If we have seen a bottom in 10-year benchmark yields, and are in the midst of a new secular bull-tre...
T'is the Season to Look At Gold & Oil Prices
06/18/2013 7:00 am EST
The two most popular investments in recent years have been dormant and out of the spotlight, but from looking at their charts, their time to shine may be closer than one may think, writes Chris Vermeulen of TheGoldAndOilGuy.com.
Seasonal charts allow us to look at what the average price for an investment does during a specific time of the year. The gold and oil seasonal charts below clearly show that we are entering a time, which price tends to drift higher.
While these charts help with the overall bias of the market, keep in mind they are not great at timing moves and should always be coupled with the daily and weekly underlying commodity charts.
Now, let’s take a quick look at what the godfather of technical/market analysis shows in terms of market cycles and where I feel we are trading. As I mentioned last week, a picture says a thousand words so why write when I can show it visually?
John Murphy’s Business Cycle
Mature Stock Market
Commodity Index Looks Bullish and Should Rise
Gold & Silver Seasonality Price Charts with Analysis
Precious metals, like gold and silver, are nearing a bounce and possible major rally in the second half of this year.
Crude Oil Seasonality Price Chart with Analysis
Crude oil has been a tough one to trade in the last year. The recent 15 candles have formed a bullish pattern, and with the next few months on the seasonal chart favoring higher prices, it has been leaning towards the bullish side.
Commodity, Gold & Oil Cycle and Seasonality Conclusion
In short, I feel the equities market is nearing a significant top in the next couple weeks. If this is the case, money will soon start flowing into commodities, in general, as more of the safe-haven play. To support this outlook, I am also factoring in a falling US dollar. Based on the weekly dollar index chart, it looks as though a sharp drop in value is beginning. This will, naturally, lift the price of commodities especially gold and silver.
It is very important to remember that once a full-blown bear market is in place, stocks and commodities, including gold and silver, will fall together. I feel we are beginning to enter a time where precious metals will climb, but it may not be as much as you think before selling takes control again.
Final thought, this could be VERY bullish for the Canadian Stock Market (Toronto Stock Exchange) as it is a commodity-rich index. While the US may have a pullback or crash, Canadian stocks may hold up better in terms of percentage points.
By Chris Vermeulen of TheGoldAndOilGuy.com
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