This week we are seeing fear across the board from traders and investors as they dump their long positions is stocks and commodities. Just in the past two trading sessions alone we have seen extreme overbought conditions and extreme oversold conditions which generally mean another big move is brewing…

Fear (panic selling) has very distinct characteristics when looking at the intraday charts and we are seeing those price and volume patterns forming now. When waves of buying and panic selling start to take place back to back, I start to prepare for a trading setup which should form within a couple of trading sessions.

Keep in mind that fear is a much more powerful force in the market and once extreme levels are reached, we typically tend to see continued selling for 1-3 more days afterwards. This is the reason I tend to scale into oversold market conditions as I can potentially enter at lower prices within the next couple of sessions to build a position with a reduced cost basis.

SPDR S&P 500 ETF (NYSE:SPY) 10 Minute Chart of My Market Sentiment Readings

Panic selling, coupled with oversold NYSE market conditions and fearful options traders makes for an extreme reading in stock prices.   [SPDR S&P 500 ETF (NYSE:SPY)]

SPDR Gold Trust (NYSE:GLD) 10 Minute Chart of My Market Sentiment Readings

Sentiment readings many times carry over into the precious metals sector and can be used as a gauge also for tightening stops, adding to long positions etc..  [SPDR Gold Trust (NYSE:GLD)]

Mid-Week Market Trading Update:

In short, I feel the market is at a major tipping point along with the US Dollar (NYSE:UUP). It is just a matter of time before we get another low risk setup and take a position for the next move in either direction.

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Written By Chris Vermeulen From The Gold And Oil Guy.com    

My name is Chris Vermeulen the Founder of TheGoldAndOilGuy. I have more than a decade of extensive experience trading stocks, indices, ETFs, CFDs and Futures. My trading style has been thoroughly refined over the years, blending the best cutting-edge approaches that have only been possible with modern systems and diverse technologies. I believe I represent the ideal combination of trading styles and trade setups including a number of trading breakthroughs entirely on my own. It is this blend of the time-tested and innovatively new that allows me to take advantage of bull, bear and flat markets regardless of how each week plays out. I’ve repeatedly observed that one of the biggest keys to making a lot of money in challenging markets involves aiming for big, quick returns, while maintaining an extraordinary focus on minimizing risk. This may be what most distinguishes what I provide vs. the experiences delivered by the vast majority of other newsletters.