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Revisiting Our ADL Predictions for S&P 500

Our research team authored an article suggesting that our Adaptive Dynamic Learning Predictive Modeling system indicated the US major markets were 12% to 15% overvalued on May 23, 2020.  This was just before the last “euphoric” phase of the recent rally took began the week after our prediction.  From the date of May 23, 2020, to the recent peak in the markets, the SPY rallied another 9.72% above the price levels when we made the ADL prediction.  This suggests that the major markets rallied to levels near 21% to 24% overvalued near the recent peak.

Please take a moment to review our original ADL article here: https://www.thetechnicaltraders.com/predictive-modeling-suggests-us-markets-12-over-valued/

In keeping with our research team’s conclusions, the downside price move that initiated on Wednesday, June 10, 2020, after the US Fed statements, and really broke down on June 11, 2020, will likely continue resulting in the US major markets attempting to find support near our ADL predictive modeling system levels.  The downside price trend could extend below our ADL price target levels if the selling in the markets pushes into an extreme selling event.  It is not uncommon for the price to attempt to move through the ADL price levels attempting to find support and/or resistance.

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!

ORIGINAL ES ADL PREDICTED TARGET LEVEL WEEKLY

This is the ES chart showing our ADL predictive modeling system results from the May 23, 2020 date.  You can see the ADL predicted price levels near 2520 on this chart and the fact that the markets rallied away from these levels in late May created what we call a “price anomaly”.  This is when price moves away from the ADL levels in a manner that is somewhat unreasonable.  The same thing happened during the peak price level in early February 2018 and the October peak in 2018.

SPY ADL PREDICTED TARGET LEVEL DAILY

Based on our ADL predictive modeling system and the targeted price levels, we believe the SPY will fall to levels close to or below $260 over the next 10 to 15+ days.  It makes perfect sense that the markets over-extended a speculative price rally based on the context that the US economy would rebound from the COVID-19 shutdown.

Now that the US Fed has deflated that expectation and the riots and other issues related to social and political events are pending, we believe a “sudden realization” within the markets could send the US stock market price levels much lower over the next 2+ weeks – eventually attempting to find support near recent lows.

We actually posted our technical forecast for the market crash, the 30% rally, and called this blow-off top and reversal 4 days before it happened in this video a while back.

CONCLUDING THOUGHTS:

Remember, developing a winning strategy is not about trading every trend and day-trading every move, it is about timing your trades and strategically positioning your portfolio to take advantage of the “best asset now”.  We’ve developed proprietary technology that assists us in determining the best assets to be invested in and our predictive modeling and other proprietary tools assist us in identifying confirmed trade triggers.  Our objective is to assist our clients in generating consistent profits – not hundreds of trades.

If you were caught on the wrong side of this move recently, please remember that we tried to warn you of our multiple research articles and clear content.  We’ve been warning that this upside rally was a speculative price move driven by foreign and US investors believing the V-shaped recovery was real.  The reality of the situation is that this recovery is going to be much more volatile than many people believe.  This is a global economic event – not just a Fed Blip or some other isolated panic volatility.

You better stay on top of these trends and risks in the markets to stay ahead of these bigger moves.

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 Active 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 another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

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. 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 but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

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 Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

The Black Swan Event for Stocks is About to Repeat

This hybrid article with videos walks you through what and why the markets crashed, what they are starting to do now, and how you can take advantage of this black swan event.

The year has been filled with big broad market swings, sell-offs, and rallies, making people pull their hair out and scream. Only those who don’t understand portfolio risk, position-sizing, and can’t read the charts are in pain this year. Unfortunately, that’s the majority of traders thought.

The video below covers what is happening in the markets this week, today, and what to expect looking forward several weeks, so get ready for some incredible market moves!

With that said this year has been a little slower with our portfolio simply because we focus on steady growth. We don’t ride the stock market rollercoaster, which has everyone stressed out. We see no point in holding positions and dealing with the stress which comes with it when you can sidestep it or better yet, profit from it.

My focus is on our BAN strategy, which stands for “Best Asset Now.” We review 30+ markets, sectors, commodities, and currencies to find the best opportunity with the lowest level of risk. We are not looking for a bunch of volatile trades. Instead, we shoot for a 1-4% return on our entire portfolio a month, which may sound dull but do the math, and you soon realize its tough to beat!

