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Critical Price Level Could Prompt A Big Move After Holiday

As technical traders and researchers, we’ve been paying very close attention to the GREEN ARC Fibonacci resistance level on the SPY as a key level for the US stock market and any hope of a continued upside price rally.  The SPY has traded near this level for the past three weeks and appears to be attempting a bit of an upside breakout right now.  Yet, we understand a long holiday weekend is upon us in the US, Memorial Day, and after a big upside GAP on Monday, the US stock market has stalled over the past few days.

Our researchers believe this GREEN ARC is still acting as critical price resistance and believe the SPY may sell off into the end of the week resulting in a failed attempt to breach this key resistance level.  If this happens, the failed attempt to break this resistance could prompt a change in price trend and initiate a new downside price trend.  If this resistance level is broken by the end of this week, then we have a pretty solid indicator that continued bullish price trending may continue.

Absent of any real news that may drive the market trend this holiday weekend and with most of the US still in shutdown mode, we believe the US stock market has continued to trade within this no man’s land area for many weeks now.  From the end of April till now, we’ve seen moderate upside price action in certain sectors, yet other sectors continue to show signs of weakness.

SPDR S&P500 ETF WEEKLY CHART

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

TRANSPORTATION INDEX WEEKLY CHART

This Transportation Index Weekly chart is a perfect example of the weakness that is evident away from the S&P500, NASDAQ, and Dow Industrials.  Compare the last 6+ weeks of trading on this TRAN chart to the SPY chart above.  Notice that the TRAN chart shows a very congested sideways price channel (highlighted in YELLOW) as well as a much deeper upside price move from the lows near March 20.  While the US major indexes have rallied substantially, the broader market indexes are not experiencing the upside price advance and continue to suggest overall weakness.

This disconnect in the markets suggests speculation is driving the US major indexes higher and not real fundamental appreciation based on earnings and revenues.  When this speculation ends, typically when speculators realize the price has been driven a bit too high compared to reality, then the trend can change in an instant.

ISHARES RUSSELL 2000 ETF WEEKLY CHART

This IWM Russell 2000 ETF Weekly chart highlights a similarly week upside price rally since the March 20th bottom.  The WHITE LINE on this chart represents a support/resistance level from early trading low price levels in 2017.  Our research team believes these levels represent a very important support/resistance level for the Russell 2000 ETF as this level coincides with the GAP in price that was generated within the recent selloff on March 9, 2020.  That GAP cleared this key support/resistance level with a very big downside price move.  We believe this level will act as intense resistance as price attempts to fill the GAP.

CONCLUDING THOUGHTS:

Overall, the US stock market has continued to trade within this no man’s land recently.  There have been some pretty decent upside price moves in certain sectors over the past few weeks.  Precious metals, certain travel/leisure stocks, and, of course, technology and services stocks.  Yet, we continue to warn our friends and followers to be very aware that the US stock market is far from immune to more downside price activity.  A deep selloff like we experienced will very often react with a “recovery move” – a dead cat bounce type of move.  While the NQ has been a big mover, these other sectors suggest we may be nearing a tipping point and we urge technical traders to stay very aware of the risks as we head into this long holiday weekend.

I’ve been trading since 1997 and I’ve lived through numerous market events.  The one thing I teach my members is that risk is always a big part of trading and that’s why I structure all of my research and trading signals around “finding profits while reducing overall risks”.  Sure, there are fast profits to be made in these wild market swings, but those types of trades are extremely risky for most people – and I don’t know of anyone that wants to risk 50 or 60% of their assets on a few wild trades.

You don’t have to spend days or weeks trying to learn my system.  You don’t have to try to learn to make these decisions on your own or follow the markets 24/7 – I do that for you.  All you have to do is follow my research and trading signals and start benefiting from my research and trades.  My new mobile app makes it simple – download the app, sign in and everything is delivered to your phone, tablet, or desktop.

Please take a moment to visit www.TheTechnicalTraders.com to learn more.  I can’t say it any better than this…  I want to help you create success while helping you protect and preserve your wealth – it’s that simple.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

The Next Big Breakout Trade: Large Cap Gold Stocks

This technical analysis video I put together has a lot of great trading opportunities in it while providing a lot of educational content to help you see the markets and trade in a way that will reduce your risk/exposure when needed.

