Everyone I know who is not involved in the stock market or has little knowledge about it is calling me and asking what stocks, indexes, and commodities to buy because everything is so cheap and dividends are juicy again.
Just look at the market sentiment chart, and price cycles that the stock market goes through, and listen to my talk below while reviewing these to images. It’s not rocket science, but the lack of education on the financial markets coupled with the force of greed to make money and miss out on the next big bull market has everyone getting suckered into this dead-cat bounce, also known as a bear trap, bear market rally.
If you want to see something else really exciting/nerve-wracking/ and real check out this post on the Stock Market Top.
A subscriber to my market video analysis and ETF trading newsletter said it perfectly:
“Always intrigues me how many amateur surfers get to the north shore beaches in Hawaii, take one look at monster waves and conclude it’s way too dangerous. Yet the amateur trader looks at treacherous markets like these and wants to dive right in!!”Richard P.
I have to toot my own horn here a little because subscribers and I had our trading accounts close at a new high watermark for our accounts. We not only exited the equities market as it started to roll over we profited from the sell-off in a very controlled way.
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is going to be an incredible year for skilled traders. Don’t miss all the incredible moves and trade setups.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.
We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.
If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/120.jpg834573adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-15 14:38:332020-04-15 14:38:33Could This Be a “Suckers” Rally?
As the global markets enter the Q1 earnings season where a host of new data and expectations will flood the markets over the next 30+ days, skilled traders should put these three symbols on their watch-list over the next few days and weeks.
We’ve been writing about how we believe the downside risks within the US and global stock markets are still very real. Many industry analysts believe the bottom has set up in the US stock market already – we don’t believe this is the case. Our Adaptive Fibonacci Price Modeling system continues to suggest a deeper downside move is in the works and we believe this potential retest of recent lows will setup another incredible opportunity for skilled traders.
Recently, we’ve posted a number of research articles to help you understand what is really taking place in the global markets. The COVID-19 virus has set-off a consumer demand contraction event that will ripple across all sectors of the global economy. There is no other way to interpret the data right now – if consumers don’t come back into the economy at levels near the late 2019 engagement levels, then the global economy will continue to contract. Consumers make up over 85% of GDP values.
HERE ARE SOME OF OUR MOST RECENT ARTICLES TO ASSIST YOU…
Now, onto the three symbols setting up an incredible upside opportunity if the global markets rotate lower as our predictive modeling is suggesting…
FAZ – DIREXON INVERSE FINANCIAL SECTOR ETF
The first symbol is FAZ. This ETF moves higher as the financial sector stocks move lower. These include banks, financial institutions, and other financial services companies. The reason we believe FAZ has a potential to move higher is that we believe the lack of consumer engagement in retail, restaurants, leisure shopping and other types of normal spending activities will put incredible pressure on business loans, consumer loans, commercial and residential real estate, business credit lines and many other aspects of the financial sector. Simply put, it would be foolish to think that some level of default and/or extended risks would not come from any type of consumer disengagement from the economy. Again, consumers make up over 85% of the total GDP levels. If we take away even 20% to 30% of these consumers, we could see a dramatic collapse in certain sectors of the economy.
Thus, we believe the Financial sector is poised for another downside price move which will prompt a rise in FAZ from current levels to near $50~$60. This represents 65% to 85%+ upside potential.
The MidCap sector is uniquely vulnerable to any economic contraction related to consumer activity. Many of the Midcap companies are uniquely consumer-based and/or consumer sector related. Thus, should another market downtrend attempt to retest recent lows or attempt to set up a deeper price bottom, the Midcap 400 ETF may see an incredible upside price move. Upside price targets are near $29 to $30 – which is 55% to 65% higher than the current price level. Ultimately, any deeper price lows set up because of a deeper price bottom setting up in the US and global markets could push MZZ well above $35.
QID – PROSHARES ULTRASHORT QQQ ETF
The last symbol we believe could see a big upside move related to increased future risk in the US and global markets is QID – the NASDAQ Inverted ETF. The reason we believe risks in the US and global major markets may bleed over into this ETF is that the NASDAQ has been a major component of US & foreign investment over the past 24+ months. Global investors continue to believe that technology firms will out-perform the general market – thus, more capital has poured into this sector of the market over the past 20+ months than many other sectors.
