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King Dollar Rides Higher Creating Pressures On Foreign Economies

One of the biggest movers of the day on Friday was the US dollar.  The US stock market appeared very weak prior to the opening bell and precious metals, especially gold, appeared to be rocketing higher.  Almost right from the open, the markets washed out the fear and changed direction. The US dollar did the same thing.

This renewed strength in the US dollar continues to baffle foreign investors and foreign governments as they continue to try to support their economies and currencies against a stronger and more agile US economy and currency. Even as the US dollar strength is frustrating many investors, it is also attempting to keep a lid on traditional safe havens such as precious metals.

This further complicates many foreign nations because their gold reserves are not appreciating at the same rate that their currencies are devaluing. Couple that with capital outflows, consumer protectionism, waning economic outputs, and the need to protect local currencies to avoid populist panic, and King Dollar seems to be riding high.

A friend of ours and foreign currency trader suggested we read the article below today.

Does China have enough US dollars to survive the US trade war?

We’ve authored many articles about the US dollar over the past few months.  We believe the strength in the US dollar will continue and that a support level above $92 is likely to continue to support the price for some time. That being said, the current price rotation near $96.50 provides a recent low price rotation level that could turn into future support after recent highs near $98.40 are broken.

Many times you’ve probably read our comments about a “capital shift” and how this shifting capital across the planet will be driving future investment in the US and other foreign markets.  At this point in time, it’s almost like a dog chasing its tail.  The more support the US dollar receives, the more pressure there is for foreign markets to support their currencies and economies. The weaker foreign economies become and foreign currencies devalue, the more demand for US dollars increases to help offset local weakness. It starting to become a vicious cycle.

We believe the defined price channel between the two magenta colored lines will continue to dominate US dollar price activity until price breaks through either the upper or lower range of this price channel. The current support near $96.50, will likely turn into a new price floor once price breaks above $99.

There are a number of factors that could ease the upward pricing pressure in the US dollar.  First, increased economic output and activity in foreign markets illustrating economic growth and prosperity would likely ease the capital shift into the US stock market and US dollar. Once foreign markets begin to act as though real opportunity exists over an extended period of time, then the dominance of the US dollar may begin to weaken.

Additionally, suitable trade deals, such as we witnessed between the US and Mexico recently, will help to alleviate currency pricing pressures on foreign currencies. This strength in foreign currencies presents an opportunity for global investors to take advantage of pricing gains.

Stronger foreign currency valuations and economic output will help to ease the US dollar dominance eventually.  Until that happens, as traders we need to be aware of the pricing issues related to the capital shift that is taking place, the pricing pressures on precious metals, and the likelihood that foreign investors will continue to pile into US equities while King Dollar is dominating.

Pay very close attention to foreign market weakness and news of banking issues or government bailouts of foreign banks. Much like the US credit crisis in 2008/2009, bank failures and extended credit risk exposure can lead to waterfall events.  This would be our biggest fear for the global economy if foreign governments and banking institutions are not properly prepared for extended devaluation periods. If things really started to crumble overseas we could see gold and the dollar move up together, it has happened before in times of crisis.

We’ll keep you informed as we see things transpire. In the meantime, King Dollar rides high end of the sunset and foreign governments/nations will continue to attempt to support their economies and currencies. Eventually, the fear factor will push precious metals broadly higher.

We have a good pulse on the major markets and can profit during times when most others can’t which is why you should join my Wealth Trading Newsletter for index, metals, and energy trade alerts.

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these super cycles are going to last years. These super cycles starting to take place will go into 2020 and beyond which we lay out in our new PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime

Happy Fathers Day Guys!
Chris Vermeulen
Founder of Technical Traders Ltd.

US Memorial Day Weekend Market Analysis

The US Memorial Day weekend is set up to become a very interesting time for investors.  The EU voting is complete and the change in EU leadership may move the markets a bit.  China appears to be playing a waiting game – attempting to hold the US/Trump at bay until after the 2020 US elections.  This week is certain to be very interesting for traders/investors.

The European stocks moved higher in trading on Monday as the relief from the EU election event and support for auto shares pushed the markets higher. The transition in the EU over the next few months will solidify into a political and social agenda.  The EU leadership must acknowledge these future objectives of all parties in order to maintain some level of calm.  It is evident that many EU nations are relatively satisfied with the current leadership while others are transitioning into more centrist leadership.  The next 4+ years will be full of further transition in the EU.

China is another global issue that is relatively unsettled.  We’ve been doing some research with regards to China and the potential future political and economic pathways that may become evident in the near-term future.  Our biggest concern is that China has been inflating their economic levels for decades and the true scope of the Chinese economy may be much weaker than everyone expects.  If our suspicions are correct and China has been inflating economic levels for many years, then the transition to a consumer/services-driven economy may be dramatically over-inflated and the US/China trade issues could be biting much harder than the Chinese want to admit.

The “Sell in May and go away” market saying may become absolute truth in 2019.  Our expectations are still suggesting that an attempt at new market highs may take place before August 2019, but the current market rotation (lower) is setting up a very strong potential for further downside price action at the moment.  Our proprietary Fibonacci price modeling system is suggesting the $7294 level in the NQ is key support.  Below this level, the NQ could break much lower and potentially target $6850 or lower.

 

The YM is setting up a similar price pattern with resistance near 25,840.  We believe this resistance will push prices lower as we move further into early June.  The potential for some type of surprise economic data or Fed/Global market move after this weekend is somewhat higher than expected.  There is a lot of shifting taking place throughout the globe and we believe this turbulence will reflect in the US market soon enough.

 

As of right now, our expectations are that a brief upside price rally will take place over the next 4~7+ days before a continued downside price trend may become evident.  Pay attention to the news cycles for key elements that could drive the US stock market lower.  We will continue to update you with regards to our proprietary research and expectations.  The next 7+ days will likely be nothing but sideways price rotation within a Pennant/Flag formation.

Read our research to understand how this setup coincides with the GOLD price setup and why it is important to understand why July 2019 is so important.  Please take a minute to review these recent research posts that focus more on the US Dollar and Gold, and also the July turning point for US Stocks.

4 DAYS LEFT TO GET YOUR FREE SILVER ROUNDS WITH SUBSCRIPTION!

We continue to see money flow into the safe-haven assets like the Utility sector, bonds, and most importantly precious metals. I anticipated this and our XLU utilities ETF taken with members for 4.4% already, and our VIX ETF trade we closed for a 25% last week.

For May I am going to give away and ship out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. You can upgrade to this longer-term subscription or if you are new, join one of these two plans listed below, and you will receive:

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

Chris Vermeulen

Bitcoin Stalls Near $8100

After an incredible 7+week rally in Bitcoin, from $3700 to above $8000, the current price action is setting up for what may become an extended Pennant/Flag formation with quite a bit of sideways trading ahead.

Our researchers believe the past 7+ weeks rally in Bitcoin was prompted by a shift away from risk in Asia/China and into more suitable protection assets.  Cryptos appear to be the easy choice for many as this rally coincided with the April 3rd through 6th US/China trade talks in Washington, DC (https://www.scmp.com/economy/china-economy/article/3004961/us-says-theres-still-significant-work-be-done-trade-talks).  It appears that many investors were preparing for a difficult deadline after the March 1st deadline for a deal was pushed back.  These early April trade talks may have been interpreted as a “do or die” effort from both sides.  Again, shortly after the May 1st US/China trade talks in Beijing, Bitcoin began another rally from the $5200 level all the way up to the $8000 level.

Our contacts, although we admit they are fairly limited in total quantity, have stated the sentiment from locals in China are very pessimistic on the US and President Trump.  A few of our contacts have recently stated they have been laid off or terminated from their jobs and, as we understand, locals have already started to react in a protectionist mode.  This happens when economies contract quickly.  Consumers attempt to protect their wealth and assets by moving any capital they have into something more efficient than their local markets – thus Cryptos.

This Weekly Bitcoin chart highlights areas that we believe our current support and resistance levels.  The $8000~8100 level goes all the way back to the February 2018 low.  This is a critical level for trading as it became a massive price support level back in 2018 – and eventually became critical resistance in July 2018.  Additional resistance is found near $9900.

 

This Daily Bitcoin chart highlights what we believe are the current Key Highs and Key Lows that will tell us if the next phase will be a continued rally or a breakdown in price.  The Key Low near $7480 must hold for any further upside price advance.  If $7480 is broken, we would expect the next Key Low price to be targeted (near $6200).  Otherwise, if another rally breaks out and price rallies above the Key High, then we could see an upside target range between $9200 to $9700 very quickly.

 

You can see from our BLUE CHANNEL levels on the lower indicator that we believe a Pennant/Flag formation may be setting up in Bitcoin right now.  This type of price rotation is not uncommon after a big move like we’ve seen already and it could be a fairly wide price rotation as this sideways Pennant/Flag pattern continues.  The current range between Key Highs and Key Lows is about $2000 – lots of room for trading/traders.

The key to understanding this move is the protectionist thinking of the people of China.  They are very likely attempting to move their capital into something that is not Chinese Yuan based and away from traditional holdings (Gold, Real Estate, Jewelry or other assets).  Eventually, we will likely see Gold/Silver follow the rally in Cryptos if fear continues to hit the markets.  Cryptos, although, appear to have executed the first leg of the “fear trade” originating from the breakdown in the US/China trade negotiations.

An additional word of warning should be that any resolution to the US/China trade talks over the next 60+ days could remove any long term support for this upside move in Cryptos.  Pay attention to the news cycles and what is happening in China, the EU and the rest of the world.  As fast as it went up, it could easily break down as news hits.

