The Technical Trader
Dow, Gold, Silver

Chris Vermeulen
TheGoldandOilGuy
Jul 6, 2009

The technical trader looks at the market differently. While many investors are confused when looking at charts which have been marked up by a technician, more experienced traders look at these charts as a map. Short term financial charts are riddles/maps allowing us to put all the pieces together creating a conclusion on how to profit in the near future.

While there are hundreds of indicators, I focus on a handful which have proven to work extremely well together. The fewer the indicators the more simple trading becomes, allowing me to focus on money management and my trading psychology instead of the charts.

Indicators I focus on in order of importance for ETF trading only:

• Price action (Candlesticks)
  
• Trend lines
  
• Momentum (MACD)
  
• Price performance (against the underlying commodity & its stocks)
  
• Stochastic Indicator
  
• Volume

Ok, let's get to the charts. When I look at charts I can see these patterns naturally. The reason I draw on them is to show you what I am seeing. This is the best way for learning to become a technical trader. You should read some books on chart patterns and Japanese candlesticks but after that, it comes down to watching charts unfold in real-time.

Dow Jones Industrial Average - US Stock Market Index

This is a chart I put together which clearly shows that we are still in a bear market. Nothing on this chart is bullish for the intermediate term view (2-8 weeks). Short term we are near support and we could see a bounce Monday, but overall we are seeing bearish price action. The high volume selling and low volume rallies are warning the technical trader to protect his positions with hedges or stops.

Also you can see the stocks have formed a short term head & shoulders pattern which is pointing to much lower prices on the Dow (DJIA). This is a very reliable chart pattern which is why I am pointing it out to you.

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GLD Fund - The Technical Trader Price Action Chart for Gold
Gold looks to be setting up for another move higher, if all goes well. Currently the price broke its blue downward trend line and now we are waiting for the momentum to turn up which will put the odds more in our favor. Gold stocks are performing well and with any luck the drop in the stock market will send buyers into gold. I continue to wait for a low risk setup before taking a position in GLD (gold bullion).

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SLV Fund - The Technical Trader Price Action Chart for Silver
Silver continued to slide lower last week and that is because it is not seen as much as a safe haven like its big sister GOLD. While informed traders know its value the average Joes do not think to buy silver, they focus on buying gold simply because of the lack of education on their end. Silver can provide massive gains but it does require more risk and skill for locking in gains because of its volatility. It does not always move with the price of gold.

Currently we are waiting for silver to reverse and generate a buy signal.

The Technical Trader Conclusion:
From looking at the Dow chart, stocks are at a short term support level. We could see prices put in a small bounce and trend sideways for a week or two still. But overall it looks like stocks are headed lower. I do not predict price, but I like to point out which way the odds are headed and what to expect if prices follow through with current supply and demand levels. I am very cautious on my long trades at this point moving my stops higher to lock in gains incase the market tanks again this week.

Gold is finding support at the current level but until we get some upside momentum I do not want to take a position.

Silver is still under pressure but looks ready for some sideways price action at this level as it decides which way to go.

If you would like to receive my Free Trading Reports or my Trading Signals please visit my website at:
TheGoldAndOilGuy.com.

Jul 6, 2009
Chris Vermeulen
email: Chris@theGoidAndOilGuy.com
website: www.TheGoldAndOilGuy.com

Chris Vermeulen is founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris' uniquely consistent investment opportunities that carry exceptionally low risk and high return.

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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.

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