I use my BAN trading strategy which is I focus on the Best Asset Now and only trade the sector, index, or commodity that has the least risk and most upside potential at the current moment.

I won’t lie, im super picky and conservative so trades are few and far between but as a swing trader, or any trader for that matter, the quality of a trade alert trumps quantity. Watch this video below and see what I provide my subscribers every morning before the opening bell. If you like it, then join us and become a technical trader today!

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

I have to toot my own horn here a little because subscribers and I had our trading accounts close at a new high watermark for our accounts. We not only exited the equities market as it started to roll over, but we profited from the sell-off in a very controlled way, and yesterday we locked in more profits with our SPY ETF trade on this bounce.

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

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

AI Trading System Using Fibonacci Theory Forecasts Future Gold, Silver & Stock prices – Part IV

As we’ve attempted to illustrate the intuitive nature of the Adaptive Fibonacci Price Modeling system we as one of the tools to help us understand the markets and price setups, we now want to more clearly illustrate other components of the current global economic environment.  We want to illustrate just how deep the current price move resonates against historical price norms.

In Part I of this article, we highlighted the Fibonacci system running on the ES (S&P 500) charts.  The point of this example was to show that a new price low had already been established and a recent new price high (the all-time high peak) was now acting as a critical price peak.  This suggests we are in the process of establishing a much deeper price low (bottom) that may come over the next few weeks as price attempts to “revalue” current economic expectations.

In Part II of this article, we highlighted the Fibonacci Price Theory concepts and attempted to teach you how to identify major and minor Fibonacci price pivot points.  This was done to help you understand what we are attempting to share with you and to help you learn to use these techniques in the future.  The conclusion of that, Part II, shared our expectations that a new, deeper low, would likely set up in the ES and NQ markets as price attempts to establish a future bottom setup.

In Part III of this article, we shared with you the NQ (Nasdaq) Fibonacci price analysis which was similar to the ES charts.  We are attempting to share with you the reality that price will setup intermediate high and low price pivots over time.  But we are really trying to explain how the major price pivots have now set up as a massive warning that a deeper low may be targeted as long as price fails to recover to levels near the all-time highs.  As “obvious” as that may seem to you now, many traders are already entering the markets expecting a recovery similar to May 2018 or January 2019 to begin.  We urge you to reconsider the scope of this disruption of the global economy.

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

WEEKLY CHART OF OUR CUSTOM SMART CASH INDEX

The first chart we want to share with you is a Weekly chart of our Custom Smart Cash Index.  This chart clearly illustrates just how destructive the recent collapse in the global economy has been.  Previous downside price rotations (Feb 2018 & October~December 2018) prompted downside price moves that stayed within the upward sloping price channel established from the 2015~2016 price range setup.

We believe this new downside price cycle will establish a new support channel for future price growth that may include a transition away from traditional economic measures.  Essentially, a “new normal” related to debt and economic expectations.

We believe this COVID-19 virus event may be unwinding a large portion of capital appreciation that originated back in 2000~2002 – after the DOT COM and 9/11 Terrorist attacks in NY.  Since that time, the US Fed and global central banks have engaged in a series of QE experiments designed to spark economic activity.  We believe the core element of the current COVID-19 economic contagion is not related to the central bank’s inability to print more money to throw at the problems in the markets.  The problem exists that a healthy market must remove risky debt/credit issues and unhealthy deficits in order to sustain real forward growth opportunities.  See this ZeroHedge article for a clear example of what we are attempting to explain: www.zerohedge.com

Looking at some of the charts from the ZeroHedge article, it becomes clear that real economic growth (in relation to proper debt expansion and economic function) likely completed a transitional cycle end near 1999~2002.  This came after the US Fed reached peak interest rate levels in the early 1980s and began a deficit spending binge that continues till today.  As credit/debt became the new norm, we can see how the expansion of credit created a broader expansion of capital valuation levels (global stock market prices) and provided for an expansion of derivatives and global shadow banking operations.  Debt begot more debt/credit – which begot more debt/credit.  And the cycle continues until it breaks.

