70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

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For a while there you could not hold a position for more than a week
without some type of news event moving the market enough to either push
you deep in the money or get stopped out for a loss. This has
unfortunately caused a lot of individuals to give up on trading which is
not a good sign for the financial market as a whole.

The key to navigating stocks which everyone thinks are overbought is
to trade small position sizes and focus on the shorter time frames like
the 4 hour charts. This chart is my secret weapon and giving you both
large price swings which daily chart traders focus on while also showing
clear intraday patterns to spot reversals or continuation patterns with
precise entry/exit points.

While I could ramble on about why the stock market is primed for
major long term growth from this point forward I will keep things short
and simple with some 4 hour and daily charts for you to see what I see
and what I am thinking should unfold moving forward.

Keep in mind, the most accurate trading opportunities that happen
week after week are the quick shifts in sentiment which only last 2-5
days at most which is what most of my charts below are focusing on…..

Dollar Index – 4 Hour Chart

This chart shows a mini Head & Shoulders reversal pattern and
likely target over the next five sessions. The dollar index has been
driving the market for the past couple years so a lower dollar means
higher stock and commodity prices.

Bond Futures – 4 Hour Chart

Money has been flowing into bonds for the past couple weeks with most
traders and investors expecting a strong correction in stocks. As you
can see the price of bonds hit resistance this week and as of Thursday
has now started selling off. Money flowing out of this “Risk Off” asset
means money will move to the “Risk On” investments like stocks and
commodities.

Gold Futures – Daily Chart

Gold is stuck in both categories in my opinion. It is a “Risk Off”
safe haven when people are scared of falling stock prices, and it is
also a “Risk On” speculative investment when people are feeling good
about the market. Gold has been trading at key resistance for a couple
weeks and looks as though it’s starting its next rally.

Silver Futures – Daily Chart

Silver is in the same boat as gold though it carries much more
volatility than gold. Expect 2-4% swings regularly and sloppy chart
patterns in this metal.

SP500 Futures – Daily Chart

As much as everyone hates to buy stocks up at these lofty prices I
hate to say it but I think they are going to keep going up and they
could do this for a long time yet. If the dollar index continues to
break down then I expect the SP500 to rally another 3% from here (1500)
in the next 1-2 weeks.

Crude Oil Futures – 4 Hour Chart

Crude oil has not had much attention from me in the past few months.
While it has had big price action many of those big days took place on
news causing an instant price movement making this extra dangerous to
trade. I continue to watch rather than get attached to it.

Natural Gas Futures – Daily Chart

Natural gas has been a great performer for us in the past 6 months as
all the short positions slowly get covered. I just closed out my
natural gas ETF trade this week with a 31.9% gain and plan on getting
back in once the chart provides another low risk setup.

Trading Conclusion:

In short, I feel the dollar index along with bonds will correct over
the next few weeks. That will trigger buying in stocks and commodities.
Keep in mind natural gas dances to its own drum beat. The dollar does
not have much affect on its price and most times natural gas is doing
the opposite of the broad market.

Chris Vermeulen

2012-10-05 10:22:14

Source: http://goldetftrader.blogspot.com/2012/10/70-second-market-outlook-metals-dollar.html