Lots of great price action unfold to take advantage of. Subscribers just closed out a 24% winner and another 3.46% as the markets prepare for a new move. If you want my trade signals and alerts be sure to check out my Wealth Trading Newsletter.

Chris Vermeulen
www.TheTechnicalTraders.com

Oil, Hot Stocks, and Currencies – Part III

In our continued effort to help skilled traders/investors understand the future risks associated with geopolitical market turmoil, the EU Elections next week and the continued US/China trade war, this Part III of our Sector Rotation article will highlight certain sectors that we believe may continue to perform over the next 12 to 24+ months and help traders/investors survive any extended price volatility/rotation over that same time. Read Part I, and Part II.

Currently, the US stock market has weathered a bit of a jolt in terms of price rotation.  After many stock indexes reached new all-time highs, the news of Iran Oil Sanctions, US/China trade talks failing and the political turmoil in DC as an incredible 2020 US Presidential election cycle heats up, investors are watching the markets for any signs of strength or weakness.  Meanwhile, the US Dollar continues to strengthen against other global currencies in an incredible show of “King Dollar” strength and dominance.  All of this plays into one of our favorite narratives that we started discussing over 30 months ago – the Global Capital Shift.

For those of you who remember our many articles about this global market phenomenon and the root causes of it, we’ll try to keep the following example/explanation of it fairly short.  For those of you that are new to our research, please allow us to try to explain the Capital Shift event and why it is important to understand.

The Capital Shift started after the 2008-09 global credit market collapse.  The US and many other nations created an easy money policy that was designed to spark investment and recovery across the globe.  This easy money, at first, supported failing companies and governments in order to maintain social order and structure.  After that process was completed, this capital went to work investing in under-valued global markets and assets.  As prices continued to rise and the easy money policies became rooted into the social structure, the hunt for greater returns rotated throughout the planet – diving into undervalued markets and opportunities, often with no regard for risk.

After 2014, things began to change in the US and throughout the planet.  The US entered a period of extended sideways trading that caused many investors to reconsider the “buy the dip” mentality.  In 2014-15, China initiated “capital controls” in an effort to prevent outflows of capital from a newly rich population and corporate structure.  Just before 2014, the Emerging Markets went through a period of pricing collapse which was associated with over-inflated expectations and $100+ oil.  All of that started changing in 2014~2016 as Oil prices collapsed – taking with it the expectations and promises of many Emerging Market investors and speculators.

This shifting of capital in search of “returns with a moderate degree of risk” is what we are calling the “Capital Shift Event”.  It is still taking place and it is our opinion that the US stock market will become the central focus of global capital investment over the next 4+ years.  We believe the strength of the US Dollar and the strength of the US Stock Market/US Economy will drive future capital investment into US and other US Associated major markets in an attempt to avoid risks associated with the foreign market and currency market valuations.  In other words, when the crap starts flying across the globe, cash will rush into the US and other safe-haven investments to protect real value.

 

Currently, the potential for another price decline in Crude Oil is rather strong with our research expecting a move back below $55 ppb over the next 4+ months.  We believe a further economic contraction across the globe with a very strong potential for increased price volatility will drive Oil prices back below $55 with a very strong potential for prices to settle near $46~48 before the downward trend is completed.

The potential for some type of price contraction over the next 12+ months will be related to how the global and localized economic concerns play out over the next 24+ months.  Yet, investors can prepare for these extended price rotations now by becoming aware of weakening price trends and the potential that certain sectors will likely be hit harder than others.  For example, the most recent price weakness in the US stock market appears to be focused in certain sectors:

Technology, Semiconductors, Scientific Instruments, Financials, Asset Management, Property Management, Banking (Generally all over the US), Consumer Goods – Electronics, Airlines, Mail Order Services, Industrial Goods, Aerospace/Defense, Farming and Farming Supply, Medical Laboratories, Medical Appliances, Oil & Gas and others.  This type of market contraction is fairly common in an early stage Commodity and Industrial economic slowdown.

 

The sectors that are improving over the past week are : Healthcare, Electric Utilities, Diversified Utilities, Gas Utilities, Consumer Personal Products, Consumer Confectioners, Cigarettes, Entertainment, Beverages and Soft Drinks, Meat Products, Specialty Eateries, REITS (almost all types), Credit Services, Telecom and Telecom/Communication Services.

All of these are protectionist rallies based on the US/China trade war and the market rotation away from Technology/manufacturing growth and into more consumer protectionist spending mode – where the consumer and larger firms focus on core items while expecting a mild recession within the economy.  All of this is very common at this time within the US Presidential Election cycle.  In fact, our researchers have shown that nearly 80% of the time when a major US presidential election is taking place, the US stock markets will decline within the 24 months prior to the election date.