(Source: https://www.zerohedge.com/markets/debt-chasm-just-too-big-fed-fill)

We believe the unwinding process of the global credit market is really just beginning.  The COVID-19 virus event was just the catalyst for this event.  The virus event prompted a collapse in the global economy because of the global economic shutdown that took place to prevent the spread of the virus.  This shutdown strained the global economic/credit market and continues to do so today, by exposing many at-risk companies and business enterprises that were operating on the “fringe” – that space where lack of consumer engagement creates a void in income while debt levels continue to plague future operations.  We believe this process of UN-leveraging debt will continue until the markets decide a suitable amount of risk has been removed from the markets.  This is when global economic expansion and growth will begin to take hold.

WEEKLY CUSTOM VOLATILITY INDEX – DELEVERAGING IS THE NEW NORMAL

This Weekly Custom Volatility Index highlights the potential for a “new normal” range as the recent deep low levels on this chart suggests a “deleveraging” process is currently taking place.  Even as the US Fed and global central banks pour trillions into the markets, this Custom Volatility Index continues to suggest deleveraging is still ongoing throughout the global markets.  Our research team believes the US Fed and global central banks are simply sucking up the immediate risk “froth” in the global markets while the “real meat” of the issue still persists.

PRECIOUS METALS ANALYSIS POINTS TO HIGHER PRICES LONG TERM

This analysis leads us to Precious Metals – yes, we know, everyone is talking about Gold and Silver right now.  Yet, the real reason we are talking about Gold and Silver is because we believe the current economic environment will present an incredible (once in a lifetime) opportunity for skilled traders.  Once you truly understand the process that is taking place throughout the globe and how debt/credit expansion over the past 45+ years has propelled the capital markets to massive highs while the metals market has been ignored.

Recently, Gold has rallied to a 6+ year high and Silver is still trading near multi-year lows.  The reality is that the global stock market is about to experience a credit/debt revaluation event that is unlike anything we’ve seen since 1929 and/or WWII.  Precious metals are about to enter a phase that has never been experienced in recent history.  What happens to safe-havens throughout the process of a global market credit/debt crisis event?  What happens to metals as the global economy attempts to wash-away excessive debt, derivatives and shadow banking risks that have built up over the past 40+ years?

CONCLUDING THOUGHTS:

If we are correct and our Fibonacci price modeling systems are correct, a deeper price low in the global markets is about to set up that will attempt to force a “wash-out” event in the global credit/debt markets.  This process will likely send precious metals skyrocketing higher.  The unknowns of this process are the same unknowns that happened after 1929 & WWII – what will the new financial functions and societal structure be composed of?  Until that side of the future becomes more clear, expect a number of unknown factors to continue to drive excessive volatility and risk in the global markets.

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

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year. Visit my Active ETF Trading Newsletter.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

When To Get Aggressive With Your Portfolio And Gold Vs Gold Stocks

Chris Vermeulen, Founder of The Technical Traders joins Cory Fleck of Korelin Economics Report to discuss general strategies and market outlook for US stocks and precious metals. He argues that now is still the time to have a cash-heavy strategy.

As for Gold and gold stocks they are still in very different patterns. Gold continues to show strength and the stocks are doing well but still have yet to break out to get him excited.

Mr. Vermeulen has been a technical analysis and trader since 1997 and has been through a few bull/bear market cycles. He has a good pulse on the market and timing key turning points for short-term swing traders.

Visit his ETF Wealth Building Newsletter to follow him to success by riding his coattails while navigating these financial markets.

Chris Vermeulen
www.TheTechnicalTraders.com

Shipping Rates Plunge, Commodities and Stocks May Follow

An almost immediate reaction to the Coronavirus outbreak in China and throughout most of the world has sent shock-wave through the global markets – particularly seen in Shipping and Oil.  The actions within China to attempt to contain the virus spread include shutting down entire cities and setting up mass quarantine events.  It is estimated that as many as 8+ million people were quarantined within cities in China throughout the Chinese New Year.

Chinese President, Xi Jinping, warned recently that the Coronavirus, and the efforts to stop it, may greatly reduce the Chinese economy over the next few months.  The Chinese President urged top officials to refrain from “more restrictive measures” to contain the virus.  It is our opinion that more restrictive measures are essential to efforts to contain the spread of this virus and that further contraction in the Chinese economy, as well as other economies, are almost set in stone at this point.

Information we’ve received from some friends living in China and Hong Kong suggest travel is very restricted, face masks are very scarce, people are staying inside their homes and surviving as family units within very close contact with one another.  They are scared, trapped and unable to do anything other than try to wait this out.  Imagine what this is doing to the local economies, shops, offices, and businesses?

Reflectively, global shipping rates have collapsed over the past 30+ days as one of the first signs of the contraction in the global markets.  As of December 31, 2019, both Tanker and Dry-Bulk rates were hovering near $14,000 per day.  Now, this rate is near $2500 per day – a -82% decrease.  As you consider the broader aspects of this massive decrease in shipping rates, consider the global contagion event that may setup if the Belt-Road region is adversely hit with the Corona Virus.

Source: Bloomberg.com

SEA SHIPPING SECTOR ETF – DAILY CHART

Shipping stocks are taking a beating. Factories are shut down, the product is not being shipped, and even product ready to be shipped many don’t want to take delivery for the time being.

From a short term standpoint, this sector is looking oversold, but depending on how much the virus spreads we could see another 20% from the current price.

CHINA’S BELT-ROAD INFRASTRUCTURE PROJECTS

China’s Belt-Road Initiative consists of massive infrastructure, port, and other projects throughout Europe, Asia, India, Pakistan, Iran, Turkey, Russia, Africa, and other nations.  These projects have been initiated over the past 5+ years and are well underway.  We believe the spread of the Coronavirus may follow a path along with the Belt and Road projects and potentially infect a larger number of individuals over the next 30+ days than originally expected.  If this virus moves into the Middle East or Africa, containment may become very difficult.

The reality is that Shipping and Commodities could see a dramatic price decline as this virus outbreak continues over the next 60+ days.  Reports are already starting to hit the news wires that Autos and manufacturing supplies are starting to pile up and ports in China.  Without a functioning manufacturing sector and workers to keep everything running, China’s economy will grind to a halt very quickly.

This translates into lower Oil prices, lower raw material prices and higher metals prices.  A capital shift will continue to take place throughout the world where capital will move away from risky environments and towards more secure investment environments.  Thus, capital will move away from Asia, India, the Middle East and potentially Europe and towards the USA, Canada and possibly Mexico.  Everything depends on what happens over the next 60 to 90+ days with regards to this virus outbreak.

MONTHLY CRUDE OIL CHART

This Monthly Crude Oil chart shows how quickly Oil rotated lower in January 2020.  Currently, Oil is trading near $50 per barrel and may break lower towards the $44 to $46 price level before finding any real support.  Overall, our research team believes Oil may reach as low as $35 to $36 ppb before reaching a bottom.  You can read our earlier research here: https://www.thetechnicaltraders.com/oil-begins-to-move-lower-will-our-predictions-come-true.  Within that research post, dated November 19, 2019, we highlighted our earlier predictive modeling research from July 2019 suggesting Oil would break substantially lower in November 2019 and again in February 2020.  We predicted this downside move in Oil nearly 8+ before it happened.

Transportation Index Monthly Chart

This Transportation Index Monthly chart highlights the sideways FLAG formation setting up in the US Transportation sector.  If the US market breaks lower as a result of lower global economic activity, we believe we will see the Transportation Index fall very quickly to levels below $9,500.  A breakdown in the Transportation Index would be an early warning sign that the US economy is headed towards a recession or contraction event.  Global shipping has already confirmed this event is taking place – yet the US Transportation sector has not shown much weakness.

Traders need to be very aware of the risks in the markets and the continued Capital Shift that is taking place throughout the planet.  Capital is running away from risk and pouring into more stable markets.  The ultimate risks to the global economy are for those nations where debt/economy levels are fragile, to begin with – which is why we highlighted the Belt Road project.  If China enters a protective mode where the Chinese Central Bank attempts to bail out Chinese companies/initiatives, we believe the Belt Road project could become a great risk.  And we believe this could happen very quickly given the current market environment.

