Morning Futures Thoughts: Gold and Oil

Bank of America’s
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disappointing numbers appear to have triggered a brief sell-off in the DJIA E-mini futures (YM). However, as this is being written, a nice 30 plus point bounce from the lows has occurred with the YM resting right around the round number of 12800.

Today is an ideal day to set up the YM Channel. The YM channel has emerged as 12766-12866. The goal is to catch a nice swing trade that can last several days to all week with this entry. Remember to wait for a full 3-minute bar, green above upper line, red below lower line, to enter this trade.

My research is indicating that 12766 is strong support and 12866 is heavy resistance. Therefore, I am expecting nice follow through should these numbers be pierced.

Oil- ready for a sell-off?

Oil has just been on an incredible tearing run on the upside- making new highs daily. It is exhibiting very strong technical candlestick patterns on the daily chart. It’s trading around $116.00/barrel with the 200 day moving average being way back at $89.35 and the 50 day MA clocking in at $103.03. However, I believe oil is due for a sell off to sub $100 soon.

I am not going to short here but rather wait for what I consider the most opportune time, entering the trade in 3 phases if necessary to provide a wider price entry window, as oil is nearly impossible to nail an exact entry. I am waiting for potential news and price reaction to converge prior to entry. Stay tuned!

Gold- trumped up and ready to fall

Gold has fallen off its high of 1033.90, sitting at around 922. This is another classic short with gold fever being in full force.

There is tremendous hype in the gold market, with every corner store becoming a gold buyer. In fact, recently, I have seen the emergence of “Gold home-parties” where housewives buy gold Tupperware Party style. If this isn’t marking a clear top, I am not sure what is!

The public is now heavily involved; it’s time for the rug to be pulled out from under them. I am on record as making a bold proclamation of Gold being 600 or below by 4/1/2009. We will see what happens!

Dave Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.