Upside DOW Breakout May Be Just the Beginning

At this point, all we can say is “Wow – did you see that breakout?”.  If you have been following our analysis, you already know we’ve been predicting this upside price move for over 4 weeks with our specialized price modeling systems, cycle analysis models and other specialized trading tools.  Last weekend, we posted very detailed analysis of the Elliot Wave and Fibonacci price levels that suggest we could see another upside price move that no one is expecting.

Please take a minute to read our two recent Elliot Wave research posts before you continue reading this post.  We want to make sure you understand the components of this price setup and what we believe will be the most likely outcome.

The upside breakout in price on Monday actually originated with an upside gap Sunday night.  This upside gap was likely the result of a combination of factors, yet it supported our analysis that the US major markets are poised for a dramatic upside price move soon.  Our Elliot Wave analysis suggested we could be setting up for a Wave 3-d upside price move that will end with a corrective price move sometime in early/mid 2019.  In order to confirm this analysis, we have to see new all-time price highs established before the end of 2018 with a solid upside price rally in place.

While the YM (DOW) was the only US major to show a clear upside price breakout, we believe the other US major markets will follow along soon enough.  We have highlighted what we believe is a critical support zone on this YM chart to try to illustrate that price rotation is normal.  We expect to see a 1~2% price rotation throughout this upside move that is completely natural and healthy for the markets.

 

Again, this is completely natural as the YM (Dow Jones index) is tied to the DOW Industrials and the Transportation Index which are breaking out this week. A breakout move like this in the YM suggests that the overall US economy is strengthening and that the future expectations are good that increased levels of transportation of goods will unfold. In our next post we will go into detail on these two sectors and show you some new opportunities emerging.

Additionally, we wanted to show you this NQ chart that is waiting for breakout confirmation from price.  Sometimes, the US majors do not always move in unison.  There are times when the S&P or the Nasdaq will move with greater velocity while the other US majors appear to move in a more muted manner.

The NQ, being tech-heavy, relies more on earnings and revenues from the FANG group.  A move higher in the NQ would indicate that future earning and revenue expectations are strengthening.  This is something we believe will happen in the near future as we expect the NQ to follow the YM with an upside price breakout very soon.

We are still very early in this trading week and we have lots of time for this move to unfold.  We can help you find and execute better trades with our advanced market timing and trade setups for active traders.  Our members already know what our predictive modeling systems are suggesting for the next 5+ weeks.

Our 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.

Become A Profitable Technical Trader Today!

Click Here

Fibonacci And Elliot Wave Predict Breakout Highs

There is nothing more exciting to us than reading the price action of the charts to see what will happen in the future.  It becomes even more exciting when we find something that everyone else seems to have missed.  Right now, traders need to pay attention to our research because we believe we have correctly identified a breakout pattern that is setting up in the US majors – and everyone seems to have missed it.

Recently, our research team began a quest to properly identify the Elliot Wave structure of the US majors in relation to the recent price congestion after the February 2018 price collapse.  You can read our earlier research post to better understand our conclusions.

Our research shows that price could be setting up in a very unique extended Wave C pattern that would indicate the recent price correction in the markets could be a Wave D price rotation setting up a “Diagonal Price Breakout” pattern.

How is this analysis important to all traders and investors?  It is critical to understand that if the majority of market analysts believe this is a Wave 5 Top Setup, believing this is an ultimate top, when the reality is this is an extended Wave 3 (2.618 x Wave 1) and possibly the Wave 3-d formation, the long-term analysis is dramatically different. Instead of an “ultimate top” setup, this analysis now becomes a “price correction in a longer-term upside trend with much greater upside potential to go”.

Let’s get into the details of this analysis to better illustrate our thinking.

Without going into the details of how Elliot Wave theory works or the fractal price rotation balance that is essentially correlated to Fibonacci price theory, we want our readers to focus on this “Ending Diagonal” that is common near the end of wave 3 or “always in wave 5 of a motive wave sequence”.  The source for this information and image below is from World Cycles Institute.

