Sector Timing Gold, Silver, Oil and Natural Gas
Chris Vermeulen, July 2nd, 2009
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Sector Timing Gold, Silver, Oil and Natural Gas
Sector timing commodities - Being able to trade different sectors is crucial for making a living in today's financial markets. One sector that cannot be over looked is the commodity sector.
Timing this sector can be a very profitable venture if executed properly. In the past commodity trading was seen as a high risk investment because of the leverage involved with purchasing futures contracts. A small wrong move in a commodity, and a trader/investor would be holding either a nice gain or a nasty draw down (loss). With the recent creation of ETFs everyone can trade the commodities market and select the level of leverage they are comfortable with. Funds range from 1 to 3 times leverage of the underlying commodity.
In this report I cover the basic funds for gold, silver, oil and natural gas which have the least amount of leverage available. It is important to know that my trading signals for these commodities work for any of the leveraged funds as well, for those who like really explosive short term trades.
Gold - GLD ETF Trading Chart
I will admit, GLD is my ATM machine. I have been trading this since the day it became available. While I do not get a tone of trades per year from it, it does produce excellent low risk trades time and time again.
Gold pulled back to our support trend line as expected and posted in my Sunday night report. The chart looks awesome for a buy signal but I am waiting for a MACD cross over before jumping on the band wagon. I like momentum to be on my side as it helps confirm the reversal putting the odds even more in my favor.
Today was a quite day with the Canadian market closed and the US holiday weekend only a day away. Volume was light today and it will be even lighter tomorrow. Generally stocks and commodities rise on low volume days pre-holiday. I would like to see gold pullback to allow for a quicker low risk entry if possible.