The dynamics of global markets are changing very quickly.  It is time for traders to prepare for bigger volatility and large range sector rotation.  Follow our research, learn how we can help you stay ahead of these bigger moves in the markets.  2020 is going to be a fantastic year for skilled traders – you just have to stay ahead of the risks and be prepared to take advantage of the opportunities as they are presented.

Join my Swing Trading ETF 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.

Is The Coronavirus Bullish For Stocks?

Earnings volatility has certainly been big.  Tesla pushed the markets much higher early this week and the US stock markets have continued the upward momentum after the State Of The Union address and the acquittal of President Trump on Wednesday.  Still, we continue to believe this rally may be a “fake-out” rally with respect to the fallout from the Wuhan virus.  Certainly, foreign investors are continuing to pour capital into the US stock market as the strength of the US Dollar and the strong US economy is drawing investment from all areas of the globe.

We believe the scope of this parabolic rally in the US stock market should actually concern skilled traders.  Markets just don’t go straight up for very long.  The last time this happened was in the 1970s and 1980s.  Very minor volatility during that time prompted a big move higher in the US stock market that set up the eventual DOT COM collapse.

Oil, Shipping, Transportation, Consumer, Manufacturing, and Retail will all take a hit because of the Wuhan virus.  We’ve, personally, received notices from certain suppliers that factory closures in China will greatly delay the fulfillment of orders.  Our opinion is that nations may have to close all or a majority of their cities, ports, and activities in Asia for at least 90+ days in order to allow this virus event to peak and subside.  We don’t see any other way to contain this other than to shut down entire cities and nations.

The US Fed and Central Banks are doing everything possible to continue the economic growth and stability of global economics.  Yet, the reality may suddenly set in that without risking a global virus contagion, nations may be forced to actually shut down all non-essential activities for well over 90+ days (possibly even longer).  If you could stop and consider what it would be like for half of the world, and many of the major manufacturing and supply hubs, to shut down for more than 3 to 6 months while a deadly virus is spreading.

Repo lending continues to show that liquidity is a problem.  We believe this problem could get much worse.  Skilled traders need to be prepared for a sudden and potentially violent change in the direction of the global stock markets.

$TNX – 10 YEAR US TREASURE YIELD DAILY CHART

30 YEAR TREASURY BOND PRICE – DAILY CHART

There is now a solid wall of inversions in all the treasury notes and bills.  The 10-year yield is inverted with 6-month and shorter durations.  The 30-year long bond dipped below 2.0% for the third time and is just 6 basis points from a record low.

Prepare to capitalize on this “crowd behavior” in the near future.  Right now, the US stock market is pushing higher as Q4 earnings drive future expectations.  Yet, be prepared for the reality of the situation going forward.

This Wuhan virus may present a very real “black swan” event.  At the moment, the US stock market appears to want to rally as earnings and economic data continues to impress investors.  Overall, the real risk to the markets is a broader global economic contagion related to the Wuhan virus and the potential it may have on foreign and regional economies.

Next week is going to be critical for many things I feel. Virus contagion growth, factory closures, Oil breakdown follow through, equities breakout follow through, and the precious metals pending move.

We locked more gains this week with one of our positions as we rebalance our portfolio holdings for these new big trends to emerge. If you want to know where the markets are moving each day and follow my trades then join my ETF Trading Newsletter.

Chris Vermeulen
www.TheTechnicalTraders.com

News and Emotions Aside, This Is Where Stocks and Metals Are Headed

If you follow the headline news, read multiple articles a day from different sources on the markets, and are human then you are likely underperforming the market in which you are trying to beat like gold, miners, the SP500 index or whatever it may be.

The information I talk about below and in this video should be a real eye opener for those have not seen technical analysis in action, just how clear the we can see what the stock market, bonds, metals, oil and more will do next. Even at a time like this when the markets are gyrating all over hte place from week to week, we can still gauge our risk and be a winner.

No matter where I go when someone asks me what I do for a living, the person asking has the same “Deer in the headlights” look on their face. I am a technical analyst and trade stocks and commodities for a living with zero external input other than what the price chart of an asset class has painted on the chart.

Most people have never heard of technical analysis for trading or investing, and those that have heard about it think its some type of VooDoo and holds little value. The reality is technical analysis outperforms most of those who trade based on news, earnings, economic data etc…

Why? because all those things are very random data points and unpredictable. If they are important big/smart/insider money has moved into position to take advantage of this before the information becomes public. This is why good news for stocks gets sold into once released for example.

I started trading stocks when I was 16 years old in high school and fall in love with reading charts. Now, 23 years later I have no doubt in my mind technical analysis and trading systems are the absolute best way to trade and invest for growth. Dont get me wrong I spent years digging through company perspectives, reports, press releases and a few years of doing that was almost enough to make me hate trading as it become more like a job and less profitable.

If you just want to cut to the point and know what and when to buy, take profits, and exit a position then technical analysis is what you seek!

HOW TO ANALYZE KEY MARKETS EVERY MORNING

The analysis presented below covers the SP500, Bond, Utilities, Gold, Silver, Oil, and even Bitcoin. This is the analysis I share very day before the opening bell to keep you up to date with current market trends, potentially explosive moves, and set you expectations so you do not become overly emotional and exit a trade early from fear, or excitement.

THIS HAPPENED LATER THAT SAME DAY – WASHOUT LOW

In the video above I talked about how the SP500 was setting critical support that day, and I did this before the opening bell at 9 am. We just take a look at what the market likes to do intraday with the price to shake traders out of their position and trigger their stop-loss orders just before a market reversal.

I live and die by these three rules for my technical trading

1. IDENTIFY TREND DIRECTION

Trends are more likely to continue then they are to reverse. Draw trend lines on the long-term and short-term charts.

2. FIND SUPPORT & RESISTANCE

Identify critical areas of support and resistance on the price charts. Calculate Fibonacci percent retracements, advancement levels, and other measured moves.

3. TIME CYCLES & SENTIMENT

Use cycle analysis, investor sentiment, volatility, panic selling, greed buying, and price patterns to form accurate price forecasts to use for trading. Opt-in to our free market trend forecast newsletter

REACHING THE CHARTS IS ONLY HALF THE EQUATION

Focus Just On The Charts and Ignore All Other Data/Opinions or else you’ll end up with analysis paralysis.

Traders contact me every day confused about which direction to trade. I can tell a couple things very quickly about their issues depending on how they state their problem or question, and its generally a simple fix, or answer that will get them back on track but analysis paralysis is one of the most common issues.

The second half the equation for trading success is a topic most traders turn a blind eye to because it seems confusing, and, or boring. Risk management is the key to long term success and a portfolio value that always goes up and to the right. Believe it or not, its super simple, takes seconds to figure out what position size you should take in any given stock or ETF trade.

In a future post, I am going to talk about how you can take half the financial risk while making 8x more profits. Stay Tuned!