The Monthly S&P heat map is not much different.  It is still showing weakness where we expect and strength in sectors that have been somewhat dormant over the past 4+ years.  The key to success for skilled traders is to be able to play this future price rotation very effectively as the different sectors continue to rotate headed into the 2020 US Presidential Elections and with all of the external foreign market factors taking place.

 

It is quite likely that the US Dollar will continue to push high, possibly well above $102, before finding any real resistance.  It is very likely that most of the US stock market will fair quite well over the next 24+ months – yet we do expect some extended price rotation over this time and we believe Technology, Financials, Real estate, and Industrial/Consumer related stock sectors could take a hit over the next 16 to 24 months.  These rotations are, again, common for this type of US Presidential Election cycle.  Skilled traders are already aware of this cycle and have begun to prepare for this event to unfold.  The unknowns of the current global market is China and the EU at present.

 

And with that last US Dollar chart, there you have it.  Our three-part article about how the Global Capital Shift is about to intensify and continue to drive a US Sector rotation that many traders have failed to consider.  The EU elections, the US/China trade wars, and the US Presidential Election event are all big factors in what we believe will drive in an increased level of uncertainty over the next 16~24 months.  Additionally, we are very concerned that China is very close to experiencing what we are calling a “broken backbone” over the next 12+ months.  We believe the pricing pressures in combination with a slowing economy and a consumer move into a protectionist stance could create a waterfall event in China/Asia.

Our advice for traders is to protect open long positions and to prepare for 16 to 36 months of “repositioning” of the global markets.  The US elections are certain to drive an incredible range of future expectations throughout the world.  Combine that with the EU elections, the BREXIT effort and the continued repositioning of US/China/Foreign market relations and we are setting up for a big shock-wave event in the near future.

Follow our research.  We’ve already mapped out the next 24 to 36 months of market price activity with our proprietary price modeling tools.  We believe we know what will happen over the next 24 to 36 months, we are just waiting for the price to confirm our analysis. Visit www.TheTechnicalTraders.com to learn more.

Chris Vermeulen
Technical Traders Ltd.

 

Trade Issues Will Drive Market Trends – PART II

In PART I of this report we talked about and showed you the charts of the Hang Seng and DAX index charts and what is likely to unfold. In today’s report here we touch on the US markets. As we’ve suggested within our earlier research posts this year, US election cycles tend to prompt massive price rotations when the election cycles are intense.  For example, the 2000 election of George W. Bush prompted a very mild price rotation in 1999~2000.  This was likely because the transition from Clinton to Bush II was not overly contentious.  The 2008 election of Barrack Obama was a moderately contested election cycle and happened at the time of the biggest credit market collapse in modern history – thus, the markets were well on their way lower 12+ months before the elections.  The 2012 election cycle showed moderate price rotation as it was a highly contested election event in the US.  The 2015-16 election event was highly contested as well and the price rotation near this time appears longer and deeper than the 2012 event.

Now, in 2020, we have one of the biggest, most highly contested US election cycles in recent history unfolding and we have already begun to see a price range /rotation over the past 12+ months that suggests we could see even bigger price rotation.  If we add into this mix the US/China trade issues, global market concerns, US political rhetoric, and other issues, we have a recipe for A BIG MOVE setting up.

 

Our analysis still suggests that we are poised for an attempt at fresh new all-time highs before any massive price rotation takes place (near the upper trend line).  Yet, we believe the downside price rotation is an eventual component of the next 16+ months of the US election cycle and the future price advance that should take place in the near future.  In other words, we believe the markets are setting up for a bigger shake-out throughout this election cycle/trade issue event that will prompt lower prices before the end of 2019.  We do believe the markets will settle and resume an upward trend bias after this downside price rotation – yet we don’t know exactly when that will happen.

 

To the best of our ability to predict the future, we can state this at the moment.  It appears the end of 2019 will be filled with large price rotation – likely to the downside as trade issues and election/political issues cause a “shock-wave” in the markets.  We believe early 2020 will see a relief rally that may setup a bigger price move throughout the remainder of 2020.  Right now, traders need to be prepared for an incredible increase in volatility and price rotation.  It is very likely that we will see a VIX level above 40 at some point before the end of 2019.  This is a time for skilled traders to get in, get profits and get out.  Position trading over the next 12+ months will be very difficult.

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 5 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 5 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

How Chinese Trade Issues Will Drive Market Trends

It is becoming evident that the US/Chinese trade issues are going to become a point of contention for the markets going forward.  We’ve been review as much news as possible in an attempt to build a consensus for the future of the US markets and global markets.  As of last week, it appears any potential trade deal with China has reset back to square one.  The news we are reading suggests that China wants to reset their commitments with the US, remove all tariffs and wants the US to commit to buying certain levels of Chinese goods in the future.  Additionally, China has yet to commit to stopping the IP/Technology theft from US companies – which is a very big contention for the US.

