Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Gold, DAX, and Dollar Still Pointing to Sharply Lower Prices


Nobody wants a market collapse, but trading to the short side of the market can quickly earn you money.

The past month has been a wild ride for both equity and commodity traders around the globe. Novice traders have had their heads handed to them and their investment accounts drained. When fear, uncertainty, and volatility are running high, some of the best opportunities become available to those who know what to look for. These market conditions force you to focus and strive for perfection in finding low-risk entry setups and to also actively managing positions with laser focus, because within hours a winning trade can turn into a losing trade.

Looking back on the daily charts of the dollar, S&P 500, gold, and also the overseas markets, it looks as though we are nearing a market bottom. I say nearing because I think investments need more time for the current selling pressure and bearish sentiment to run its course, which could take another few weeks and possibly a few months before truly bottoming. Let's take a quick look at some charts.

SPY 30-Minute Chart Looking Back Two Months

As you can see below, price action has been wild. But for subscribers to my newsletter it has been a fun and exciting time having pocketed over 40% return from August 1 -- up until today.

The point of this chart is to show you the basic market phases (Impulse, Uncertainty, and Corrective). Understanding how to identify each phase using momentum, price action, volume analysis, and market sentiment is crucial for success in today's volatile market. Once mastered, you can trade virtually any investment with a high level of confidence, though I recommend mastering three to four investments at most and just trading those full time with pinpoint accuracy.

As you can see below, I am anticipating weakness in the market over the next few days. Once those levels are reached, or if the charts start hinting that a reversal back down is imminent, I will be ready to take action using an inverse leveraged ETF.

Gold 30-Minute Chart Looking Back Two Months

This chart will anger some people for sure, but the chart to me is still pointing to lower prices at this time. Until we get a breakout above the upper resistance level, I am not bullish on gold. Keep in mind that during strong sell-offs in the stock market almost all investment drop together (gold, silver, oil, stocks).

German DAX Daily Chart Looking Back Three Years

This chart shows the long-term chart of the DAX which I think is giving us some insight to a global market bottom in the coming months. You will notice I painted the phases over the chart and where I feel the market is trading and where it is headed looking forward.

Dollar Index Daily Chart Looking Back Three Years

The dollar also shows us three years for price action. If this strong rally continues in the dollar we will see lower stock and commodity prices for a few more months.

Trend Trading Idea Conclusion

In short, I feel we have some very exciting times ahead along with huge potential trades starting to unfold. While I don't want the market to collapse, I will admit I prefer trading the short side of the market because fear is easier to trade than greed, not to mention prices drop much quicker than they rise. I'm sure you like making money fast as well.

Editor's Note: Chris Vermeulen offers more content at his site,

Twitter: @GoldAndOilGuy
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos