Stocks, ETFs, Options, Commodities & Currencies

David A Banister – www.MarketTrendForecast.com

Today we take a look at the Bullish Percent Index chart relative to Gold’s cycle and Gold Stocks.
Essentially it tells you what percentage of Gold sector stocks are at or above a moving average, which normally would be 50 days. When 70% or more are above a 50 day moving average, sectors can be peaking out. If you look at our chart at the bottom, we have labeled various incidents with A, B, C, and D.

A. The precious metal as we all know peaked in the fall of 2011 at $1923 per ounce, and the Bullish percent index was at 80%! Usually at 30% or so, they are bottoming out in most cases.
B. We saw a rare case in the summer of 2013 where the Bullish percent index for Gold stocks was at 0%, yes that is not a miss-print.
C. Gold bottomed at 1181 in late June 2013, and then rallied up to 1434 and we saw Gold stocks rally 40-80% in individual cases and the Bullish percent index rallied up to 55%.
D. If we fast forward to December 2013, we have Gold pulling back in the final 5th wave down from the Bull cycle highs in August 2011 at $1923. The Bullish percent index is back to 10% and heading towards 0 or close once again.* At the same time, the Gold miners index ETF (GDX) is at 5 year lows and even lower than June-July 2013 lows.

These types of indicators are coming to a pivot point where Gold is testing the summer 1181 lows and may go a bit lower to the 1090 ranges. At the same time, we see bottoming 5th wave patterns combining with public sentiment, bullish percent indexes, and 5 year lows in Gold stocks. This is how bottom in Bear cycles form and you are witnessing the makings of a huge bottom between now and early February 2014 if we are right.

The time to buy Gold and Gold stocks is now during the next 4-5 weeks just as we were recommending stocks in late February 2009 with public articles that nobody paid attention to.

This is the time to start accumulating quality gold miner and also the precious metals themselves as the bear cycle winds down and the spring comes back to Gold and Silver in 2014.




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I would like to start by wishing you a Happy Holidays & New Year!

So far this year (2013) has been a great year for trading and my 2014 forecast looks to be as good if not even better. I do have something exciting to share with you that is going to make 2014 really amazing, but first let me talk about the stock market and what is likely to unfold in the next week or two so you can protect your investments.

As many of you know, I follow and post frequently on StockTwits.com. I like to see what traders and investors are thinking/feeling about the broad market using extreme sentiment readings as a contrarian signal for trade ideas or to protect open positions more by tightening my protective stops and locking partial profits.

Below I have posted a two charts on sentiment courtesy of StockTwits to show these extreme readings of where the US stock market is trading at. The first chart is of the symbol $STUDY and this sentiment shows us that 98% of trading material is bullish on the stock market right now. My theory is, if everyone is moving in one direction, you better be ready for them to change direction any time. The masses move like a school of fish and one they get spooked they change direction and start selling everything they just bought.

The second sentiment chart is of the SPY exchange traded fund. This mimics the SP500 index and is also a gauge for broad market sentiment. If we think back to the 80/20 rule, we know that 20% of the crowd/clients are correct while 80% tend to be incorrect. With sentiment reaching the highest level in a couple months and with the index making new highs, coupled with the holiday price bulge (holiday rally) logic says a pullback in the near term is very likely an that it could be sharp and it almost like automated trading.

Market Sentiment – Broad Market Contrarians Indicator



The stock market has wave like patterns that form on a monthly basis that provide us with a steady stream of trading opportunities. One of the best swing trading tools for timing these waves is through the use of this chart below provided by Barchart.com.

The chart below is self explanatory, but let me quickly explain how it works. This chart rises as more and more stocks trade above the 20 day simple moving average. And when the majority of stocks are in a strong uptrend, it’s a lot like humans all trading in the same direction (a school of fish) and the odds favour a change in direction temporarily. These waves are great intermediate trends for swing trading and typically last multiple weeks at a time. This is one of my strategies which I trade with my members at TheGoldAndOilGuy.com alert newsletter. Keep in mind, its not as easy as it looks, because there are more moving parts to this equation but you can see these extreme waves clearly in this chart.



The Holiday Bulge & Amazing Information Conclusion

With the stock market still firmly in an uptrend and firing on all cylinders short term analysis is pointing to a pause or pullback in the next week or two. I did forecast this exact price action several weeks ago and how it could lead to the start of a major market top. If a major top does form early in 2014 then we could make some big money once the down trend starts.
Remember, stocks fall 3-7 times faster than they rise, so once we get short massive gains can be made quickly and while the masses (school of fish) are losing money, we should be on the other side watching our trading account sky rocket!

