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NASDAQ Set to Fall 1000pts In Early 2020, and What it Means for Gold

One of our most interesting predictive modeling system is the Adaptive Dynamic Learning (ADL) price modeling system.  It is capable of learning from past price data, building price DNA chains and attempting to predict future price activity with a fairly high degree of accuracy.  The one thing we’ve learned about the ADL system is that when price mirrors the ADL predictive modeling over a period of time, then there is often a high probability that price will continue to mirror the ADL price predictions.

One of our more infamous ADL predictions was our October 2018 Gold ADL prediction chart (below).  This chart launched a number of very interesting discussions with industry professionals about predictive modeling and our capabilities regarding Adaptive Learning.  Eric Sprott, of Sprott Money, highlighted some of our analyses related to the ADL predictive modeling system in June and July 2019.  Our ADL predictive modeling system suggested a bottom would form in Gold near April/May 2019 and then Gold would rally up toward $1600 by September 2019, then rotate a bit lower near $1550 levels.

LISTEN TO WHAT ERIC SPROTT SAID ABOUT OUR ANALYSIS

OCTOBER 2018 GOLD FORECAST

CURRENT 2020 GOLD FORECAST

This next chart shows what really happened with Gold prices compared to the ADL predictions above.  It is really hard to argue that the ADL predictions from October 2018 were not DEAD ON accurate in terms of calling and predicting the future price move in Gold.  Will the ADL predictions for the NQ play out equally as accurate in predicting a downward price rotation of 1000pts or more?

CURRENT 2020 NASDAQ FORECAST

This NQ Weekly chart shares out ADL Predictive Modeling systems results originating on September 23, 2019.  The Price DNA markers for this analysis consist of 15 unique price bars suggesting the future resulting price expectations are highly probable outcomes (95% to 99.95%).  This analysis suggests the end of 2019 resulting in a broad market push higher in early 2020 may come to an immediate end with a downward price move of 800 to 1000+ pts before January 20~27, 2020.  The ADL predictive modeling system is suggesting price will be trading near 8000 by January 20th or so.

Only time will tell in regards to the future outcome of these ADL predictions, but given the current news of the US missile attack in Iraq and the uncertainty this presents, it would not surprise us to see the NQ fall below the 8000 level as this euphoric price rally rotates to find support before moving forward in developing a new price trend.

Pay attention to what happens early next week with regards to price and understand the 8000 level will likely be strong support unless something breaks the support in the markets over the next 30+ days.  Ultimate support near 7200 is also a possibility if a deeper downside move persists.

As we’ve been warning for many months, 2020 is going to be a fantastic year for skilled technical traders.  You won’t want to miss these opportunities in precious metals, stocks, ETFs and others.

We have a good pulse on the major markets and can profit during times when most others can’t which is why you should join my Wealth Trading Newsletter for index, metals, and energy trade alerts. Visit our website to learn how you can see what this research is telling us.

I am going to give away and ship out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. You can upgrade to this longer-term subscription or if you are new, join one of these two plans listed below, and you will receive:

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Chris Vermeulen

What Does The Global Stock Market Contraction After The Missile Strike Mean?

The US Stock Market contracted in early morning trading on Friday, January 3, by more than 1% after news of the missile attack in Baghdad targeting a top-level Iranian military General and others.  After the attack on the US Embassy in Iraq last week, President Trump issued a strong warning that the US would act to protect its people throughout the world and Iran scoffed at this message.  It would certainly appear President Trump means business and won’t hesitate to stop terrorists from acting against the US – no matter where they are in the world.

This news, overnight, pushed Oil, Gold, Silver and most precious metals higher.  The fear factor associated with the unknowns of what may come from these actions shot through the roof over the past 24 hours.  The global stock markets contracted by a fairly strong amount in Friday’s trading.  Most global markets were off by 0.75% to levels well over 1%.

GLOBAL MARKET SELLOFF AFTER MISSLE STRIKE – CANADA, BRAZIL, CHINA, UK…

The real question skilled technical traders must ask themselves is this “will this turn of events prompt a change in investor expectations/thinking over the next 12+ months”?

I can remember what happened in the markets and the US economy in 1991 when Desert Storm happened.  Because this was one of the first US military efforts that were televised almost 24/7, almost immediately people were suddenly distracted by these war images and videos.  They were entranced by the actions taking place half-way around the world.  Local economies slowed because of this change in consumer sentiment and certain businesses struggled as their customers stayed home and watched TV.

A similar type of event happened after 9/11.  The United States was in shock.  People still attempted to conduct life as normal, yet our objectives changed.  We lost a bit of that care-free American attitude that we had in place before the 9/11 event.  We were more solemn, more conservative, more reserved in our daily lives.  Could something like this happen if Iran (and neighbors) attempt to retaliate against the US for this missile attack?  Could this change the thinking of consumers and investors as concerns about re-engaging in a Middle East conflict arise?

US MARKET SOLD OFF ON MISSILE ATTACK

The US stock market contracted fairly strongly in early trading on Friday, January 3, 2020.  Yet, by afternoon trading, support had pushed most prices off the lows.  We authored a research article recently that suggested traders were very emotional near the end of 2019.  We believe these emotions could continue to haunt the markets in various ways over the next 10 to 25+ trading days.  One thing we are concerned with is a change in price trend sometime between January 13 and January 25.  We believe these dates could prompt a major change in price trend and direction in the near future.

December 20, 2019: WHO SAID TRADERS AND INVESTOR ARE EMOTIONAL RIGHT NOW?

We don’t have a confirmation, as of yet, that any major trend change is taking place – but we feel it would be unprofessional to not warn traders that an event like this could dramatically change the way traders view future expectations.  We really have to understand one key factor about investing and trading – trends are the results of investors/traders believing the future revenues and results of a company, stock or economy will product greater or weaker returns.  If investors believe the returns will be greater, then the trend tends to move higher.  If investors believe the returns will be weaker, then the trend tends to move lower.

EVENT COULD CHANGE EQUITIES MARKET OUTLOOK – DOW JONES INDEX

Could this new event change future expectations for traders and investors?  How will extended uncertainty or military engagement alter trader’s expectations over the next 12+ months?

Right now, we want to urge our followers to protect their open long positions and watch carefully as this event unfolds.  We don’t have any confirmation that a trend change is taking place.  If the YM price fell to levels below $28,000, then we would consider recent support near $28,350 breached and begin to take a look at other price modeling systems.

We suggest our followers read the following research post from the end of 2019.  This will give you a better understanding of what is really happening right now and what would be needed to push the markets into a new bearish trend in early 2020.

December 31, 2019: WHAT TO EXPECT IN EARLY 2020

As we warned throughout most of 2019, we believe 2020 will be an incredible year for traders with extended volatility and returns.  You really don’t want to miss these bigger price moves when they happen.  Our precious metals calls throughout all of 2019 were nearly perfect and our recent Gold calls have nailed this big move.  Get ready – 2020 is going to be a great year for skilled technical traders.

With over 55 years of technical trading experience, we have been through a few bull/bear market cycles, I have a good pulse on the market, timing key turning points and what to buy and sell for both short-term swing trading and long-term investment capital. The opportunities are financially life-changing if handled properly.

I urge you visit my Wealth Building Newsletter and if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
Founder of Technical Traders Ltd.

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

Vermeulen and Swanson Look To New Trading Setups For 2020

This week I talked with Chris Vermeulen who runs the website thetechnicaltraders.com on the current stock market rally, which has some similarities to the way the market acted in 1999 and other years of low volatility moves up.

Chris also gave his updated views on gold, silver, and some other trading setups he sees lining up now for 2020.


Get Chris’ daily video trend analysis, and detailed trade alerts for stocks, indexes, oil, and gold. Visit: https://www.TheTechnicalTraders.com

Current Equities Rally Similarities To 1999

Euphoria is a type of market rally where valuations, real market expectations, and global market concerns are pushed away from view while a trader based rush to rally takes place.  One of the clearest examples is the 1995 to 2000 DOT COM US stock market rally.  As the Internet burst into homes and businesses across the world, the US-led the way with dozens of new Internet-based IPOs touting glorious expectations, potential earnings and more.  Everyone had the idea this new medium would dramatically change the economy for the better and breakthrough traditional economic boundaries.

The rally that took place in 1995 through 2000 was incredible.  The S&P 500 rallied from 463 to 1535 – +235.57%.  What we find interesting is the “price wave formation” that took place within that rally.  There were a number of key price rotations that took place as the market continued to rally, we’ve labeled them A, B, and C.  The first rotation, A, took place in July~Dec 1997.  The second, B, took place from May 1998 to November 1998.  The last, C, took place between January 1999 and November 1999.  Technically, these rotations are significant because they represent “true price exploration” related to price advancement.  The price must always attempt to identify true support/resistance levels while trending.

When we compare the rally from 1995 to 2000 with the current rally in the US stock market, we can see a defined level of euphoric price advance after the 2016 US elections.  We must also pay attention to the previous price advance from the 2009 price lows as the global markets were struggling to recover from the Credit Crisis. Our research team identified the A, B, C rotations in the current price and associated them to the similar rotations in the 1995-2000 price rally as “key components of the current rally and a potential warning sign of a pending top formation”.

Our researchers believe the QE processes of the global central banks have set up a similar type of euphoric price rally in the current global markets even though current economic metrics are warning of weakening economic activity and weakening global market output.  The US Fed and global central banks seem to want to keep pumping money/credit into the global markets to keep the rally going – most likely because they are fearful of what a crash/correction may do to the future growth opportunities around the planet.

Yet, our research team focused on the C rotation in 1999 and 2019 – a full 20 years apart.  What interested our research team the most was the fact that the rotation in 1999 set up a full 21 months before the November 2000 US Presidential election.  The current C rotation initiated in January 2018 – a full 34 months before the November 2020 US Presidential Elections.  Anyone paying any attention will recognize the 21 and 34 are both Fibonacci Numbers – relating a 1.619 ratio advancement.

Are we setting up a massive top in the US stock market based on a Fibonacci price range expansion related to the patterns we have identified in this SP500 chart?  Have we advanced from the 2000 peak and 2009 bottom in some form of Fibonacci Ratio expansion that aligns with the C rotation pattern we have identified?

The rally from Bill Clinton’s second term start date to the peak in 2000 totaled 932.9 pts – +153.61%.  the rally from Donald Trump’s first term start date to our projected peak level totals 997.5 pts – +44.38%.  The rally in 2000 peaked at a range that is 200% larger than the ration between the two separate percentage point ranges.  Is this significant to traders?  Does it help to align our peak with the 1.619 Fibonacci ratio?

153.61 / 44.38 = 3.4612

3.4612 / 2 = 1.7306

Given the alignment of these values with a potential 200% range expansion theory, we need to start to look at TIME/PRICE ratios to determine if these rallies are aligned efficiently.

The rally from 1995 to the peak in 2000 consisted of 63 Months.  The rally from 2009 to our projected peak consists of 131 bars.  This represents a price TIME expansion of 207.9%

The rally from 1995 to the peak in 2000 consisted of a price move of +1081.2 pts (+235.57%).  The rally from 2009 to our projected peak consists of a price move of 2585.6 pts (390.49%).  The ratio between these two price expansions is 1.657.

