ChartWatchers

LOOKING AT OIL AND GOLD/SILVER INDEXES

 | 

For the longest time, crude oil and gold prices have dominated the news in terms of bullish commodities. We like to look at the ratio between the Integrated Oil and Gold/Silver Indexes ($XOI:$XAU) for a possible "pairs trade", and every few years we are accorded any opportunity to do so. In fact…that time is now. If we look at the ratio, we find that the 150-week moving average is a very decent "fulcrum point" from which to trade; thus we will be moving into the trade via long positions in the XOI components of Amerada Hess (AHC) and Sunoco (SUN), while moving to a short position in Freeport McMoran (FCX) and Newmont Mining (NEM).


The trade has a well defined stop loss point per a ratio trade to 7.00, where it must trade for two weeks. The target: NEW HIGHS over the next several years.



"Paid-to-Play" Portfolio 2006 YTD Performance: +13.2%

S&P 500 2006 YTD Performance: +3.1%

Announcement from the Author

{{ announcement.content }}

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
Subscribe to ChartWatchers to be notified whenever a new post is added to this blog!
comments powered by Disqus