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Gold Stocks Are Overbought. You Don’t Want Prices to Go Straight Up

Bill Powers of MiningStockEducation.com talks with a professional trader and market commentator Chris Vermeulen says gold stocks are overbought and need a breather which would be good for the overall upward trend.

Chris shares how he has and is trading the junior gold sector. He called the recent February 24th top in the gold stocks before the March crash. And now he is warning to a top in some gold-stock positions during an expected pullback.

Chris also addresses whether a lot of the gap-up’s in many gold stocks must be filled before they can run higher. This interview is full of advice from an experienced trader in the gold sector.

Be sure to sign up for Bill’s free newsletter and receive interview transcripts, stock profiles, and investment ideas: http://eepurl.com/cHxJ39

0:15 Introduction
1:25 Do these gap-up’s in the charts of many gold stocks need to be filled before they can go higher?
3:14 Liquid companies more likely to get their gap-up’s filled?
5:23 Chris called the Feb 24th high in the junior gold stocks
7:32 How do you time your entry into and exit out of tiny gold juniors? 11:03 What type of pullback in gold stocks should we expect?
12:37 How Chris approaches riskier trades
15:10 Navigating trading the futures market
16:22 How are you trading oil?
18:38 Extreme volatility leads you into cash?
20:00 CAD to trend lower against the USD?
21:12 Do you close your trades before a long weekend?
22:41 What makes your trading service unique?

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 an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop 35-65% during the next financial crisis.

Just think of this for a minute. While most of us have active trading accounts, 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 the next bear market, you could lose 25-50% or more of your 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 Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Q1 GDP Data Will Likely Mask True Global Economic Future, Part II

This portion of our continued research into the Covid-19 virus event, one of the greatest disruptions to the global economy over the past 50+ years, concludes in this article.  In Part I of this article, we highlighted how price factors and economic data continue to suggest the US and the global stock market will likely attempt to retest recent lows or fall further, as the extent of the virus event continues to play out.  In this second portion, we’ll highlight some of this data and present the opposite aspect of the technical/data-driven research we’ve been providing to you.

Recently, something very important has happened in the US stock market – a breakout of sorts.  The weakness we expected to see last week prior to the new $500 billion in new stimulus appeared to end this past week.  Not only have the markets opened a bit higher this week, but they have continued to push higher over the past 3+ days.  From a technical standpoint, as long as the support channels and current trends do not falter, the US stock market may continue to push higher before breaking this uptrend.

Before we continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

NASDAQ 100 DAILY CHART

This NASDAQ 100 Daily chart highlights the upside price trend that originated a bottom just as the US Fed initiated a massive stimulus program.  Weakness in the market, from a technical perspective, is still the overall trend because of the move away from the February highs.  At this point, even if the markets continue to rally, we would need to see a substantially higher price move to establish a new bullish trend.  Yet, as long as price stays above the RSI price channel and the relatively low price channel on this chart, the upside potential is higher than the downside price trend we have been predicting.

SPY DAILY CHART

This SPY Daily chart highlights the same type of setup.  We can easily see the minor rotation in price last week which prompted us to issue a warning that price may be turning lower near key Fibonacci levels.  Yet, early this week stock prices pushed higher – even as far weaker global economic data was published.  As long as this upward trend holds, price should continue to move higher.  If it breaks below these price channels we’ve highlighted on this chart – look out below.

At this point, it appears the market is more about a battle between the US Fed and the global central bankers dumping capital into the market to prevent a greater price collapse vs. the data that is starting to support a global economic collapse that may be bigger than the 2008-09 credit crisis.  Currently, it appears global traders and investors are banking on the central bank’s capacity to pour capital into the markets to suppress risks that appear to be growing.

The next series of charts highlight the US economic data as we are just entering a reporting period that reflects the contraction in the US and global economies.  Pay attention to this data and the scope of the collapse compared to the 2008-09 crisis event.

REDBOOK RETAIL SALES INDEX (WOW)

This first chart is the Redbook Retail sales index (WoW) data.  The collapse this week and last is far greater than the lowest levels in 2008~09.


https://www.investing.com/economic-calendar/redbook-911

RICHMOND MANUFACTURING INDEX

This next chart is the Richmond Manufacturing Index – again, the newest data is near twice as deep as the 2008-09 credit crisis levels at their deepest levels. Remember, we are just starting to see the data from the Covid-19 virus event.


https://www.investing.com/economic-calendar/richmond-manufacturing-shipments-1510

US QUARTERLY GDP DATA

This next chart is the US Quarterly GDP data.  The -4.8% level is deep, but still a bit away from the -6.3% level that happened in the 2008-09 credit crisis.  Yet, we believe the Q2 GDP data could offer a number below -8~10%.


https://www.investing.com/economic-calendar/gdp-375

PENDING HOME SALES CHART

This Pending Home Sales chart confirms a very broad contraction in home buying activity.  In the midst of the 2008-09 crisis, this data printed a -29.9% data point in July 2010 – well after the bottom in the markets had completed.  We believe the next few months will present even deeper sales data.


https://www.investing.com/economic-calendar/pending-home-sales-232

REAL CONSUMER SPENDING

Real consumer spending has collapsed.  Consumer engagement makes up a large portion of all global GDP numbers.  As long as consumers stay away from normal activities, the global GDP levels will continue to contract.


https://www.investing.com/economic-calendar/real-consumer-spending-914

CONCLUDING THOUGHTS:

From a technical standpoint, at this point, as long as price continues to track within the upward sloping price trend, the bullish trend may continue for a bit longer.  Once price breaks below this channel though, look out below.

Our longer-term price modeling systems continue to suggest price is still in a Bearish price trend and this move is a bullish price recovery in a bearish price trend.  Time will tell if the markets have enough resilience to push higher even further.  We believe the data is pointing to a very real potential for a new bearish price trend to emerge.

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 an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

Subscribers of my Active Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

Ride my coattails as I navigate these financial markets and build wealth while others watch most of their retirement funds drop 35-65% during the next financial crisis.

Just think of this for a minute. While most of us have active trading accounts, 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 the next bear market, you could lose 25-50% or more of your 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 Passive Long-Term Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Q1 GDP Data Masking The True Global Economic Future?

As Q1 GDP data is released on Wednesday, April 29, which will reflect the first three months of 2020 in terms of total economic output, we believe the number will skew the current true global economic conditions to a large degree.  The pandemic shutdowns started in the US on March 15th – nearly 2 weeks before the end of Q1:2020.  Thus, we had a fairly normal Q1 in terms of economic activity, production, and consumer engagement. Everything changed after March 15th, 2020.

Skilled traders need to watch the current economic data and “week over week” data that is presented.  Skilled traders also need to pay attention to the news items that are being pushed out to the public.  Larger and larger corporations and sectors are moving towards bankruptcy or screaming for a bailout. Airlines, Hotels, Car Rental, and dozens of other sectors have all collapsed over the past 5+ weeks.  We expect real estate activity and pricing to collapse as well.  The results of the last 5+ weeks, after the March 15th shutdown started, have been anything but normal.

We continue to believe the current data and news, which is still representative of the Q1 (pre-shutdown) economic activity may lull investors/traders into believing the global economy will rebound fairly quickly from this virus event.  Traders/investors are looking at this current data and thinking, “well, this isn’t so bad”.  But they are failing to understand the true scope of the economic contraction event and what the longer-term outcome is likely to be in terms of recovery.

TOTAL WORLD GDP OUTPUT

The total world GDP output was approximately $190 trillion.  An estimated 15% to 20% global GDP contraction as a result of the Covid-19 virus event would shave $28.5 to $38.0 trillion right off the top of the 2020 global economic output.  Should the global shutdown last through the end of May 2020 (or beyond in some form), we believe the contraction in global GDP could become even more severe.

The complicated issues that arise from this global contraction in GDP also bleed over into supply-side economics.  As the world attempts to “shelter in place” to avoid spreading the virus and risking more lives, demand collapses. Once demand collapses enough (resulting in price level collapses as we’ve seen in Oil) the result in production/supply issues becomes even more complicated.  Unlike Eggs or Milk, one simply can’t bury or destroy other types of supply.  The destruction of certain industries, resources, and capabilities will become very real over time as a result of any extended contraction event.  The longer-term results of this type of event are sometimes called “stagflation” – where price levels rise as income and economic output stay moderately flat.

BEFORE WE CONTINUE, BE SURE TO OPT-IN TO MY FREE MARKET TREND SIGNALS SO YOU DON’T MISS OUR NEXT SPECIAL REPORT!

CUSTOM SMART STOCK MARKET INDEX

Our Custom Smart Cash Index highlights the “new price channel” that setup recently and why all traders/investors should really start to pay attention to how the global markets have transitioned into a new phase or price cycle.  You can see from the chart, below, that the global markets broke below an upward price channel that has been in place since 2012 recently and has established a new downward price channel spanning the December 2018 lows to the February 2020 highs.

We believe the current upward price trend on this chart is nothing more than a “bullish retracement in a bearish trend” and that the global markets will begin another downside price move within 5 to 10+ days.  As we’ve been trying to share with you over the past few weeks, the longer-term global economic disruption is just getting started.

US DOLLAR DAILY CHART

We believe the US Dollar will enter a new phase of increasing demand throughout the world as global economies begin to feel the pressures of the demand-side collapse.  We believe the US dollar is uniquely positioned to benefit from the global economic crisis simply because the US economy is the biggest and most capable economies on the planet in terms of the ability to recover from this virus event.  As foreign nations attempt to deal with weakening currencies and economies related to the collapse in demand and continued virus-related economic transitions, we believe the US economy will be one of the first global economies to regain any real growth over the next 2 to 3+ years.

Thus, we believe the US Dollar may attempt another quick downside valuation move, similar to what happened in February/March 2020, then rally to levels above 102 again as continued economic data hit the markets.  Remember, valuation levels of currencies are often based on future expectations of economic stability and capability for any nation.  The US Dollar is a bit different because it is also the “currency of choice” in terms of global economic activity.  We believe the US Dollar could begin a moderate “melt-up” process as the virus data continues to scorch the world’s economic output.

CONCLUDING THOUGHTS:

These longer-term economic expectations are key to understanding how the recovery process will create opportunities for skilled traders and investors.  We believe the world will survive this virus event.  Yet, we also believe the global economic landscape will likely change over the next 3+ years as this virus event could very easily push many foreign nations away from economic relationships or projects they have engaged in over the past 10+ years.  This virus event is really a “big game-changer” in terms of how and what the future of the global economic world will look like for many.

As we’ve warned many times, it is not the localized “one-off” economic event that presents a real problem for the global economy – central banks can simply patch the economy up with an infusion of cash.  The bigger problems for the global economy happen when a fundamental shift takes place that lasts 6 to 12+ months and disrupts the “systems” in place throughout the globe.  We believe this virus event could start a process that disrupts supply, demand, consumer engagement, and true valuation levels of almost all commodities and assets throughout the globe over the next 24+ months.

In Part II of this article, we’ll attempt to share more data and highlight where opportunities may present real profit objectives for skilled investors and traders.

The next few years are going to be full of incredible opportunities for skilled traders and investors.  Huge price swings, incredible revaluation events, and, eventually, an incredible upside rally will start again.

I’ve been trading since 1997 and I’ve lived through numerous market events.  The one thing I teach my members is that risk is always a big part of trading and that’s why I structure all of my research and trading signals around “finding profits while reducing overall risks”.  Sure, there are fast profits to be made in these wild market swings, but those types of trades are extremely risky for most people – and I don’t know many successful traders that want to risk their hard-earned money when daily price swings in various assets are moving 10% to 95%.

I’m offering you the chance to learn to profit, as I do with my own money from market trends that I hand-pick for my own trading.  These are not wild, crazy trades – these are simple, effective, and slower types of trades that consistently build wealth.  I issue about 2 to 4+ trades a month for my members and adjust trade allocation based on my proprietary allocation and risk algo – the objective is to gain profits while managing overall risks.

You don’t have to spend days or weeks trying to learn my strategy.  You don’t have to try to learn to make these decisions on your own or follow the markets 24/7 – I do that for you.  All you have to do is follow my research and trading signals and start benefiting from my trading experience.  My new mobile apps make it simple – download the app, sign in and everything is delivered to your phone, tablet, or desktop – updates, videos, education, and trade alerts.

I offer membership services for active traders, long-term investors, and wealth/asset managers.  Each of these services is driven by my own experience and my proprietary trading and risk modeling systems.  I have a small team of dedicated researchers and developers that do nothing but research and find trading signals for us to take advantage of together. Our objective is to help you protect and grow your wealth.

Please take a moment to visit www.TheTechnicalTraders.com to learn more.  I cannot say it any better than this…  I want to help you create success while helping you protect and preserve your wealth – it’s that simple.

Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.

Kevin O’leary and Chris Vermeulen on TraderTV Talking Economy & Markets

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.

Virus Curve, Market Crash, and Mortgage Massacre

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.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

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

refinancing applications plummeted 33.8%… “

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.