This suggests the past 6+ months of trade talks have completely broken down and that this trade issue will likely become a market driver over the next 12+ months.  The global markets had anticipated a deal to be reached by the end of March 2019.  At that time, Trump announced that he was extending talks with China without installing any new tariffs.  The intent was to show commitment with China to reach a deal at that time – quickly.

It appears that China had different plans – the intention to delay and ignore US requests.  It is very likely that China has worked to secure some type of “plan B” type of scenario over the past 6+ months and they may feel they are negotiating from a position of power at this time.  Our assumption is that both the US and China feel their interests are best served by holding their cards close to their chests while pushing the other side to breakdown through prolonged negotiations.

Our observations are that an economic shift is continuing to take place throughout the globe that may see these US/China trade issues become the forefront issue over the next 12 to 24 months – possibly lasting well past the November 2020 US Presidential election cycle.  It seems obvious that China is digging in for a prolonged negotiation process while attempting to hold off another round of tariffs from the US.  Additionally, China is dealing with an internal process of trying to shift away from “shadow banking” to eliminate the risks associated with unreported corporate and private debt issues.

The limited, yet still valid, resources we have from within China are suggesting that layoffs are very common right now and that companies are not hiring as they were just a few months ago. One of our friends/sources suggested the company he worked for has been laying off employees for over 30 days now and he just found out he was laid-off last week.  He works in the financial field.

We believe the long term complications resulting from a prolonged US/China trade war may create a foundational shift within the global markets over the next 16 to 24+ months headed into the November 2020 US Elections.  We’ve already authored articles about how the prior 24 months headed into major US elections tend to be filled with price rotation while an initial downside price move is common within about 16+ months of a major US election event.  This year may turn out to prompt an even bigger price rotation.

US Stock Market volatility just spiked to levels well above 20 – levels not seen since October/November 2018, when the markets fell nearly 20% before the end of 2018.  The potential for increased price volatility over the next 12+ months seems rather high with all of the foreign positioning and expectations that are milling around.  It seems like the next 16+ months could be filled with incredibly high volatility, price rotation and opportunity for skilled traders.

Our primary concern is that the continued trade war between the US and China spills over into other global markets as a constricted price range based trading environment.  Most of the rest of the world is still trying to spark some increased levels of economic growth after the 2008-09 market crisis.  The current market environment does not settle well for investor confidence, growth, and future success.  The combination of a highly contested US Presidential election, US/China trade issues, a struggling general foreign market, currency fluctuations attempting to mitigate capital risks and other issues, it seems the global stock markets are poised for a very big increase in volatility and price rotation over the next 2 years or so.

Our first focus is on the Hang Seng Index.  This Weekly chart shows just how dramatic the current price rotation has been over the past few weeks and how a defined price channel could be setting up in the HSI to prompt a much larger downside objective.  Should continue trade issues persist and should China, through the course of negotiating with the US, expose any element of risk perceived by the rest of the world, the potential for further price contraction is very real.  China is walking a very fine line right now as Trump is pushing issues (trade issues and IP/Technology issues) to the forefront of the trade negotiations.  In our opinion, the very last thing China wants is their dirty laundry, shady deals and political leadership strewn across the global news cycles over the next 24+ months.

 

The DAX Weekly Index is showing a similar price pattern.  A very clear upper price trend channel which translates into a very clear downside price objective is price continues lower.  Although the DAX is not related directly to the US/China trade negotiations, the global markets are far more interconnected now than ever before.  Any rotation lower in China will likely result in a moderate price decrease in many of the major global market indexes.

 

As we’ve suggested within our earlier research posts, US election cycles tend to prompt massive price rotations when the election cycles are intense. In our next post PART II of this report, we talk about what happened in the past election cycles reviewing the monthly charts and weekly SP500 index charts which are very telling in what could be about to happen next for the stock market from an investors standpoint.

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 excactly 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 7 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 13 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

 

 

Stay tuned for PART II next!

 

US Increases Trade Tariffs Against China – Markets, Gold, and Silver

Today, the US increased tariffs on $200B of Chinese goods as the US/China trade deal breaks down.  China has vowed to retaliate for the move.  The past week has seen the global markets shocked by two items: Iran sanctions and US/China trade breakdown.  The markets had been expecting a US/China trade deal to be reached and optimism was quite high – hence the rally in the Chinese stock market and the rally in the US stock market.  What next?

Well, we believe this news, as well as future news that will likely hit the markets over the next 3+ months, will continue to prompt the Shake-Out we have been warning about.  Depending on how severe these news events are, the rotation in the markets could be quite severe as well.

Our recent analysis suggests that recent lows in the US stock market may be near-term support and that the US stock market may attempt to form a bottom near these lows.  Our research shows the Transportation Index is leading this move.  We believe the ORANGE Moving Average level, as well as the RED and GREY Fibonacci projection points, will act as a temporary price floor this week and next.  The YM could move lower by 100 to 200 points today, retesting these low levels, before recovering near the end of the day.

