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US/China Trade Issues Create SHOCKWAVE Around The Globe

Unless you were following our research, see below, and were already aware of the many warning signs we’ve been posting in our continued efforts to help traders and to help educate skilled investors, you were probably caught completely off guard by the news of near trade tariffs last Sunday, May 5th.  Let’s face it, the short position in the VIX was an indication that institutional and retail investors had gone “all in” on this rally and had failed to even consider anything disrupting the narrow range price rally that had been in place over the past 45+ days.  Well, all of that changed on Sunday night and many traders woke up Monday morning to the INDU down nearly -500 points.

The most incredible facet of this rotation was that the markets had already discounted the trade tariff news and began to rally almost immediately after the opening bell on Monday.  Sure, we are not out of the woods at this time with the potential for continued price volatility and price rotation, but the fact that the US stock market was capable of rallying back from a very deep opening price shows just how resilient the US stock market and the economy really are.  The issue this time, we feel, will be felt in the global market and in foreign currency rates. We’ll get into that more as we continue.

In case you missed our most recent research posts, we suggest you take a few minutes to review the following posts to bring you up to speed with our analysis/research.  Reviewing these posts may help you to better understand the rest of this article and our expectations for the next 60 to 90 days.

 

March 31, 2019: Proprietary Cycles Predict July Turning Point for Stock Market
https://www.thetechnicaltraders.com/proprietary-cycles-predict-july-turning-point-for-stock-market/

 

April 10, 2019: Intra-Day Fibonacci Modeling Shows Volatility Is About To Spike
https://www.thetechnicaltraders.com/intra-day-fibonacci-modeling-shows-volatility-is-about-to-spike/

 

April 17, 2019: US Stock Markets Setting Up For Increased Volatility
https://www.thetechnicaltraders.com/us-stock-markets-setting-up-for-increased-volatility/

 

April 22, 2019: Prepare For Unknown Price Action As New Highs Are Reached
https://www.thetechnicaltraders.com/prepare-for-unknown-price-action-as-new-highs-are-reached/

 

April 28, 2019: Markets Are Setting Up a SHAKE-OUT – Be Prepared
https://www.thetechnicaltraders.com/markets-are-setting-up-a-shake-out-be-prepared/

 

Now that we’ve covered a bit of our past research, allow me to attempt to summarize things a bit.

_ First, we continue to expect new high prices to be established over the next 30+ days.  Yes, volatility will be larger than it was 30 days ago, but we believe the “Shake-out” is just starting and we believe the US stock market will continue to push higher – at least for the next 3+ weeks.

_ Second, we are very cautious of the July/August 2019 Cycle Predictions, see above.  We believe these cycles could be a warning of a major price trend change that prompts some type of “dynamic shift” in the global markets.  Right now, it appears a “Shake-out” in China/Asia may be in play.  But we believe a bigger “Shake-out” may be brewing somewhere else in the world.

_ Lastly, we believe any top formation in the US Stock market will result in a Pennant/Flag formation, rotational top formation, that will give traders ample time to reposition their trades and reduce risks.

Just a few days ago, we posted this research to help traders understand just how close the markets are to topping and what to expect – see below.  We continue to believe this “Shake-out” is more about disrupting low volatility expectations and less about a major market top in the US stock market

 

April 30: How Close Are The Markets From Topping?
https://www.thetechnicaltraders.com/how-close-are-the-markets-from-topping/

 

The Chinese stock markets will likely continue to drop as new expectations are suddenly realized and trade issues, especially IP and future IP partnerships, become a major contention moving forward.  Every step China takes, right now, is very fragile in terms of US expectations and the ability to show the world China is willing to become a responsible player in the technology field.  If China fails to realize this, the world will clearly see that China’s intention is to take as much as they can from global technology leaders while stuffing their pockets full of foreign cash – it will not end well.

The Shockwave that has just started to unfold across the global stock market/financial world is that trade, economic expectations, and currency valuations will continue to “revalue” to address these ongoing concerns until some formal resolution works itself into place.  In the meantime, any new issues that become present could further complicate these “revaluation” efforts.  The concert just started, folks.  We have a long way to go before this is all over with.

This Weekly YM chart showing our proprietary Fibonacci price modeling system is suggesting we have a “long way to go” before we could consider any downside price rotation a major risk.  The recent price highs in this YM chart have prompted a Bearish Fibonacci Trigger Price near the December 2018 lows (see the RED line near the $21,450 level).  You might be asking, “why so low?”.  This “learning modeling system” attempts to learn from price and attempts to identify where key price levels are that MUST be reached for a confirmed trend change.  As price has continued to rotate within a very wide range over the past 7+ months, the Fibonacci modeling system is suggesting that price could fall all the way back to near the December lows WITHOUT triggering a new “long term” bearish price trend.

In other words, the current price range that would constitute “normal price volatility” is anywhere between $21,450 and $26,950.  When we said to expect increased volatility, we really meant it.  This is a $5,500 range in the YM that could become a “normal volatility zone”.

 

The NQ Weekly chart, on the other hand, is providing us a much clearer Bearish Fibonacci Trigger level, near $7,393.  Once the price is able to close below this level, then we would consider the NQ entering a new Bearish trend as long as price stays below the $7,393 level.  If it was to rally back above this level, then the trigger is negated as long as it stays above the trigger level.

Pay very close attention to the YELLOW price channels that originate back in early 2018.  Those levels are likely to play a very important role in going forward as price attempts to establish new price ranges/channels throughout this expected price rotation and volatility.

 

Lastly, we’ve been warning that the Financial Sector could come under some intense pressures over the next 5 to 16+ months as all of this “Shockwave” plays out.  The reason we believe the Financial sector is vulnerable to this crazy volatility is that the exposure to multiple levels of capital risk could complicate the long-term earnings capabilities of this sector.  Almost all of these firms are involved in Personal, Corporate/Business, Real Estate, Trade, Global financing, Currency, and Bond related business ventures.  These firms are not remotely immune to any “Shockwave” – they are located right in the Bullseye/Target zone.

We believe the XLF may come under increased pressure over the next 3~6+ weeks as the Shockwave event continues to unfold.  We believe issues with Personal/Consumer credit will be the first sign of a Shockwave event and further pressures from Corporate/Business/Global/Currencies would likely be the second shoe to drop over the next 8+ months.  We believe a rotation in the XLF to near $25 is very likely over the next 3~6 months and that this move could be the result of extended risk factors originating from the “Shockwave event” we’ve been suggesting is currently unfolding.

Skilled traders should be watching technology stocks, the NASDAQ, the INDU, the Financial Sector and commodity prices over the next 4+ months for any signs that the Shockwave event is increasing in amplitude.  Additionally, pay very close attention to how currencies are moving and where the US Dollar is moving in relation to other currencies.  Gold and Silver should also be on your radar over the next few months as well.  Lastly, prepare for the major cycle event in July/August 2019.

The past four tradings sessions with volatility has kept us busy check out our most recent index trades on the SP500

 

Our advice continues to be to look for opportunities as the volatility increases and continue to expect an upside price bias in the US stock market – at least until we have any strong evidence that price trend has changed.  Don’t buy into the doom-sayers just yet.  In our opinion, this US upside price move is not over yet.

If you want to become a technical trader and pull money from the markets during times when most others cannot be sure to join the Wealth Trading Newsletter today. Plus, for a few days only I’m giving away and shipping Free Silver Rounds to subscribers who join our select membership levels.

Chris Vermeulen
www.TheTechnicalTraders.com

 

Gold May Give Us One More Chance With New Lows

Our proprietary price cycle tool is showing us that the Daily Gold cycles may dive a bit lower, possibly into the $1250 to $1265 level, over the next 3~7+ days before reaching an ultimate low.  We’ve been covering the precious metals markets like hawks because of our proprietary price modeling tools that suggested the April 21~24 dates as an ultimate low/momentum base pattern.  This new cycle formation highlights the potential that a deeper price low in Gold may set up over the next 5 to 7 days and it may become an incredible buying opportunity for skilled traders.

Taking a look at this cycle chart, we can see the deep price low that may target the $1270 levels or levels just below the $1270 price area.  It appears that this new price low may form somewhere near the end of this week, May 3rd, or early next week, May 6th or 7th.  Please pay attention to this potential price move as this may be the last low price reversal before a very strong upside price move.

 

You may remember our analysis from January 2019 regarding the ADL price predictions for Gold (the chart is below).  Pay very close attention to the “April/May 2019” dates as we are targeting that low price level right now and the upside price potential showing predicted price levels well above $1400.

