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Silver Traders Big Trend Analysis – Part 2

This, the second part of our Silver research article suggesting Silver may be forming a massive price base in preparation for an explosive upside move, will continue from Part I of this research series.

Our research team believes Silver is setting up in a price pattern that may already be “ripe” for an explosive upside move.  Our researchers have poured over the data and believe the disparity between Gold and Silver is already at excessive levels.

Historically, anytime the disparity between Gold prices and Silver prices (rationalized into comparative Gold price levels) breaches 30% to 60% and Gold begins an upside price advance, Silver typically begins to move higher with 4 to 8+ months.  This setup pushes the Gold to Silver ratio back below 50 or 60 as Silver rallies substantially higher, and faster than the price of Gold.

Comparatively, Silver continues to trade within a sideways price range after basing in early 2016.  This price range has been fairly consistent between $14.50 and $21.0.  With Gold recently starting to move higher because of the US/Iran military conflict, this raises an early warning flag for our research team because Silver has continued to trade below $18 – and well below recent highs near $20.

The price disparity between Gold and Silver is currently greater than 200% based on our proprietary modeling system.  Remember, anytime this disparity level is greater than 30% to 60% and Gold breaks out in a rally, Silver will break to the upside within just a few months.

The second stage rally in Silver, the real money-maker, will come when investors pile into Silver and Silver Miners as the breakout in Silver becomes explosive.  The time to get into this trade is/was now or 4 months ago.  Still, there is plenty of opportunity for skilled traders right now because the breakout move in Silver and Silver Miners has not really begun yet.

The first big upside move in Silver and Miners will be to attempt to move higher and target recent resistance.  Resistance in Silver is currently near $19.70 and $21.00.  This means any move above $19.75 (or higher) where the price of Silver fails to move above $22 or $23 would constitute a “Stage 1 Base Advancement”.

After this move is complete, a “Breakout Stage” price move will take place.  This may be where Silver prices advance from the $21 to $23 level up towards the $28 to $32 price level.  This upside price advance breaches the Stage 1 resistance and attempts to establish new support for a continued Stage 2 advance.

Remember, the current disparity level is just over 200% between Gold and Silver.  If Gold continues to rally higher and Silver attempts to break higher, attempting to narrow the disparity level, then Silver will (at some point) enter a near parabolic upside price move above $36 to $40.  Our researchers believe this may happen before June or July 2020.

This incredible opportunity is currently setting up for skilled traders.  Believe it or not, while Silver continues to trade below $18 per ounce and global investors are focusing on US stocks, Emerging Markets, and Gold, Palladium and others, this setup in Silver may become the biggest investment opportunity of 2020.  Sure, Gold may rally 80% to 140% over the next 12 to 24 months.  Palladium may rally even higher.  If Silver does what we expect it to do once this setup/trigger really breaks open, Silver could rally 500%+ over 12 to 24+ months on an incredible upside disparity reversion move.

This last chart highlights why we believe this setup in Silver should not be ignored.  In 2005, the rally in Silver as a result of this Disparity trigger resulted in Silver reaching a 38% higher peak than Gold.  In 2009, the same Disparity trigger prompted Silver to rally to levels nearly 300% higher than the peak in Gold prices.  If Gold rallies to levels above $2800 to $3100, which is our expectation, and this Disparity trigger prompts an upside move in Silver, we believe Silver could rally to levels 200% to 400% (or more) higher than Gold prices.  By our estimates, that would put Silver prices above $90 to $95 per ounce – possibly much higher.

Take advantage of any opportunity you have to position your portfolio for this setup and be patient.  The upside breakout in Silver happens like a train leaving the station.  Slow and steady at first, then building momentum, then finally running at top speed.  Each time this Disparity trigger sets up and executes, Silver starts a moderate move higher at first, then explodes to the upside as Gold continues to rally higher.  That last explosive move is why Silver reaches peaks that are substantially higher (in percentage terms) than the peaks in Gold.

