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Q1 GDP Data Masking The True Global Economic Future?

As Q1 GDP data is released on Wednesday, April 29, which will reflect the first three months of 2020 in terms of total economic output, we believe the number will skew the current true global economic conditions to a large degree.  The pandemic shutdowns started in the US on March 15th – nearly 2 weeks before the end of Q1:2020.  Thus, we had a fairly normal Q1 in terms of economic activity, production, and consumer engagement. Everything changed after March 15th, 2020.

Skilled traders need to watch the current economic data and “week over week” data that is presented.  Skilled traders also need to pay attention to the news items that are being pushed out to the public.  Larger and larger corporations and sectors are moving towards bankruptcy or screaming for a bailout. Airlines, Hotels, Car Rental, and dozens of other sectors have all collapsed over the past 5+ weeks.  We expect real estate activity and pricing to collapse as well.  The results of the last 5+ weeks, after the March 15th shutdown started, have been anything but normal.

We continue to believe the current data and news, which is still representative of the Q1 (pre-shutdown) economic activity may lull investors/traders into believing the global economy will rebound fairly quickly from this virus event.  Traders/investors are looking at this current data and thinking, “well, this isn’t so bad”.  But they are failing to understand the true scope of the economic contraction event and what the longer-term outcome is likely to be in terms of recovery.

TOTAL WORLD GDP OUTPUT

The total world GDP output was approximately $190 trillion.  An estimated 15% to 20% global GDP contraction as a result of the Covid-19 virus event would shave $28.5 to $38.0 trillion right off the top of the 2020 global economic output.  Should the global shutdown last through the end of May 2020 (or beyond in some form), we believe the contraction in global GDP could become even more severe.

The complicated issues that arise from this global contraction in GDP also bleed over into supply-side economics.  As the world attempts to “shelter in place” to avoid spreading the virus and risking more lives, demand collapses. Once demand collapses enough (resulting in price level collapses as we’ve seen in Oil) the result in production/supply issues becomes even more complicated.  Unlike Eggs or Milk, one simply can’t bury or destroy other types of supply.  The destruction of certain industries, resources, and capabilities will become very real over time as a result of any extended contraction event.  The longer-term results of this type of event are sometimes called “stagflation” – where price levels rise as income and economic output stay moderately flat.

BEFORE WE CONTINUE, BE SURE TO OPT-IN TO MY FREE MARKET TREND SIGNALS SO YOU DON’T MISS OUR NEXT SPECIAL REPORT!

CUSTOM SMART STOCK MARKET INDEX

Our Custom Smart Cash Index highlights the “new price channel” that setup recently and why all traders/investors should really start to pay attention to how the global markets have transitioned into a new phase or price cycle.  You can see from the chart, below, that the global markets broke below an upward price channel that has been in place since 2012 recently and has established a new downward price channel spanning the December 2018 lows to the February 2020 highs.

We believe the current upward price trend on this chart is nothing more than a “bullish retracement in a bearish trend” and that the global markets will begin another downside price move within 5 to 10+ days.  As we’ve been trying to share with you over the past few weeks, the longer-term global economic disruption is just getting started.

US DOLLAR DAILY CHART

We believe the US Dollar will enter a new phase of increasing demand throughout the world as global economies begin to feel the pressures of the demand-side collapse.  We believe the US dollar is uniquely positioned to benefit from the global economic crisis simply because the US economy is the biggest and most capable economies on the planet in terms of the ability to recover from this virus event.  As foreign nations attempt to deal with weakening currencies and economies related to the collapse in demand and continued virus-related economic transitions, we believe the US economy will be one of the first global economies to regain any real growth over the next 2 to 3+ years.

Thus, we believe the US Dollar may attempt another quick downside valuation move, similar to what happened in February/March 2020, then rally to levels above 102 again as continued economic data hit the markets.  Remember, valuation levels of currencies are often based on future expectations of economic stability and capability for any nation.  The US Dollar is a bit different because it is also the “currency of choice” in terms of global economic activity.  We believe the US Dollar could begin a moderate “melt-up” process as the virus data continues to scorch the world’s economic output.

CONCLUDING THOUGHTS:

These longer-term economic expectations are key to understanding how the recovery process will create opportunities for skilled traders and investors.  We believe the world will survive this virus event.  Yet, we also believe the global economic landscape will likely change over the next 3+ years as this virus event could very easily push many foreign nations away from economic relationships or projects they have engaged in over the past 10+ years.  This virus event is really a “big game-changer” in terms of how and what the future of the global economic world will look like for many.