Chris Vermeulen
www.TheTechnicalTraders.com

Fed Leaves Rates Unchanged – Gold & Stocks Rally/Dollar Falls

The Federal Reserve announced they were leaving rates unchanged on Wednesday, June 19.  The markets were expecting this or a quarter percent price decrease.  Initially, the markets reacted to the news by moving to the downside recently. The markets immediately reversed the upside rather dramatically showing that investors believed that that may move into an easy stance within a few months. The big movers after the bad news which we expected were in gold, silver, miners and the US dollar.  Subscribers locked in another 17.4% winning trade on this fed news while the US dollar rotated lower on Tuesday, June 18 prompting a further downside move after the bad news. It is very likely that the US dollar will move lower an attempt to retest support near 96.50.  A weakening US dollar will help to support the US stock market and precious metals prices.  Additionally, a weaker US dollar will help support trade, economic growth, employment, and GDP output.
We believe the US stock market is nearing upper resistance.  We still believe the US stock market will eventually attempt to move about the psychological levels of 3000 for the S&P, 30,000 for the Dow and 340 SPY.  This move to new all-time highs will likely result in a ”scouting party” type of price pattern where price attempts to identify new resistance, slightly above the psychological levels, then reverses back below these levels to retest support. Our continued belief that a large pennant/flag formation is unfolding has not changed. As technical analysts, we need to wait for the new price peak form before we can identify where the upper channel of the pennant/flag formation is trending. We would urge traders to be conscious that any outside move in the stock markets as a very limited upside potential from current levels. The SPY is trading at 293 and we believe upper resistance will be found slightly above 300. Thus, we really have about a $7 or $8 move to the upside from current levels – only about 3% to 4% more room to the upside.
The transportation index paints a very clear picture of price channels, support and resistance, and expected price rotation going forward. The current price channels indicate a high target area near 5250.  This upward channel range is still only 3% or 4% higher from current levels. After this peak level is reached the market should reverse downward attempting to retest support. We believe we are very close to a market top at this point and believe that the US stock market may attempt to move above the major psychological levels – as indicated above. There are a few items which could change our outlook currently. A.  Positive news regarding trade issues with China B.  Renewing or new central bank easing policies C.  Any type of dramatic positive economic news D.  China attempting to resolve banking issues by taking the problems and addressing them with capital/gold reserves. Ideally, there are quite a few opportunities for the stock market rally far beyond the psychological levels. Yet with only about 14 months to go before the US presidential elections and no indication that any of our four critical components for renewed price advance are anywhere close to being accomplished, we hold to the belief that the markets will complete the Pennant/Flag formation as we have originally been stating.
We urge traders to pay attention to precious metals and the US and foreign stock markets as we enter this critical phase of the market. We believe the US stock market will continue to rotate within the channels clearly on the transportation index chart.  We believe any excessive fear will become evident in the bond markets and precious metals well before the US stock market rotates lower. In our opinion, this is not the time to buy into technology or the US stock market expecting a massive breakout to the upside. We are urging our clients to be very cautious over the next 30 to 60 days and to trade with short profit targets in mind. There are a lot of moving components throughout the global economy and we are urging our members to be very aware of the larger patterns that are setting up. Our super cycle research has given us a very clear picture as to what to expect over the next 16 months or longer. 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 TWO 1oz Silver Rounds FREE 2-Year Subscription SUBSCRIBE TO MY TRADE ALERTS AND  GET YOUR FREE SILVER ROUNDS! Free Shipping! Chris Vermeulen

Fed May Trigger Wild Swing In Index and Metals

As our research team continues to pour over the charts and look for any signs of direction regarding tomorrow’s Fed news, we put together a couple the charts that may highlight some expectations and in at what the markets may do the rest of the week. The expectations that the US Federal Reserve may maintain rates at current levels or potentially drop rates by a quarter percent leaves an open interpretation as to how the global markets will digest this news. Obviously, leaving rates unchanged would be the most benign action the Fed could take. Often though, the markets interpret this as a sign of weakness. Whereas a quarter percent decrease in the US fed rates would suggest that the Fed is preparing for future economic weakness in the US and potential global economy, yet investors may consider this as a very bullish reaction to the Fed.
Our belief is that the Fed will leave rates unchanged and possibly hint at adjusting rates lower later this year or early next year in preparation for the US presidential elections. The US economy is still moderately strong and the recent trade deal with Mexico as well as policy advancement in DC leads us to believe the Fed has no reason to adjust rates right now. Of course, a quarter percent decrease would allow the Fed to spur additional economic growth and potentially jump-start the waning housing market in the US. This first chart of the YM, the Dow E-mini futures, highlights key price technical support and resistance that will likely come into play over the next 3 to 10 weeks. We ask you to pay special attention to the dual resistance levels above 26,500. These double resistance levels act as a double ceiling in regards to price advancement.  In other words, some type of strong price advance of 27,000 would have to take place in order for the price to move beyond these resistance areas. Should the Fed surprised the market and the market interpreted this move as strongly bullish, there is a moderate chance that the YM could advance beyond 27,000 before the end of this week or early next week.  We believe the Fed news tomorrow will be interpreted as a protectionist stance and the market made move lower from current highs.  Any big rotation lower after the Fed announcement tomorrow could prompt a new downside trend to retest our pennant/flag formation base near 25,000. Either way, our automated technical analysis prediction software will keep or get on the right side of the market.
Additionally, after the Fed announcement tomorrow, it is very likely that the US dollar may, under some pricing pressure and that precious metals could rocket hire and continue their advance towards $1450.  Any market reaction to the downside in the US stock market and/or the US dollar would likely push precious metals well above recent highs.  It all depends on how the market reacts to the US Fed announcement tomorrow, June 19.
We believe we have positioned our gold trades appropriately for the Fed news tomorrow.  Either way, we believe gold, precious metals, and the miners will advance after the Fed news tomorrow.  A close above $1375 in gold will prompt a very quick rallied towards $1440. We’ll continue to watch how the markets react to the Fed news tomorrow with the knowledge that precious metals and gold should advance either way as fear and greed drive the metals higher.  We’ll look for new trades near the end of next week after the Fed news shakes out the short term traders. There is nothing wrong with being on the right side of a profitable trade in precious metals and miners. If you want to trade profitably with us and fellow traders from in 87 other countries be sure to join our Wealth Building Newsletters Today! Chris Vermeulen www.TheTechnicalTraders.com