Please pay attention to our research team’s efforts to help you create greater success and find great trades.  Take a minute to visit Technical Traders Ltd. to learn how we can assist you in 2020 and help you build wealth, attain greater success and stay ahead of these bigger market moves.

As a technical analysis and trader since 1997 I have been through a few bull/bear market cycles, 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.

Join my Wealth Building Newsletter if you like what you read here and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own.

Chris Vermeulen
www.TheTechnicalTraders.com

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

My Big Trend Analysis For Silver Investor – Part 1

Everyone seems to be focused on Gold recently and seems to be ignoring the real upside potential in Silver.  With all the global economic issues, military tensions, geopolitical issues, and other items continually pushed into the news cycles, it is easy to understand why traders and investors may be ignoring Silver.

Silver has really not started to move like the other precious metals.  Gold is up over 45% since 2016.  Palladium is up over 350% since 2016.  Silver is up only 29% since 2016.  The Gold to Silver ratio is currently at 86.7 – very near to the highest level on record going back over 25 years.

Historically, Silver rallies 6 to 12+ months after Gold begins a price rally.  The big break in the Gold to Silver ratio comes at a time when Gold rallies by more than 30% to 60% faster than the price of Silver.  In other words, when a major disparity sets up in the price of Gold compared to the price of Silver, then Silver explodes higher – which results in a drop in the Gold to Silver ratio.

Currently, the relative price of Gold to Silver is over 200%.  Considering this fact and considering the under-performance of Silver recently, our researchers believe Silver is setting up a massive basing pattern in preparation for an explosive upside move.

Our research team put together this chart to help illustrate the real upside potential in Silver.  This Monthly chart highlights the Gold to the Silver ratio (Darker BLUE), the price of Gold (Gold) and the price of Silver (light BLUE) over the past 20 years.

Every time Gold broke a sideways Flag formation and began to rally substantially higher, Silver followed Gold higher 5 to 12 months after with an incredible upside price rally.  In 2005, Silver rallied over 100%.  In 2009, Silver rallied almost 400%.  Now, in 2020, could Silver rally 100%, 200%, 300% or more?

In the recent past, we’ve authored numerous articles about Gold, Silver and precious metals highlighting our expectations going forward.  Our incredible research from October 8, 2018, floored many institutional traders and researchers because we were able to accurately predict the future price moves in Gold 9+ months into the future.  Take a little time to read some of our earlier research posts

Metals & Miners Prepare for 2020 Liftoff – https://www.thetechnicaltraders.com/metals-miners-prepare-for-an-early-2020-liftoff/

ADL Trading System Confirms Gold Targets – https://www.thetechnicaltraders.com/adl-gold-prediction-confirms-targets/

VIX Is Set to Spike And What It Means for Gold – https://www.thetechnicaltraders.com/metals-vix-are-set-to-launch-dramatically-higher/

We believe the current setup in Gold and Silver is almost identical to previous setups where Gold rallied on economic or global concerns, prompting a massive disparity ratio between Gold and Silver.  We believe Silver is setting up in a massive basing pattern that may be an incredible opportunity for skilled traders.

In Part II of this research post, we’ll highlight why we believe all skilled traders and investors should be paying very close attention to the metals markets, Miners and, in particular, Silver.

As a technical analysis and trader since 1997 I have been through a few bull/bear market cycles, 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.

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
www.TheTechnicalTraders.com

Commitment Of Traders (COT) Data Suggests Gold In Rally Mode

Many people believe the price of Gold will need to fall to support Institutional short positions.  We don’t believe this is the case.  The Commitment Of Traders (COT) Data suggests Commercial Hedgers have a large and growing shot position that is a very positive sign for a continued rally in Gold and Miners looking forward months from now.

Don’t think about COT data like everyone else with it comes to gold.

