Buy It When It’s Not Hot!

Our Adaptive Dynamic Learning (ADL) modeling system has been hot.  Now we want to share something super exciting with all our followers – a super trade setup in the ES.  Our research team at Technical Traders Ltd. has identified what may be one of the best trading signals we’ve seen in a long time – a potential +100pt move.  That’s right, our advanced predictive modeling system is been calling a bottom in the markets for over 10 days now and we believe the following charts show us the that S&P will be one of the leaders in the move higher.  Therefore, we want to urge our followers to be prepared for a potential 100+ pt upside move in the ES within the next 3~5 days and to trade accordingly – we certainly will be.

This chart shows us the ADL price modeling system at work.  We can see that the ADL price modeling system is showing a very strong potential for an immediate price rally to well above 2700 on the ES.  Monday’s close is 2616.  We believe this trigger price anomaly is an exceptional opportunity for traders to identify and capture a rather lengthy upside price move over the next 3~7+ days.

Additionally, our ADL system is showing that this move may be isolated to the S&P.  Other price modeling results show more muted bullish price outcomes.  This happens sometimes when the market dynamics are diverging a bit.  Not every market moves in a similar range.  Sometimes the NQ will move 2~3x the range of the other major indexes.

Still, a +5~9% rally in the Small Caps is a decent move.  One should never complain about a solid profit on a trade that lasts less than 15 days.

MOST RECENT TRADES:

Want to know what we’re telling our valued members is going to happen next week and the many weeks that follow?  Visit www.TheTechnicalTraders.com to learn what we offer our members and to learn how we can help you spot these move days or weeks in advance.

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Political Posturing Distracts – Trade The Wall Of Worry

Recent news about the US and China posturing for Trade Deals and the continued increase in rhetoric has weighed heavily on the markets these past few weeks.  Yes, trade issues are a concern for nations and fair trade is essential to support both economies.  Yet, the news seems to be exaggerated in scale and scope when one considers the totality of it all.  Our research team at Technical Traders Ltd. has recently completed a detailed analysis of the Chinese economy including a study of the expected pressures that are mounting throughout most of China/Asia.  A property market cycle, extended debt issues, foreign capital projects, military tensions and now “trade tariffs” are adding up to quite a bit of headwind for the Chinese.

As we discussed in an article last year, we believe capital is like a living organism – always attempting to migrate to sources of better return, less risk and a more healthy environment for success.  We believed, at the time of that article, that capital would migrate into the US because of the recent election of a new US President and because of the multiple deregulations and pro-business steps taken by the new US President.  At the same time, in 2016/2017, we were keenly aware of a broader market cycle that had been setting up with regards to the early stage price advances throughout 2017.

Somewhat similar, we now believe the trade issues in conjunction with economic cycle issues, that are playing out as we write this article, will coincide to drive capital away from riskier environments and, again, towards the US as a “safe haven” investment.  We believe this will drive another wave of upward pricing pressure over the next 2~3 months starting with an early stage price rotation in the ES to near 2770.

Take a look at this ES chart with our Adaptive Dynamic Learning modeling system at work.  This modeling system is one of the tools we use to help us understand and predict future price moves by asking it to scan and research the highest probability outcomes for the price in the future.  One can clearly see the upward price channel, drawn in YELLOW, as a key source of price boundaries.  One can also clearly see the ADL predictive learning model showing prices should advance throughout early April to near 2770, then stall near this level for a period of about 3~4 weeks (we expect early/mid May), before another massive advancement in price starts near the end of May or early June.  This later stage advancement appears to predict “new highs” set in early June 2018.

Therefore, we are advancing the analysis that this recent news about technology issues (Facebook and others) in addition to the trade issues and comments between China and the US are nothing more than a distraction from the reality that we are discussing multiple nations, multi-trillion dollar economies and billions of global consumers.  In a worst-case scenario, certain products and raw materials will cost a bit more over a period of time.  These costs will be absorbed into the general economies and consumer costs over time.  Over time, traders will come to understand this as an opportunity to take advantage of depressed pricing.

