NEW YORK (
) -- Over the past year my long-term trends and outlooks have not changed for gold, oil or the
. There has been a lot of sideways price action, however, to keep us on our toes and focused on the short-term charts.
As we all know, if the market does not shake you out, it will wait you out, and sometimes it will do both. So stepping back to review the bigger picture each week is crucial in keeping a level trading/investing strategy in motion.
The key to investing success is to always trade with the long-term trend and stick with it until price and volume clearly signal a reversal/down trend. Doing this means you truly never catch the market top nor do you catch market bottoms. But the important thing is that you do catch the low-risk trending stage of an investment (Stage Two -- Bull Market, Stage Four -- Bear Market).
Lets take a look at the charts and see where prices stand in the grand scheme of things...
Gold Weekly Futures Trading Chart
This is the last week to talk about about how precious metals are nearing a major tipping point and to be aware of those levels because the next move is likely to be huge and you do not want to miss it.
Overall, gold and silver remain in a secular bull market and have made many pauses similar to what we have seen in the past year. The gold market seems to be trying to shake out
wait out investors with its 18-month volatile sideways trend.
A lot of gold bugs and investors in gold and mining stocks are starting to give up, which can been seen in the price and selling volume for these investments recently. I am a contrarian in nature, so when I see the masses running for the door I start to become interested in what everyone is unloading at bargain prices.
Gold is now entering an oversold panic selling phase, which happens to be at major long-term support. This bodes well for a strong bounce or start of a new bull market leg higher. If gold breaks to less than $1,500 - $1,530 it could trigger a bear market for precious metals, but until then I'm bullish at this price. I think we could see another spike lower in gold to test the $1,500 - $1,530 level this week, but after that it could be off to the races to new highs.
Crude Oil Weekly Trading Chart
Oil had a huge bull market from 2009 until 2011, but since then has been trading sideways in a narrowing bullish range. I expect some big moves this year for oil, and technical analysis puts the odds on higher prices. If we do get a breakout and a rally, then $130 will likely be reached. But if price breaks down, then a sharp drop to $50 per barrel looks likely.
Utility & Energy Stocks - XLU - XLE - Weekly Investing Chart
The utility sector has done well and continues to look very bullish for 2013. This high dividend paying sector is liked by many, and the price action speaks for itself. If the overall financial market starts to peak then these sectors should hold up well because they are services, dividend and a commodity play wrapped up in one.
S&P 500 Trend Daily Chart
The S&P 500 continues to be in an uptrend that I am trading with until price and volume tell me otherwise. But there are some early warning signs that another correction or a full-blown bear market may be just around the corner.
Again, sticking with the uptrend is key, but knowing what to look for and prepare for is important so that when the trend does change your transition from long positions to short positions is a simple measured move in your portfolios.
Weekend Trend Conclusion
In short, I remain bullish on stocks and commodity-related stocks until I see a trend change in the S&P 500.
The energy sector is doing well and looks bullish for the next month. As for gold and gold miners, I feel they are close to offering a low-risk entry point for traders to start building new long positions. The risk is low compared to potential reward.
When the price of a commodity or index trade near the apex of a narrowing range or major long-term support/resistance level, volatility typically increases as fear and greed become heightened. This creates larger daily price swings. So be prepared for some turbulence in the coming weeks while the market shakes things up.
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This article was written by an independent contributor, separate from TheStreet's regular news coverage.