The correction from the peak in 2000 to the low in 2009 consisted of 109 months.  The ratio between the 63 months (1995~2000 peak) to this correction time is 1.73.  The ration of the 2009~2019 rally time span is 1.20.  Thus, the correction between the peak in 2000 to the bottom in 2009 expanded at a rate of 1.73x the time it took to complete the DOT COM rally from 1995 to 2000.  The recovery that has taken place from the 2009 bottom to our projected top in 2019 would expand at a rate of 1.20x the correction time rate.  All of these levels align with common Fibonacci numbers and ratios.

In other words, we believe the current expansion in price is nearing a completed Elliot Wave/Fibonacci ratio peak (likely wave C) that maintains proper aspect ratios related to previous major price rotations.

Other major sectors and asset classes also look to be showing similar topping patterns like the real estate values and charts here.

CUSTOM VOLATILITY INDEX MONTHLY CHART

Our Custom Volatility Index shows extended volatility is increasing with price nearing the upper range for December 2019.  Notice the increase in the range of these bars since the just before the peak in January 2018.  This increased range suggests extreme price volatility has been pushing the markets for the past 24+ months.  If this volatility continues into early 2020 as our projected peak sets up, we may see some very big rotation in 2020.

2000 AND 2019 PRICE SIMILARITIES IN S&P 500

This 2000 peak to 2019 peak comparison chart highlights the similarities in the C price pattern that has setup.  In 1999, the C pattern set up with an initial peak, followed by minor downside rotation – just like in January 2018. The second peak was higher, followed by a much deeper downside price rotation – just like in Nov/Dec 2018.  And the final rally broke upward after a Pennant/Flag formation pushing higher by +25% in 2000.  The current upside breakout from the December 2018 lows suggests a 39.5% price peak – just above our predicted 32% scaled Fibonacci rally expectation.

FIBONACCI PRICE AMPLITUDE TOP LEVEL IS NOT MUCH HIGHER

The total scope of this price move over the past 40+ years is impressive.  These longer-term patterns still drive the markets to establish major peaks and valleys.  Take a look at this chart and try to understand the ratios that are being presented here.  21%, 34%, 50%, 62%, 100% and any combination of these levels using 2x, 3x or any multiplier constitute a Fibonacci structure.  One of the most important facets of attempting to understand the Fibonacci price theory is that the ratios must be somewhat aligned.

Pay attention to the Fibonacci Price Amplitude arcs (the circles) drawn on this chart.  They represent the price range from the peak in 2000 to the low in 2009.  The reason this range is important to our researchers is that it will properly measure the previous upward price rally and the current price rally in terms of price amplitude.  Pay attention to how the current price rally stalled and rotated near these arcs.  We believe the upper GREEN arc level will operate as major resistance for the markets – possibly setting up another “rollover” type of top similar to the one in 1999~2000.

Skilled technical traders still need to be cautious headed into 2020.  The current rally, and most of 2018 and 2019, have been setting up a very serious type of pre-top setup.  Any downside rotation in early 2020 may attempt to move lower in multiple waves – possibly spanning multiple years.

Currently, our research suggests a limited 2.5% upside price range before the SP500 will reach the GREEN resistance arc.  The US markets may reach this level before the end of 2019 and may begin a topping pattern before you finish reading this article.  Please stay informed and understand the structures, trends, and dynamics that are at play in these markets to attempt to reduce your risk.  Now is the time to trim your equity/stock positions and prepare for a much bigger swing in price/volatility.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

We’ll keep you informed as this plays out with Wealth Building & Global Financial Reset Newsletter if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar Shipped To You!

Chris Vermeulen
Founder of Technical Traders Ltd.
www.TheTechnicalTraders.com

Gapping Rotation in SPY and News Based Rallies Are A Warning

As holiday trading sets up in the global markets, the SPY is starting to show signs of volatility and warning of a potential top by gapping as price attempts to trade sideways.  This type of top formation, along with the fact that the overnight REPO facility continues to roil the markets, continues to draw our researchers to the conclusion that some type of debt or liquidity issue is just below the surface of the global markets.

We believe the topping formation in the SPY may be a sign that the holiday trading, normally spanning from just before Thanksgiving to sometime after January 10th or 15th, may prompt a very volatile price rotation in the global markets.  The lack of liquidity in the market at this time often leads to fairly narrow ranges in price.  Yet we are seeing volatility continue to stay somewhat high at this time and the REPO issue hangs over the heads of nearly every investor at this time.

One of our friends, an ex-Chicago floor trader, wrote to us just a few days ago suggesting he was receiving phone calls from many friends and associates in the US and overseas about the REPO issue.  We believe this issue is now taking root as a concern for global investors and could become a major issue for the markets going forward into 2020.  Our friend’s suggestion was to “buy gold and to pair back equity positions”.

This SPY Daily chart highlights the GAPS in price that has our research team concerned. A breakdown below $308 would qualify as a new Bearish Price Trend.  If the most recent gap is filled to the downside, the price may begin to accelerate lower, confirming our analysis.

On the flip side of that scenario, is a breakout above $315 that can hold for a couple of days or into the end of the week. That would trigger a new uptrend and possibly a Santa Rally.

This Weekly YM chart highlights the Hangman pattern set up last week with a very long lower wick.  This pattern set up at the price high is very indicative of a topping formation.  The fact that it set up just below the GREEN Bullish Price Trigger level near $28,175 suggests this level is acting as resistance.  A breakdown in price near this level could prompt a move to levels below 26,000.

Traders need to stay cautious over the next 5+ weeks as the lack of volatility in the market may prompt some very big price moves.  We believe the REPO issue may have some legs in the future and we believe a rotation may begin before Christmas 2019.

If liquidity continues to diminish, a flash crash type of event would not be uncommon.  We believe there are serious risks of a downward price rotation in the works and urge our followers and members to prepare for unknown risks over the next 5+ weeks.

Normal trading volume will not likely start to pick back up till after January 15th.  We have at least 4+ weeks of unknowns to contend with in a very illiquid market. We are going to trade with the short term market trends and be agile going into the new year.

S&P 500 & BOND TREND – DECEMBER 13

The stock market was setting up a topping pattern the past couple weeks but that has now been negated. The charts/technicals are bullish and so are we it’s that simple really.

Yesterday more chatter of tariffs and other news sparked a strong equities rally at the open bell which sent stocks sharply higher while bonds corrected. With yesterday’s S&P 500 hitting new highs after a fear-based correction two weeks ago the market is now back in rally mode and should have enough energy to sustain a rally into the year-end.

While we trade based on technical analysis, there will be days when news hitting the market and causes some large moves on the same day we have technical buy or sell signals. Like yesterday, for example, The past couple of trading sessions we have been talking about how the S&P 500 has to hie new highs to kick things back into a new uptrend after the previous week’s price correction. Yesterday, the SP500 broke to new highs, while bonds broke down triggering a new breakout rally in stocks. Sure there was news to help push price higher but none the less all our analysis has confirmed for the buy trigger.

We touch on other markets or news from time to time but we do not take any of the news into consideration for our trades. While there are many warning signs out there pointing to dark times ahead for the financial markets like the Repo market and many others, the reality is we follow the price, not the news. The market is climbing a wall of worry among educated traders and investors, and that’s what the market does best and we can’t fight it. Eventually, the price will turn down for a mega bear market and we will be there to profit from it, until then we ride the fearful rally higher.

Chris Vermeulen
www.TheTechnicalTraders.com

Trader Predicts Assets Direction With This Forward-Looking Indicator

Great traders are often the result of dedication to principle, theory, price study, and a solid understanding of Intermarket market dynamics.  The one thing that can’t be taught, though, is experience behind the screens and with the markets.

The longer a trader spends working with the charts, trading the markets and studying the trends/indicators, the more knowledge, experience, and capability that trader has in being able to see and predict future price moves.

We believe it is the same way with other professions in life – a professional race car driver, a professional pilot or ship captain.  Any profession where an individual is “at the helm” of some vehicle, instrument or live-action event, that individual will, over time, hone his/her skills to be able to foresee and manage certain aspects of the live operation better than someone without the experience.

One might want to call this a “sixth-sense”, but we believe it is simply applied knowledge and experience.  These individuals see and feel things that others simply miss or brush off as unimportant.

Trading is the same way and traders will become better and more skilled by following the charts very closely and watching how price reacts to geopolitical and regional economic events.

One of our primary price modeling tools is what we call the V10.  It has gone through a number of revisions over the years and is capable of running on almost any chart, in any time-frame.

What we learn from using this tool is when and how price rotates, confirms trend changes, sets up new triggers and more.  It also helps us to identify price cycles, when we should add-to positions, trim profits or expect a new market rally or correction.

Before you continue, take a second and join my free trend trade signals email list.

V10 TREND TRADING STRATEGY – AVERAGE TRADE 45 DAYS

As we expand the use of the V10 price modeling system into other markets, you’ll see how changes in price trends can assist us in seeing into the future and preparing for price rotation that others may miss completely.

NATURAL GAS V10 CHART ANALYSIS

This NG chart highlights a number of price trend rotations (from RED to ORANGE to GREEN, or from GREEN to ORANGE to RED).  Each time the color leaves a primary trend color (GREEN OR RED) we have an early warning signal that price rotation is setting up.

You can see the initial uptrend in late August we set up by a RED to ORANGE trend change.  The same thing happened in late October.  Now, a GREEN to ORANGE trend change setup near mid-November warning us that NG was going to move lower in the future.

These types of setups appear in all types of charts, asset classes, and time-frames and soon we will make different versions available so we have long term investing, trend trading, swing trading, and momentum trader signals.

THE POWER OF CYCLES WITHIN PRICE ACTION

When attempting to interpret price modeling systems or indicators with cycle analysis utilities, it is important to understand that cycles don’t drive price moves.  Price moves drive cycle rotations.  Knowing when price cycles are topping or bottoming can assist traders in understanding where and when new trade setups are viable and when to trim profits off existing trades.

If we know when the most active and relevant cycle is trending, topping or bottoming and the expected cycle length for a potential price trend, then we can make a more informed determination about the viability of the trade setup and risk factors.

We are also able to use the price modeling systems and cycle modeling systems to better understand how far price may move, when we may begin to see price weakness in the trend and other important factors to help us manage our trade properly and reduce risks.  This is where things get really interesting and exciting.

EXAMPLE SP500 PREDICTED PRICE MOVE

HOW I PREDICT FUTURE PRICE MOVEMENT

This last chart shows you the price of Natural Gas futures.  We have overlaid our proprietary Cycle Modeling tool onto it so you can clearly see how the price has moved in alignment with the cycles.  Follow the LIGHT BLUE cycle line on the chart and try to understand that the range/height of the cycle lines does not correlate to price levels.  They represent the “intensity” of the cycle peak or trough.

A higher peak on the cycle line suggests this upside cycle peak has a higher intensity/probability than a lower cycle peak.  We gauge these rotations as a measure of intensity or amplitude.  Lower cycle troughs suggest a price bottom may have more intensity/amplitude in price than a moderately higher cycle trough.

Follow the three-cycle lows starting near early October on this chart.  Each of them resulted in deeper Cycle troughs on our Cycle modeling tool.  Yet, the real price reaction was to set up a small inverted Head-n-Shoulders bottom pattern.  The last cycle trough low didn’t result in a deeper price level, but it did result in the completion of the bottom pattern that prompted an immediate upside price rally – more intensity.

