Rotation out of the tech and into financial

Last Friday’s, June 9th, 2017, decline of the tech sector continued into Monday, June 12th, 2017.  I expect the NDX to test the range, as illustrated within the red box in the below chart, before continuing higher, but not closing below the red box.

chart1

The banking stocks were among the beneficiaries of the tech slump, with BAC, GS and JPM all defying their head and shoulders break-down setups.

chart2

The volume in the QQQ fund has been excessive. Last Friday, June 9th, 2017, it was 8 standard deviations above its’ normal average volume. On Monday, June 12th, 2017, it was more than 6 standard deviations above its’ normal average volume. It set a new record since back in 1999.

Goldman Sachs sent a memo out to its’ clients late last week.   Goldman worries that the boom has created an “valuation air-pocket,” similar to the ridiculously high valuations for tech stocks during the Dot-Com boom.”

 

The SPX Trade!

The market is in a very bullish posture if we remain over 2420 in the SPX. There is NO market crash in sight. Tune in every morning for my video analysis and market forecasts at TheGoldAndOilGuy.com to know where the main ‘asset classes’ Gold, Oil and SP500 are headed tomorrow, this week and next month. This daily forecast service closed out an oil trade in SCO on June 8th for a quick 21% profit!

As this bullish pattern continues to rise throughout the summer, we should then prepare for the next correction in the SPX. This next pullback can take us from the 2500 – 2550 SPX region and potentially back down towards the 2300 SPX. The next buying opportunity should occur in the fall of 2017, approximately sometime during the Thanksgiving Day holiday.

chart3

 

 

 

How A ‘Market Crash’ Stops:

‘Circuit breakers’!

 Stock exchanges attempt to ease ‘panic selling’ by taking certain steps to halt trading. These moves are called ‘market circuit breakers’.

The purpose is to prevent a market or stock price ‘free-fall’ by trying to rebalance buy and sell orders. ‘Circuit breakers’ halt trading on the nation’s stock markets during dramatic drops and are set at 7%, 13% and 20% of the closing price for the previous day. The ‘circuit breakers’ are calculated daily.

 

Level 1 halt (7%):

Trading will halt for 15 minutes if the drop occurs before 3:25 p.m. (ET)

At or after 3:25 p.m. (ET) — trading shall continue, unless there is a Level 3 halt.

 

Level 2 halt (13%):

Trading will halt for 15 minutes if the drop occurs before 3:25 p.m. (ET)

At or after 3:25 p.m. (ET) —trading shall continue, unless there is a Level 3 halt.

 

Level 3 halt (20%):

At any time during the trading day—trading shall halt for the remainder of the trading day.

 

The De-regulation of ‘RED TAPE’ in the Financial Industry Will Place the Markets at a Greater Risk!

 

The Trump Administration hopes that by unshackling businesses from all the ‘RED TAPE’ regulations, renegotiating trade deals and by cutting tax rates, that this will help the economy to grow faster. The administration hopes that these changes will create new jobs.

Last Thursday, June 8th, 2017, The House of Representatives (http://www.house.gov/) approved legislation to erase the core financial regulations implemented in the Dodd-Frank Act of 2010. Republicans moved a step closer to delivering on their promises to eliminate rules that have been perceived as strangling small businesses and stagnating the economy. The non-partisan Congressional Budget Office estimated that the bill would reduce federal deficits by $24.1 billion over the next decade.

This bill will reverse most of the protections put in place since “The Great Financial Crisis Of 2017”.

(http://frozenmail.net/2017/06/10/us-financial-choice-act-passes-house-of-representatives.html)

The Choice Act would exempt some financial institutions which meet capital and liquidity requirements from many of Dodd-Frank’s requirements that limit risk taking. It would also replace Dodd-Frank’s method of dealing with large and failing financial institutions. This is known as the orderly liquidation authority — which critics say reinforces the idea that some banks are too big to fail — with a new bankruptcy code provision.

This new legislation would weaken the powers of the Consumer Financial Protection Bureau. The bill would also eliminate the Labor Department’s fiduciary rule which requires brokers to act in the best interest of their clients when providing investment advice about retirement.

 

TRADES IN MAY:

FOLD, up 18% in 6 Weeks
TNA, up 5.9% in 11 Days
ERY, up 4.75% in 2 Days
SLV, up 3.2% in 5 Days
MOBL, up 15% in 7 Days
FOLD, up 9.5% in 40 Days
NUGT, up 81% in 27 Days
UGAZ, up 74% in 14 Days

 

If you would like to take FULL Advantage of all of my insight and expertise, tune in every morning for BOTH my daily market forecasts video and my Premium Stock & ETF Trade Alerts services!

Chris Vermeulen

Goldman Sachs Crashes Tech FANG Stocks!

Last Friday June 9th, 2017, Robert Bouroujerdi, a Goldman Sachs analyst, “warned that the $600 billion outperformance by the 5 biggest tech stocks known as ‘FAAMG’ — Facebook, Amazon, Apple, Microsoft and Alphabet — had contributed about 42 percent of all stock market gains over the last year. Goldman worries that the boom has created an “valuation air-pocket,” similar to the ridiculously high valuations for tech stocks during the Dot-Com boom.”

Goldman Sachs comments “market’s over-reliance on FAAMG for growth and appreciation has created positioning extremes, factor crowding and difficult-to-decipher risk narratives.”

Almost like the Dot-Com bubble, investors are piling into the tech stocks with the belief that these companies will continue to generate billions in revenues and branch out into other enterprises to drive innovation and growth. I talked about this two weeks ago;  “The Fourth Industrial Revolution, which will be referred to as: Tech Hypergrowth

compa

The QQQ’s were trading at $140.15 per share last Friday, June 9th, 2017, but by afternoon, they were down $3.42 (-2.38%). Year-to-date, the QQQ’s have gained 18.29% versus an 8.75% rise in the SPX index during the same period. The heavy losses were focused and contained. It was an orderly coordinated profit taking day!

There was a sector rotation in The Dow Industrials which closed at a new high. Prior to the past year, the last two times that the Dow Jones closed at a high, while the Nasdaq sold off hard, was back in 1999 and 2007.

The Tech sector has been driving the general market yet higher since November of 2016. I keep scanning the horizons in every direction and I just cannot see anything that would trigger more than a minor correction day. Of course, a minor correction could deliver outsized impacts, given the heavy weighting of a few stocks. as well, as passive index investing.

 comp1

 

Are the Financials and The Small Caps Back?

Small Cap stocks, IWM, vaulted all the way up to $139, and it has had a strong follow through on Friday, June 9th, 2017, well above $140. That is a nearly 4% move from trough to peak since Wednesday June 7th, 2017, in a dramatic “V-shaped rally” in Small-Cap stocks.

The DOJI candlestick on the breakout is a sign of INDECISION! I am currently waiting for a re-test of 138.50 before entering this trade. According to decades of studying historical seasonal chart patterns, the month of June almost always closes lower than its’ open. Its’ worst days are June 15th to June 18th. MRM Traders played TNA for the recent run-up in price.

IWM-ATP

In the SPY, impressive asset flows have hit SPY lately, topping more than $6 billion in this move higher in the past week.

Dr. Ed Yardeni discussed why:

“So far, the current bull market has marched impressively forward despite 56 anxiety attacks, by my count. They were false alarms. I remain bullish. My long-held concern is that the bull market might end with a melt-up that sets the stage for a meltdown. The latest valuation and flow-of-funds data certainly suggest that the melt-up scenario may be imminent, or underway.”  Article

 

In the aftermath of “The Great Financial Crisis of 2017”, Global Central Banks began to buy stocks and bonds and other financial assets in very large quantities and they continue to do so!  It is estimated that they will continue to buy $3.6 trillion dollars during 2017. They continue to pump up the global stock markets. This is their response in correcting the forces of past excesses. Their financial engineering may be able to keep this bubble growing bigger and bigger for many years to come. They have reached a point of no return and have no plans to unwind balances sheets.

 

 

Will the Financials Lead the Market Higher?

The banking stocks were among the beneficiaries of the tech slump, with BAC, GS and JPM all defying their head and shoulders setups at this time. The XLF, is suggesting further near-term gains for the financial sector while heading into this coming week’s FOMC meetings on June 13th and June 14th, 2017.

 xlf-2

 

 

Trade Your Way To Success!

On May 25th, 2017, I issued a trade alert, to my membership, a couple of hours before the opening bell!

