By Chris Vermeulen of TheGoldAndOilGuy.com
NEW YORK (
) -- Charts of the
SPDR S&P 500 ETF
SPDR Gold Shares
iShares Silver Trust
present a bearish outlook for the market over the next five to 10 trading sessions.
This is because everything looks to be trading near resistance levels, as the following charts illustrate. This should bring sellers out of the woodwork and put pressure on prices.
Trading commodities and indices through the use of exchange-traded funds sure keeps things simple for an average trader. These funds allow individual investors to buy and sell things like gold, silver, oil and the
One of the nice things with ETFs is that they allow everyone to follow the price of a commodity or index using any charting Web site. With ETFs, there is no need for expensive data feeds and charting programs, and you don't have to worry about contract expiration.
SPDR Gold Shares
As you can see, gold broke out of its support zone this week and popped into the next resistance level. This is very typical price action in the markets. It is important to look at the price charts like an apartment building -- nothing but a bunch of floors and ceilings.
How it works: If a ball breaks though a floor it will naturally fall to the next floor and bounce. The same applies when a ball breaks through a ceiling, it will hit the next ceiling then bounce back down. This is essentially how the market moves.
iShares Silver Trust
Silver is forming a large pennant and nearing its apex. Given the amount of volume traded within this large-volume channel, I would expect a sharp breakout once a direction is established.
United States Oil Fund
Crude oil had a funky day. Early Wednesday morning in premarket trading we saw virtually every investment drop at the same time, which was strange. The dollar dropped sharply, and oil went down also. Normally, as the dollar drops, oil rockets higher, but that was not the case yesterday.
Currently oil is trading between two trend lines and is trying to hold up. If we get a breakdown, we could see a sharp drop in oil over the next one to two weeks.
SPDR S&P 500
The S&P 500 is trading within a high-volume channel in the same way as silver. Once a breakout in either direction is made, I would expect a sizable move lasting a few weeks.
Midweek Commodity and Stock Conclusion
Again, the market looks bearish for the next five to 10 trading sessions.
Silver and gold stocks tend to lead the metals sector on breakouts, so it will be important to keep an eye on them as we near a possible breakout or breakdown in the metals. If you see the iShares Silver Trust or the
Market Vectors Gold Miners ETF
outperform SPDR Gold Shares by two to three times, then you should expect SPDR Gold Shares to move higher later in that session or during the following session.
The dollar trend usually helps us to identify whether there will be downward pressure on oil. Also energy stocks tend to lead the price of oil by a few hours and some times by a day. I keep an eye on the
Select Sector Energy SPDR
for a feel for how the energy stocks are doing. I also watch the
PowerShares DB USD Bull ETF
In the stock market, tech, financials and the Russell 2000 small-cap stocks tend to lead the way for the broader market. Watch the
Select Sector Tech SPDR
Select Sector Financial SPDR
iShares Russell 2000 Index
to confirm breakouts.
If you would like to get my trading analysis and alerts, please join my free newsletter at
-- Written by Chris Vermeulen in Collingwood, Ontario, Canada
Chris Vermeulen is founder of the popular trading sites www.thegoldandoilguy.com and www.ActiveTradingPartners.com. There he shares his highly successful, low-risk trading method. Since 2001, Chris has been a leader in teaching others to skillfully trade in gold, silver, oil and stocks in both bull and bear markets.