Gold building up a head of steam!

The following comments were sent to Myra P. Saefong, Financial Writer for Marketwatch.com, at 8:47 AM EDT.
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The outlook for the Precious metals continues to brighten as we are now in Day 3 of this rally in Gold. The market has to overcome two trendlines, one short-term and the other a longer-term trendline drawn from the May highs, but I believe that this area of resistance won't pose any real problem for GOLD. It took 5 months for the market to correct and I believe this correction is over and the next big leg up has begun. My best guess, since I don't make market predictions, is that we'll see DEC GOLD trading near the $650 level before the end of the year! New highs in 2007? Bet on it.

Dale F. Doelling

Chief Market Technician

Trends In Commodities

BUY DEC GOLD!!

The following comments were sent to Myra P. Saefong, Financial Writer with Marketwatch.com, at 9:04 AM EDT.

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We have another interesting scenario developing in the DEC GOLD contract this week. The daily chart is tracing out a potential HEAD & SHOULDERS bottom that could translate into a vigorous rally in the metals complex over the next few weeks. The low on 9/14 of 576.60 should provide the necessary support if this pattern holds true. A test of that area and then a gradual turn higher would complete the pattern allowing DEC GOLD to finally break through overhead resistance at the 50-day MA currently at 604.60. Should this occur the stage would be set for a rally back to the $650 level in the near-term. SILVER would likely follow Gold's path as it has consistently held the 10.55-10.60 area since mid-July.

Copper continues to trade sideways and further weakness will likely be seen with support coming in near the 3.20 area. If the market were to break this area of support then a retest of the June lows below 3.00 would become a strong possibility.

Dale F. Doelling

Chief Market Technician

Trends In Commodities

Like "deja vu" all over again!

Gold and Silver are walking the line of unchanged this morning but I haven't given up on my theory that a "reversal of fortune" is about to take place in the metals complex. This is a great example of Inter-Market analysis where the direction of one market correlates to the direction of another. Yesterday I alerted our clients to a scenario that isn't dead yet even though it didn't quite play out the way we had expected it to. This is like "deja vu" all over again. I can remember the stock market crash of '87 as if it were yesterday. I believe this October, like October of 1987, may have a surprise for the markets that will drastically change traders' perspectives. Is there anyone out there in the financial world that doesn't think that "UP" is the only way stocks can go? Complacency is like a cancer - once it's discovered it's usually too late to do anything about it. So traders need to keep their fingers on the trigger and be ready to BUY GOLD and SILVER between now and Friday if my theory comes to fruition. It could be the last great buying opportunity of 2006.

Dale F. Doelling

Chief Market Technician

Trends In Commodities

Will today be "the day the music died"?

The DOW Industrial Average FINALLY breaks the 12,000 mark then quickly ducks for cover. Can we mark our calendars showing that 10/18/06 was the beginning of the end for stocks? It's still too early to tell but I've been talking about this exact scenario to our clients and, if it does hold true and the DOW ends the day in negative territory, this may just end up being the top in the Stock Index futures.

Stay tuned!

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Coverage on TheStreet.com

I'd like to thank Mr. Simon Constable, Financial Writer for TheStreet.com, for adding Trends In Commodities to his list of market commentators. You can read today's comments on TheStreet.com.

Market comments for October 5, 2006

The following comments were transmitted to Myra P. Saefong, Financial Writer at Marketwatch.com, at 8:47 AM EDT.

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This short covering rally this morning is, unfortunately, nothing more than a good opportunity to sell Gold and Silver. The technical picture is quite clear as the trends in the metals remain down. Now that I've given you the gloom and doom let me say that it's always darkest before the dawn and I happen to think that the bottom is near. The Financial markets are near their respective peaks where the air is getting very thin. That's the reason for all the euphoria. The lack of oxygen is causing a return of "irrational exuberance" only this time we've got a lot more negatives that come into play. One look at a daily chart of Gold and we're quickly reminded how fast markets can turn. Well, don't look now but the recent pullback in the metals complex will pale in comparison to what's in store for the financial markets. It's time, once again, for stock traders to take their medicine and this will benefit Gold and Silver tremendously over the next couple of years. As a matter of fact, by the time the dust settles, traders won't want to own anything BUT Gold and Silver. Remember, you heard it here first.