 

As we apply the same type of ADL price prediction to the NQ, we can see similarities in price setup and advancement.  Additionally, we have added a time cycle component to this chart that helps to identify price rotation levels, cycle bottoms, and tops.  One can clearly see we have recently passed a massive cycle bottom formation where price rebounded off of the lower price channel.

Additionally, a longer-term price cycle bottom formed in early March.  This longer-term price cycle rotation is indicating we should see prices advance through April and May before reaching a peak in the middle of June (sometime).  The further out we attempt to predict price peaks and troughs, the vaguer the timeline analysis becomes.  We can attempt to predict an immediate price advance simply because the time cycles and ADL price predictions are showing us that price is currently below ADL predicted levels and the predicted levels are moving higher.  This tells us that price should rebound from this lower price channel very quickly in an attempt to “re-balance” with expected price levels.

 

 

One key element has been added to this next chart, the downward price channel that is currently containing price advancement.  Once this level is breached, we believe the move higher will be aggressive and sustained.  All of this analysis coincides with a number of factors that play into our analysis.  We believe that capital will continue to migrate into the US as a safe haven from foreign market crisis events.  We believe that China/Asia are on the cusp of a potential asset/general market downturn.  We believe that other nations will experience a “ripple effect” from the China/Asia rotation that we are predicting.  And we believe these events will drive further investment into the US markets and equities as a source of continued returns.

 

Overall, we do believe that at some point in the near future the US market will experience a massive price rotation that will begin a new bear market – but we don’t believe that is happening right now.  As you can see from the chart, above, we have indicated that “Caution Below This Level” would be an early warning signal that a deeper price rotation may be set up.  As long as the price stays within this major upward price channel, we should see a mean price reversion to the projected levels and if our ADL predictions hold true, we will likely see new price highs before the end of June 2018.

If you want to learn more about our research team, specialized tools for traders and how we can assist you in taking advantage of these price swings, please visit www.TheTechnicalTraders.com to learn more and to read our previous research articles.  We offer daily videos, commentary, trading signals and more to our members to assist them in profiting and preparing for these future market moves.  Our advanced technologies provide us a unique view into the future.  If you want access to our powerful tools and to become a profitable technical trader, then please visit www.TheTechnicalTraders.com to see how accurate our technology has called all of 2018 – almost to the exact day of many price tops and bottoms.

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Stock Index, Oil, and Gold Charts – Eye Opening Analysis!!!​​​​​​​

You don’t have to be smart to make money in the stock market, just think differently.
That means: we do not equate an “up” market with a “good” market and vice versa
– all markets present opportunities to make money!
We believe you can always take what the market gives you, and make a LOT of money.

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

JOIN NOW AND BECOME A PROFITABLE TECHNICAL TRADER

Small Cap Stocks Show Reversal Pattern

On April 4th in pre-market, we talked about how small-cap stocks were our favorite index because of their relative strength compared to the DOW, NASDAQ, and SP500.

On Wednesday morning stocks were set to gap sharply lower on heavy volume, and the VIX was rising fast indicating massive panic selling among traders and investors. While everyone was in a panic and worried about the trading session at the opening bell, our team and subscribers were sitting comfortably watching and waiting to get long the IWM Russell 2K (TNA 2x Fund).

Before the markets opened we showed our members our proprietary cycles analysis and price prediction model which shows a significant market bottom should take place any day. This same type of cycle analysis is how we profited 15.5% with DUST profiting when gold stocks fell in February, and 9.1% from the natural gas bottom in March and the list goes on.

Here is what we share with members of our Wealth Trading Newsletter:

GOT LONG TNA DURING BIG GAP DOWN
THE FOLLOWING SESSION

 

SP500 INDEX FLASHED SELL SHORT SIGNAL
WARNING OF POSSIBLE WEAKNESS ON FRIDAY

 

 

TNA ETF PROFIT TAKING AT 10% THE FOLLOWING DAY

 

IF THIS TYPE OF ANALYSIS AND ETF TRADING 
GETS YOU EXCITED THEN JOIN US TODAY
AND BECOME A PROFITABLE TECHNICAL TRADER!

