Categories: Base Metals / Energy / Precious Metals
Topics: General Base Metals / General Energy / General Precious Metals

Active Traders Report for Gold, Silver, Oil & Nat Gas

Precious metals like silver and gold have pulled back to support levels and trending sideways. This week will be interested as we watch prices bounce or breakdown. The energy sector looks be breaking down with more power as the bullish percent index for energy stocks dropped substantially last week.

Precious Metals Sector
The bullish percent index tells us the percentage of gold stocks which currently have a point and figure buy signal. Looking at the charts below it looks as though precious metals are trading at support. I am inclined to think we will get a bounce this week for gold and silver.

Figure 1

Hui:Gold Ratio
When this chart is trending up gold bullion and gold stocks are in favor and rallying. This ratio is currently at a support level which is pointing towards a bounce in the near term. This is a weekly chart so we could be 1-2 weeks away before it shows up on the chart.

Figure 2

Hui – Gold Stocks Index
This is an index of gold stocks. We saw prices breakout and rally in May but now they are testing support. They could go either way quickly from here.

Figure 3

Gold Price Action – GLD Gold Fund
As you can see gold has pulled back from resistance is now at a possible support level. From looking at the HUI:GLD price performance and stochastic indicator at the bottom of the chart which is now turning up, it points to higher prices for gold in the short term.

Figure 4

Silver Price Action – SLV Fund
Silver is doing much the same as gold. It has pulled back from resistance and is now looking for a bottom. Gold and silver tend to rally and correct together so if gold starts to move higher this week I expect silver to go with it.

Figure 5

The Energy Sector
The energy sector has been on fire the past couple months. The bullish percent indicator has broken down sharply and to confirm this we can look at the XLE energy ETF price performance indicator at the bottom of the chart. We can see that our support trend line was clearly broken last week. It looks like money is starting to rotate out of energy.

Figure 6

Crude Oil Price Action – USO Fund
USO has been taking a breather the past two weeks. With last weeks price action I am starting to think a much deeper correction could be just around the corner. I mentioned in a previous report that we should be looking to take some profits on a break of the dotted blue support trend line. That exit point was executed by many traders and congrats to those who pulled the trigger. Taking profits/exiting trades is one of the most difficult things to do, yet one of the most important parts of trading.

We could see the price dip back down towards the $33 level if the spec traders sell their oil positions.

Figure 7

Natural Gas Price Action – UNG Fund
Natural gas is now becoming the next commodity to watch. This is similar to the USO breakout earlier this year. The chart price action and volume look the same. While UNG had a breakout and buy signal last week, no position was taken because risk was over 12% which is very high in my opinion.

My trading model has been fine tuned to minimize risk to 3% and to provide the highest probability trade setups. Don’t ask me why but when trade setups carry more than 3% risk there is a higher probability that the trade will not work anyways. So that is the main reason I follow my trading model and rules so well.

Figure 8

Active Traders Conclusion:
We are currently waiting for precious metals for find support. Whether it is at this level or lower I do not know for sure. But either way there will not be a buy signal generated until some type of support level has been found and momentum is trending up again.

As for the energy sector, we have seen a massive run in oil prices. The rally looks a little long in the teeth and the technical indicators are starting to breakdown. Natural gas looks exciting and volume is picking up but I am staying clear of it for now. If the energy sector continues to find selling pressure this week I figure it will hold Nat Gas down as well.

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Chris Vermeulen