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It’s been a bright week so far for stocks and commodities. It appears that the down trend could have ended as of yesterday (Tuesday, June 15). In this mid-week report I figured I’d bring back the ‘80s colors to see if I can spice things up.Below are some charts I did showing my current views on the market. You may want to put on your hyper color shirt, sunglasses, and zinc when viewing them in order to get into the zone! SPX -- S&P 500 Index Exchange Traded Fund -- Daily ChartI’ll keep this short and sweet. Here are the main points: Moving Averages crossed over this week, and when we see this, a trend reversal generally occurs. That being said, it’s best to wait for the moving averages to cluster, which means we need a pullback or sideways movement for a few days. I feel this is very likely to happen.NYSE Buying Spikes have returned! We saw these during the previous bottom back in February. As the market continues to trend higher and mature, these volume spikes tend to increase also. Long-Term Cycle has bottomed and should start to rise this week. As we can see from the February bottom, the cycle was also bottoming, which is very bullish for the index. We Are Here shows where I think we’re currently trading. The market is overbought right now and I feel a quick pullback or sideways move is needed before we see a continued move up. Here’s my pre-market trading video and Squawk Box recording for today if you want to see my charts as of this morning.Gold Futures -- Daily Chart Gold is trading in a tight wedge at the moment. The long-term picture is pointing to higher prices, but I feel there’s a good change of one last drop, which should shake out a bunch of traders before rocketing upward. August and September are good months for gold to move up, and if you’ve been following the market as long as I have, then you know patterns and prices can drag out much longer than we anticipate. So as much as the chart of gold looks like an imminent breakout is about to occur, it could still be a few months way. And to be honest, that’s how the market works: If it doesn’t shake you out, it will wear you out! Crude Oil Futures -- Daily Chart Oil is trading a key pivot point and also looks to have formed a possible bear flag. At the moment I’m neutral on oil; it’s a 50/50 guess as to which way it will go, so I’m just watching for now. But I’ve pointed out some key resistance and support levels for those with oil positions. This small chart makes it look like I put a line at every $2, but if you look closer some are above and below those even numbers. Mid-Week Stock and Commodity Wrap-Up In short, I think the market is on the verge of another rally, which is very exciting since we cashed out in late April before the market had the big sell-off. It will be nice to put some long-term plays to work so we’re not so dependent on the short intraday plays which last one to two days because of the extreme volatility in the market. I figure we’ll see stocks and gold move up together, but I’m not really sure about oil at this point. If oil doesn’t move up then the market will have limited up side, and instead of a new bull market rally to new 2010 highs, we could just see a move up to test near the April high. Then it could roll over and start heading back down, triggering much larger sell-off as we enter another bear market. All that being said, it looks to be a couple months away still and a lot can happen in that time. As a market technician, I take each chart one day at a time.
Buzz & Banter: A trading desk on your desktop. 30 pro traders share their insight. FREE trial.Chris Vermeulen offers more content at his site, TheGoldAndOilGuy.com.
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