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Is This A Bear Market When Stocks Crash 20% and Bonds Spike 30%

It is another blood bath in the markets with everything down, including TLT (bonds) and gold. Safe havens falling with stocks is not a good sign as people are not comfortable owning anything, even the safe havens, and this to me is a very bearish sign.

Now, with that said, this is one day one of this type of price action and one day does not constitute a new trend or change the game, but if we start seeing more of this happen, we could be on the verge of the bear market we have all been expecting to show it ugly face.

The SP500 (SPY) is down 19.5% from the all-time high we saw just three weeks ago, and the general bias for most people is once the market is down 20% that is a new bear market. I can’t entirely agree with that general rule. Still, a lot of damage is happening to the charts. If price lingers down here or trades sideways for a few months I will see it as a new bear market consolidation before it heads lower, and we start what could be very deep market selloff and test 2100 on the SP500 index (SPY $210) for the next leg down looking forward several months.

20% STOCK MARKET CORRECTION ARE NOT BEARISH

Just because the markets have a deep correction of 20% does not mean its game over for stocks. Just take a look at the chart below on what happened the last time the market corrected 20%. As you can see, they were the biggest and best investor opportunities over the past 12 years. Today, my friend called and said they heard on the news that we are now officially in a bear market, and what should he do?

20% CORRECTIONS CAN TURN INTO A BEAR MARKET – BE READY

The SP500 fell 20% in 2001 and again from the 2007 high its lows, then bounce 10% – 14 over the next few months before rolling over to start its first bear market leg. I feel something similar will happen this time, which would put us a few months before the price should test these lows again and breakdown to give us optimal time to reposition our long term portfolio.

Once we do start a bear market, you will notice price moves very differently from what we have experienced over the past 12 years. How you trade now likely will be a struggle to make money. If you try to trade bonds, they are relatively tricky because of how they move during a bear market. The stock market can fall for a year, and bonds are still trading at or below the price they were when the bear market started. This different price action is what happened in 2001-2002, and again in 2008.

BONDS GO BALLISTIC

Bonds also take on the price action similar to how the VIX trades with violent price spikes only to fade back down again quickly, and this generally happens near the end of a bear market, or extreme selloff like we are in now. Heck bonds (TLT) jumped 30% just in the past few weeks, we caught it, but most traders missed this move. You need to understanding market sentiment and how to trade bear market type price action because that is how the market is moving this week, and trading/chart patterns become more sentiment-driven than logical trading setups and trades become counterintuitive.

I also traded GDXJ for a 9.5% gain and closed that position at open for the high tick with my followers, and we didn’t follow my proven trading rules for price targets, trailing stops, and reading the market sentiment we could be down over 30% today which I know many traders are simply because they lack control of their trading (no defined rules, fall in love with positions). I’ll be doing a detailed gold and gold miners article so stay tuned!

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

CONCLUDING THOUGHTS:

I share this analysis, not to scare you, but let you know where we stand. The stock market is treading on thin ice, and if/when it breaks down, a new bear market will have started. Remember, we are still in a bull market, but the coronavirus is stopping businesses, which means earnings will be poor, and that is why stocks are falling. Investors know stocks are worth less money if they make less money; it is that simple.

The type of market condition I think we have entered could be here for a while, a year or three, and it’s going to be a traders market, which means you must have a trading strategy, plan your trades, and trade your plan. It’s amazing how simple a few trading rules are written down on paper can save you thousands of dollars a year from locking in gains, or cutting losses. I have this mini trading strategy mastery course if you want to take control of your trades and override your emotional issues. It’s easy to hold winners until they turn into losers, taking to large of a position, or maybe you have masted the art of buying high and selling low repeatedly? Yikes! It happens to most traders, and it can easily be overcome with a logical game plan I cover in the crash course, pun intended 🙂

Someone yesterday I spoke with said that in the USA alone already had 10,000 people die just from common influenza, yet here we are freaking out over 17 dead in the USA. Sure, its bad news, but the common sicknesses for older citizens makes coronavirus seems a little blown out of proportion. There are conspiracy theories out there and this could be bioweapon which is scary and I am no expert in this field but my sources are not concerned with the Conornavirus. I want to think a cure gets found soon, and if so, the markets will rebound with a vengeance, and we can relax.

