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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.

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.

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.

Before we continue, be sure to opt-in to our free market trend signals 
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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.

Before we continue, be sure to opt-in to our free market trend signals 
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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

Ray Dalio Suggests USA Is Entering A Period Of Decline And New World Order

We find it interesting how researchers attempt to compare history, sometimes ancient history, to the applicable functions of today’s world and to attempt to translate the decline of empires in the past to what is happening in today’s world.  Ray Dalio appears to be suggesting the rise of the Chinese economy and economic capabilities is going to threaten to unseat the US as a world super-power.

Within Ray Dalio’s article, he suggests the following which seems to sum up his cycle theory:

“In brief, after the creation of a new set of rules establishes the new world order, there is typically a peaceful and prosperous period. As people get used to this they increasingly bet on the prosperity continuing, and they increasingly borrow money to do that, which eventually leads to a bubble.
As the prosperity increases the wealth gap grows. Eventually the debt bubble bursts, which leads to the printing of money and credit and increased internal conflict, which leads to some sort of wealth redistribution revolution that can be peaceful or violent. Typically at that time late in the cycle the leading empire that won the last economic and geopolitical war is less powerful relative to rival powers that prospered during the prosperous period, and with the bad economic conditions and the disagreements between powers there is typically some kind of war. Out of these debt, economic, domestic, and world-order breakdowns that take the forms of revolutions and wars come new winners and losers. Then the winners get together to create the new domestic and world orders.”

Our own research team has completed quite a bit of research into cycles and super-cycles and, although we agree with Mr. Dalio that past Empires have collapsed and been replaced with more efficient and emerging soon to be a new world leader. Yet, in every instance in the past, the world has been transitioning from a rather disconnected economic structure where ancient empires, or rather the last gasps of ancient empires and wealth, have become threatened, gone to war, and declined.

WWI initiated with the assassination of Archduke Franz Ferdinand in Sarajevo on June 28, 1914.  Nearly a month later, the great powers of Europe were aligned into two coalitions: the Triple Entente – consisting of France, Russia, and Britain – and the Triple Alliance of Germany, Austria-Hungary, and Italy.  Thus, the lines were drawn between ancient European empires that led to the beginning of a new structure of world empires.

Throughout history, the biggest world empires are structured, grow into superpowers, and begin to decline.  Most of these last well over 200 to 250+ years.

The Ottoman Empire started in the early 1300s and ended in the early 1600s because of a war with Persia – more than 300 years.

The Arab Empire, Mohammed, started in 632 and ended in 1258 – more than 600 years.

The Roman Empire began in 753 BC and ended in 23BC – over 700 years.

Chinese Qing Dynasty started in 1644 and ended in 1911 – over 250 years.

Chinese Ming Dynasty started in 1368 and ended in 1644 – almost 300 years.

America’s strength as a nation started to build in the late 1800s/early 1900s. Our rise to a world power came at a great expense in the 1930s and 1940s – fighting Hitler and the Japanese while saving most of Europe and SE Asia in the process. Then, we managed to rebuild most of these areas over a very short period of time.

Additionally, the idea that the current world would allow a nation like China to become a world-power – threatening world-order, capitalism, democracy, and current global geopolitical order seem alien to our researchers.  There is one thing Mr. Dalio seems to ignore in his theories – the world has a choice in the matter – just like we did when Adolf Hitler threatened western Europe and with Hideki Tojo threatened the US and most of SE Asia.  We have a choice in how we address the rise of China and how we protect our freedoms, rights, and futures from any threat China may present.

Currently, the world is moving away from a China-friendly relationship after the COVID-19 virus event has wreaked havoc across the globe.  China’s rise over the past 25+ years has mostly been on the success of selling China as a cheap manufacturing center for the US and other stronger economies.  The process of growing China has been to take advantage of the relationships they’ve built with foreign business/banking.  This is all starting to come to a sudden halt which may put extreme pressures on China’s banking and credit systems over the next 20+ years.

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!

Our research team put together this chart to highlight the past 100+ years of cycle/super-cycle trends.  When you review this chart, pay attention to the deep collapse of the heavy blue line from 1923 through 1939 – the span of the Great Depression.  We’ve highlighted the area of the Great Depression in BLUE.  We’ve also highlighted recessions in RED and MAGENTA.  Red areas being recessions in cycle areas where the cycles are trending lower and Magenta are where recessions happened in upward trending cycles.  Near the end, we’ve highlighted an area in YELLOW where we believe a new recession will emerge.

