be profitable.

    I also limit exposure, do not leverage and do not go all in either. The banks are yielding reasonable returns (even better in an SMSF ) but I just think they are still over valued on current economic conditions so I will not touch them. Things will be worse for them if more foreign banks are given retail licenses to open in Australia.

    I share your views on China Greg and think things are not as good as they seem and figures are without a doubt in my mind being fudged. RIO and BHP are overvalued too I feel with an impending slowdown coming. I thought we would be in recession already, on some economic fronts it could be argued we are.
    Still think we are headed for recession in the medium term, maybe an under estimate and it gets worse than that too… Even through all this turmoil some areas should still outperform so having some exposure enables one to benefit from this.

    I think the next 5 years are going to be probably the best time to set oneself up financially than has been available for a couple of decades. The next 5 years are also going to be the worst time in the last few decades for those that have accumulated wealth to hang on to it if they do not be proactive in managing their finances.

  • 11 Lachlan // Apr 15, 2012 at 5:30 pm

    Retailers I know around here are saying its very poor going at present. Not sure about other places.

    You been shorting the Dow Plornt? Adrenaline junky. Those buggers’l get ya you know πŸ˜‰

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