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What Does The Global Stock Market Contraction After The Missile Strike Mean?

The US Stock Market contracted in early morning trading on Friday, January 3, by more than 1% after news of the missile attack in Baghdad targeting a top-level Iranian military General and others.  After the attack on the US Embassy in Iraq last week, President Trump issued a strong warning that the US would act to protect its people throughout the world and Iran scoffed at this message.  It would certainly appear President Trump means business and won’t hesitate to stop terrorists from acting against the US – no matter where they are in the world.

This news, overnight, pushed Oil, Gold, Silver and most precious metals higher.  The fear factor associated with the unknowns of what may come from these actions shot through the roof over the past 24 hours.  The global stock markets contracted by a fairly strong amount in Friday’s trading.  Most global markets were off by 0.75% to levels well over 1%.

GLOBAL MARKET SELLOFF AFTER MISSLE STRIKE – CANADA, BRAZIL, CHINA, UK…

The real question skilled technical traders must ask themselves is this “will this turn of events prompt a change in investor expectations/thinking over the next 12+ months”?

I can remember what happened in the markets and the US economy in 1991 when Desert Storm happened.  Because this was one of the first US military efforts that were televised almost 24/7, almost immediately people were suddenly distracted by these war images and videos.  They were entranced by the actions taking place half-way around the world.  Local economies slowed because of this change in consumer sentiment and certain businesses struggled as their customers stayed home and watched TV.

A similar type of event happened after 9/11.  The United States was in shock.  People still attempted to conduct life as normal, yet our objectives changed.  We lost a bit of that care-free American attitude that we had in place before the 9/11 event.  We were more solemn, more conservative, more reserved in our daily lives.  Could something like this happen if Iran (and neighbors) attempt to retaliate against the US for this missile attack?  Could this change the thinking of consumers and investors as concerns about re-engaging in a Middle East conflict arise?

US MARKET SOLD OFF ON MISSILE ATTACK

The US stock market contracted fairly strongly in early trading on Friday, January 3, 2020.  Yet, by afternoon trading, support had pushed most prices off the lows.  We authored a research article recently that suggested traders were very emotional near the end of 2019.  We believe these emotions could continue to haunt the markets in various ways over the next 10 to 25+ trading days.  One thing we are concerned with is a change in price trend sometime between January 13 and January 25.  We believe these dates could prompt a major change in price trend and direction in the near future.

December 20, 2019: WHO SAID TRADERS AND INVESTOR ARE EMOTIONAL RIGHT NOW?

We don’t have a confirmation, as of yet, that any major trend change is taking place – but we feel it would be unprofessional to not warn traders that an event like this could dramatically change the way traders view future expectations.  We really have to understand one key factor about investing and trading – trends are the results of investors/traders believing the future revenues and results of a company, stock or economy will product greater or weaker returns.  If investors believe the returns will be greater, then the trend tends to move higher.  If investors believe the returns will be weaker, then the trend tends to move lower.

EVENT COULD CHANGE EQUITIES MARKET OUTLOOK – DOW JONES INDEX

Could this new event change future expectations for traders and investors?  How will extended uncertainty or military engagement alter trader’s expectations over the next 12+ months?

Right now, we want to urge our followers to protect their open long positions and watch carefully as this event unfolds.  We don’t have any confirmation that a trend change is taking place.  If the YM price fell to levels below $28,000, then we would consider recent support near $28,350 breached and begin to take a look at other price modeling systems.

We suggest our followers read the following research post from the end of 2019.  This will give you a better understanding of what is really happening right now and what would be needed to push the markets into a new bearish trend in early 2020.

December 31, 2019: WHAT TO EXPECT IN EARLY 2020

As we warned throughout most of 2019, we believe 2020 will be an incredible year for traders with extended volatility and returns.  You really don’t want to miss these bigger price moves when they happen.  Our precious metals calls throughout all of 2019 were nearly perfect and our recent Gold calls have nailed this big move.  Get ready – 2020 is going to be a great year for skilled technical traders.

With over 55 years of technical trading experience, we have been through a few bull/bear market cycles, I have a good pulse on the market, timing key turning points and what to buy and sell for both short-term swing trading and long-term investment capital. The opportunities are financially life-changing if handled properly.

I urge you visit my Wealth Building Newsletter and if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
Founder of Technical Traders Ltd.

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.  Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed.  Visit our web site www.TheTechnicalTraders.com to learn how to take advantage of our members-only research and trading signals.