In short, if you have lost money with your trading account this year, holding some big losing trades that were big winners just a couple of weeks ago, I think it’s worth joining my trading newsletter so you can stay on top of the markets. I take the loud, emotional, and complex market and deliver simple common sense commentary and a couple of winning trades each month.

My trading is nothing extreme or crazy exciting because I’m not an adrenaline trading junky. I only want to grow my entire portfolio 2-4% a month with a couple of conservative ETF trades and make a 22%-48% return on my capital without the stress of being caught up in this type of market and feeling like I always need to be in a trade.

Happy Trading!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

TLT Trade of the Year and What Is Next!

We just closed out our TLT position, which opened up 20.07% from our entry price, amazing. Who said bonds are dull and boring? haha

Only three times since 2008 have I seen bonds rally more than 20% from a new swing trade entry. Each time the move was short-lived, and the price collapsed after it within a few weeks. My goal is not to try and time tops and bottoms for the best entry and exit level. That is a gambler/losing strategy. Sure it pays big if you luck out and nail the timing, but they are few and far between, and the losses from trying will eat up any previous gain.

What I do is follow the price using my proven technical trading experience and tools, which I have acquired since 1997 and then apply position management to limit risk. I then use my trading systems for statistical analysis, so I know the odds for trade are favorable to win and also to pinpoint profit taking levels just like today’s TLT position closure.

Sure, TLT could pop and rally another 5-10%, but its highly unlikely, and it’s fear/volatility driven, so any spike higher from here is likely to drop straight back down shortly after. We got the low-risk easy money portion of the trade, and we are back in cash while everyone today is freaking out and losing money and piling into bonds because of fear, which is likely a top for the price of bonds for a while.

The bottom line, we avoided the stock market crash. We will not be trading inverse ETFs on the stock market until we enter a bear market. Until then, we avoid market corrections by moving to cash, then into bonds just like we have done with TLT. The SP500 is down 14% from the high a few weeks ago, and our TLT bond position is up 20% as of today.

We also made some good money on GDXJ for those who follow our trading strategy and position management. The last couple of weeks has been a tremendous learning experience, in my opinion. The recent price action amplifies how critical position management is (targets, stops) are for our long term trading success. No one knows where the price will ultimately move to or reverse, but through the use of technical analysis and our trading systems, we can consistently pull money out of the market each year.

Yes, we will have small losing trades from time to time like SSO, and UNG but when we do take a loss, they don’t cause much damage to our overall account because of our position sizing and stop levels. I was once told by my trading mentor in 2001 that you should be proud of yourself for taking a loss.

Taking a loss (closing a losing trade) means you are following rules, managing risk, and that you can accept your timing for the trade was wrong. That has stuck with me and pops into my head every time I have to bite the bullet and close out a losing trade.

The stock market is down 9.5% for the year as of today, our account is positive and making money, not many can say that right now. The Power of Technical Analysis!

Remember, successful trading is not about having a bunch of positions you have open, and thinking you always need to own something. It’s about limiting/avoided risk when the odds are unfavorable, and getting back into the market when they do become favorable. Cash is a position and sometimes its the best and only position to be in like right now.

Thanks, everyone, for the kind and uplifting emails, it really is amazing to navigate the market like this with all of you.

HAPPY MEMBERS MAKING MONEY!