Skilled traders need to try to understand a move like this in Gold will likely be predicated on some external global news events that create a level of fear in the markets.  We don’t know what they may be at the moment, but our suspicions are that they are going to be related to the EU and/or China (or both).

This is it.  This should be the last low price rotation (if it happens) before Gold begins to skyrocket higher.  Pay attention and remember we were very early in making this call – so it will be an incredible run if it happens as we predicted 5 months ago.

With a total of 55 years of technical analysis and trading between Brad Matheny, and myself Chris Vermeulen, our research and trading signals makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen

Markets Are Setting Up A Shake-Out – Be Prepared

Now that the April 21 ~ 24 Gold “momentum base” prediction that we’ve been discussing for the past 4+ months has past and appears to be accurate, we think it is time to start warning of increased market volatility and the potential for a market “shake-out” to happen.  Last week was a key component to our future price predictions and market projections.  We believed our proprietary price modeling systems were accurate and had latched onto a key component of the markets – the “momentum base” call in Gold for April 21 ~ 24 of this year.  Remember, this original research post was made in September 2018 – over 7 months ago.  We kept refining our research over the past 4+ months and warned, repeatedly, that this base in Gold would likely prompt a market shake-out over the next 30~60+ days.

The moves in the major markets, over the past few weeks, have been very telling.  With the SPY and NASDAQ pushing to new all-time highs, strong earnings (overall) and the global markets setting up for another shoe to drop (at some point in the future), it leaves many questions for skilled traders.  What’s going to happen next and what should we expect from price?

Well, we have a few simple answers for you regarding the next few weeks expectations as well as some bigger future predictions.

First, Crude Oil rotated dramatically lower on Friday.  This was a big downward price rotation considering the Trump/Iran deal stance early on in the week.  A disruption in the supply of Oil is often a driver of bigger market swings.  I learned a long time ago to watch Gold and Oil all the time.  These are often the leading commodities that reflect fear/greed in the markets and potential global unrest.

With Crude Oil slipping below a key Fibonacci trigger level (at $65.25) and another key Fibonacci trigger level sitting at $61.60, it seems rather obvious that Oil may slip back below $60 on deeper price rotation over the next few weeks which could lead to a bigger “shake-out” in the markets.  We recently posted an article about how Oil could rotate lower and retest the sub $55 level (https://www.thetechnicaltraders.com/oil-may-be-setup-for-a-move-back-50/ ).  At this point, a breakdown of oil prices below the $61.60 level would indicate the very strong potential for further downside price.

 

Precious metals have setup our momentum base/bottom on the dates we predicted over 4+ months ago (April 21 ~24).  It is incredible that our ADL price modeling system can be so accurate so far into the future.  Our proprietary price modeling systems provide us with an incredible advantage over most other research firms.  The ADL and Fibonacci price modeling systems are predicting an upside price advance of at least 12% to 20% over the next few weeks.  Read one of our original research posts here: https://www.thetechnicaltraders.com/45-days-until-a-multi-year-breakout-for-precious-metals/

The upside price potential in precious metals should not be overlooked.  Additionally, the implication that some other global market malaise could unfold between now and the end of 2019 to drive precious metals prices even higher is fairly strong.  We’ve been warning that Europe, China, and even the US markets could come under some pricing pressure or increased volatility as the US markets establish new price highs.  It makes sense that traders would be preparing for another deep price rotation as prices near previous peak levels.

 

The Transportation Index rotated downward near the end of the week quite hard. Thursday, April 25, saw the Transportation Index fall over -250 pts (over -2.25%) after briefly breaching a key resistance level near $11,050.  As we’ve been suggesting, the Transportation Index typically leads the markets by a few week/months and we follow it as a means of understanding future trends, risks and price rotations.  Right now, the Transportation Index is suggesting increase price rotation and price volatility is likely to “shake-out” the markets for a while.