 

BULL MARKET MOTIVE ENDING DIAGONAL PATTERN

The Bull Market Motive Ending Diagonal pattern is the one that caught our attention as we attempted to better understand the current market price structure in the SPY chart.  Pay very close attention to this pattern because we strongly believe most of the major analysts have completely missed the structure of price in relation to the upside potential within the US markets.  As you are likely aware, our advanced predictive modeling systems have been warning of a price bottom and much higher price predictions over the past 30+ days.  This prediction does not settle well with many traditional analysts because they seem fixated on the Wave 5 ultimate top analysis.  We believe they are wrong and we will show you why – keep reading.

This type of Ending Diagonal is very common near the end point of a larger Wave 3 formation – often setting up a Wave 5.  This type of Ending Diagonal is rarely seen as a wave C. (source : http://elliottwavepredictions.com/wave-notes/).

Remember, we believe most of the best analysts on the planet have missed this setup and believe the early February price top is the “ultimate wave 5 peak” setting up a much broader downside price move.  Here is why we believe these analysis are wrong.

 

INCORRECT SPY DAILY CHART ANALYSIS EVERYONE IS USING

This SPY Daily chart shows what most analysts would identify as a proper Elliot Wave count if they understood the Ending Diagonal pattern that was setting up.  This is incorrect because the lower price rotation (iii and iv) are structurally invalid based on Fibonacci time/price structure.  We believe this is one reason why so many analysts have misinterpreted this current price pattern.

 

CORRECT SPY DAILY CHART ANALYSIS

The correct analysis of this pattern is shown below.  The difference, in our opinion, is that wave “iii” is still in the process of forming and will ultimately breakout to new highs before forming a short retracement and rocketing much higher to complete the ultimate wave 5.

Please take notice of the CYAN price line drawn by our researchers.  Structurally, this price level must be reached in order to complete a wave “iii”.  We believe once this “new price high” level is reached and the market price retraces, the retracement level will likely be about 3% and stall near the upper BLUE wedge resistance line (near $278).  The current price consolidation, over the past 4+ days, is nothing more than temporary resistance before the upside breakout to complete the “iii-c” price peak.

Ultimately, as we suggested in our earlier research post Elliott Wave Prediction for US Stocks, the final Elliot wave analysis of this rotation may take many more months to conclude with any degree of accuracy.

The point of this article is that this Ending Diagonal pattern is common near the end of wave 3 and near the beginning of wave 5 – yes, we understand this point.  Yet, our question remains “is this the end of a 5-leg sub wave 3” or “the end of a major 5 leg (ultimate peak)” formation?  Our belief is that the answer is this is the end of an “extended wave C” that will likely result in much higher price activity over the next few months/years.

3

There is one key to understanding our analysis and our future expectations – recent price lows in the SPY must not be breached for our analysis to remain valid.  These recent low-price levels are $254.67 & $252.92.  If our analysis is incorrect, these low-price levels will be the first levels to be breached on a market price reversal.  If our analysis is correct, price will never come near these levels and will continue to accelerate higher as a new wave 5 is created.  If we are correct, there will be a lot of short sellers that get caught in this failed analysis and this move could be explosive and trigger that signature blow off/capitulation topping spike in price that ends most bull markets.

If you like our work, want our trade alerts, and want to support our efforts, please visit www.TheTechnicalTraders.com to learn how we can help you stay ahead of the markets.  We live for this type of work, research and helping our members find profits in the markets.  We believe our research is top-tier and we know we provide value to our loyal members.

Elliott Wave Predictions for US Stock Market 2018 and Beyond

Recently, an interesting concept was discussed among our research team – a very interesting concept about the markets.  As many of you know, part of the process or research is to test conclusions that may lie outside common thinking.  While we were discussing the Fibonacci and Elliot Wave structures of the US market using longer-term charts, one item kept intriguing our research team.  This one item could change everything in terms of how we are thinking about the US markets and Global markets.

Almost everyone knows that Elliot Wave (EW) theory consists of Five Waves to complete a major EW Cycle.  The most common form of EW price cycles is A, C & E (or 1, 3 & 5) waves advancing and B & D (or 2 & 4) waves declining for an uptrend.

Chart courtesy of stockcharts.com

The opposite is true for a downtrend.  It is relatively common knowledge these types of price formations make up almost all of the markets price moves.

Chart courtesy of stockcharts.com

Yes, there are variations that can sometimes come into play, like Triangle formations, Zig-Zag formations, Regular, Expanded, Contracting and other rarities.  Yet, many people don’t understand the mathematics requirements that apply to EW and Fibonacci as a method of constructing proper EW structures.

The question proposed by one of our research team was “what if this recent move higher (from 2011 to current) is nothing more than an extended wave 3 and not a wave 3-4-5 formation.  What if this 166.94% rally in the SPY is nothing more than an extended Wave 3?  This question began a quest within our team of research to try to identify if this concept had any validity – and the results are surprising.

 

Basic Concepts of Major and Minor Wave Formations

Before we continue, allow us to explain some of the basic concepts of major and minor wave formations as defined by Ralph Nelson Elliot and Robert Prechter.

  • The basic 8 wave form is fractal in nature. It is operating at all degrees (chart timeframes) simultaneously.
  • In most impulses, there is a 5-wave pattern which unfolds adhering to the following rules:
    • Subwave 2 does not overlap the start of wave 1
    • Subwave 4 does not overlap the extreme of wave 1. Also, as a strong guideline, it is not advisable to assign a wave 4 label if there is any overlap of the territory of wave 1 during the 4th
    • Subwave 3 is not the shortest of 1, 3, & 5.
  • Impulses are typically bound by parallel lines
  • In impulses, one of the waves 1, 3 or 5 will likely extend substantially in comparison to the other two. In the stock market, wave 3 is most likely to extend, whereas, in commodities, wave 5 is the more likely to extend.
  • Rarely, a wedge-shaped diagonal appears as wave 1, A, 5 or C. It is sometimes referred to as a diagonal triangle.  In a diagonal, both trendlines slope/tilt in the same direction (both up or both down).  Most often, the trendlines converge (get closer together) as they extend.  Sometimes they diverge (get further apart with time). Concepts courtesy of Elliott Wave Predictions

 

One aspect of the EW rules that intrigued us the most is that “Subwave 3 is not the shortest of 1, 3 & 5”.  This facet of EW in combination with the concept that retracement waves typically contract to 38.2% of the previous impulse wave provided our research team with an impetus to consider alternative wave counts.

What if, this chart below, showing a completed EW 5 wave cycle where wave 3 & 5 are nearly identical in length is structurally incorrect.

 

What if the real EW count is as we are showing in the next chart below – where the current upside wave (originating near the end of 2011) is nothing but an extended wave C setting up a push higher.  Remember, wave 3 (in this case wave Ciii) can’t be the same length as wave Ci.  In the chart, below, the yellow arrows drawn for Ci and Ciii are identical in length.  It could be concluded that, if our hypothesis is correct, wave Ciii is not completed yet and will extend further to the upside (if it develops into a complete 5 wave structure) or wave Ciii may be near an end because it is already 2.618 x wave A and has completed a structurally relevant ABC formation.  Traditionally, wave 3 is the longest wave of the ABCDE wave formation.

The one aspect of wave C in our research that confounds us is that neither of the corrective waves (wave Cii or the current pullback near wave Ciii) come close to the 0.382% pullback expected by corrective waves.  This one component of our research is leading us to believe the upside in the US majors may be dramatically underestimated by most market analysts.  If our research is correct, then this current market pullback, or corrective wave, may be a “combination sideways minor correction of wave C”.

 

Our predictive analysis is clearly indicating US majors should continue to push higher over the next few months.  This analysis is counter to a completed EW 5 wave cycle.  In other words, the US market should not attempt to target new highs if this recent high is the completion of a total EW 5 wave cycle.  Therefore, it is our opinion that we are looking at an extended (2.618x) EW wave 3 move that will result in a correction at some point in the future (forming wave 4).

