Quite a few traders have been discussing the recent rally of Bitcoin to recently breach the $10,000 level on May 7, 2020. This psychological price level is a major milestone for Bitcoin – even though the price has fallen into an extended Flag/Pennant formation since reaching the recent peak. Many traders and speculators are expecting Bitcoin to rally alongside the precious metals sector as there appears to be a strong belief that Bitcoin aligns with precious metals well. Our researchers attempted to put this assumption into a simple test and this is what we found.
Bitcoin appears to be similarly volatile in comparison to precious metals, although the overall trending of Bitcoin has been moderately lower since the peak levels in February 2020 whereas the Gold/Silver sectors have seen advancing price activity over the same span of time. Precious metals rallied much quicker after the bottom near March 2020 whereas Bitcoin didn’t really begin to rally until late April 2020. Because of this disconnect in price association, we don’t believe Bitcoin is aligned with the precious metals segment.
Bitcoin doesn’t seem to be aligned with the price action of the Dow Jones either. Initially, after the peak in February 2020, the price alignment between Bitcoin and the DJI was almost in sync. A broader price disconnect appears to be more evident in late April where Bitcoin rallied and the Dow Jones stayed rather flat. Because of this shift in price alignment – we believe Bitcoin is not aligned with the Dow Jones well enough to derive any cross-market correlation.
Additionally, we attempted to compare Bitcoin to major consumer sectors (communications, staples, and utilities) to see if we could find any measurable correlation to these sectors in relation to Bitcoin price activity. Again, the early price alignment of all of these seemed somewhat in-sync in the early downside price collapse in February 2020. Yet that alignment quickly deteriorated in early March 2020 as Bitcoin prices collapsed and bottomed while the consumer sectors continued to trend a bit lower until after March 20, 2020. The one thing we did notice is that the consumer sectors appear to be much less volatile than Bitcoin in both downside and upside price activity.
BITCOIN – COMMUNICATIONS – STAPLES – UTILITIES
Lastly, we compared Bitcoin to the NASDAQ 100 and the Russell 2000 attempting to find any price correlation between these major market sectors. Although the price correlation is not perfect, our researcher believes Bitcoin is moderately closely correlated to the Russell 200 more than any other symbol/sector we have attempted to analyze. Many of the bigger, more prominent, upward, and downward price cycles/trends seems to align with the Russell 2000 price action (often within 1 or 2 days of the Bitcoin trends – if not immediately).
For example, the bottom/base near April 21 aligned almost perfectly between the two symbols, the rally starting near April 25 began 1 day apart on both symbols, the peak in price before a moderate selloff on March 26 happened on almost the same day for both symbols, the moderate upside peak before the big collapse on March 4 occurred only one day apart. Even though there is a broad price volatility difference between Bitcoin and the Russell 2000, the correlations between the two symbols seem much more aligned than any symbols we’ve attempted to run other comparisons.
We will add that appears a recent shift in price activity may be starting to disassociate Bitcoin to the Russell 2000 over the past 7+ days. Our researchers have identified the Russell 2000 (and other consumer sectors) appear to be attracting new investments from skilled technical traders while the major sectors appear to be weakening. We believe this is because capital is shifting away from already pricey assets and moving into undervalued assets that may do well as the recovery strengthens.
BITCOIN – NASDAQ 100 – RUSSELL 2000
Will Bitcoin continue to rally above the $10,000 level? Eventually, the answer to that question is “probably – yes”. The one thing we want to bring to our reader’s attention is the immediate downside price correlation of Bitcoin to all of the various sectors and symbols we’ve presented today. When a broader downside price collapse happens in the US/Global markets – it appears Bitcoin is not immune or considered a decentralized asset class in any form. Bitcoin seems much more aligned with the Dow Jones and/or the Russell 2000 than any other symbols/sectors.
Because of this alignment, we suggest traders watch the Dow Jones and the Russell 2000 for price trend correlations that may relate to how Bitcoin price activity may react in the near future. Until this correlation is broken, we believe the alignment in price is relatively predictable for skilled technical 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. 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.
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.
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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
Exactly one month ago, on February 20th, the SP500 made an all-time high and reversed its trend to the downside. What a wild ride the last month has been across virtually all asset classes.