As we’ve warned many times, it is not the localized “one-off” economic event that presents a real problem for the global economy – central banks can simply patch the economy up with an infusion of cash.  The bigger problems for the global economy happen when a fundamental shift takes place that lasts 6 to 12+ months and disrupts the “systems” in place throughout the globe.  We believe this virus event could start a process that disrupts supply, demand, consumer engagement, and true valuation levels of almost all commodities and assets throughout the globe over the next 24+ months.

In Part II of this article, we’ll attempt to share more data and highlight where opportunities may present real profit objectives for skilled investors and traders.

The next few years are going to be full of incredible opportunities for skilled traders and investors.  Huge price swings, incredible revaluation events, and, eventually, an incredible upside rally will start again.

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 many successful traders that want to risk their hard-earned money when daily price swings in various assets are moving 10% to 95%.

I’m offering you the chance to learn to profit, as I do with my own money from market trends that I hand-pick for my own trading.  These are not wild, crazy trades – these are simple, effective, and slower types of trades that consistently build wealth.  I issue about 2 to 4+ trades a month for my members and adjust trade allocation based on my proprietary allocation and risk algo – the objective is to gain profits while managing overall risks.

You don’t have to spend days or weeks trying to learn my strategy.  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 trading experience.  My new mobile apps make it simple – download the app, sign in and everything is delivered to your phone, tablet, or desktop – updates, videos, education, and trade alerts.

I offer membership services for active traders, long-term investors, and wealth/asset managers.  Each of these services is driven by my own experience and my proprietary trading and risk modeling systems.  I have a small team of dedicated researchers and developers that do nothing but research and find trading signals for us to take advantage of together. Our objective is to help you protect and grow your wealth.

Please take a moment to visit www.TheTechnicalTraders.com to learn more.  I cannot 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
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.

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.

Our Fib Trading System is Telling Us Where The Market Is Headed Next

In this section of our multi-part research post centered around our Adaptive Fibonacci Price Modeling system’s expectations, we are focusing on the NQ (NASDAQ futures) and the future expected price rotations. As we discussed earlier, in Part I, Fibonacci price theory teaches us that price must always attempt to establish new price highs or new price lows within a trend.  Reversals happen when price fails to continue establishing new price highs or new price lows and breaks above or below a recent critical price level.

First, we’ll focus on the major Fibonacci Price Pivots and how to identify and use them with the Fibonacci Price Theory.  Major Price Pivots are points in time where a major new High or Low price is established that becomes a critical price top or bottom.  Often, within extended trending, a minor price pivot will become a major price pivot simply because the price trend has extended for many weeks or months without establishing any type of moderate price rotation.  The reason we could consider a minor price pivot as a major price pivot is that, within the extended trend, we attempt to identify where price setup a “unique low” or “unique high” as a point of support or resistance within the trend.

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 NASDAQ CHART – MAJOR PIVOTS

Here is a Weekly NQ chart highlighting the major Fibonacci Price Pivots.  Notice the Major Low Pivot in late November 2019 that was identified as a “minor to major” pivot.  These major price pivots become a road map telling us where price MUST go in order to establish a new trend or to change trend direction.

Currently, the bearish trend is clearly identifiable because the price has recently broken below the last major Fibonacci Low Price Pivots and established a “new price low”.  In order for us to consider this bearish trend is completed or over, the price would have to rally all the way back to break the move recent major Fibonacci High Price Pivot (near the recent peak). A couple of weeks go I published a PDF guide on how to identify market trends both short-term and long-term using some basic indicators.

NASDAQ WEEKLY CHART – MINOR PIVOTS

Now, let’s learn about the minor Fibonacci Price Pivots…

This next Weekly NQ chart highlights the minor Fibonacci Price Pivots.  These are the price lows and highs that do not constitute a “critical price high or low” on the chart.  They are still valid for us in our understanding of Fibonacci price theory and where future price may attempt to rally or selloff to and they help skilled traders in understanding the true nature of price activity and structure.

Minor Fibonacci Price Pivots are intermediate unique high or low price levels that set up the “wave structure” in price that we are attempting to illustrate to you.  When price moves higher, a series of new higher highs and higher lows usually sets up within that trend.  When price moves lower, a series of new lower lows and lower highs usually set up within that trend.  These minor pivots are a method of tracking this type of price activity and a process of learning the major and minor price levels that usually become very important in determining what is really happening in price structure.

COMBINING BOTH MINOR AND MAJOR PIVOTS

Now, we’ll combine these major and minor pivots onto one chart to grasp the bigger price structure.

Once we combine these major and minor Fibonacci Price Pivots onto one chart, you should be able to see the “road-map” of the structure of price fairly easily.  You should be able to see how Major Pivots setup massive critical price structures (tops and bottoms) that establish the major support and resistance levels in price.  These also become major trigger levels for broader trends and reversals in price.  You should also be able to see how the Minor Pivot Levels offer intermediate price guidance and shorter-term support and resistance as price attempts to work through the Fibonacci Price Theory Structure.

Remember, the Fibonacci Price Theory suggests that price is always attempting to reach new highs or new lows within a trend.  Thus, if it is not attempting to reach new highs, then it must be an attempt to reach new lows.  These pivot structures are the keys to understanding the true Fibonacci price theory.

CONCLUDING THOUGHTS:

Currently, The NQ would have to rally all the way back above 9750, the most recent Major Fibonacci Pivot High, in order to qualify for a new Longer-term Bullish trend.  We expect the price of the NQ will rotate lower in the near future simply because the most recent confirmed price trend was the breakdown low in early 2020 that broke below the past three major Fibonacci Low Price Pivots.

Remember the Fibonacci Price Theory tells us that Price is always attempting to establish new price highs or lows – all the time.  Thus, if the newest price low has broken below the past Major Low Price Pivots, then the trend is considered Bearish until price confirms it has broken above the most recent Major High Price Pivot.

As you continue to learn Fibonacci Price Theory and apply these techniques, remember that these types of price structures are fundamental components to the much broader technical analysis techniques and modeling systems we use every day for our clients.  We want to help you learn to become a better trader and learn to identify solid trading signals.

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.

Why You May Want to Avoid Buying Options This Week

If you do not understand implied volatility and you are buying put or call options or some combination, you have been warned!

The market continues to move very fast, has large swings, and one would think that makes it an excellent time to buy options for huge gains, right? Our Research Team believes that large Volatility swings will be here for a while. Once you understand the significant role Volatility plays in Option Pricing, you may want to avoid this investment construct for some time to come.

The VIX is at an extreme level and has only been over 50 only seven times in the past 25 years based on a daily closing price. It evident the last two trading sessions the investment sentiment has been bearish and option puts make money if price declines, which has been the popular trade of choice until now.

What many options traders do not understand, however, is that the price of options is configured using implied volatility.

The more volatility, the more expensive the options become to factor in the wild swings the underlying security may experience. This is reflected in the price the option trades off to factor in the fear and trepidation.

This can be seen in the substantial premium on top of the intrinsic pricing from the strike price.

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

For example, bank stocks are usually considered very conservative when implied volatility is under 20. This results in options being priced accordingly.

However, in the last few trading sessions, volatility has jumped, reaching 62 at one point this week already, which is more than 3x what you would want when simply buying options. This is a VERY HIGH RISK and a difficult time to buy options. Unfortunately, this is what most options traders do, they BUY options, and while it may work in most market conditions, this is most likely NOT the time you want to do so until such time Volatility and VIX begin to subside and we do not see that in the near future.

Let me try to explain in the most basic laymen terms because I know 95% of options trades don’t really get this, and it boggles my mind. As you know, or should know, buying options is one of the riskiest and hardest ways to profit from the market, in my opinion (and statistics continue to prove this out as MOST option buyers LOSE money). I traded options years ago and do very little options trading now, though they are still a great way to make money with certain trade setups and in certain market conditions.

OPTIONS RISK #1: TIME DECAY/THETA

In short, trying to time the market with an index, stock, sector, commodity, or currency is hard enough, but when you buy options, you make things a whole lot harder for yourself. Not only do you need to time this almost perfectly so that the underlying asset has time to move, but you need to time it with precision because now the time is your enemy (Theta).

Every day the option contract you bought is going to lose value because you lose time, and there are fewer days left for your asset to move in the direction to make up for the large premium embedded in the option price. Each day this time premium begins to erode. The closer you get to the time expiration, the faster the time premium decays.

OPTIONS RISK #2: IMPLIED VOLATILITY

This is the main issue I want to share and the reason for writing this article for you.

If options are valued in relation to implied volatility (which they are), then when the volatility is above 50 (62 as of Monday, March 9) and the option is worth $1,00.

Here is the issue, even if the price of your asset stays the same, but the fear in the market fades away as it always does from this extreme level, your option value will decline dramatically. I’m just using numbers out of thin air for the example so you can grasp the issues easily.

If implied volatility drops from 62 down to 35, the option contract value will go down with the volatility as well. The $1.00 contract priced with huge volatility could now be worth $0.85 overnight.

If you traded a short-term option contract, then you will also have time decay, and your option would drop even more to say $0.82.

Remember this is the type of price action you will experience and the VIX falling (and fear subsiding) and even if your asset price just stays the same you have the potential for a significant loss and is the reason why buying options during extreme high volatility is not the trade that should be taken.

OPTIONS TRADING TIP

If implied volatility is over 25 then 
it is usually better to be a seller of options, 
if it’s under 25, then its often better to be a buyer.

So what does a trader do? 