Adaptive Dynamic Learning Predicts Massive Market Bottom

Our research team at Technical Traders Ltd. has been hard at work trying to identify if this recent downside price move is more concerning or just a rotational move.  The recent global news regarding the US/China trade tariffs as well as the fallout that started nearly two weeks ago in Technology with Facebook, Snap and others has spooked the markets.  Our additional research shows that China and Asia are extremely fragile at the moment and the global Central Bankers as well as the Real Estate market could be key to any future unraveling of the markets.

Yet, at this time we believe our predictive modeling systems and analytical systems are indicating a strong market recovery is just days away.  As we have discussed earlier, capital is constantly searching for the safest and most reliable ROI throughout the planet at all times.  We believe the current market environment will show signs that stronger, more established economies will continue to benefit from capital migration as a result of this new wave of uncertainty plays out.  The US DGP growth rate over the past 2 years has been exceptional – increasing over 200% from 2015~2016 averages of 1.48%

 

As you might have read from our China/Asia Implosion research, there are many factors at work currently in the markets and the one thing that is a constant is consumer and debt cycles.  Additionally, we have been relying on our cycle analysis, Adaptive Fibonacci modeling system and our incredible Adaptive Dynamic Learning modeling system (ADL), for much of our analysis throughout the end of 2017 and early 2018.  Today, we are going to share what we believe to be one of the most amazing analytical calls of this year – a potentially massive rally in the US markets.

 

First, our Weekly Fibonacci modeling system is still showing strong bullish signs while indicating recent price rotation is below bearish trigger levels.  Because of this last component, we are still concerned that unknown factors could derail any price recovery that our advanced modeling systems are predicting.  Yet, we believe the core elements of Capital Migration and the fact that capital will chase the greatest ROI and safest environment for future liquidity and growth indicate that the US markets are the only game in town.  The newly established price channel can be clearly seen in the chart below.

As we consider the fragility of the global markets as well as the potential that foreign and domestic capital will likely be migrating into the US Equity markets in an attempt to maintain ROI and liquidity that is simply unattainable in other global markets.  Risks are starting to stack up in many foreign markets with Brexit, debt issues, cycle rotations and other issues.  Yet, the US markets have recently been unleashed in terms of growth expectations and regulations.

This S&P Daily chart showing our ADL predictive price modeling system is clearly showing the price anomaly that is currently setting up.  Prices are been pushed much lower – below our price expectations shown as DASHES on the chart.  Yet we need to pay attention to the dramatic price reversal setting up to the upside.  Without our ADL price modeling system and the ability to identify these types of setups, we would have little knowledge that this type of dramatic price increase is about to hit the US markets.

Additionally, when we compare the ES chart (above) to this NQ chart (below), we can see another price anomaly that is setting up in the US markets.  These types of price anomalies are quite unique in the sense that they represent a price disconnect that usually results in a violent and dramatic price reconnect.  In other words, when these types of price anomalies happen, price is driven outside normal boundaries of operation for periods of time, then it recovers to near the projected price levels – just like it did in early February 2018 with a dramatic downside price correction.

 

Lastly, this SPY chart below is confirming all of our price analysis with a very clear picture of the price anomaly that is currently setting up.  External news factors have driven the current price to well below the expected ADL levels and setup what may turn out to become a Double Bottom in the process.  Yet, the most critical part of all of this is the potential of a massive 10% or greater price rally over the next 3 to 10 days.

Many people simply don’t believe our ADL system can be this accurate, yet we urge readers to visit www.TheTechnicalTraders.com to review our research articles from late 2017 and early 2018 to see for yourself how well it has worked out so far.  You don’t want to miss this move and what follows.  This move will be a huge opportunity as our analysis is showing the potential for 8 to 12+% price advances over the next 30 to 60 days.

We are writing this message to alert all of our members and followers that we are uniquely positioned to take advantage of this move while others are preparing for the potential price decline that is evident by move traditional technical analysis modeling system.  If you want to learn how to stay ahead of these moves and profit from this type of adaptive predictive price modeling, then please visit our website to learn more about our stock and ETF service for active traders and investors.