Hi Chris, Many thanks for your sterling work. The beauty of your work is that you cover all asset classes to identify setups. One key lesson we learnt is to trust the bond market more than the equities market when the trend between the two asset classes diverges. 
Regards, Yusuf

Hi Chris,
I just wanted to send a quick note to tell you how impressed I am with your service and your trading system.  I’ve followed/subscribed to several folks over the past several years and have never seen anything like what you provide. Your timely and accurate technical analysis of the major markets is incredible and perfectly aligns with my preferred swing trading approach. My favorite part of the day is watching (and learning from) your morning videos. And to know that my account is steadily increasing in the face of utter market panic is invaluable.


Thanks so much for all you do!

Ryan M.

If you want to become part of an exquisite trading newsletter where you can learn to reach the charts, spot trades, profit targets, stops, and be force-fed winning trades like this TLT trade, and our GDXJ trade then join my Wealth Building Trading Newsletter Today!

Click Here: https://www.thetechnicaltraders.com/#pricing  

Chris Vermeulen
Chief Market Strategist
Technical Traders Ltd.

Today’s World Rests on an Empire of Debt

Here is a great video that shares the brutal truth and issues taking place today with the financial markets. Obama and Fed Chairwoman Agree as shown on video…

Obama and Fed Chairwoman Agree as shown in video…

Fast track video START AT 4:22 time where Mike shares his insights.

You can get on this special email list to learn more and to profit from this turmoil – Click Here

FAST TRACK VIDEO START AT 4:22 TIME

Get Stock & ETF Trading Signals, and Long-term Investment Portfolio Strategy
Start Profiting And Be Protected – Click Here

The New Retirement – Big Pill To Swallow!

President Donald J. Trump was elected the 45th President of the United States to preside over the largest debt collapse ever in U.S. history.  During this four-year term, he and his administration will be most feared and hated president there ever was. The odds are stacked high against his ideology of “Making America Great Again” during his term in office.

 

Debt deflation is a concept that was first introduced in 1933 by the economist Irving Fisher.  Debt deflation is a concept whereby the combination of high levels of debt and falling prices cause a downward spiral in the economy.  When there is deflation in an economy, those who are in debt become significantly worse off financially. Deflation causes prices and wages to fall and the value of money to rise which increases the real value of debts thereby causing it to become more difficult for people to pay off their debts, i.e.: people holding mortgages would be forced into selling their homes. However, the selling of assets only served to worsen the situation by causing prices to fall even further – creating more deflation. This affects all those people who are in debt and the cycle repeats itself exponentially. Hence, the beginning of the “Next Great Reset of 2017-2020” which should start June/July of this year.

As many Americans enter retirement, they are realizing one unfortunate fact.  The fact is that the new retirement plan means no retirement, at all, and is called the Retirement Myth.

One of the promises of the American Dream was the idea of a comfortable retirement, however, this will NOT materialize due to financial swindling and a real estate bubble. Most Americans have incurred massive debt and have consumed their future nest egg by making purchases beyond their budgets and are living beyond their means.  We are now left with over 75,000,000 ‘baby boomers’ which a large portion of them are entering retirement with very little and/or no savings. DEBT has enslaved them!

The stock market collapse of 2008 resulted from a class of “subprime mortgage bonds” going into default. Today, the triggers for our financial crisis in the U.S. are still there to cause a hiccup in a Treasury bond auction, trouble in the settlements of derivatives contracts held by major banks or default on leveraged finance loans or high-yield junk bonds. Apparently, we cannot live without debt as it has become the American Way! Your next pension check or social security check could soon be cut back or eliminated altogether, regardless of legal government guarantees. A loss such as this could be both debilitating and devastating for retirees. Global Central Banks have destroyed the financial markets.

Timing Is Everything!

The next BIG TRADE is here. You should take advantage of my hard work and expertise to help make you wealthy. Protect your financial future by tuning in every morning for my current video update on all asset classes and new trade set ups. Your future should involve a proven strategy. We have just entered a new TGAOG commodity trade which looks to be nearing its’ multi-year lows and is forming a bottoming pattern. You want to be in the next trade of the Next Hot Sector setup!