We’ve also highlighted some of our most recent trades related to our analysis using the V10 and our Cycle modeling tool.  +35% over the past 4 months on three successful trades – we’re pretty happy about that.

Also, keep in mind that we are not showing you what the cycle modeling tool or the V10 is predicting for the future.  We reserve that for our valued subscribers/members.  We know where the cycle and other predictive modeling systems are telling us the price will go, but we can’t share it with you (yet).

CONCLUDING THOUGHTS:

Since 2001, our focus has been on learning and mastering the tools we have developed and use as well as the Cycle Modeling tools so that we can follow the markets more closely, learn to provide better opportunities and attempt to identify the highest probability trades for our members.

What we never expected was that our efforts to study, learn and apply these tools would provide us with that “sixth-sense” ability to attempt to see into the future and to attempt to predict 10 to 20+ days into the future.

Our modeling tools share opportunities with us all over the markets and across multiple instruments and time-frames.  We recently posted our gold and gold miners price/cycle forecast here. We focus on Daily and 30-minute intervals for our members, but we see these opportunities across all levels intervals – from 1 minute all the way to monthly/quarterly.

The one thing we are certain of is that our members continually write to us about how important it is to them to have us explain the setups, trends, cycles and future market implications to them in our daily market videos.  They don’t have to try to learn to do this type of cycle research on their own, we give them the details every morning before the markets open and any trade signal we have for SP500, gold, oil, nat gas, bonds, and more.

Visit my website at http://www.TheTechnicalTraders.com

Chris Vermeulen
Found of Technical Traders Ltd.

High Yield Bond and Transports Signal Gold By Signal

Technical Analysis is the theory that price relates all news, fundamental and correlative future expectations into current and recent price activity.  It is the theory that price is the ultimate indicator and that charts paint a very clear picture for those individuals that are capable of understanding the message that is being presented.

In this research article, we are going to highlight the technical analysis components that we believe are painting a very clear picture that an “early warning” signal is flashing very brightly in the US and Global markets right now.

Cross market analysis and methods of rationalizing true price rotation, valuation and trend become the foundation of most technical analysis.  Studies, technical indicators, advanced price theory and all the rest of the tools we use are ways for us to better understand what price is actually showing us.  Today, we are going to focus on Gold, High Yield Corporate Bonds, and the Transportation Index because combined they are telling us something big is close to happening.

Before you continue, take a second and join my free trend trade signals email list.

Gold is a safe-haven instrument that measures uncertainty, fear, greed and the future expectations related to a secure global market economy.  When a crisis, economic or other uncertainty fears are minimized, Gold tends to move lower or consolidate into a lower price range.  When fears, economic uncertainty or any type of crisis event is causing concerns for global investors, Gold then begins to move higher as a measure of protection from risk and fear of any type of crisis event.

PRICE OF GOLD – BULL FLAG WITHIN A BULL MARKET

Gold has recently rallied well above the $1400 level and formed a large Bullish Flag pattern.  The recent rally above $1400 confirmed the new Bullish Price Trend for Gold which indicates global investors are becoming more fearful of a crisis event or some other type of economic uncertainty.

We believe the next move high in Gold will push prices above the $1625 level, then above the $1745 level.  If that happens, we’ll know the fear of some type of crisis event is very real and that the Bullish major trend in Gold may continue for many years to come.

We just posted a much more detailed report on the new 7-year bull market starting for gold and mining stocks, which if you have not yet seen take a look at the charts.

As much as we like to think that Gold leads the market in terms of measuring fear and uncertainty, Corporate Bonds also share a role in the understanding and future expectations related to economic capacity.

If Corporate Bonds begin to sell-off before a major downside market trend begins, it represents a fear that future earnings and the ability to support/service corporate debt levels may be at risk.  The way I explain this to people is that it is like a ship “battening down the hatches” and securing the cargo before entering a major storm.

A Corporate Bond sell-off indicates that global investors believe the economy is grinding to a halt and that earnings going to decline – thus putting debt at risk of failure in the future and this is why investors sell their bonds, and they they typically move before the stock indexes do. Think of high yield bonds as a leading indicator by a few days.

HIGH YIELD CORPORATE BONDS – POTENTIAL MAJOR BREAKDOWN

This HYG chart highlights the support channel in Corporate Bonds that appears to be at risk of being broken.  If a breakdown in price happens, this downside rotation in HYG would be a very clear warning that the US and global stock markets may be entering a serious price correction period.

If Bonds were to move dramatically lower while Gold rallied, we can only interpret this as fear has really begun to hit the markets and traders are panicking.

TRANSPORTATION INDEX – ECONOMIC LEADING INDICATOR

Lastly, take a look at this Transportation Index chart and pay very close attention to the Head-n-Shoulders pattern setup on the right side of the chart.  You’ll see a similar Head-n-Shoulders pattern in May 2019 – just before a moderate downside price rotation.

As we move into the end of this year with liquidity diminishing and volatility starting to increase, the potential for a dramatic price sell-off becomes even greater.  The lack of real market depth and liquidity, as well as this “early warning” set up in the charts, suggests a market breakdown event may be happening right before our eyes. It also may not happen, which is fine also.

As technical traders we do not require price to move in any one direction, we simply follow price and bet on the direction it’s moving. But if we do get a breakdown here it could be really exciting especially if you have a trade or two on the right side of the market.

The cross-market Technical Analysis and the chart patterns are suggesting that a peak has set up and that future expectations are much weaker than they were 14 to 18+ months ago.

We recently published this article highlighting some of our proprietary Indicators and Indexes suggesting this recent rally in the US stock market may have been a “euphoric zombie-land rally” with no real support behind it.