Our articles, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors to explore the tools and techniques that discretionary and algorithmic traders need to profit in today’s competitive markets. Created with the serious trader and investor in mind – whether beginner or professional – our approach will put you on the path to win. Understanding market structure, trend identification, cycle analysis, volatility, volume, when and when to trade, position management, and how to put it all together so that you have a winning edge.

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Technical Traders Outlook on Oil, Gold, and Stocks Indexes

Chris Vermeulen, from The Technical Traders, shares his outlook for the precious metals and oil by relating how he thinks the USD and US markets will move in the next couple weeks. With the USD rebounding slightly we can expect some more upside. As for the US markets, a bounce is also expected as we continue the choppy sideways movement.

Click the download link to listen on this device: Download to Listen to Show

Part V – China/Asia Economic Implosion on the Horizon?

As we, the research team at www.TheTechnicalTraders.com, continue to deliver sections of this multiple part global market research report centered around China and Asia as a catalyst for an impending global market/debt collapse, we want to make sure our readers understand this process will likely play out over many months into the future.  This is not something that we should concern ourselves with right away.  This is not a warning that “the sky is falling and we need to run to our bunkers”.  This is forward-looking research that indicates a strong possibility that China and Asia, along with many other nations in this region, may experience a credit/debt market contraction that could lead to another global credit crisis and we need to be aware of it and plan to profit from it. (Part I, Part II, Part III, Part IV)

So far, we have covered the history of Chinese property and equity market growth from before the 2008-2010 global credit crisis till now and have clearly shown that the Chinese property market is rolling over (downward) after the 2016 regulations were put into place to curtail the mass exodus of capital from within China.  We have also gone over many of the correlative economic items that point to the fact that a 15~25% correction in any one market segment, property, equity, credit/debt or global markets that result in capital risks for China, could drive a contagion effect for the Chinese investors/government.  In other words, a simple 10~20% price decline in two or more of these markets could put enough pressure on the Chinese that capital reserves could diminish dramatically as well as some level of investor panic could set in to drive a “death spiral” type of event.

Even today, our researchers visited the National Bureau of Statistics in China to continue our research and found the following :

Whereas growth rate of purchases (land), commercial sales and floor space sales and growth rate of fund for development have decreased dramatically just over the past 3+ months.  When you look at this data on a year over year context, it shows mild contraction up until December 2017.  After December 2017, the contraction in Residential and Commercial real estate activity is dramatic – almost frightening.

Throughout all of 2017, the Growth Rate of Investment in Real Estate Development averaged near 8.1%.  Beginning in early 2018, this level shot up to 9.9% – the highest level in over 13 months.

Growth of Land Area Purchased over the same period showed signs of increase over 2017 – averaging near 11.2% or so throughout 2017.  The values of this indicator near the end of 2017 were above 15%..  Whereas the 2018 levels show a -1.2% growth rate.  In one month span, the level of this indicator fell -17%?

The Growth Rate of Floor Space and Sales of Commercial Buildings continued to decline throughout most of 2017.  Starting near 25~26% and ending the year near 10% – a -15% decrease.  What we found very interesting is that Sales of Commercial Buildings increased 1.6% in early 2018 while Floor Space sold decreased 3.6%.  It would appear the Chinese central bank is willing to lend to property buyers while floor space buyers are falling off the map.

Our primary concern with regards to any type of Chinese or Asian credit market collapse is that the recent 5 to 7+ years of outward capital expansion, expanding investments outside of China/Asia in support of lofty objectives and fuzzy real/return values, may have prompted a massive sub-standard debt issue that could become very dangerous for the world.  We’ve all been reading of the issues of Non-performing assets and loans in China recently.  These types of credit/debt are the same types of instruments that led to the 2008~2010 global credit crisis.

Imagine the Chinese economy as both a local organism (contained to only the China/Asia general region), but also as an international organism (depending on external sources for essential life sustaining components – like the US and UK for purchases and the other emerging markets for growth projects).  Now, imagine these external sources experience an extended 10~35% general asset decrease over a period of 3~5+ years while the US Federal Reserve, and other central banks, tighten the credit markets and push up borrowing costs.  If China is dependent on these outside sources for essential economic sustaining components, then the economic balance they depend upon could become threatened – if not even more fragile than we have already examined.

