Gold, Oil & SPX Trading at Key Pivot Points
Source: Chris Vermeulen, TheGoldAndOilGuy (6/14/10)
Very dicey times right now to pick a direction. . .
The price of gold continues to form the large cup-and-handle pattern and is trading near resistance. This week, I figure we will see gold make a move up or break the dotted support trendline and drop towards the blue support level. I continue to wait for a low-risk setup for gold.
Crude Oil—Daily Chart
Crude oil has been trending down for a couple months and recently rebounded to test its resistance level. It looks as though oil is forming a bear flag which generally means we should see lower prices in the near future. But another $1–$2 move up could trigger a surge of buyers if this resistance level is broken, which is why this week should be volatile. . .it's a 50/50 chance for commodities to either rally or selloff.
The SP500 has posted some decent gains the past couple days, but it's still no in the clear just yet. . .Most technicians are looking for a move above 1100–1110 area with heavy volume before they start to commit serious money to the long side.
It looks and feels as though the market could drop or rally very sharply from here, and if you are caught on the wrong side of the move then it's going to really hurt the trading account. During times like this, when the market is at a critical pivot point with increased volatility levels along with mixed market internals, I tend to stay on the sidelines until some dust settles.
Weekend Gold, Oil and SPX Trading Conclusion:
In short, everything is trading near key pivot points giving mixed signals for prices to rally or drop. My analysis is pointing to a small move up Monday morning to break Friday's high, followed by some selling late Monday or Tuesday. How much of a move down, I don't know for sure, but there is potential for a 3%-4% move. On the flipside, if buyers step in pushing the price above 1100 then we could see a surge higher of 3%-4%. . .
Very dicey times right now to be trying to pick a direction, which is why it's best to wait for the risk level to diminish before getting involved, or at least trade a small position with a protective stop if you feel confident in a direct.
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