NOW FOR THE GOOD NEWS!
A few days ago my new book “Technical Trading Mastery – 7 Steps To Win With Logic” became available to my followers and readers with an offer you would cannot refuse. If you buy my book before Jan 1^st you get a Lifetime Membership to my new Monthly INNER-Investor Newsletter so you can keep your long term investment capital on the right side of the market forever.
Get the Full Details at: http://www.thegoldandoilguy.com/arti...surges-amazon/
Chris Vermeulen


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When trying to decide on a futures trading system, there are many different factors that you need to take into account. The majority of the systems that you look at will probably fall into categories that you have an interest in whether it is day trading, swing trading or more of a position/investing strategy.

Once you have selected the time frame in which you want to trade and how active you will be trading it is important to select a market to trade. Personally I like the SP500 index. Its big, highly liquid and has many investment vehicles that track its performance.
Some of the investment vehicles include exchange traded funds being 1x, 2, or 3x leveraged. The largest asset based ETF that mimics the SP500 is:

SPDR S&P 500 ETF Trust (SPY) – No surprises here! The S&P 500 tracker is the most successful fund having just past its 20th birthday. The oldest ETF on the market, the S&P 500 ETF Trust is the largest and most successful fund with*$121 billion in assets under management. This fund is the most liquid and actively traded ETF, and in it investors have stored nearly one tenth of all assets invested in ETFs. With an annual expense ratio of .095%, this fund proves that success brings lower expenses.

ES Futures Contract: But the most popular trading investment for the SP500 index is the ES futures contract also known as the Emini, or E-Mini.



No matter the futures trading strategy or investment vehicle to decide to trade each will have its own drawbacks. Before settling on any system that you come across, make sure that you look at the account drawdowns, number of trades it has for winning and losing streaks, how often it trades etc… Systems can have pretty long and draining drawdowns, so discovering them early could be very important to how you thin, feel and react to them in real-time.

When reviewing new systems and its backtested data, be sure to confirm that the system has not been curve fitted or your success with the system will not work for more than a few months at best. A curve fitted system is one in which the futures system designer optimized it to work extremely well for the recent price action/market conditions. So when the market changes and evolves your once dream machine is junk and likely going to cost you a lot of money in losses.

Most systems available are not only black-box trading system, meaning you do not have a clue why its trading when it does, but you also never have access to the system designer or developer. If this is the case then be cautious about putting real money to work. It simply means the creator does not have any confidence in his own system and wants to remain hidden. Customer support is crucial.

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David A. Banister- www.ActiveTradingPartners.com

The best time to buy cheap is when you are afraid to bring up your ideas around the water cooler at work for fear of the peer laughter. Our work centers on looking for oversold conditions and crowd behavioral anomalies that can give us better low risk entries with good upside potential. A combination of fundamentals and technical, combined with Elliott Wave Theory patterns can lead to nice profits with low risk.

For just a few quick ideas that would make sense in this area, we point out 3 ETF’s that you could look at entering now as they are way out of favor and very oversold.

Gold Stocks: GDXJ

The Junior Miners index is high risk, high reward. However, if you time the entry right at the opportune moment the upside is very high with low downside risk. With GOLD out of favor, we have been pounding the table the last 10 days or so that there are only 4-5 weeks left to buy quality miner names. Instead of picking through them one at a time, you can pick up the high beta play GDJX ETF.



How about Brazil?

Everyone hates Brazil stocks now, but they have some of the most valuable natural resources in the world, and Brazil almost always bounces back strong off bear cycle lows. Here is a way to play the commodity rebound we see in 2014: EWZ ETF



It’s not too late to eat some Turkey:

The country TURKEY also often is a very volatile play to invest, but going in during very oversold conditions often plays out to the upside for gains later on. ETF TUR is beat up, it’s time to buy.



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The futures trading system that you use should be about more than just making money. To design a futures trading system, you need to understand the fundamentals of the market and then build on those foundations. If you do not take these considerations seriously, then it will take much longer to create a system that consistently pulls money from the market, if ever…

The first fundamental that any successful futures trading system is the robustness that it can offer. The best futures trading systems are versatile and can adjust strategies and money management as the market conditions change. If you have a system that has actually worked for a long time (many years), you already know what is involved to make a robust system.

