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TLT Trade of the Year and What Is Next!

We just closed out our TLT position, which opened up 20.07% from our entry price, amazing. Who said bonds are dull and boring? haha

Only three times since 2008 have I seen bonds rally more than 20% from a new swing trade entry. Each time the move was short-lived, and the price collapsed after it within a few weeks. My goal is not to try and time tops and bottoms for the best entry and exit level. That is a gambler/losing strategy. Sure it pays big if you luck out and nail the timing, but they are few and far between, and the losses from trying will eat up any previous gain.

What I do is follow the price using my proven technical trading experience and tools, which I have acquired since 1997 and then apply position management to limit risk. I then use my trading systems for statistical analysis, so I know the odds for trade are favorable to win and also to pinpoint profit taking levels just like today’s TLT position closure.

Sure, TLT could pop and rally another 5-10%, but its highly unlikely, and it’s fear/volatility driven, so any spike higher from here is likely to drop straight back down shortly after. We got the low-risk easy money portion of the trade, and we are back in cash while everyone today is freaking out and losing money and piling into bonds because of fear, which is likely a top for the price of bonds for a while.

The bottom line, we avoided the stock market crash. We will not be trading inverse ETFs on the stock market until we enter a bear market. Until then, we avoid market corrections by moving to cash, then into bonds just like we have done with TLT. The SP500 is down 14% from the high a few weeks ago, and our TLT bond position is up 20% as of today.

We also made some good money on GDXJ for those who follow our trading strategy and position management. The last couple of weeks has been a tremendous learning experience, in my opinion. The recent price action amplifies how critical position management is (targets, stops) are for our long term trading success. No one knows where the price will ultimately move to or reverse, but through the use of technical analysis and our trading systems, we can consistently pull money out of the market each year.

Yes, we will have small losing trades from time to time like SSO, and UNG but when we do take a loss, they don’t cause much damage to our overall account because of our position sizing and stop levels. I was once told by my trading mentor in 2001 that you should be proud of yourself for taking a loss.

Taking a loss (closing a losing trade) means you are following rules, managing risk, and that you can accept your timing for the trade was wrong. That has stuck with me and pops into my head every time I have to bite the bullet and close out a losing trade.

The stock market is down 9.5% for the year as of today, our account is positive and making money, not many can say that right now. The Power of Technical Analysis!

Remember, successful trading is not about having a bunch of positions you have open, and thinking you always need to own something. It’s about limiting/avoided risk when the odds are unfavorable, and getting back into the market when they do become favorable. Cash is a position and sometimes its the best and only position to be in like right now.

Thanks, everyone, for the kind and uplifting emails, it really is amazing to navigate the market like this with all of you.

HAPPY MEMBERS MAKING MONEY!

Hi Chris, Many thanks for your sterling work. The beauty of your work is that you cover all asset classes to identify setups. One key lesson we learnt is to trust the bond market more than the equities market when the trend between the two asset classes diverges. 
Regards, Yusuf

Hi Chris,
I just wanted to send a quick note to tell you how impressed I am with your service and your trading system.  I’ve followed/subscribed to several folks over the past several years and have never seen anything like what you provide. Your timely and accurate technical analysis of the major markets is incredible and perfectly aligns with my preferred swing trading approach. My favorite part of the day is watching (and learning from) your morning videos. And to know that my account is steadily increasing in the face of utter market panic is invaluable.

Thanks so much for all you do!
Ryan M.

If you want to become part of an exquisite trading newsletter where you can learn to reach the charts, spot trades, profit targets, stops, and be force-fed winning trades like this TLT trade, and our GDXJ trade then join my Wealth Building Trading Newsletter Today!

Click Here: https://www.thetechnicaltraders.com/#pricing  

Chris Vermeulen
Chief Market Strategist
Technical Traders Ltd.

US Fed Panics – Predictive Modeling Shows You What’s Next

March 3, 2020: the US Fed issued an emergency rate cut of 0.50% to move rates to levels near 1.0% as a result of global economic concerns related to the spread of the Coronavirus and the potential damage it may do to the global major economies.  President Trump had been suggesting the US Fed needed to be ahead of the risks associated with future market expectations to allow for increased liquidity and global economic function.  Yet, we believe this move by the US Fed came at the wrong time for most investors and traders.

The global markets had already begun a process of revaluing risk in the markets near the end of February 2020.  After the Q1 earnings data was digested and the newest Chinese data became available, investors suddenly understood the risks that we had been warning about for most of January and February.  Suddenly, the US markets collapsed and traders were revaluing forward expectations.

Now that the US Fed has engaged in a 0.50% rate cut, the real risk solidifies in investor minds as “hey, the Fed is acting in a manner to ease money supply in preparation for a broad global slowdown”.  What does this mean for skilled traders?  We’ll explore the future price action using our Adaptive Dynamic Learning modeling system.

DOW JONES WEEKLY CHART

This INDU Weekly chart showing the ADL predictive modeling system results suggests the INDU will likely rotate near current lows (near 27,000) with very high volatility.  Current volatility ranges on the INDU suggest the US markets could rotate 1000 points a day very easily over the next few weeks.  Near early April, our ADL modeling system is suggesting the INDU will attempt to rally back to near 29,500 setting up a potential Double-Top formation.  Our earlier research suggests the INDU/YM will likely form a bottom well before the S&P and NASDAQ – so this aligns with our earlier research.

Once the Double-Top sets up – all bets are off as risk will be extremely high for another breakdown event.  We believe a true bottom will form/setup sometime between May and June 2020.  Therefore, any recovery in the INDU to levels near 29,500 before the end of April would strongly suggest the markets are setting up for a Q1 earnings collapse – and a potential for a much deeper price low to set up as a real bottom.

NASDAQ WEEKLY CHART

This NQ Weekly Chart highlights a shorter-term ADL projected price outcome.  The reason we went further back in time to produce these results is because these ADL results aligned with price quite efficiently and also illustrated the perceived weakness in price throughout the end of 2019.  Notice the CYAN DASH lines below the price in December 2019 – these are the ADL predictive price levels for that span of time.  Near the early January 2020 price bars, the ADL predictive modeling system identified price levels that almost mirrored the NQ price activity.  Currently, the ADL system is predicting the NQ will find temporary support near 9000 for a few weeks before breaking lower to levels near 8000~8200.

This price move, which is opposite that of the INDU, suggests the tech-heavy NASDAQ may continue to experience price pressure with a potential for a downside “waterfall” price event setting up.

TRANSPORTATION WEEKLY CHART

Lastly, this TRAN (Transportation Index) Weekly chart highlights was we believe to be a more true valuation event setting up over the next 60 to 90+ days.  This ADL chart suggests the TRAN price will almost immediately move back to levels near 11,000 (with a potential for a new high print above 11,300), then consolidate near 10,800 before breaking lower in late April or early May.  This type of price action aligns with the Q1 results reflecting an economic contraction while optimistic investors attempt to push price levels back towards recent highs before the reality sets into the markets.  The real forward expectations of Q2-2020 and Q3-2020 may be a fraction of levels reported for Q4-2019.

The US Fed is attempting to front-load the global markets with easier monetary policy to allow for unknown risks that may span 6 months out or longer.  Our researchers believe the US stock market will set up a major bottom sometime between May and June 2020 (possibly a bit later) and from that point we expect the US markets to begin to move gradually higher.  We believe this move will be similar to the downside price collapse that happened in January 2018 when the markets formed a clear Double-Bottom and began to move higher after May 2018 – eventually peaking above all-time highs.

Although the Fed fired an emergency rate cut of -0.50%, the reality is that investors may see this as a “miss” in terms of hitting a target.  Yes, it eases capital flows and sets investor expectations to believe the US Fed is prepared for this risk – but it also diminishes the potential for the US Fed to take decisive action in Q2 or Q3 of 2020 if the markets collapse as we expect.

As we’ve been saying for many months, 2020 is sure to be an incredible year for skilled traders.  Pay attention to our research to prepare for the biggest moves in the markets.

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 both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

I urge you visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

Chris Vermeulen
www.TheTechnicalTraders.com

Stock Market & Flu Breakdown Metrics – Where’s The Bottom?

The end of February was brutal for traders that were not prepared for the breakdown in the US stock markets.  The breakdown in price actually started on February 20th and 21st.  Most traders didn’t pay attention to these minor downside price rotations in the Technology sector (NQ) and the Financial sector.  The early downside price rotations in key sectors gave traders a bit of a warning that the markets were starting to shift away from the earnings-driven rally that had set up the recent peaks.

The other item that concerned the markets was the spread of the Corona Virus into Italy, Iran and other areas without known contact to areas of the virus origin.  Obviously, there had to be some process of contact for the virus to spread – but there are concerns now that the virus could be active within various societies throughout the incubation period and spreading to people in densely populated cities in these areas.  The idea of a “super spreader” event becomes very real if societies are not able to identify and contain the sources of these transmissions.

The fear that gripped the markets last week had been telegraphed for many weeks with the news and speculation that China and Asia were going to be hit with much weaker economic data in Q1 of 2020.  Almost anyone with a bit of common sense should understand the economic complications associated with quarantining millions of people for well over 30+ days would destroy economic activity in China. Even environmental data (NASA) suggests the Chinese economic activity has collapsed in 2020.

(Source: https://earthobservatory.nasa.gov)

It is time for skilled traders and investors to come to the realization that a Deflationary Recession is very likely given the scale and scope of the Corona Virus spread.  Although the numbers pale in comparison to the common Flu/Cold, the economic implications are far more severe.  As the virus spreads into the Middle East, Europe and Africa (think Belt Road Initiative) and early signs that it has already spread into parts of South America, one has to begin to wonder if this event could be something similar to Plague or Pandemic events of the past?

