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Trading Commodity Update for GLD, SLV, USO & UN

 

By Chris Vermeulen

Jun 29 2009 3:16PM
www.TheGoldAndOilGuy.com

   

Last week commodities moved higher as investors started buying into the recent pullback in prices. This is a healthy sign for the overall market. This is a quick update for gold, silver, oil and natural gas short term traders.

GLD Gold ETF Trading Chart
Gold has provided us with two great trades this year. Both trades lasted only a few weeks and we locked in profits on technical breakdowns. Many of you have been asking when we will get a short signal (make money in a down market). Well, I don’t like shorting a commodity that is in rally mode. KISS is my mentality and trading only with the major trend is what I focus on.

For those of you who want to short gold (DZZ Ticker) may do so at your own risk, I recommend waiting for an extended rally of 10+ percent in price before you start looking for a technical breakdown to short. The quicker prices rise, the higher chance that a technical breakdown will provide a quick shorting opportunity. Locking in profits within a few days is crucial. In a bull market pullbacks in price are generally quick and short lived.

 

SLV Silver ETF Trading Chart
Silver and gold generally move in the same direction. These precious metals are looking ripe for a low risk setup. What I am looking for is momentum to turn up along with a reversal candle pattern. We continue to wait.

 

USO Oil ETF Trading Chart
Oil has had a solid move the past 2 months. This chart is starting to look a little bearish and if what I am seeing is correct for the short term then we could see oil slide lower this week. But in the event prices rally we could get a buy signal within 5-10 days if all goes well.

 

UNG Natural Gas ETF Trading Chart
Natural Gas has been drifting sideways for over 2 months now. Everyone is excited to catch this reversal when prices start to head north again. Seems like most people are long UNG already from what I gather because of the fear of missing the next big rally.

To be honest I have that fear as well but I do not let it control my trading. As usual I follow my simple trading model and trade when risk is low and the odds are on my side. One thing that traders should remember is that UNG (Nat Gas) looks to be bottoming from a very big sell off. If in fact prices are reversing there will be plenty of opportunities to buy it still. Even though I am really excited for this trade, I continue to wait for my time. I would like to see the momentum breakout and start moving higher before I buy anything.

 

Commodity Trading Conclusion:
Looks as though money is starting to flow back into commodities. With any luck we could have some buy signals this week. GLD and UNG have the best looking charts for a buy signal currently.

As usual I wait for the trades to unfold and come to use. Keeping risk low, scaling out of trades to lock in profits where there is a technical breakdown and allowing our core position to run for larger gains is my focus. I don’t forecast prices I just analyze prices and prepare for what two scenarios will most likely occur within a couple days.

If you would like to receive my Free Weekly Trading Reports or my Trading Signals please visit my website: www.GoldAndOilGuy.com

 

Chris Vermeulen

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This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.