The precious metals may finally be suffering from the rarified air that they find themselves in at this time. Frankly, it's time for the markets to give back some of the recent gains and, hopefully, that's what we'll see this week. After reaching new contract highs overnight the markets are finding little follow through in the pits and have now turned negative on the day. There's certainly no cause for alarm. The markets are overbought and a pullback from these levels is absolutely necessary in order for the trends to continue their upward paths. I won't be surprised to see FEB Gold slip back to around the $545 area before it launches its next leg up. MAR Silver will most likely test $9.00 and MAR Copper has strong support at $2.00. All in all, the markets have gotten off to a fast start in 2006 and those traders who aren't committed to the long-term trends will ultimately fuel the additional gains as they cover their long positions only to buy again later after they have concluded that their exit was premature.
Dale F. Doelling
Editor and Chief Market Technician
Trends In Commodities
Tuesday, January 17, 2006
Gold running away.
I had a recent conversation with a friend of mine regarding the Precious metals and Gold in particular. He asked me if it was too late to invest in Gold and I told him, flat out, that I thought the best was yet to come. I did say that the markets were overbought so I recommended the following strategy. Decide how much capital you are going to commit to Gold and invest 1/2 of that amount now in case the market ignores its overbought condition and continues along its merry way. Keep the other 1/2 available if 1) the market experiences a 5% retracement or 2) the market advances another 5%.
Now, here's what amateur investors do and I've seen this happen more often than not. Because I mentioned that the market was overbought, my friend decided to hold off on that first purchase because he wants to try to "buy the break". This is the old "Buy Low, Sell High" syndrome that most investors suffer from. His logic is flawed because the market may not experience a retracement, at least not anytime soon. So, my friend has missed out on the $20 rally that has occurred. Remember, trend followers NEVER try to " Buy low, Sell high". It rarely, if ever, happens. BUY strength, SELL weakness.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
Now, here's what amateur investors do and I've seen this happen more often than not. Because I mentioned that the market was overbought, my friend decided to hold off on that first purchase because he wants to try to "buy the break". This is the old "Buy Low, Sell High" syndrome that most investors suffer from. His logic is flawed because the market may not experience a retracement, at least not anytime soon. So, my friend has missed out on the $20 rally that has occurred. Remember, trend followers NEVER try to " Buy low, Sell high". It rarely, if ever, happens. BUY strength, SELL weakness.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
Gold's strong start
The following comments were sent to Myra P. Saefong, Financial Writer with Marketwatch.com, on 1/12/06 at 8:43 AM.
On December 20th, 2005, the FEB GOLD futures reached a significantly oversold condition which led to the most recent rally of more than $60 from low to high. The market is now in a highly overbought condition which would lead me to believe that some short-term weakness may ensue. If I were an investor who's had his head in the sand for the last 3 years and was just starting to look at the precious metals markets to invest some of my capital, I might want to hold off on making my first purchase. For those of us who have been actively buying for some time now, I can only say "No worries, mate!" These trends have some serious "legs" to them and contain all the elements that trend followers look for when making trading decisions (Strong fundamentals, strong technicals, and strong investor sentiment). If the early going is any indication then 2006 is going to be a year of enormous returns for Precious metals investors and, I believe, the best is yet to come.
Dale F. Doelliing
Chief Market Technician
Trends In Commodities
On December 20th, 2005, the FEB GOLD futures reached a significantly oversold condition which led to the most recent rally of more than $60 from low to high. The market is now in a highly overbought condition which would lead me to believe that some short-term weakness may ensue. If I were an investor who's had his head in the sand for the last 3 years and was just starting to look at the precious metals markets to invest some of my capital, I might want to hold off on making my first purchase. For those of us who have been actively buying for some time now, I can only say "No worries, mate!" These trends have some serious "legs" to them and contain all the elements that trend followers look for when making trading decisions (Strong fundamentals, strong technicals, and strong investor sentiment). If the early going is any indication then 2006 is going to be a year of enormous returns for Precious metals investors and, I believe, the best is yet to come.
Dale F. Doelliing
Chief Market Technician
Trends In Commodities
Monday, January 09, 2006
More on the DOW
The MAR DOW Futures are threatening to make a new high above 11010. Should that occur and the market closes above that level this afternoon, I'll COVER my two short positions at the open of the electronic market and stand on the sidelines temporarily. I believe that the US Stock markets are ripe for a serious setback but the markets don't always do what you'd like them to do. I will SELL the market again when we see a daily close below the previous week's low. More on that later.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
Dale F. Doelling
Chief Market Technician
Trends In Commodities
Wednesday, January 04, 2006
DOW Update
Paul Tudor Jones would not approve (Losers average Losers!) but I added an additional SHORT position at 10905 in the MAR DOW futures. I agree with Mr. Jones in principle but I also believe that you'll rarely, if ever, sell the high tick. So, if my original plan is to be short two contracts, I'd rather SELL one and average in the other trade. Over my many years of trading I've found it to be an excellent risk management strategy.
I'm not going to place a physical STOP at this time but, if the market registers a close above the previous closing high of 11010, I'll exit the trade.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
I'm not going to place a physical STOP at this time but, if the market registers a close above the previous closing high of 11010, I'll exit the trade.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
SELL Stock index futures!
The Stock market continues to confound the masses as it vacillates between support and resistance levels that have been in place for what seems like forever. I believe that the market's days are numbered and I'm willing to place a calculated bet here that the so-called "January Effect" is going to resemble the same effect that many experienced on New Year's Day. Can you spell "HANGOVER"? Yesterday's rally was way overdone and came on the assumption that the FED is close to done regarding interest rates hikes. WHO CARES?
I'm placing my bets early today. I'm already SHORT March Dow futures from 10880. I'm not interested in placing a protective stop just yet but I'll monitor the day's trading and update the blog later. Let's see how this trade plays out.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
I'm placing my bets early today. I'm already SHORT March Dow futures from 10880. I'm not interested in placing a protective stop just yet but I'll monitor the day's trading and update the blog later. Let's see how this trade plays out.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
Tuesday, January 03, 2006
Happy New Year!
The following comments were sent to Myra P. Saefong, Financial Writer at Marketwatch.com, at 9:21 AM EST.
____________________________________________________________________
Happy New Year!
The Precious metals, with the exception of Copper, have jumped out of the starting box and look ready to run to new highs quickly. I believe that the number one investment for 2006 will be Gold and I like the way it's beginning the new trading year. As I've said previously, there's a lot of upside left in the entire metals complex and, as some of the financial uncertainties become more clear as we head into 2006, Gold is going to take the lead and achieve exceptional returns for traders who continue to focus on the long-term trends in these markets. Traders who exercise patience will be rewarded handsomely. I don't like to make predictions but I truly believe that new all-time highs will be achieved before this secular bull market in commodities, and specifically the Precious metals, finally runs its course.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
____________________________________________________________________
____________________________________________________________________
Happy New Year!
The Precious metals, with the exception of Copper, have jumped out of the starting box and look ready to run to new highs quickly. I believe that the number one investment for 2006 will be Gold and I like the way it's beginning the new trading year. As I've said previously, there's a lot of upside left in the entire metals complex and, as some of the financial uncertainties become more clear as we head into 2006, Gold is going to take the lead and achieve exceptional returns for traders who continue to focus on the long-term trends in these markets. Traders who exercise patience will be rewarded handsomely. I don't like to make predictions but I truly believe that new all-time highs will be achieved before this secular bull market in commodities, and specifically the Precious metals, finally runs its course.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
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