 

Gold is showing signs of a potential upside price leg in the early stages, just as we had been suggesting.  Our April 21~24 momentum base call from months ago appears to be incredibly accurate.  At this point, we are just waiting for the upside price swing to begin.  When it starts, the momentum behind this upside move will increase as it will catch the attention of many gold traders and solidify the “fear” aspect of this move.

 

Silver is still lagging behind Gold – as usual.  We continue to believe the real opportunity for a great trade lies in Silver.  The potential for a $22 o ~$28 upside price swing on a market breakdown or fear play is still very solid.  Headed into the 2020 US election cycle and with all the uncertainty in the global markets, we believe this is the “sleeper trade” of the next 16+ months.  When Gold begins to breakout to the upside, Silver should follow about 20 days later.

 

These new US trade tariffs puts pressure on China to come to the table and develop and honest deal.  This is not the old way of slow negotiations with no real consequences.  For China, the lack of access to the US market could be devastating in both the short and long run.  Skilled traders should not be overly optimistic throughout this weekend.  Protect your longs and prepare for more news over the next few weeks.  This is the type of market that will make or break many traders.

UNIQUE OPPORTUNITY ONLY IN MAY

On May 1st we talked about the old saying goes, “Sell in May and Go Away!” and that is excactly 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 a few 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 11 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 13 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

The Shake-Out Continues – Where Is The Bottom?

Smart traders are already asking themselves “where is the bottom for this move”.  They’ve likely been through these types of rotations in market price before and understand the fundamentals of the US economy are strong enough to support further upside price activity in the near future.  The current US/China trade worries could result in a pricing disruption of 4 to 8%, seen as rotation, yet the US Fed is continuing to leave rates unchanged and most US economic numbers are still posting strong levels.

So, smart traders want to know where the bottom in the market is likely to be found and when they should start to accumulate new long positions – which is understandable.  We’re here to help.

Our proprietary Fibonacci price modeling system is one of the unique modeling tools we use to hone into any market move.  The reason for this is because it shows us so much data that we can “read into” our analysis/research.  The other reason is that it is an “adaptive learning” model – which means it continues to learn from price data and adapt its analysis of that data.

Let’s start with the Weekly YM chart.  The GREEN highlighted box on this chart shows where the past two Bullish Fibonacci price trigger levels were generated.  These, obviously, become key support levels going forward.  The narrow ORANGE box near the current peak is the resistance channel we highlighted many weeks ago that suggested a volatility rotation peak may be setting up.  We have also drawn an oblique/circle on the chart in BLUE that highlights upside Fibonacci target price levels.

It is our opinion that a further downside leg, possibly to levels below $25,000, are possible as this Shake-Out continues and as the global markets continue to revalue expectations.  We are watching the currencies very closely as the Chinese Yuan has devalued extensively over the past few days.  This US Dollar strength will keep metals fairly flat while prompting some extra stability in the US stock market over time.

 

This next chart, the NQ Weekly, shows a similar chart format to that of the YM.  Clear resistance can be seen near the recent highs and support is found near the $6600 level from previous Fibonacci Bullish Price Trigger Levels.  The NQ, being very heavily weighted in Technology and Internet stocks, may have the ability to fall the furthest within this price rotation – possibly as much as -700 to -800 pts before finding support.  Currently, a support level near $7400 is the first level we are watching.  If the NQ breaks below this level, then we could see a much bigger move to the downside unfold fairly quickly.

 

Lastly, the Transportation Index (TRAN) is showing us that the downside price move may have already reached a level that may prompt intermediate price support – or a potential base formation.  The $10,400 to $10,500 level, which was already reached, appears to be the initial support level for the TRAN.  It would make sense that the TRAN may begin to base near this level over the next few days/weeks while the US stock market attempts to hammer out a bottom.

Ultimately, the $10,000 level has proven to be very strong historical support for the TRAN.  So any breakdown in this index would immediately prompt a target level of $10,000 for the next support level.  Again, pay attention to the US Dollar and Gold as this movement continues.  Any real fear will translate into a weaker US Dollar and increasing prices in precious metals.

 

In closing, we believe the early signs of a potential price bottom are setting up right now.  This may not be the ultimate bottom, but the clear support level in the TRAN is a very good sign that the markets are setting up a support base that may prompt some sideways trading over the next few weeks as the market continues to digest all this global trade news.  A deeper “washout-low” price formation may set up in the INDU or the NQ over the next few days which means we may see a deeper price rotation before the downtrend actually ends.

Right now, pay attention to our continued research and we’ll help you find the bottom when it forms.  Our current expectations are for a continued downside price move that will establish a washout-low formation over the next 3 to 10 trading days.  We’re not out of the woods yet, but we are starting to see the early signs of price support – which means a bottom may not be too far off.