Yet, consider one additional component of this hypothetical exercise.  Consider that the Chinese property and equity markets experience a moderate contraction event (say 10~20+% lower over 2~3 years) while the US and other established economies continue to push up the borrowing costs with rising interest rates.  We have long believed that capital migrates into the most healthy and opportunistic environments, with ease, and as capital migrates to new sources of returns, it leaves deteriorating economies in a “death spiral” for a period of time.  Capital that is unable to quickly move to new opportunistic sources may become trapped in these contracting economies for many years or decades.

The signs of this hypothetical economic exercise are already starting to become evident.  Recent China housing market data shows an incredible decline in activity and pricing – about to fall into negative territory.

China’s property market cycles have topped out as well, indicating a strong potential for further contraction in the real value of property assets.

 

Combine this with a global central bank tightening and recently announced US/China tariffs and economic positioning and we have the making of another Global Crisis event – this time originating in China/Asia as the Chinese Dragon economy bursts.

 

As US mortgage rates continue to climb above 5%, the inevitable economic tightening across the US and globe will continue.  The attempt to move China away from a US Dollar based economy and become more focused on the Chinese Yuan will, in our opinion, be a difficult transition over many decades.  We believe the Chinese/Asian markets are on the cusp of a potentially dramatic collapse and the recent news of US and Chinese tariffs do nothing more than exasperate the current issues.  Pay very close attention to the surrounding Asian markets as we continue to watch for breakdown events.

In the next, and last, portion of this series, we will attempt to present our final conclusions and expectations for traders and investors.  We have attempted to clearly illustrate our detailed China/Asia market research and the potential for a dramatic price decline in the immediate future.  We’ve outlined how this incredible opportunity for investors was setup, almost perfectly, by the global recovery efforts after the 2008-09 credit crisis.  At this point, it would appear the Chinese Dragon economy is on its last leg and we are well positioned to take advantage of the next big move.

If you find our research valuable and want to learn how you can stay on top of these moves while profiting from them, visit www.TheTechnicalTraders.com to learn more about our services and memberships.  We work very hard to keep our members aware of these types of opportunities and make every effort to deliver successful results for our valued members.  We hope to see you in the members area soon where we can share more insightful analysis and research.

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen

Part IV – Economic Implosion on the Horizon

Our previous three segments of this research report detailed not only the history of the Chinese economic activity but also detailed some of the capital flow issues that have been active in presenting this unique instance in time as it relates to a potential implosion of economic activity in China and most of Asia.  We, the research team at Technical Traders Ltd., have attempted to clearly illustrate all of the components and facets that have existed to make up a very unique scenario where traders may be able to experience a once or twice in a lifetime trade that could result in massive returns.

Within our previous posts, we attempted to disclose what we believe to be one of the most critical and potentially damaging economic events in our future.  We urge all readers to review (Part I, Part II, Part III) of this multi-part research report to bring everyone up to speed with our thinking.  Please take a moment to our earlier posts before continuing.

In this section, we are going to explore the ongoing relationship between debt levels, shadow economic functions, global equity price levels and global economic activity all coincide at this very unique time to present a potentially massive and unprecedented event in human history – a massive economic collapse across dozens of nations and resulting in a potentially cataclysmic economic outcome.  We are certain you might be asking, “how could this happen again?”.  Well, in some ways the recovery process in the US, Europe and other areas could have prompted a very unique and dangerous setup in China, India and the general Asian region.  Why are these areas uniquely at risk?  The reason is because China has become a major economic driving force in the region and has become responsible for much of the areas economic advancement.  This has been the case since the late 1990s.

In the previous section, we hinted that a downturn in the Chinese property market between 2015 till 2016 in combination with an equity price decline in excess of -15% to -20% and an outflow of capital from the Chinese economy resulting in a massive, $1 trillion, decrease in the Chinese capital reserves.  How could something like this result in a total of $1 trillion in reserves to be depleted?  The answer is that pressures on the economy at that time resulted in a number of general and corporate debt failures that, if left alone, would have pressured the entire Chinese financial/banking system into a possible crisis.  Therefore, the Chinese had to make the problem go away and they did this by diving into their reserves to wash away the debt issues while continuing to prop up their economies and banking institutes.  This $1 trillion reserve decrease was the “patch” that was needed to make sure the economic collapse was averted.