Out of all the major indexes, commodities, and currencies, only one asset and trade moved higher. It’s no surprise given the title that cash or the US Dollar is the asset of choice having rallied over 9% while everything else fell with bonds down 22.75%, stocks 30%-40%, gold miners 58%, and crude down 62%.
My team and I have talked about this rotation to safety into USA/US Dollar) since the lows back in 2018. During the recent stock and commodity price crash, we have seen where investors are dumping their money. It’s not gold, it’s not bonds, but the US Currency. Stocks and commodities are being sold around the globe, and that money is buying up the US dollar.
US DOLLAR RISES ABOVE THE REST
PROOF THE GREENBACK IS STILL THE #1 CURRENCY WORLD WIDE
DAILY S&P 500 INDEX – SUPPORT, BOTTOMING SIGNAL, AND RESISTANCE
The 30+% correction in the ST&P 500 index has been an extraordinary event. Those who have proven trading strategies and abide strictly to position, and risk management rules have been able to not only avoid the market crash but profit and reach new account highs. While those who trade for the thrill, expect oversized gains regularly, and who don’t have a clear trading plan or position management are suffering from the recent selloff.
Last night I watched a great video talking about performance and the winning mindset that both traders and top athletes share. The different ways someone can trade profitably in the markets is fascinating. If you want to be inspired to be a better person and trader, take a look at this video by Real Vision with Dr. Gio Valiante.
Ok, so let us jump into the charts. As a technical analysis and trader since 1997, I have been through a couple of bull/bear market cycles. I have a good pulse on the market and timing key turning points for short-term swing traders and long-term investors.
As you will see from the chart below, I keep things easy for you to see visually and get the idea of what to expect moving forward. The green line is a very significant long term support level on the S&P 500 index. Knowing that price has fallen straight down to this level gives us a much higher chance of a bounce at a minimum.
Trade Tip: The faster the price moves to a critical support or resistance level, the higher the chance you will have a bounce back from that level for a candlestick or three.
The pink arrow on the chart points towards a candlestick pattern, which I call Tweezers. These should be seen as a possible reversal signal.
Lastly, is the red resistance zone. I know it’s a huge range, but at this point, it’s the area we will zero in on once/if price starts to near that level.
30 MINUTE S&P 500 TRADING CHART
This chart is the 30-minute chart of the index and only shows regular trading hours between 9:30 am ET and 4 pm ET. While this is only 1/3rd of the trading day for futures, it is when the majority of contracts/shares are traded, so that is my main focus for analysis.
Since 2001 I have been building and refining my trading strategies to make them somewhat automated. This chart below shows my trend colored chart, which is the basis of my trading for almost all asset classes. What the S&P 500 does directly relates to how I trade or avoid other asset classes.
Recently, we created a market gauge showing you visually where the market is within its 30-50 day price cycle.
When the trend changed, and the bars turned orange on Feb 25th subscribers, and I closed our equities position because they were now out of favor. This allowed us to avoid the market crash through trend analysis, and from our trailing stop order.
FIRST WAVE OF SAFETY WAS IN BONDS
The two charts below of bonds show the same trend and trades but share some different trading tips.
The first 30-minute chart shows a pink line, which was our trend trade. The strategy is to look for large patterns, wait for a trend change, and then take advantage of the new trend. This trade we entered mid-January.
The key points from this chart are to know when the price goes parabolic in any direction and with huge price gaps, know its time to start scaling out of a trade, or close it.
BONDS DAILY CHART – SPOT LARGE PATTERN, TRADE THE BREAKOUT
The second point is that you must have a trading plan and actively manage your trade by moving up protective stop orders, so when price corrects, you are taken out of the trade automatically.
This daily chart of bonds shows the large bullish chart pattern (bull flag). I waited for price to breakout, the trend to turn green, and then entered the trade using Fibonacci extensions for price targets, which I have found are the absolute best way to spot our price targets. If bonds were to rally to the 100% measured move, we would close the trade, and that is what happened exactly.
A few things took place at that price level, which has the charts screaming at me to sell. First, the 100% target was reached. The second was that price was going parabolic with a 10% gap higher above my target, and volume was extremely high, meaning everyone, including their grandmother, were buying bonds. If everyone is buying the same thing, its time to move on to a new chart.