We at TheGoldAndOilGuy.com purchased the SCO ETF which is a 2x oil ETF, which rocketed higher by 10.4% over the next few hours on May 25th, 2017 which we locked in partial gain and adjusted our stop to eliminate any downside risk. Members were ecstatic with our instant results. Then, oOn June 8th, 2017, we closed the remaining position of SCO for a 22% Profit!

If understanding why the markets move they way they do, and where they are headed tomorrow is something you want to know, become a member and have access to my premium pre-market video forecasts to have the necessary insights that you require to build your trading account!

Chris Vermeulen
www.TheGoldAndOilGuy.com

U.S.Bond and Small Cap Stock Soaring Together?

U.S. Stock Markets just keep going higher and higher! How much higher will they go?  I am FORECASTING another 25% higher for U.S. Stocks! The ‘bullish trend’  from the breakout continues, as expected. Breadth has become strong, once again, including a new all-time high on the SPX Advance/Decline line to match the new all-time high for the SPX. My breath thrust index reissued another buy for the SPX on May 31st, 2017!  Once the markets wake up and realize that there will be no U.S. tradewars, they will then begin their assent.

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THE BIG PICTURE!

The Fourth Industrial Revolution, which will be referred to as ‘Tech Hypergrowth’, will be the enabling attribute of technology’s new central role within the global economy. Through technological innovation and investment, in developing infrastructures, companies are heading into an all new frontier.

Harnessing technology so as to realize undeveloped opportunities is a hallmark of ‘tech hypergrowth’. This approach leads to the now quite familiar phenomenon of  innovation. Tech Hypergrowth Companies are employing both existing and recently developed infrastructures for growth. These new opportunities lie in ongoing and recent technology shifts, industry transformations and demographic and societal changes. Research indicates that ‘tech hypergrowth’ companies are highly data-driven and that data is enabled to adjust the fit between the technology, the business and its’ customers.

82

 

‘Emergency Stimulus’ Is Now Permanent!

Last Friday, June 2nd, 2017’s Jobs Report supported the number of new jobs that are now expected.  If the economy continues to contract, the FED, in alliance with the  Trump Administration,  will increase their money printing which will, in turn, push gold higher. This explains why gold prices rallied in response to the disappointing jobs report.  There is NO market crash on the horizon. In last weeks’ article, May 26th,2017, I wrote (that)  “When short-term sentiment becomes pessimistic, it creates a new ENTRY SIGNAL to re-enter the SPX long!  This is exactly what occurred on May 25th, 2017”. We still remain extremely bullish with a stop/loss at 2400.   There is major support at the 2400 level. This level used to be strong resistance, then became major support in the May 2017 breakout.

83

 

Historically, the best sectors were dominated by staples, utilities and health care which had shown consistent positive returns.

Understanding correlations in complex financial systems is crucial in the face of turbulence, such as the continuing ongoing ‘financial crisis’. The strong breath and new highs support the advance of the SPX as it continues on its’ gains.

 

 

 

The New Bear Market Of Interest Rates!

In recent decades, this has led to a further decline in interest rates, almost every time, along with a rally in the more defensive sectors of the stock market.

84

Over the past 36 years, the ten-year Treasury Note Yield has preceded a new downtrend in interest rates, virtually every time,when they have reached major support. Yields dropped an average of a 11% over the following year and declined 9 out of 11 times.

As interest rates continue to decline, it is great for bond funds, but not good for banks. The SPX Banks SPDR, (KBE) is near its’ 2017 low as depicted in the chart below.

85

The U.S. dollar index closed last week at a new low for the move at 96.67, down 47 basis points on Friday, June 2nd, 2017 (0.48%). The  dollars’ trouble came when the government jobs report announced only 138,000 new jobs were created last month! This fell short of economist’s expectations and lower than that of April of 2017. Dropping yields are a driver of currency exchange rates and forecast  future lower interest rates.

The U.S. dollar clearly took a hit from the May jobs report with expectations of the FED raising U.S. interest rates beyond June.  From a technical standpoint, the Dollar Index is bearish on the daily charts.  With the lack of confidence that the FED will NOT take any action beyond June, has pushed the dollar further into a new bear market territory but price is nearing critical support and I do feel a short term bounce in dollar is near.

 

The Decoupling Of Correlated Asset Classes!

In financial systems, correlations are not constant, all the time, but rather, vary over time. Reliable estimates of correlations are necessary to protect a portfolio. I find that the result that the correlation among different ‘asset classes’ scales ‘linearly decouple’ with market stress.