Dale F. Doelling

Chief Market Technician

Trends In Commodities

BUY DEC CORN

I've been looking for a place to get long the grains and I think the time has come. Let's look at what has happened in the Corn market, which happens to be one of my favorites, and I'll show you how I analyze the market from a trend follower's point of view. One thing that I'm always looking for in my analysis is divergences. This is where a market makes a new low but a technical indicator that I'm using fails to make a new low. This can many times signal that a reversal could be imminent. Looking at the daily chart and using the Williams %R oscillator, the divergence is obvious. The Williams %R bottomed with a reading of 98.00 on August 11th with the market trading at 241 3/4. The market made a new contract low at 233 1/2 and closed at 235 3/4 on 8/18 and the oscillator reading was 93. Here's the divergence that I was looking for. I BOT DEC CORN MOO on Monday, August 21st at 236. To translate, I bought the December Corn contract at the market on the open (MOO) and was filled at a price of 236. The market closed the session at 237 1/2, up 1 3/4 cents on the day or a gain of $87.50 per contract from the prior day's close. If I'm right and this signal is validated by further gains then Corn should rally from this point to at least the first resistance area at around 248. That would give me about $550 profit per contract. With the current margin for Corn at $608, that would give me a cash on cash return of over 90% if the market reaches the area of resistance at 248.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Wednesday's Precious metals commentary

The following comments were sent to Myra P. Saefong, Financial columnist
at Marketwatch.com at 9:44 AM EDT.
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The Dollar is starting to resemble Rocky Balboa this week. It takes a
terrific beating with every release of economic news but it finds a way to
get back on its feet to fight another round. The short-term trend in the
Dollar v. the Yen is getting a little shaky with trendline support at 115.40
Yen being critical if the greenback is to continue this recent rally. The
Gold traders are still scratching their heads wondering how long this choppy
environment will last. With no real direction it's a very tough trading
environment and, for what it's worth, I still think the metals complex has
some work left on the downside before it finds a bottom. These are
definitely the "dog days" of summer. Still, the fact that the housing
sector has fallen into a coma, the long-term effects will soon become
apparent and the Dollar will suffer from the fallout. As this scenario
unfolds, it should bring stocks to their knees and provide metals traders
with plenty of incentive to move Gold and Silver to new all-time highs
eventually.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Here's the mid-month commodities update

Here's a new feature for all of you. We'll be providing you with an update on all the markets we cover on the 1st and 15th of the month. Here's the mid-August update:

Stock Index futures:

SEP DOW futures contract began the month at 11230 and settled today at 11248.
SEP RUSSELL 2000 contract began the month at 704.60 and settled today at 699.30.
SEP NIKKEI contract began the month at 15435.00 and settled today at 16020.00.

This simply shows us that Foreign markets are outperforming our markets and, within our markets, the small caps have weakened vs. the Big Cap stocks but, frankly, the markets have done nothing but churn over the last two weeks. I think you know my opinion on the Stock Index futures. SELL all rallies. I think today's market action was probably a selling oportunity.

Grains:

SEP CORN began the month at 239-0 and settled today at 222-0
SEP WHEAT began the month at 397-4 and settled today at 376-6
SEP SOYBEANS began the month at 585-4 and settled today at 556-4

Here's a group that has been creamed of late. Is there a bottom in here somewhere? I think so but I've never been a fan of catching falling knives. I'm going to stand aside for now but I'll be watching these markets very closely for any sign that a rally is about to occur.

Currencies:

SEP DOLLAR INDEX began the month at 85.09 and settled today at 85.05.

Although the Dollar has seen some strength over the last two weeks vs. the Yen the rest of the currencies have been relatively flat. I've been a buyer of the Dollar vs. the Yen since it bottomed on August 4th. But the longer-term outlook is highly suspect and a possible head andn shoulders top in beginning to form on the daily chart. With today's PPI number taking the steam out of the recent rally it's highly likely that the rally has peaked.

Energy Complex:

SEP CRUDE OIL began the month at 74.40 and settled today at 73.03
SEP UNLEADED GAS began the month at 221.18 and settled today at 200.25
SEP NAT GAS began the month at 8.211 and settled today at 7.025
SEP HEATING OIL began the month at 2.0376 and settled at 2.0275

I've been very bearish on Crude Oil and Unleaded Gas but mildly bullish on Nat Gas. I put on some LONG NAT GAS/SHORT CRUDE spreads on July 24th, I've taken my profits already. This area should continue to work lower as the "fear premium" gets wrung out. Also, demand is deteriorating which should continue to pressure the Energy complex.

Interest rates:

SEP 30 yr. BONDS began the month at 108-09 and settled today at 108-23
SEP 10 yr. NOTES began the month at 106-010 and settled today at 106-090

I've been LONG bonds for a while now and, although the PPI numbers released today were rather tame, I just don't know whether there will be a lasting affect on the markets. The 10 yrs. have rallied over 2 1/2 points since the low was made in late June. The markets haven't retraced enough for me to exit my LONG positions but I'll need to see some real follow-through over the next couple of sessions to keep my position intact.

Meats:

AUG LIVE CATTLE began the month at 83.72 and settled today at 87.75
AUG LEAN HOGS began the month at 68.55 and settled today at 71.75

I don't trade the MEATS very much but they've been on a tear recently. LIVE CATTLE, since bottoming in April, has rallied 20%. LEAN HOGS have been a little more volatile but have logged some significant gains since April. If you have the stomach for these markets power to you.

Precious Metals:

OCT GOLD began the month at 640.40 and settled today at 628.30
SEP SILVER began the month at 1137.0 and settled today at 1212.5
SEP COPPER began the month at 357.00 and settled today at 351.50

We've had a bit of a mixed bag in these markets with GOLD and COPPER lower and SILVER higher. I think we have more work to do to the downside in the short-term but I'm still a MAJOR BULL longer-term. BUY the dips in GOLD and COPPER for now.

Softs:

OCT COTTON began the month at 53.45 and settled today at 53.35
SEP FCOJ began the month at 169.25 and settled today at 172.50
SEP COFFEE began the month at 99.35 and settled today at 102.85
OCT SUGAR began the month at 14.91 and settled today at 12.79
SEP COCOA began the month at 1486 and settled today at 1524
OCT LUMBER began the month at 273.00 and settled today at 265.80

These markets are always interesting and the last two weeks have been no exception. Cotton is the same price it was 2 years ago. One of two markets that are really worth taking a look at, OJ has been one of the truly stellar performers and has been on a tear since it bottomed in May of 2004. Coffee could very well work its way back to the 90 cent level soon. Sugar ain't been real sweet lately since it failed to break the 20 cent mark at the beginning of the year. Cocoa rallied sharply in late June and into July but has now fallen back into the previous trading range. Lumber is the other market worth looking at and I've been SHORT this market simply because I think there's a lot of bloodletting that will take place in the housing markets over the next 18-24 months. If you can handle trading LUMBER stay SHORT for further gains.

That's the update for mid-August. If you have any questions email me a dale@trendsincommodities.com.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Monday's Precious metals commentary

The following comments were sent to Myra P. Saefong, Financial Columnist at Marketwatch.com, at 7:33 AM EDT.
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The traders that are looking at the daily charts of Gold, Silver and Coppermight conclude that the secular bull markets and well-defined trends thathave developed over the last 5 years have come completely unravelled.But a longer-term view of the markets, i.e. weekly and monthly charts,provides a far brighter picture. By expanding their time horizon traders canfind strong evidence that the long-term trends remain intact.Successful traders often need to alter their perpective especially during periodswhen the markets experience a lack of direction and become choppy andvolatile because these types of markets are extremely tough to squeeze profits from.A short-term trader could make the case that there are only 2 positives in theGold market right now. 1) OCT GOLD closed above the 50-dayMA (627.30) on Friday and 2) the 100-day MA still has a positive slope.The bad news is more extensive. The 20 and 50 day MA's have turned downand Gold closed below both the 20-day and 100-day MA's on Friday and isnow trading more than $50 below the retracement high of 684.70 on July 17th.In other words, it's not looking good if your focus is on the short-term.Absent of well-defined short-term trends the markets are being whipsawed byevery minor news item and comment by anyone of any importance around the globe.This makes for an extremely difficult trading environment. The short-termtraders can only hope that the current market conditions will be short-lived and that theshort-term trends will emerge once again. If this occurs, the likelihood that the metalsmarkets can push to new all-time highs will rise dramatically.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

An ugly August ahead?

The DOW futures, which I have been SHORT since May, are starting off the month with sharp declines. If you've been monitoring this blog then you know that I warned that the DOW's retracement rally ended on Friday when the index broke through the 100-day MA on an intraday basis but ended the week below that level. I don't believe in trying to predict where the markets are going to be in the future but I have to admit that I believe the month of August will go down in the record books as one of the ugliest on record for the Stock Index futures. Let's just call it a hunch. So, stay SHORT and enjoy the ride to new cycle lows. There is a pot of gold at the end of this rainbow but only those traders who exercise patience will generate the maximum profit from this next leg down.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Comments on Commodities

I received an email from Jon Nones, Financial Writer for Resource Investor, asking for comments on the commodities markets. Jon wanted my thoughts on which markets I thought were leaders and laggards in the first leg of this secular bull market in the commodities markets and which might lead the markets higher from here. The following are excerpts from my response to Jon which was sent on July 22, 2006. Take note of my comments on Natural Gas which has skyrocketed since I wrote these comments.

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The Energy complex: LEADER. You certainly have to rank this group as a leader in the current bull market in commodities. But what some have missed is the fact that NaturalGas, after record highs in 2005, has now fallen 50%. Did Nat Gas make a bottom recently and is now ready to retest the highs of 2005? It's too early to tell from a strictly technical view but I wouldn't be surprised if a major bottom is in place in this market. So I might be tempted to BUY NAT GAS and SELL CRUDE or UNLEADED GAS at this juncture because the fundamentals simply don't support Crude at these levels and I think that market could see the same kind of retracement that Nat Gas experienced.

The Precious metals: LEADER. These markets are a tough call right now. I had no choice but to declare the Bull market over recently when Gold closed below its 100-day MA on 6/13. Of course we now know that Gold bottomed the following day and was able to regain nearly 68% of the decline before turning lower again recently. When Gold failed to break the previous low at 546.00 I got far less bearish on the market. That was a significant level on the chart and the market held. Now, the market is once again sitting right above the 100-day MA (619.90). I'd be willing to wager that, if the market closes below this level a second time that we'll see the market move below 546.40, the recent low in June. Silver is in the same boat. Copper is approaching trendline support. If it breaks, sayonara to Copper in the near-term.