Over the past 20+ years, every time the COT Commercial Hedgers position in Gold falls, weakens substantially, or makes new multi-year lows the price of gold rallies.

WHY RECORD COMMERCIAL SHORT HEDGE POSITION IS BULLISH

It is my belief that the markets will move in favor of where the big money (commercial/institutions) want it to go in most cases. so if the commercial’s keep adding a short hedge position that means they are adding to heir long exposure and need to add more of a hedge to help protect their growing LONG position.

The weakening COT data from 2001 through 2012 is a perfect example.  As Commercial Hedgers moved away from Gold, the price of gold rallied to the all-time highs.

Additionally, after the major bottom in Gold in 2016, Commercial traders would have bought and accumulated gold driving the price higher.

Now, in late 2018 and throughout all of 2019, the Commercial Hedger COT position in Gold has fallen to the lowest level in the past 20+ years. This suggests the rally in Gold has really just begun to accelerate to the upside and there are more people buying gold than ever before who are buying protection (hedging)

The COT data I find very deceiving because it’s displayed and delayed in a way that makes traders and investors think the opposite.

Wall Street is in the business of making a market, and that means they play a game of deception so you do the opposite of what they are doing. Wall Street show As you watch gold moving with your new view on the COT data, you will notice gold will rally and post strong moves, then a couple of weeks later the COT data comes out.

With all that said, this is just my view and opinion of how I read the COT data for gold specifically. As with every chart and trader, there are many different ways things can be analyzed and viewed.

Since the price just had a strong advance, and you now see the commercials have added to their short position you naturally expect a pullback after a price rally especially when you see the big players adding to their short/hedge position. But what really just happened? the big players bought gold, and they had to hedge some of their new position. Very bullish in my opinion. While I do not use it for trading, it is a good confirming indicator of a trend.

Our research team, as well as our proprietary price modeling systems, suggested that Gold may rally to levels above $3700 before reaching an ultimate peak.  Currently, our predictive modeling systems are suggesting the next target is well above $1600 and we believe our original target from our October 2018 analysis, of $1700 to $1750, is still very valid.

We believe this current upside price rally in Gold will attempt to clear the previous high levels near $1924 – from September 2011.  We believe moderate resistance/rotation near $1700 to $1750 will be the last level of price resistance before a continued rally will push Gold prices above the $1924 peak – possibly stalling just below $2100.  Once price breaches the previous high level, we expect a short period of price rotation before another upside price acceleration takes Gold prices above $2400 to $2500.

Gold Miners are poised for an incredible upside price rally if our analysis of Gold is accurate.  GDXJ is currently trading near $42 – showing moderate weakness while Gold has seen some strength this week.  We believe Miners will do very well once Gold really breaks out above $1750 and begins to target the previous all-time high level.

Much like our expectations for Gold, we believe GDXJ will rally to levels near $60 once this current overbought condition wears off. Then we expect it to head towards $60 and rotate lower for a few weeks before attempting to rally further to levels above $70+.

Take a minute to review some of our recent Gold research posts to gain further insight

January 2, 2020: ADL GOLD PREDICTION CONFIRMS TARGETS

December 30, 2019: METALS & MINERS PREPARE FOR AN EARLY 2020 LIFTOFF

December 4, 2019: 7 YEAR CYCLES CAN BE POWERFUL AND GOLD JUST STARTED ONE

You won’t want to miss this incredible run in Precious Metals and Miners.  Follow our research.  Learn how we can help you find and execute better trades.  We’ve been warning all of our followers of this move for months – now it is about to get very real. In fact, we are giving away free silver and gold bullion bars to all new subscribers of our trading newsletter!

As a technical analysis and trader since 1997 I have been through a few bull/bear market cycles, 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.

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
www.TheTechnicalTraders.com

Middle East Trouble Renews Interest in Gold

Last time oil peaked, it dropped nearly 20% soon afterward!