Dec 2, 2019: IS THE CURRENT RALLY A TRUE VALUATION RALLY OR EUPHORIA?

If our analysis is correct, and we get the drop in stocks, it could be a very big downside move.

We believe these charts confirm that price and Technical Analysis are screaming an “Early Warning” signal that price weakness is setting up in the US and global markets.  We believe the continued lack of liquidity throughout the Christmas holiday season may prompt a very big breakdown price move at any time in the near future.  When any one of these charts begins a price move to confirm these predicted setups, it won’t take long for the bigger major trends to follow-through.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly. This week we entered two new trades and it’s not too late to get into them before they run higher!

We’ll keep you informed as this plays out with Wealth Building & Global Financial Reset Newsletter if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar Shipped To You!

Chris Vermeulen
Founder of Technical Traders Ltd.
www.TheTechnicalTraders.com

About To Relive The 2007 Real Estate Crash Again?

Does history repeat itself?  Are price patterns and chart patterns reliable enough to suggest that a global Real Estate market collapse may be set up?  What would it take for another Real Estate collapse to take place in today’s global market?

First, let’s start with this simple chart highlighting the “Bear Flag” setup from 2007 and the current 2019 Bear Flag setup.  This price pattern was enough of an early warning sign for our research team to run into our offices and tell us of the exciting pattern they just identified regarding Real Estate and what they thought could happen.  We listened to them share their ideas and concepts of how we have 11 months to go before the 2020 US Presidential election takes place and how higher risk delinquencies and foreclosures are starting to spike.  They suggested the political theater of the global markets and US election cycle will likely distract from the weakening economic cycle which could present enough “smoke and mirrors” to keep investors’ attention away from this potential collapse in the housing market.

Much like a magician attempts to distract you just long enough to pull of their new trick, could the political theater, global economic news cycles and the never-ending battle in Washington DC be just enough of a distraction that skilled traders miss this critical setup?  We hope not.

The peak that occurred in 2007 setup about 19 months before the 2008 Presidential election took place.  The 2019 peak occurs about 13 months before the 2020 Presidential election.  In both instances, a highly contentious political battle is taking place which may distract traders and investors from really paying attention to the underlying factors of the global markets.

A real estate crash is no something to dismiss. For most of the people, their home is the nest egg, or their largest investment and watching this asset tumble in value 10, 20, 30% or more is serious. Before you continue, take a couple of seconds and join our free trend signals email list.

2007 VS 2019 REAL ESTATE MARKET TOPPING FORMATIONS

Recent economic data suggests that builders and permits experienced an increase over the past 60 days – which is vastly different than what happened in 2006-2007.  By the time the Bear Flag had setup in IYR in 2007, new building permits had already started to fall dramatically – for at least 12+ months prior to March 2007.  Currently, the number of building permits on record is sitting near 50% of the range established between 2000 and 2009.

We authored a number of research articles this year that more clearly highlight our expectations:
– PART II – Is The Fed Too Late To Prevent A Housing Market Crash?
– Are Real Estate ETFs the Next Big Trade?

The recent increase in building permits could indicate a euphoric level of buying/flipping by builders and speculators thinking “its easy to make profits flipping these homes in this market”.  Much like the euphoric activity before the 2007 crash.

The collapse that happened after the Bear Flag setup in IYR in 2007 resulted in a dramatic -73% decline in value over a very short 24 month period.  Could something like this happen again in today’s market?

Our research team raised a couple of interesting points relating to the potential for a “rollover” type of event taking place over the next 12+ months.

First, the US Presidential election cycle could setup a very real fear that a new president could attempt to derail/damage the marketplace with new policies, taxes and other unknowns.

Second, the current Real Estate market has experienced real price growth for almost 10+ years since the 2009-2010 bottom and wage earners may already be priced out of certain markets – reducing overall demand at current price levels.

Third, a lot of recent news has been published showing massive amounts of people moving away from larger cities/states like New York, California, New Jersey, Chicago, and other locations.  These people are moving away from higher taxes and housing costs and trying to move to areas that are cheaper and quieter.

Forth, there are an estimated 40+ million “baby boomer” homes that must be liquidated over the next 10+ years as these people/families transition into elderly status.

The reality is that unless price levels revert to levels that make housing more affordable or earnings levels dramatically increase over the next 3+ years, the price level for homes in the US and Canada is already historically high.

2007 REAL ESTATE HOUSING SELLOFF

REAL ESTATE PRICES/VALUATION TESTING 2007 EXTREME HIGHS

How high?  Take a look at this last chart of IYR and pay attention to the fact that current price levels are already at the historic high price levels from 2007.  This should tell you almost all you need to know.

Unless earning levels somehow rise dramatically over the next 24 to 36+ months, housing prices are already at or near peak levels for most consumers – even if the US Fed decreases interest rates another 25 to 50 bp.

The other thing to consider is what type of new policies, taxes, costs would a new US president do to the housing market and global stock market?  What would happen in Bernie Sanders or Elizabeth Warren were to suddenly take the lead in the polls wanting to raise taxes on everyone and install new trillion-dollar policies while attacking America’s millionaires and billionaires?  Think that may have some pull on the markets?

Our researchers believe we should cautiously watch IYR for further signs of weakness over the next few weeks and months.  Yes, there is a very real potential that the US and global housing markets could collapse over the next few years – but right now we are looking at a Bear Flag pattern that may be an early warning sign of a potential price selloff.  Nothing is confirmed yet but any week now could spark the start of something ugly for home prices.

Yes, housing market economic data show some weakening while building permits and construction ramped up last month.  Housing has certainly reached a mature economic state and we believe any collapse in the global stock market could send a wave of fear throughout the housing market as people attempt to get out before prices start to collapse. We’ll keep you updated as we continue to watch the Real Estate market and our researchers pour over the data.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

We’ll keep you informed as this plays out with Wealth Building & Global Financial Reset Newsletter if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar Shipped To You!

