Last week was nothing special as stocks continued to drift higher on light volume and the CBOE Volatility Index, or VIX, reached a new multiyear low. This mix of higher prices on light volume, multiyear lows in the VIX and an overbought market paints a clear picture to a market technician -- be ready for a pullback.

I issued a report last Wednesday on sector rotation comparing the price performance of the gold, silver, oil and natural gas sectors from the January peak with last week's price action. It was very interesting and it pointed to a sharp selloff Thursday or Friday.

Gold

Gold last week gapped higher then traded sideways for a few days. I will admit it was very tempting to buy into the move but I stuck with my trading strategy which is to not chase moves which gap in my direction.

Gaps are known to get filled about 70% of the time. What that means in this situation is that the price most likely will sell back down to fill that gap before trying to move higher.

With that said, the problem I see now on the daily chart is the possibility of the mini head-and-shoulders pattern breaking down.

If gold moves any lower then I would expect a sharp pullback. The measured move would equal a pullback to the $104 area on the chart of the SPDR Gold ( GLD) exchange-traded fund and the $1,070 level for spot gold.

Silver

The silver chart, as represented by the iShares Silver Trust ( SLV) ETF, looks much different than gold's but in reality they are trading in a similar situation. If silver moves any lower then sellers will flood the market and take the price down to the next support level. But if we get a bounce then it should surge and rally almost a $1 an ounce from this point.

Only time will tell as we let this trade unfold with a stop at $16.52.

Natural Gas

Natural gas has been selling down for almost two months. The chart is starting to show a possible buy point if all goes well in the next few weeks.

What I like about this chart is that we saw a break of a support level and heavy selling which tells me the general herd is getting shaken of their long positions. This extended selloff is now entering a support zone and could provide us with a low-risk setup in the next two to three weeks.

Crude oil

Oil is trading similar to gold and silver. It is trading at a key pivot point and could go either way quickly. I will be keeping my eye on the daily and 60-minute charts for a possible low-risk entry point.

In short, the overall market is trading at level where there isn't much to we can do. Day traders, not swing traders, are able to take advantage of this price action.

I feel the major indexes have another one to two down days left in them before a bounce, but it's more difficult to gauge the momentum with a cool down period (the weekend) in the middle of it all.

The market is on the edge of some exciting moves as I can feel something brewing. With any luck there could be some great opportunities in the coming days.

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.

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