Followers of my work locked in 112% profit this week in a swing trade with NUGT, and another 7.7% in 24 hours with ERX, which we are still long a portion and expecting further gains. All the trades are based on my Momentum Reversal Method (MRM) trading system.  There are two key components of this trading strategy.
apttrrades 

You will receive NEW explosive trade setups Every Week!

Stocks & 3x ETF Trading – www.ActiveTradingPartners.com
Daily Video Analysis & ETF Signals – www.TheGoldAndOilGuy.com

Chris Vermeulen

Can New President Make Things Better for the People?

Where is this economic boom that Former President Obama and his administration had taken so much credit for?

 

The Obama Administration, with the assistance of the Federal Reserve and Company, deliberately kept the U.S. economy from creating any growth at all.  The money that flowed from the Federal Reserve, over the last 8 years, had a direct pipeline that flowed only into Wall Street Investment Banks. The American people were sold this false bill of sale that “Quantitative Easing” was going to make lending money to “Main Street America” easier to access. They promised that there would be a boost in hiring which would, in turn, increase aggregate demand and thereby reflect a newly stimulated economic growth!

 

This QE effectively down-sized the middle class into minority status.  The largest growth has occurred within the low-income category.  Despite the stock market reaching near all-time highs and real estate bubbling over once again, there are now 45 million Americans on food stamps.  This number is at an all-time high.  People are feeling poorer today than ever, and with sky rocketing real-estate prices those who do not own a home cannot afford to buy anymore!

 

This Weeks Sector ETF Ready To Rally – Click Here

This massive disconnect is expanding exponentially. The velocity of money is the number of times that currency is turned over to purchase domestically- produced goods and services.  One can see, as in the chart below, that the velocity of money has been steadily decreasing.  There are less transactions occurring by individuals in our economy.  One can see that the money never reached “Main Street America” which is why there has not been any demand for goods and services.

 

fred

 

The average American is now barley scraping by and many do a lot of their shopping at dollar stores. Most the growth in the job market is in low wage jobs which have zero benefits! The clear majority of Americans have bought into the propaganda promoted by the controlled media outlets.

 

The masses bought into this propaganda as Wall Streets’ big banks kept artificially inflating the equity markets with free and cheap money, which was at the expense of U.S. taxpayers.

 

The Obama Machinery put on a stellar performance for the American people, however, this was a fictitious story. In fact, the real number, as of January 2017, of unemployed Americans currently stands at 22.9%: (http://www.shadowstats.com/alternate_data/unemployment-charts). The big gains have been largely allocated to the well-connected financial sector.

 

Corporations took advantage of low interest rates to buy back stock in their own companies. Since 2008, corporate stock buybacks have surpassed $2.2 trillion. These buy backs have only increased the price of corporate stocks and made their companies appear more valuable than they are. This means that stock prices are far above what they would be if it were not for extremely low interest rates.  The politicians believed that it was more important to create a false front and to continue the illusion so that they would remain in power.

 

The Tax Foundation reports that 60% of the population now receives more in government benefits than what they pay in taxes. What does this say about a society in which more than half of the population are living at the expense of the other half?  Currently, what is even worse is that the dependent class is steadily growing. The 60% will soon become 70%.

 

Representative Paul Ryan of Wisconsin, recently stated that “more people have a stake in the welfare state than in free enterprise. This is a road that Hayek perfectly described as the road to serfdom”: (https://en.wikipedia.org/wiki/The_Road_to_Serfdom). (http://www.economist.com/blogs/freeexchange/2014/03/keynes-and-hayek). (https://mises.org/library/road-serfdom-0).

 

Mr. Hayek stated that “Capitalism is the only system of economics compatible with human dignity, prosperity, and liberty. To the extent, we move away from that system, we empower the worst people in society to manage what they do not understand”.

