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The Russell and Transportation Tell A Completely Different Story

We’ve been writing about the broader US stock market for many months – highlighting the Pennant/Flag formations that have continued to set up since early 2018.  Sometimes, the keys to really understanding what is transpiring behind the scenes in the US markets is to pay attention to various market segments and to consider applying some “outside the box” thinking. Before you continue, be sure to opt-in to our free market trend signals newsletter.

Our research team would like to fall back into price analysis using the Russell 2000 and the Transportation Index as “additional measures” that mirror the US major stock market in terms of price, volatility and future price targets.  The interesting facet of this type of analysis is that we can study any symbols we want and apply the different techniques, patterns and insight we learn to the total scope of the broader US stock market.  Thus, we can attempt to identify how and when certain price actions may become more intense or volatile while comparing how our predictive modeling systems and other tools share unique outcomes.

The Russell 2000 and the Transportation Index should be on every skilled traders radar – along with the three major US stock market symbols (ES: S&P500, YM: Dow Jones, and NQ: NASDAQ).

Additionally, all traders should follow the US Dollar, Gold, Silver, Oil, VIX and a handful of other key market sectors.  The old saying is “it is not a stock market – it is a market of stocks” is very true.

After the two day selloff, many traders still have questions about what lies ahead for the US markets.  We’re reading some reports of a “collapse taking place in the US stock market” and others, like our research team, believe this move in the markets is related more closely to a “move away from risk and a capital shift into safety”.  So which is it?  A collapse in the making or a sideways shift of capital into various safe-havens?  Let’s look at the charts.

WEEKLY RUSSELL 2000 (IWM) CHART

This Weekly Russell 2000 (IWM) chart highlights the rotation that has been in place throughout much of 2019.  The MAGENTA support level near 144.25 has proven to be intermediate support through multiple downside price cycles.  Ultimate Support resides at 125.00.  The current downside price move is still above the intermediate support level, although that could be breached over the next few trading days if price weakness resumes.  Therefore, until the 144.25 level is breached, we would presume that price may attempt to find support or form an intermediate basing pattern near recent lows.  Our ADL predictive modeling system suggests the YM (Dow Jones) may have already bottomed.  Thus, any continued weakness in the US stock market may result in a “wash-out” price low point near Ultimate Support.

TRANSPORTATION AVERAGE (IYT) WEEKLY CHART

This Transportation Average (IYT) Weekly chart shares a similar price setup as the Russell chart.  Again, we can see the recent downturn in price has only really moved back towards intermediate support near 174.25 and has yet to really attempt to breach into “new low price” territory.  Because of this, we can assume the downside moves in the ES, NQ, and YM which did result in “new low” price formations can’t be completely confirmed until the IWM and IYT also break into “new low” price formations.  Ultimately, the MAGENTA support levels are key to understanding if this is a “collapse” or a “shift in capital” as we suggest.

CUSTOM WEEKLY MARKET VOLATILITY INDEX

One of our favorite tools for understanding market price volatility and potential is our Custom Volatility Index.  This Weekly Custom Volatility Index chart highlights the current downside price rotation in historically rational terms.  Much like the two charts above, this chart shows the current price levels are still well above the previous two base/bottoming price levels – thus, we have little confirmation of a breakdown or collapse in prices (yet).  If the price of our Custom Volatility Index were to move lower and close below 8.00 on an END OF WEEK basis, then we would see a new “closing price” low that would immediately send up warning flags of a possible price collapse in the US stock markets.

Ultimately, without this type of price move happening, we are well within the standard deviation ranges of normal price rotation and strongly believe this rotation to be a shift in capital away from risk and towards value, safety, and Blue Chips.  Think of it like this, traders and investors are shifting their investments away from what has been “high flying” and moving their capital into more traditional blue chip/dividend-paying assets.

CONCLUDING THOUGHTS:

Of course, time will tell if our analysis and predictions are correct or not.  We urge you to also read our recent ADL predictions research post suggesting the ES and NQ will see broader price rotation and volatility than the YM in this recent post here.