Chris Vermeulen
Founder of Technical Traders Ltd.

Is The Current Rally A True Valuation Rally or Euphoria?

Our research team has been warning that the US stock market price rally over the past few months has been more of a zombie-land price rally than a true valuation rally.  Our researchers believe the continued push higher has been more about capital seeking safety away from foreign risk and into US Dollar based assets than it has been about anything fundamental or valuation based.  Over the past few days, our researchers identified another rally like this that happened recently and wanted to highlight the eventual outcome of this type of Zombie-Rally. Before you continue, take a couple of seconds and join our free trend signals email list.

Zombie-Rallies happen in the market when there are really no other alternatives but to “keep doing what seems to have been successful over the past few months or years”.  A good example of this is the DOT COM rally that continued to push higher and higher even though investors and traders could clearly see the wheels were coming off the train and companies were not able to achieve profits to measure up to proper valuations.  This is a measure of GREED becoming a driving force behind investor sentiment.  Who’s going to go against the markets when the trend bias is continuing to push higher and the risks of shorting far outweigh the risks associated with following the herd.

Our researchers use our Custom Market Cap index to help us understand where peaks and valleys are likely to form in the markets and, generally, this utility is quite accurate.  It measures the ability of the US stock market to rally, sell-off and rotate very clearly and can be used to measure when the price has reached near extreme levels.  Recently, we authored an article suggesting liquidity and volume would begin to fall over the next few weeks and months that would result in increased volatility headed into the end of 2019.

December 1, 2019: LIQUIDITY & VOLUME DIMINISH – WHAT NEXT?

CUSTOM MARKET CAP INDEX CHART IS CLEARLY IDENTIFYING A MARKET PEAK

Our Custom Market Cap Index chart is clearly identifying a market peak has formed as of the end of

November 2019.  The extreme high peak on this chart on the Thanksgiving holiday week is well above traditional high peak levels and should be considered an extremely high price exuberance peak in the US stock market.  Our expectations were that an immediate price rotation would setup pushing prices much lower over the next few days and weeks.

Historically, once the price reaches these extreme levels, the price typically rotates lower and attempts to target the lower/middle price boundaries drawn by our channel lines.  This would suggest that an 8 to 12% downside price rotation is in our future should this price peak follow previous examples.

Yet, what other evidence could we present to support our expectation that this recent price rally is truly a “zombie-rally”?

TRUE STOCK MARKET VALUATION APPRECIATION INDEX

Our researcher team put together this chart to highlight the true valuation appreciation at various times within the past 6+ years.  When this chart is climbing, valuation levels in the global stock markets are rising in comparison to traditional safe-haven instruments.  When this chart is falling, then valuations are decreasing in comparison to safe-havens and total overall valuation appreciation.  Think of it as a measure of how much conviction is behind the market price activity.  The more traders believe the future appreciation is valid, the more valuations will appreciate and investors will move away from safe-haven investments.  The more concerned traders become about price valuation levels, the more likely they are to begin to hedge into protective, safe-haven, investments and the less confidence they have in the ability of price to appreciate in the future.

This chart highlights a number of key factors…

_First, the true market peak occurred in September/October 2018.  That was the high point on this Global Valuation chart and that was the peak of positive investor sentiment before the US Fed initiated a very deep price rotation.

_Second, the rally from the November 2016 Presidential elections till the January 2018 peak was a true broad-participation rally where global investors really believed in the future price appreciation of the global stock markets.  Thus, we see this Global Market Valuation chart rally much higher after the November 2016 elections.

_ Third, since the peak in October 2018, the global market participants have been much more fearful of the capability of future price advances.  There has been no real price appreciation advance on this chart since the peak in October 2018 and we believe this highlights a very weak foundation in the global markets for this current “zombie” price rally.

If our researcher team is correct, there is a very real potential that a broad market price rotation could test the lower boundaries of this market valuation chart and possibly attempt to push true global market valuations below the February 2018 lows.  This would represent a complete collapse of the global stock market resulting in a -10 to -15% price correction over the next few weeks/months.

Every rotation on the Global Valuation Chart over the past 3+ years can be clearly seen on this SP500 chart.  The January 2018 peak followed by the downward price collapse.  The October 2018 peak followed by the downward price collapse.  Even the June and August 2019 price rotations are clearly evident in the Global Market Valuation chart as downward valuation corrections.

CURRENT US STOCK MARKET PEAK IS NOT SUPPORTED AS A TRUE VALUATION

The current US stock market peak is not supported as a true valuation advance by this data.  Yes, the stock market level is much higher than the peak level in October 2018, but the underlying global market true valuation level is suggesting this is a zombie-land for investors.

The only other time something like this happened was near the end of 2017 when the US stock market continued to climb much higher even though the valuation levels were already weakening.  Although this was a brief period of time, the span from November 2017 till the end of January 2018 resulted in a very similar type of price rally.  Take a look at the “2018” markers on these charts.  You’ll clearly see the Global Valuation chart is showing the valuation level was DECLINING just before the start of 2018 whereas the SP500 chart shows the market price was rallying upward consistently…  Welcome to Zombie-land.

CONCLUDING THOUGHTS:

If our researchers are correct, this current rally will likely end as we near the end of this year when volume and liquidity diminish.  The rotation lower, on Monday, December 2, was very clearly a downward price rotation away from these extreme peak levels and, potentially, an end to the zombie-land price rally of the past few months.