Grains: LAGGARD. Here's an area that is very interesting to me. I love to trade the grains because I've probably been trading them longer than any other group. I think this could be a group to watch because Corn has traded sideways all year long. It's not going to do that forever. Ditto for the bean market. Wheat may have made a major low in March and could be the market to lead the entire complex higher from here.

Meats: BIPOLAR. You never know what you're going to get trading these markets. That's why I don't trade them.

Softs: MIXED BAG. There have been some great moves in these markets and there have been some duds. FCOJ and Sugar have been stellar performers until this year. Are they consolidating or are they ready to tumble? I think it's too early to tell. Cotton could be a surprise over the next 12 months. With the recent break below 50 cents, this market looks like it could roar into 2007. Cocoa is interesting. If it hold the previous lows at around 1400 it could reverse quickly and move back to the upper end on the trading range near 1900. But I think this market could break the previous lows and this would start the beginning of an ugly slide back below 1000. Coffee is near 2 1/2 year lows. The same holds true for Coffee as it does for Cocoa. If the market breaks 90 cents it could go to 50. Lumber has been puking its guts out and that's a very good sign that there's big trouble in the housing sector.
Which leads me to my "financial apocalypse" scenario that I've been touting for as long as I can remember. 75% of the economy is based on housing. Housing is going to be bloodied over the next few years and it's going to take the US Economy with it. Just look at Lumber if you don't believe me. When this house of cards really starts to fall it's going to be ugly. Ben Bernanke wanted to be the Chairman of the FED. It could be the biggest mistake of his life.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

More comments on the DOW

Here's where the near-term market direction should become quite clear. With the DOW futures eclipsing the 100-day MA of 11258 (11275 intraday high) we now must wait and see how the market is able to finish. The last time the DOW closed above the 100-day MA was on July 6th. The market was only able to close above the MA one day before it fell over 500 points in the next 6 sessions. Do chart patterns repeat themselves? Very often they do. If the market closes above 11258 then Monday will be the day that should tell us whether the DOW continues on its merry way or it takes another nosedive. Stay tuned!

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Sunday evening observation (9:05 PM EDT): The Dow futures broke through near-term resistance on Friday but was unable to maintain those levels and ended the day below the 100-day MA closing at 11254. With the market down 10 in the early going this could be a great time to SHORT the Dow or BUY PUTS on the DOW or other stock indexes. I'll update this blog on Monday morning after the market opens at 9:30 AM EDT.

DOW Update

Here's the deal. The Dollar is getting hit hard this morning after a much weaker-than-expected GDP number but, so far, it's holding right at trendline support at around the 114.90 Yen level. Now, some of you may be asking yourselves, "What's the Dollar got to do with the DOW?" A lot, actually. If you were to place a chart of the Dollar over top of a chart of the DOW futures you would see that their relationship is inverse and fairly consistent. So, here's where it gets interesting. If the Dollar is able to hold trendline support and rally off of today's lows we should begin to see the DOW turn lower. Also, the Dollar is reaching fairly significant OVERSOLD levels just as the DOW is getting into OVERBOUGHT territory. We'll keep watching this pattern to see if it holds.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

It's looking pretty good so far!

The DOW futures were able to move above the trendline resistance but failed to reach the 100-day MA that I mentioned in my previous entry. Now the market is failing miserably and those of you who got SHORT near the 11200 level are looking pretty good so far. It's still too early to tell if a top in in place but I won't be surprised if 11225, today's high in the $5 DOW, is the high for this retracement rally in this long-term bear market in the Stock Index futures.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Picking tops and bottoms

It's always tough to pick retracement tops and bottoms and the DOW futures are proving, once again, just how tough a task it can be. The market is higher this morning as it presses toward resistance at the 11200 level represented by the trendline drawn from the MAY/JULY highs. So, this may be a very good place to lightly SELL the DOW keeping in mind that there's a decent chance that the DOW might just make a run at the 100-day MA at 11254. Shorting the DOW here would give you about a $300-$400 risk per contract and that should be tolerable for most traders. Consecutive closes above the 100-day MA would negate this whole scenario and probably push the DOW sharply higher. I'll be very surprised if that comes to pass.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

"I've seen this before."

Mondays, I have found, always hold the most potential for surprise from the perspective of a market trader. Take today for example. Last week, the Stock markets remained strongly entrenched in their long-term downtrends with the NASDAQ hitting a 14-month low. But what a difference a (Mon)day makes! The DOW has ripped a limb off of the bears today with a near 200 point advance. I sometimes feel like Chance the gardener in the movie "Being There". Chance wasn't the brightest bulb in the drawer but he would occasionally say something brilliant. "I've seen this before" he would say. And just in case you've never seen the movie, do yourself a huge favor and go to your local Hollywood Video and rent it.

