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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

Broad Market Sector Rotation Starts In 60+ Days – Part I

We have been writing about the strong potential for a deeper market rotation in the US and global markets for well over 60+ days.  In fact, our researchers predicted an August 2019 breakdown date based on Super-Cycle patterns that, eventually, pushed into 2020 as the US/China trade negotiations and other global news kept global markets in a low volatility bullish trend throughout the end of 2019.

We’ve highlighted some of our research posts over the past 30+ days to help illustrate the technical and price patterns that our research team has identified and shared.

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

December 16, 2019: CURRENT EQUITIES RALLY SIMILARITIES TO 1999

December 2, 2019: NEW PREDICTED TRENDS FOR SPX, GOLD, OIL NAT GAS

Technical Analysis is based on the premise that price reflects all news and expectations the instant that news or data is known.  A common term in Technical Analysis is “Bias”.  This is when the price trend is substantially more Bullish or Bearish by nature or expectation.  Bias occurs when investing conditions mostly eliminate risk (for the Bullish side) and opportunity (for the Bearish side).  When traders feel they can enter trades without any real risks (trading Long) or when they feel there is no opportunity for the markets to rally (trading Short), then a BIAS exists in the markets.

When the global markets rotate and volatility extends to much higher levels, the markets change from a “Biased Trend” to what Technical Analysts call “True Price Exploration”.  When this happens, price begins to operate under the price principles of Gann, Fibonacci and Elliot Wave theories where price attempts to rotate to new lows or highs in an attempt to “seek out” clear support and resistance levels before establishing a new longer-term “Biased trend”.

We believe the global markets are about to enter a very volatile period of sector rotation.  Certain sectors may see a much deeper price exploration than others.  For example, consumer product manufacturers focused on US and European markets may see very limited risks compared to the Industrial Supply sector where a global economic slowdown could really hurt their future expectations.

These two Market Sector Maps (source www.Finviz.com) highlight the change in the direction and scope of these changes over the past week and the past 30 days.

THIS FIRST SECTOR MAP IS A 1 WEEK SECTOR MAP

THIS SECOND SECTOR MAP IS A 1 MONTH SECTOR MAP

Pay very close attention to the sectors that were moderately or strongly weak in the 1-month chart and continue to weaken in the 1-week chart (Financial, Property, Telecommunications, Telecom Services, Healthcare, Biotech, Basic Materials, Industrial Goods, Lodging, Resorts, Travel, Hospitality, Food, Packaging, Textile.  The list is rather impressive and it suggests this Coronavirus has somewhat panicked the markets and consumers.  Yes, many of these consumers will continue to go out for food, entertainment, and other essentials – but what if 15% to 25% of them cut back on these activities and decide to stay home more often and watch movies or play games?

I remember in 1990 when Desert Storm started.  Just before this war started, the US economy was clicking right along.  I remember that within 10 days of the war starting, things started to change on the roadways and markets.  I also noticed a change in consumer spending with a friend’s computer gaming distribution company.  All of a sudden, consumers slowed their external purchasing activities and focused more on protectionist activities.  We believe this same type of event is going to quickly unfold within the US and other nations as this Corona Virus extends over the next 30+ days.

This is why I believe the volatility of price and market sector rotation will continue for at least 60+ days as the globe attempts to contain and eliminate the risks associated with this virus.  We understand the risks in the US and Canada are very small at the moment, but that has not stopped shoppers from emptying the shelves at the local hardware and pharmacy stores for “surgical masks” and supplies.  Trust us, people are already well into the protectionist-mode and are preparing for what may happen over the next 30+ days.

This creates an opportunity for technical investors and traders.  This potential for deeper price rotations and extended opportunities resulting from an end of bias volatile price exploration allows us to target very quick and exciting trades.

In part II of this research post, we’ll highlight three specific sectors we believe are poised for great trade setups as a result of the volatility and rotation in the global markets.  Join us in our quest to create incredible profits from these bigger trends – visit www.TheTechnicalTraders.com today.

Chris Vermeulen

Corona Virus and Manufacturing Shutdowns Will Affect Companies

A technical trader talks about this week’s large price swings, Coronavirus, and how to trade this volatility.


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The Wuhan Wipeout – Could It Happen?

News is traveling fast about the Corona Virus that originated in Wuhan, China.  2744 cases and 80 deaths confirmed globally according to Bloomberg and the National Health Commission.

In most of Asia, the Chinese New Year is already in full swing.  Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.  Millions of people have already traveled hundreds of thousands of miles to visit family throughout this massive celebration.  We are certain that hundreds or thousands have traveled to all parts of the world by now.  The potential for exponential growth in the threat from this virus could be just days or weeks away.

