Posts

Crude Oil Collapses Overnight On Supply Glut And Fractal Analysis Say $7 is Support

Crude Oil continues to be a big mover as the supply glut has really pushed global capacity to its limits. Dozens of full tanker ships are anchored off the California and Singapore coastlines waiting for demand to pick up.  As long as the Virus shutdown persists globally, the supply gut will continue to wreak havoc on oil price levels into Summer.  As of early Monday morning, Crude Oil is lower by -17% to $14.10 as I type.

What most readers of our articles here don’t fully grasp is just how accurate our long-term predictions truly are and its why we link to past research posts that clearly prove our analysis can be deadly accurate.

You may remember our incredible research post from July 2019 which suggested Crude Oil would collapse in early 2020 calling out a potential $14 price target.

You may also like to review our warning from January 2019 related to Oil and Energy. We also predicted the gold bullion breakout and bull market to happen last year in April, May, or June, which is it, and we called that six months prior. Eric Sprott talked about our gold prediction and how much he liked out analysis on his podcast back then.

Our Adaptive Fibonacci price modeling system is suggesting a support zone near $9 to $18 may become a new sideways trading zone for Crude Oil.  We believe the downside risk to price levels is still excessive, but we also believe that true price valuation levels will keep Oil above $4 ppb as global demand will eventually recover.  Thus, we believe Oil will likely settle into a sideways price range between $9 and $18 as this virus event continues.  It may attempt brief moves outside these ranges but eventually, settle back into this range until true demand begins to accelerate higher.

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

DAILY CRUDE OIL CHART
ADAPTIVE FIBONACCI PRICE MODELING

This Daily Crude Oil Chart highlights our Adaptive Fibonacci Price Modeling system’s results and clearly shows the Support Zone.  We believe this Zone will become a new sideways price channel for Crude oil.

WEEKLY CRUDE OIL PRICE CHART – SUPPORT ZONE

This Weekly Crude Oil Price chart also highlights the Support Zone.  The potential for Crude prices to retest the $7 to $8 price range based on this massive supply glut is not out of the question.  We believe Crude Oil will settle into the Support Zone while attempting to establish a price bottom near $7 or $8 over the next 90+ days.  It may become an extended sideways bottom/flag formation as the bottom forms.

Our suggestion is to expect a more sideways bottom formation in Crude Oil over the next 60 to 90+ days.  The supply-side glut is really pushing price levels down to extreme levels.  Nothing will change that aspect of the market dynamic until we exit this Virus shut-down and demand starts to skyrocket higher.  That may come in August or later in the year.

We do believe Oil will attempt to find support above $7 to $8 ppb as we believe the supply glut will push oil prices to a “core value level” where global buyers will attempt to say “we can’t sell oil at anything less than $x.xx”.  We believe that level is $7 to $8 ppb overall.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is an incredible year for traders and investors.  Don’t miss all the incredible trends and trade setups.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

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

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

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Real Estate Crash Is The Next Shoe To Drop

The past few weeks and months have been very interesting to see how the global central banks and governments have attempted to position themselves ahead of this COVID-19 virus event.  We continue to suggest that we are just starting the process of navigating through this potentially destructive virus event.  We believe the sudden onset of the virus pandemic has sent a shock-wave throughout the globe in terms of expectations and valuations that are, just now, starting to become “real”.  Let us try to explain our thinking and how this relates to Real Estate…

Before we continue much further, we suggest taking a moment to review our previous research articles related to the Real Estate market which we predicted the selloff and falling values. Both of these articles were at the top of the Yahoo finance and Google with hundreds of thousands the week we posted them:

Real Estate Crash Predicted Part I – Click Here
Real Estate Crash Predicted Part II – Click Here

The COVID-19 virus event is a global crisis event that is currently in the very early stages of consumer psychological processing.  All types of crisis events prompt some forms of typical human reaction.  We believe the Real Estate market may be the next big asset revaluation event as consumers continue to process the COVID-19 virus crisis and the consequences of this event.