GOLD AND GOLD MINERS AS A SAFE HAVEN
While subscribers of my ETF trading signals and I profited on GDXJ as an early safe-haven trade exiting our position at the high tick of the day before it reversed and fell 58%, most traders I know still hold their gold miner’s positions.
For most of us, it is tough to sell a winning trade, and it is even harder to sell a losing trade. And knowing most trades will turn into a losing trade if you hold them long enough, the odds are clearly stacked against you as a trader.
This pullback in metals and miners, which turned into something much larger than I ever expected, is a huge shock to most people. The reality is history shows during extreme volatility/fear both gold and bonds collapse, and it is nothing new or unexpected.
In fact, I posted a warning that both will fall two days before they topped and collapsed in this special report.
CONCLUDING THOUGHTS:
In short, we are experiencing some unprecedented price swings in the financial system, but other than extra-large market selloffs, and rallies the charts are still moving and telling us the same things for trading and investing.
There are times when the markets are untradable as a swing trader, which is has been the last 15 days because of how them market has been moving. It is a fantastic time for day traders, but with some sectors moving 10-25% a day back to back like the gold miners or crude oil, it is high-risk trading (gambling) right now.
With all that said, my inter-market analysis is pointing to some tradable price action potentially starting next week. The potential is larger than normal because price volatility remains elevated, meaning 10-20% moves over a week or two are expected.
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.
https://thegoldandoilguy.com/wp-content/uploads/2020/03/73.png6131024adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-03-20 09:40:132020-03-20 09:40:13Cash Is King, Not Gold, Not Bonds
Chris Vermeulen says money is moving just as it has in the past 5 waves of panic. This is a normal technical behavior in this type of market. There will be a huge move when money comes back into the stock market within several weeks. This will mark the first bounce in the bear market. All the countries of the world are pumping and dumping money into their economies.
Eventually, the music will come to an end. Dumping trillions may work out well for everyone, Americans, government, and investors. Whatever happens, it’s going to be a major plus for precious metals and mining stocks.
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.
https://thegoldandoilguy.com/wp-content/uploads/2020/03/A1.jpg266400adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-03-19 10:40:392020-03-19 10:40:39Coronavirus Induced Bear Market with Chris Vermeulen
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.
https://thegoldandoilguy.com/wp-content/uploads/2020/03/61.png544850adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-03-18 14:27:512020-03-18 14:27:51Four Key Questions To This Crisis Everyone is Asking
It is another blood bath in the markets with everything down, including TLT (bonds) and gold. Safe havens falling with stocks is not a good sign as people are not comfortable owning anything, even the safe havens, and this to me is a very bearish sign.
Now, with that said, this is one day one of this type of price action and one day does not constitute a new trend or change the game, but if we start seeing more of this happen, we could be on the verge of the bear market we have all been expecting to show it ugly face.
The SP500 (SPY) is down 19.5% from the all-time high we saw just three weeks ago, and the general bias for most people is once the market is down 20% that is a new bear market. I can’t entirely agree with that general rule. Still, a lot of damage is happening to the charts. If price lingers down here or trades sideways for a few months I will see it as a new bear market consolidation before it heads lower, and we start what could be very deep market selloff and test 2100 on the SP500 index (SPY $210) for the next leg down looking forward several months.
20% STOCK MARKET CORRECTION ARE NOT BEARISH
Just because the markets have a deep correction of 20% does not mean its game over for stocks. Just take a look at the chart below on what happened the last time the market corrected 20%. As you can see, they were the biggest and best investor opportunities over the past 12 years. Today, my friend called and said they heard on the news that we are now officially in a bear market, and what should he do?
20% CORRECTIONS CAN TURN INTO A BEAR MARKET – BE READY
The SP500 fell 20% in 2001 and again from the 2007 high its lows, then bounce 10% – 14 over the next few months before rolling over to start its first bear market leg. I feel something similar will happen this time, which would put us a few months before the price should test these lows again and breakdown to give us optimal time to reposition our long term portfolio.