UNIQUE OPPORTUNITY ONLY IN MAY

On May 1st we talked about the old saying goes, “Sell in May and Go Away!” and that is excactly what is happening now right on queue. In fact, we closed out our SDS position today for a quick 3.9% profit and our other new trade started today is up already 10%.

Second, my birthday is only a few 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 13 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 13 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

US/China Trade Issues Create SHOCKWAVE Around The Globe

Unless you were following our research, see below, and were already aware of the many warning signs we’ve been posting in our continued efforts to help traders and to help educate skilled investors, you were probably caught completely off guard by the news of near trade tariffs last Sunday, May 5th.  Let’s face it, the short position in the VIX was an indication that institutional and retail investors had gone “all in” on this rally and had failed to even consider anything disrupting the narrow range price rally that had been in place over the past 45+ days.  Well, all of that changed on Sunday night and many traders woke up Monday morning to the INDU down nearly -500 points.

The most incredible facet of this rotation was that the markets had already discounted the trade tariff news and began to rally almost immediately after the opening bell on Monday.  Sure, we are not out of the woods at this time with the potential for continued price volatility and price rotation, but the fact that the US stock market was capable of rallying back from a very deep opening price shows just how resilient the US stock market and the economy really are.  The issue this time, we feel, will be felt in the global market and in foreign currency rates. We’ll get into that more as we continue.

In case you missed our most recent research posts, we suggest you take a few minutes to review the following posts to bring you up to speed with our analysis/research.  Reviewing these posts may help you to better understand the rest of this article and our expectations for the next 60 to 90 days.

 

March 31, 2019: Proprietary Cycles Predict July Turning Point for Stock Market
https://www.thetechnicaltraders.com/proprietary-cycles-predict-july-turning-point-for-stock-market/

 

April 10, 2019: Intra-Day Fibonacci Modeling Shows Volatility Is About To Spike
https://www.thetechnicaltraders.com/intra-day-fibonacci-modeling-shows-volatility-is-about-to-spike/

 

April 17, 2019: US Stock Markets Setting Up For Increased Volatility
https://www.thetechnicaltraders.com/us-stock-markets-setting-up-for-increased-volatility/

 

April 22, 2019: Prepare For Unknown Price Action As New Highs Are Reached
https://www.thetechnicaltraders.com/prepare-for-unknown-price-action-as-new-highs-are-reached/

 

April 28, 2019: Markets Are Setting Up a SHAKE-OUT – Be Prepared
https://www.thetechnicaltraders.com/markets-are-setting-up-a-shake-out-be-prepared/

 

Now that we’ve covered a bit of our past research, allow me to attempt to summarize things a bit.

_ First, we continue to expect new high prices to be established over the next 30+ days.  Yes, volatility will be larger than it was 30 days ago, but we believe the “Shake-out” is just starting and we believe the US stock market will continue to push higher – at least for the next 3+ weeks.

_ Second, we are very cautious of the July/August 2019 Cycle Predictions, see above.  We believe these cycles could be a warning of a major price trend change that prompts some type of “dynamic shift” in the global markets.  Right now, it appears a “Shake-out” in China/Asia may be in play.  But we believe a bigger “Shake-out” may be brewing somewhere else in the world.

_ Lastly, we believe any top formation in the US Stock market will result in a Pennant/Flag formation, rotational top formation, that will give traders ample time to reposition their trades and reduce risks.

Just a few days ago, we posted this research to help traders understand just how close the markets are to topping and what to expect – see below.  We continue to believe this “Shake-out” is more about disrupting low volatility expectations and less about a major market top in the US stock market

 

April 30: How Close Are The Markets From Topping?
https://www.thetechnicaltraders.com/how-close-are-the-markets-from-topping/

 

The Chinese stock markets will likely continue to drop as new expectations are suddenly realized and trade issues, especially IP and future IP partnerships, become a major contention moving forward.  Every step China takes, right now, is very fragile in terms of US expectations and the ability to show the world China is willing to become a responsible player in the technology field.  If China fails to realize this, the world will clearly see that China’s intention is to take as much as they can from global technology leaders while stuffing their pockets full of foreign cash – it will not end well.

The Shockwave that has just started to unfold across the global stock market/financial world is that trade, economic expectations, and currency valuations will continue to “revalue” to address these ongoing concerns until some formal resolution works itself into place.  In the meantime, any new issues that become present could further complicate these “revaluation” efforts.  The concert just started, folks.  We have a long way to go before this is all over with.