What I'm trying to say here is that these rallies are all intended to bring hope back to the masses of investors who wouldn't know how to SHORT the markets if they had a gun to their heads. So, lo and behold, we have a rally underway and hope springs eternal! What we'll probably see is an hour or two of buying tomorrow and the resumption of the downtrend. In other words, we have another great opportunity to get SHORT the Stock Index futures. I've been SHORT since May and I've done well. Could the market rally last longer than just a day? Of course it could but I'm betting it won't. Never be afraid to bet your conviction.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Gone fishin'!

I will be on vacation until July 10th beginning tomorrow. I wish all of you a safe and happy 4th of July holiday. My wife and I will be celebrating our 27th year of marriage next week. How she has managed to maintain her sanity is beyond me!

One last note before I go. I was just looking at some charts and I wanted to let you know about a very interesting situation that is happening in the Copper market. The daily chart was showing signs of a "bear flag" formation, until today. The overnight action in Copper has allowed the SEP COPPER contract to break out of the "flag" formation. If the market is able to hold on to these gains today this could be a very good sign that the lows are in and higher prices are likely. I won't be surprised to see Copper substantially higher when I return from vacation.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

A followup to my June 27th post on the DOW.

I was rather surprised at the market's strong reaction to the FED's rate hike yesterday and so I thought I'd do some more work on the technicals as they apply to the DOW futures. Here's what I came up with.

A very interesting scenario has developed in the DOW. The market's big rally yesterday took the DOW futures right up to key resistance at the 100-day MA (11,268). If I happened to be bearish on the long-term prospects for stocks I would consider this to be a perfect opportunity to SELL the DOW futures using a very tight stop above the 50-day MA of 11,289 (on a closing basis only). If the market clears that level (11,289) then I'd have to reconsider my position as this would be very bullish for the markets near-term prospects.

Enjoy your 4th of July holiday!

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Post FED comments

These are additional comments that were emailed to Polya Lesova, Financial Writer at Marketwatch.com, immediately after the FOMC announcement on interest rates.
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With the Dollar going into a virtual freefall since the FED announcement, it will be interesting to see just how far Gold can rally. If Tuesday's high of 599 gets taken out there's a decent chance that the rally can continue right up to major resistance at 609.40 which is the 100-day MA. If Gold is going to test that resistance level it will take some serious fund buying along with continued Dollar weakness which just hasn't been evident of late.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Pre-FED announcement commets

The following comments were emailed to Polya Lesova, Financial Writer at Marketwatch.com, at 8:57 AM EDT.
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It seems like the markets have been sloshing around for days in anticipation of today's decision by the FOMC on interest rates. The question is - Will they raise 25 or 50 basis points? 25 is a given but 50 could send ripples through the markets and make for some very volatile trading. There doesn't seem to be anything in the near-term that will move Gold back above the $600 mark so it would seem that the path of least resistance points to lower prices in the Precious metals complex. Although the Dollar has been treading water for days the likelihood of further gains against the major currencies remains favorable, especially if the markets get a 50 point pop in the fed funds rate. Suffice to say that we'll see little in the way of volume or volatility until the announcement comes this afternoon. I guess we'll all need to find a good book to read until then.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Watching the DOW.

The action in the Stock index futures, specifically the DOW, is telling me that we are in for another sharp drop and that additional SHORT positions are warranted at this time. We began selling the DOW futures on May 9th and have continued to hold these positions. With another rate hike imminent, the markets may just choke on this additional tightening by the FED.

Dale F. Doelling
Chief Market Technician
Trends In Commodities.com

The following comments were sent to Polya Lesova, Financial Writer at Marketwatch.com, at 9:39 AM EDT.
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We've reached one of those interesting times in the markets where you have many fundamental forces colliding with the technical aspects of the markets. The FOMC meeting this week is keeping the metals traders on the edge as they square postions ahead of the Thursday announcement. The consensus is that the FED will raise rates again so that is already factored into the markets. With the Dollar/Yen having completed a 61.8% Fibonacci retracement at this morning's 116.69 high the Dollar's month-long rally could be coming to an end. If the Dollar turns lower it may just provide the spark that will allow the Precious metals to gain some footing and begin to move higher. Gold and Silver still have a ways to go before they test major resistance so, for now, this short-term rally in the metals has a long way to go before it becomes significant. For now, I continue to see the strength in GOLD and SILVER as nothing but a retracement from an oversold condition. When they approach their respective major resistance areas then we'll get a better idea as to whether the markets have actually turned the corner.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Is the Dollar rally done?

The Dollar/Yen has now made a perfect 61.8% retracement from the December 5, 2005 high of 121.37 to the May 17, 2006 low of 108.96. This is only important if you give any credence to the major Fibonacci numbers. Due to this retracement number being reached it might be a good idea to watch what the Dollar does in light of the fact that the FOMC will be deciding their next interest rate move on Thursday. I like the SHORT side at this level because of the divergences that are taking place in our proprietary oscillators and the overbought levels that we are currently seeing in the Dollar/Yen. Choosing the correct entry point is extremely important when it comes to trading and this is one that I like. So, we're SHORT the Dollar/Yen after this one month retracement. Now it's a matter of waiting to see if our assessment of the market is correct. If we are correct the continuation of the long-term downtrend in the Dollar should be at hand.

Dale F. Doelling
Chief Market Technician
Trends In Commodities.com

Precious metals bull market - R.I.P.

The following comments were sent to Myra P. Saefong, Financial Writer for Marketwatch.com, at 7:56 AM EDT.
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The Precious metals bull market is officially over. Just remember, you heard it here first. I say this with some trepidation because the markets love to see me eat my words and, frankly, I'd love nothing better at this juncture. But, from a technical perspective, no matter how oversold the markets have become, the markets have sufferred far too much damage. The only thing left to do is to declare the bull market to be finished and hope that they'll bounce back and rally sharply. But, as one wise old trader once said, there's no wishing or hoping when it comes to trading.

AUG GOLD, having flirted with its 100-day MA for a couple of sessions, broke down in overnight trade and is now looking to revisit the highs from January at around $589. Any close below this level and $550 is the next obvious target on the daily chart. JUL SILVER, after being above $15.00 a month ago, is also pushing down to its January highs of around $10.00. As Silver took out dollar sized chunks on the way up it's doing exactly the same thing on the way down. The thing that I find most surprising about this decline is the correlation that we've seen in the markets. As Gold and Silver rose (along with many other commodities), so did the stock market. As we watch Gold and Silver decline, stocks are declining as well. I expected the latter but not the former. The improbable has now become reality. I guess that's what I love about the markets. What may seem totally illogical is exactly what a trader should anticipate. In other words, never rule anything out when it comes to the financial markets.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Precious metals on track.

The following comments were emailed to Myra P. Saefong, Financial Writer at Marketwatch.com, at 7:41 AM EDT.
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The strengthening Dollar has provided no real impediment to the Precious metals complex as APR GOLD now has one daily close above the $600 mark under its belt and Silver and Copper continue to rally sharply with MAY SILVER touching $13.00 briefly in the overnight trade. These are powerful bull markets that just continue to feed on themselves as market momentum is showing no sign of abating. Consecutive closes above $600 will certainly do wonders for the outlook for Gold, and consecutive closes above $13.00 in May Silver would keep that market on track as well is spite of its severe overbought condition. MAY COPPER seems to have its sights set on the $3.00 mark and I, for one, think it will probably achieve that mark.

The Energy markets defy logic, especially Crude Oil, as the price of Crude is not reflecting the current Supply/Demand equation. We're literally awash in the product right now so I believe it's only a matter of time before Crude experiences a sharp retracement and, although I was short MAY CRUDE before getting stopped out on the trade yesterday, I believe the approach to $70 will bring the sellers back in droves which could drive prices below initial support at 65.60. Any close below this level would most likely bring a swift decline which could set up a test of major support at the 60.25 area.

Dale F. Doelling

Chief Market Technician

Trends In Commodities

There are no guarantees when it comes to trading the markets.

The following comments were sent to Myra P. Saefong, financial writer at Marketwatch.com, at 9:35 AM EDT.
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A good employment report wasn't able to keep the Dollar from losing some ground this morning and it certainly didn't do anything for the Precious metals markets either. APR GOLD is still having difficulty closing above the $600 mark and that does make me a little nervous. MAY SILVER is trading above $12.00 but is likely to correct at some point due to its severe overbought condition. If the Dollar should find its footing and break above the 118.00 Yen level, all of the enthusiasm that has been witnessed in the metals markets could evaporate in an instant and those analysts who seem to be able to predict, with 100% certainty, the long-term direction of Gold or Silver or Tulip bulbs, for that matter, may finally learn that the markets simply don't work that way. The fact remains that NO ONE knows where a particular market may go, short or long term. The best that a trader can do is determine whether a trend has developed, trade with that trend, and hope it doesn't end as soon as they enter the market.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Looking for that second wind.

These following comments were emailed to Myra P. Saefong, Financial Writer for Marketwatch.com, at 8:41 AM EDT.
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Traders are pondering the same question that was raised many months ago. When will Gold break the $600 mark? Even with a very nice first quarter gain Gold continues to frustrate those of us who have been advocating the long side of this market. Well, if I had known it would take this long I would have never uttered the phrase "$600 Gold" to begin with. My arms are getting very tired from "carrying the torch" for this market. Now, don't get me wrong. My position on the Precious metals markets remains enthusiastically "bullish" but this is where it really gets tough to hold on to your objectivity. We traders are only human, after all. This is like a marathon runner who has "hit the wall" and is looking for that second wind that is going to allow his to finish the race. I believe Gold is about to get its second wind, i.e. the $600 barrier and, once that hurdle is overcome, the metals markets could kick things into high gear and simply run away from those who were hoping to get in a slightly better price.

Dale F. Doelling

Chief Market Technician

Trends In Commodities

Why they're called "Precious" metals.

This was sent to our basic subscribers on 04/03/06.
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A new quarter has begun and we'd like to just review our positions from the first quarter to see where we've been and where we might be heading. Please don't misconstrue what I just said. We don't attempt to predict anything when it comes to the markets. We follow trends and we manage the risk on the individual trades. We have been blessed with a secular bull market in the commodities markets for over 4 years now. If you have been a participant, congratulations! You should be very wealthy by now. If not, I will try, through this service, to help you get your share of the profits that are yet to come as the commodities bull market is showing no signs of decay.

Precious Metals - Anyone that follows my comments in the financial journals knows that I have been bullish and, of course, LONG the Precious metals for quite some time. All you have to do is go back to August of last year and I was still begging traders to get LONG the market. I am THE "raging bull" when it comes to the Precious metals complex. (See article at http://www.resourceinvestor.com/pebble.asp?relid=11873) So where do I stand today? Well, nothing has changed because the trend remains up. Now, I know what some of you are saying. "Dale, the market has come a long way and I'm just not comfortable buying at these lofty levels." Well, my friends, one of the tenets of trend following is the "Buy high and Sell higher". Could the trend in Gold and Silver end today? Absolutely! That's where the "Manage the Risk" part of the trade applies. No one knows when trends will end but don't sell this bull market short. I believe that Gold will rally to $1,000 and beyond. Remember, that's just one man's opinion. To recap, APR GOLD closed at 523.40 on December 30, 2005. The closing price on March 31, 2006 was 581.80. I'll do the math for you. That's an 11%+ gain for the quarter. But, of course, due to the leverage that can be applied in the futures markets, our actual return was simply phenomenal. MAY Silver? It closes at $8.96 on 12/30/05 and the closing price on Friday was $11.52. That's a quarterly gain of 28.6%! Let me throw in one caveat while you wipe the drool off your face. I like Gold much better than I do Silver right now due to one thing - the new SILVER ETF that should come to market soon. This new trading vehicle has created an artificial demand for Silver and, once the IPO comes to markets, I won't be surprised to see a setback in Silver. But this setback would probably be nothing more than an opportunity to enter the market for further gains.

Here's a link to a very interesting chart on Gold courtesy of The Privateer.

http://www.the-privateer.com/chart/gold-pf.html

More later.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Thursday's Metals comments - 03/30/2006

The following comments were emailed to Myra P. Saefong, Financial Writer at Marketwatch.com, at 9:34 A.M.

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If there was any doubt about the health of the Precious metals complex today should certainly erase that doubt. APR Gold is looking to post a new closing high for the contract, the previous high being 576.80. If this should occur, then a swift rally to the $600 area would most likely follow. MAY Silver continues to rally in anticipation of the launch of the Silver-based ETF. It will be very interesting to see whether Silver be be able to maintain these lofty levels once the IPO comes to market. I'm skeptical and I expect a setback in Silver after the ETF is launched. I also expect to see the volatility in Silver rise in the interim. Copper, which I like to call the "ol' man river" market because it "just keeps rolling along" - HIGHER!!! What a magnificent market to trade. Not many surprises here as the market now seems to be targeting the $3.00 level. Only time will tell whether the market has what it will take to reach that lofty level.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Back to the (DOW) Futures!

I haven't posted any comments on the DOW futures since January 9th but I have been watching (and trading) when the opportunity arises. As I'm sure you are aware, I am a long-term BEAR on the Stock Index futures and I recently began SHORTING the JUN $5 DOW futures contract, first at 11100 and then at 11200. Here's my strategy and it's certainly not too late to get on board. I'm risking $7500 on this strategy and I'll be the first to admit that most professional traders would think I've taken leave of my senses regarding my approach to this particular market. But, as I like to point out, it's MY MONEY!! I'm using a 150 point stop loss or $750 per trade. I'm trading one lots and I'm selling all the way up to 12000. As it stands right now, with the market closing at 11118 (down 11 on the day), I'm up 64 points on my 2 positions. I will SELL another Jun DOW contract at 11000 STOP and continue to do so until further notice. If you have any questions or comments you can post them here on the Weblog.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

03/02/2006 Precious Metals comments

The following was emailed to Myra P. Saefong, Financial Writer at Marketwatch.com, at 8:50 AM EST.
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The new month finds the metals complex starting off rather quietly as the "tug-o-war" continues between support and resistance and neither side able to gain the upper hand. There's little reason to be overly concerned about any major retracement but there's also little evidence that the market will break out to new highs anytime soon either. Traders' patience will likely be tested over the next several weeks and one side will finally cry "uncle". I believe that the long-term trend remains intact in all of the metals markets but we may have to experience a longer than normal consolidation period before the markets are finally able to see some fresh buying which would put the markets back on track for new contract highs. In the meantime, we'll probably see volatility rise with lots of stops being hit in the near term. Nothing aggravates long-term traders more than churning markets but, for the scalpers, it's like taking candy from a baby.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Like a deer in the headlights......