Once we do start a bear market, you will notice price moves very differently from what we have experienced over the past 12 years. How you trade now likely will be a struggle to make money. If you try to trade bonds, they are relatively tricky because of how they move during a bear market. The stock market can fall for a year, and bonds are still trading at or below the price they were when the bear market started. This different price action is what happened in 2001-2002, and again in 2008.
BONDS GO BALLISTIC
Bonds also take on the price action similar to how the VIX trades with violent price spikes only to fade back down again quickly, and this generally happens near the end of a bear market, or extreme selloff like we are in now. Heck bonds (TLT) jumped 30% just in the past few weeks, we caught it, but most traders missed this move. You need to understanding market sentiment and how to trade bear market type price action because that is how the market is moving this week, and trading/chart patterns become more sentiment-driven than logical trading setups and trades become counterintuitive.
I also traded GDXJ for a 9.5% gain and closed that position at open for the high tick with my followers, and we didn’t follow my proven trading rules for price targets, trailing stops, and reading the market sentiment we could be down over 30% today which I know many traders are simply because they lack control of their trading (no defined rules, fall in love with positions). I’ll be doing a detailed gold and gold miners article so stay tuned!
I share this analysis, not to scare you, but let you know where we stand. The stock market is treading on thin ice, and if/when it breaks down, a new bear market will have started. Remember, we are still in a bull market, but the coronavirus is stopping businesses, which means earnings will be poor, and that is why stocks are falling. Investors know stocks are worth less money if they make less money; it is that simple.
The type of market condition I think we have entered could be here for a while, a year or three, and it’s going to be a traders market, which means you must have a trading strategy, plan your trades, and trade your plan. It’s amazing how simple a few trading rules are written down on paper can save you thousands of dollars a year from locking in gains, or cutting losses. I have this mini trading strategy mastery course if you want to take control of your trades and override your emotional issues. It’s easy to hold winners until they turn into losers, taking to large of a position, or maybe you have masted the art of buying high and selling low repeatedly? Yikes! It happens to most traders, and it can easily be overcome with a logical game plan I cover in the crash course, pun intended 🙂
Someone yesterday I spoke with said that in the USA alone already had 10,000 people die just from common influenza, yet here we are freaking out over 17 dead in the USA. Sure, its bad news, but the common sicknesses for older citizens makes coronavirus seems a little blown out of proportion. There are conspiracy theories out there and this could be bioweapon which is scary and I am no expert in this field but my sources are not concerned with the Conornavirus. I want to think a cure gets found soon, and if so, the markets will rebound with a vengeance, and we can relax.
In short, if you have lost money with your trading account this year, holding some big losing trades that were big winners just a couple of weeks ago, I think it’s worth joining my trading newsletter so you can stay on top of the markets. I take the loud, emotional, and complex market and deliver simple common sense commentary and a couple of winning trades each month.
My trading is nothing extreme or crazy exciting because I’m not an adrenaline trading junky. I only want to grow my entire portfolio 2-4% a month with a couple of conservative ETF trades and make a 22%-48% return on my capital without the stress of being caught up in this type of market and feeling like I always need to be in a trade.
https://thegoldandoilguy.com/wp-content/uploads/2020/03/2.png606923adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-03-11 11:50:492020-03-16 11:58:29Is This A Bear Market When Stocks Crash 20% and Bonds Spike 30%
An almost immediate reaction to the Coronavirus outbreak in China and throughout most of the world has sent shock-wave through the global markets – particularly seen in Shipping and Oil. The actions within China to attempt to contain the virus spread include shutting down entire cities and setting up mass quarantine events. It is estimated that as many as 8+ million people were quarantined within cities in China throughout the Chinese New Year.
Chinese President, Xi Jinping, warned recently that the Coronavirus, and the efforts to stop it, may greatly reduce the Chinese economy over the next few months. The Chinese President urged top officials to refrain from “more restrictive measures” to contain the virus. It is our opinion that more restrictive measures are essential to efforts to contain the spread of this virus and that further contraction in the Chinese economy, as well as other economies, are almost set in stone at this point.
Information we’ve received from some friends living in China and Hong Kong suggest travel is very restricted, face masks are very scarce, people are staying inside their homes and surviving as family units within very close contact with one another. They are scared, trapped and unable to do anything other than try to wait this out. Imagine what this is doing to the local economies, shops, offices, and businesses?