Far too many people are too young to have any knowledge of the 1855 Third Plague Pandemic that originated in China.  This outbreak quickly spread to India and Hong Kong and claimed 15 million victims.  It lasted until the 1960s when active cases of the Plague dropped below a couple hundred.

If we consider the broader scope of this issue, we have to take into consideration the results it may have on the broader global economy, commodities and consumer activity as skilled traders.

The world is much bigger than it was in 1855.  We have more technology, more capability and faster response capabilities related to this potential pandemic.  Yet, we also have a much greater heightened inter-connected global economy, currency, and commodity markets.  What happened in China can, and may, result in some crisis events throughout the planet.  It is not the same world as it was in 1855. (Source: history.com)

It is far too early to speculate on any future economic outcomes related to this potential outbreak, but it is fairly certain that China, most of Asia, India and potentially Africa could see extensive economic damage related to a contraction in consumer and industrial economic demand as a consequence of this outbreak.  Once the Chinese New Year ends, in about 10 to 15+ days, people will return back to their home cities and we’ll begin to understand the total scope of this problem.  If the problem continues to be isolated in China, Asia and within that general region, then we may see economic consequences isolated to these regions.  If not, then we could see a much bigger and broader global economic consequence setting up.

The 1855 Plague Pandemic lasted for nearly 100 years and wiped out 1.25% of the total global population.  This was at a time when there was limited transportation options and global economics was a much smaller component of the total global economy.  Everything is somewhat isolated at that time. In today’s world, a similar type of event could wipe our 1% to 5% of the total global population before we have any means to attempt to control it.

Bill Gates believes this outbreak could kill more than 30 million people within 6 months (Source: businessinsider.com)

It is time to get real about this and prepare for how the global markets will interpret this potential outbreak.

We’ve been warning that the market was “Rallying To A Peak” recently and believe this outbreak has changed the minds of traders.  This could the catalyst that breaks the bullish trend for quite a while.  Skilled traders will be trying to get ahead of this rotation in the markets and attempt to deleverage risk.  As retail traders, we should be doing the same thing – deleveraging risk, buying metals, trimming open long positions and hedging into inverted ETFs.

DAILY ES CHART

This Daily ES chart highlights a very real support level near 3050 that also aligns with the longer-term Moving Average.  A downside move like this would represent a -10 to -11% downside price reversion and take us back to December 2019 price levels.  It could happen very quickly.

TRANSPORTATION INDEX CHART

This Transportation Index chart highlights a potential downside price reversion of -11% to -12% – targeting the 9,750 level.  We’ve recently authored an article about the weakness in the Transportation Index and how we believe it could be setting up for a downward price move.  If a breakdown move like this happens in TRAN, it would suggest a massive contraction in the global economy is taking place.

DOW JONES (YM) DAILY CHART

This last YM chart highlights support near 28,000 which would be an immediate downside target if the Dow Jones Industrials revert lower.  And, again, this would put us back to December 2019 price levels.  If this 28,000 level is broken, then we start looking at levels closer to 26,000 (roughly -20%).

CONCLUDING THOUGHTS:

Right now, consider this situation as you are a captain of a ship sailing into a storm.  You can either prepare for it and navigate through it to the best of your ability or ignore the warnings and hope for the best.  It is far too early to panic at this point, but a certain degree of “preparation” is certainly in order.

We’ll know more in about 7+ days as we learn how far and how wide this problem has actually extended.  In the meantime, watch your investments.  Protect your assets.  Prepare for the storm.  Best case, you can always reposition your capital for clearer skies in a few weeks.

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 want winning ETF swing trade alerts every month? Then ride my coattails as I make money while others will struggle and lose money as the markets correct and become more volatile.

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.

Transportation Sector Crashed Hard and What it Means

The Transportation Index, a common measure of economic optimism or pessimism, collapsed very early in trading after the Martin Luther King holiday (January 20, 22020).  We found this very informative because a rotation like this suggests optimism may be waning by global investors and future expectations of growing economic activity may be reverting to more realistic expectations headed into a US election year on top of the US political circus.

When we take a look at these TRAN charts, below, pay very special attention to the historical upper range of price activity over the past 20+ months and you’ll see why we believe a top formation/setup near these current levels in the TRAN could be a very strong topping pattern for the US and Global markets.

DAILY TRANSPORTATION CHART

This Daily Transportation chart highlights the immediate rotation that is setting up a sideways price channel.  The range between 11,250 and 10,450 has established a moderately strong sideways price channel going back well over 3+ months in the Transportation Index.  The broader price channel, between 11,250 and 9,700, extends well over 8+ months.  Beyond that, we have a rotation going all the way back into 2018, between 11,600 and 8,650, that establishes a very broad sideways price channel.

