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US Stock Markets Trade Sideways – Waiting On News/Guidance

Our researchers believe the global concerns centered around Banking and Debt within the Emerging Markets and Asia/Europe are very likely to become major issues over the next 3+ months.  These potentially dangerous issues could have far-reaching pricing ramifications for almost all of the world’s financial markets.  This weekend, we received first-hand information from an associate in Hong Kong about banks limiting ATM withdrawals and very limited transportation services.  Our source stated the biggest issue was the lack of transportation right now.

We also followed the news of the Bank collapse in India this weekend and the aftermath for Indian banking customers – PMC Bank

Many of you remember how the US credit crisis event started in a similar manner.  First, it is news of a few select financial institutions or lenders that are in trouble.  This sends a shock-wave throughout the populous – they react by becoming more “protectionist” in their actions.  Sometimes, small bank runs can happen as consumers want to have more cash on hand instead of “in the bank”.  Next, the local economic metrics start to fall – almost like a self-fulfilling nightmare, the consumers, acting to protect their interests and assets, are now pushing the local economy over the edge and the banks, possibly, over the breaking point in terms of Non-Performing Loans.

This time, as we have detailed in our previous research posts, we believe the crux of the credit problems is related to how emerging markets and foreign markets took advantage of the cheap US dollar between 2011 and 2015.  At that time, it was cheaper for banks to borrow the US Dollar than it was for them to borrow money from their own local central banks.  Thus, many went out seeking to borrow as much US Dollar as they could because it provided an opportunity to save on interest fees.  Now, as the global economy continues to contract in a “stagflation” type of manner, it becomes even harder for many of these firms, banks, and individuals to service their debt.

We believe the global markets and the US stock market are waiting for news before initiating any new price trends.  We believe the recent US manufacturing number is indicative of the type of economic output values we can expect over the next 30+ days.  Unless the US Christmas season starts off with a big spending spree or the US/China trade issue is resolved and settled within 30+ days, we believe the markets will continue to search for and identify “true price value” by seeking out true support before attempting to move higher again.

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S&P 500 DAILY CHART

This ES Daily chart highlights the recent resistance, triple-top formation, near 3025.  It is clearly obvious that this 3025 level is a very strong price resistance level.  Below this ceiling, we have multiple support levels to watch.  2875 is highlighted in MAGENTA and is one that we believe is the most critical right now.  Below that, the Moving Average level, currently at 2845, could also provide some support.  Below these two, we suspect the 2700 level is the only level of support left before we could experience a much bigger price breakdown.

DOW JONES DAILY CHART

This YM Daily chart sets up a similar type of price pattern.  In fact, they are almost identical.  Again, the current downside price rotation has already established new recent price lows.  The RED resistance channel we drew across the tops should provide some real level of a price ceiling within this trend.  Our concern is that price will attempt a further breakdown without any positive news to extend a positive perspective for the US markets future.  There is just too much uncertainty in the world for investors to have the confidence to push prices higher.  The most logical transition would be for price to “reset” by rotating lower, finding true price value levels and establishing a new price bottom to begin a new rally from.

DOW JONES 2-WEEK CHART

This 2-Weekly YM Chart highlights exactly why we believe skilled technical traders need to be cautious right now and why having a very skilled team of researchers is important.  This is not the time to go ALL-IN on any trades.  This is not the time to roll your retirement account into HIGH-RISK funds.  We suggest being very cautious at the moment and to prepare for any downside rotation by scaling back your trading account to 70 to 80% CASH.  Deploying only about 20 to 25% into the markets right now.

CONCLUDING THOUGHTS:

It is funny how real traders understand the value of having a skilled team of dedicated technical and fundamental researchers assisting them at times like this.  While other people freak out and turn into “super protectionist traders”.  The reality of these types of markets is that they are the best markets for traders.  Price swings are larger, opportunities are setting up nearly everywhere and skilled traders can attempt to make 45%, 65%, 85% or more within a very short time-frame.  Not like the regular market moves of 3~5% annually in the SPY.  This is the time when you want to become more attentive and active in the markets – with the right team.

Opportunities are setting up EVERYWHERE and will continue to present very clear trade setups over the next 16+ months.

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.

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. My simple technical trading strategy using ETFs will allow you to follow the markets closely and trade with it so you never get caught on the wrong side of the market with big losses.

Chris Vermeulen
www.TheTechnicalTraders.com

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.  Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed.  Visit our web site to learn how to take advantage of our members-only research and trading signals.

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