The following comments were sent to Myra P. Saefong, Financial Writer for Marketwatch.com, at 8:00 AM EST.
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One thing that I'm seeing in a variety of markets (Stocks, metals, currencies, bonds) is higher volatility but little headway being made in either direction. The recent ranges have widened but the markets themselves are really just treading water. I'd feel a lot better if things were quiet for a period because that's usually a great indication that a breakout is ready to occur. But as it stands now, we could be going nowhere fast for the forseeable future and the metals complex could see the frustration level of the long-term players rise dramatically over the weeks to come. Gold's $40 range between $540 and $580 may be tough to break anytime soon. The range is just wide enough to put the market in oversold territory at the bottom and overbought at the top. So, I believe it's going to take some kind of extraordinary event to move this market out of it's "comfort zone". What could cause such a reaction? That's the $64,000 question. There are so many potential catalysts out there. That's why I keep recommending that any significant dip be bought in any of the metals because the potential for a move through resistance is so high considering the global tension that currently exists.

Dale F. Doelling
Chief Market Technician
Trends In Commodities
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02/23/06 Precious metals comments

The following was sent to Myra P. Saefong, Financial writer at Marketwatch.com, at 7:18 AM EST.

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Not a whole lot going on in the metals complex this morning. The rally that we've seen in the Gold market over the last few sessions seems to be fizzling out. With the near-term outlook turning ominous I won't be surprised to see us work back below the 2/14 low with $525 looking like a logical downside objective basis the April contract. This would, from a technical perspective, put the market in a position that it hasn't seen since early November/05, meaning the market would have to experience multiple closes below the 50-day MA which now stands at 545.50. If the market should break to that level I believe it will just be another attempt to drive the weaker longs from the market and, in turn, put the market back into an extreme oversold condition which would act as a springboard for the next leg up. I don't usually make wild predictions but I believe that Gold will break $600 by June 15th, which happens to be my 50th birthday. That would be a very nice present indeed.


Dale F. Doelling
Chief Market Technician
Trends In Commodities

02/14/2006 Precious Metals comments

The following comments were transmitted to Myra P. Saefong, Financial Writer at Marketwatch.com, at 8:03 AM EST.

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The overnight action in the Gold market has brought the April contract to the 50-day MA which now stands at 541.70. Back on 2/7, I wrote that I expected to see a test of the 50-day MA and we have now seen that test with April Gold touching 537.80. This very strong support area is holding for now and, with my proprietary oscillators now back in extreme oversold territory this may be an opportune time for those who have been waiting for this retracement to finally end. Only consecutive closes below the 50-day MA would compel me to rethink my position. The market also has successfully tested trendline support drawn from the Nov/Dec lows which is further evidence that this pullback may have finally run its course and the market could be poised to make a run at $600.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

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02/10/2006 - Precious Metals Comments

The following comments were sent to Myra P. Saefong, Financial Writer for Marketwatch.com, at 7:38 AM EST.

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There is a very ominous scenario developing on the daily chart for the April Gold contract. The formation of a potential Head-and-Shoulders top is becoming more and more likely and this could mean trouble for the entire Precious metals complex. With the markets all currently in the loss column after being higher overnight, traders will be watching Gold very closely to see if this chart pattern develops further. Consecutive closes below 545.20, the low set on 1/19, would set the stage for a move all the way back down to the $500 level. Only a close above the contract high of 579.50 will break this pattern and turn the short-term trend back up.

The chart pattern in Silver isn't as well defined as the Gold chart but it too shows the beginnings of a potential top. The next few trading sessions should provide enough evidence for a potential trend reversal. Should Gold begin to see a major shift in sentiment then Silver will most likely follow suit. Support in March Silver lies at 8.75 and 8.25.

Copper's trend should remain positive for the near-term but consecutive closes below 2.24 would send up the caution flag in this market. This will be a good opportunity for Copper to break away from Gold and Silver and to follow its own path to new highs.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

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02/07/06 - Precious Metals Comments

The following comments were sent to Myra P. Saefong, Financial Writer for Marketwatch.com, at 8:02 AM EST.

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The Precious metals complex has been on a tear right from the New year's opening day but it finally looks like we're in for a little bit of profit taking and a necessary retracement. It's always hard to guage exactly when a particular market will begin a normal retracement and, with the recent strength in the metals, making that call can be dangerous. The overall market trends remain intact but I won't be surprised to see a move in APR GOLD down to the 50-day MA (537.40) which is very strong chart support. This would put the market back in oversold territory while forcing the majority of small specs out of the market in the interim. This would probably set up the next leg that would finally see Gold testing that $600 resistance level.

MAR Silver has strong support at its 50-day MA which lies just above the $9.00 level and Copper, well, Copper is another story altogether. I've said many times that I believe Copper will continue to lead all of the metals, precious or base, and it continues to prove me right. Copper will most likely eclipse $3.00 before the market experiences any significant pullback. The fundamentals, technicals, and sentiment are all aligned for Copper and this market should continue to make new contract highs.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Precious metals softening is a good thing!

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

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

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

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

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

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

Happy New Year!

The following comments were sent to Myra P. Saefong, Financial Writer at Marketwatch.com, at 9:21 AM EST.

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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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