The Transportation Index has been trading within this sideways price channel over the past 20+ months as global investors attempt to determine the future expectations for the US and global economies.  If global investors believe the economy will accelerate as consumers become more active, then the Transportation Index will rise above the 11,800 level on an upside breakout move.  If global investors believe the US and global economies will contract before experiencing any further advance, then the Transportation Index will likely fall to levels below 10,400 – possibly lower.

The recent downside rotation in the TRAN suggests global investors and skilled traders are not expecting the economy to continue as it has over the past 6 to 12+ months – as the US stock market.  The melt-up in the US stock market was a result of global capital attempting to take advantage of a stronger US Dollar and continued price appreciation in the NASDAQ and various US stock sectors.  Even though the underlying economic data and fundamentals may not have changed, it was still advantageous for global investors/traders to play the “melt-up” because it provided the opportunity to gain on two fronts – US Dollar gains and US share price gains.

If this massive “capital shift” trade is unwinding, in part or in full, then we will start to see weakness in the Transportation Index and likely the Mid-Caps as global investors try to pull away from risks in the US stock market.  If the Transportation Index falls below 10,450, then we need to get ready for a potentially bigger downside price move across the global markets.

WEEKLY TRANSPORTATION CHART

This Weekly TRAN chart highlights our Adaptive Fibonacci price modeling system which has drawn the GREEN and RED “trigger levels” above and below the current price action.  It is doing this because the TRAN price action has not defined any real price trends recently – staying within the sideways price channel.  The price must either rally above 11,450 to begin a new bullish price trend or fall below 8,990 to initiate a new bearish price trend.  That means a downside price rotation may support a -2000 point decline from current levels before initiating a continued downside Bearish global market trend.

It is time to really start paying attention to what happens with the Transportation Index.  First, we have to watch the 10,400 level.  Then we have to watch the 9,700 level.  If both of those fail, then we have to watch the 8,990 level as the final “trigger level” for a new global market bearish trend. We are a long way away from that moment right now, but it appears the Transportation Index has started to revert back to the downside and we are alerting our friends and followers to be aware this rotation may be a very timely warning of a new global market top in the making.

UTILITY SECTOR WARNS OF BIG MONEY
IS EXITING THE MARKET

Utility stocks have been on fire ripping to the upside and they tend to lead precious metals and then bonds so I am starting to get excited for our portfolio.

We locked in 10% the 3rd quarter of our SSO position today, we still have 25% of that initial position left but our exposure to equities is now very small. All the other asset classes like high yield bonds, gold, and utilities are pointing to a correction in the stock market.

You can see which markets do well at various stages of risk in the market using our custom market gauge we have been developing. This is one of the new trading tools have been working on.

This gauge will automatically update live with the markets using all of our analyses. Its a really exciting new tool we plan to make available in the next 30 days for our subscribers.

BIG MONEY FLOW GAUGE
20-40 DAY MARKET PRICE CYCLE


TheTechnicalTraders.com Market Gauge

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

Shifting Undercurrents In The US Stock Market

Even as we write this post, the US Stock Market continues to push higher as global traders and investors pour capital into the continued US rally.  The strong US Dollar continued to attract capital from around the globe and with fresh earning about to hit from Q4 2019, investors are expecting another round of solid income and earnings growth.

Yet, underlying all of this is the undercurrent of shifting capital into safe-havens like precious metals, Cryptos, and under-valued foreign markets.  This shift started to happen late in Q4 2019 and accelerated early in 2019.

HYG – HIGH YIELD CORPORATE BONDS DAILY CHART

One of our favorite measures of extreme bullishness is the scope of capital/trend pouring into High Yield Corporate Bonds.  This chart below highlights the scale of the rallies that take place before a price reversion event.  You’ll notice that each rally in HYG is nearly identical in size – and that each rally is followed by a fairly deep price reversion event.

The likelihood of some surprise earnings collapse from Q4 2019 is somewhat muted.  Other than the retail sector reporting some missed earnings expectations related to Christmas 2019, generally most market sectors should report earnings and growth near an average 2% to 3% growth expectation annually.

Still, with Rhodium, Platinum and Palladium rallying extensively and Gold and Silver recently setting up an upside breakout pattern (see our recent Gold and Silver research), we believe undercurrents are already at play in the markets where skilled traders are preparing for a price reversion event – attempting to mitigate risk.

Over the past 20 years, the DOW JONES INDUSTRIAL has been positive in January by a ratio of 1.2:1.  In other words, the odds of a positive January for the DOW is near 60%.  The average upside price advance in January for the DOW is a little over 600 points.  As of right now, the DOW has advanced a bit over 525 points since the end of 2019.  We believe the undercurrent trends may result in a moderate price reversion event if our analysis is correct.

We’ll wait to see what happens with earnings data and other news, yet our proprietary technical price modeling systems are suggesting a reversion/rotation event should happen fairly early in 2020.

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.

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.

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

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.

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Chris Vermeulen
www.TheTechnicalTraders.com