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 and gold 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:

1oz Silver Round FREE 1-Year Subscription 
1/2 Gram Gold Bar FREE 2-Year Subscription

SUBSCRIBE TO MY TRADE ALERTS AND 
GET YOUR FREE BULLION!

Chris Vermeulen
www.TheTechnicalTraders.com

Crude Oil Reverses Lower Again After US Missile Attack

Normally, after tensions between Iran/Iraq and the US flare-up, Oil and Gold rally quite extensively but reversed sharply lower by the end of the session.

Yes, Gold is 1% higher today and was up over $35 overnight, but Crude Oil has actually moved lower today which is a fairly strong indication that disruptions in oil supply from the Middle East are not as concerning as they were 10+ years ago. Traders and investors don’t believe this isolated targeted missile attack will result in any extended aggression between the US and Iran.

When past conflicts in the Middle East happened, Oil would typically rally and Gold would spike higher as well.  Consider this a reflex action to uncertain oil supply issues and concerns that global market uncertainty could crash the markets.  Gold seems like an easy expectation related to this type of uncertainty as it continues to act as a hedge against many risks like missiles/war, financial uncertainties etc…

In my pre-market video report to subscribers today (Monday, Jan 6th) I pointed out how the price of crude oil was testing a critical resistance area form the last time there were missiles fired. Today’s reversal is not a huge surprise and in fact, it looks like an exhaustion top.

Oil, on the other hand, has experienced one of the longer price declines in recent history, from the peak price near $147 near July 2008 to levels currently near $63.  But we saw a low price for oil below $30 (near February 2016).

CRUDE OIL DAILY CHART

I believe a technical resistance channel may be pushing Oil prices lower today as the price has continued to rotate lower after moving into this extended Resistance Channel.  It may be that global traders don’t believe this conflict with Iran will result in any type of massive oil supply disruption or risk for the global markets right away.  The Resistance Channel, between $63 and $65.50, has continued to act as a price ceiling over the past 7+ months.

CRUDE OIL WEEKLY CHART

Our proprietary Fibonacci Price Modeling system is highlighting similar levels near $64 and $50.  This price modeling system maps and tracks price rotation using a proprietary adaptive Fibonacci price theory model.  These levels, highlighted on this chart, represent immediate price target levels for any upside move (CYAN, already reached) and any downside move (BLUE, suggesting a move back towards $50 may be in the works).

If Oil is not capable of breaking above this Resistance Channel, then Fibonacci Price Theory would suggest price must turn lower and attempt to establish a new LOW PRICE level that is below recent low price levels.

If this Resistance Channel continues to act as a solid price ceiling, Crude Oil may turn lower over the first few quarters of 2020 and attempt to target levels near or below $50 fairly soon.  Skilled traders should prepare for this type of move and identify opportunities for profits in the near future.

In fact, I also gave subscribers a head up that GDXJ and TLT were going to gap higher and likely be under pressure all session. Also, I showed how the SP500 was going to gap lower deep into oversold territory and likely rally strongly just like last Friday, all of these things happened perfectly today.

Pre-market GDXJ, SPY, TLT warning of price gaps into extreme territories beyond the small colored lines: Red (overbought level), and Green (oversold level)

PRE-MARKET CHART ANALYSIS

END OF DAY MARKET MOVEMENTS

My point is my team and I 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 and gold 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:

1oz Silver Round FREE 1-Year Subscription 
1/2 Gram Gold Bar FREE 2-Year Subscription

SUBSCRIBE TO MY TRADE ALERTS AND 
GET YOUR FREE BULLION!
Free Shipping!

Chris Vermeulen
www.TheTechnicalTraders.com

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:

1oz Silver Round FREE 1-Year Subscription 
1/2 Gram Gold Bar FREE 2-Year Subscription

SUBSCRIBE TO MY TRADE ALERTS AND 
GET YOUR FREE BULLION ROUNDS!
Free Shipping!

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