Consequently, the diversification effect, which should protect, melts away in our current financial times. If my empirical analysis is consistent with the interesting possibility that one could anticipate diversification breakdowns.

In our very leveraged financial markets, the ‘leverage effect’ can decouple the traditional relationships correlation between the asset classes.

It is crucial to understand the fundamentals of the capital processes that are currently in play!  President Trump is preparing for a major shake-up at the FED. There are three vacancies coming up at the FED’s Board of Governors. President Trump is preparing for a series of new appointments to the FED. He is considering a former Federal Reserve Economist, who advocates the implementation of negative interest rates. The administration has been saying that it plans to deregulate the old rules that were imposed on Wall Street in the aftermath of “The Great Financial Crash of 2007”.

In January 2018, the term of FED Chairwoman Janet Yellen will expire! The president is undecided whether he will reappoint her or seek a new appointee for this position.

In my opinion, President Trump wants a weaker dollar which in return boast profits in U.S. corporation.

86

 

 

The Anatomy of a Winning Trade!

Tune in every morning for my video analysis and market forecasts at TheGoldAndOilGuy.com to know where the main ‘asset classes’ Gold, Oil and SP500 are headed tomorrow, this week and next month. This daily forecast service closed out an oil trade in SCO June 8th for a quick 21% profit!

Short-term aggressive traders may want to look at my premium newsletter ATP  in which we alert our clients to weekly opportunities in small cap stocks and attempt to keep our members aware of new trade setups by using our proprietary (MRM) Momentum Reversal Method trading strategy, which just locked in $590 in TNA, and another $1800 from FOLD on June 6th.

TRADES IN MAY:

FOLD, up 18% in 6 Weeks
TNA, up 5.9% in 11 Days
ERY, up 4.75% in 2 Days
SLV, up 3.2% in 5 Days
MOBL, up 15% in 7 Days
FOLD, up 9.5% in 40 Days
NUGT, up 81% in 27 Days
UGAZ, up 74% in 14 Days

 

If you would like to take FULL Advantage of all of our insight and expertise, tune in every morning for BOTH our daily market forecasts video and our Premium Stock & ETF Trade Alerts services!

Chris Vermeulen

The New Bull Market of 2017!

I cannot stress strongly enough the importance of understanding where the markets are currently technically located, with regards to different time frames and which help to guide all my trading and investing decisions.

The longer that the SPX is inside a ‘consolidation pattern’ and going sideways, the bigger the ‘Break Out’. There is a very strong bullish posture on all time frames within the markets. A unique ‘Sentiment Indicator’ has now been reset from being overbought to oversold, therefore, there is huge potential to the upside. Momentum has been reset!  In my market article review, from last February 28th, 2017, I discussed that the “Stealth ‘Bull Market’ In Stocks Is Still In Progress!”.

nb1

Additionally, I also wrote about how “Elliott’s theory is based on the Dow theory in that stock prices move in waves. Because of the “fractal” nature of markets, I have broken them down so that you can trade a daily complete wave count”.

The below chart was originally posted in April of 2017 with the potential price paths for the SPX to reach the next price target of 2500. The overall forecast points to higher prices this summer with the potential of a major top forming in late July or August.

nb2

Courtesy of  TMTF website.

 

A close above 2424, of the SPX, would trigger a NEW ENTRY POINT, as well as indicating the continuation to the SPX 2500 level. The next potential target is 2430.

 nb3

Have The Markets Changed?

The “FAANGS” describe five major stocks in the index: Facebook, Apple, Amazon, Netflix, and Google. The “FAANGS” could create a huge ‘Melt Up’ in our current stock market environment! The “FAANGS” and other large technology stocks will send the SPX much higher.

The U.S.-listed ETFs had inflows of $7.8 billion during the week ending Thursday, May 25th, 2017.  The year-to-date inflows are $188.6 billion.

These five stocks (FAANGS) represent 9.25% of the SPX index. They also represent 31.45% of the NDX – 100.

 

Stocks Have a Long Way To Go!

The Bank of Japan (BOJ) and the European Central Bank (ECB) are sending the SPX to even newer highs. Easy money policies, and provide cash to invest into the markets, while adding more liquidity.

Therefore, we are in a “risk on” environment.  This is fueling the ‘market bubble’ and will continue for some time yet.  The markets have been resilient as traders “buy the dips”!

