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Over the past year we have had some
really interesting things unfold in the market. Investing or even swing
trading has been much more difficult because of all the wild economic data
and daily headline news from all over the globe causing strong surges or sell
offs almost every week.
For a while there you could not hold a
position for more than a week without some type of news event moving the
market enough to either push you deep in the money or get stopped out for a
loss. This has unfortunately caused a lot of individuals to give up on
trading which is not a good sign for the financial market as a whole.
The key to navigating stocks which
everyone thinks are overbought is to trade small position sizes and focus on
the shorter time frames like the 4 hour charts. This chart is my secret
weapon and giving you both large price swings which daily chart traders focus
on while also showing clear intraday patterns to spot reversals or
continuation patterns with precise entry/exit points.
While I could ramble on about why the
stock market is primed for major long term growth from this point forward I
will keep things short and simple with some 4 hour and daily charts for you
to see what I see and what I am thinking should unfold moving forward.
Keep in mind, the most accurate
trading opportunities that happen week after week are the quick shifts in
sentiment which only last 2-5 days at most which is what most of my charts
below are focusing on…
Dollar Index – 4 Hour Chart
This chart shows a mini Head &
Shoulders reversal pattern and likely target over the next five sessions. The
dollar index has been driving the market for the past couple years so a lower
dollar means higher stock and commodity prices.
Dollar Index Trading
Bond Futures – 4 Hour Chart
Money has been flowing into bonds for
the past couple weeks with most traders and investors expecting a strong
correction in stocks. As you can see the price of bonds hit resistance this
week and as of Thursday has now started selling off. Money flowing out of
this “Risk Off” asset means money will move to the “Risk On”
investments like stocks and commodities.
Bond Futures Trading
Gold Futures – Daily Chart
Gold is stuck in both categories in my
opinion. It is a “Risk Off” safe haven when people are scared of
falling stock prices, and it is also a “Risk On” speculative
investment when people are feeling good about the market. Gold has been
trading at key resistance for a couple weeks and looks as though it’s
starting its next rally.
Gold Futures Trading
Silver Futures – Daily Chart
Silver is in the same boat as gold
though it carries much more volatility than gold. Expect 2-4% swings
regularly and sloppy chart patterns in this metal.
Silver Futures Trading
SP500 Futures – Daily Chart
As much as everyone hates to buy
stocks up at these lofty prices I hate to say it but I think they are going
to keep going up and they could do this for a long time yet. If the dollar
index continues to break down then I expect the SP500 to rally another 3%
from here (1500) in the next 1-2 weeks.
SP500 Futures Trading
Crude Oil Futures – 4 Hour Chart
Crude oil has not had much attention
from me in the past few months. While it has had big price action many of
those big days took place on news causing an instant price movement making
this extra dangerous to trade. I continue to watch rather than get attached
to it.
Crude Oil Futures Trading
Natural Gas Futures – Daily
Chart
Natural gas has been a great performer
for us in the past 6 months as all the short positions slowly get covered. I
just closed out my natural gas ETF trade this week with a 31.9% gain and plan
on getting back in once the chart provides another low risk setup.
Natural Gas Futures Trading
Trading Conclusion:
In short, I feel the dollar index
along with bonds will correct over the next few weeks. That will trigger
buying in stocks and commodities. Keep in mind natural gas dances to its own drum beat. The dollar does not have much affect on its price and most times natural gas is doing
the opposite of the broad market. Get My Pre-Market Trading Analysis Video
and Intraday Chart Analysis EVERY DAY – www.TheGoldAndOilGuy.com
Chris Vermeulen
Editor, the
Gold and Oil Guy
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