We have been watching the news and related investment research for years attempting to stay on top of these moves and keep our members aware of the potential for a market correction/reversal.  Part of our research is now warning us that we need to begin to prepare for the eventual crumbling of the economic footing of the global markets and we believe China/Asia will play a massive role in the next big move.

Chinese debt to GDP is massive compared to the US or other developed nations.

And China’s debt just keeps rising…

By our estimates, the current Chinese debt to GDP levels have increased by nearly 100% (to somewhere above 350% of total annual GDP.  Additionally, current levels are well in excess of 200% to 300% of levels found near 2005 to 2007.  If we consider 2014 levels alone, the time just before the massive $1 trillion reserve decrease, debt levels today are nearly 45% larger than debt levels in 2014.  Therefore, the fragility of the Chinese economy in terms of debt constrictions related to any proposed property market price rotation and/or any capital/equity market price correction, particularly if they happen at the same time (like before), could present a very unique collapse event.  It is our opinion that the current debt levels make the fragility of the Chinese economy even more sensitive to property market and/or equity market disruptions.

China’s shadow banking, particularly WMP (Wealth Management Products), Entrusted, Trust and loans by Financial Firms present a huge issue in regards to stability of the Chinese credit markets.  Over 4~5 short years, over $30 Trillion Yuan in these types of loans have been originated – a massive 400% increase on average.  The individual component levels range from a 100% increase to well over 650% increase.

Remember, these financial (credit) instruments are rooted in the projections that borrowers have the ability and capability to repay these loans, or that the projects they back will result in substantial real value at some point.  The loan origination data, below, shows a decent increase just after the US Presidential elections and we are certain this recent rally in the US and global markets has eased some pressure away from the Chinese and other Asian markets.  Yet, the recent price rotation (February and March 2018) could be “just enough” to crush the floor in the Chinese/Asian markets waiting for that last pin drop to start the crumbling process.

It is our belief that any contraction in any single market, Chinese property, Chinese equities or Chinese debt could likely be contained as long as the contraction range is less than 15~25% from the most recent highest valuation points.  Our range of 15~25% is just that, a range that should be considered extremely dangerous for the Chinese and Asian markets.  Should two or more of these market react in a similar manner, decreasing by 15~25% over an extended 12~24 month period, we believe the pressures of this type of move could be catastrophic for China and parts of Asia.  The simple fact that two, or more, capital markets that experience this type of valuation decline would likely put an additional $1 to $2.5 trillion (or more) in reserve pressure on the Chinese and local markets.

Additionally, this type of valuation pressure would likely result in liquidations of foreign assets at near fire-sale prices to move these asset into cash as quickly as possible.  This type of market action is called a “death spiral” for a reason.  As panicked sellers dump assets to get into cash, they are driving the property and equity valuations even lower in the process – causing others to become panicked sellers and perpetuating the cycle.  A death spiral event is one that sparks up overnight, causes runs on banks as people try to get as much cash as possible and causes wildly unreasonable price valuations simply because people are desperate to unload assets that could destroy their balance sheets.  It is better to sell it for X than to hold onto it and watch it destroy any existing capital I may currently have.

Now that we’ve gone through quite a bit of detail in describing what could happen, allow us to go into just a bit more detail with our next article showing the current equity markets and the current property markets in these regions in addition to more of our predictions.

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

If you like what we offer, please visit to learn more about our trade alert services and research.  We put these types of research posts out to the public because we believe it is our duty to alert and warm traders of opportunities and risks that others may not be talking about.  We try to make it simple, but in this case, the details are more complex and require a bit more effort on our part.  We welcome you to join our valued members and become part of our team of professionals while we navigate these markets and find opportunities.  Please visit www.TheTechnicalTraders.com to learn more.

PART III – China/Asia Economic Implosion on the Horizon?