Analysts at Morgan Stanley believe that “profit expansion within the S&P 500 is growing at its best rate in nearly six years. Specifically, ratio of companies raising internal earnings estimates versus those lowering future earnings expectations is reaching its highest level since 2012”.

Michael J. Wilson, Morgan Stanley Equity Strategist, wrote in a client note, “The momentum of earnings revisions breadth like that seen recently is often synonymous with higher equity prices over a 12-month horizon.”

nb4

 

Intermarket Analysis:

Global Central Banks have injected a record $1 trillion in 2017… they will be required to continue to inject more as the year progresses.

nb5

The current focus is on the fundamental key drivers that move the market. The current drivers are Trumponomics, the FED rate hikes, Quantitative Easing and ZIRP.

‘Correlation’ is when you look at one market and it can forecast another markets’ behavior.  For example, if the USD turns higher, it is likely that commodity prices will soon begin to fall. If commodities do not drop right away, they have diverged from their natural relationship and we can expect them to start to fall soon.

Correlations offer useful information for traders.  Linear correlation analysis presupposes the effects which are linear in nature in a one-to-one causal relationship. The correlation of any two markets can range between +1.0 (the price behavior of the two markets is the same) and -1.0 (the price behavior of the two markets is exactly the opposite of one another).

The historical correlation between GLD and the U.S. dollar has been -0.59.

nb6

 

IS GOLD DUE FOR A BREAKOUT?

Gold is the ultimate hedge for setbacks in the Trump agenda.  If the administration fails to get its’ agenda enacted, gold prices will likely move higher.

Gold is the most (negatively) sensitive precious metal to react to changes in the Federal Funds Futures.

nb7

The FED cannot raise rates, aggressively, without harming the U.S. economy: U.S. debt levels remain ‘astronomically high’. There has been no deleveraging since the Great Financial Crisis of 2007/ 2008.

Total U.S. debt remains above 250% of GDP.  This explains, better than any other factor, why the Federal Funds target rate is still below 1%.

 nb8

  

GLD broke through an important resistance level and remains above all key moving averages. GLD out-performed other safe havens last week.

A close above GLD 120.60 would indicate a great swing trade to GLD 122 and then GLD 126.  This would also reflect the continuation of the bearish move on the U.S. dollar to the 94 and 95 levels.

 nb9

 

In Conclusion:

Tune in every morning for my video analysis and market forecasts at TheGoldAndOilGuy.com to now where the main ‘asset classes’ are headed tomorrow, this week, and next month.

Short-term aggressive traders may want to look at our premium newsletter ATP where we alert our clients to weekly opportunities and attempt to keep our members aware of new trade setups using our proprietary Momentum Reversal Method trading system.

TRADES IN MAY:

ERY 4.75%, in 2 Days

SLV 3.2%, in 6 Days

MOBL 15%, in 7 Days

FOLD 9.5% in 40 Days

 

If you want to take FULL Advantage of All Our insight and expertise tune in every morning for BOTH our daily market forecasts video and our Stock & ETF Trade Alerts services now!

This week will be most interesting in the markets. It is vital that you understand what the markets are telling you. Attempting to trade stocks, bonds, commodities, and the currency markets, without intermarket awareness, can be very costly.

Chris Vermeulen
TheTechnicalTraders.com

Stock Market & Crude Oil Forecast!

The SPX hit new highs and will see even higher highs! Goldman Sachs, is the latest bank to publish research, to justify the current high prices of the market and its year-end SPX price target. Goldman argues that the index can head higher to 2580 in this bull market trend.

The current rally continues to climb without a quantifiable pullback!

My proprietary technical model has now confirmed a NEW BUY SIGNAL on the SPX!  This is a new signal informing us of the continuation of this rally.  President Trump’s pro-business policies, along with soaring business and consumer optimism, is jet fuel for this bull market to continue even higher.

The correction is OVER and the next leg of this bull market will take the SPX to 2500+.  The bears will be left with nothing, except huge losses. The call and put buying action that is reflected from the CBOE shows that the leveraged money is now on the long side of these equity markets.

In my research report that I released back on April 18th, 2017, I stated that “On a short -term basis, we are at that point where sentiment is overly ‘pessimistic’. Seasonality is turning positive and any further selling should be erased by the time when everyone pays Uncle Sam. When short-term sentiment becomes pessimistic, it creates a new BUY SIGNAL to re-enter the SPX long!”.  This is exactly what occurred on May 25th, 2017.

 

Margin Debt:

The New York Stock Exchange, (NYSE), releases data monthly, of the customers of clearing firms overseen by the NYSE. This data includes margin debt and free credit balances. As you can view, from the chart below, there is a positive correlation between margin debt and the rise of the SPX.  It is now confirming that buying continues to push the SPX much higher!

sf1

Follow the Smart Money!

Company insiders tend to be the smart money. When there is insider buying, it is good for the markets.  Buying and selling, by corporate insiders, often occurs when they believe in the future prospects of their company’s earning potential.

A proprietary ‘insider’ indicator was created to monitor the buying and selling of options.  This indicator measures the net number of insiders among companies in the SPX, that sold minus bought, shares in their own companies. It looks over the past five years to determine the average level of buying or selling during that month, and adjusts the current figure based on those averages.

The bottom green line is when the insiders are buying, meaning when the blue indicator line is low it means stocks should be bottoming and can be bought based on insiders activity.

sf2

The Slippery Slope – Oil

On, Thursday May 25th, 2017, oil prices plummeted 5% after the OPEC and non-OPEC producers agreed to extend the oil output cut deal for nine months. Oil sold-off, aggressively, as market participants were expecting the cartel to announce deeper cuts to output.

I issued a trade alert, to my membership, a couple of hours before the opening bell as I could see what oil what about to do next. We at TheGoldAndOilGuy.com purchased the SCO ETF which is a 2x oil ETF, which rocketed higher by 10.4% over the next few hours on May 25th which we locked in partial profits and adjusted our stop to eliminate any downside risk. Members were elated with our instant results.

Watch Crude Oil Forecast Today Video

crude-oil-forecast-todayCLICK HERE TO WATCH

 

Short-term aggressive stock traders may want to look at our premium newsletter where we alert our clients to these types of opportunities every week at ActiveTradingPartners.com and attempt to keep our members aware of strong trading signals using our proprietary Momentum Reversal Method trading system.

 

TRADES THIS MONTH:

ERY 4.75%, in 2 Days

SLV 3.2%, in 6 Days

MOBL 15%, in 7 Days

FOLD 9.5% in 40 Days

 

If you want to take FULL Advantage of All Our insight and expertise tune in every morning for BOTH our daily stock market forecast video and our Stock & ETF Trade Alerts Newsletter today!

Chris Vermeulen

Stock Market Fear Trading

The broad US stock market last week took a tumble sending a massive wave of fear through investors’ minds. On Wednesday May 17th the S&P 500 index plummeted 1.7% causing the fear index to jump a whopping 48% in a single session.

What does this mean and what should we expect going forward? I don’t see the recent drop as being anything to worry about at this point. It’s important to remember that some of that larges drops in stocks happen during a bull market (rising trend). In fact, these stand out sharp drops on the charts are nothing more than the market trying to buck investors out of the bull market (scare them out) before it continues higher.

 

The Market Trend Forecast Prediction

Look at the chart below courtesy of TMTF website. This chart was originally posted back in April with two potential price paths for the SP500 to reach the next price target of 2500. The overall forecast points to higher prices this summer with the potential of a major top forming late July or August.

I should caution that I believe there is potential for another washout low with the SPX dropping to the 2300 level still to reach that Elliott Wave level. Even if this level is hit, the overall market trend will remain bullish and would be fully rejuvenated for the next big leg higher.

TMTF--3

 

Fade the Fear – Swing Trading Fear

Let’s face it, we all know the feeling of when so one jumps out and scares us. The surge of blood pressure, adrenaline, and how our body jolts into action is a natural human response.

Fear among investors is almost identical when there is a sharp drop in price. Other than the fact that investors don’t typically scream, put up their fists and/or run away, instead they hit the SELL button to close out losing position in order to remove the fear/pain of further losses.

Typically, most traders panic out of positions at the same time (within a few trading days) and this sentiment shift can be seen as a price spike on the VIX chart.

Below you will see a chart and recent trades executed based on a strategy I have been testing for some time and recently started trading live. It is based around the fact that fear/panic is very short lived and fades away quickly. It is also based on the fact that leveraged VIX ETFs also fall in value over time because of how they have been designed. This allows us to short the long leveraged VIX ETF adding further potential gains to a falling VIX price.

vix-atn

 

Momentum Trade Extreme Panic & Greed

The two previous charts above were based on daily charts of the markets. This portion shows you the potential turning points and trade setups each week based on the 30-minute intraday chart. Some weeks can provide multiple trade setups if property identified.

The below chart is the SP500 continuous contract futures chart which I created and use for identifying turning points and trades in the broad market using SPY, SSO, SDS, or ES Mini Futures. This chart and its analysis also helps me identify when the VIX (Fear index) should be topping or bottoming as well.

Obviously, these moves are small and quick only lasting a day or two. But keep in mind if you have high probability trade setups and apply leverage like ES mini futures one can profit handsomely from small but frequent moves like this ranging between $250 – $1500 profit.

OB-OS

 

In Conclusion:

In short, the longer-term trend for US equities remains up (bullish). Based on the short-term 30-minute chart above stocks are a little overbought so a small pullback or pause is likely. While this week is a full trading week, it is going into a holiday weekend which typically favors higher stock prices by the closing bell on Friday.

In my next article, I plan to share with you what gold, silver, and miners are setting up for and it’s likely bigger and in the opposite direction than you think, stay tuned!

Finally, I want to mention that I will be getting back to my roots and passion in terms of article content. The past two years I changed gears to write more about the global economy and news. Recently I realized that I just don’t enjoy writing about these types of thing. Its all doom, gloom, corruption, and ridiculous actions but leaders around the world and not fun to write or read. So, I am thrilled to say that things will be back to how they were: Simple, technical analysis based forecasts and weekly trade setups.

Learn more about my daily price forecasts and turning points video: www.TheGoldAndOilGuy.com

Chris Vermeulen

The “Political Coup” Was Just Initiated In Washington D.C.!

The financial markets have already “priced in” huge tax cuts, reducing red tape regulations and a massive increase in infrastructure spending.

Perhaps, the markets are now believing that the agenda is not going to occur with Al Green asking for Trump impeachment?  This could result in a significant downturn for stocks if it were to unfold.

 

The SPX index declined more than 1.75% and wiped away about $375 billion in market value. The SPX went from a record close three days ago, to below its 50-day simple moving average on Wednesday May 17th, 2017.  Institutional traders view the 50-day simple moving average as very strong trend support. The SPX level at 2407 turned out to be the best the bulls were capable to achieve. Their second attempt to push the benchmark higher failed at 2406, where the bears stepped in.

 

Financial Markets are Spooked!

There is a slow leak in U.S. stocks. The SPX has more declining stocks than advancing ones during this tight trading range. This is unusual behavior and resulted in lower returns over the following month.  Tune in every morning for my video analysis and market forecasts on all ‘asset classes’ so you know where and why the market is about to move.

The SPX decline on Wednesday May 17th, 2017, was abnormally large, relative to the past 3 years.

SPXM18

These two market warning signs, the Titanic Syndrome” and the Hindenburg Omen” are giving a “preliminary sell signal” based on analyses of 52-week New Lows in relation to New Highs on the NYSE. On May 4th, 2017, the Hindenburg Omen was triggered on the NYSE and Nasdaq exchanges.  It has a consistent record at highlighting underlying weak market conditions that preceded market trouble. On May 16th, 2017, both exchanges triggered the Titanic Syndrome. This occurs when the NYSE 52-week lows out-number 52-week highs within 7 days of an all-time high in equities within days of the major indexes closing at a one-year highs. Historically, these signals have led to further weakness over the following two weeks. As stocks were plunging, investors are currently panicking out of stocks and into the “safety” of bonds.

 

Is This The Return of New Volatility?

Richard Haworth, CIO of Capital Advisors, a London-based hedge fund, which bets on rising price swings is quoted as saying, “The market will revert to higher volatility and this could be the start of it. The sharp move this week reflects how low volatility the market was — how complacent.”

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Conclusion:

In short, investors have been overly bullish with virtually no fear that share prices could fall.  But this weeks drop seems to have renewed the fear and is cleansing the market by weak investor shares being sold to those who are bullish and willing to hold them for higher prices.

This is normal bullish price action and once this phase ends higher prices should return as we enter the summer months.

In the past week over at ATP service we have closed a few winning trades whie the market sold off. SLV 3.2% profit, FOLD 9.5%, MOBL 15%, and ERY 5.4%.