We will follow up this research article with another, more detailed, one soon.  We believe we have accurately understood the EW pattern formations that are currently setting up in the market and we believe there is a strong potential for an upside breakout to attempt near all-time highs in the market before any start to a corrective wave.  We believe far too many people have failed to understand the structure of this major EW pattern and have concluded this is an EW wave 5 completion.  There are going to be a lot of short sellers getting caught in any upside move as the Upside Triangle breaks and prices push higher.

One condition for all of our analysis is that the low at corrective wave 2 (@ $254.67) must hold as price support.  Failure for the price to hold above this level means we have a failure in our proposed analysis and we would fall back to a potential that this corrective move could fall further to complete a 0.382% (or greater) wave pattern.  It all depends on price and our predictive modeling systems are showing us that price should advance over the next few weeks, thus we believe our analysis is correct.

As we close out this research post, think about what this means to us as traders.  A large portion of the globe may be setting up for a massive market top formations – setting up short positions and leveraging their positions for what they believe could be a massive downside move.  Yet, if our analysis is correct, this downside move may be over and we could be setting up for a broad upside move in the US markets to create a further extended wave C or a new wave E.  If we are correct, the pressure put on these short sellers is going to be tremendous and the markets could skyrocket higher.

We’ve been discussing “capital migration” recently to highlight how fragile certain foreign and Emerging Markets are and how capital will quickly move into more stable economies/markets that can generate solid returns.  It may be that we are setting up for a massive wave of capital migration into the US equities markets and the US Dollar that everyone is failing to understand or foresee.  Time will tell if we are correct.

If you want to know how we are helping our members and the specialized proprietary research we offer to keep them ahead of this market, please visit www.TheTechnicalTraders.com. Last weeks trade resulted in a +18% profit for our members.  Once you realize that we have been calling these market move perfectly over the past few months, you’ll understand that our membership costs are very nominal compared to the benefit and information we provide to you each day.

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.

Chris Vermeulen

Natural Gas Flashes Buy Signal with Cycles Confirming

Our research team has been following the energy sector quite intensely with Oil and Natural Gas making an impressive move.  A little known seasonal pattern in Natural Gas has setup recently and we have alerted our members to this play which is already up over 16%.  Our advanced price modeling systems and Adaptive Dynamic Learning Cycles have recently triggered another buy entry point which we share in this article but first look at the seasonal chart showing the month which Natural Gas is generally strong.

This seasonality table refers to particular time frames when commodities are subjected to and influenced by recurring tendencies that produce patterns each year.

 

It is our belief that Natural Gas will continue to climb higher moving well above the $3.00 level before the end of this month as well as potentially pushing well above the $3.20 level on continued price advances in energy.

Quite a bit of concern globally is driving energy supply fear that is pushing energy prices higher.  This unique seasonal pattern indicates the potential for some strong upside price moves.  We believe smart traders were already positioned for this move weeks ago, yet there is still quite a bit of opportunity from the recent entry point. See the left side of chart; below with oversold pullbacks.

 

A price move from current levels to above $3.00 would reflect an additional 4~6% price gain and a advance above $3.20 would reflect a 11% price advance.  Again, our predictive price modeling systems and cycle modeling systems are showing us this has the potential for quite a bit more, but we can only estimate the $3.00 to $3.20 level is a sufficient upside target for this initial move.

If you would like help finding trade triggers like this and help knowing what to expect each day in the markets visit us at www.TheTechnicalTraders.com. We’ll help you to understand the market dynamics as the markets move, we’ll provide you with a comprehensive daily market video to show you what to expect and we’ll continue to provide you with this simple yet highly effective market research and analysis to help you stay ahead of the market moves.  Our current trade in UGAZ is up 16% and likely going much higher.  It just takes one or two of these types of trades to pay for your membership for years.

Our 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.

 

Indexes Fill Tuesday Price Gap Now Where?

The 30-minute chart price pattern with a large gap down in price on Tuesday morning created what we call a “Gap Window”. Almost all gaps in the SP500 get filled eventually, and both the top and bottom areas of a gap window become short-term resistance or support.

A three-wave a-b-c correction is generally what causes stop orders to be run, panic selling, and creates a pivot low. This is displayed with a red line on the chart.