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.

Be sure to ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar and SPECIAL OFFER – CLICK HERE

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. This quick and simple to understand guide on trading with technical analysis will allow you to follow the markets closely and trade with it. Never be caught on the wrong side of the market again and suffer big losses. PDF guide: Technical Trading Mastery

Chris Vermeulen
www.TheTechnicalTraders.com

Downside Price Rotation Dominates After Manufacturing Data

Our research team has been all over this longer-term Pennant/Flag setup and the potential for the breakdown in the US/Global markets.  The US manufacturing data released today confirmed what we believed would be the outcome of the extended trade issues between the US and China – a moderate slowdown in US manufacturing.  Couple that with a US Fed that is attempting to navigate very difficult economic developments, consumers headed into the Christmas season unsure of what lies ahead, the US political environment (almost complete chaos) and uncertainties with foreign markets and we have a perfect setup for “investor malaise”.

This is something we last saw after 9/11 and even earlier in 1990 when the US invaded Kuwait.  With each of these events, consumers and investors entered a phase of moderate indifference/malaise in terms of attention put towards global economics and investing as well as a general unwillingness to actively engage in anything related to investing and finance related.  It appeared that consumers and investors were just busy taking care of their lives, families, jobs and watching the “news cycle” as it seemed every evening something new hit the news-cycles to distract from the markets.

If this is the case with the new Impeachment proceedings, the US Presidential election event (2020) and geopolitical trade/finance issues in today’s markets, then we may be entering a period where capital will continue to shift into safe-havens, protective stocks (DOW and dividend-paying stocks) and attempt to shun the high-flying, high-risk technology, Biotech and heavy-equipment and other stocks that rely on a booming global economy.  We have about 13 months to go before the November 2020 US Presidential elections and it appears we have a dramatically changing economic environment ahead of us.

If this downward price move continues as we expect, capital will move away from risk factors and into safe-havens, bonds, and blue-chip stocks as a method of protecting against valuation risks.  The NASDAQ and technology stocks could get crushed while the VIX index rockets higher. The smart money index and the price reversion look to be starting now and we explained it much more detail in this article.

S&P 500 (ES) DAILY CHART

This ES Daily chart highlights the new lower low produced by the downside price move on October 1.  This new low confirms the bearish trend is currently dominating the direction and suggests price may attempt to target the 2880 level (first level of support) before possibly moving lower.  Our researchers believe the ES is likely to fall 5% to 12% over this total downside rotation based on our Adaptive Dynamic Learning (ADL) predictive modeling system. If this happens then see what we think will happen to the price of the VIX. Thus, retesting August 2019 lows is really going to be a key setup to determine what happens next.

DOW JONES DAILY CHART

This YM Daily chart provides an even more dramatic example of the new price low set up that continues to suggest further downside price action is in our future.  Support near 26000 would be our first target level and ultimate support near 25000 would be our ultimate support level based on recent price rotation.  Ideally, we believe the YM will move towards the 26000 level and find support rather quickly.  Much more quickly than the ES and NQ – as we’ve recently detailed in our ADL predictive modeling research article.

NASDAQ DAILY CHART

Because we believe the NASDAQ and the S&P stocks are more likely to experience a broader price rotation than the Dow Jones stocks, we believe that capital will begin a very dramatic and dedicate shift away from risk over the next 2 to 3+ weeks.  This would suggest that certain S&P and Dow stocks/sectors could see some support setting up within a 3~5 week span – well before the NASDAQ stocks find any real support.  It also suggests that Metals and Miners are likely to begin another rally higher over the next few weeks/months.

Ultimately, this will result in the VIX rallying much higher, as we suggested near 30+ days ago, and possibly targeting levels above 25 (initially), then possibly 35 as the capital shift extends.  Once capital begins to pour out of risk and into safe-havens, the VIX could rally above 40 on a deep price downturn in the NASDAQ.

CONCLUDING THOUGHTS:

If this downside rotation extended into the global stock market, we may see a much broader rotation of capital throughout the world as risk factors are heightened and credit/debt issues are pushed to the limits for certain foreign nations/corporations.  This is likely to be a “shake-out” moment if the downside price move extends deeply.

Right now, we need to watch how the foreign markets will react to this new and how consumers and corporations address this manufacturing slowdown.  Obviously, everything is not as rosy as one might think given the global trade and economic issues.  But we believe this rotation is very healthy for the markets and if our ADL predictive modeling is correct, the ES and YM will recover near mid-November for a moderate Christmas rally for 2019.  The NASDAQ/technology/Biotech sectors, though, may not be so lucky.

Be sure to ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar!

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. This quick and simple to understand guide on trading with technical analysis will allow you to follow the markets closely and trade with it. Never be caught on the wrong side of the market again and suffer big losses. PDF guide: Technical Trading Mastery

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.

The Equities Wedge At The Edge – Front And Center

We continue to alert our followers of the extended Wedge (Flag or Pennant) formation that has setup over the past 16+ months in most of the US major indexes.  The reason these are so important for skilled technical traders is because the Apex of these formations typically result in a violent price move  that may result in a dramatic profit opportunity (or massive risk event).  The most interesting facet of the current Wedge formation is that it is happening just 12 months before the US Presidential Election cycle.

It is our believe that a major price reversion event will begin to take place over the next 2 to 6+ weeks and complete near the end of 2019 or into early 2020.  This reversion event is and continues to align with our super-cycle event analysis from earlier this year.  Our researchers believe this reversion event is essential for price to establish “true valuation levels” and to begin a renewed future price trend.  We believe that trend will begin between June 2020 and August 2020 and will result in a strong bullish price trend.  We also believe this bullish price trend in the US stock market may last well beyond 12+ months – well into 2021 and beyond.

CUSTOM TECHNOLOGY WEEKLY INDEX CHART

This Custom Technology Index chart highlights the Wedge formation that is one of our main concerns.  The Technology sector is one of the most heavily weighted sectors in the US stock market and the one that typically has the highest price to earnings multiple.  Over the past 5+ years, billions have poured into the Technology sector chasing the rally and the security of the US stock market/US Dollar.  A breakdown in this sector (like the DOT COM crash) could be devastating for the global markets.  As you can see, the price is already very close to the lower price channel and could breakdown within the next 2 to 5+ weeks.  Pay attention to weakness in the NASDAQ and/or the technology sector overall.

MONTHLY S&P 500 CHART

This S&P 500 chart highlights the rising Wedge formation that is set up and nearly complete.  This Monthly chart also highlights the extended volatility within the global markets compared to levels prior to 2018.  It is our opinion that the Apex of this Wedge will result in a breakdown/price reversion event targeting levels below 2600 on the SPX.  This reversion could extend to levels below 2000 on extended price weakness.  Our opinion is that the bottom will form sometime between December 2019 and April 2020 where a new Wedge formation will setup before reaching the Apex and starting a new upside price trend near August/October 2020.

We prepared for a very volatile price rotation/reversion event as these Wedges reach their Apex moment.  Skilled technical traders should be able to find lots of opportunity for profits over the next 6+ months with these big price rotations.

WEEKLY US DOLLAR CHART

The US Dollar will likely rotate within the Magenta price channel as this has continued to provide very clear price support over the past 20+ months.  We don’t believe the US Dollar will decline by more than 5% to 7% throughout the reversion event.  The fact is that the US Dollar has regained a level of dominance within the world and the US Dollar may continue to strengthen for many months into the future.

Remember, these reversion events are essential for proper price exploration and future price trends to establish.  They are fundamental to all price activity.  A healthy price rotation will allow for future trends to establish and mature well into 2021~2024.  The current Wedge formations must complete and the Apex rotation must happen in order for price to conduct “true price exploration” and “true price valuation”.  From these levels, price will establish a new price trend that may continue for many years into the future.

CONCLUDING THOUGHTS:

We strongly suggest all readers consider the risks of their open portfolio positions and take steps to protect against any unwanted risk exposure.  As we are suggesting, we believe the Apex event will begin within 2 to 4+ weeks – possibly sooner.  If you want to know what we are advising our clients about this event, visit www.TheTechnicalTraders.com to learn how we can assist you.

I urge you visit my Wealth Building Newsletter and if you like what I offer, join me with the 1 or 2-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 Round or Gold Bar!

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. This quick and simple to understand guide on trading with technical analysis will allow you to follow the markets closely and trade with it. Never be caught on the wrong sie of the market again and suffer big losses. PDF guide: Technical Trading Mastery

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

Earnings may surprise the stock market – Watch Out!

I believe the outcome of the past 6+ months with regards to global trade, currency devaluations, and consumer sentiment will result in weaker US earnings in Q2 than at any time over the past 3+ years.  We believe US stocks, after recently breaching key psychological price levels ($300 SPY and $3000 ES) are poised to set up a sideways Pennant price pattern formation headed into a key price breakdown near the middle of August 2019. Our cycle indicator tools and predictive modeling suggests that August 19, 2019, is the date to watch out for and after that date, we believe the US and global stock markets may begin a new downward price phase that could lead to a dramatic price decline. Read our August 19 Top warning here This week I will share a report showing some really interesting charts rm a very different point of view that signal a larger correction is coming based on some leading sectors and proprietary analysis. You can get this report by joining my free newsletter located at the bottom of my Current Index Trade Signal Page here.

Earning Season Expectations For This Week

Early this week, July 15 through July 19, a total of 173 companies will be reporting earnings – including a number of very large firms such as Bank Of America (BAC), Alcoa (AA), US Bancorp (USB), IBM, Bank of New York Mellon Corp (BK), E-Bay (EBAY), Netflix (NFLX), Charles Schwab (SCHW), Citigroup (C), United Airlines (UAL), JP Morgan Chase & Co (JPM), Wells Fargo & Co (WFC) and others.  The mix of reporting firms this week includes financial, consumer, basic materials, healthcare, home builders and many others. If anything has disrupted these industries over the past 3+ months it has been the shock to the markets related to the October 2018 to December 2018 US stock market price collapse and the continuing trade wars/issues with China.  It is our opinion that these trade wars and pricing disruptions have resulted in a much more difficult environment for certain US and foreign nations to achieve Q2 expectations.  Thus, we are planning for a few interesting surprises over the next 10 to 15+ days. Next week, July 22 through July 26, a total of 659 companies will be reporting earnings. We believe the bulk of these earnings reports will provide increased US and global market price volatility and could actually present a number of surprise results (both positive and negative). The Nasdaq website reported this article on June 17, 2019, which we found interesting. Expectations for Q2 2019, and to be quite honest – the rest of 2019, is overall quite negative from this article.  We believe the US markets will still be the top-performing global stock market because of the strength of the US economy and dynamic foundation of growth and opportunity going forward 2 to 4+ years.  But we are very concerned that the second half of 2019 stock market correction is about to hit and shock traders with a -15% to -20% (or more) price collapse initiated by the recent psychological price levels being breached and the Q2 earnings data that could shock the global markets. From the Nasdaq article, Zacks Sector analysis for Q2 vs. Q1 2019 shows concern in a number of sectors while Consumer Discretionary and Retail/Wholesale shows Revenues increase and Margins fall.  Overall, it is quite distressing to see these expectations when one considers the strong economic data being released recently.
(Source) The computer and technology sector seems uniquely poised for a very rough year based on Zachs expectations.  Overall, Q1 2019 earnings expectations were -6.7%, Q2 2019 earnings expectations are -11.5% and Q3 earnings expectations are -11.5%.  This does not look like a very positive set of data for the rest of this year and we believe this is where the real risk of a US stock market price collapse resides.
(Source)

Our Index Prediction Looking Forward

Months ago, we warned that a July 2019 market top is setting up and that we believed the US stock market would rotate much lower after a peak in July setup.  About 45 days ago, we adjusted our expectations to suggest that this top would likely form in August or early September based on our predictive modeling system output and our cycle tools.  We’ve honed the date down to August 19, 2019 (+/- 5 days) as the date that we believe the US stock market will TOP and/or initiate a new downside price move from this date. You can see from the chart, below, that we believe the current price top may actually be near the highest point reached over the next 30+ days.  We believe earnings data will change the dynamics of price activity and increase volatility over the next 2 to 3 weeks.  Setting up a sideways Pennant price formation as the global markets and investors digest this new economic data.  Ultimately, a price breakdown is likely (a price revaluation event) that will allow for continued upside price growth in the future.
This Daily DJI chart highlights our expectations and highlights our Fibonacci Price Amplitude Arcs that suggest the true price top formation will happen sometime near August 19, 2019.  We believe this date is critical and that price could begin a very quick and dramatic downside price move near this date based on the data we are expecting to see from Q2 earnings.
In previous articles, we’ve suggested a simple trade setup technique we use to identify entry and exit points – the 100% Fibonacci Extension Move.

Earnings and Prediction Conclusion:

We urge traders to plan and prepare for this potential setup by reducing risk in long positions and preparing for a potential downside price move that could be related to global market concerns, Q2 earnings data and continued global trade/economic issues. Overall, once this price revaluation event is completed, much like the event in Oct~Dec 2018 and the event in May 2019, the US stock market will very likely resume the upward price bias/trend and continue to attempt to establish new all-time price highs into 2020 and beyond. Price rotations, like the one we are suggesting, may happen after August 19, 2019, are very healthy for the markets.  These types of moves allow price to establish support and resistance levels, revalue assets, shake out certain biases and provide for future price moves/trends. Be prepared.  The data may result in a very big increase in volatility over the next 10~15+ days and this could result in a very dramatic price correction setting up as we’ve suggested.  Learn how our research team can help you stay ahead of these bigger market moves and find incredible trading opportunities as these big moves take place. I can tell you that huge moves are about to start unfolding not only in real estate, but metals, stocks, and currencies. Some of these supercycles are going to last years. Brad Matheny goes into great detail with his simple to understand charts and guide about this. His financial market research is one of a kind and a real eye-opener. PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime 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 to visit my Wealth Building Newsletter and if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible, get a FREE BAR OF GOLD and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next set of crisis’. Chris Vermeulen Technical Traders Ltd.

Small Caps May Lead A Market Rally

We believe a unique Pennant/Flag formation is setting up in the US stock markets. We believe the Small Cap sector may provide a better technical reference to the price breakout we are expecting in late August or early September than the mid or large-cap sectors.  The charts tell a very interesting story when comparing the different sectors to the SPY. As most of you are well aware, the very deep selloff between October and December 2018 prompted a low price pivot point that most technical analysts are using as a reference to support. What we find interesting is that these Small Caps have really failed to mount any type of price recovery.  We believe this is because of the continued capital shift where foreign investors and institutional investors are piling into mid-cap and large-cap equities chasing dividends and safety.  The small-cap index chart may provide the best technical reference for the pennant formation and eventual breakout move. This weekly chart of TNA highlights exactly what we are referencing in comparison to the mid-cap and large-cap charts. Pay very close attention to the support level near $53.50.  Also, notice that define panic formation setting up after the December 2018 bottom. We believe the price rotation in the small-cap index is clearer and more identifiable than the rotation in the mid-And large-cap indexes.  We also believe the small-cap index will show early warning signs of price weakness or strength after the apex of this move.
The mid-cap and large-cap weekly charts paint a very different picture than the small-cap chart. We can see the upward price slow after the bottom in December 2018 was much more aggressive. We can also see an upward sloping Pennant formation setting up between the lower, blue, price channel and the magenta upward sloping price channel from the recent lows.  Please pay close attention to the upper and lower support zones we drawn on this chart. Any future break down in price will likely find support near the upper support zone and possibly pause near this level before attempting a breakdown further if needed.
This last SPY weekly chart highlights the similarities between the made In the large-cap indexes. The way price reacts to these channels as well as creates these Pennant formations in unison is rather interesting. Compared to the small chart, the TNA, it is clear that the main and large-cap prices are moving somewhat in tandem. At this point in the process, we are waiting for wave 3 to end and wave 4 to begin of the pennant formation.  As price continues to consolidate within the pennant range, we should take advantage of opportunities that exist within this rotation and prepare for a brief breakout to new all-time highs. After new all-time highs are reached, we believe an immediate downside price rotation will begin sometime in September 2019 and last possibly into October or November 2019 – possibly longer. Pay attention to vertical line number 10 on this chart. This price cycle reference occurs on September 8, 2019. It also occurs right after the apex of the pennant formation between the red and magenta lines. Our researchers believe a washout high price rotation, targeting new price highs, will be the likely resulting breakout move.  After the washout high exhausts, we believe an immediate downside move will likely begin and push prices back below the 282 to 270 level while attempting to find support.  Ultimately this downside move may attempt to retest the 240 level or lower. Time will tell.
Our suggestion is to pay attention to the small-cap index in relation to the mid-cap and the large-cap symbols. We believe the small-cap sector will provide greater detail for technical analysts and researchers. Overall, every one of these charts paints a fairly clear picture. We believe our research is accurate and that the market will do exactly as we are suggesting. The only thing that we are unsure of, at this point, is where the new all-time high price level will peak. Our ADL predictive modeling system is providing some guidance in regards to this peak level.  We will continue to provide further guidance and research as these price swings continue. It would be wise to prepare to trade a tightening price channel as this pennant formation continues – then be prepared for some very big price swings in late August and all through September. 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 I am going to give away and ship out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. You can upgrade to this longer-term subscription or if you are new, join one of these two plans listed below, and you will receive:
1-Year Subscription Gets One 1oz Silver Round FREE (Could be worth hundreds of dollars) 2-Year Subscription Gets TWO 1oz Silver Rounds FREE (Could be worth a lot in the future) SUBSCRIBE TO MY TRADE ALERTS AND  GET YOUR FREE SILVER ROUNDS! Free Shipping! Chris Vermeulen Founder of Technical Traders Ltd.

ADL Predicts Expected Range Of The NASDAQ Before Breakout

Our advanced predictive modeling system is suggesting a defined range for the NQ over the next 30 to 60+ days before a bigger breakout move is expected.  If you’ve been following our research, you already know we have been predicting the NQ to move in a sideways pennant formation.  Our ADL predictive modeling system is suggesting the NQ will stay within a defined price range over the next 30 to 60 days. The upside price bias we are predicting is based on the ADL modeling systems suggestion that an upward price bias is inherent in the markets. You’ll see from the charts below that two different predictive results are driving our interpretation currently. One result is predicting an upward price bias over the next 2 to 4 months whereas the second result is predicting a sideways price result over the same period of time. Our conclusion is that the NQ will likely trade in a sideways pennant formation over this span of time before a breakout price move happens. Our research continues to suggest a price peak may happen in August or September of 2019. We believe this peak aligns with our cycle research as well as aligns with our suggested pennant formation pattern. We believe the peak that forms near August or September will likely result in new all-time price highs. That breakout to new all-time highs will likely be the end of the move higher for now.   After our expected price peak sometime near September, we believe the markets will turn lower with a possible move of -10% to -15% or more. This two-week bar chart of the NQ highlights our ADL predictive modeling results. You should be able to see the yellow dashed lines on this chart showing what we believe will be price support above 6800.  we’ve also drawn lines on the chart highlighting where the pennant formation price rotation will likely take place. Over the next few weeks, we expect the NQ price rotation to stay between 6800 and 7500.  This range presents an incredible opportunity for traders to trade this rotation.
This NQ monthly chart highlights to ADL predictive modeling results showing two separate ADL predictions. Our researchers use these results to create a combined consensus expectation for the markets. This particular NQ monthly chart suggests there is a strong upward price bias over the next 2 to 3 months. Combining this upward bias with our expectations of price support near 6800, we conclude that a sideways price rotation should be expected with a fairly volatile price range. Please take notice of the upper yellow dashed lines of 8000. These ADL predictive levels suggest that the NQ will likely attempt a move above 8000 sometime in August or September of 2019, then move dramatically lower as price attempts to revert back to the 7500 level – or lower.
It is critically important for traders to understand the future price expectations of the NQ and the US stock market. Having knowledge of future price activity, like our ADL predictive modeling can produce, allows traders to plan for and execute strategic trading strategies. Once the peak in August or September is reached, skilled traders should begin to prepare for a bigger downside price move which may last many months. Initially, our expectation is a move back to 7500. Our longer-term research and cycle analysis suggest prices may move much lower – possibly towards 6000 or lower. 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 Trading! Chris Vermeulen

US Stock Market Setting Up A Pennant Formation

As we’ve been warning over the past few weeks and months, the current price rotation in the US stock market is very much related to the strength of the US Dollar and the continued Capital Shift that is taking place as trade issues and currency valuations drive investors into the US equity and debt markets as protection against risk.  We talk about some of these new Super-Cycles starting and how we can take advantage of them in this new guide. The US Dollar stalled today after a recent price decline from just above $98 to a current level near $96.60.  Over the past 15+ months, the US Dollar has risen from lows near $88 to highs near $98 – an 11.2% price rally.  Meanwhile, many other foreign currencies have collapsed over this same span of time.
We believe the continued Capital Shift is driving further investment in the US stock market and debt market as a way to avoid the risks of further currency valuation declines and as a means of protecting wealth.  Until this currency dynamic changes, we expect the strength of the US economy and US Dollar to continue to push investors into the US equity markets. This being said, a very interesting dynamic is starting to set up.  Gold and Silver have started to move higher while Oil, Natural Gas and other commodities are pushing lower.  This type of activity in the commodity markets suggests some increased fear is driving investors away from speculating on increased global economic activities and pushing capital into expectations of a market top or deeper correction. We’ve read recently where institutional traders have started initiating heavy short positions in the US markets and we believe these investors have jumped the gun a bit.  We don’t see how or where a massive US market collapse is likely given the current strength in the US Dollar and the US economy.  Yes, at some point this dynamic may shift and at some point, we may see a fairly deep correction of 12% to 18%.  We believe that a top may happen in August or September 2019 – after the US stock market (DOW) reaches new all-time highs above $30k. Right now, we believe the first rotation of our expected Pennant/Flag formation is starting to set up and we look for early signs in the DOW and TRAN charts. This TRAN chart shows price rotation near the CYAN resistance level originating from the late April peak and spanning the early May price high.  We believe this resistance level may play a key role in understanding how and when the next upside price leg begins to advance.  We expect a downside price rotation to take place pushing the TRAN towards the $9600 level over the next few days/weeks.
This YM chart highlights a similar price pattern, but clearly illustrates one key difference – the New Price High.  This fundamental element of Fibonacci price theory is that any attempt to break a past critical price high which results in a “new price high” designates the current trend as Bullish.  Within Fibonacci price theory, price is always seeking to establish new price highs or new price lows – AT ALL TIMES.  Therefore, a new price high or new price low is very significant. The TRAN chart may continue to consolidate below the CYAN resistance level whereas the YM chart may attempt to push higher, with a bullish bias, setting up a Pennant/Flag formation as we expect.  This would indicate that even though economic and transportation expectations are waning, the bullish bias in the YM suggests the Capital Shift factor is still pushing the US stock market upward.
Pay close attention to that big blue ellipse near the top of the chart.  We drew that in place many months ago as an indicator of where we believe critical resistance is should the markets attempt to push higher and attempt new all-time highs. We still believe this resistance is valid and as price rotates into the Pennant/Flag formation, we’ll extend this resistance forward – carrying the same slope and angle forward.  If the YM is going to attempt a move to above $30k before our expected August/September 2019 top setup, it will have to push well above this resistance zone to accomplish this move. Watch Gold and Silver over the next 3 to 4 weeks as any perceived weakness will push the precious metals higher still.  We believe Gold will reach $1450 this summer and possibly higher before August as smart money rotates into the safe havens in anticipation of a bear market. If you wanna become a technical trader with use and trade ETFs then be sure to join our Wealth Building Newsletter today and get our daily video analysis and swing trade alerts. In the past 17 months, our newsletter trade signals have generated 91% ROI for its subscribers, be sure to join before the markets start making new big moves and profit with us! Chris Vermeulen www.TheTechnicalTraders.com

Bitcoin Stalls Near $8100

After an incredible 7+week rally in Bitcoin, from $3700 to above $8000, the current price action is setting up for what may become an extended Pennant/Flag formation with quite a bit of sideways trading ahead.

Our researchers believe the past 7+ weeks rally in Bitcoin was prompted by a shift away from risk in Asia/China and into more suitable protection assets.  Cryptos appear to be the easy choice for many as this rally coincided with the April 3rd through 6th US/China trade talks in Washington, DC (https://www.scmp.com/economy/china-economy/article/3004961/us-says-theres-still-significant-work-be-done-trade-talks).  It appears that many investors were preparing for a difficult deadline after the March 1st deadline for a deal was pushed back.  These early April trade talks may have been interpreted as a “do or die” effort from both sides.  Again, shortly after the May 1st US/China trade talks in Beijing, Bitcoin began another rally from the $5200 level all the way up to the $8000 level.

Our contacts, although we admit they are fairly limited in total quantity, have stated the sentiment from locals in China are very pessimistic on the US and President Trump.  A few of our contacts have recently stated they have been laid off or terminated from their jobs and, as we understand, locals have already started to react in a protectionist mode.  This happens when economies contract quickly.  Consumers attempt to protect their wealth and assets by moving any capital they have into something more efficient than their local markets – thus Cryptos.

This Weekly Bitcoin chart highlights areas that we believe our current support and resistance levels.  The $8000~8100 level goes all the way back to the February 2018 low.  This is a critical level for trading as it became a massive price support level back in 2018 – and eventually became critical resistance in July 2018.  Additional resistance is found near $9900.

 

This Daily Bitcoin chart highlights what we believe are the current Key Highs and Key Lows that will tell us if the next phase will be a continued rally or a breakdown in price.  The Key Low near $7480 must hold for any further upside price advance.  If $7480 is broken, we would expect the next Key Low price to be targeted (near $6200).  Otherwise, if another rally breaks out and price rallies above the Key High, then we could see an upside target range between $9200 to $9700 very quickly.

 

You can see from our BLUE CHANNEL levels on the lower indicator that we believe a Pennant/Flag formation may be setting up in Bitcoin right now.  This type of price rotation is not uncommon after a big move like we’ve seen already and it could be a fairly wide price rotation as this sideways Pennant/Flag pattern continues.  The current range between Key Highs and Key Lows is about $2000 – lots of room for trading/traders.

The key to understanding this move is the protectionist thinking of the people of China.  They are very likely attempting to move their capital into something that is not Chinese Yuan based and away from traditional holdings (Gold, Real Estate, Jewelry or other assets).  Eventually, we will likely see Gold/Silver follow the rally in Cryptos if fear continues to hit the markets.  Cryptos, although, appear to have executed the first leg of the “fear trade” originating from the breakdown in the US/China trade negotiations.

An additional word of warning should be that any resolution to the US/China trade talks over the next 60+ days could remove any long term support for this upside move in Cryptos.  Pay attention to the news cycles and what is happening in China, the EU and the rest of the world.  As fast as it went up, it could easily break down as news hits.

Lots of great price action unfold to take advantage of. Subscribers just closed out a 24% winner and another 3.46% as the markets prepare for a new move. If you want my trade signals and alerts be sure to check out my Wealth Trading Newsletter.

Chris Vermeulen
www.TheTechnicalTraders.com