Price swings and volatility are high this year are extreme, which means we pear back the number of trades we make, and reduce position size to protect both our subscribers trading and investing accounts, along with our own.

This market volatility is attracting new traders to the market like a mosquito to a bug zapper light. We, on the other hand, take the opposite approach and step back to only cherry-pick a few low-risk trades here and there.

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!

When stocks and commodities are moving 10-92% a day as we have seen recently, it’s not the best time to be risking your hard-earned month because you can do a lot of damage quickly overnight with the way this market had been behaving.

Anyway, if you are looking for a simple, logical trading strategy with ETFs that is hitting new high watermarks for the year with less than a 3% drawdown on the year, then watch this video of my most recent analysis and prediction.

Here are the other two other videos I referenced in the video above: showing the price predictions before they happened.

FEB 21: BLACK SWAN EVENT BEGINS

We called the Black Swan Even late 2019, not knowing what it would be, then on February 21, we warned the black swan event had begun – Read Here.

We also warned of the waterfall sell-off before that on Jan 26 – Read here

MARCH 27: 30+% MARKET RALLY ANALYSIS:
HTTPS://YOUTU.BE/GZGQRBVDEY0

JUNE 5TH: MARKET RALLY TOP FOR THIS WEEK ANALYSIS
HTTPS://YOUTU.BE/MWGC_VOXYWA

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 Active 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 another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

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. 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 but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

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 Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Trend Higher for the Nasdaq will it Hold?

The trend higher for the Nasdaq-100 remains intact from a technical standpoint. The Tech Traders Founder Chris Vermeulen joins Jill Malandrino on Nasdaq to talk about if the trend will hold or reverse.

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 Active 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 another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

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. 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 but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

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 Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Financial Sector Under Pressure and What It Means

The Financial sector is unique in that it is an essential component of global economics as well as local economic functions.  Consumers depend on banking services, credit, and all sorts of other financial services in their day-to-day lives.  The Financial sector is one of the components of the US stock market that can suddenly find itself under pricing pressure as an economic crisis event unfolds.  This happens because banks earn a large portion of their income from servicing debt and originating loans.

The recent rally in the Financial sector, over 47% from the March 2020 lows, has reached our proprietary Fibonacci price modeling system’s upside price targets and has also filled a major gap that was created in early March 2020.  Because of these factors, and the current downside price rotation within the Financial Sector, we believe this component of the US stock market could continue to see extended pricing pressure going forward as we learn just how damaging the past 70+ days of the economic shutdown have been for the economy.

We do know that certain consumers have quickly begun to pay off credit card debt.  We believe this is a learned trait from the 2008-09 market crisis where credit card rates skyrocketed as large numbers of consumers began defaulting on their homes and other types of credit.  We also know that delinquencies for autos and other sub-prime credit services have begun to skyrocket higher.  The sub-prime credit market is vastly different than it was in 2008-09.  Recently, Fintech and other new resources have allowed for extended sub-prime lending and leveraging within the US (Source: cnbc.com).

When you combine the sub-prime mortgage, auto, personal loans, personal Fintech margin capabilities, and sub-AAA corporate debt levels, the total amount of at-risk subprime debt must exceed $2 trillion US Dollars.  We believe this source of risk has been greatly underestimated in terms of risk to the Financial Sector over the next 12+ months (Source: zerohedge.com).

NON-100 LARGEST BANKS CREDIT CARD DELINQUENCY RATES

The current delinquency rate among the non-100 largest US banks for credit cards has already climbed well above the 2008-2010 peak levels.  It appears subprime borrowers are already pushed well beyond their limits in terms of servicing current debt levels.  This suggests a contraction in the credit market will likely take place over the next 24+ months as these at-risk borrowers default at greater rates.  This could transition into the housing market and other sectors of the economy if multiple waves of sub-prime borrowers stress the US financial system because of the COVID-19 shutdown.

XLF FINANCIAL ETF INDEX DAILY CHART

Our research team believes the peak in the XLF ETF has already set up after the recent 47%+ rally from the March lows.  The $27 price peak sets up directly between our two Fibonacci Daily upside price target (Peak) levels.  We believe this setup is a very strong indication that a move to below $23 may be setting up over the next 30+ days.  The Q2 data may very well push investors to re-evaluate the potential for the Financial sector if delinquencies and at-risk borrowers continue to default in greater numbers.