(Source: https://gisanddata.maps.arcgis.com)

As skilled traders, we need to try to stay ahead of these events, attempt to predict where risks and opportunities will arise and work to protect our assets while attempting to trade within these market events.  What happens if this event turns into an extended downside price rotation?  What happens if, collectively, the global central banks can’t support the markets as consumers globally move away from traditional spending and shopping activities?  What are the longer-term implications of this event as it unfolds?  Could this Virus event turn into a Global Deflationary Depression?

There are a few positives we need to report originating out of the US and Israel.  News of a potential vaccine produced by a Texas firm and an Israeli firm has been announced over the past 10+ days.  Both firms believe they will be able to engage in human trials of these vaccines within a few weeks.  Our advanced technology and computerized modeling systems allow us to respond to these types of virus events much faster than ever before.  If these vaccines are successful and can be distributed in mass throughout the globe, we may see this virus event come to a sudden positive conclusion.

The other good news is that the Corona Virus appears to be far less deadly than even the common Flu or Cold.  Currently, the reported numbers are (roughly) 87,000 infected and 3,000 deaths.  That results in a 3.4% mortality rate.  The 2019 mortality rate for pneumonia and influenza was 6.9% (Source: https://www.cdc.gov/).  The reality of the situation on the ground is that we will know more about these data points as we progress further in time.  Numbers change as the total scope of the issue is determined.

As skilled traders, our objective is to protect capital and identify opportunities for profits.  As horrible as it may seem to look at this global event and try to find ways to profit from it – that is really our main objective.  We’ve been getting calls from friends and clients asking us “should I buy airlines and other sectors right now?  This seeming like an incredible opportunity to buy into this weakness?”.  Our answer is a bit more complicated as we are attempting to predict the future event and we don’t believe the bottom has setup/formed yet.  The simple answer is “NO, you should not be buying into this weakness until we know a bottom has setup and risks to the global economy are more settled”.

Still, there are different opinions from institutional and private investors regarding the total scope of this event.  UBS recently issued a BUY for “rich clients” to take advantage of this drop in prices in Chinese and Emerging Markets (Source: https://finance.yahoo.com).  We don’t agree with this analysis quite yet – unless you have a very deep threshold for risk and potential losses.  Our research suggests the bottom will likely complete in May or June of 2020.

This ES chart highlights the downside rotation in price last week and the fact that our Dynamic Rotation modeling system is still suggesting the Weekly trend has not changed to Bearish from Bullish.  The fact is this downside price rotation is still above the YELLOW dashed line which represents trend support.  The Daily chart of the ES, below the Weekly chart, shows the Dynamic Rotation modeling system has already changed from a Bullish trend to moderate Bearish trend.  Because of this, skilled traders need to immediately protect open long positions and consider adjusting their portfolio allocations in preparation of extended downside price moves.

Our researchers believe the ultimate support level on the ES chart is near the $2590 level.  Price may pause near the $2975 level as this level coincides with previous tops in the market and identifies as moderate support.  Yet, we believe the ultimate support level is really near the $2590 level and that is the price this downside move will initially target.

This NQ chart also highlights the immediate downside price rotation in the NASDAQ and how the Weekly chart has yet to confirm any new Bearish price trend.  The Weekly chart still shows confirmed bullish price trends and suggests the recent downside price rotation was within volatility ranges.  The Daily chart has already changed from a Bullish to moderate Bearish trend.  Again, this suggests skilled traders should immediately attempt to lock in profits and prepare for any further downside price trends.

True support on the NQ chart is currently $6575.  This suggests the NQ has another 2000 points to fall (-23.5%) before any real price support will be found.  Be prepared for this move.

This SPY chart more clearly shows the scope of the downside price rotation.  The Weekly chart has already changed from GREEN to YELLOW – indicating a change in rotation price trend from Bullish to NEUTRAL on the Weekly chart.  The Daily chart shows a trend change from Bullish to Moderate Bearish (Pink) to BEARISH (Red).  This suggests the SPY price reaction has more clearly illustrated the risks of this downside price move and suggests extended downside trending may continue.

Our ultimate support level for the SPY is near $262 – another $35 lower (-11.75%).  If these ultimate support levels are reached, the total downside price rotation for all of these charts would total more than -20%.  Certainly more than a simple 8~10% correction.

This is why we believe skilled traders need to pay attention to our recent research and understand the total scope and scale of this move.  We’ve already been warning our friends and followers of the potential risks setting up in the markets.

February 24, 2020: HAS THE EQUITIES WATERFALL EVENT STARTED OR A BUYING OPPORTUNITY?

February 19, 2020: IS THE TECHNOLOGY SECTOR SETTING UP FOR A CRASH? PART III

We can’t make this warning clear enough for all of you right now – prepare for deeper downside price rotation and prepare for the potential of a Deflationary Recession event over the next 6+ months.

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 both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

I urge you visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

Chris Vermeulen
www.TheTechnicalTraders.com

Gold Sets Up For Another Massive Move Higher

Our research team believes the recent downward price activity in Gold and Silver are indicative of past price patterns we saw in Gold over the 2007 to 2012 rally.  Throughout almost every rally in precious metals (Gold), there have been a number of moderate to serious price corrections taking place within that extended rally.  The current downside move is moderately small compared to historical price rotation in Gold and potentially sets up a massive upside potential rally to levels above $2100 per ounce.

WEEKLY GOLD PRICE PATTERN FROM 2007 – 2017

This chart, below, highlights the downside price rotation that took place just before and as the US stock markets collapsed in late 2008 and 2009.  Notice how Gold collapsed nearly 28% right as extreme market weakness began to become present in the US stock market.  Then, pay attention to how Gold rallied from $730 in multiple upside price legs to a peak just below $1900 – well above 110%.  Could the same pattern already be setting up in 2020?

WEEKLY GOLD CHART TREND IS CLEARLY UP

This current Gold chart highlights what we believe is a similar price pattern where Gold collapsed as the downturn in the US stock market took place between October 2018 and December 2018.  Subsequently, Gold then rallied to levels nearing the previous peak levels (near $1380), then rallied even further to $1540.  We believe the current downside price rotation is similar to the downside price rotation that took place in August/Sept 2010 – just before Gold rallied from $1050 to $1890 (+85%).  If a similar type of rally were to take place from the current $1587 lows, the peak price of Gold may be near $2935.

GOLD/SILVER RATIO WEEKLY CHART SCREAM BARGIN

This last chart highlights the true potential for a Silver rally based on historical levels of the Gold to Silver Ratio.  There has never been a time in history since 1990) that the Gold to Silver ratio has been this high (93.9).  Historically, traditional levels are closer to 74~76.  If gold rallies above $2100 and the Gold to Silver ratio contracts to the historical 74 to 76 level, Silver will likely rally to levels above $40 to $50 per ounce.  If gold rallies to our projected peak level of $2935 and the ratio reverts, Silver could rally to levels well above $65 per ounce.

This downside move in both Gold and Silver are an incredible opportunity for skilled traders.  Don’t miss the opportunity to get into a precious metals position near these levels – before the real rally begins.

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 both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

I urge you visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

Chris Vermeulen
www.TheTechnicalTraders.com

SPY Breaks Below Fibonacci Bearish Trigger Level

Our research team wanted to share this chart with our friends and followers.  This dramatic breakdown in price over the past 4+ days has resulted in a very clear bearish trigger which was confirmed by our Adaptive Fibonacci Price Modeling system.  We believe this downside move will target the $251 level on the SPY over the next few weeks and months.

SOME RECENT HEADLINE ARTICLES WORTH READING:

On January 23, 2020, we issued a warning that the Put/Call ratio was warning of a potential Flash Crash

On January 24, 2020, we issued a research post related to the Wuhan Wipeout the markets

On January 26, 2020, we issued this research post about the start of a Black Swan event

On January 29, 2020, we issued this research post about a potential WaterFall selloff

Clearly, we were well ahead of this correction and issued multiple warnings to our friends and followers. This week we locked in 9.48% on GDXJ at the open on Monday, and today we are writing to suggest that $251 on the SPY is real support (see the magenta/purple area/line on this chart) and pay attention to the real risks at play in the markets.

This would suggest that the major markets will wipe out about 25% of the valuations in the major averages (ES, NQ, and YM), before finding any real support.  Obviously, there is a level near $208 that appears in RED on this chart.  If $251 fails to hold as support, then we immediately start to look at that $208 level for ultimate support.

This is the time when you want skilled researchers and traders backing you up and sourcing real solid trade opportunities for you.  We’ve been warning about this move for many months, suggesting that 2020 was going to be an incredible year for skilled traders and warning that a large downside price rotation was likely after August 2019.

In fact, one of our researchers predicted this move back in February/March 2019.  Visit www.TheTechnicalTraders.com to learn how we can help you stay ahead of these massive trends and find real opportunities in the markets.

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

Chris Vermeulen
Technical Traders Ltd.

Has the Equities Waterfall Event Started Or A Buying Opportunity?

Over the past 5+ days, a very clear change in market direction has taken place in the US and global markets.  Prior to this, the US markets were reacting to Q4 earnings data and minimizing the potential global pandemic of the Coronavirus.  The continued “rally to the peak” process was taking place and was very impressive from a purely euphoric trader standpoint.  Our researchers found it amazing that the markets continued to rally many weeks after the news of economic contraction and quarantines setup in China/Asia.

Make sure to opt-in to our free market trend signals newsletter before you continue reading this or you may miss our next special report!

We believe a number of critical factors may have pushed global investors away from their comfortable, happy, bullish attitude over the past 5+ days – most importantly the reality that the virus pandemic was very real and would continue to result in a more severe global economic contraction process and the outcome of the Caucus voting where Bernie Sanders appears to be leading almost every early voting event.  There are now two major concerns hanging over the global markets and the future of the US 2020 Presidential elections.  These two major issues may be enough to change investor sentiment and present a very real volatility event.

Uncertainty breeds fear and can cause traders to move away from risk.  We discussed these topics in research posts many months ago.

January 29, 2020: ARE WE SETTING UP FOR A WATERFALL SELLOFF?

November 11, 2019: WELCOME TO THE ZOMBIE-LAND OF INVESTING – PART II

September 24, 2019: IS SILVER ABOUT TO BECOME THE SUPER-HERO OF PRECIOUS METALS?

September 7, 2019: US STOCK MARKET HASN’T CLEARED THE STORM YET

Our researchers believe the underlying concerns that are becoming more evident to global traders are the very real facts that the global economy may continue to contract because of the spreading Corona Virus and risks of a global pandemic event and the fact that the US 2020 Presidential election process appears to be setting up to become a real battle between Donald Trump and Bernie Sanders.  Our researchers believe the combination of these two unknowns is creating an environment where global traders are fearful of the future growth opportunities within the US and global markets.

Bernie Sanders has been dominating the Caucus events in the US as a Socialist/Progressive candidate.  For many Americans, this is a frightening concept.  Even early into the Caucus voting cycle, it appears Mr. Sanders has taken a very clear leadership role headed into the 2020 Presidential election event.  Business and global investors are not going to like the concept of a Socialist/Progressive US Presidential candidate.  This is going to cause investors and business owners to avoid engaging in projects and opportunities until after the November 2020 elections.

Add into this fear contagion the fact that the Coronavirus event may continue to add to the global fear component of the US and global economy.  How much more risk is involved because of the spread of this virus over the next 12+ months and how will this concern complicate the concerns related to the US Presidential electing event?

DAILY DOW JONES INDUSTRIAL CHART

This Daily Dow Jones Industrial chart highlights the huge Gap lower that took place early on Monday, February 24, 2020.  This huge move resulted from an extended fear of a growing potential for a global pandemic event and a renewed fear that global economic activity may be greatly reduced over the next 12+ months.  We believe the extended fear of a potential Socialist/Progressive Democrat candidate may be adding to this massive decline in the global markets.

TRANSPORTATION INDEX DAILY CHART

The Transportation Index is an excellent measure of future economic activity expectations and investors belief that the global economy will recover from this potential contagion event.  On Monday, February 24, 2020, the Transportation Index collapsed below 10,600 on a Gap Down move as the markets collapsed.  This is a real sign that global investors suddenly believe the global markets will contract over the next 3 to 6+ months and are moving away from risky instruments in the US and global markets.

WEEKLY TRANSPORTATION INDEX

This Weekly Transportation index chart illustrates just how far the TRAN could move while still saying within the range of price activity from 2018 to 2019.  The TRAN could fall all the way to levels near 8,800 before reaching the lows of December 2018.  Thus, from current levels near 10,500, we could see a continued price decline in the global markets of at least 15% to 20% before we near the 2018 lows.

As our research team has been predicting, it appears a Waterfall event is beginning to take place.  This Gapping downside move may become the catalyst top in the global markets that presents a broader market rotation/decline.  As we’ve been warning, be prepared for broad sector market rotation and for precious metals to skyrocket as greater fear sets up in the global markets.  We hope you were paying attention to our research over the past 5+ months.  We’ve been all over this setup and have issued multiple warnings for all our friends and followers.

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 both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

I urge you visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

Chris Vermeulen
www.TheTechnicalTraders.com

Yield Curve Patterns – What To Expect In 2020

Quite a bit of information can be gleaned from the US Treasury Yield Curve charts.  There are two very interesting components that we identified from the Yield Curve charts below.  First, the bottom in late 2018 was a very important price bottom in the US markets.  That low presented a very deep bottom in the Yield Curve 30Y-10Y chart.  We believe this bottom set up a very dynamic shift in the capital markets that present the current risk factor throughout must of the rest of the world.  Second, this same December 2018 price bottom set up a very unique consolidation pattern on the 10Y-3Y Yield Curve chart.  This pattern has been seen before, in late 1997-1998 and late 2005-2008.

The reality of these two patterns setting up in the Yield Curve charts suggests that the US and global markets are going to experience a surge in volatility and a very real potential that the US and global markets will contract over the next 6 to 24 months.  Within about 3 to 6+ months of these patterns setting up, one of two separate outcomes typically takes place.

A.  A continued US stock market price advance takes place pushing the Yield Curves lower and ultimately setting up a massive stock market top formation.

B.  A moderate price peak sets up where the Yield Curve levels begin to rise from these current levels while the US and global stock markets begin a moderate correction phase – eventually leading into the possibility of a massive price collapse.

Our research team believes the deep price rotation near the end of 2018 set up a very unique capital shift event that took place within the global markets.  Currently, there is well over $75 Trillion in the US and global markets.  This capital has become enough of a force in the global markets to act as the “moon and the tide”.  In a way, this capital, and the search for profits and safety, has propelled the global markets into a very fragile position.

This total amount of capital, in combination with the derivative markets and global credit markets, presents a significant risk for global central banks and nations.  Many foreign nations have pushed their debt levels to well over 100% of GDP.  Still, even more, have engaged in reckless lending and shadow banking practices that engage a further level of risk to the global markets.  Global central banks have taken on excessive debt levels and acquired assets after 2009 in order to help stabilize the global markets.  The combination of all of these facets of new capital, risk, and assets add a new dynamic to historical patterns in the Yield Curves.

Even though the patterns are similar in structure, the risks are far greater than in 2000 or 2008.  Before, the Central Banks were like a ship navigating the Tides of the seas.  Now, the Central Banks have become the Tides and the Moon – they are essentially an omnipresent force in all levels of assets, capital, risks, and contagion.

We believe the 30Y – 10Y yield curve may move slightly lower if any type of reprieve or complacency continues throughout the global markets that risk is not a factor going forward. This would suggest that the US stock market may continue to move a bit higher – possibly seeing the DOW breach the $30,000 level.  Otherwise, we believe the Yield Curve may continue to climb suggesting that a global market peak is setting up and a price reversion event is beginning to take place.

This 10Y – 3Y Yield Curve chart highlights the potential for a brief collapse in this level to below ZERO, yet it is not necessary at this point in time to confirm a potential major market peak.  Ideally, the future of the US and global stock markets depend on how these yield curves react at this juncture in time.  A deeper move to levels below ZERO will suggest a broader market peak is setting up.  A rally from these levels would suggest the peak has already set up and that real risk and fear are entering the global markets.

The NQ setup an Engulfing Bearish pattern after a very impressive rally from moderate rotation in December 2019.  We highlighted the potential that the US markets are rallying to a peak in a number of research articles recently.  The one we’ve included, below, is an excellent example of this type of research.

January 31, 2020: A COMBINATION TOPPING PATTERN IS SETTING UP

As we’ve been suggesting for many months, this is the time for skilled traders to become “cautious long traders”.  This upside move could end in a very violent manner as the Moon and Tide shift suddenly as fear and central bank paralysis setup in the markets.  We urge all our friends and followers to prepare for this eventual setup and to understand the total scope of this omnipresent capital/debt event.  This time will certainly be different because Central Banks have become banker, holders, guarantor and leveraged participants in the future outcome.

Our suggestion is to plan to setup your portfolio so you have sufficient cash in reserve in the event of an unexpected market decline.  We also suggest proper protection/hedge investments, such as precious metals and metals miner ETFs.  Currently, this single Engulfing Bearish pattern is not enough of a trigger to warn of any immediate action for traders – but the Yield Curve charts are clearly showing us the markets will either continue to rally to an ultimate peak or begin to setup that peak very quickly from current levels.

Think of it this way, we know the music will likely stop at some point in the near future, we just don’t know exactly when it will stop.  So, we have to prepare for the scramble for the chairs when it ends.

Join my Swing Trading ETF Wealth Building Newsletter if you like what you read here and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
www.TheTechnicalTraders.com

Gold Rallies As Fear Take Center Stage

Gold has rallied extensively from the lows near $1560 over the past 2 weeks.  At first, this rally didn’t catch too much attention with traders, but now the rally has reached new highs above $1613 and may attempt a move above $1750 as metals continue to reflect the fear in the global markets.

We’ve been warning our friends and followers of the real potential in precious metals for many months – actually since early 2018.  Our predictive modeling system suggests Gold will rally above $1650 very quickly, then possibly stall a bit before continuing higher to target the $1750 range.

The one thing all skilled traders must consider is the longer-term fear that is building in the markets.  Many traders are concerned about the global economy with the Coronavirus spreading economic worries throughout Asia, Japan, and Europe.  We believe this fear will push precious metals continually higher over the next 24+ months with a real upside target above $2100 eventually.

Right now, skilled traders need to understand that wave after wave of higher price rotation will continue to happen in Gold and Silver.  If you missed the $1450 level and missed the $1550 level, this is your time to attempt to find your entry point near $1650 or below that level.  Ultimately, real fear has yet to result in a parabolic rally in Gold and Silver – but it is likely going to happen within the next 24+ months.

As skilled traders, our Fibonacci price modeling system is suggesting that any price rotation below $1550 would be an excellent buying opportunity.  These levels really depend on where the current rally ends and what happens in the global markets over the next 60+ days.

Less than 7 days ago, we published this research article suggesting that our ADL predictive modeling system was telling us that Gold would rally above $1650 within 15 to 30 days.  It is very likely this rally will start a multiple-leg upside price advance in precious metals where Silver will finally breach the $20 to $21 level as Gold advances higher.

February 13, 2020: PREDICTIVE MODELING SUGGESTS GOLD WILL BREAK ABOVE $1650 WITHIN 15~30 DAYS

Once fear really enters the markets, we’ll see huge sector rotation and a massive price reversion event take place.  Historically, Gold and Silver will react to this move, but the parabolic price move in precious metals will come 4 to 6+ months after the reversion event in the global markets.  So, from a historical standpoint, any entry-level near current price levels is exceptional.

Trust us, you really don’t want to miss this next move in precious metals.  Our Fibonacci price modeling system and Adaptive Dynamic Learning modeling system are suggesting price levels above $2400 as an ultimate upside price target for Gold.

Join my Swing Trading ETF Wealth Building Newsletter if you like what you read here and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
www.TheTechnicalTraders.com

Is The Technology Sector Setting Up For A Crash? Part IV

As we continue to get more and more information related to the Coronavirus spreading across Asia and Europe, the one thing we really must consider is the longer-term possibility that major global economies may contract in some manner as the Chinese economy is currently doing.  The news suggests over 700+ million people in China are quarantined.  This is a staggering number of people – nearly double the total population of the entire United States.

If the numbers presented by the Chinese are accurate, the Coronavirus has a very high infection rate, yet a moderately small mortality rate (2~3%).  Still, if this virus continues to spread throughout the world and infects more and more people, there is a very real potential that 20 to 50 million people may be killed because of this event.  It may become one of the biggest Black Swan events in recent history.

We really won’t know the total scope of the damage to the Chinese and Asian economies for another 35+ days – possibly longer.  The information we have been able to pull from available news sources and from the Chinese press is that hundreds of millions are quarantined, the Chinese Central Bank is pouring capital into their markets in order to support their frail economy and, just recently, President Xi suggested stimulus will not be enough – austerity measure will have to be put into place to protect China from creating a massive debt-trap because of this virus.

Austerity is a process of central bank planners cutting expenses, cutting expansion plans, cutting everything that is not necessary and planning for longer-term economic contraction.  It means the Chinese are preparing for a long battle and are attempting to protect their wealth and future from an extreme collapse event.

From an investor standpoint, FANG stocks have outperformed the S&P, NASDAQ and DOW JONES indexes by many multiples over the past 5~6 years.  The chart below highlights the rally in the markets that originated in late 2016 (think 2016 US Presidential Election) and the fact that foreign capital poured into the US stock market chasing expected returns promised by future President Trump.

It becomes very clear that the FANG stocks rallied very quickly after the elections were completed and continued to pull away from valuation levels of the S&P, NASDAQ and DOW JONES US indexes.  How far has the FANG index rallied above the other US major indexes? At some points, the FANG index was 30~40% higher than the biggest, most mature industries within the US.  In late 2018, everything contracted a bit – including the FANG index.

As or right now, the FANG index has risen nearly 274% from October 2014.  The S&P has risen nearly 60% over that same time.  The NASDAQ has risen 140% and the S&P 500 Info Tech Index rose 180%.  The reality is that capital has poured into the technology sector, FANG stocks and various other US stock market indexes chasing this incredible rally event.

(source: https://www.theice.com/fangplus)

This Netflix Weekly chart highlights what we believe are some of the early signs of weakness in the FANG sector.  The sideways FLAG formation suggests NFLX has reached a peak in early 2018 and investors have shied away from pouring more capital into this symbol while the Technology index and FANG index have continued to rally over the past 8+ months.

This Weekly Custom FANG Index chart highlights the rally that took place after October 2018 and continues to drive new highs today.  This move on our Custom FANG index shows a very clear breakout rally taking place which is why we believe more foreign capital poured into the US markets as the US/China trade deal continued to plague the global markets and as BREXIT and other economic issues started to weigh on economic outputs.  What did investors do to avoid these risks?  Pour their capital into the hot US technology sector.

Another chart we like to review is our Custom Technology Index Weekly chart.  This chart shows a similar pattern to the FANG chart above, yet it presents a very clear picture of the excessive price rally and rotation that has taken place over the past 5+ months.  The real risk with this trend is that investors may start to believe “it will go on forever” and “there is no risk in these trades”.  There is a very high degree of risk in these trades.  Once the bubble bursts, the downside move may become very violent and shocking.

A reversion event, bubble burst event, in the technology sector as a result of the economic collapse in China and throughout other areas of the world may break this rally in the technology sector at some point and may push investors to re-evaluate their trading plans.  Until investors understand the risks setting up because of the Coronavirus and the potential for a 20%, 30%, even 40% decrease in economic activity and consumer spending may finally push global investors to really think about the true valuations within the FANG/Technology sector.

We writing this article to alert you to the very real fact that “what goes up – must come down” at some point.  Pay attention to how this plays out and what may cause global investors to suddenly change their opinion of the Technology sector.   A pullback in this sector may result in a -40% to -50% price reversion.

We believe the economic collapse and humanitarian crisis that is unfolding in China may be enough to put a massive dent in future expectations for 2020 and 2021.  You simply can’t have a major global economic collapse in this manner without having some type of cross-over event.  As we learned in 2008-09 with the US credit crisis – when a major economy collapses its assets and financial markets, the ripples spread across the globe.  China may become the next financial crisis event for the new decade.

Join my Swing Trading ETF Wealth Building Newsletter if you like what you read here and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
www.TheTechnicalTraders.com

Is The Technology Sector Setting Up For A Crash? Part III

FANG stocks seem uniquely positioned for some extreme rotation over the next 6+ months.  The continued capital shift that has taken place over the past 5+ years has driven investment and capital into the Technology sector – much like the DOT COM rally.  The euphoric rally in the late 1990s seems quite similar to today.

The biggest difference this time is that global central banks have pushed an easy-money monetary policy since just after 2000.  The policies and rallies that took place after 9/11 were a result of policies put in place by George W. Bush and Alan Greenspan.  Our research team believes these policies set up a  process where foreign markets gorged on cheap US Dollars to expand industry and manufacturing throughout the late 1990s and most of the early 2000s.  This process sets up a scenario where the US pumped US Dollars into the global markets after the 9/11 terrorist attacks and foreign markets gobbled this capital up knowing they could expand infrastructure, industry, and manufacturing, then sell these products back to the US and other markets for profits.  Multiple QE attempts by the US Fed continued to fuel this capital shift.

It wasn’t until after 2008-09 when the US Fed entered a period of extreme easy money policy.  This easy money policy populated an extensive borrow-spend process throughout most of the foreign world.  Remember, as much as the US was attempting to support the US markets, the foreign markets were actively gorging even more on this easy money from the US and didn’t believe anything would change in the near future.  China/Asia and most of the rest of the world continued to suck up US Dollars while pouring more and more capital into industry, manufacturing and finance/banking.

This process of borrowing from the US while tapping into the expanding US markets created a wealth creation process throughout much of Asia/China that, in turn, poured newly created wealth back into the US stock and real estate markets over the past 7+ years.  It is easy to understand how the trillions pushed into the markets by the US Fed created opportunity and wealth throughout the globe, then turned into investments into US assets and the US stock market.  Foreign investors wanted a piece of the biggest and most diverse economy on the planet.

This foreign investment propelled a new rally in the Technology sector, which aligned with a massive build-out of technology throughout the world and within China.  Remember, in the late 1990s, China was just starting to develop large manufacturing and industry.  By the mid-2000s, China had already started building huge city-wide industry and manufacturing.  But in the late-2000s, China went all-in on the industry and manufacturing build-out.  This created a massive “beast” in China that depends on this industry to support finance and capital markets.  This lead to the recent rise in the global and US markets as all of this capital rushed around the globe looking for the best returns and safest locations for investment.

FANG stocks have taken center stage and the recent rally reminds of us the DOT COM rally from the 1990s.  Could the Coronavirus break this trend and collapse future expectations within the global markets?  Is it possible that we are setting up another DOT COM-like bubble that is about to break?

THE WEEKLY CHART OF APPLE (AAPL)

This first Weekly chart of Apple (AAPL) shows just how inflated price has rallied since August 2019.  The share price of AAPL has risen from $220 to almost $320 in the last 6 months – an incredible +49%.  We attribute almost all of this incredible rise to the Capital Shift that took place in the midst of the US/China trade war.  Foreign capital needed to find a place to protect itself from currency devaluation and to generate ROI.  What better place than the US Technology Sector.

THE WEEKLY CHART OF FACEBOOK (FB)

Facebook has also seen a nice appreciation in value from the lows in late 2018.  From the August 2019 date, though, Facebook has seen share prices rise about +25% – from the $180 level to the $225 level.  Although many traders may not recognize the Double Top pattern set up near the $220 level, we believe this setup may be an early warning that Technology may be starting to “rollover” as capital may begin searching for a safer environment and begin exiting the Technology sector.

THE WEEKLY CHART OF GOOGLE (GOOG)

Google (Alphabet), GOOG, is another high-flier with share prices rising from $1200 to $1500 from August 2019 till now – a +28% price increase.  We can clearly see that GOOG is well above the historic price channel set up by the rotation in late 2018.  We believe resistance near $1525 will act as a price boundary and may prompt a downside price rotation associated with the rotation away from risk within the Technology sector.  Any downside move, if it happens, could prompt a price decline targeting $1350 or lower.

CONCLUDING THOUGHTS:

Remember, we are warning of a change in how capital operates within the markets.  The Capital Shift that has continued to drive advancing share prices in Technology may be nearing an end.  It does not mean the capital shift will end, it just means this capital may rotate into other sectors in an attempt to avoid risks and seek out returns.  We believe this is a real possibility because we believe the Coronavirus in China is disrupting the markets (supply/manufacturing and consumer spending) by such a large factor that we believe capital will be forced to identify new targets for returns.  In other words, we believe the Technology Sector may be at very high risk for a price reversion event if this “black swan” event continues to disrupt the global markets.

Let’s face it, a very large portion of our technology originates and is manufactured in China.  In fact, a very large portion of almost everything we consume is manufactured in China.  Heck, the cat food I buy every week is made in China.  If this Coronavirus continues to force China to shut down large sections of their nation and manufacturing while it continues to spread, then the only real outcome for the rest of the world is that “China manufacturing capabilities will be only 10~20% of previous levels” (if that).

Once supply runs out for most items originating from China, then we are going to have to deal with a new reality of “what are the real future expectations going to really look like” and that is why we are preparing our followers and friends the Technology sector may be one of the biggest rotating sectors in the near future.

Join my Swing Trading ETF Wealth Building Newsletter if you like what you read here and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
www.TheTechnicalTraders.com

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.