This capital influx also creates an opportunity for contrarian traders if the markets fail to recover – as many people believe will happen. This capital that has recently poured into the NASDAQ may become “at-risk” if another deeper downside price move takes place. Investors may have hard stops in place and forced selling may take place if the markets attempt to establish a deeper price bottom in the near future.
Conservatively, an upside price move in QID to levels near $27 (45%) is the first Fibonacci target. Further upside target levels near $30.50, $42.50 and $44.25 also exist. Of course, these higher target levels would be the result of a much deeper global market collapse where a deeper bottom in price is established.
CONCLUDING THOUGHTS:
We believe these three symbols present very real opportunities for skilled technical traders. Wait for the right setup and confirmation before jumping into these trades. If the US and global markets begin to move lower on poor earnings or economic data, jump over to these charts to see how they are reacting to price weakness. There is a very real opportunity for 20~40+% profits in each of these charts with the right setup in place.
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is going to be an incredible year for skilled traders. Don’t miss all the incredible moves and trade setups.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.
We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.
If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/111.png601850adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-15 14:29:002020-04-15 14:29:00Downside Opportunities Everywhere – Watch These Symbols
For years, many Gold Bugs (investors who’ve been advocating buying Gold and Silver at low prices as a hedge against future global economic risks) were shunned as conspiracy theorists and nuts. How could these people believe Gold and Silver were solid investments when the Global equities markets were rallying 5% a year consistently – what could go wrong?
Over the past two weeks, I have personally received multiple phone calls and emails from friends and associates asking how these people can suddenly ”buy physical metals”. In one case, this individual was purchasing Airline and Food Services stocks in late February thinking this move would be short-lived and telling me how the airlines would recover quickly after this is all over. Now, that person wants to know my secret contacts for buying physical metals.
If you know any Gold Bugs, you know we’ve built relationships with suppliers, friends and other Gold Bugs throughout the year. Believe it or not, I can still buy physical metals from a few of my closest associates in the industry. Eric Sprott is a fan of my precious metals forecasts and talked about my work a few times publicly. Eric owns SprottMoney.com. the other source is SDBullion.com. Both of these are my most trusted sources for buying physical gold and silver, I have never had any issues with them and customer support is top-notch!
Yes, the prices have begun to skyrocket a bit – Silver especially. But I can still buy physical metals because I have a deep resource of friends and suppliers.
What’s going to happen over the next few weeks is that more and more average people are suddenly going to realize they should have been buying metals as security against risk. Paper metals are going to explode as well, but physical metals will demand a premium that is much higher than paper/spot price. Right now, one ounce of Silver is going for about $21 to $25 per ounce in physical form (depending on my sources). The current SPOT price of silver is $14.50. That means the premium for physical Silver is between +45% to +75% right now in the open market.
This Daily Gold chart highlights the upside Fibonacci price targets using our Adaptive Fibonacci Price Modeling system. We believe the next upside price target for Gold is $1825. A higher upside price target is visible on this chart near $1950 and we believe Gold prices will reach this level eventually. But we believe the current $1825 level is the immediate target. This would represent an immediate +10 upside price advance and would establish NEW HIGH prices for the past 9 years.
SILVER DAILY CHART
This Silver Daily chart also highlights our Adaptive Fibonacci Price Modeling system and shows an upside price target of $17.25. Remember, the current physical demand for Gold and Silver has skyrocketed over the past 2+ weeks. The Spot price is really not indicative of the open market price of physical at the moment. If Spot Silver moves to $17.25 as we predict, that would be a +19% upside price advance. If Silver advances to $18.25, that would be a +26% upside price advance.
Silver Bugs are loving the setup right now because they know the pattern that sets up in the Metals market when a crisis hits. First, Gold begins to rally faster than Silver and the Gold to Silver ratio spikes higher. Then, once the shock-wave of the market crisis subsides, the metals begin a fairly usual price advance where both Gold and Silver advance – in unequal forms. This is when the real fun for Gold & Silver Bugs begins.
GOLD TO SILVER WEEKLY RATIO CHART
THE SILVER LINING
Take a look at this Gold to Silver Weekly Ratio chart. This chart measures how much one ounce Silver it takes to purchase one ounce of gold at current prices. Notice that spike in the ratio back in 2008? That was the spike in gold prices relative to Silver prices as the top formed in 2008 and the “shock wave” struck global investors. What happened? Everyone tried to pile into the Gold trade and ignored Silver for about 6+ weeks.
Then what happened to the Gold to Silver Ratio? It COLLAPSED from levels near 85 to a bottom hear 31. That means the price of Silver advance almost 3x faster than the price of Gold over that span. In order for the ratio to fall from near 90 to levels near 30, that indicates a very expansive price increase in the price of Silver.
Now, take a look at what has happened just recently in the Gold to Silver Ratio… another massive price spike. This time, the spike reached levels near 120 (Yikes). Can you guess why Gold and Silver Bugs are so excited right now? If another price advance takes place in precious metals which is similar to the 2008~2011 rally, Gold may see a 300% to 500% rally and Silver may see a 450% to 900% rally over the next 2 to 3 years.
This is no joke. Physical metals are why Gold and Silver Bugs believe the value of having it in your hands is much better than owning an IOU from a broker or bank.
Get ready for some incredible price moves in the metals markets and congrats to all the Gold and Silver bugs out there. Our analysis says our patience and accumulation of physical metals will soon pay off in a big way.
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor with any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal this week!
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/22.png582850adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-06 14:22:462020-04-06 14:22:46Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up!
What a week, thank goodness its Friday cause we need a break for all the market volatility and weakening economic data.
TraderTV had both Kevin O’Leary and me to talk economy and the markets. Kevin had some really extreme and borderline ethical business ideas, but I do have to admit, if you want to survive as a small business in this environment he has a good point and it could work. I’ll talk about that in a minute, but right now lets takes focus on crude oil, energy stocks, and the Canadian Dollar in the clip below.
TRADERTV ASKS CHRIS HOW TO TRADE OIL, ENERGY STOCKS, AND LOONEY
TRADERTV ASKS KEVIN ABOUT OIL, THE MARKETS, WHAT PEOPLE SHOULD DO
Kevin talks about not paying your rent, suppliers, etc… to preserve cash your business as long as you possibly can. The hope is that this virus and the economic situation stabilize sooner than later but we just don’t see any light at the end of the tunnel yet.
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor with any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/10.jpg790940adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-06 12:37:052020-04-06 12:37:05Kevin O’leary and Chris Vermeulen on TraderTV Talking Economy & Markets
We can only imagine what many of you are thinking and feeling right now. Shock? Concern? Despair? Some of you have already emailed us asking about the US and Global markets to find out what our predictive modeling systems are suggesting. Today, we’re going to show you what the longer-term Adaptive Fibonacci Price Modeling system is suggesting for the S&P and NASDAQ.
First, we want to ask you to slow down, take a few seconds to realize we will recover from this virus event and the smart thing to do is protect your family, protect your assets, and prepare for the future. Market crashes happen only 2-3 times in a lifetime and they, not the end of the world or financial system.
This event is different than the 2000 or 2008 market crash events. Each of those past events was somewhat localized events that disrupted a segment or portion of the global economy. Yes, the 2008 event was bigger than the 2000 event, but the localization of the event still presented a similarity that provided a moderately quick recovery process.
Next, we want you to attempt to understand this virus event is a bit different than the most recent crash events. A virus pandemic of this nature will likely result in a much broader economic contraction and various collateral damage processes as it transitions across the globe. Currently, our research team is attempting to watch for the early signs of these collateral damage processes to determine if a broader global market collapse is going to take place. At this time, we must all try to prepare for what is unknown and could happen in the future.
The longer-term generational cycle (the roughly 85-year Strauss-Howe Theory suggests societies navigate a long term cycle that repeats itself, roughly, every 85 years). This societal evolutionary theory centers around the concept that people repeat many of the same failures learned by previous generations – roughly every 85 years. What was learned in the 1920s~1940s will have been forgotten in the 1990s~2020 and many of the same mistakes will be made.
One of our researchers, Brad Matheny, authored a book in March 2019 that analyzed these super-cycles and accurately predicted this market crash could happen as early as August or September 2019. Within this book, Mr. Matheny made great efforts to illustrate how important it is for everyone to become aware of these bigger market cycles and to prepare for what was likely to come near the end of 2019 and into early 2020. You can get your own copy of this book here.
Additionally, smaller market cycles take place within the bigger super-cycles. This example of the 8.6-year business cycle highlights the repetitive nature of these broader market cycles. Think about how 10 of these smaller business cycles equal the much larger 85-year generational cycle. Now, think about how each stage of the roughly 20~21 year generational cycle has played out over the last 85 years.