The bottom line is that it really does not matter which way the market goes, there will always be ways to profit.

Chris Vermeulen
Daily Market Price Forecasting Video
Active Stock & ETF Trading

Market Forecast & Analysis that is EYE OPENING

Exchange-Traded Funds Make Decisions Easy

Stock Market Forecast Big Picture: The broad stock market is working through a more complex corrective price pattern. My recent forecast, as displayed in the chart below, indicates that the next leg up is toward 2500.  The market may be about to start a larger A-B-C correction to test the 2300 level to fully cleanse itself, before starting the next leg up. But overall, the SPX is very bullish long-term.

Investors are among the most pessimistic they have been in 7 years!  Over the past four weeks, this sentiment is nearing the lowest of all readings of the past 30 years. If it declines a bit further, it will suggest future returns of the SPX will be impressively positive over the next couple months.

tmtf-spx

Courtesy of TMTF service

 

Federal Tax Revenue Falls to 80-Month Low!

The last time that Federal receipts fell this much was, in July of 2008, right before the “financial crisis”.  March of 2017 was the fourth month, in a row, in which federal receipts were down year over year, while growth rates overall have been falling quickly since mid-2015.  This a RED FLASHING warning sign that all is not well in the U.S. economy.

 

What is their solution?

Private Collection of Overdue Federal Taxes Begins this April.

The Internal Revenue Service, IRS, announced earlier this month have hired four debt collection agencies to collect on outstanding payments from taxpayers. The IRS now has employed private debt collection firms to contact taxpayers who still have not paid their previous years’ taxes.

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Households and employees apparently are NOT doing nearly as well as they have been told they are! I wonder if Chairwoman Yellen and Company. ( https://mises.org/library/end-ultra-easy-money), are aware of all of this?  To my naked eye, this does not look like economic growth nor a healthy economic recovery!

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What we have invented, in order, to keep big banks afloat, for a while longer is ultra-low interest rates, NIRP, ZIRP, etc. They create the illusion of not only growth, but also of wealth. They make people believe that a home they could never have dreamt of otherwise buying not long ago is possible to fit into their ‘budget’. This is how they are lured into signing up for ever larger mortgages, which, in turn, keeps our banks from falling over.

Record low interest rates have become the only way that private banks can create new money and stay alive (because at higher rates barely anyone would be able to afford a mortgage). It is of course not just the banks that are kept alive, but the entire economy, as well.

I really do not think that we are actually returning to normal interest rates under these circumstances. I believe that based on this overview, proper interest rates in the FEDs future are going much lower than it has been historically.  The FED is now going to now realize that it cannot buy itself out of a “business cycle” and that an “old-fashioned” deflationary depression is upon us, now!

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The International Monetary Fund, (IMF), released a report that is projecting a prolonged period of low interest rates and low growth that has gripped the global economy since the 2008 financial crisis. This would force major structural changes of pension funds, asset-management firms and insurance companies. Their products and business models, under lower growth and low interest rates, will have to be radically revamped!  Pension funds, insurance companies and the future of investing all will likely have to change significantly: (https://www.bloomberg.com/view/articles/2017-03-24/pension-crisis-too-big-for-markets-to-ignore). Defined-benefit pension plans would have to start reducing benefits. Insurance companies will have to reinvest in maturing assets at lower yields while continuing to make high payouts on their policies.  Today, they are acting more like hedge funds than their traditional roles. They will most likely require more capital to stay solvent.

The IMF Global Financial Stability Report stated, “The experience of Japan suggests that an imminent and permanent exit from a low-interest-rate environment need not be guaranteed. That would pose “a considerable challenge to financial institutions.” The Trump Rally Will continue🙁 http://www.barrons.com/articles/are-you-ready-for-trump-rally-2-0-1492634005)

 

Live The American Dream!

Are you living hand-to-mouth or paycheck-to-paycheck? This all is too common a reality for U.S. workers.  Three-quarters of the population are scrambling to cover their basic living costs.  This next problem that Wall Street is about to experience can actually help you to make money, if you understand it and do exactly what we are doing.

Tune in every morning for my video analysis and market forecasts at TheGoldAndOilGuy.com on all ‘asset classes’ and new ETF trade opportunities.

Chris Vermeulen
www.TheGoldAndOilGuy.com