 

Lastly, the YM (Dow Futures), is setting up in a very narrow price channel below the recent all-time high established in early October 2018 (at $26,966).  This decreased price volatility suggests that the US major indexes are setting up for a price breakout move.  Congesting price channels suggest that price is stuck within a defined price range/channel and the ultimate breakout move will likely be a big breakout move to one side or the other.  We have our suspicion as to which direction the move will likely be and we’ll share it with you now.  Our longer-term analysis suggests that price will continue to push higher while attempting new all-time price highs.  Our expectations that price volatility will increase throughout the rest of 2019 suggest we could see some very big price swings over the next 7+ months.  But for right now, we believe this YM price channel will result in a brief upside price breakout that will push the YM price to new all-time highs (briefly) before retracing to form another extended sideways price channel near $27,000. Stocks, in general, are doing well as all our positions rallied last week with one stock jumping over 11% in one session.

 

Below, we have included a Daily YM chart that highlights this current price channel in MAGENTA.  Pay very close attention to this channel as we near the eventual price breakout that will end this congestion.  Weakness may prompt a “false breakout” to the downside, suckering in shorts, before a continued upside rally pushes prices over the $27,000 market, then stalling to set up the next Pennant/Flag formation.  We’ve seen this type of price action many times in the past.  Any downside “false breakdown” would prompt a big increase in volatility.  This aligns with our broader market analysis.  The push to the upside to establishing new all-time highs also aligns with our broader market analysis.  Thus, we expect a pretty big series of price events to unfold over the next 2~5+ weeks.

 

If you like our research and want to learn how we can help you find and execute great trades, please visit www.TheTechnicalTraders.com.  Get ready for the next big moves and learn how our team of skilled researchers and traders can help you stay ahead of these market moves.

Chris Vermeulen
www.TheTechnicalTraders.com

 

Financials Setting Up An Island Top Formation

As we continue to scan the charts for setups and trigger to alert our followers, we’ve come across a setup that may be more ominous than what it appears.  Recently we’ve posted articles about how the SPY and the NQ have pushed into new all-time high price territory and how Gold is setting up for a momentum base that should launch precious metals to near highs.  We’ve also discussed how we believe the current upside price bias in the US stock markets should last another 10~35+ days before new price weakness sets up – possibly pushing prices lower in late May or early June 2019.

Our research team has been scanning the charts looking for anything that could give us an edge to the potential setup for this price weakness in the future.  We believe the Transportation Index and the Financials could be keys to understanding how far the upside rally can continue and when a price peak may begin to warn of a potential price top or rollover.

An Island Top is a pattern that sets up with an upside price gap followed by sideways price action above that gap.  In theory, this type of setup should promote the gap to be filled with downside price action before any further upside price move can continue.  Although, gaps to the upside are fairly common in strong uptrends.  Given the strength of the earnings data released early this week and the expectations that we have for some continued upside price bias over the next 10~35+ days, we are watching these Island Top formation in the Financials for any signs of weakness to alert our followers.

This Daily FAS chart highlights the GAP as well as the Resistance levels that are currently acting as a ceiling.  A breakout above the resistance level would indicate that we have more room to run higher.  Any failed breakout to the upside, where price briefly rallies above the resistance level, then falls back below it, would be a pretty strong indication of a rotational peak.  The Financials could fall 10% from current levels and still be within the range of the March/April lows.  It would take a much bigger move to qualify as a breakdown bearish trend.

 

This Daily XLF chart highlights a similar pattern to the FAS chart.  The key element of the XLF chart is that the Resistance level provides more key fundamental price peaks than the FAS chart.  On this XLF chart, we can see that the current Resistance level aligns perfectly with the Nov/Dec 2018 highs.  We can also see a short GREEN Fibonacci trigger level line in early March 2019 above the Resistance level.  That Fibonacci trigger level is still valid and any move above that level would constitute a new bullish price trend trigger.

Any failure to break the Resistance level would qualify as a price rotation to fill the GAP and potentially set up a move back to near $25 looking to find new support.  Overall, the Financials are poised for a move – up or down.  Our research suggests the US stock market is not done rising, thus we are concerned that certain sectors may begin to show signs of weakness as the broader market continues to rise.

 

Our research team believes a critical peak formation is likely near the end of May or in early June 2019.  It is because of this belief that we are warning traders to play the next 15~25+ days very cautiously.  Watch the Financials, the Transportation Index, the US Dollar, and Precious Metals.  We believe any early signs of weakness will be found within these symbols.

With a total of 55 years of technical analysis and trading between Brad Matheny, and myself Chris Vermeulen, our research and trading signals makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen