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Real Estate Stats Show Big Wave Of Refinancing Is Coming

Current data released for the May Real Estate and Consumer Spending activity suggests a wave of refinancing is taking place – and not much else.  Pending home sales slipped to 69.  That level is 7.4 points below the lowest level in 2010 – at the height of the 2008-09 credit crisis that collapsed the global Real Estate values.  How big is this new low level in Pending home sales?  It’s HUGE.

It suggests the rate of sales in the US for Real Estate has collapsed beyond levels that were seen at the worst possible time in recent history (July 2010).  In fact, over the past 20 years, there has never been a time when the pending home sales index has collapsed below 74 to 75 – until today.

2008-2011 PENDING HOME SALES DATA

The sudden collapse of Pending Home Sales as a result of the COVID-19 virus event should not have come as any surprise to skilled technical investors.  Don’t misread this data – there are still homes selling in the US market, buyers are just being far more selective and discerning in regards to their purchases and timing.

Anyone who understands Supply and Demand theory knows that when price levels are perceived to be excessive, consumers slow their purchases considerably as the supply is determined to be overvalued in price.  This slowing of purchasing results in a supply glut that will eventually push price levels lower (attempting to attract more buyers).

It is this process of shifting perceptions in the Supply and Demand relationship that is likely taking place right now in the Real Estate market.  Low rates in combination with the COVID-19 virus are not prompting more sales of Real Estate right now.  Consumers simply don’t have the confidence (perception) that future price appreciation in Real Estate will be substantially based on the current market environment.  Thus, the perception of the value of Real Estate changes from optimism to caution.

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2020 PENDING HOME SALES DATA

Source: https://www.investing.com

A large portion of the issue related to Real Estate is consumer confidence in their ability to earn real incomes and the stability of employment and opportunity related to their future.  The COVID-19 virus event has really disrupted a large portion of the US consumer market as well as the future expectations of consumers and spending habits.  This disruption is likely to take at least 12 to 24+ months to settle before any real bottom is likely to take place on a broad scale.

Real consumer spending has collapsed in April and May 2020.  Even though the US government has spent trillions attempting to support the US economy, the continued shutdown of cities and states has cut consumers’ jobs, incomes, and the need to go out and spend like normal.  Even though they may be saving some extra money throughout this time, the destruction to local and state economies/revenues is devastating.

MAY 2020 REAL CONSUMER SPENDING DATA

Source: https://www.investing.com

The one aspect of the low-interest rates that we do expect to peak soon is the refinance market.  Stronger homeowners with solid income opportunities are able to refinance at lower rates now and that activity seems to be spiking.  This is very similar to what happened in 2009-2011 where stronger consumers were able to take advantage of very low-interest rates and were able to shed the 5 to 7%+ mortgages and refinance at much lower levels.  Once these transactions peak, these homeowners will likely be settled in their homes for another 5 to 10+ years with new lower rates (unless something disrupts their financial/income situation).

MAY 2020 MORTGAGE REFINANCE INDEX

Source: https://www.investing.com

CONCLUDING THOUGHTS:

Combining all of this data into a consensus analysis for technical traders, we come to the conclusion that a wave of refinancing has likely peaked and that consumers are now in the early stage of attempting to understand what the recovery will look like going forward over the next 6 to 12+ months.  Add into the mix that we have a US Presidential election taking place in 6 months and the potential policy and tax changes that could take place as a result of this election and we have a real “consumer abyss” setting up over the next 6+ months.

With the Fed doing all they can to support the markets, the COVID-19 virus still causing shutdowns and other issues and the consumer waiting for some clear skies and positive expectations, the US and global economy could be stuck in a mode of greatly decreased consumer activity over the next 6 to 12+ months – which translates into a shift in perspective related to business creation, optimism, income/earnings and much more.  A dramatic shift in consumer expectations over a longer period of time could result in far more damaging longer-term issues for assets, state and local governments, and more.

Once the wave of refinancing is completed, we’ll have to see how the housing market data relates to increased consumer optimism.  At this point, we don’t believe anything is likely to change consumer attitudes until after the November 2020 elections.  Skilled technical traders should prepare for some really big price swings over the next 12+ months. This is the time for technical traders to shine with the setups and data that is being presented right now as well as in the future.

You don’t have to spend days or weeks trying to learn my system.  You don’t have to try to learn to make these decisions on your own or follow the markets 24/7 – I do that for you.  All you have to do is follow my research and trading signals and start benefiting from my research and trades.  My new mobile app makes it simple – download the app, sign in and everything is delivered to your phone, tablet, or desktop.

I offer trading signals for active traders, long-term investors, and wealth/asset managers.  Each of these services is driven by my own experience and my proprietary trading systems and modeling systems.  I have a small team of dedicated researchers and developers that do nothing but research and find trading signals for my members.  Our objective is to help you protect and grow your wealth.

Please take a moment to visit www.TheTechnicalTraders.com/tti to learn more about our passive long term investing signals, Also, get our swing trading signals here www.TheTechnicalTraders.com/ttt.  I can’t say it any better than this…  I want to help you create success while helping you protect and preserve your wealth – it’s that simple.

Chris Vermeulen
Chief Market Strategist
Founder of Technical Trader Ltd.

Real Estate Crash The Next Shoe To Drop – Part III

Our continued research into the state and status of the Real Estate market continues to point to a process that is starting to unfold in the US which may put price and activity levels at risk.  Within the past two segments of this research article, we’ve highlighted how market cycles and recent market data point to a Real Estate market that may be in the early stages of a downward price cycle.

Additionally, within Part II of this article, we highlighted the human psychological process of dealing with a crisis event which also suggests a deepening price contraction event may take place within the next 12 to 24+ months.

US NEW HOME SALES DATA WAS JUST RELEASED

We believe the psychological process is just starting to become evident in the current data.  For example, the US New Home Sales data was just released and it shows the sharpest decline in activity since June 2010 (nearly 14 months after the actual bottom in the US stock market in March 2009).

Source: https://www.investing.com

Our researcher team believes investors/traders and many consumers have become complacent with the current data and are simply in denial in attempting to relate future economic outcomes to the current set of circumstances.  There has never been anything like this to disrupt global economic activity and consumer engagement over the past 100+ years.  Not even the Great Depression or WWII was on this scale.

When you stop to consider the scale and scope of this COVID-19 virus event and the process of recovery, one should really ask serious questions about how quickly you believe the global economy will be able to recover to 2018/2019 economic activity levels, how quickly the world can create and sustain 25~75 million new jobs, and how quickly global nations can attempt to regain GDP output levels nearly equal to 2018/2019 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!

IYR MONTHLY CHART

Take a look at this IYR Monthly chart, below.  The initial collapse in the markets in 2007 was the start of a similar type of economic and psychological crisis event.  Notice how IYR started to move lower in early 2007 – well before the real collapse in the US economy began in December 2008. Another aspect to consider is how long it took for IYR to recover back to near 2007 levels.  From the bottom in early 2009, it took nearly 6 years for IYR to reach levels above $80 again.

CASE-SHILLER US HOME PRICE INDEX CHART

This Case-Shiller US Home Price Index chart shows a similar setup taking place.  The peak in home price values on this chart happened in early 2006 – well before the peak on the IYR chart in early 2007.  The interesting component of this Case-Shiller chart is that real home price values didn’t bottom until early 2012 whereas the speculative traders pushed the bottom in IYR in mid-2009.  We believe the speculative side of investment and asset growth paired up near or after the 2011-12 time-frame where improved levels of economic growth and activity prompted real increased asset valuations in Real Estate.

Currently, using the Realtor.com Hotness Index (https://www.realtor.com/research/reports/hottest-markets/ ), we can see that data reported in December 2019 shows a moderate shift away from certain “hot” areas in larger market areas.  Pay attention to how the RED colors in 2018 have changed (in some areas) compared to Q1 2019 levels on these charts below.  We believe the continued shift towards a Real Estate recession is currently taking place and that these Hotness areas will suddenly cool very quickly as new data is published.

CALIFORNIA HOTNESS MAP

FLORIDA HOTNESS MAP

NEW YORK HOTNESS MAP

FRESH DATA RELEASED TODAY FROM REALTOR.COM

Fresh data released today from Realtor.com data (updated on 4/2/2020: https://www.realtor.com) suggests a peak in the housing market may be setting up.  Total active listings have declined steadily over the past 4+ years while median price levels have continued to climb.  This is a sign that the Real Estate market has been within a moderately tight “seller’s market” where buyers are competing for the best properties.  The Increase (Blue) to Decrease (Orange) data suggests that price levels tend to stabilize in Q4 of each year where sellers are unwilling to move away from their expected listing price.  Q1 through Q2 see dramatic increases in both levels of price alterations as the activity level tends to flatten out in the early portion of each year.

CONCLUDING THOUGHTS:

Our conclusion from this data is that sellers may become increasingly desperate to reprice assets if a shift in the Real Estate market dynamics takes place as a result of the COVID-19 virus event. As of July 2019, price level decreases reached the highest levels over the past 4+ years reaching 30% of all total listings.  Currently, this ratio for March 2020 is at 21.8% and is certain to climb higher.

As the human process of dealing with this virus crisis event continues to take place, we are certain that asset values and expectations will shift as they have in the past.  Jobless numbers hit again today with another massive 4.42 million new jobless claims over the past week.  Take a look at the charts below to see just how dramatic this event is turning out to be for American workers.

Source: https://www.investing.com

Anyone expecting the Real Estate market to survive this massive virus event unscathed is simply not seeing the data as clearly as one should.  We believe once the data starts to breakdown to really show the contraction in activity, price, and expectations, then a new Real Estate recessionary trend will take place where real values will attempt to establish a true bottom.   Our belief is this process may take as long as 18+ months to really bottom out and the true bottom really depends on when consumers transition away from the fear and helplessness phases and start to become optimistic again.

I am hoping people can see what I am trying to warn about, which is the next major market crash, much worse than what we saw in March. See this article and video for a super easy to understand the scenario that is playing out as we speak, and real estate will follow.

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.

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. Yesterday we closed out SPY ETF trade taking advantage of this bounce and our account is at another all-time high value. Exciting times for us technical 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. 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.

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.

(Source: www.carealtytraining.com)

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.com, www.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.

Virus Curve, Market Crash, and Mortgage Massacre

In this last segment of our multi-part research article, we want to highlight our expectations of the Covid-19 virus event and how the next 6+ months of global market activity may play out.  We’ve covered some of the data points we believe are important and we’ve touched on the collateral damage that may be unknown at this time.  Today, we’ll try to put the bigger picture together for investors to help you understand what we believe may be the 12+ month outcome.

As the global central banks and US Fed attempt to come to the rescue, the reality is that monetary policy works better when consumers are able to actually go out and engage in spending and economic activity.  If the Covid-19 virus event contracts global consumer activity, as it has recently, for an extended period of time (4 to 6+ months), then we have a real issue with how QE efforts and consumer activity translate into any real recovery attempt.

The real risks to the global markets is an extended risk that the Covid-19 virus creates a contracting economic environment for many months/quarters and potentially fosters an environment where extensive collateral damage to corporations, consumer activity, credit/debt markets, and other massive financial risks boil over.

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!

News is already starting to hit that QE is not helping the deteriorating situation in the Mortgage banking business.  Remember, this is the same segment of the financial industry that started the 2007-08 credit crisis event.  News that mortgage lenders and bankers are already starting to experience margin-calls and have attempted to contract their exposure to the risks in the markets (a bit late) are concerning.  This is a pretty big collateral damage risk for the global markets.

(Source: https://www.zerohedge.com/markets/mortgage-massacre-continues-mounting-margin-calls-spark-crisis-wall-street )

Additionally, as we expected, applications for new mortgages have collapsed to their lowest level since 2009.  Until consumers feel confident in their ability to get out, engage in real economic growth and take on home loans they know are relatively secure in their ability to repay – there is going to be a continued market contraction.  The next phase of this contraction is a price reduction, forced selling/foreclosures and a glut of assets waiting for a bottom.

“Home-purchase applications dropped by 14.6% while

refinancing applications plummeted 33.8%… “

(Source: https://www.zerohedge.com/personal-finance/mortgage-apps-crash-most-2009 )

I think the most important aspect of this global virus event is to remember that we will survive it (in some form) and we will live to rebuild after this event completes.  Yet, the reality is that we were not prepared for this event to happen and we don’t know the total scope of this Covid-19 virus event.  We simply don’t know how long it will take to remove the threat of the virus and for societies to reengage in normal economic activity – and that is the key to starting a real recovery.

(Source: https://www.zerohedge.com/markets/no-country-has-exit-strategy-expert-warns-lockdowns-could-last-months-years )

Hong Kong has recently reported a “third wave” of Covid-19 infections.  I believe we should attempt to learn from places like Hong Kong, where news is moderately accurate and reported via social media and other resources.  If we want to learn what to expect in the US and how the process of containing this virus may play out, we need to start learning from other nations that are ahead of us in the curve.

It appears that any attempt to resume somewhat normal economic activities while the virus is still active spouts a new wave of infections.  This would suggest that the only way to attempt to reengage in any somewhat normal economic activity would be when a vaccine or true medical cure is in place to allow nations to attempt to eradicate the virus as these waves continue. (Source: https://www.marketwatch.com/story/third-wave-hong-kong-thought-it-had-a-handle-on-coronavirus-it-doesnt-2020-03-23 )

The price collapse in 2008-09 represented a -56% decline from top to bottom.  Currently, the S&P has fallen by just over 35%.  We don’t believe the bottom in the US stock market has setup just yet and we do believe there is a greater downside price risk ahead.  We don’t believe the housing market will be able to sustain any of the current price levels for much longer.  We believe the collateral damage of this event is just starting to be known and we believe a greater economic contraction is unfolding not only in the US but throughout the globe.

Skilled traders need to understand the total scope of this event.  We’ve attempted to highlight this risk in this article and in our “Crunching Numbers” research article (PART III).  An economic contraction, like the Covid-19 virus event, could contract global GDP by as much as 8 to 15% over an extended 16 to 36+ month span of time.  Are we concerned about the Real Estate market?  You Bet!  Are we concerned about global markets?  You Bet!  Are we prepared for this as traders? You Bet!  Are the central banks global nations prepared for this? We certainly hope so.

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

Part II – We Are Concerned About The Real Estate Market

In this second part of our research into the potential collateral damage, the Covid-19 global virus event may cause in the housing and commercial real estate markets, we want to start by sharing some information that severe cracks are already starting to appear in the entire system.

Hedge funds and banking institutions may already be feeling the pressure to attempt to contain the losses that are piling up (source: https://www-bloomberg-com).

An extended decline in the global markets will continue to place pressure on institutional financial markets, banks, hedge funds, and other traditional lending and investment firms.  Investors will start to pull investment capital away from risk (out of the markets and funds) and may expose some of these larger institutions’ excessive leverage and risk exposure in the process.

This is almost exactly what happened with Bernie Madoff when his firm, Bernard L. Madoff Investment Securities, collapsed in December 2008.  As long as there was no pressure on his firm from clients pulling out capital or asking too many questions, he was allowed to continue running his Ponzi scheme.  Once investors started pulling capital out of the firm and questioning the transactions/reports, it became evident that it was all a house of cards and would come crashing down quickly.

If larger investment firms and hedge funds are attempting to “buy the dip” at this point in time, we believe they are making a grave mistake.  We believe the downside risks associated with the Covid-19 virus event are just starting to unfold and the collateral damage that may come from this massive global shutdown that is currently taking place will be unprecedented.  We don’t believe there has been anything like this happening in any recent history – even WWII pales in comparison to this event.

News is starting to hit the wires about large investment firms and Real Estate investment companies sounding the alarm  The one news item out this weekend that caught our attention was this one from https://www-bloomberg-com. The fear is evident in the short content of this news article.

“Loan repayment demands are likely to escalate on a systemic level, triggering a domino effect of borrower defaults that will swiftly and severely impact the broad range of stakeholders in the entire real estate market, including property and homeowners, landlords, developers, hotel operators, and their respective tenants and employees,” he wrote.

Just take look at the foreclosures in the major cities starting to spike in the maps below. This was before the virus closed down most businesses, and everyone losing their jobs. Give the fact that 70% or more of the world lives pay-check to pay-check, foreclosures and real estate values are likely to plummet lower to an extreme similar to how overpriced they are now.

I have talked about his in some presentations, and in videos in the past how real estate is grossly overvalued and when the music stops, prices will tumble. Huge opportunities for those who can preserve their capital until the recession matures enough will be able to buy real estate, businesses, and equipment for pennies on the dollar, but this will take another 1-2 years from now I imagine, but it will be great for those with money on hand when things get ugly.

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

CURRENT LOS ANGELES FORECLOSURE MAP
(SOURCE: ZILLOW.COM)

CURRENT SAN FRANCISCO FORECLOSURE MAP
(SOURCE: ZILLOW.COM)

CURRENT NEW YORK FORECLOSURE MAP (SOURCE: ZILLOW.COM)

Many of you may remember my Crunching Numbers article from just a week ago where I attempted to model what I believe would be the likely outcome of US GDP over the next 5+ years?  Well, it now appears others are following up with their own predictions for US GDP.   Based on some of the expectations within this Bloomberg article, my predictions pale in comparison to these comments.  Source: https://www.bloomberg.com

Now, let’s try to be realistic about how this entire process is likely to take place.  We know the economy will find a base (at some point) and attempt to recover from this virus event.  The question is what does that base look like and where is the bottom?

We won’t really know where the bottom is in the global markets until most of the unknowns have been processed, most of the collateral damage has been identified and processed, and consumers realize the bottom is in sight.  At that point, there is a real chance that the global markets will begin a recovery process that may eventually push to new all-time highs.

What we’re concerned about right now is the Q1 and Q2 economic activity and how that relates to consumer markets, credit markets, existing business enterprises and the potential collateral damage to hard assets like homes, commercial real estate and other foundations of wealth.  We believe the first few dominos of this event will be the collapse of jobs, earnings, and consumer spending.  The longer the global stays in a mostly shutdown economic environment, the greater the risks these critical numbers will implode – possibly taking with it the rest of the economy.

We believe the suspension of Foreclosures for a potential 12 month period may not reduce the total number of foreclosures across the US, we believe it may compound the problem.  The suspension effort is designed to help people stay in their homes if their incomes become threatened or lost.  But the reality is that a Foreclosure suspension will simply start to build larger and larger numbers of properties in foreclosure (waiting for the suspension to be lifted) while home prices potentially collapse.

We’ll dig into more data in Part III of this article and attempt to illustrate the data we believe will point to a clearer picture of how all of this may unfold in the near future.

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