Top Technical Trades: SPX, Dollar, Nat Gas

NEW YORK ( -- Wednesday's price action was bearish again and we are patiently waiting for a counter-trend pullback to happen. While there are some good-looking plays out there, I really do not want to get long until the market clears the air with a bout or three of strong selling. Remember 3:4 stocks follow the market and the odds of picking a commodity or ETF that bucks the trend is unlikely.

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S&P 500 / Broad Stock Market

We have seen a big run-up in stocks this month and things are looking a little long in the teeth. A large number of stocks are trading above their upper Bollinger bands and the broad market is testing that key resistance level also. Typically when a Bollinger band is reached, we see price reverse for a couple days, at minimum.

While the equities market is in a new uptrend, as seen by the moving averages, a pullback seems imminient. The last two days have formed reversal candles and are pointing to lower prices.

Dollar Index Hourly Chart

This chart shows a possible bottom forming in the dollar pointing to a three- to eight-day pullback in stocks.

Gold Futures Hourly Chart

Natural Gas Hourly Chart

Trading Conclusion

Looking at the charts on several different time frames, not all shown here, technical analysis shows a pullback in stocks is highly likely. This is what we are currently positioned for.

The U.S. dollars downward momentum is slowing and if it can find a bid today, it should trigger strong selling in both stocks and commodities. Gold and silver are down sharply along with miners.

We have been watching natural gas for a few months and know that it has been trading inverse to what stocks do. This bodes well for a bounce in natural gas, if stocks start a selloff. That being said, natural gas is trading at a key tipping point that could spark a very fast and hard drop. This knife can fall at a speed that will take a slice out of your trading account, if not traded and managed properly (tiny position and use of a stop).

I actually like natural gas the more it moves down and could issue a buy alert on it today or this week. I would like to see volume decline at this level, showing the momentum is slowing.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Chris Vermeulen is founder of the popular trading sites and 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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