Now, as we align these cycle trends with price, we start to see a bigger picture emerge.  This SPY Weekly Log chart illustrates how our cycle analysis aligns with price trends quite well over the past 45+ years.  Our cycle research goes forward over 600 years and we can identify where and when price trends will likely set up, breakdown, or breakout as a result of our extensive cycle research.

Mr. Dalio’s comments, while somewhat valid in general scope, don’t necessarily translate into real-world processes.  With the amount of wealth and new global alliances, inter-connected economies and the recent push attempt to right the many wrongs of the past 30+ years, the world appears to be much more aligned towards restoring some proper order and developing a real future where nations are held accountable and central banks may be forced to adopt a more conservative capital process in the near future.

Without giving away too many details, our cycles are point to a very important cycle event that will take place in the near future.  Many people are completely unaware of when and how this event will take place.  In fact, many analysts are simply guessing as to what may happen over the next 20+ years whereas we’ve actually mapped out 500+ years of detailed price cycles for the global markets.

If you want to gain insight into the markets next big move or learn how our researchers attempt to stay ahead of the biggest market trends, then you owe it to yourself to visit www.TheTechnicalTraders.com to learn how we help our members create success and find great opportunities.

We can promise you one thing right now – the global markets are going to continue to be very interesting for technical traders over the next 10 to 20+ years.  You don’t want to miss the opportunities that are setting up in the global markets and we strongly believe everything you are reading about cycles from others is superficial in structure and content.

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 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.

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.

Predictive Modeling Suggests US Markets 12% Over Valued

Our Adaptive Dynamic Learning (ADL) predictive modeling system has called some incredible moves over the past 24+ months.  It predicted the moves in Gold moving from $1340 to $1750 – including many of the trend changes that took place over the past 15+ months.  It predicted the collapse in Crude Oil back in July 2019 – even calling for a sub-$20 price collapse in March/April 2020.  Overall, the abilities of this unique predictive modeling tool have been nothing short of incredible.

For many weeks, we’ve been suggesting the US stock market has entered a no man’s land after the bottom setup near March 20, 2020.  The US Fed and global central banks have stepped in to attempt to support the markets and to take pressures off financial institutions and consumers.  These efforts presented a very real opportunity for technical traders to attempt to “ride the Fed wave” over the past 3+ weeks. Right now, things appear to be a bit more fragile going forward into the Summer months and the ADL predictive modeling system is showing us what to expect.

One of the most important benefits of the ADL predictive modeling system is to identify “consensus” predictions of price activity looking forward in time.  Sometimes, the ADL system makes very bold predictions – like the Crude Oil predictions.  Other times the ADL system makes rather mundane predictions.  Today, the ADL system is suggesting the US major indexes (and stock market) is about 10% to 15% overvalued and will attempt to revert back to fair valuation levels.

This prediction suggests that a downside price move, or price reversion, is likely to set up over the next few weeks where price level may fall to near (or below) the predicted ADL levels.  When price reverts like this to a valuation level, it can sometimes move beyond the predicted price level before settling closer to the predicted ADL level.  Price can also set up an “anomaly” pattern where it avoids the ADL predictive levels for a period of time, then aggressively reverts back to levels near the ADL predicted price levels.  These anomalies can be really great trades for technical traders.

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!

WEEKLY S&P500 E-MINI FUTURES ADL CHART

This weekly ES (S&P500 E-Mini Futures) ADL chart suggests a downside price reversion totaling more than 14% is very likely over the next 3+ weeks.  Should the downside reversion extend below the CYAN predicted ADL levels, this move could result in a 20% or more downside price collapse.

Notice how the ADL predictive price levels flatten out over the next 8+ weeks.  This suggests volatility may increase as price attempts to form a sideways FLAG or other extended patterns.

WEEKLY DOW JONES INDUSTRIAL ADL CHART

This Weekly INDU chart shows a similar ADL price prediction – an 11% to 13% downside price move followed by moderate downside price weakness over the next 8+ weeks.  Pay very close attention to the  21,000 level which appears to be lower support based on the ADL predictions.  We believe any downside move in the INDU could attempt to breach the 21,000 level as it attempts to find and establish future support.

WEEKLY SPDR S&P500 ETF (SPY) ADL CHART

Lastly, this Weekly SPY ADL chart suggests a 13% to 15% downside price move is setting up which also suggests price may move beyond the lower ADL predictive ranges over the next 3+ weeks.  If this happens, the SPY may collapse toward levels near $240~$245 (or lower) before finding any real support and moving back towards the ADL predictive price levels.

If you’ve been following our research and articles, you already know we’ve been warning about a “double-dip” move in the stock market and have also been advising readers to stay prepared for the incredible swings that are about to happen in the markets in 2020 and 2021.  Our research team issued a Black Swan warning on February 21, 2020 – just days before the start of a collapse in the US stock market.  We’d been warning about the setup and potential for this Black Swan event for nearly 5+ weeks before it happened.

This current ADL predictive modeling research suggests the US stock market will likely stall through the Memorial holiday weekend and begin next week with a measurable downside price bias – starting the move towards the lower ADL predicted levels.  Now is the time to prepare for this move if you are long and holding any “at-risk” trades.

It is very likely, based on this research, that a downside price move to levels just above recent lows will take place over the next 5+ weeks.  This will set up many great trading opportunities for skilled technical 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 going to be an incredible year for skilled traders.  Don’t miss all the incredible moves and trade setups.

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.

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.

Gold Stocks Are Overbought. You Don’t Want Prices to Go Straight Up

Bill Powers of MiningStockEducation.com talks with a professional trader and market commentator Chris Vermeulen says gold stocks are overbought and need a breather which would be good for the overall upward trend.

Chris shares how he has and is trading the junior gold sector. He called the recent February 24th top in the gold stocks before the March crash. And now he is warning to a top in some gold-stock positions during an expected pullback.

Chris also addresses whether a lot of the gap-up’s in many gold stocks must be filled before they can run higher. This interview is full of advice from an experienced trader in the gold sector.

Be sure to sign up for Bill’s free newsletter and receive interview transcripts, stock profiles, and investment ideas: http://eepurl.com/cHxJ39

0:15 Introduction
1:25 Do these gap-up’s in the charts of many gold stocks need to be filled before they can go higher?
3:14 Liquid companies more likely to get their gap-up’s filled?
5:23 Chris called the Feb 24th high in the junior gold stocks
7:32 How do you time your entry into and exit out of tiny gold juniors? 11:03 What type of pullback in gold stocks should we expect?
12:37 How Chris approaches riskier trades
15:10 Navigating trading the futures market
16:22 How are you trading oil?
18:38 Extreme volatility leads you into cash?
20:00 CAD to trend lower against the USD?
21:12 Do you close your trades before a long weekend?
22:41 What makes your trading service unique?

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

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

TRAN & SPY Setup Intermediate Topping Patterns

Recently, the Transportation Index and the S&P SPDR ETF setup topping patterns near the end of April 2020.  In terms of technical triggers, these patterns need to see additional downside price confirmation before we can confirm the true potential for these setups. If they do confirm, we could be starting a new downside price trend fairly soon.

The recent market upside price move is dramatically different on the TRAN chart vs. the SPY chart.  Even though the SPY price advance has mirrored the move in the ES and NQ, the TRAN upside price move has been more muted.  This is because global economic activity has continued to stall and is not translating into active shipping and trucking activity.  Remember, the Transportation Index helps us to understand the core levels of economic activity as parcels and products move around the globe.

Initially, the downside price break that occurred on Friday, May 1, 2020, which acts as a potential new downside price trend, yet we would want to see the recent lows from 8 days ago breached before we could consider this a truly confirmed trend.  Technical traders may choose how and when to enter new trades/trends – yet we like to teach our followers to wait for true confirmation. I posted a short video about how I analyze the index for new trades here.

TRANSPORTATION INDEX (TRAN) DAILY CHART

On the TRAN chart, the recent lows near 7,762 would qualify as a breakdown price move.  Thus, if the TRAN sells off below that level, then we would have a confirmed downside price trend expecting 6,500 to be reached again.

SPY DAILY CHART

On this SPY chart, a similar type of Three River Evening pattern setup a nearly perfect top over the past four days.  A confirmation appears to be valid on Friday, May 1, 2020.  Yet, we would need to wait to see if the low price level near 272 is breached before we could confirm a true breakdown in this upward price trend.

 

Skilled traders should pay very close attention to what happens over the next five or more trading days as any new breakdown in price could be very volatile and aggressive.  Our researchers believe the 251.50 level on the SPY would be the next downside target (see the YELLOW ARROW on this chart).

The heavy GREEN Arcing line near the recent peak is our proprietary Fibonacci Price Amplitude Arc representing a very key resistance level (1.618x).  Notice how this level played a very key role in providing initial support in early March and is now acting as a major top/resistance area.

We could be in for a very big ride if a new breakdown begins soon.

SPY WEEKLY CHART – REVERSAL CANDLE

This 35% bounce in the SP500 I called many weeks showing how this very similar setup unfolded during the 2000 market top.

2000 STOCK MARKET TOP & BEAR MARKET THAT FOLLOWED

The chart may look a little overwhelming, but look at each part and compare it to the market psychology chart above. What happened in 2000 is what I feel is happening this year with the stock market sell-off.

In 2000, all market participants learned of at the same time was that there were no earnings coming from their darling .com stocks. Knowing they were not going to make money for a long time, everyone started selling these terrible stocks, and the market collapsed 40% very quickly.

What is similar between 2000 and 2020? Simple really. COVID-19 virus has halted a huge portion of business activity, travel, purchases, sporting events, etc. Everyone knows earnings are going to be poor, and many companies are going to go bankrupt. It is blatantly clear to everyone this is bad and will be for at least 6-12 months in corporate earnings; therefore, everyone is in a rush to sell their stock shares and are in a panic to unload them before everyone does.

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!

2020 STOCK MARKET TOP IS UNFOLDING

As you can see, this chart below of this year’s market crash is VERY similar to that of 2000 thus far, it’s based on a similar mindset.

I posted this chart originally mid-March, expecting a 30+% rally from these lows before the market starts to fall and continue the new bear market, which I believe we are entering. Only the price will confirm the direction and major trend to follow, and since we follow price action and do not pick tops or bottoms, all we have to do is watch, learn, and trade when price favors new low-risk, high reward trade setups.

It does not matter which way the market crashes from here, we will either profit from the next leg down, or will miss/avoid it depending on if we get a tradable setup. Either cause is a win, just one makes money, while the worst-case scenario just preserves capital in a cash position, you can’t complain either way if you ask me.

I have issued an Important Trade and Investment Alert here because a new bear market is potentially just around the corner.

CONCLUDING THOUGHTS:

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

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

US Fed Intervention Wains… What Next?

What happens to the global markets when the US Fed begins to weaken stimulus activity and when the global markets must begin to function on their own?  Are the global markets capable of sustaining current price levels without the Fed supporting them?

A recent news article suggests the US Fed has drastically slashed stimulus activity over the past 5+ days.  From a peak level of nearly $600 Billion a week to current levels near $83 Billion per week – a -86% decrease.  How will this reflect in the market’s ability to sustain current price levels in the face of disastrous Q2 expectations? Yup, markets are falling fast and hard going into the weekend as expected!

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

BUFFET INDICATOR

Another common tool for skilled traders is the Buffet Indicator which helps us understand stock market valuation levels and measures extreme trends by measuring Standard Deviation ranges. Currently, the Buffet Indicator is near the highest levels ever recorded over the past 60+ years.  Additionally, a “detrended” version of the Buffet Indicator suggests a broader global recession would require a further devaluation before a true bottom is likely to complete.

This first Buffet Indicator chart shows the current market value to GDP and highlights the recent peak as being the highest level ever recorded.  Notice how this level is much higher than the peak in 2000.  This indicates that the stock market valuation level is excessive compared to historical norms.

DETRENDED BUFFET INDICATOR

This Detrended Buffet Indicator suggests the recent peak may not reflect the same excessive valuation levels as we experienced in 2000, yet are historically near the upper range of extended valuation levels.  Notice how price devalues as a process of setting up a valuation advance throughout time. When prices become overvalued (think of simple supply/demand theory), demand typically collapses – sending prices lower. At this time, we have the global Covid-19 virus event disrupting the demand-side of this equation.  When demand collapses, where do prices go?

Our research team believes the current trend will eventually end and global stock market prices will collapse again as a much deeper price low/bottom sets up.  Skilled traders need to understand that as long a the US Fed was pouring $600 Billion a week into the credit/stock market, the recovery in price was going to be substantial.  Once that stimulus ends and the markets are left to function on their own, the aspects of the demand collapse become more evident.