The end of 2019 and early 2020 could be full of very violent and dramatic price rotations as the true global market valuation levels have yet to rally to meet the US stock market peaks.  This underlying fact suggests that price must fall in order to realign with true valuation levels or the valuation levels must immediately start to rise to meet current price levels.  Our research team believes that price levels will collapse to meet true valuation levels.  There is no indication that any true investor valuation appreciation is taking place at the moment, thus price must fall to fair values based on true investor valuation estimates.

We’ll keep you informed as this plays out with Wealth Building & Global Financial Reset Newsletter if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar Shipped To You!

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these super cycles are going to last years. A gentleman by the name of Brad Matheny goes into great detail with his simple to understand charts and guide about this. His financial market research is one of a kind and a real eye-opener. 2020 Cycles – The Greatest Opportunity Of Your Lifetime

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

Chris Vermeulen
Founder of Technical Traders Ltd.

Liquidity & Volume Diminish – What Next?

As the Thanksgiving holiday passes, traders should begin to understand that liquidity and volume in the US and global markets typically begin to diminish over the next 30 to 45+ days.  Typically, between mid-November and early January, trading volumes weaken dramatically as institutional and retail investors move away from the markets in preparation for year-end celebrations and tax planning.

Historically, the month of November is vastly more positive than negative in terms of overall price action.  Over the past 21 years in the NQ, a total of 15 months have resulted in an average of +122.75 pts whereas only 6 months have resulted in an average of -194.83 pts.  This suggests the downside price moves, when they happen, are nearly 40% larger than the average upside price move for November.  So far for 2019, the NQ is +320.25 pts for November 2019.

November Historical Data Results:

===================================================

– Largest Monthly POS : 332.25 NEG -768
– Total Monthly NEG : -1169 across 6 bars – Avg = -194.83
– Total Monthly POS : 1841.25 across 15 bars – Avg = 122.75

——————————————–

– Total Monthly Sum : 672.25 across 21 bars
Analysis for the month = 11

For December, the historical data is split evenly – 10 months show positive results and 10 months show negative results.  The positive average is +129.15 and the negative average is -117.95.  This data suggests that December is historically slightly more positive than negative – but overall, December is a very FLAT month for trading in the NQ.

===================================================

– Largest Monthly POS : 782 NEG -616.25
– Total Monthly NEG : -1179.5 across 10 bars – Avg = -117.95
– Total Monthly POS : 1291.5 across 10 bars – Avg = 129.15

——————————————–

– Total Monthly Sum : 112 across 20 bars
Analysis for the month = 12

===================================================

It is very likely that the recent rally in the US stock markets has reached very near to a price peak headed into the end of 2019.  Our custom Market Cap Index is suggesting the US/Global markets could be setting up for a broader price rotation over the next few weeks and months.

When the Custom Market Cap Index reaches these Extreme Overbought levels, it is very common for the markets to enter a retracement period that will likely result in a downside move in the Custom Market Cap Index towards the middle “Green” area.  The only time we’ve seen any type of extended upside price pressure was in late-2017 when the globe rallied after President Trump was elected expecting a boost in global economic activity.  Still, if you pay attention to the rotation near this period of time, you’ll see that violent price rotation did take place just before the peak in January 2018. Take 8 seconds and enter your email address and join my free trend signals email list.

Our Adaptive Dynamic Learning (ADL) predictive modeling system is also suggesting a downside price rotation for the NQ which further validates our expectations that the US and Global markets have reached levels that are extremely overbought.  We authored a research post titled “Welcome To The Zombie-Land Of Investing” in early November – prior to this melt-up price rally.  You can read that article here: https://www.thetechnicaltraders.com/welcome-to-the-zombie-land-of-investing-part-ii/

We continue to believe the collapsing foreign markets have driven capital and investment into the US stock market and further investment into more mature economic markets as investors flee risks and pricing pressures throughout the world.  Current news continues to support this premise and we believe the global pressures related to economic output and expectations will begin to weigh more heavily in the US stock market – specifically in regards to profitability, debt levels, and future expectations.

Additionally, we believe the continued collapse in Crude Oil is a very strong sign the global economy is contracting faster than anyone really expected and that continued price weakness may result in a price reversion event in the near future.  We authored a number of research articles about these facets of the global markets over the past few months…

Nov 15, 2019: WHEN OIL COLLAPSES BELOW $40 WHAT HAPPENS? PART III

Nov 3, 2019: WARNING: CREDIT DELINQUENCIES TO SKYROCKET IN Q4

Oct 20, 2019: BLACK MONDAY 1987 VS 2019 – PART II

Our ADL predictive modeling system suggested Crude Oil would collapse from levels near $57~58 to levels just below $49 in November 2019.  This prediction was made in early July 2019.  It is amazing how our ADL predictive modeling system can see into the future like this.  Now, all we are waiting for is the further price contraction in Crude Oil to our expected price levels for November.  Once that sets up, then we should see a brief pause in price rotation in December 2019, then further selling in early 2020 reaching near a bottom in February or March 2020.

Demand for Crude Oil is waning dramatically near the end of 2019.  There appears to be some level of chaos throughout much of the world and we believe additional uncertainty related to the US Presidential Elections, Super-Cycle events/expectations, and a mature global market contraction will continue to put demand/pricing pressures on many commodities/global markets.

The one thing we’ve been warning about for almost 14+ months is the incredible opportunity setting up in Precious Metals.

Sept 24, 2019: IS SILVER ABOUT TO BECOME THE SUPER-HERO OF PRECIOUS METALS?

Now is the time to prepare for some of these big rotation expectations over the next 15+ months.  The end of 2019 and almost all of 2020 are certain to be filled with extreme volatility, liquidity issues and more.  If you are a skilled trader and want better insight into what is happening and how to profit from these fantastic setups, take a minute to see how we can provide you with winning trades to stay months ahead of these moves and ride the wave of success!

Chris Vermeulen
www.TheTechnicalTraders.com