If this very short-term pattern unfolds it would create fantastic entry point because several different types of analysis come into play at the same time and price. The green 20-day simple moving average and our short-term cycle projection would act as support and a cycle low.

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.

PART II – Vix Cycles Point to Market Correction

Recently, we authored an article about Fibonacci price levels in which we referred to a term called “Fibonacci Price Ladders”.  This is our own term, as far as we know, and we used it as a way to attempt to explain how price operates within the Fibonacci theory.  Our objective was to allow the reader to think of a standard ladder and how each ladder rung allows the climber to advance (move up) or decline (move down) using the ladder.  We hope it helped all of our readers to better understand the concept of how price rotates within a trend to establish longer-term price trends.

Within this post, we are going to revisit this Fibonacci Price Ladder concept to show you how recent price rotation may be setting up for a new, and possibly historical, price advance in the near future.  We urge our readers to revisit our earlier Fibonacci Price Ladder research to refresh your memory should you have any questions about this research.

 

Daily DOW Index Chart

This Daily YM Mini DOW Index chart shows the price rotation, downward, that moved directly to our Fibonacci support level near 24,600.  Technically, this constitutes a “new price low” formation and could foretell the end of this price correction before a new price advance begins.  If you remember, our prior analysis has indicated a very strong potential for a very strong price move higher from recent lows.  Yes, we expected this move and actually protected ourselves and our members by pulling profits in some trades near the highs last week.  Now that this move appears to be nearing completion with a proper Fibonacci price rotation, we believe a new price bottom will form quickly near the 24,600 level (with massive support existing above 24,400) driving a new price advance within days.

 

Daily ES Chart

This Daily ES chart helps to confirm the Fibonacci Price Ladder analysis by showing an even deeper “new price low” price rotation recently forming.  Massive price support exists in the ES between 2684 and 2700 and we believe this level will hold to form a price bottom/base before a new leg higher will advance price to new highs.

This Fibonacci Ladder process is simple to understand, once a new price high or low is established, any failure to continue to set new immediate higher highs or lower lows constitutes a potential failure of the current price trend.  So, if this recent low price move is a move to near a market base/bottom, then we should expect an upside price rotation to set up fairly quickly over the next few days.  We believe this will be the case and that traders should already be looking for new entry levels for the next leg higher.

 

Daily VIX Chart

This last Daily VIX chart showing Fibonacci Time/Price cycles shows that we are nearing a major cycle date, with resistance just above the current price of the vix.  We should expect the current downside stock market price to possibly extend downward, briefly, to establish a low price rotation and then reverse higher to begin a new upside price leg.

It is our belief that the VIX will stall near the resistance level and fall back to near or below $11 as the new upside price advance in the US majors extends to near all-time highs.

 

Currently, we see this price rotation as a healthy normal price rotation that is essential to a further price advance.  Price MUST attempt to rotate while establishing new price lows in order to establish new price highs.  This is healthy, normal price rotation that we believe will result in a larger price advance in the immediate future.

We are already searching for new entry triggers to take advantage of the future price leg higher.  If you are searching for ways to profit from this, and other future price moves, then visit www.TheTechnicalTraders.com to learn how we can help with Daily video content, extensive and proprietary research and price modeling, detailed trade triggers and analysis and more.  Our job is to assist you in becoming a better and more successful trader.

Our 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.

Fibonacci Price Ladder Points to Higher Prices

We continue to appreciate the positive and supportive comments we are receiving from our followers and members.  We can’t tell you how pleased we are that all of you are enjoying our efforts to provide you with the best market research and analysis we can offer.  Today, we are highlighting some important Fibonacci price levels and how they should continue to drive price action over the next 3~10 days or so. Let’s get started.

This first Daily ES chart shows a pretty big picture of the Fibonacci price legs (the Fibonacci price “ladder” as we will refer to it in this article) and how these legs work in tandem with other types of support and resistance channels/level as price expands or contracts within new trends.  As you probably remember, one of the key factors to understanding Fibonacci price theory is that “price MUST attempt to establish new highs or lows at all times”.  Therefore, as we can see by recent price action, new price highs have been reached.  This is a clear indication that a new bullish trend is in place and we should now be searching to key levels to enter new trades.

