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US Stock Market Enters Twilight Zone

The US stock market has rallied substantially since the bottom on March 23, 2020.  Our Adaptive Fibonacci Price Modeling system is showing us just how fragile the US stock market and certain sectors of the markets really are right now.  What’s going to happen next and how should you prepare for the next big move?  Let us try to explain our beliefs.

First, the US stock market bottom just as the US Senate and Fed announced major stimulus packages designed to support the collapsing markets.  Everything done prior to the March 23 date was “fodder” as the risk to the global markets was far greater than anything the US Fed or global central banks could muster.  On March 23, the US Fed initiated an unlimited asset purchase program to support the failing markets.  This changed the perspective of traders/investors immediately – but it also created a massive risk factor that few even considered. For a complete timeline on the US Fed actions, review this link.

Our own research team was calling for a breakdown in the US and global markets many months in advance of this move – even before the world knew about the Chinese/Wuhan virus event.  Take a look at some of our research posts from the past

January 26, 2020: The Black Swan Event Begins

January 29, 2020: Are We Setting Up For A Waterfall Selloff?

February 18, 2020: Is The Technology Sector Setting Up For A Crash? Part II

Less than 3 days prior to the massive selloff event, we posted this:

February 24, 2020: Has The Equities Waterfall Event Started Or A Buying Opportunity?

Today, we are posting this research article to highlight the unique setup in many of the major US stock indexes and sectors.  Using our Adaptive Fibonacci Price Modeling system, two things become clearly evident in the charts…

A.  Price must hold above support levels (the upper TRIGGER ZONE level and/or the GREEN Fibonacci Trigger level on the right side of the chart) in order for the uptrend to continue.

B.  Price has already reached (in most cases) the CYAN Fibonacci projected target level and this level may turn into major resistance pushing the price back into a downtrend.

BEFORE WE CONTINUE, BE SURE TO 
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DAILY SPY CHART

This first Daily SPY chart clearly highlights the setup we are describing.  First, take a look at the CYAN line on the chart near the 282.97 level.  This Fibonacci target level becomes support when price moves above it and becomes resistant when price moves below it.  Currently, the SPY is trading very near to the 283 level and we believe this level may turn into massive resistance over the next 5 to 10+ days.

Secondly, take a look at the TRIGGER ZONE on this chart (a price zone drawn between the Bullish and Bearish Fibonacci price trigger levels).  This zone represents a very dangerous price area where the overall price trend may change directions and where volatility could explode. As long as the price stays above this zone, then moderate bullish price activity should be expected.

If the price falls below this zone, then moderate to strong bearish price activity should be expected.  The reason why the downside risk is much greater than the upside potential is because of the recent downtrend in the market that sets up a “recent higher high” near 295.50.

MONTHLY SPY CHART

This Monthly SPY chart highlights the longer-term Fibonacci price analysis.  The extreme breakdown in price has already broken below the RED Fibonacci Bearish price trigger level near $300 and broken through the BLUE initial target level near $279.00.  The next downside price target levels are GREY, near $173.40, and RED, near $128.00.  Currently, the SPY price has rallied back above the BLUE target level and is stalling near $282~285.  This price level is already below the $300 Bearish Trigger level – which suggests further downside price activity in our future.

Additionally, pay attention to the “arcs” that are on this Monthly chart.  These are our proprietary Fibonacci Price Amplitude Arcs that show us where price may target based on a theory that each price trend creates “price amplitude waves” into the past and future.  Currently, the “4D” area on this chart is our most likely bottom area.  There is also a “1.618” GREEN price arc that is just above the current price level (near $292).  We believe this Green 1.618 level is acting as major resistance and that price will reverse back to the downside within a 5 to 10-day window.

WEEKLY TRANSPORTATION INDEX CHART

This Weekly TRAN, Transportation Index, chart highlights a similar pattern but also shows how much downside pricing pressure is still evident across different sectors of the markets.  Even though the ES, NQ, and YM have rallied to near 50% to 61% of the initial downside price move, the Transportation Index has only recovered to the 38.2% Fibonacci Retracement level.  This suggests that the US Fed and global central banks have poured capital into the blue chips and technology sectors while leaving much of the broader market bloodied and on the sidelines.

A similar type of setup is appearing in this TRAN chart.  The CYAN target level has been reached and the price has stalled just above this level.  The TRIGGER ZONE is clearly evident on the chart and the price is slightly above that level right now.  Very clear downside price targets are evident (RED, Blue and GREY) and any price move below $7565 will likely prompt a much bigger downside price move.  What we are seeing in the markets is that any substantial downside price rotation will potentially set up a much bigger downside price collapse in the US and global markets.

WEEKLY XLF CHART

This Weekly XLF chart, the Financial Sector SPDR ETF, sets up almost identical to the TRAN chart.  Deeper price targets, the price has already reached the CYAN target level and stalled recent downside price rotation, and a very real possibility that any downside price move could breach the Fibonacci Bearish Price Trigger Level near $21.

What happens if, suddenly, the US and global markets roll lower by 5% to 10% and a new wave of selling panics the markets?

CONCLUDING THOUGHTS:

The answer is that the US and global markets will attempt to reach the most recent low price levels, or one of the deeper Fibonacci bearish target levels on these charts, and attempt to find support (or true market value) before attempting any move higher.  One must understand that until price shows us that it is capable of rallying above all-time highs, there is still a very real risk that another downside price move could take place.

These TRIGGER ZONES are key to understanding where the fragile balance in price is located on these symbols. As long as price stays above this zone, then continued bullish price action should be expected. If the price falls below this zone, then more downside price activity should be expected.

If you pay very close attention to almost all of these charts, you’ll notice that the next Fibonacci upside price targets (above the CYAN level) are well above the most recent all-time high levels.  This suggests that price will have to rally well above these all-time high levels to qualify the next bullish price target.  It could happen if the global markets recover much quicker than we expect and the earnings/GDP damage is minimal.  But given what we believe is really happening throughout the world right now, the downside targets seem more realistic outcomes (unless the US Fed and global banks absorb $40 to $50 Trillion in global risk assets over the next 60 days.

Watch how the markets react to these price levels and how the longer-term price pivots setup on these Weekly/Monthly charts.  The price will tell us where it wants to go.  We just have to be on the right side of the move so we don’t get slaughtered by a sudden price move.

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

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

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

Just think of this for a minute. While most of us have active trading accounts, 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 the next bear market, you could lose 25-50% or more of your 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.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Sector Rotation Giving Mixed Signals About The Future

It seemed the markets wanted to make a point to alert us that volatility may be here to stay very early in trading this week.  After a fairly flat overnight session with very little price volatility, the markets opened up to a moderately large price rotation (first downward, then back higher) before settling into a broader downside move in the early afternoon in New York.  The interesting facet of this move is that it seemed to be related to price valuations and expectations in certain sectors. Before we get into the details, be sure to opt-in to my Free Market Forecast and Trade Ideas Newsletter so stay on top of these market moves.

As we’ve been suggesting for many weeks and months, we are not out of the woods quite yet.  The US markets may be subject to more price volatility than we have considered while the continued Capital Shift (foreign capital pouring into the US markets) may also be shifting.  One thing is certain, now is not the time to try to set up positional trades in the market expecting longer-term price trends to set up and run over the next few months.  This appears to be a traders market where skilled technical traders will shine by finding opportunities and executing very skilled and targeted trades for profits.

Many months ago we authored an article about the US Presidential election cycle and how that event plays into market uncertainty and price activity.  We are currently entering the prime span of time where price rotation and volatility because of this election event should take place.  This “price malaise” typically happens about 16 months before the election date.  As we move closer to the elections, the markets typically become much more volatile and enter a period where the price tends to consolidate near recent lows or establish moderate new lows as attention shifts away from the economy and towards the election news.

If you are serious about trading, this is when you want to pay very close attention to the various market sectors and understand that opportunities may be very short and sweet for profits.

Mid Cap Stock Index 30 Minute Chart Pattern

This first chart is the MC (S&P 400 Midcap) which shows how price strength in this sector moved against the overall price trend of the ES, YM, and others.  From the start of trading, the MC appeared to have a stronger upside price bias than the other US major market sectors.  This may mean that traders are finding real value in the Midcap sector and are stepping back into this sector thinking it may have some real opportunity for growth.

Transportation Index – 30 Minute Chart

Additionally, the Transportation Index moved higher in a similar structure.  The Transportation Index typically leads the US stock market by 3 to 6 months as an indicator of future price expectations related to the need for trucks, rail, shipping, and other economic-related activities.  More need for shipping/transportation solutions means a more active economy.  A more active economy means more buying and selling of goods, services, and other items.  Thus, if the Transportation Index can break recent high levels and begin a new upside price move, it would be a very clear sign that the US economy is strengthening and that the US major indexes may begin a new upside price move soon.

VIX – Volatility Index 30 Minute Chart

The VIX, on the other hand, is still showing us that price volatility has not vanished quite yet.  The VIX started moving higher early in trading and continues to push a bit higher right now.  If the VIX moves back above 18 or 19 quickly, the we are likely going to see increased volatility in certain sectors of the market which could present real problems for traders.  As long as the VIX stays below 18, then the volatility may stay a bit muted going forward.

Pay attention to the VIX and what happens to the major stock indexes over the next 2+ weeks.  Trade accordingly.  This is not your simple, safe trending market any longer.  This is larger volatility with increased risks.

If you are not a very skilled technical trader that understands risks and position sizing, then this market is probably not for you.  This is where you will likely chew through your account trying to run longer-term setups in a very choppy market environment.

Volatility is key.  Until the VIX settles back down below 12, we are going to continue to experience bigger, more volatile price rotations.  Some may be as large as 2% or 3% as news hits.  This is why we must understand the risks that are at play here and how to protect our assets from losses.  Remember, you don’t have to be in a trade all the time in order to profit from the markets.  Watch for the proper setups and wait for the proper entry point before this market chews you up and spits you out.

We believe our super-cycle research and other proprietary modeling systems are suggesting that price weakness will dominate the markets for the next few months. Ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis and recession.

In short, you should be starting to get a feel of where commodities and asset class is headed for the next 8+ months. The next step is knowing when and what to buy and sell as these turning points take place, and this is the hard part. If you want someone to guide you through the next 12-24 months complete with detailed market analysis and trade alerts (entry, targets and exit price levels) join my ETF Trading Newsletter.

FREE GOLD OR SILVER WITH SUBSCRIPTION!

Chris Vermeulen – www.TheTechnicalTraders.com

Technical Trader Launches New Active Trading Dashboard and Tools for Index Trading Signals

Collingwood, Jun 17, 2019 (Issuewire.com)  – The Technical Traders Ltd has announced the release of their revised intuitive Trading Application for all current members. This new trading application represents an increased ability to better serve our client and members as well as improved levels of service, information, and automation. The Technical Traders Ltd plans to continue expanding this application to include proprietary trading models, alert services, market updates, and much more in the future.

The newly released Trading Application is a revision to the Phase-1 development process started in January 2019. Phase-1 of this platform provides a live updating portfolio, charting, and instant SMS and email trader alerts for Buy Triggers, Price Targets, and Stop Loss. These automated features allow all of our members to visit the application to review and monitor all portfolio updates while the application runs the automation/trades on live data.

Future updates to this application, Phase-2, will include a new index trading system and signals, spike alert trades, gap window trades, chatroom, and more. The Technical Traders Ltd expects to release the second phase of this application before November 2019

“Once this new application is fully released in the next couple months this trading newsletter and its tools will make it one the best trading tools available for active traders no matter if you are a day trader, swing trader, or long term investor, you can trade and follow the markets with ease”, said Chris Vermeulen. He also stated, “This is his life’s work all coming together to create a traders dashboard that he has always dreamed of”.

Brad Matheny stated, “My objective is to continue to deliver the best research and tools we can make available to our members. This trading application is a remarkable leap forward for The Technical Traders Ltd. It allows us to focus on our research, tools, and development of incredible new utilities and proprietary solutions for its users vs. attempting to manually manage the same data the application can handle in an automated process”. He added, “The potential for what we can create as real value, proprietary insight and profitable opportunities for our members is limitless at this point – all it takes is for us to continue what we have been doing for years with our new focus of delivering these value solutions through our specialized trading application dashboard”.

The Technical Traders Ltd expects to continue releasing a series up updates and improvement, with the inclusion of new trading systems, services, and alerts, over the next 6+ months before attempting to move the application into Phase-3 development which will be another game-changer for traders, and investors around the world.

Website : https://www.thetechnicaltraders.com/

My Dream Trading Tools Are Almost Automated!

2018 and thus far in 2019 has been good but great is just around the corner!

The tech guys and I have been testing, debugging our new Trading Application to bring online so we can all benefit from more timely analysis/trades with instant email and sms alerts every time a new trade, target or stop is reached. This has been a process to get it to this stage but it looks like its ready to come online next week for phase one which is the live portfolio and instant alerts.

Phase II will be our SP500 index trend color-coded charts with momentum, swing, and trend trade signals, and many more phases to follow as we build out the best active traders tools to follow and trade the market with ease. I’m building exactly what I want and need for more steady monthly income and I know you will love it!

SP500 Trend Analysis Complete with:
Momentum 1-3 Day Trades
Swing Trades 3-20 Day Trades
Trend Position

 

Recent SP500 Oversold Momentum 2 Day Trade

 

Sneak Peak at Live Portfolio/Chart/Alert Dashboard

This auto-updating portfolio page allows provides all the trading information you need on each position we take. You can click to see a chart of each stock or ETF we own, and this also automatically sends you instant SMS and email alerts when a new trade, target or stop has been reached. This dashboard is the foundation and Phase One of many new great trading indicators and trades over the next several months.

 

If you wanna join now before we raise rates and get grandfathered in be sure to join now because once we go live with this added value we will be raising our subscription prices.

EDIT: September, 26, 2019. New Terms and Conditions are in effect. Grandfathered rates may no longer apply. Please read the Terms and Conditions available on the sign-up page of www.thetechnicaltraders.com.

CLICK HERE TO SUBSCRIBE AND BECOME A TECHNICAL TRADER TODAY!

 

P.S. If you wanna see our Gold Price Predictions check this out – Click Here