Reflectively, global shipping rates have collapsed over the past 30+ days as one of the first signs of the contraction in the global markets. As of December 31, 2019, both Tanker and Dry-Bulk rates were hovering near $14,000 per day. Now, this rate is near $2500 per day – a -82% decrease. As you consider the broader aspects of this massive decrease in shipping rates, consider the global contagion event that may setup if the Belt-Road region is adversely hit with the Corona Virus.
Shipping stocks are taking a beating. Factories are shut down, the product is not being shipped, and even product ready to be shipped many don’t want to take delivery for the time being.
From a short term standpoint, this sector is looking oversold, but depending on how much the virus spreads we could see another 20% from the current price.
CHINA’S BELT-ROAD INFRASTRUCTURE PROJECTS
China’s Belt-Road Initiative consists of massive infrastructure, port, and other projects throughout Europe, Asia, India, Pakistan, Iran, Turkey, Russia, Africa, and other nations. These projects have been initiated over the past 5+ years and are well underway. We believe the spread of the Coronavirus may follow a path along with the Belt and Road projects and potentially infect a larger number of individuals over the next 30+ days than originally expected. If this virus moves into the Middle East or Africa, containment may become very difficult.
The reality is that Shipping and Commodities could see a dramatic price decline as this virus outbreak continues over the next 60+ days. Reports are already starting to hit the news wires that Autos and manufacturing supplies are starting to pile up and ports in China. Without a functioning manufacturing sector and workers to keep everything running, China’s economy will grind to a halt very quickly.
This translates into lower Oil prices, lower raw material prices and higher metals prices. A capital shift will continue to take place throughout the world where capital will move away from risky environments and towards more secure investment environments. Thus, capital will move away from Asia, India, the Middle East and potentially Europe and towards the USA, Canada and possibly Mexico. Everything depends on what happens over the next 60 to 90+ days with regards to this virus outbreak.
MONTHLY CRUDE OIL CHART
This Monthly Crude Oil chart shows how quickly Oil rotated lower in January 2020. Currently, Oil is trading near $50 per barrel and may break lower towards the $44 to $46 price level before finding any real support. Overall, our research team believes Oil may reach as low as $35 to $36 ppb before reaching a bottom. You can read our earlier research here: https://www.thetechnicaltraders.com/oil-begins-to-move-lower-will-our-predictions-come-true. Within that research post, dated November 19, 2019, we highlighted our earlier predictive modeling research from July 2019 suggesting Oil would break substantially lower in November 2019 and again in February 2020. We predicted this downside move in Oil nearly 8+ before it happened.
Transportation Index Monthly Chart
This Transportation Index Monthly chart highlights the sideways FLAG formation setting up in the US Transportation sector. If the US market breaks lower as a result of lower global economic activity, we believe we will see the Transportation Index fall very quickly to levels below $9,500. A breakdown in the Transportation Index would be an early warning sign that the US economy is headed towards a recession or contraction event. Global shipping has already confirmed this event is taking place – yet the US Transportation sector has not shown much weakness.
Traders need to be very aware of the risks in the markets and the continued Capital Shift that is taking place throughout the planet. Capital is running away from risk and pouring into more stable markets. The ultimate risks to the global economy are for those nations where debt/economy levels are fragile, to begin with – which is why we highlighted the Belt Road project. If China enters a protective mode where the Chinese Central Bank attempts to bail out Chinese companies/initiatives, we believe the Belt Road project could become a great risk. And we believe this could happen very quickly given the current market environment.
The dynamics of global markets are changing very quickly. It is time for traders to prepare for bigger volatility and large range sector rotation. Follow our research, learn how we can help you stay ahead of these bigger moves in the markets. 2020 is going to be a fantastic year for skilled traders – you just have to stay ahead of the risks and be prepared to take advantage of the opportunities as they are presented.
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NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research. It is provided for educational purposes only. Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed. Visit our web site (www.thetechnicaltraders.com) to learn how to take advantage of our members-only research and trading signals.
https://thegoldandoilguy.com/wp-content/uploads/2020/02/44.png456850adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2020-02-12 16:44:422020-02-12 16:44:42Shipping Rates Plunge, Commodities and Stocks May Follow