We know the massive support zone exists below 2620 in the ES and we know a critical price channel exists between 2625 & 2660.  We don’t believe price will retrace enough to threaten any of these levels.  We believe price may retrace to near 2700 before finding additional support and developing a new base for a “ladder move” higher (likely to near 2855).

 

To confirm this analysis lets take a look at the YM (DOW futures) Daily chart below as well.  The Daily YM chart, below, paints a fairly similar example as the ES (S&P500 futures) chart, above).  Yet, this YM chart shows that the recent high price is very close to the Fibonacci 100% price level (a “ladder rung”) and should find moderate resistance near this level (24993).  We expect price may rotate lower to near 24598 before finding support and establishing a quick, possibly V-shaped or large lower wick type price rotation, bottom that would propel price higher to the next Fibonacci ladder leg near 25937.

 

This, zoomed in view of the Daily YM price chart below with our Fibonacci price levels drawn, helps to better understand what we expect to see.  As we keep trying to instill into your thinking, “price MUST attempt to establish new price highs or lows as it continues to develop trends and trend reversals in Fibonacci Theory”.  Therefore, price MUST attempt to rotate lower after establishing a new price high (as it has done recently) only to FAIL to establish a new price low (which would be a move to below 23460 – a long way away).  In doing so, the failure to establish a new price low (through price rotation) would indicate that price MUST do what?  That’s right, establish another NEW PRICE HIGH.

It is our belief that any price rotation below 24700, when price appears to be holding or forming support, would be a tremendous opportunity to identify new long entries.  Of course, the deeper the downside move, the better the entry levels will be created, but we don’t believe this future downside price rotation will be very deep – possibly just below 24500 as the lowest points for the YM.

 

If you have been following our research and analysis, you know we called this move nearly a month ago and have been sticking to the analysis of our advanced modeling and predictive analysis systems.

We offer some of the most complete and informative research anywhere and we invite you to visit www.TheTechnicalTraders.com to learn how we can help you find and execute better trades.  Your subscriptions help us continue to deliver these incredibly valuable research reports and we urge you to consider how our work has helped you over the past few months.  If you feel our work is superior and valuable, then support our research team and start using our research. 2018 is proving to be a fantastic trading year and we urge everyone to join us in creating greater success.

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.

Chris Vermeulen

Metals and Miners – The Sleeping Giant Trade

Throughout this year, many analysts have focused on the price of Gold, Platinum & Silver markets for insight to the fear levels that exist in the global markets.  Demand for Gold and Silver have been near historically high levels for the past 12+ months and the ratio of Gold to Silver has continued to show that Silver is extremely undervalued in relative value to Gold.  We’ve highlighted these facts in previous articles to our readers.

The recent news regarding economic and political concerns regarding a wide range of Emerging Markets and established economies, we believe, has continued to drive upward price pressures in the precious metals markets.  We feel the Metals & Miners are setting up a unique opportunity for patient and skilled traders/investors.  Possibly, the opportunity of a lifetime if our analysis is correct.

 

2015 Gold Miners – Weekly NUGT Chart Pattern

Near the end of 2015, NUGT was setting up a congested wedge formation, that lasted 7 months, with clear support near $20.  This pennant formation retested support over 6 times before a “wash-out low” price pattern formed as price attempted the eventual breakout.  These types of “wash-out” patterns are common as price begins to accelerate into new trends.

Washout lows tend to flush out stops and positions from traders that have their stops too tight for the markets.  In this manner, the market is rotating in a matter to reaffirm support before the new bullish trend extends.  Notice how quickly price expanded in this uptrend and how price moved above the $30 level in just a week before continuing well above the $120 level.  We are illustrating the explosive capabilities of a congestion trade setup like this – well over 500% from the $20 support level.

 

2018 Gold Miners – Weekly NUGT Chart Pattern

Take a look at a current 2018 NUGT chart (below) and please pay very close attention to the similarities between these two charts.  We can’t stress how important it is to understand the opportunity we are showing you today with regards to these patterns and the potential for traders to take advantage of this setup.