Chris Vermeulen
www.TheTechnicalTraders.com

What happens To The Global Economy If Oil Collapses – Part 2

In the first part of this research article, we shared our ADL predictive modeling research from July 10th, 2019 where we suggested that Oil prices would begin to collapse to levels near, or below, $40 throughout November and December of 2019.  Our ADL modeling system suggests that oil prices may continue lower well into early 2020 where the price is expected to target $25 to $30 in February~April 2020.

We believe this type of global commodity price collapse, essentially collapse in oil revenues for many global nations could present a very real crisis in our future.  Most of the oil-producing nations rely on stable oil prices to supply much-needed revenues/income to support current and future operations and essential services. If oil prices collapse to levels below $40, this decrease would represent a -40%, or more, collapse in oil revenues for these nations.  If oil prices fall to levels below $30, this would represent a -55%, or more, decrease in expected revenues.

You can get my daily market analysis articles and trade ideas by opting into my free market trend signals newsletter.

We believe the ADL predictive modeling systems results, if accurate, represents a very real potential that the global capital markets and stock market may experience a major crisis event before the end of 2020.  This type of commodity collapse happened once before in history – nearly 10 years before the 1929 US stock market collapse and the slide in commodity prices continued in 1930 and beyond as an extended economic contraction pushed the US into an economic depression.

PRODUCER PRICE INDEX FOR ALL COMMODITIES FROM 1914 TO 1933

Take a look at these charts for comparison.  The first is a chart of the Producer Price Index for All Commodities from 1914 to 1933. Pay close attention to how commodity prices collapsed in 1921, approximately 9 to 10 years before the US stock market peak (1929) and commodities continue to slide lower.  This collapse in commodity prices relates to the consumer, agriculture, and industrial demand after WWI and setup a shift within the capital markets more focused on stock market speculation. The period between 1923 and 1929 resulted in a complete shift in the capital markets where farms, agriculture, and manufacturing levels decreased while urban areas, cities, and the stock market flourished – until it ended in 1929. (Source: https://eh.net/encyclopedia)

MONTHLY CRUDE OIL CHART

Now, take a look at this Monthly Crude Oil chart which highlights very similar types of price patterns over the span of about 10 years.  This strangely similar chart, in combination with the strangely similar set of circumstances related to farm, agriculture, and manufacturing as well as the shift of capital towards speculation in the US/Global stock market may be setting up another type of 1929 stock market peak event.

ASSETS IN MONEY MARKET ACCOUNTS

The shift in the capital markets is very clearly seen in the following chart – the Assets in Money Market Accounts chart.  One can clearly see that after the credit crisis in 2008-09, investors were not willing to participate in the Money Markets at levels prior to 2008.  In fact, for the entire period of 2009 through 2017, global investors stayed away from Money Markets and only recently began pouring capital back into the markets near late 2017 – when confidence increased.

Yet, this chart also shows a very clear “shift” in capital engagement which is very similar to what happened in the late 1920s.  At a time when manufacturing, agriculture and farm foreclosures were haunting the markets, investors poured capital in the stock market and speculative investments because these instruments were ripe with opportunity. The rally in the US stock market in the late 1920s became an opportunity that no one could resist.  Is the same thing happening right now in the US stock market?  Has a capital shift taken place that has global investors bumbling their way into the US stock market while trying to avoid/ignore obvious risks in local markets, manufacturing, and the global economy?

We believe the evidence is very clear for any investor willing to pull off the “bubble goggles” and take a good hard look at where we really are in the economic cycle.  Unless something dramatic changes in relation to global economic growth, credit market expectations and consumer economic participation, it seems obvious that we are inching our way towards a global stock market peak just like we did in 1929.

Even if a trade deal between the US and China were to happen today and eliminate all trade tariffs, would this change anything or would this simply pour fuel onto the “capital shift” fire that is already taking place with speculation reaching frothy levels?

Skilled technical traders should pay very close attention to Oil Prices and global economic factors while this “zombie-land melt-up” continues.  We believe this is not a healthy rally in the US stock market currently and is more similar to what happened in the last 1920s than anything we’ve seen over the past 80+ years.

In Part III of this research article, we’ll highlight some of the recent economic news that helps to further identify the complexity that makes up the current global stock market  “zombie-land”.

If you want to earn 34%-50% a year return on your trading account with very few ETF trades then join me at the Wealth Building Newsletter today!