XLF FINANCIAL ETF INDEX WEEKLY CHART

This XLF Weekly chart highlights the recent rally and the “Gap” that recently filled.  It is our belief that the range between the MAGENTA horizontal lines represents a very clear support/resistance level within this longer-term XLF chart.  We believe that price will have to fall below $25 in order to initiate a deeper downside price move targeting recent low price levels or price will have to move above $27.50 in order to continue to rally.  Currently, our researchers believe the downside potential has a much higher probability of success as we get closer to the end of Q2:2020.

If our research is correct and XLF falls below the $25 price level, we believe it will target at least $22 to $22.50 before finding some support.  If it breaks below the $22 price level, it could fall well below the $20 price level again on weaker expectations.

These types of price swings can be incredible setups for skilled technical traders.  Follow our research and learn how we can help you find and execute better trades.  We recently executed a new swing trade for our members that is already showing great opportunity.  Protect your capital and learn to trade proven technical setups with our dedicated team of researchers and traders.

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 Active 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, and we closed out another winning trade on Friday.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Cheddar TV Talks Technical Charts & The Stock Market Surge

Cheddar TV had me on today for the 9:30 opening bell to talk markets, check out the clip below.

Chris Vermeulen: 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 Investor and Swing Trading Newsletters 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, and we closed out another winning trade last Friday.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

The Big Jobs Number and How to Trade It – Part II

In the first part of this research article, we attempting to highlight how the huge jobs number shocked the market into a big upside price move on Friday, June 5, 2020, and how the underlying data continues to suggest we have quite a bit of work to do before the US economy supports current stock market price levels.  In this second part of our research article, we’ll continue to share data and charts that we believe paint a very real picture for skilled technical traders.

The huge upside price rally in the US stock market after the 2.5 million jobs number was posted at 8:30 am pushed the stock market higher by 3.5%+.  This is an incredible rally in terms of how primed the stock market was for this type of great news.  Yet, as we continue to try to suggest, we are still moderately cautious of this rally in terms of sustainability after the destruction to the US and the global economy as a result of the COVID-19 virus event.

Our researchers believe the current numbers may be slightly skewed because of the extreme contraction event that took place over the past 60+ days.  Additionally, many of these numbers are calculated using a modeling system that attempts to normalize outlier data.  Currently, with the markets pushing well into a bullish territory and the NASDAQ reaching new all-time highs, we can’t argue that the US stock market appears to want to move higher on any news (good or bad).

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!

NASDAQ (NQ) E-MINI FUTURES DAILY

This NQ Daily chart highlights the incredible rally we’ve seen in the tech-heavy NASDAQ.  After recovering nearly 50% from the March lows, the NQ began to set up an upward sloping wedge formation near the middle of April.  This tightening wedge formation has apex’ed recently just as we got the new jobs number today.

In an unbelievable upside price rally, the NQ is now trading at the highest levels EVER.  After 38 million jobs lost, the US economy operating at only a fraction of what it was in January, huge consumer displacement factors, and thousands of pending solvency issues – hey, why not push the NASDAQ up to new all-time highs.  This makes no sense to us at the moment.

NAS100/GC DAILY RATIO CHART

The reality is that this incredible rally in the stock market may have already become a speculator “bubble” – a euphoric over-reaction to the deep decline related to the COVID-19 virus event.  Earnings and future revenues typically drive valuation growth higher.  Take a look at this NAS100 to Gold ratio chart to understand what has really happened in the markets over the past 4+ years.  The peak in values in October 2018 coincided with the US Fed action to raise interest rates which prompted a massive decline in the US stock markets throughout the end of 2018.  Near Christmas, 2018, the markets bottomed and began to rally higher.  Notice the peak in 2019 was not higher than the peak in 2018?  This suggests the real valuation peak in the market coincided with the peak Fed Funds Rate level in October 2018.

Additionally, the downward price channel that has setup in this ratio chart suggests the wild trending in the markets while Gold has pushed moderately higher has prompted a sideways pennant/flag formation.   The previous peak, in early 2020, and the current peak are well above the upper pennant level – this suggests an over-exaggeration of price advancement.  This type of ratio activity is very reminiscent of 2005 to 2007 – where the stock market rallied and gold rallied, eventually leading to the breakdown in the stock market in 2008-09 and a much deeper breakdown in this ratio.

US ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX

The current economic data does not support a US stock market rallying to new all-time highs – unless you attempt to account for investor over-enthusiasm and exuberance.  The business activity data over the past few months have shown the deepest decline over the past 20+ years.  There has never been a print of this indicator below 30, ever, except April 2020.  Even at the height of the 2008-09 housing/credit market crisis or the 911 terrorist attacks, US businesses continued to operate at moderate levels.

(Source: https://www.investing.com/economic-calendar/ism-non-manufacturing-business-activity-1484 )

US UNEMPLOYMENT RATE MONTHLY

The unemployment rates are still far higher than at any time in over 70+ years – everything is fine.  Why not push the stock market price levels higher by another 20 to 25% – right?  These people will eventually find work somewhere – sometime??  The consumers will eventually re-engage in the economy and push income and revenue levels higher – but not right now.

(Source: https://www.investing.com/economic-calendar/unemployment-rate-300 )

US ISM MANUFACTURING INDEX MONTHLY

The ISM Manufacturing Index suggests manufacturers are operating 25 to 45% or below capacity levels from early January/February 2020.  This will translate into bottom-line revenue data in the near future and likely result in much lower forward earnings guidance.

(Source: https://www.investing.com/economic-calendar/ism-manufacturing-pmi-173 )

Our continued warnings may go unheeded by the masses – and maybe we are wrong.  Yet we continue to advise our clients to be very cautious of this upside price rally as we believe the technical factors driving this market are skewed.  Speculators and investors are caught up in an elated buying phase when real data suggests more moderate price valuations.  We are still very concerned about the risks of a breakdown in the markets related to a sudden shift in trader/speculator thinking.

Very similar to the enthusiasm of 2006 to 2008, traders can sometimes fall into a trap that expectations do not correlate with real data/technicals – and this can be dangerous.  If you play these upside moves very cautiously and target the best asset for your investment objectives, you can do very well while this rally pushes higher.  Yet, you also have to be very aware of the risks of a breakdown in price related to the tightening economic conditions and price channels.

YM – DOW JONES E-MINI FUTURES 30 MINUTE CHART

This YM 30-minute chart highlights the incredible rally that took place very early in trading on June 5, 2020 – just after the jobs number hit.  The traders and speculators want anything that seems positive after months of uncertainty related to the COVID-19 virus event.  This bias towards anything positive suggests traders will attempt to push price levels into a feeding frenzy – ignoring all risks and other data.  No Fear is an excellent description of what is happening right now in the US stock market – traders have absolutely no fear of any downside risks.  We’ve seen this before – and it usually ends badly for some people (remember the DOT COM rally?).

CONCLUDING THOUGHTS

Our opinion is that traders should stay moderately cautious near these current levels.  Even though it appears the markets can do nothing wrong and speculators will likely be telling you “this is the opportunity of a lifetime – just buy anything right now”, our experience is that these types of crazy, euphoric rallies are very dangerous.  Price breakdowns come fast and hard in markets like this – they happen quickly.

Cover your open long trades with moderate stop levels.  Be picky about what you invest in and target quick gains.  Remember the market can act irrationally much longer than many people can stay whole.  The shorts are under severe pressure right now, but the data is pointing to a very different outcome in our opinion.  We urge you to stay cautious right now – this seems very similar to the exuberance that we saw in 2006-2008 – just before it all fell apart.

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 Active 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, and we closed out another winning trade on Friday.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Surprise Jobs Number and What It Means For Your Positions

The Huge Non-Farm Payroll number released on Friday, June 5th, shocked the market.  A massive 2.5 million jobs were created in May 2020.  If you were paying attention to the data, you’ll also understand that 1.87 million new jobless claims just last week.  In fact, over the month of May 2020, a total of 12.58 million jobless claims were filed.  Taken into consideration, the new jobs created in May represent less than 20% of the total job losses over the same span of time.

Our researchers believe the jobs number is representative of a phased reopening of many US states and correlates directly with the extended opportunity for further re-engagement of the US economy over time.  The current social unrest taking place throughout the US will likely result in a new spike in COVID-19 cases as well as extended losses for certain businesses.

The rioting seems to be taking place in more populated states right now – which suggests some real concerns for many of these states in regards to scheduled reopening phases and the potential for a spike in COVID-19 cases.

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!

US MAP – STATES REOPENING STATUS

As you can see from the US map, below, the number of states that have started to reopen over the past 30+ days exceeds the number of states still shutdown or partially open.  Our researchers believe the migration of the protesters from state to state as well as the continued unrest throughout the US may prompt a new spike in COVID-19 cases – particularly within states that have had the highest transmission rates and are more populated than other states.

US NON-FARM PAYROLL MONTHLY

The May 2020 Non-Farm Payroll number is a welcome positive surge after many months of negative data.  Still, as we suggested near the start of this article, the 2.5 million new jobs created did not offset the 12.58 million jobs lost in May 2020.  Anyone capable of doing simple accounting can figure out that we need to see more continued new job creation levels to begin to offset the massive layoffs and job losses as a result of the COVID-19 shutdown event.

The US Stock market is hungry for any positive news right now, so the markets look at this data as a very positive sign that a recovery will happen and could be a stupendous opportunity for future growth.  Our researchers are still very cautious about this recovery simply because the underlying data is still very negative overall.

US JOBLESS CLAIMS – WEEKLY

As you can see from this Weekly Jobless Claims chart, below, the spike in new jobless claims happened in early April 2020 with 6.86 million new jobless.  Since then, the number of new jobless has continued at levels greater than 2 million per week and have slowly been decreasing.  We are aware that many states are reducing state and educational employment budgets as a result of the COVID-19 virus event.  These budget cuts and layoffs may continue throughout all of 2020 and into 2021 unless a strong recovery event takes place before the end of 2020.

State budgets and the continued risks of a COVID-19 case spike present very real concerns in the minds of our researchers as we have just begun the initial reopening phases for many states.  If our presumptions are correct, the social unrest and rioting may prompt a major spike in COVID-19 cases across many states and present a very real extended shutdown event that could last well into late-Summer.

PUT/CALL RATIO – DAILY

This next chart suggests there is “No Fear” in the markets right now as investors pile into the long trades.  This Put/Call ratio chart highlights one simple fact that the market can stay irrational for much longer than many traders can handle.

The Fed intrusion into the markets on March 20, 2020, created a bullish foundation in the markets.  Traders have piled into this bullish trend over the past 45+ days and this Put/Call chart highlights how extended the rally has gotten recently.  Normally, the extremely low levels on the Put/Call chart would suggest a massive market top setup is about to happen – yet, traders may push the markets further into an irrational bullish phase with their exuberance.

We put together a short yet detailed video that will open your eyes to what the market data and charts are pointing to. If you are short the market of having FOMO (Fear Of Missing Out) on this rally be sure to click and watch this video right after you finish this article.

CONCLUDING THOUGHTS:

The reason we stay cautiously related to this bullish price trend in the US stock market is that we believe technical patterns have already set up that suggest a downward price cycle must complete before the bottom in the markets is settled.  In Part II of this article, we’ll go over additional charts and data to help you plan for and prepare for the next big move in the markets.

If the markets are able to push much higher after today’s big jobs number, we urge all long/bullish traders to lock in gains with protective stops and to adopt a very cautious outlook going forward.  It appears the markets have over-extended this rally and we are still very concerned that a sudden breakdown in price will happen.

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 Active 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 another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

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. 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 but we do have a way for you or your advisor can take advantage of the market gyrations with our Technical Wealth Advisor investing signals.

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 Passive Long-Term ETF Investing Signals which we issued a new signal for subscribers.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Comparing Bitcoin to Other Sectors – Risk vs. Value

Quite a few traders have been discussing the recent rally of Bitcoin to recently breach the $10,000 level on May 7, 2020.  This psychological price level is a major milestone for Bitcoin – even though the price has fallen into an extended Flag/Pennant formation since reaching the recent peak.  Many traders and speculators are expecting Bitcoin to rally alongside the precious metals sector as there appears to be a strong belief that Bitcoin aligns with precious metals well.  Our researchers attempted to put this assumption into a simple test and this is what we found.

Bitcoin appears to be similarly volatile in comparison to precious metals, although the overall trending of Bitcoin has been moderately lower since the peak levels in February 2020 whereas the Gold/Silver sectors have seen advancing price activity over the same span of time.  Precious metals rallied much quicker after the bottom near March 2020 whereas Bitcoin didn’t really begin to rally until late April 2020. Because of this disconnect in price association, we don’t believe Bitcoin is aligned with the precious metals segment.

Bitcoin doesn’t seem to be aligned with the price action of the Dow Jones either. Initially, after the peak in February 2020, the price alignment between Bitcoin and the DJI was almost in sync.  A broader price disconnect appears to be more evident in late April where Bitcoin rallied and the Dow Jones stayed rather flat.  Because of this shift in price alignment – we believe Bitcoin is not aligned with the Dow Jones well enough to derive any cross-market correlation.

BITCOIN – DOW JONES – METALS CHART

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Additionally, we attempted to compare Bitcoin to major consumer sectors (communications, staples, and utilities) to see if we could find any measurable correlation to these sectors in relation to Bitcoin price activity.  Again, the early price alignment of all of these seemed somewhat in-sync in the early downside price collapse in February 2020.  Yet that alignment quickly deteriorated in early March 2020 as Bitcoin prices collapsed and bottomed while the consumer sectors continued to trend a bit lower until after March 20, 2020.  The one thing we did notice is that the consumer sectors appear to be much less volatile than Bitcoin in both downside and upside price activity.

BITCOIN – COMMUNICATIONS – STAPLES – UTILITIES

Lastly, we compared Bitcoin to the NASDAQ 100 and the Russell 2000 attempting to find any price correlation between these major market sectors.  Although the price correlation is not perfect, our researcher believes Bitcoin is moderately closely correlated to the Russell 200 more than any other symbol/sector we have attempted to analyze.  Many of the bigger, more prominent, upward, and downward price cycles/trends seems to align with the Russell 2000 price action (often within 1 or 2 days of the Bitcoin trends – if not immediately).

For example, the bottom/base near April 21 aligned almost perfectly between the two symbols, the rally starting near April 25 began 1 day apart on both symbols, the peak in price before a moderate selloff on March 26 happened on almost the same day for both symbols, the moderate upside peak before the big collapse on March 4 occurred only one day apart.  Even though there is a broad price volatility difference between Bitcoin and the Russell 2000, the correlations between the two symbols seem much more aligned than any symbols we’ve attempted to run other comparisons.

We will add that appears a recent shift in price activity may be starting to disassociate Bitcoin to the Russell 2000 over the past 7+ days.  Our researchers have identified the Russell 2000 (and other consumer sectors) appear to be attracting new investments from skilled technical traders while the major sectors appear to be weakening.  We believe this is because capital is shifting away from already pricey assets and moving into undervalued assets that may do well as the recovery strengthens.

BITCOIN – NASDAQ 100 – RUSSELL 2000

Will Bitcoin continue to rally above the $10,000 level?  Eventually, the answer to that question is “probably – yes”.  The one thing we want to bring to our reader’s attention is the immediate downside price correlation of Bitcoin to all of the various sectors and symbols we’ve presented today.  When a broader downside price collapse happens in the US/Global markets – it appears Bitcoin is not immune or considered a decentralized asset class in any form.  Bitcoin seems much more aligned with the Dow Jones and/or the Russell 2000 than any other symbols/sectors.

Because of this alignment, we suggest traders watch the Dow Jones and the Russell 2000 for price trend correlations that may relate to how Bitcoin price activity may react in the near future.  Until this correlation is broken, we believe the alignment in price is relatively predictable for skilled 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.

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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.

Metals Nearing Critical Momentum For New Parabolic Rally

While the US stock market has rallied over the past 5+ weeks, Gold has stalled near $1730 to $1740.  We issued a research post suggesting the GREEN Fibonacci Price Amplitude Arc was acting as major resistance and once that level is breached, we expect a big upside move in Gold.  Currently, Gold has reached just above the Green Price Amplitude Arc and this week may be a critical moment for both Gold and Silver in terms of a momentum base.

Gold has continued to move high in a series of waves – moving higher, then stalling/basing, then attempting another move higher.  This recent base near $1740, after the deeper price rotation in February/March, confirms our 2018/2019 predictive modeling research suggesting that $1750 would be a key level in the near future.  Part of that research suggested once $1750 is breached, then a bigger upside move would take place targeting levels above $2400 – eventually targeting $3750.

April 25, 2020: Fibonacci Price Amplitude Arcs Predict Big Gold Breakout

GOLD FUTURES WEEKLY CHART

This consolidation after the COVID-19 event near $1750 is a very real confirmation for our researchers that the upside breakout move is about to happen.  How soon?  It could begin to break out next week of the following week?  How high could it go?  Our upside target is $2000 to $2100 initially – but Gold could rally to levels near $2400 on this next breakout move.

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SILVER FUTURES WEEKLY CHART

While Gold has been consolidating near $1740, Silver has exhibited an incredible upside price move after a very clear Flag/Pennant formation (highlighted in YELLOW on the chart below).  The current upside price rally in Silver appears as though it may breach the MAGENTA downward sloping trend-line and this breakout move may prompt a rally to levels near or above $21 over the next few weeks.

Eric Sprott is very excited about silver and miners. Also, he talks about the demand for physical delivery which is way out of whack and how something could finally give which would be metals go parabolic.

We’ve been suggesting that metals will transition into a moderate parabolic upside price trend as the global markets deal with concerns related to economic activity, debt, solvency, and continued operational issues.  For skilled technical traders, this setup in Metals may be a very good opportunity for skilled technical traders to establish hedging positions in ETFs or physical metals before the breakout really solidifies.

Concluding Thoughts:

Longer-term, we believe metals could continue to rally for quite a while, yet we understand skilled technical traders want to time entries to limit risks.  We believe skilled technical traders should consider hedging their portfolio with a moderate position in Metals/Miners at this time – allowing traders to trade the remaining portion of their portfolio in other sectors/stocks.

If the US/Global markets continue to struggle to move higher over the next 60 to 90+ days, metals/miners should continue to push higher – possibly entering a new parabolic upside price move.  The deep washout low in Silver was an incredible opportunity for skilled traders to jump into Silver miners and Silver ETFs at extremely low price levels.  Now, with Silver at $18.40, it’s time to start thinking about $21+ Silver and $2100+ Gold.

Now is the time to really tune up your trading and get ready for some really great trading opportunities.

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 passive 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.

M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up?

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market collapse.  It appears to our researchers that these extended periods of zero interest rates deflate the capability of money circulating throughout the economy and engaging in real growth opportunities for investment and capital inflation.

It also suggests that the US Federal Reserve, while attempting to support the US economy and global markets, maybe destructively engaging in policy that removes the capital function from the markets in a systematic process.  Eventually, something will break related to M2 Velocity and/or the global economy.  As more capital pours into less liquid assets and/or broader investment funds and Bonds, this process ties capital up into assets that take investment away from Main Street and the lower/middle class.  There is less capital available to support the ground level economy as more and more capital ends up buried in longer-term investment assets.

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VELOCITY OF M2 MONEY STOCK

US FEDERAL FUNDS RATE CHART

We believe the collapse of the M2 Velocity rate is similar to a slow decline of economic capacity and output over a longer period of time.  We believe this process will likely end in a series of defaults and bankruptcies as a result of capital being stored away into longer-term assets and investments (pensions, investment funds, and other types of longer-term assets).  As this capital is taken away from the core engine of economic growth (main street and startups), the process of slowly starving the economy begins.

We believe we’ve already entered a period of decline that has lasted at least 15+ years and the “blowout process” that ends this decline will be somewhat cataclysmic.  One way or another, the function of capital must return to levels of activity that supports a ground-level engagement of economic growth and opportunity.  A healthy balance of capital available to all levels of society and deployed in means to support growth and opportunity is essential for the proper health and future advancement of global economies.

It appears that after 2008-09, the global economy disconnected from reality as investors began relying on institutional level investments and speculation in large scale assets instead of ground-level investments and core economic function.  This translates into a very euphoric mode for stocks and commodities where capital chases capital around the planet seeking out undervalued and opportunistic investments…  until…

Pay attention to what happens over the next 4 to 5+ years related to the COVID-19 virus event.  We believe this virus event could be a “monkey wrench” in the capabilities and functions of the global economy over the next 5+ years. Pay attention to what is really happening as capital plays the “dog chasing its tail” routine and the central banks attempt to stimulate economic activity by printing more and more money.  If you understand what we are trying to suggest in this article – printing more and more money at this stage of the game is like saying “diving our of the 20th-floor window is not enough – let’s go up to the 50th floor and give it a try”.

Hang tight, there are going to be some very interesting and big price swings over the next 4+ years in the US and global markets.  Skilled technical traders should prepare for the opportunity of a lifetime if they understand what to watch for and how to protect assets.

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 to learn more.  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
www.TheTechnicalTraders.com