Costs are the next important foundation of any successful system. It helps to be extremely mindful and vigilant about the costs your system might incur. Things like drawdowns, slippage and general overheads like commissions and dedicated server fees can add up quickly and strip your trading system of its profits. Don’t make any optimistic judgments regarding costs – overtrading has been the killer of many a good trading system. Some of the most stable and profitable systems only trade 20-40 times a year, so don’t get caught up with how many trades you think a system should have to make to generate cash flow.



The expectancy of a system is the potential gain from any trade that it makes on average. Based on three stats known as average win, average loss and win percentage. You want a system that can generate a positive return with the systems statistics after factoring all costs and slippage. Finding a system that can offer you positive expectancy consistently is very important yet hard to create or find.

You also need to ensure that your system has a personality similar to yours. This might sound a little strange, but if you have a system that is based on the long-term and you are somebody who works on quick wins and moving fast, then it may not be the right fit for you. If you have patience, you want something that is more based around the long-term, and vice versa if you are an impatient and highly strung person a day trading system may be more your thing.

These fundamentals are all extremely important to your success in trading futures systems. If you can build a system that works with all of these methodologies and fundamentals in a positive way, then you are off to the races!

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This is the last part four of my four part series. The biggest mistakes traders and investors make which costs them time, money and usually self-confidence when trading are laid out in in the information below.

This last mistake is the by far the biggest and hardest problem individuals have. Believe it or not, the best way around it is with the use of algorithmic trading strategies which trades for you simply because we cannot mess things up. This is one of the reason automated trading has exploded in the recent years.

The Four Biggest Mistakes

1. Lack Of A Trading Plan – Part I
2. Using To Much Leverage – Part II
3. Failure to Control Risk – Part III
4. Lack Of Self-Discipline – Part IIII

Mistake #4 – Lack Of Discipline, this silent killer is in all of us!

Over the 16 years in which I have been trading and investing, I have never found a person who has not had discipline issues in their trading career. The brutal honest truth you likely do not want to hear is that you will never succeed at trading if you cannot follow a proven trading strategy and all its rules over and over again.

While some individuals just don’t have enough discipline to trade, most of us fall victim to fear, greed or our ego causing us to break our trading rules and do silly things with our money or open positions.

Lack of discipline is failing to do what you should do in a given circumstance when trading your strategies. We all know how easy it is to break rules from time to time because our gut feeling is so strong against what our trading strategy is doing but it is a huge mistake to intervene.

How to Avoid Your Lack Of Discipline

There are only three ways that will only help reduce (not eliminate) your lack of discipline.

1. Lose enough money that you now respect the market.
2. You have taken the time to think, create, and test a proven trading strategy that trades within your market philosophy and risk levels. I talk about this in great detail in my book “Technical Trading Mastery – 7 Steps To Win With Logic”.
3. You either automate your trading strategies or subscribe to a Automated Trading Strategy that removes you from the equation.

An interesting way to think of trading is not think but react.

The key to defeating your lack of discipline is to create and trade a system that is very simple to execute. And you must have 100% confidence in the system so you do not step in and alter its trading decisions. The key is to react and execute trade first with your proven strategy, and then once you are done you can think about what and why things did what they did all you want.

The last point I want to make, is that if you have your own system it is crucial that you are not tinkering with it all the time. If you keep tinkering with it, then you will never truly know how well it works thus you will second guess its activities and remain an un-disciplined trader.

Four Biggest Mistakes Series Conclusion:

My primary goal of this series has been to show you that there really is only one person who can control your success or failures in trading along with everything else in life. That person is you. In the end you are responsible for everything you have done.
The most common pitfall traders fall into is that when something goes wrong, they blame the market for the loss and not himself.

The key in trading is to accept that you will have losing trades and understand that it is part of this business. And when you lose a trade be sure not to allow these bad experiences have a negative effect on subsequent trades.

So the next time you find you self contemplating breaking a trading rule that has proven to work well over the long run for you, know that if you fall off the discipline train you will instantly be categories as one of those 90% of losing traders kind of guy.

I hope that his series has helped you. If you missed the previous parts, scroll up and use the links within this article near the top for Part I, II and III.

Here are some important resources for conquering these four biggest mistakes:

1. Read my new book “Technical Trading Mastery – 7 Steps To Win With Logic”
2. Take the Trading As Your Business program
3. Complete the Trading System Mastery Program
4. Build your own Automated Trading System with RIZM
5. Or review my All-In-One Automated Trading System

Chris Vermeulen


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Our friend Brian posted this great little article/traders experience we feel is worth sharing…
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He couldn’t even remember a time since he started years ago, what it was like to NOT take time, usually hours, out of his time that used to be spent with family.

It’s amazing how time flies.

When we got to talking about it, he was really almost shocked at the fact that it’s been over 5 years he’s been struggling along, beating his head on the rock, and still not really any further along than at any other point.
Sure, he’s learned a lot along the way and certainly dozens of ways to NOT make money in trading.
But when I asked him why he got into it in the first place, why he chose trading over all the other choices he had, he paused.

Well, it was for his family.

He wanted to provide a better life for them, to have the time and financial freedom to enjoy living, especially with his kids.

When I asked him what went wrong, he said probably that never planned it out, just wanted to make some money and it seemed simple enough.

But then he got ‘stuck’ running on the treadmill, trying different systems from time to time, but mostly just got used to the “try-and-fail” routine.

And now here it is, years later and they’ve gone by in what seems like no time.
I asked him why he sought me out, and he said that it’s because I ‘preach’ about skills and treating trading as a business.

And those really seemed to resonate with him because it makes it about HIM, instead of about focusing on the money (which hadn’t worked in over 5 years).

Trading is a skill-based occupation, even though it seems simple enough on the surface.
And the better you get at the right things, the easier it becomes.

That’s why I focus on ‘training’ rather than ‘shiny objects’ like systems – those are just tools.
Getting your trading operation properly organized goes a LONG way to dramatically shortening your time to consistent profitability.

Getting good at taking trading methods and properly systemizing and verifying them gives you confidence and makes you good at the ‘making money’ part.

To learn more about either training program, just click the links below.

Time is MORE than money – it is life itself, and you should invest your time wisely so that it doesn’t just slip away like it does for so many traders.

Focus on yourself, become the successful trader.

To learn more about either training program, just click the links below.

Time is MORE than money – it is life itself, and you should invest your time wisely so that it doesn’t just slip away like it does for so many traders.Focus on yourself, become the successful trader.

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2013 was one of the worst years for gold in a generation and the strangest part of it is that this loss came during a time in what should have been a banner year for gold.

When the Fed launched its QE1 and QE2 programs, gold posted huge gains but with QE3, we only had a brief rally in late 2012, it’s been all downhill for there.

The price of gold over the last year highlights just how much Europe has become a powerful driver behind gold vs. the US which has historically been the main mover. When the European debt crisis started a few years ago, people fearing a financial meltdown in Europe put a lot of their money into gold as it was the save haven of choice.

However, with financial and political risk in Europe subsiding, we have seen money leave gold and move into other markets, hence the big outflows from gold ETF’s.

Other factors that have dragged on gold over the last year include falling jewelry demand, the loss of its role as an inflation hedge with deflation becoming more of a concern in some areas, also tax increases on gold imports in India, and the supposedly improving economy in the US. All these contributed to the selling of gold.

Gold and gold stocks crashed last year in the summer. They have since been going through a stage one base. This suggests that 2014 will mark the start of a new bull market for gold, gold mining stocks and commodities.

Gold Market Traders & Manipulators Provide Contrarian Bullish Outlook

Gold market traders and manipulators like some of the commercial banks/brokerage firms have been verbally slamming gold, and it turns out many are not as negative as lead us to believe…

Goldman Sachs we all know are the biggest hypocrites. While advising clients to sell gold in the second quarter of 2013, they bought a stunning 3.7 million shares of the GLD. And when Venezuela needed to raise cash and sell its gold, guess who jumped in to handle the transaction? Yup, GS! So while they tell everyone to sell gold, they are accumulating as much as they can without being obvious.

There is a lot more reasons and fundamentals to be bullish on commodities and gold, but that is not the point of this technical based report.

Weekly CRB Commodity Index – Bull Market Cycle About To Start

Taking a quick look at the CB index which is a basket of commodities, it looks as though a breakout above its down trend line will trigger a new bull market in the commodity sector. While this has not yet happened it looks s though it may happen in the next few months.

On stock market that recently broke out of a Stage 1 basing pattern (new bull market) is the Toronto Stock Exchange. This index is heavily weighted with commodity based stocks.



In this report I want to show you some interesting charts that are pointing to a new gold bull market cycle which looks to be starting.

The chart below of the gold miner’s bullish percent index is often misread by many traders and trade off its information incorrectly. Many for example think this index is based on stocks trading above a moving average which is no correct.