REAL ESTATE CYCLES

Real Estate cycles typically transition through the following phases as supply and demand functions work through the markets.  Pay attention to the middle of this cycle chart.  In the Expansion and HyperSupply stages, once supply peaks and prices somewhat peak/stabilize, a transition takes place in the market where buyers chase premium properties and push price levels moderately higher.  The Recession Cycle is typically a disruptive cycle that is the result of an economic/income disruption.  When people can’t earn enough to satisfy their debt obligations and or provide for their families, then the Real Estate cycle begins to contract.

An event like this, the COVID-19 virus event, would typically start out as a regional/local event.  This did happen as it roiled certain areas of China in late 2019.  Watching how China attempted to manage and hide the extent of the virus explosion within their country was painful to watch.

The Chinese state media was pushing out information and numbers which didn’t match anything seen on the streets and being reported by others within China/Hong Kong.  This “disconnect” and the misinformation presented within this early virus pandemic event is critical to understanding how the world will now deal with this mess.  So, keep in mind, everything was somewhat “clicking right along” in late 2019 and early 2020 as China was fooling the world.

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

AS IT UNFOLDED…

The Chinese New Year celebration fell on January 25, 2020 (Year of the Rat).  Near this time in China, hundreds of millions of people travel “back home” to celebrate the New Year with their families and friends.  As this travel starts typically 4 to 5 weeks ahead of the date of the New Year, China allowed potentially infected people to travel throughout the world before shutting down travel within China on January 23, 2020.  This locked infected and uninfected people into areas within China while the Chinese government began extended efforts to control the virus outbreak.

By early February 2020, the virus had been confirmed in India, Philippines, Russia, Spain, Sweden, the United Kingdom, Australia, Canada, Germany, Japan, Singapore, the US, the UAE, and Vietnam.  In essence, the Chinese lock-down presented a very real opportunity for those that had visited China and left to be “locked into location” outside the quarantined areas within China.  If they were infected or asymptomatic carriers, these people now became source-spreaders.  On February 3, 2020, Chinese President Xi Jinping indicated the Chinese government knew about the virus well before the public alarm was raised – as reported by the Chinese state media.

By Mid February 2020, China had over 40,000 infections and over 900 confirmed deaths related to the COVID-19 virus.  Nearly a week later, near February 19, China reported more than 74,000 total cases and 2,100+ deaths.  By this time, general global panic had already been set up and this is the point of this article – how consumers respond to a crisis event like a virus pandemic. (Sources: www.aljazeera.comwww.businessinsider.com)

The reason we went through all of this detail is to illustrate how the virus event started as a localized event in China, near the end of 2019.  Yet, by early February 2020, less than 35 days later, the virus event suddenly became a global event – panicking the world.  The COVID-19 virus event has now turned into a global economic disruption event that has dramatically reduced most people’s ability to earn an income.  Businesses and individuals will feel the consequences of this event and we believe the economic contraction is just starting. How do consumers respond to an event like this?

In PART II of this series, we’ll continue to delve into the reasoning behind our research and why we believe the Real Estate market will become very risky for investors over the next 24+ months.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is going to be an incredible year for skilled traders.  Don’t miss all the incredible moves and trade setups.

I have to toot my own horn here a little because subscribers and I had our trading accounts close at a new high watermark for our accounts. We not only exited the equities market as it started to roll over, but we profited from the sell-off in a very controlled way, and yesterday we locked in more profits with our SPY ETF trade on this bounce.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

The Fed Induced Twilight-Zone

The past three weeks have been filled with intense drama, incredible highs and lows, political battles that continue to this day, and millions of questions from people throughout the world.  Throughout this COVID-19 virus event and the collapse of the US and global markets, one continued belief has prevailed – the US Fed will attempt to rescue the global markets (again).

Late last week, President Trump announced a task force to evaluate how and when to reopen the US economy and more than US nine states have already committed to a staged reopening process.  COVID-19 virus being what it is, the US is going to attempt to lead the way forward.  This means every resource and every effort will be taken to engage in a proper process to protect our future while battling this virus outbreak.

This was also a pivotal week for the US Stock market. With the US Fed in buying mode attempting to counter the recent weakness in the markets, literally trillions of dollars have poured into the US stock market over the past 5+ days.  The Dow Jones Industrial Average rallied 532 points (+2.2%).  The NASDAQ rallied 581.50 points (+7.06%). The S&P 500 rallied 89.25 (+3.2%).  Obviously, capital is pouring into the NASDAQ faster than the other major indexes and this suggests investors believe in the earnings and future capabilities of technology companies over more traditional market segments.