This screen capture highlights the phases and structures of the broader Strauss-Howe generational theory. Pay very close attention to how structured the process is and what to expect in the future. Also, notice that we entered a CRISIS phase in 2005.
Past cycles have lasted more than the average 20~21 years. Longer cycle lengths are not uncommon within the broader 85-year super-cycle when larger societal events take place. Thus, this current CRISIS phase could last 25 to 35 years before a new HIGH phase sets up.
The reason we are bringing all of this together within this article is because we want to clearly stress forward and future expectations as well as to make our longer-term market concerns very clear to all of you. If, as the generational cycles suggest, we have entered a CRISIS phase and are moving toward a HIGH phase, then we are in the midst of a phase that can be very destructive to institutions and society as a whole.
“According to the authors, the Fourth Turning is a Crisis. This is an era of destruction, often involving war or revolution, in which institutional life is destroyed and rebuilt in response to a perceived threat to the nation’s survival. After the crisis, civic authority revives, cultural expression redirects towards community purpose, and people begin to locate themselves as members of a larger group.”
These super-cycles and the broader “collateral damage” issue is what leads our researchers to believe the US and Global markets may continue to target much deeper price support levels before finding a bottom. Even though the US and global central banks are doing everything possible to avoid a contagion economic collapse, we believe many people have “forgotten” about these broader market cycles and may be shocked to learn the COVID-19 virus event is happening in the midst of an 85-year generational Super-Cycle that predicts a true price bottom (new HIGH phase) may not set up until 2030~2035.
Let’s take a look at where our Adaptive Fibonacci Price Modeling system is suggesting the markets may bottom.
DAILY S&P 500 FUTURES CHART
We’ll start by exploring this Daily ES chart which highlights two key Fibonacci downside price targets: 1683 and 1225. Look for the GREY and RED lines near the bottom of this chart and look for the BLUE/RED and GREY SQUARES near the right edge of this chart. These SQUARES are the DAILY Fibonacci downside price targets as calculated by our Adaptive Fibonacci Price Modeling system.
Also, pay attention to the CYAN price channel that we’ve drawn on this chart highlighting the current downside price channel that has setup. It is our opinion that price will likely attempt to stay within this price channel as it moves deeper to target these support levels – eventually attempting to set up a bottom near either of these deeper Fibonacci support levels.
WEEKLY S&P 500 FUTURES CHART
This Weekly ES chart highlights the Weekly Adaptive Fibonacci Price Modeling system’s results – which are almost exactly the same as the Daily targets. This is very important if you understand that the Fibonacci price structure is supposed to be structured in a universal means throughout all price activity. Thus, if the Daily and Monthly Fibonacci Modeling system is targeting the exact same levels – then this carries much greater importance to us.
The same downside targets in the ES are 1683 and 1225. These represent a continued downside price move of -32.75% or -50.25% from current levels. The YELLOW lines we’ve drawn on the chart represent what we believe the bottom may look like if the first level of support, 1683, acts at a bottom. We do believe a bottom will set up in a FLAG formation that may take many months to complete before any real rally begins.
This Weekly NQ chart points to an even deeper price bottom. The downside Fibonacci targets are 3900 and 1865 (-48.59% and -75.15% below current price levels). These deeper price targets suggest the NASDAQ market may become unusually volatile over the next 12 to 24+ months. We believe this could become an unforeseen risk for many global investors that believe technology will recover faster than many other market sectors. If our research is correct, the NASDAQ could collapse to far deeper levels than the S&P or the Dow Industrials.
How could the NASDAQ collapse like this? Remember the “collateral damage” aspect and think about what it would take for these technology companies to loose their financial support? Companies like Twitter, Uber and dozens of others operate with negative annual cash-flow – they depend on spending money they can’t earn to stay in business. If this cash reserve vanishes – what happens?
The process of getting to these lows can come in many forms – yet the targets are still there for us to understand and prepare for.
On the weekend I wrote an interesting post sharing a trading experience I had during the 2000 bull market and how there are some similarities in price patterns and psychologically with traders as we have right now. It’s worth a read.
Watch for the global markets to continue to target recent lows. On the NQ chart, above, we’ve drawn some CYAN lines near recent lows to illustrate these levels. If the global markets do collapse to the Fibonacci levels we are predicting, then a much bigger contagion event is taking place along with the generational cycles and an unraveling of many institutional processes and functions. Remember, we may continue within the CRISIS phase of the Super-Cycle for another 3 to 10+ years. The COVID-19 virus event may be just the trigger of this collapse – but the writing has been on the wall for many decades.