Our Long-Anticipated Gold Momentum Rally Begins

Over the past 6+ months, we’ve been covering the price rotations in precious metals very closely.  We’ve issued a number of amazing calls regarding Gold and Silver over the past few months.  Two of the biggest calls we’ve made were the late 2018 research post that suggested Gold would rally to above $1300, then stall.  The other amazing call was our research team’s suggestion that April 21~24 would see Gold setup an Ultimate Base, or what we were calling a “Momentum Base”, near $1250 to $1275.

We issued both of these markets calls many months in advance of these dates/price levels targeting these moves.  In both cases, we issued these market calls well over 60 days prior to the move actually taking place.  The accuracy of these calls can be attributed to our proprietary price modeling solutions as well as the skill and techniques of our research team.  Don’t mind us while we take a few seconds to take credit for some truly amazing precious metals calls over the past 6+ months.

This Weekly Gold chart highlights just about everything we have been suggesting would happen over the past 12+ months.  The rally in Gold from below $1200 to almost $1350 setup an upside price leg that we believe is still just beginning.  The rotation lower, after the February 2019 highs, setup the Momentum Base near April 24 – RIGHT ON TARGET.  Now, the upside price advance that we’ve been predicting should launch Gold well above the $1400 price level appears to be setting up.

Our Adaptive Dynamic Learning price modeling system, as well as our Adaptive Fibonacci Price modeling system, have been key elements to unlocking these early calls.  You can read more about our earlier Gold and Silver calls by reading this article: https://www.thetechnicaltraders.com/adl-predictions-for-price-of-gold/

The next leg higher for Gold will see a price peak near $1450 before another brief sideways/stalling pattern sets up.  After that, our research suggests a rally will quickly drive Gold prices above $1550 (or much higher).

 

As we’ve been suggesting, Silver will likely lag behind Gold by about 20+ days.  We believe Silver is going to see an incredible upside price move – even bigger than Gold in percentage terms.  Our belief is that Silver will be trading above $26 to $28 per ounce – almost DOUBLE the recent low price level, when Gold will be trading just above $2000 per ounce.  The reason for this is the relationship between the Gold/Silver/US Dollar pricing levels – called the Gold/Silver Ratio.  The chart is below

When the ratio is above 0.80, we consider this to be a “Moderate Peak” zone for Gold.  Where the price of Gold (per ounce) represents more than 80 ounces of Silver.  The ratio of the price of Gold to the price of Silver is a fairly common measure to determine when Silver is very undervalued compared to Gold.  When the ratio typically falls above 0.80, then the price of Silver is very cheap compared to the price of Gold.  When this ration move above 0.90, these levels are Extreme Peaks in the disparity of pricing between Gold and Silver.  These are the areas where both Gold and Silver rally back to restore a ratio level closer to 0.60 or 0.65 (or lower).

This would indicate that the price of Silver will rally much faster than the price of Gold and in order for this ratio to move back to the 0.06 level, Silver would have to rally at a rate of 1.35:1 or 1.45:1 compared to Gold.

Custom Index – chart by TradingView

 

This Weekly Silver chart highlights the levels we are watching for the upside breakout in Silver to begin – $15.40 or higher and we believe the upside price move in Silver till accelerate well above $18 per ounce very quickly.  Again, the move in Silver will likely lag behind Gold by at least 20+ days.  So now if the time to buy Silver in physical form (or any form) as we prepare for this move.  Once it starts, we can promise you that the rally will be impressive and quick.

 

Watch how Gold and Oil react over the next few weeks as Fear re-enters the global markets.  Our belief is that Oil will fall while Gold initiates the first leg higher, towards $1400 to $1450 before stalling.  Once this happens, we can be certain a new upside price advance is beginning in Gold and this could be a fairly strong indicator that the markets are weakening and there is increased global fear.

This is proving to be an incredible trading year for traders who follow our trade alerts newsletter.

For active swing traders, you are going to love our daily trading analysis. On May 1st we talked about the old saying goes, “Sell in May and Go Away!” and that is exactly what is happening now right on queue. In fact, we closed out our SDS position on Thursday for a quick 3.9% profit and our other new trade started Thursday is up 18% already.

Second, my birthday is only three days away and I think its time I open the doors for a once a year opportunity for everyone to get a gift that could have some considerable value in the future.

Right now I am going to give away and shipping out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. I only have 4 left as they are going fast so be sure to upgrade your membership to a longer-term subscription or if you are new, join one of these two plans, and you will receive:

1-Year Subscription Gets One 1oz Silver Round FREE
(Could be worth hundreds of dollars)

2-Year Subscription Gets TWO 1oz Silver Rounds FREE
(Could be worth a lot in the future)

I only have 4 more silver rounds I’m giving away
so upgrade or join now before its too late!

SUBSCRIBE TO MY TRADE ALERTS AND GET YOUR FREE SILVER ROUNDS!

Happy May Everyone!

Chris Vermeulen