Continued global economic weakness and shuttered US states will have a chilling result on Q2 outcomes and revenue growth.  We continue to believe Q2 and Q3 of 2020 will be much weaker than investors are expecting and we believe the US Fed has lulled many investors into believing a “deep V bottom” is the most likely outcome.  Over time, we believe the loss of 20+ million working Americans and the destruction of the shuttered global economy will translate into much weaker global market price levels.

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

NASDAQ (NQ) WEEKLY CHART

This NQ weekly chart highlights the real potential for downside risks.  The appreciation in price from the 2016 levels are a direct result of investor anticipation of growth after the 2016 election.  What’s changed is that a major risk to the markets has unraveled more than all the growth we’ve accumulated over the past 2+ years.  Investors should stop to consider the real economic outcome over the next 2+ years before jumping into the Fed-backed Twilight Zone.

As the total scope of the global economic environment continues to shift, it does make sense that certain technology companies may benefit from any type of extended virus event.  Gaming companies, technology suppliers and resellers, certain software companies and a host of streaming and content firms may gain users and incomes over the next 12+ months.  Yet, we continue to believe the COVID-19 virus event may continue to present risks in the markets going forward.

The NY Federal Reserve issues a GDP Nowcast which attempts to translate forward economic GDP outcomes in near-real-time.  The current level for Q1 2020 GDP is -0.4% and -7.9% for Q2 2020.  This suggests the second, and possibly third, quarters could be substantially weaker overall than what we’ve just experienced over the past 50+ days.    Even though the stock markets began to collapse on February 25, 2020 – we really didn’t begin to understand the total scope of the economic contraction until nearly the middle of March (very late in Q1).  Q2 may reflect the complete global economic burden of this virus event and we believe investors are failing to comprehend the total scope of this risk at the moment and how it relates to future earning capabilities.

Weakness in Q2 and possibly Q3 earnings for 2020 could have a shock-wave across many sectors of the US and global markets which we are somewhat blindly ignoring.  Asset values, belief in a “V” type bottom setup, lack of disruption for state and local governments and others seem to continue to be the prevailing attitude.  With the US Fed to the rescue, somehow investors seem to believe the recovery process will only take a few weeks or a few months.

We found this information very interesting in terms of how local governments generate revenues and how the virus event may present a very real 20 to 40% revenue contraction for state and local governments over the next 24+ months.  Based on this data, nearly 40 to 50% of annual revenue to state and local governments may be at risk.  When we consider the 20+ million people in the US that have recently filed for unemployment (nearly 6% of the total US population and 8% of the total working population), we can’t expect a stellar economic output.

S&P 500 (ES) MONTHLY CHART

This ES Monthly chart highlights our expectation that the US Stock market will attempt to establish a deeper bottom in price that may take the form of a FLAG formation setup.  We don’t believe the continued disruption to the global markets will do anything to support the past 3+ week recovery in the US markets.  Global investors will likely end up backing the US as the leader in this recovery, yet we believe the actual bottom in the markets will take place over the next 12+ months and likely complete just before the November 2020 elections.

CONCLUDING THOUGHTS:

Our proprietary modeling systems have reflected the recent strength in the US stock market adequately – yet they have failed to result in any changes regarding allocation into the markets.  For right now, everything stays the same as it was.  We do believe the Fed’s buying will potentially prompt a “false trigger” if the rally continues.  We will assess the trigger when and if it happens in the near future.

Until we get a more accurate understanding of the risks, we feel it is much safer to assume the worst-case scenario going forward.  There is simply no way to paint a positive picture when people throughout the globe are losing their jobs, incomes, and all sense of normalcy.  The reality is that this disruption in the global banking and financial sector is certainly a big one that could last well into summer. If you read this article or watch the video you will understand the magnitude of this market top that looks to be forming.

As of right now, skilled investors are preparing for a potentially deeper price bottom and watching what is happening in the markets with interest – waiting for the right trigger to jump on the next big trend.

I have to toot my own horn here a little because subscribers and I had our trading accounts close at a new high watermark for our accounts. We not only exited the equities market as it started to roll over, but we profited from the sell-off in a very controlled way, and yesterday we locked in more profits with our SPY ETF trade on this bounce.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is going to be an incredible year for skilled traders.  Don’t miss all the incredible moves and trade setups.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

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.

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

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.

Part III – Crunching Some Numbers – Virus, Market Crash, Rate Cuts

In this section of this multi-part research article related to the potential economic destruction of the Covid-19 virus event across the global markets (Part IPart II).

We’re going to peer into data related to the GDP and other factors of the US economy.  Remember, the US economy is the largest single economy and consumption component in the world.  As we suggested in our earlier research, the US and China (combined) account for about 30% of the total global GDP each year.  The top 12+ GDP nations on the planet account for just under 80% of the total annual GDP for the globe.  What happens if economic activity and global GDP collapse for the next 24+ months because of the Covid-19 virus?

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

The second thing we want to discuss is the real potential for economic interruption within the global markets.  As of today, the US has declared an emergency status and many states and cities have already started to shut down schools, sporting events, entertainment venues and many other aspects of the US economy.  Additionally, a travel ban has been set up in an attempt to prevent the spread of the Covid-19 virus and the potential of an uncontrolled global contagion.  We believe these travel restrictions will stay in place for at least 60+ days and we believe the spread of this virus will continue for at least another 45+ days before potentially “leveling off”.

The third thing we want to discuss is the economic fallout that is resulting from this Covid-19 event.  It has clearly become evident that exporting a large portion of our manufacturing capabilities to China and other nations puts the USA in a very dangerous situation.  China has threatened to withhold vital medical supplies and other items from the USA over the past few weeks as China attempts to blame the USA for initiating this virus event.  Simply put, America will not be held hostage by China under any circumstances.

Additionally, we believe other mature economies and nations are also starting to reconsider many policies and manufacturing processes related to this event.  Although we don’t have any real proof that this Covid-19 virus event originated in a Chinese lab in China, the very first instance of this virus was documented in China in November 2019 and didn’t really spread to any other country until well into 2020.  It makes perfect sense this Virus originated in China and spread throughout the Chinese New Year to other nations.

Debt and Banking capabilities become a real issue at times when consumers shift spending and economic habits.  Large sectors of the economy become “at-risk” very quickly.  The way our researchers put it is “isolated economic events may cause certain economic events to unfold, but extended economic events put greater pressure on even mostly healthy corporations and enterprises as lack of revenues and a shift in consumer activity can result in a broad market collapse”.

So, here we have the setup of the economic event and now we can speculate about the consequences.  Our researchers believe the immediate needs of all nations is to attempt to contain this virus event and to reconsider policies and manufacturing processes/locations to eliminate risks related to hostile countries.  Is it worth it to save a few pennies to manufacture something while putting your entire nation at risk when an event like this happens?

The funny thing about all major events, like this, is that usually cause people and nations to “shift gears”.  Remember after 9/11 how America shifted away from certain policies and came together to support our military against terrorists around the world?  Remember after the 2008-09 credit crisis how the US took immediate steps to attempt to prevent this type of financial event from happening again and how consumers were “shell-shocked” to re-enter the marketplace after the fallout?  This same type of social constriction happens all over the world as consumers/people act in a flock-mentality.

WHAT DO OUR RESEARCHERS BELIEVE IS THE MOST LIKELY OUTCOME FOR Q1 AND Q2 OF 2020?

We took the past 73 years of quarterly US GDP data and attempted to run two rolling Standard Deviations on them.  The first, a 12 quarter (roughly three years) rolling Standard Deviation.  The second, a full 10-year rolling Standard Deviation.  The purpose of this was to determine how volatile past economic events have been related to these standard deviation ranges.

There have only been a few economic events that meet any of the criteria similar to the Covid-19 virus event.  The closest was the 2008-09 Credit Crisis.  All other events were isolated US types of events related to bubble events and Federal Reserve functions.

1957-1958: a collapse in GDP growth (below the 12 QTR StdDev) took place where GDP contracted by nearly 10 billion (-2%), then almost immediately rebounded back to 2x StdDev growth by 1959.