The current price pattern setting up in NUGT is another congested wedge formation with support near $22.  This pattern has been setting up in the pennant formation for over 12+ months.  Price initially rallied from the initial bottom formation (December 2016) and established a price peak @ $54.80 (highlighted in RED).

Afterward, the price has continued to rotate between support and the downward sloping resistance channel presenting traders with a very extended congestion pattern.  What interests us the most about this current pattern is the length of the congested wedge pattern.  We believe the upside pricing pressure that is being built up within this wedge could be 2x to 3x (or more) the pressure from the 2016 upside breakout.  This would indicate that NUGT could rally well past the $100~140 level when this breaks – again a 500%+ price advance.

 

2018 Gold Miners – DAILY Chart Pattern

This Daily NUGT chart shows one of our price modeling systems and shows it has clearly indicated a new bullish trend began on April 10.  Lower price support is currently near $24 and ultimate support is near $22.  You can see from this modeling system chart that any upside breakout above the CYAN Standard Deviation channel would be very positive within this bullish trend and likely prompt a further upside price rally.

Clearly, any chance at a new trade entry near or below $24.50 is acceptable with risk near $2 per share.  Remember, if this breakout/rally happens as we expect, a “wash-out” price rotation may precede this move where stops need to be soft in nature.  Support is near $22, but the “wash-out” price rotation may attempt to test price levels below $22 before the massive upside rally begins.  So be aware that the smart play is to understand the risk of this trade and play it knowing a “wash-out” price rotation may happen as price breaks these channels.

It is not often that the markets provide traders with these types of setups.  These are the type of trades that can make 400~500% or more on a single trade over 4~6 months.  We focus on finding opportunities for our members and delivering success for them every month.  Members to our Wealth Building Newsletter have already been alerted to this trade setup, and others and will know when a position should be initiated.

Our other recent trade alerts, that are up well over 10% each are UGAZ, FAS, and TECL.  These have been rocketing higher – as we predicted.  On Friday we closed our TECL position which hit our resistance level and we locked in the 18.3% gains with our members.  The single point of success for all of us is to manage our assets well in an attempt to achieve greater long-term success.

If you’ve been following our research and analysis and find it valuable, please visit www.TheTechnicalTraders.com to support our research team and become a valued member.  The markets are full of incredible opportunities like this and we focus on delivering critical market research, analysis, Daily video content, detailed trade triggers and continued support for our members.  We know you will not find anything like our proprietary price modeling systems and adaptive predictive modeling systems anywhere else.

Our 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.

Congestion Basing Can Present Incredible Opportunities

Our research team wanted to alert our followers to the incredible opportunities that continue to present themselves in the current market.  While many people have been overly concerned about a market top and price rotation in the US majors, the Energy sector and many others have seen incredible price moves.

Take a look at this XLE chart as an example.  Yes, we know that Oil has rallied from about $60 to closer to $70 recently, yet we want you to focus on the price pattern that setup this move in XLE.  Specifically, we want you to focus on the Multi-Month Base pattern in price between early February and early April of 2018 as well as the upside breakout that followed.

In true technical analysis theory, price tells us everything and indicators assist us in relating current price movement/action to historical price movement/action.  This simple chart illustrates how price setup a top/resistance zone near $78 in early January 2018, broke lower in early February, then setup a multi-month price support base for nearly 60+ days.  This price support base because an extended bottom formation and a “price support zone” by testing and retesting the critical $65~66 price level while establishing a series downward sloping high price peaks.  When it finally broke free of this support zone, near mid-April, price skyrocketed higher (+17% or more).

 

With the stock market showing all the signs that it is in the late stage of a bull market this is when traders need to start identifying the hot sectors or high probability continuation patterns. Why? because we have entered a stock pickers market. It’s simple really, it means all the stocks are not going to be rising together and if you put your money into the wrong sector you could lose money while the markets rise.

So where is the next hot sector? we believe a very similar pattern is setting up in the IYT (Transportation Index) just like we saw on the first chart of the XLE. We feel an upside breakout move is likely to happen within the next two weeks.