Chris Vermeulen
www.TheTechnicalTraders.com

Negative Yields Tell A Story Of Shifting Economic Leadership

Negative yields are becoming common for many of the world’s most mature economies.  The process of extending negative yields within these economies suggests that safety is more important than returns and that central banks realize that growth and increases in GDP are more important than positive returns on capital.  In the current economic environment, this suggests that global capital investors are seeking out alternative solutions to adequately develop longer-term opportunities and to develop native growth prospects that don’t currently exist.

Our research team has been researching this phenomenon and how it relates to the continued “capital shift” that is taking place throughout the globe.  We believe we have some answers for anyone interested in our opinions.  We also believe the longer-term answers will depend on what happens over the next 5 to 7 years throughout the globe and how economic expectations shift as well as how global debt is dealt with.

We urge all of our followers to read all of the segments of this research post about how the global central banks are pushing the envelope and have been for many years :

Aug 14, 2019: GLOBAL CENTRAL BANKS MOVE TO KEEP THE PARTY ROLLING

Throughout our research, we referenced a number of current articles to determine our own outcomes and expectations.  Some of the articles we used as reference are listed below.

Sources for some of our research:

Each of these resources helped to create a bigger picture of what we believe will likely happen and how the process may unfold.  We’ll start by attempting to understand the core elements of the negative yield perspective and how/when it may change.

Negative yields are a result of expected economic malaise rooted in the understanding that GDP growth and economic output are relatively flat and not expected to rise.  It comes down to the fact that if investors identified true growth opportunities in the major global economies, the yields for the debt instruments would reflect investor optimism (resulting in higher yields).  Thus, the core element of the current global economic malaise is that the planet is transitioning from a very fragile 19th-century economic model into something new – we call it the 21st-century economic model.

This process will likely take an additional 10+ years to really begin to complete and may require many false starts as the world begins to understand exactly what is required to make this transition.  Debt, as a process of engaging in economic activity, is something that is essential for some level of inflation, income, and the creation of future growth.  Debt becomes a major issue when growth declines over extended periods of time resulting in a default risk for some nations/countries.  Yet, as the human population continues to expand and global central banks continue to attempt to find the spark that will launch the new economic growth model, debt is essential to avoid economic contraction.

As we’ve hinted to, above, we believe the true answer is the transition away from 19th century economic structures that have resulted in massive risk factors (like unfunded pensions, unfunded state, and federal liabilities and massive global bank, investment banking and industrial level economic “black holes”) and to move towards true new world economic model.  What that looks like is something we are considering at the moment and have a few ideas of.

Currently, there are a few new industries that show promise across the globe in terms of the new 21st-century economy and fledgling new industries.

_  Cannabis industry

_  Human Care Services Industry

_  Alternate housing Solutions

_  Eco-Sustainability Solutions

_  Fintech Wealth Creation Solutions

_  Social/Infrastructure Restoration Solutions

We believe the next 10+ years will become very fluid as traditional economic models are replaced with newer, more alternative, types of economic solutions that spark real growth industries and opportunities.  We hope this process of transition initiates fairly quickly before any extended failure process takes place to start the reduction of capacity and resources that will be required for the rebuilding of the new 21st-century economy.  Time will tell.

What this means for the rest of us is that we need to stay very focused on the fact that transitional asset shifts are very likely over the next 10+ years.  The only time in history that we believe was similar to the current global economic environment was shortly after WWII.  Global debts had skyrocketed and economic expectations throughout the planet were mild at best.  Germany and most of Europe was beginning a rebuilding process while most of SE Asia and Japan were also attempting to rebuild and restructure after a brutal series of global wars.  Much of the outside world was still in some form of an undeveloped economic structure at that time.  For most of the developed world, the process of rebuilding and identifying real economic growth came nearly 20 years after the end of WWII – near the late 1950s and early 1960s as a type of Renaissance Era.

Given today’s world and how quickly things progress, we believe the process may take about 7 to 14 years to complete this time – depending on how quickly we are able to transition the global away from risks and systematic failures that are a result of clinging to failed 19th-century components.

It is our opinion that wild price rotations in a variety of global assets will plague the global markets over the next 7+ years as pools of capital are moved into and out of opportunities for returns and gains.  We believe all of the world’s global markets are at risk for these very volatile rotations in price levels and that individual segments of the global markets will become targets for price declines and advances as capital attempts to force a “price discovery” process that seeks to identify true price values.