 

On March 23rd, 2009, the then Treasury Secretary, Tim Geithner sent the stock markets soaring. He announced a plan to help banks unload illiquid securities of uncertain worth from its’ balance sheets. The Wall Street headlines read “Toxic-Asset Plan Sends Stocks Soaring”. Federal Reserve Chairman Ben Bernanke implemented “financial engineering” (https://en.wikipedia.org/wiki/Financial_engineering)  as the sole solution to all our financial problems.

 

He was publicly opposed to the nationalization (https://en.wikipedia.org/wiki/Nationalization) of banks and said “the bookkeeping problems of many banks are largely an artifact of foolish federal regulations. Capital standards, accounting rules and other regulations have made the financial sector excessively procyclical.”  As we are presently realizing, government control over the financial markets and the economy have failed us.  What we needed was the Federal Government to focus on job creation and to restructure our economy for new and future growth.

 

They were laser focused on merely bailing out Wall Streets’ big banks.  In my view, the Federal Government should only be focused on its’ constitutional responsibilities. Keeping the free markets out of their control and protection and serving the American people should be their primary goal.

 

They needed to allow deflation to play out its’ cyclical role. However, it turned out worse as they attempted to control it. Federal Government bailouts resulted in financial enslavement.  There was further unequal distribution of wealth in our society. Today, in 2017, I clearly see the implosion of America, as we once lived and knew it to be.

 

The economy was being run on non-to low growth policies intentionally.  President Obama deliberately took the path of doing absolutely nothing.  He did not want to be accountable for any economic growth most likely because a stock market crash would ensue. That would have placed pressure on wages that would cause inflation at which time the Federal Reserve would be forced to raise interest rates.  If this had occurred, all the free money which Wall Street investment banks received would not have been invested in the equity markets.

 

The GDP Annual Growth Rate in the United States merely expanded by 1.90% in the fourth quarter of 2016, over the same quarter of the previous year. A record low of -4.10% was reported in the second quarter of 2009.

 

fred2

 

They purchased their own shares back which sent stocks higher into unchartered territory. The way that they played the game was to keep inflation at bay and allow us to wallow in a deflationary contracting economy.  As stock prices rallied upwards, the corporate executives continued to receive heavy compensation on cheap cash being provided to them.  In the term that Chairwoman Yellen resides over, she has only increased interest rates twice by a mere marginal 25 basis points.  This was an immaterial rate hike so as the Federal Reserve could maintain their credibility. Increasing interest rates would have killed this game of “cheap money” which kept the wealth flowing into the top 1 percent.  The Federal Reserves’ decision to not raise interest rates during their last meeting (http://money.cnn.com/2017/02/01/news/economy/federal-reserve-january-meeting/index.html)  sends a clear and powerful message that they do not want to go down the path of normalization (http://www.discovery.org/a/23721) . They want to continue to artificially suppress interest rates. If they had attempted to “normalize”, it would create massive assets and derivative bubbles bursting domestically and globally. Either the bubble will burst or we will return to inflation.

 

President Trump wants to create the growth which former President Obama never accomplished. He is proposing tax cuts, introducing fiscal stimulus and removing all the red tape that has been so costly for small businesses to implement.  He has also promised to lift GDP to 4% by spending $1 trillion to rebuild America’s infrastructure.  This will overheat the economy!  Trying to implement his plans will call for deep cutbacks in Medicare and Social Security.  It will take years to forge ahead with legislative approval.

 

Conclusion:

Where is this economic recovery that supposedly happened?   It exists in the stock market at present as the masses are enduring a poorer quality of life!

 

Our subscribers are currently in a swing trade with NUGT (http://www.etf.com/NUGT)  which is up 95.8% currently and we are expecting further gains going into this week. All the trades are based on our Momentum Reversal Method (MRM) trading system. The strength of the precious metals will continue to drive gains for our NUGT position.  Expect some very interesting and exciting new trades this week.  We are getting ready for some very explosive moves.

 

Chris Vermeulen
Co-Author: John Winston
www.ActiveTradingPartners.com