The setup of this price pattern is a bit broader and more volatile than the XLE Multi-Month Basing pattern – which means the IYT upside breakout could be more volatile and dramatic in form (possibly driving price +10% to 20% over an extended period).

Additionally, the high price peaks are setting up in a similar format with lower high price peaks over the span of the base.  Support near $182.50 to $185 is critical and we believe the eventual upside breakout will be an incredible opportunity for traders.

 

This breakout will coincide with much of our other analysis of the US major markets which we have been sharing recently.

Our other recent trade alerts, that are up well over 10% each are UGAZ, FAS, and TECL.  These have been rocketing higher – as we predicted.  On Friday we closed our TECL position which hit our resistance level and we locked in the 18.3% gains with our members.  The single point of success for all of us is to manage our assets well in an attempt to achieve greater long-term success.

If you have not seen or read much of our recent analysis, please visit www.TheTechnicalTraders.com to learn more and review our work.  Our exclusive members are already positioned for many moves like this in the markets and more continue to form each week.

We urge you to consider joining our Wealth Building Trading Newsletter as a member to receive our incredible insight, proprietary research, and trade alerts to assist your own trading success.  We have delivered insights and research to our members that have clearly informed them of where we believe the markets are headed for many months in advance.  Imagine how powerful that kind of research could be for 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.

Chris Vermeulen

Stock Indexes Stuck Under Resistance What Next?

As we close out this very successful week of trading, we wanted to provide some additional analysis and research regarding our belief for what next week holds.  Before we get into the analysis for next week, lets take a bit of time to recap this week’s success.

Our other recent trade alerts, UGAZ, FAS, TECL, SIL and GDXJ have all been moving up quite well.  UGAZ, FAS and TECL have been rocketing higher – as we predicted.  Today, we closed our TECL position to lock in the 18.3% gains for our members with the intent to reenter with new trade opportunities as our strategies tell us.  The single point of success for all of us is to manage our assets well in an attempt to achieve greater long-term success.  We are still holding the other trades open for larger gains next week.

Now, onto our research and analysis.  This Daily SPY chart shows us that price has already breached the recent price peak level – indicating that an attempt to push to new price highs should continue.  Yet, the downward sloping resistance level (in YELLOW) is the current boundary for price and price has stalled at this level.  This is to be expected after such a nice run upward and with price reaching this resistance level.  We do expect price to advance much higher over the next few weeks, but we are also aware that price may rotate a bit near this level before attempting to breakout to the upside.

This weeks strong rally we warned and showed this exact chart before price broke out, take a look.

 

This Daily Transportation chart shows the opposite side of the bullish breakout – where price has broken the downward sloping resistance channel (drawn in RED) yet has not broken the most recent price peak level.  Again, price MUST attempt to establish new price highs or lows based on Fibonacci price theory.  Although a recent intermediate price peak has been broken, we would like to see technical confirmation that the major price peak is breached to confirm that the upside trend will extend further.

Yesterday, we sent an update that included the Weekly YM ADL predictions (below).  We want to stress that as long as the ADL system is predicting much higher price targets and current price levels stay dramatically away from these predicted targets, we are seeing a “price anomaly” pattern setting up.  We have seen many of these over the past few weeks and months.  When these types of patterns setup, price usually breaks towards the predicted price levels VERY QUICKLY & VIOLENTLY (very much like what happened in early February with the dramatic price drop).

We believe the reason for this is that price should be nearer to the predicted ADL levels and, when the price anomaly pattern sets up, the external pricing factors that are preventing price from nearing the ADL levels is in control of price.  As price finally breaks free of these external factors, price will attempt to “recover” towards the predicted price level and this move can sometimes be very quick (and profitable).

Be prepared over the next few weeks as we try to guide our followers towards some incredible profits.  We are still waiting for technical confirmation of this breakout, but it should not be long now.

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.

Enjoy your weekend and be safe.  This has been a great week and next week should be even better.

Chris Vermeulen
www.TheTechnicalTraders.com