Thank you for following our multi-part research (Part IPart II) into the possibility of a China/Asia market collapse and our hypothetical analysis of what that event might consist of and how it may play out.  So far, we have discussed the Chinese housing market rotation as well as the recent trends within the past 7+ years, expansion and foreign investments made by many Chinese and successful Asian investors.  All of this research raises some interesting questions for us to consider.

  • Just how much risk exposure have these Asian/Chinese investors set themselves up with?
  • How deep of a property price or equity price decline would be enough to set off a panic mode?
  • How tightly are the assets in China/Asia associated with equity/debt that was used to explore foreign investments and additional debt?
  • How varied and deep do these “debt rabbit holes” go in terms of derivative assets, layered debt and more?
  • How has the expansion of credit/debt in China expanded out into other foreign markets?
  • How has the US and other central bank easing policies fostered a risk-taking role in Asia over the past 7+ years?

And finally, the BIG question:

What would it take for China/Asia to move from an investments/risk-taker mode to a protectionist/crisis mode?

One of the first things we need to consider is the expansion of credit that originated after the global market credit crisis (2008 to 2010) was still evident in China and Asia – although not quite as deep in form and structure as it was in the US, Canada, Europe and others.  Our previous research reports show that China’s property market and equities markets were not subject to the types of deep declines the US and other established economies experienced.  This was likely because China, at the time, was still experiencing a middle stage economic expansion period where China could continue to fund and export enough raw and finished materials to keep their economy running at 6%+ without much issue.  Of course, after 2015~2016, China was able to accomplish this by devaluing their currency, expending billions in reserves to build and product excess cities and finished material as well as foster and finance hundreds of large-scale projects throughout the globe (Africa, Europe, Asia, Mexico and South America).

In other words, the growth that China is experiencing is almost a shadow of the real growth because it has been enacted by shadow banking, shadow debt and leveraged expenses based on reserves while decreasing the Yuan valuation in order to maintain this economic shell game.  As long as their markets don’t contract more than a certain amount and investors are able to continue rolling their capital into this shadow banking system without any fear – nothing will likely change.  But when it does change, it should be very dramatic and quick.

Recent Chinese economic expansion has been partly a result of renewed global economic activity as well as the capacity of the Chinese government to use capital reserves to support their economic transition process – as evident by the $1 trillion in capital reserves that vanished between 2015 and 2017.

When one considers the recessionary economic cycles chart, above, as well as the US Presidential election cycle, one could explain this contraction as a general global contraction in relation to the uncertainty of a US election.  Yet, the size and scope of the capital reserve decline (over $1 trillion) within the scope of an expanding global economy, as well as expanded investment projects within China, means only one outcome could result in this reserve decline – reserves were used to support banking and finance facilities in an effort to avoid a collapse of credit/debt mechanisms.

These are tell-tale signs that the Chinese, and likely other Asian/Indian countries, are trapped in an expansive credit/debt environment that is likely very similar to what happened in the US/UK to set off the 2008~2010 global credit crisis.  The only difference this time is that it appears to be the Chinese have run themselves into this debt trap and the fragility of their economic footing is showing signs of cracking.

What would it take to cause the floor to crumble under the Chinese/Asian economies?

A deep (-32%) price correction occurred between 2015 and early 2016 that coincides with the reserve decrease as well as the property market price decline.  As our research shows, this also coincides with a mass exodus of capital from within China to outside sources (USA, Canada, UK and elsewhere).  If a decline of this nature in equities that was also associated with a property price decline resulted in a $1 trillion decline in China’s reserves, think about the potential chaos that could be associated with a new property price decline associated with an equity market decline.

The next portion of this report will explain the magnitude of this potential move in very clear relative terms and explain why we believe all traders should be aware of this move as it is setting up.  We hope you are enjoying this research and the detail in which we are bringing this to you.

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

We believe this move will present tremendous opportunities for all traders and we believe www.TheTechnicalTraders.com is the only source for this type of detail and success.

Tomorrows Double Dip (stock market crash) and Rally

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

 

We believe this move will present tremendous opportunities for all traders.