Investors are confident, bullish and buying stocks, but…

The Technical Traders Ltd has identified a unique price to volatility relationship between the SP500 and VIX index.  The calculations required to compute the VIX index are composed of a number of factors. That final value of the VIX index is reported on an annualized basis. This means that VIX index as already internalized the past 12 months price volatility into the current VIX levels. We believe this increased VIX volatility expectation could be muting future VIX spikes and trading systems focus on the VIX Index.  The fact that the VIX as likely to internalized that large October to December 2018 price rotation and will not move beyond this price range until well after April or May of 2020 creates a unique problem for VIX systems and analysts. In short, the VIX has normalized a 20% price volatility expectation, or more, and will not reduce this expectation until well after April or May of 2020. Taking a look at this weekly VIX chart clearly highlights the large 472% increase in January and February 2018.  The reason why the VIX increased by this incredible amount is that the prior 12 months price volatility was extremely muted.  The price rotation in the SPX was -343, for a total of -12%. The second VIX Spike between October and December of 2018 resulted in a 227% increase while price rotated more than 600 points, -20.61%, in the SPX. Obviously, the larger price movement in October through December 2018 would have likely resulted in a large VIX move if prior volatility expectations had remained the same. It is our belief that the January to February 2018 price volatility rotation increase the VIX volatility expectations by at least 30 to 40%. The second, much larger, price rotation during October to December 2018 pushed the VIX volatility expectations higher by at least 10 to 15%. Our researchers believe the normalized VIX levels representing current price volatility are likely to stay above 12 or 13 until well after November or December 2019 if price volatility and expectations stay rather muted. Any additional large price rotations, to the downside, will likely continue to normalize or internalize increased VIX level volatility expectations.
This SPX chart helps to compare the relative VIX price increases in relation to the true SPX price volatility. We’ve also drawn a 12-month price window, as a red box on this chart, to highlight how the VIX attempts to normalize the past 12 months volatility going forward. It is our belief that a move above 500 to 600 points in the SPX may only prompt a rally in the VIX to near 28 to 30. Whereas, the same price swing from October to December 2018 prompted a VIX move to about 36. We would need to see the SPX move at least 900 points before the VIX will spike above 25 again.  Remember after January or February of 2020 the VIX may begin to contract again as price volatility stays muted for the rest of this year.
We currently believe a large price rotation may be set up for near the end of 2019. Our proprietary cycle modeling systems and extended research are suggesting this downside move may begin sometime near August or September of 2019. Remember, this new VIX research suggests that any large price downswing may result in a very moderate VIX price increase at first. In other words, things could get very interesting towards the end of 2019 for traders. Please take a minute to visit www.TheTechnicalTraders.com and see how we have been navigating, trading and profiting from the market over the past 17 months, I think you will be pleasantly surprised. Our research team believes the US stock market will likely form an extended pennant formation over the next 60+ days.  Now is the time for us to plan and prepare for what may become a very volatile second half of 2019 and early 2020.

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Chris Vermeulen