Be very cautious buying into these dips at the moment. We have been warning about this event for a while. Just last week we published a short guide and our basic trading and investing strategy on how to profit from bear market cycles – explained. Our researchers predicted August/September 2019 as the “critical date” and urged “move to cash” at that time to protect your assets from this event – few listened to us while the markets continued to push higher.
Luckily, on February 23rd we closed out all of our remaining positions for our active ETF trading account with our subscribers. Our trading accounts are sitting at a new high watermark and we avoided the market crash and took advantage of the 20% rally in bonds.
Maybe more people will listen to us after reading this article and prepare for what may come in the near future? Maybe some of you will grasp the idea that these Super-Cycles are real and learn this may become the greatest opportunity of your life with our help.
As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor with any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/1.jpg5891178adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-03 10:16:302020-04-03 10:16:30Stock Market Has Entered a 25-35year Crisis Cycle Re-evaluation Event
As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/HoweStreet.png251400adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-01 10:55:532020-04-01 10:55:53Are Equities Likely To Rally?
As the world reacts to the global economic slowdown because of the COVID-19 virus event and the massive stimulus programs and central bank efforts to support the global economy, investors still expect weakness in the US and foreign markets. We believe this expected weakness will not subside until news of a proper resolution to this virus event is rooted in the minds of investors and global markets.
Hong Kong and China are currently concerned about experiencing a “third wave” of the COVID-19 virus within their society. As the economies open back up to somewhat normal, people are very concerned that a renewed wave of new infections will suddenly appear and potentially result in another shut-down event or infectious cycle? We believe all nations are watching what is happening in Hong Kong and China as they attempt to reopen their economies.
The rest of the world is still battling the rising infection rates and dealing with the economic shutdowns that have brought the global economy to its knees. Europe, Japan, Canada, and the US are all experiencing vast disruptions to their economies and commodity prices and demand expectations are collapsing as a result.
Nearly a week ago, we issued a research article that suggested our proprietary Fibonacci Price Modeling tool’s key resistance levels may become a very valid ceiling for any price recovery. It appears this is happening in the markets as the NQ Daily chart, below, shows.
The NQ resistance level, near 7880, has acted as a soft ceiling in the NQ over the past 4+ trading days. Today, the NQ briefly rallied above this level, then rotated downward below this level again to confirm this key resistance level. We believe this critical Fibonacci resistance level may continue to act as a price ceiling over the next few trading days and push prices lower as economic news and expectations hit the news this week and next.
The next downside price target for the NQ is 6565 – new price lows.
This ES Weekly chart illustrates another key resistance level near 2679. Although the ES price has not rallied up to reach this critical Fibonacci resistance level, we still believe this level is acting as a price ceiling and that the ES will weaken as future expectations are confirmed by earnings data, economic data and other collateral damage to the global economy.
We are still very early in understanding the total scope of this virus event. The US and other global central banks are attempting to front-run any weakened expectations as a result of this virus event. We continue to believe the extended collateral damage to the consumer, business and other aspects of the economy are yet to come. Most recently, consumer delinquencies have begun to skyrocket and the news is being printed about landlords and renters being unable to satisfy obligations on April 1st.
This is part of the reason why we believe further caution is warranted at this time in the markets. We issued an Important Trade and Investment Alert Yesterday.
Our research team believes a deeper price low will likely set up over the next 30+ days to establish a true price bottom. As we’ve warned, we believe extended collateral damage to the US and global economy will soon become better understood and the extended shutdown of the US and other economies only manages to complicate any positive expectations for a bottom.
We believe a deeper price low will set up within the next 30+ days and we urge skilled traders to pay attention to the broader expectations of the markets. Earnings data and other economic data will continue to stream into the news centers over the next 30+ days. Don’t get too aggressive with trying to buy a bottom in the markets just yet. Be patient and wait for the markets to show you when the bottom has really setup.
As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/191.png601850adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-01 07:54:302020-04-01 07:54:30Weakness Appears To Be Setting For This Week’s Economic Data
Many traders become very emotional when the markets turn Bearish and fail to properly understand that price structure is still driving market price movement. This morning, I highlighted this structure to my subscribers attempting to alert them to the possibility that the markets could recover moderately over the next 3 to 5+ days attempting to set up the next “waterfall” downside price event.
On January 29, 2020, I posted a research article detailing my belief that a “waterfall” type of event was setting up in the markets. This article was nearly 30 days prior to the peak in the markets. It explained how events take place and how markets tend to develop a moderate recovery phase between selloff price declines.
Skilled traders should notice the size and levels of each selloff event in the chart (above) and pay very close attention to how price initially collapsed from the peak, then recovered nearly 50% in early and late November before finally setting up a deeper waterfall price collapse in early December.
Our research team believes the US stock markets may attempt something similar over the next 3 to 5+ days as the Covid-19 economic outcome continues to process through the global markets.
The US and other Central Banks have taken broad steps to attempt to overcome the negative economic outcomes related to the Covid-19 global shutdown. Their biggest concern is that consumer activity could diminish and banking/credit firms could come under severe pressures because of a consumer collapse.
There are over 35 million US low-wage jobs that may become at-risk because of the Covid-19 virus event. We believe the true economic contagion of the global virus event may now be known until well into April or May 2020. Yet we believe these at-risk, low-wage jobs are prevalent throughout the globe and foreign nations, such as Asia and Europe, may experience a similar consumer economic contagion over the next 6+ months.
We believe the data related to the Covid-19 economic crisis will not fully be known until well into April or May 2020. Because of this, we believe the US stock markets may recover to levels near the 50% Fibonacci Retracement levels on these charts before attempting a series of further downside price moves. Skilled traders should not become overly emotional right now and pay attention to the structure of the price action as well as other technical conditions in play at the moment. Our objective is to execute trades with a highly targets success rate – not to trade on emotions.
SPY DAILY CHART
This SPY Daily chart shows the SPY would only need to rally 18.70 points to reach the 50% Fibonacci retracement level on this chart. This could happen very quickly given how close the price actually is to this key Fibonacci level. If that were to happen over the next 3 to 5+ trading days, the downward sloping price channels from our TTCharger modeling system would move lower to meet price near 278 – which would set up a new resistance zone and possibly a new wave of selling.
INDU DAILY CHART
This INDU Daily chart shows the Dow Jones would have to rally about 2025 points (to levels near 23,886) to reach the 50% Fibonacci Retracement target. If this were to happen, the sloping price channels on this chart would likely move lower to meet price near this 50% target level – presenting a very clear resistance zone for a new wave of selling to begin.
Remember, it is not about emotions or attempting to try to force the markets to adopt your “belief”. Skilled traders attempt to identify risks, opportunities and realistic technical setups that allow them to objectively determine where and when the markets are providing a real opportunity for success.
We may be just a few days away from the next major wave of selling, yet any trader who jumped into an emotional trader over the past 5+ days expecting the markets to continue to break down is likely under a fair amount of stress right now. Learn to read the charts and the structure of price more effectively and you’ll find the answers are already on the charts in front of you.
As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
If you are a more active trader and swing trader visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.
Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.
https://thegoldandoilguy.com/wp-content/uploads/2020/04/182.png465850adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-04-01 07:27:592020-04-01 07:27:59The Selloff Structure Explained – Fibonacci On Deck
In this last segment of our multi-part research article, we want to highlight our expectations of the Covid-19 virus event and how the next 6+ months of global market activity may play out. We’ve covered some of the data points we believe are important and we’ve touched on the collateral damage that may be unknown at this time. Today, we’ll try to put the bigger picture together for investors to help you understand what we believe may be the 12+ month outcome.
As the global central banks and US Fed attempt to come to the rescue, the reality is that monetary policy works better when consumers are able to actually go out and engage in spending and economic activity. If the Covid-19 virus event contracts global consumer activity, as it has recently, for an extended period of time (4 to 6+ months), then we have a real issue with how QE efforts and consumer activity translate into any real recovery attempt.
The real risks to the global markets is an extended risk that the Covid-19 virus creates a contracting economic environment for many months/quarters and potentially fosters an environment where extensive collateral damage to corporations, consumer activity, credit/debt markets, and other massive financial risks boil over.
News is already starting to hit that QE is not helping the deteriorating situation in the Mortgage banking business. Remember, this is the same segment of the financial industry that started the 2007-08 credit crisis event. News that mortgage lenders and bankers are already starting to experience margin-calls and have attempted to contract their exposure to the risks in the markets (a bit late) are concerning. This is a pretty big collateral damage risk for the global markets.
Additionally, as we expected, applications for new mortgages have collapsed to their lowest level since 2009. Until consumers feel confident in their ability to get out, engage in real economic growth and take on home loans they know are relatively secure in their ability to repay – there is going to be a continued market contraction. The next phase of this contraction is a price reduction, forced selling/foreclosures and a glut of assets waiting for a bottom.
“Home-purchase applications dropped by 14.6% while
I think the most important aspect of this global virus event is to remember that we will survive it (in some form) and we will live to rebuild after this event completes. Yet, the reality is that we were not prepared for this event to happen and we don’t know the total scope of this Covid-19 virus event. We simply don’t know how long it will take to remove the threat of the virus and for societies to reengage in normal economic activity – and that is the key to starting a real recovery.
Hong Kong has recently reported a “third wave” of Covid-19 infections. I believe we should attempt to learn from places like Hong Kong, where news is moderately accurate and reported via social media and other resources. If we want to learn what to expect in the US and how the process of containing this virus may play out, we need to start learning from other nations that are ahead of us in the curve.
It appears that any attempt to resume somewhat normal economic activities while the virus is still active spouts a new wave of infections. This would suggest that the only way to attempt to reengage in any somewhat normal economic activity would be when a vaccine or true medical cure is in place to allow nations to attempt to eradicate the virus as these waves continue. (Source: https://www.marketwatch.com/story/third-wave-hong-kong-thought-it-had-a-handle-on-coronavirus-it-doesnt-2020-03-23 )
The price collapse in 2008-09 represented a -56% decline from top to bottom. Currently, the S&P has fallen by just over 35%. We don’t believe the bottom in the US stock market has setup just yet and we do believe there is a greater downside price risk ahead. We don’t believe the housing market will be able to sustain any of the current price levels for much longer. We believe the collateral damage of this event is just starting to be known and we believe a greater economic contraction is unfolding not only in the US but throughout the globe.
Skilled traders need to understand the total scope of this event. We’ve attempted to highlight this risk in this article and in our “Crunching Numbers” research article (PART III). An economic contraction, like the Covid-19 virus event, could contract global GDP by as much as 8 to 15% over an extended 16 to 36+ month span of time. Are we concerned about the Real Estate market? You Bet! Are we concerned about global markets? You Bet! Are we prepared for this as traders? You Bet! Are the central banks global nations prepared for this? We certainly hope so.
As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
Recently, I was asked to participate in a live radio talk with Arnold Gay and Yasmin Wonkers at Money 89.3 Asia First and was sent the following questions to prepare for the show. I thought this would be a great way to share my thoughts and expectations related to the Covid-19 virus, global economics and what the Central Banks are doing to combat this virus economic event.
The reality is that the bottom in the markets won’t set up until fear subsides and the unknowns related to this virus event are behind us. Until then, the global markets will attempt to seek out the true valuation levels based on this fear and the unknowns. This means true valuation could be much further away from current price levels as the virus event is still very fluid in nature.
I’ve included a few of our custom index charts to highlight exactly where the markets are currently situated and have attempted to explain my thinking related to these charts. Please continue reading.
This first chart is our Custom Smart Cash Index Weekly Chart. We had been expecting a breakdown in the US stock market last August/September 2019 (near the origination point of the line on the RSI pane) as our Super-Cycle system indicated a major breakdown was likely near the end of 2019 and into early 2020.
As the US Fed started pumping credit into the Repo market and the US/China trade deal settled over many months, a zombie-like price rally pushed prices higher through December 2019 and into early 2020. We alerted our members that this was likely a blow-off rally and to prepare for greater risks.
You can see how dramatic the change in trend actually is on this chart. We have broken the upward sloping price channel and moved all the way to the lower range of the GREEN downward sloping price channel. This is HUGE. Near these levels, we believe the US stock market will attempt to find support while continuing to rotate and setup additional “waterfall downside price events”. These custom indexes help us to understand the “hidden side” of the market price action.
This next Weekly chart is the Custom US Stock Market Index and we want you to pay very close attention to the fact that the recent lows have come all the way down to reach the upper range of the 2016 trading range. Once the 2018 lows were breached, we knew the markets were setting up for a deeper downside price move.
We do believe this current level is likely to prompt some type of “Dead Cat Bounce” or moderate support though. The entire range of 2016 (low, midpoint and high) are very much in play right now as these represent the current support levels for the US stock market. We do believe some moderate support will be found near these levels – yet we have to wait for the price to confirm this bottom setup.
This is our Weekly Custom Volatility Index and the extremely low price level on this chart suggests the US stock market may attempt to try to find moderate support soon. We have not seen levels this low since 2009. If the markets continue to push lower, this Custom Index will continue to stay below 6.0 as the price continues to decline. Yet, we believe this extremely low price level may set up a bit of support near recent lows (within the 2016 range) and may set up a sideways FLAG formation before the next downside price leg.
Please continue reading the questions (below) and answers/thoughts to those questions (below the questions). We certainly hope this information helps you to understand and prepare for the next 6 to 12+ months as we believe the volatility and unknowns will persist for at least another 4 to 6+ months. But keep in mind the market dynamics change on a daily and weekly basis and if you want to safely navigate them and have a profitable year follow my analysis and ETF trades here
QUESTIONS:
1. Rates at zero, massive injections and coordinated central bank action… why isn’t the market convinced the situation is under control?
2. What are investors looking for now – A peak in coronavirus infection rates? A sense that a proper healthcare response is in place and won’t be overwhelmed?
3. The main issue seems to be that this is not a slowdown, but the sudden closure of economic activity, do you see massive fiscal support coming, including bailouts for sectors like airlines?
4. Do you get a sense that the White House finally gets it, and is now moving to reassure markets and ordinary Americans?
ANSWERS/THOUGHTS:
The markets are not reacting to what the global central banks are doing right now and probably won’t react positively until two things happen: fear of the unknown subsides across the globe and the total scope of the global economic destruction is assessed (think of this as TRUE PRICE VALUATION). Right now, we are in the midst of a self-actuating supply and demand-side economic contraction that will result in a renewed valuation level as markets digest the ongoing efforts to contain/stop this virus. Where is the bottom, I have an idea of where the bottom might setup – but the price will be what dictates if that becomes true.
If 2018 lows fail to hold as a support level, then we are very likely going to attempt to reach the 2016 trading range and I believe the midpoint and low price range of 2016 are excellent support levels for the market. I show the SP500, Nasdaq and Dow Jones index analysis and prediction in this video below.
What we are looking for in terms of closure of this event (or at least a pathway out of it) is some type of established containment of the event, the spread of the infections and the ability for governments and economies to begin to advance forward again. As long as we are stuck in reverse and do not have any real control of the forward objective (meaning consumers, corporations and governments are reacting to this event), then we will have no opportunity to properly estimate forward expectations and advancement in local and global economies – and that is the real problem.
The White House and most governments get it and are not missing any data with regards to this virus event. I truly believe that once this virus event ends and the general population gets back to “business as normal”, the world’s economy will, fairly quickly, return to some form of normal – with advancing expectations, new technology and continued global economic and banking functions. Until that happens, which is the effective containment and control of this virus event, then no amount of money or speech writing is going to change anything.
Far too many people are acting emotionally and afraid right now. The facts are simple; until we get a proper handle on this virus event, there will continue to be extended threats to our economy, people, families and almost every aspect of our infrastructure, banking, society and more. Once the virus event is mostly contained and settled, then we can get back to business cleaning up this mess and finding our way forward.
I’m not worried too much, my research team and I advised our clients to move into bonds and cash before the drop in equities and have been warning our members of a “zombie-rally) for the past 5+ months which took place as expected. We called for a “volatile 2020 with a very strong potential for a breakdown in global markets” near August 2019. This is playing out almost exactly like we expected (except we had no idea a virus event would be the cause).
I firmly believe the global leaders and dozens of technology firms will have a vaccine and new medical advancements to address the Covid-19 virus. I believe this event will be mostly behind us in about 90+ days. What happens at that point is still unknown, but I believe we will be able to see a pathway forward and I believe all nations will work together to strengthen our future.
In closing, I urge everyone to try to relax a bit and understand this is a broad (global) market event with a bunch of unknowns. It is not like the Fed can just throw money at this problem and make it go away. This is going to be a process where multiple nations and various industries and groups of people will have to work together to reduce and eliminate this threat. Because of that, there are no real clear answers right now – other than to be prepared for a few months of quarantine to be safe.
As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.
Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.
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