The process of true price discovery is convoluted with the steps of shaking off old expectations, risks, liabilities, falsehoods, and processes while attempting to identify real future value and executing the steps to transition these resources into renewed future expectations.  It is almost like tearing down a structure in order to build something better and more efficient from the usable pieces of the old structure.

Our opinion is that skilled technical traders need to stay very fluid right now and to understand that broader risk factors are at play throughout the globe.  Every major and minor economy on the planet will likely feel some aspect of the transition that is taking place within the global economy.  We’ve highlighted a few charts, below, to show variations of risk as related to the trends that have taken place over the past 8+ years.  Two of these charts shows a Pitchfork type of price channel.  Once price breaks below these price channels, we enter a new territory of downward price trends that will begin the price discovery process.

This chart of the German DAX suggests the lower price trend channel is currently near $9300.  As time progresses, that channel continues to rise.  We would expect the $10,000 level to be a critical psychological level going forward.

This chart of the FSTE 100 shows a similar pattern where the lower price channel is near $5450 currently.  As we progress further in time, that level continues to rise.  We would suggest the $6000 will become critical for price support in the FTSE going forward.

The SPY sets up a similar pattern but shows more of our cycle and other research elements.  The lower BLUE price channel, near $240, is our current price channel providing longer-term support.  Below that level, we would fall back to the 2016 lows near $209.40.

Pay attention to what happens in the global markets over the next 6 to 18 months.  The US Presidential election, Brexit and a host of other global issues are still playing out.  We believe we are just starting this transition process and we believe now is the time for all skilled technical traders to fully understand that risks, price rotation, and true price discovery are very likely outcomes that may drive very wild price moves for many years into the future.

We urge all of our followers to read all of the segments of this research post about how the global central banks are pushing the envelope and have been for many years :

Aug 14, 2019: GLOBAL CENTRAL BANKS MOVE TO KEEP THE PARTY ROLLING

CONCLUDING THOUGHTS:

In closing, sit back and think about all the opportunities that will be created over the next 7+ years if you are skilled enough to trade these massive price swings.  Think about how the world will transition away from risk factors that continue to plague our future and towards something that will usher in a 50+ year run of opportunity and gains.  If you are young enough to enjoy this run, now is the time you will want to find a solid team of people that can help you navigate this process and find success.

We are only halfway into August and we have already closed out 24.16% in gains from the falling SP500 using SDS, and the pop in gold using UGLD, and from the oversold bounce and rally in silver miners SIL.

We urge all of our followers to pay attention to our research, consider your options very closely and prepare for this next move by pulling some of your active portfolio away from risks and into more protective measures.  This Crazy Ivan event is just 10 days away and we really want to urge all of our followers to not under-estimate this event cycle.

WARNING SIGNS ABOUT GOLD, SILVER, MINERS, AND S&P 500

In early June I posted a detailed video explaining in showing the bottoming formation and gold and where to spot the breakout level, I also talked about crude oil reaching it upside target after a double bottom, and I called short term top in the SP 500 index. This was one of my premarket videos for members it gives you a good taste of what you can expect each and every morning before the Opening Bell. Watch Video Here.

I then posted a detailed report talking about where the next bull and bear markets are and how to identify them. This report focused mainly on the SP 500 index and the gold miners index. My charts compared the 2008 market top and bear market along with the 2019 market prices today. See Comparison Charts Here.

On June 26th I posted that silver was likely to pause for a week or two before it took another run up on June 26. This played out perfectly as well and silver is now head up to our first key price target of $17. See Silver Price Cycle and Analysis.

More recently on July 16th, I warned that the next financial crisis (bear market) was scary close, possibly just a couple weeks away. The charts I posted will make you really start to worry. See Scary Bear Market Setup Charts.

FREE GOLD OR SILVER WITH MEMBERSHIP!

BECOME A TECHNICAL TRADER AND PROFIT
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Chris Vermeulen

Global Central Banks Move To Keep The Party Rolling Onward

The recent news that the US Fed, China and many of the global central banks are continuing to make efforts to lower rates and spark further consumer spending and economic activity is reminiscent of the late 2010~2013 global economic recovery efforts.  This was a time when the economy was much slower than current levels and when central banks were doing everything possible to attempt to raise consumer and business activity related to capital.