How a bullish percent index is calculated is based on Point & Figure buy and sell signals with each individual stock within the sector and in our case the gold minders ETF GDX.

Gold prices peaked in 20111 at $1923 an ounce when the gold mining stocks index was above 80%. Why is this important? Because gold stocks typically lead the price of gold in both directions, tops and bottoms.

As of today we have the reverse situation with the bullish percent index at 13% and showing bullish divergence from that of gold stocks. This is an early signal that the new gold bull market cycle is turning up and it should not be overlooked.

Also we see the 5th and final Elliott wave pattern forming and we could once again whiteness another multi year rally in the price of gold.

Gold Mining Bullish Percent Index – Weekly Chart




Gold Miners ETF – Monthly Chart

Gold stocks have not yet broken out to start a rally as you can see in the chart below. But the important thing to note is that the daily chart has formed a mini Stage 1 Basing patterns and could breakout this week to kick start a multi month/year rally.



Gold & Gold Stock Bull Market Conclusion:

If you have been following me for a while, you know I don’t try to be a hero and pick tops or bottoms. We all know that strategy is a losing one over the long run.

Since 2011 I have been a very dormant gold trader. Why? Because the price and technical indicators topped out and confirmed a massive consolidation or bear market was in motion.
With gold, gold stocks and precious metals about to start a new bull market, it is time to get back to trading gold and gold stocks.


See more here.

David Banister - www.MarketTrendForecast.com Jan 15 2014

The SP 500 has been in Major wave Elliott Wave 3 up of Primary wave 3 from 1267 by our best projected counts. Our technical analysis of stock trends predicted back in early September a large rally up in the SP 500 to 1822-1829, which we managed to see hit just 3 months later from the mid 1600’s.

Recently, the market had a bit of an extension higher than our original 1822-29 pivot projections, but we see possible trouble ahead. Our Elliott Wave Theory interpretation is based on Fibonacci sequencing, Investment Advisor sentiment surveys, traditional technical analysis patterns and more.

The stock market is climbing here now likely in a final 5th wave of Major 3 and we believe it may truncate or be shorter than normally expected. We also have a rising bearish wedge from the Intermediate wave 4 lows of 1560 for Major wave 3 structure, which is a classic topping pattern for the markets in general.

Our view is that the SP 500 Index or the market should top out around 1868 and then begin a Major Elliott Wave 4 correction in February, and at the same time GOLD and SILVER are forming bottoms now and will begin strong moves up in February.

Much like our Kitco.com piece in early September called for a Top in GOLD and a Bottom in the SP 500 at the time, we see the opposite nearing now.

Below is our updated best projection on the SP 500 market trend analysis and near term action, with potential of course for a blow off reversal top over the 1868 area. For now we would watch 1868 and we would be buyers of GOLD as we have been saying for several weeks during this final window into early February.




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The two trend reversals everyone has been waiting a year for are about to take place, but they have not yet started.
While I do think 2014 is the year we see gold, silver, miners and many other commodities rally, it is important to follow the trend and wait for a reversal to form before getting overly excited and long commodities.

Each time we see the daily charts form some type of bullish pattern gold market traders become instantly bullish. And each time this happens they get another reality check about their trading technique of trying to pick a bottom.

I just published a book in December which teaches readers how to identify trends and stages in the market – “Technical Trading Mastery – 7 Steps to Win With Logic”. Buying into a bear market rally is not a high probability winning position. Odds favor that sellers will pull the price down and likely to new lows.

This January is one of these times and gold market traders are getting excited and long positions. While the bottom may in for precious metals, buying a bounce in a bear market is tricky and you better have some trading discipline to exit if price starts to sell back down.

Eventually we will see the stock market rollover and breakdown below its support trendline and gold will rally. But keep in mind, some of the largest percentage based moves take place just before a reversal. What does this mean? It means that the stock market could easily go parabolic and rally for a few more weeks, then reverse down sharply. And precious metals would do the opposite, sell off, make new lows, then reverse back up and start a new bull market.

Stock Market VS. Gold – Gold Market Traders Be Aware!



Below are a few more charts showing my big picture trend analysis for silver and gold miners.




Gold Market Traders Conclusion:

In short, the precious metals sector is still in a bear market and has not yet reversed to the upside. As you know I don’t pick bottoms or tops which go against the longer term trend. In this case the trend is down for precious metals so I am not trying to pick a bottom.
While I am starting to get excited about the eventual bottom in gold, I am still sitting on the fence with my cash.

See more here.