This Weekly YM chart showing our proprietary Fibonacci price modeling system is suggesting we have a “long way to go” before we could consider any downside price rotation a major risk.  The recent price highs in this YM chart have prompted a Bearish Fibonacci Trigger Price near the December 2018 lows (see the RED line near the $21,450 level).  You might be asking, “why so low?”.  This “learning modeling system” attempts to learn from price and attempts to identify where key price levels are that MUST be reached for a confirmed trend change.  As price has continued to rotate within a very wide range over the past 7+ months, the Fibonacci modeling system is suggesting that price could fall all the way back to near the December lows WITHOUT triggering a new “long term” bearish price trend.

In other words, the current price range that would constitute “normal price volatility” is anywhere between $21,450 and $26,950.  When we said to expect increased volatility, we really meant it.  This is a $5,500 range in the YM that could become a “normal volatility zone”.

 

The NQ Weekly chart, on the other hand, is providing us a much clearer Bearish Fibonacci Trigger level, near $7,393.  Once the price is able to close below this level, then we would consider the NQ entering a new Bearish trend as long as price stays below the $7,393 level.  If it was to rally back above this level, then the trigger is negated as long as it stays above the trigger level.

Pay very close attention to the YELLOW price channels that originate back in early 2018.  Those levels are likely to play a very important role in going forward as price attempts to establish new price ranges/channels throughout this expected price rotation and volatility.

 

Lastly, we’ve been warning that the Financial Sector could come under some intense pressures over the next 5 to 16+ months as all of this “Shockwave” plays out.  The reason we believe the Financial sector is vulnerable to this crazy volatility is that the exposure to multiple levels of capital risk could complicate the long-term earnings capabilities of this sector.  Almost all of these firms are involved in Personal, Corporate/Business, Real Estate, Trade, Global financing, Currency, and Bond related business ventures.  These firms are not remotely immune to any “Shockwave” – they are located right in the Bullseye/Target zone.

We believe the XLF may come under increased pressure over the next 3~6+ weeks as the Shockwave event continues to unfold.  We believe issues with Personal/Consumer credit will be the first sign of a Shockwave event and further pressures from Corporate/Business/Global/Currencies would likely be the second shoe to drop over the next 8+ months.  We believe a rotation in the XLF to near $25 is very likely over the next 3~6 months and that this move could be the result of extended risk factors originating from the “Shockwave event” we’ve been suggesting is currently unfolding.

Skilled traders should be watching technology stocks, the NASDAQ, the INDU, the Financial Sector and commodity prices over the next 4+ months for any signs that the Shockwave event is increasing in amplitude.  Additionally, pay very close attention to how currencies are moving and where the US Dollar is moving in relation to other currencies.  Gold and Silver should also be on your radar over the next few months as well.  Lastly, prepare for the major cycle event in July/August 2019.

The past four tradings sessions with volatility has kept us busy check out our most recent index trades on the SP500

 

Our advice continues to be to look for opportunities as the volatility increases and continue to expect an upside price bias in the US stock market – at least until we have any strong evidence that price trend has changed.  Don’t buy into the doom-sayers just yet.  In our opinion, this US upside price move is not over yet.

If you want to become a technical trader and pull money from the markets during times when most others cannot be sure to join the Wealth Trading Newsletter today. Plus, for a few days only I’m giving away and shipping Free Silver Rounds to subscribers who join our select membership levels.

Chris Vermeulen
www.TheTechnicalTraders.com

 

Gold May Give Us One More Chance With New Lows

Our proprietary price cycle tool is showing us that the Daily Gold cycles may dive a bit lower, possibly into the $1250 to $1265 level, over the next 3~7+ days before reaching an ultimate low.  We’ve been covering the precious metals markets like hawks because of our proprietary price modeling tools that suggested the April 21~24 dates as an ultimate low/momentum base pattern.  This new cycle formation highlights the potential that a deeper price low in Gold may set up over the next 5 to 7 days and it may become an incredible buying opportunity for skilled traders.

Taking a look at this cycle chart, we can see the deep price low that may target the $1270 levels or levels just below the $1270 price area.  It appears that this new price low may form somewhere near the end of this week, May 3rd, or early next week, May 6th or 7th.  Please pay attention to this potential price move as this may be the last low price reversal before a very strong upside price move.

 

You may remember our analysis from January 2019 regarding the ADL price predictions for Gold (the chart is below).  Pay very close attention to the “April/May 2019” dates as we are targeting that low price level right now and the upside price potential showing predicted price levels well above $1400.

Skilled traders need to try to understand a move like this in Gold will likely be predicated on some external global news events that create a level of fear in the markets.  We don’t know what they may be at the moment, but our suspicions are that they are going to be related to the EU and/or China (or both).

This is it.  This should be the last low price rotation (if it happens) before Gold begins to skyrocket higher.  Pay attention and remember we were very early in making this call – so it will be an incredible run if it happens as we predicted 5 months ago.

With a total of 55 years of technical analysis and trading between Brad Matheny, and myself Chris Vermeulen, our research and trading signals 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 Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen