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Weakness Appears To Be Setting For This Week’s Economic Data

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.

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DAILY NASDAQ (NQ) CHART

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.

If you have not seen this important technical analysis on the Nasdaq which I posted a couple of days ago, be sure to see these charts.

SP500 (ES) WEEKLY CHART

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.

Treasuries Pause Near Resistance Before The Next Rally

Our research team believes the US Treasuries and the US Dollar will continue to strengthen over the next 2 to 6+ weeks as foreign market and emerging market credit and debt concerns outweigh any concerns originating from the US economy or political theater.  Overall, the major global economies will likely continue to see strength related to their currencies and debt instruments simply because the foreign market and emerging markets are dramatically more fragile than the more mature major global economies.

We believe the US Treasuries may surprise investors by rallying from current levels, near price resistance, to levels above $151 on the TLT chart.

Our belief is that further economic concerns related to trade, foreign economic metrics and data and the forward perspective of many emerging and foreign markets will continue to weaken much more dramatically than the US or other major global economies.  Thus, we believe capital will continue to pour into the US and more mature major global economic markets (Canada, Japan, Great Britain, Swiss) as a move to safety just as capital is moving into the precious metals markets.

When fear enters the global markets, capital seeks out the safest and most secure environments for investment.  If the rest of the world’s economies are becoming weaker and more fragile as trade and economic factors continue to hit the news wires, the more mature major economic countries are naturally going to benefit from their more robust and secure economic power and strength.  The flight to safety will result in capital moving away from risk and into the safety of these more mature economies simply because they provide a level of security and risk aversion that can’t be found elsewhere. Make sure to opt-in to our free market trend signals newsletter.

DAILY TLT CHART

This Daily TLT chart highlights the resistance level that we believe is current constricting the current price advance from breaking higher.  We believe this resistance channel is causing the TLT price to pause below $147 and will continue to keep prices within this channel until some economic news event or positive US economic news item pushes the price higher.  The US and global markets are waiting for some type of news event before attempting to make another move.  We believe the future news will result in an upside technical breakout and a new rally towards the $152 to $155 level in TLT.

WEEKLY TLT CHART

This Weekly TLT chart highlights the extended bullish price rally that started back in late October 2018.  This upside price move has already rallied more than 40%, but we don’t believe it is over yet.  Our Fibonacci price modeling system is suggesting $154 to $155 is the next upside price target.  To be a bit more conservative, we’ve targeted the $152 level for skilled traders to work with.  Once price achieves the $152 target level, look to cover any open long trades you may have.

If you are an active trader of gold, gold stocks, bonds, or the SP500 and would like to hear a trading style that reduces the amount of trades you take while making the same or better returns listen to this conversion with Adam Johnson who is an x-Bloomberg anchor, and now active trader.

Understanding how pricing and global market dynamics work throughout the stock market and the global market can be confusing at times.  How can one attempt to understand what will move in a certain direction, why it will move that way and how one can profit from these opportunities and be difficult for many people to grasp.  We do our best to try to help you by highlighting trade setups, explaining our thinking and research, sharing some of the charts with our proprietary trading tools and to help you identify strong opportunities for success.

Bonds are likely to continue to trade in a sideways price range before breaking higher near the end of 2019.  This aligns with our expectations that foreign markets may come under intense economic pressure while the US economy continues to provide safety for investors for the long term.  The support level above 157 is critical going forward.

DAILY PRICE CYCLE PREDICTED PRICE TREND

While cycle analysis helps us paint a clear picture of what to expect looking forward up to 45 days I still rely on my market trend charts to know when I should be buying or selling positions.

THE TECHNICAL TRADERS CONCLUDING THOUGHTS:

Right now, we believe the markets are waiting for some news events to make their next move.  This is the time to take very measured positions when trading.  This is NOT the time to go “all-in” on some trade.  Be prepared for a spike in volatility and a new price trend to establish within the next 3 to 10 trading days.

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 Today to Get a Free 1oz Silver Bar with a subscription – Offer Ends This Week!

Chris Vermeulen
www.TheTechnicalTraders.com

Currencies Show A Shift to Safety And Maturity – What Does It Mean?

Recent rotation in multiple foreign currencies hints at the fact that a new stage of the “Capital Shift” process is taking place and that skilled technical investors need to pay very close attention to how these currencies continue to react over the next 3 to 6+ months.  In the recent past, most of the world’s foreign currencies were declining in value while the US Dollar continued to strengthen.  In fact, we authored many research articles about these trends and how weakness in foreign currencies will drive new foreign investment into the US stock markets for two simple reasons; strength and security.

Now that a few of the world’s most mature economies, and some that may surprise you, are starting to change directions, we may be beginning a new stage of the “capital shift” process that may open up multiple new opportunities for skilled technical traders.  As the old saying goes, “follow the money”.  At this point, if our research team is correct about these price trend changes, following the money may mean opening our eyes to new investment opportunities across the Pacific and Atlantic – as well as very near to the US.

Before we continue, we suggest reading the following research post to understand a bit about the history of our research and be sure to opt-in to our free market trend signals newsletter.

September 10, 2019: METALS & THE US DOLLAR: HOW IT ALL RELATES – PART I

The first thing we want to highlight is our belief that the US Dollar and US stock market should continue to provide price strength and upward price opportunity – even throughout any price correction or contraction that our researchers may identify.  Our predictive modeling systems have shown us what we believe to be an incredibly accurate prediction of future price activity over the next 3 to 5+ years.

Even though we are not going to share that research with you today, the one thing we want all of our followers to understand is that the US stock market, and likely the US Dollar, are poised to continue to see longer-term upward price growth over the next 3+ years.  Yes, there may be a few price rotations/declines throughout this process and we need to be aware that price naturally attempts these types of rotations in an effort to provide future price support, price exploration and future price trends.  The price must always attempt to establish new highs or lows throughout a trending process.

US DOLLAR

The US Dollar has been trending higher since early 2018.  We believe the US Dollar will continue to push higher within the price channels we’ve drawn on this chart and, eventually, attempt to move to levels above 100 near the end of 2020 (or slightly after this date).  We don’t believe anything will disrupt the continued strength of the US Dollar unless some major economic/credit crisis completely destroys the support of the global economic markets and takes everything down with it.

Our researchers believe the new shift in the “capital shift” process of global investing is centered around the concept that certain global currencies, as well as their associated stock markets and strategic stock sectors, may have reached a point where price is exceedingly below fair value and when one considers the fundamental economic strengths related to maturity, economic capabilities, geopolitical or proximity economic factors and future leadership/opportunity factors – investors are suddenly viewing these currencies and stock markets as “uniquely positioned for potential upside growth”.  Thus, this change in perspective could drive a new upside price trend throughout a number of undervalued currencies as well as present a very real possibility that skilled technical traders may find real value and real opportunity by expanding their search criteria into assets related to these currencies.

One of the most basic elements of investing is understanding how supply-demand economic functions work and where the current “equilibrium” is at.  The easiest way for us to try to explain this concept is to think of a very sought-after product (let us assume one ounce of gold) and the price of that gold as a measure of the price level in relation to demand.  When the price of gold is very low, buyers rush into the market to buy up as much as they can afford because the perception is that gold prices should be higher (thus gold is undervalued).  This means the equilibrium level is higher than the current price level of gold.  When the price of gold is very high, buyers stay away from purchasing (or can’t purchase because it is too high) and the price will eventually begin to fall lower because demand is very low.  This means the equilibrium level is lower than the current high price of gold.

Price always moves from above or below the equilibrium level to price levels on the opposite side of the equilibrium level.  Think of the equilibrium level as the optimal price level where demand meets supply and where future expectations of price are minimized.  This equilibrium level is where the price would be if we removed all the hype, fear, greed and speculation out of the market.  The equilibrium level fluctuates as true fundamentals and true price exploration takes place across the supply-demand curve.  Almost like the average temperature fluctuates throughout the seasons of the year.

When a shift in investor sentiment happens, much like a shift in seasons, price changes direction begins to rally of decline and this shift in trend changes the supply-demand equilibrium level as investors pile into or pull out of a market.  Thus, if our researchers are correct and this change in the longer-term opportunity for selected currencies is a true longer-term capital shift, it may be a very early opportunity for investors to begin focusing on the opportunities that will become present in the near future.

AUSTRALIAN DOLLAR

The first currency we want to focus on is the Australian Dollar.  Historically, the Australian Dollar has continued to trend lower over the past 18+ months and currently shows very little strength or opportunity to form a bottom.  The lows near 0.67 may prove to become a future bottom in price, but the trend has not confirmed this yet and because of that, we believe weakness is still prevalent in price.

CANADIAN DOLLAR

The Canadian Dollar, on the other hand, has set up an intermediate price bottom in early 2019 and has continued to strengthen moderately over the past 10+ months.  One thing that we want to point out about our research is that we believe currencies and nations that have strong economic ties and proximity advantages (being close to the US and having strong economic ties with the US) are very likely to perform well or begin to strengthen in the near future.  Canada has a number of factors that may prove to be advantageous going forward.  Strong economic ties with the US, a booming cannabis and resource market, strong agriculture exports and a very mature economy compared to other nations.

EURO

The Euro price chart continues to illustrate price weakness as future expectations of economic strength is very far off.  The interesting facet related to the Euro is that a weakening Euro will eventually present a very clear opportunity for investors the instant the European-union enters any type of economic recovery or strength.  Until that happens, we believe the continued price weakness will potentially drive the Euro lower – eventually attempting true parity with the US Dollar.

BRITISH POUND

The British Pound has recently rebounded to the upside with some level of ferocity.  Of course, this 6+ week upside price rally does not make a new longer-term price trend yet – but we believe this upside price move may be related to the future BREXIT deal and renewed economic ties/trade with the US.  In other words, investors may be shifting expectations and price levels into acceptance that the British Pound may become a very solid future investment assuming the BREXIT deal creates a renewed economic cooperation between Great Britain and the US.

MEXICAN PESO

Lastly, the Mexican Peso has recently started to base near 0.049 and may possibly attempt to move above longer-term resistance near 0.053 on renewed expectations of a stronger economy, stronger economic ties with the US and a post-US 2020 Presidential election rally.  Currently, the bottom in the Peso occurred in 2017 near 0.04785.  We believe the Peso could rally above 0.061 over the next 18+ months – resulting in an 18%+ upside price rally related to stronger US economic growth and stronger economic ties between the US and Mexico.

CONCLUDING THOUGHTS:

These changed in direction in the Mexican Peso, Canadian Dollar and British Pound suggest that global investors may begin shifting capital into the strongest sectors and/or the value sectors of these countries attempting to capture a late 2020 price rally that may carry forward into the 2021 and beyond economic recovery that we expect to take place after the 2020 US Presidential elections.

Please keep in mind that quite a bit hinges of the outcome of the US Presidential elections in 2020.  Just like we saw on election night in November 2016, global investors and global corporate leaders will react to any fear or opportunity related to who is expected to win the US elections in 2020.  More taxes, more regulation, more uncertainty will immediately derail any attempted economic recovery that sets up over the next 10+ months.  We need to watch how these currencies strengthen before the election, then become very cautious 2 to 3 weeks before the election takes place in 2020.

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!

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.

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.

US Dollar Rallies Off Support But Is This A Top Or Bottom?

The US dollar rallied nearly half a percent off recent support near $96.50.  This upside price move confirms the capital shift we have been talking about.  Foreign capital is pouring into US markets and US dollar as strength in the US economy continues to dominate.

This new upside move in the US dollar has established a new lower price channel that should continue to act as price support going forward. Fibonacci price structure dictates that a higher low and a higher high price rotation may follow. We would expect some resistance just below the $98 level and if the Fed lowers the rate the dollar will likely pullback and consolidate for a few weeks to digest the news, but investors will still see the USD as the strong currency and keep buying it longer term.

It is important to understand the strength in the US dollar and the US economy should continue unless something interrupts the growth and continued out what from the US. It is very likely capital will continue to seek out the best returns and the best safety which we believe is available only in the US right now. Eventually, things may change where foreign markets become more opportunistic for investors and capital begins to shift away from the US markets. Until that happens we believe the US markets will continue to drive higher and likely push towards new all-time highs.

The strength of the US dollar is muting the upside potential in precious metals as well as the US stock market. We believe the underlying strength and opportunities resulting from the capital shift, where capital is rushing into US markets, will eventually override the strength of the US dollar. In other words, investors will continue to pour money into US stocks and into precious metals as a protection mechanism against risk while the US dollar continues to rise.  If and when the US dollar does rate below the lower price channel, the US stock market may likely breakdown as well and precious metals should skyrocket higher. Until that time, we expect a moderate price advance to continue in the US stock market major and mid-cap sectors, the US dollar, and precious metals.

Gold will likely rally from the 1340 level to just below 1380 on the next leg. Then Gold will likely cause and rotate to near 1360, pause briefly, then rally to levels above 1400. We believe this rally may happen before July 12-15, 2019.

Follow our research to stay ahead of the market moves.  We’ve been warning our followers for months that 2019 and 2020 will include incredible opportunities for skilled traders. We’ve also been calling these major moves very accurately. With the US elections only 15 months away, we urge all traders and investors to pay very close attention to our research and insights.

We have recently suggested that a major price may set up in late August or early September 2019. Once we get to this date or closer to this inflection point, we’ll provide more insight as to what our modeling systems are suggesting.

UNIQUE PHYSICAL SILVER OPPORTUNITY:

I have taken advantage of the flow into the safe-haven assets like the Utility sector, and most importantly precious metals (GLD up 3.68%, GDXJ up 11.16%). I anticipated this and our XLU utilities ETF taken with members was a quick 3.11% winner. Our VIX ETF trade also hit our 25% profit target within a few days of entry.

Now, I have a few silver rounds here at my desk I am going to give away and ship out to anyone who joins me with a 1-year, or 2-year subscription to Wealth Trading Newsletter. You can upgrade to this longer-term subscription if you a current subscriber or join one of these two exciting offers below, and you will receive:

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Chris Vermeulen

King Dollar Rides Higher Creating Pressures On Foreign Economies

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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