The world’s governments and banks operate on a very simple premise – transactions and economic activity must continue to operate within a fairly standard range of consistency in order for tax revenues and transactional fees to drive profits/income.  If extended periods of economic contraction persist, the capacity to function within standard operating parameters diminishes very quickly for these institutions.  A -5% to -10% contraction in asset values, transactional business, tax revenues and/or consumer activity over an extended period of time could result in a catastrophic set of events taking place.

All the credit issues and interest rate changes recently allowed us to profit from collapse in the stock market and rally in metals for a quick 24.16% profit last week.

The 2008-09 global credit market collapse

In the 2008-09 global credit market collapse, we witnessed an event that accelerated well beyond this -10% contraction very quickly.  We believe the reason the US Fed and Global Central Banks are engaging in stimulus that is designed to attempt to spark further lending, borrowing and increased consumer activities to prompt another round of expansion within the global economy.  We believe these efforts to support global asset prices and transactional processes and fees may end up supporting a process where many central banks and governments may end up paying consumers to borrow (negative interest rates) and pay consumers to continue engaging in economic activities.

Historically, central bank rates have never been this low in recent history and recent news that global central banks may continue to lower interest rates, ease monetary policy and introduce new stimulus programs suggests that concerns of a global market recession are real and that concerns the global consumer may contract economic activity and spending are real.  Yet, is the answer to this problem related to real lending rates or something else?

Countries where risks are excessively higher rates

It appears from our research that the only countries that are capable of operating at rates that are closer to normal are countries where risks are excessive and rates are higher because they need to attract investment into their debt/bonds.  Established markets appear to be operating in a mode where lending rates are not conducive to traditional economic mechanisms of spending, saving, investing and rational accounting fundamental.  The closest example we can use to attempt to explain this process is to state that we believe the credit markets never fully recovered after the 2008-09 credit market collapse and the new debt created from that event has, as of yet, failed to prompt any real economic expansion.

We believe the global economy is within a transitional process that will result in a longer-term economic expansion – yet we believe the process of achieving this expansion may require the destruction of certain aspects of the current economic system.  The chart below highlights the efforts from 2003 through early 2019 of global banks to stimulate and stabilize the global economy with every tool available.

As difficult as it is to see in this image, global central banks have engaged in various efforts, at various times, to enact a concerted effort to stimulated the global economy, then back away from stimulus to evaluate the individual processes of the global economy and its ability to support itself.  Each rise in QE activity is marked with new challenges and new efforts to spark economic activity.  We believe one of the main challenges of this policy is that QE efforts may have benefited the wrong segment of the global population at the time and further eroded the intended outcome of these efforts.

CONCLUDING THOUGHTS:

Throughout this incredible global effort to stimulate and stabilize the global economy, certain facets of the global economy have reacted positively while others have reacted negatively.  Obviously, the benefits and failures of this continuing effort to transition through the recent economic malaise have resulted in a number of various advancements and declines over the years.  It is rather interesting how capital has shifted into and out of various markets, segments, commodities and other forms in an effort to chase opportunity and returns while it appears the fundamental components of the global economy are still somewhat weak.

Next, in Part II of this article, we’ll take a look at some of the winners and losers over the past 10 to 20+ years as a series of global economic events continue to roil the global markets and we’ll discuss what we believe may become the final transitional phase of this global event.

MORE WARNING SIGNS AND TRADES TO BE AWARE OF: GOLD, SILVER, MINERS, AND S&P 500

In early June I posted a detailed video explaining in showing the bottoming formation and gold and where to spot the breakout level, I also talked about crude oil reaching it upside target after a double bottom, and I called short term top in the SP 500 index. This was one of my premarket videos for members it gives you a good taste of what you can expect each and every morning before the Opening Bell. Watch Video Here.

I then posted a detailed report talking about where the next bull and bear markets are and how to identify them. This report focused mainly on the SP 500 index and the gold miners index. My charts compared the 2008 market top and bear market along with the 2019 market prices today. See Comparison Charts Here.

On June 26th I posted that silver was likely to pause for a week or two before it took another run up on June 26. This played out perfectly as well and silver is now head up to our first key price target of $17. See Silver Price Cycle and Analysis.

More recently on July 16th, I warned that the next financial crisis (bear market) was scary close, possibly just a couple weeks away. The charts I posted will make you really start to worry. See Scary Bear Market Setup Charts.

FREE GOLD OR SILVER WITH MEMBERSHIP!

BECOME A TECHNICAL TRADER AND PROFIT
CLICK HERE

Chris Vermeulen