In a way, the Fed acted as a “demand supplement” for the US and global markets.  Buying up assets and supporting the credit markets in an effort to transition us past the crisis event that took place in late February and March 2020.  How quickly will the global markets transition back into a declining mode in the continues to stay passive?

CUSTOM US STOCK MARKET INDEX – WEEKLY INDEX

Our original targets where price may attempt to form a deeper bottom near the 2015~2016 price range is still very valid.  Near the peak of the recent selloff, price levels reached these predicted levels just before the US Fed began the stimulus programs. Now, price levels are nearly 35%+ above these low price levels.


Chart By: TradingView.com

CUSTOM SMARTCASH INDEX – WEEKLY CHART

It seems obvious to our research team that continued lack of consumer demand and lack of central bank intervention will likely result in the US stock market moving lower in the near future and attempting to establish a true price bottom.  We believe that bottom will likely happen near July or August 2020 and will likely reach levels near, or below, the 2015~2016 price range but this analysis will change as we progress forward with new events and analysis.

You can see our predicted price bottom on this Weekly Smart Cash Index chart.  The lines we’ve drawn into the future show where we believe the first attempt at a true price bottom may take place near July or August 2020.


Chart By: TradingView.com

CONCLUDING THOUGHTS:

Remember, this type of price rotation is very healthy for the US and global markets.  The price must rotate through these types of trends to eliminate excessive risk/froth and to secure a proper price equilibrium where valuation levels can begin to appreciate again.  This process is almost cathartic in a sense.  The ability to regain a “true valuation base/bottom” in price (consider Fibonacci Price Theory) allows the future appreciation cycle to function more efficiently (having eliminated excessive risk valuations).

We will get through this and the global economy will continue to function.  We just have to get through the next 6+ months and the relative economic disaster of Q2 and Q3 (likely) before we’re going to see any real chance at true price appreciation.

At this point, when the Fed-induced upside trend breaks – watch out below.

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

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Q1 GDP Data Masking The True Global Economic Future?

As Q1 GDP data is released on Wednesday, April 29, which will reflect the first three months of 2020 in terms of total economic output, we believe the number will skew the current true global economic conditions to a large degree.  The pandemic shutdowns started in the US on March 15th – nearly 2 weeks before the end of Q1:2020.  Thus, we had a fairly normal Q1 in terms of economic activity, production, and consumer engagement. Everything changed after March 15th, 2020.

Skilled traders need to watch the current economic data and “week over week” data that is presented.  Skilled traders also need to pay attention to the news items that are being pushed out to the public.  Larger and larger corporations and sectors are moving towards bankruptcy or screaming for a bailout. Airlines, Hotels, Car Rental, and dozens of other sectors have all collapsed over the past 5+ weeks.  We expect real estate activity and pricing to collapse as well.  The results of the last 5+ weeks, after the March 15th shutdown started, have been anything but normal.

We continue to believe the current data and news, which is still representative of the Q1 (pre-shutdown) economic activity may lull investors/traders into believing the global economy will rebound fairly quickly from this virus event.  Traders/investors are looking at this current data and thinking, “well, this isn’t so bad”.  But they are failing to understand the true scope of the economic contraction event and what the longer-term outcome is likely to be in terms of recovery.

TOTAL WORLD GDP OUTPUT

The total world GDP output was approximately $190 trillion.  An estimated 15% to 20% global GDP contraction as a result of the Covid-19 virus event would shave $28.5 to $38.0 trillion right off the top of the 2020 global economic output.  Should the global shutdown last through the end of May 2020 (or beyond in some form), we believe the contraction in global GDP could become even more severe.

The complicated issues that arise from this global contraction in GDP also bleed over into supply-side economics.  As the world attempts to “shelter in place” to avoid spreading the virus and risking more lives, demand collapses. Once demand collapses enough (resulting in price level collapses as we’ve seen in Oil) the result in production/supply issues becomes even more complicated.  Unlike Eggs or Milk, one simply can’t bury or destroy other types of supply.  The destruction of certain industries, resources, and capabilities will become very real over time as a result of any extended contraction event.  The longer-term results of this type of event are sometimes called “stagflation” – where price levels rise as income and economic output stay moderately flat.

BEFORE WE CONTINUE, BE SURE TO OPT-IN TO MY FREE MARKET TREND SIGNALS SO YOU DON’T MISS OUR NEXT SPECIAL REPORT!

CUSTOM SMART STOCK MARKET INDEX

Our Custom Smart Cash Index highlights the “new price channel” that setup recently and why all traders/investors should really start to pay attention to how the global markets have transitioned into a new phase or price cycle.  You can see from the chart, below, that the global markets broke below an upward price channel that has been in place since 2012 recently and has established a new downward price channel spanning the December 2018 lows to the February 2020 highs.

We believe the current upward price trend on this chart is nothing more than a “bullish retracement in a bearish trend” and that the global markets will begin another downside price move within 5 to 10+ days.  As we’ve been trying to share with you over the past few weeks, the longer-term global economic disruption is just getting started.

US DOLLAR DAILY CHART

We believe the US Dollar will enter a new phase of increasing demand throughout the world as global economies begin to feel the pressures of the demand-side collapse.  We believe the US dollar is uniquely positioned to benefit from the global economic crisis simply because the US economy is the biggest and most capable economies on the planet in terms of the ability to recover from this virus event.  As foreign nations attempt to deal with weakening currencies and economies related to the collapse in demand and continued virus-related economic transitions, we believe the US economy will be one of the first global economies to regain any real growth over the next 2 to 3+ years.

Thus, we believe the US Dollar may attempt another quick downside valuation move, similar to what happened in February/March 2020, then rally to levels above 102 again as continued economic data hit the markets.  Remember, valuation levels of currencies are often based on future expectations of economic stability and capability for any nation.  The US Dollar is a bit different because it is also the “currency of choice” in terms of global economic activity.  We believe the US Dollar could begin a moderate “melt-up” process as the virus data continues to scorch the world’s economic output.

CONCLUDING THOUGHTS:

These longer-term economic expectations are key to understanding how the recovery process will create opportunities for skilled traders and investors.  We believe the world will survive this virus event.  Yet, we also believe the global economic landscape will likely change over the next 3+ years as this virus event could very easily push many foreign nations away from economic relationships or projects they have engaged in over the past 10+ years.  This virus event is really a “big game-changer” in terms of how and what the future of the global economic world will look like for many.

As we’ve warned many times, it is not the localized “one-off” economic event that presents a real problem for the global economy – central banks can simply patch the economy up with an infusion of cash.  The bigger problems for the global economy happen when a fundamental shift takes place that lasts 6 to 12+ months and disrupts the “systems” in place throughout the globe.  We believe this virus event could start a process that disrupts supply, demand, consumer engagement, and true valuation levels of almost all commodities and assets throughout the globe over the next 24+ months.

In Part II of this article, we’ll attempt to share more data and highlight where opportunities may present real profit objectives for skilled investors and traders.

The next few years are going to be full of incredible opportunities for skilled traders and investors.  Huge price swings, incredible revaluation events, and, eventually, an incredible upside rally will start again.

I’ve been trading since 1997 and I’ve lived through numerous market events.  The one thing I teach my members is that risk is always a big part of trading and that’s why I structure all of my research and trading signals around “finding profits while reducing overall risks”.  Sure, there are fast profits to be made in these wild market swings, but those types of trades are extremely risky for most people – and I don’t know many successful traders that want to risk their hard-earned money when daily price swings in various assets are moving 10% to 95%.

I’m offering you the chance to learn to profit, as I do with my own money from market trends that I hand-pick for my own trading.  These are not wild, crazy trades – these are simple, effective, and slower types of trades that consistently build wealth.  I issue about 2 to 4+ trades a month for my members and adjust trade allocation based on my proprietary allocation and risk algo – the objective is to gain profits while managing overall risks.

You don’t have to spend days or weeks trying to learn my strategy.  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 trading experience.  My new mobile apps make it simple – download the app, sign in and everything is delivered to your phone, tablet, or desktop – updates, videos, education, and trade alerts.

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

Please take a moment to visit www.TheTechnicalTraders.com to learn more.  I cannot 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 Traders Ltd.

Silver Demand vs Gold Demand

I recently talked with Jim Goddard at HoweStreet radio about gold, silver, miners, the dollar, among other things. Many markets are at major turning points and its critical that investors understand where we are in the major market cycles.

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 home.

If our retirement accounts are not protected during the next bear market which one will happen eventually, 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 and uncertain like they are now. I will 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.

LISTEN TO THIS CONVERSATION FOR MORE DETAILS.

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.

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 watch most of their retirement funds drop 35-65% during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.