Mid 1960 to mid-1961: GDP growth collapsed to below 1x StdDev range, at one point almost stalling in Q1 1961, then immediately rebounded back to 2x StdDev growth by the end of 1961.

Q1 1982 to Q1 1983: GDP growth stalled to levels near 0.5 StdDev range for a period of 12 months before slowly rebounding back to 1x+ levels by late 1983 into 1984.

Q3 1990 to Q4 1991: GDP growth stalled to nearly 0.6 of the StdDev range, then rebounded back to 1.5x StdDev range by Q2 1992

Q4 2000 to Q3 2002: The Dot Com bubble and the 9/11 terrorist attacks resulted in an extended contraction in GDP expansion throughout this time.  By Q4 2001, GDP growth was only 0.53x the StdDev range.  Growth finally rebounded in late 2002.

Q1 2008 to Q1 2010: The Credit Crisis really took a toll on GDP.  Throughout most of 2008, GDP levels were still positive and above 0.5x the StdDev range.  Yet in Q3 2008, everything turned negative and GDP reached an extreme (-2.088x) StdDev range in Q3 2009.  Gdp rebounded back to 2x StdDev range in Q1 2010.

Q3 2015 to Q3 2016: This was an election year GDP contraction.  GDP continued to grow, but fell below the 1x StdDev range that seems to be very consistent.  Q4 2016 returned to levels above 1x StdDev.

What this shows us is that a -2x StdDev range is not uncommon and that a bigger move could take place with the right global economic setup.  A 3x or 4x GDP reversion (downside collapse) is also not out of the question if certain circumstances setup to present such an event.

IN CONCLUSION

This lengthy article and extensive research, our researchers do believe a 2x to 3x GDP reversion event is on the immediate horizon.  Given current data points and the fact that we’ve had little “transition” from previous growth phases to this potential new contraction phase, we believe the GDP contraction for Q1 2020 is likely going to be -10% or more from previous levels.  We believe Q2 GDP contraction may actually be higher (-12% or more).  This will be the result of China’s contracting and quarantining economy as well as the fallout from the continued spread of the Covid-19 virus throughout the rest of the world.

We believe Q4 2020 may result in a positive GDP quarter before further GDP contraction takes place in early 2021. We believe this will likely be the result of extended global economic malaise, global banking issues, global credit, and corporate earnings issues and the possibility that a global asset revaluation event may be taking place (similar to the 2008-09 Credit Crisis event).  This time, though, we believe it will be foreign markets engaging in a Credit Crisis and asset revaluation process that will drag the US economy into a 2021~2023 slump.

A 2x StdDev GDP event right now would be a collapse of $1.65T.  A 3x StdDev GDP event right now would be a collapse of $2.486T.  A 4x StdDev GDP event (God forbid), right now would be a collapse of $3.316T.  Remember, it is not really the size that matters – it is the length of time this contraction takes place.

Be prepared for some really ugly earnings data in Q1 an Q2 of this year, then we’ll figure out if our expectations were accurate or not and what we should be doing to plan going forward.

The type of market condition I think we have entered could be here for a long time, 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 that are written down on paper can save you thousands of dollars a week or month 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. And also if you want to start making money from home which is the only option going forward the next 3-6 months from the looks of it my trading as a business program is something to think about doing.

– If you hold winners until they turn into losers

– Taking too large of a position and get stuck with a drawdown so large that if you close the position you will lose 10-50% of your trading account

– have mastered the art of buying high and selling low repeatedly?

All these things happen to most traders, and they can easily be overcome with a logical game plan I cover in the crash courses, pun intended 🙂

In short, if you have lost money with your trading account this year giving back years of gains, I think it’s worth joining my trading newsletter so you can stay on top of the markets and if you really want to excel take my mini-courses. I take the loud, emotional, and complex markets and deliver simple common sense commentary and a couple of winning trades each month for you to follow.

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. Earning a 22%-48% return on my capital every year without the stress of being caught up in this type of market, and knowing I have a proven bear market trading strategy incase this market continues to fall is a comforting thought.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
www.TheTechnicalTraders.com

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

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

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

Palladium, Gold, US Dollar

Get Chris’ trade alerts complete with price targets, and stop-loss levels.

Get Access Now – CLICK HERE