We encourage investors to use probabilities to work in your favor!

You could put on debit spreads: This way, some of the volatility is reduced as you sell a put or call, so the volatility premium is now in your favor, and time decay is mitigated.

OR

Sell it to those people that are so sure of this big move!

We have already identified that we are in a period where the VIX in an area very rarely seen. But since the VIX can stay here for a while, a more logical option move may be to sell calls going out into the future. Due to contango, it will retrace back down as the contango effect will begin to change as trader sentiment improves, and fear is reduced.

Credit spreads have so many advantages over simply buying calls and puts

  • Defined risk – Can only lose the difference of your strikes less the premium received.
  • If the trade starts to go against, you have backup options to manage risk.
  • Roll the trade to a future date giving your trade time to work out.
  • Sell another option spread opposite of your existing trade (if a put spread on place a credit call spread, this creates an iron condor) now giving you a larger cushion for the trade to work as you received more premium.
  • Buyback the offending strike at a loss and let the profitable strike run if you feel it has legs.
  • Buy a put to defend your spread further out in time as theta decay does not get affected as quickly.
  • Use a stop loss of 2x or 3x premium received etc.
  • or take possession of the stock
  • Income – selling out of the money credit spreads can be an effective way of generating a passive revenue stream

RISK REWARD is most important, and it is critical to get into the right trade at the right time. Remember that theta-neutral trades and buying options are when implied volatility is low. Selling options, when implied volatility is high, is your best option.

  • This is where we are right now.

I hope this helps shed some light on the basics of why buying options during high volatility is an uphill battle, no matter how good your timing is to predict the movement of the underlying asset you are trading.

In the near future, my team and I will make our options trades available to follow. As you know, timing the market is our specialty. Knowing what time frame an asset will rally or breakdown, and how far its first move will give us a distinct advantage to pinpoint the ideal option contracts to consider buying or selling for maximum short-term gains.

Happy Trading!

Chris Vermeulen
 www.TheTechnicalTraders.com 

Trader Predicts Assets Direction With This Forward-Looking Indicator

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

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

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

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

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

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

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

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

V10 TREND TRADING STRATEGY – AVERAGE TRADE 45 DAYS

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

NATURAL GAS V10 CHART ANALYSIS

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

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

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

THE POWER OF CYCLES WITHIN PRICE ACTION

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

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

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

EXAMPLE SP500 PREDICTED PRICE MOVE

HOW I PREDICT FUTURE PRICE MOVEMENT

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

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

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

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

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

CONCLUDING THOUGHTS:

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

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

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

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

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

Chris Vermeulen
Found of Technical Traders Ltd.

US Indexes Continue To Rally Within A Defined Range

This week ended with the S&P, Dow Industrials and Nasdaq stalling near recent highs.  From a technical perspective, both Thursday and Friday setup small range price bars (Doji candles or small Spinning Top type bars) after the upside price move on Wednesday.  These are indicative of price consolidation and indecision.

The news events that initiated this rally, nearly a week ago, continue to drive sentiment in the markets.  Yet the news from the ECB that new stimulus efforts would begin with $20 Billion Euros monthly invested in assets until they decide it is not required any longer suggests the EU is desperate to support extended growth and some renewed inflation.  This move by the EU pushed banks and the finance sector higher while the US stock market stalled near the end of the week.

At these lofty levels, almost all of our indicators and predictive modeling systems are suggesting the US stock markets are well within an overbought mode.  Of course, the markets can continue in this mode for extended periods of time as central banks and external efforts to support the asset/stock market continues, at some point investors/traders will recognize the imbalance in price/demand/supply as a fear of a price contraction.

We are very cautious that the market is setting up a lofty peak at this time.  It is important for traders and investors to understand the global situations that are setting up in the markets.  With precious metals moving higher, it is important to understand that FEAR and GREED are very active in the markets right now.  The continued capital shift that has been taking place where foreign investors are shifting assets into US and more mature economies trying to avoid risks and currency risks is still very active.  Yet the lofty prices in certain segments of the US stock markets means that this capital shift may take place where investment capital is shifted away from more risky US assets (high multiple speculative stocks) and into something that may appear to be undervalued and capable of growth.

The shifting focus of the global markets, the EU and the continued need for stimulus at this time is somewhat concerning.  Our view is to watch how the global markets play out and to maintain a cautious investment strategy.  We shifted into an extremely cautious mode back in February/March as the US market completed the October/December 2018 breakdown and precious metals started a move higher.  We continue to operate within this extremely cautious investment mode because we believe the foundation of the global markets are currently shifting and we don’t believe the stability of the markets is the same as it was after the February 2017 market collapse.

What do we believe is the result of this shift in our thinking?  This is very simple.  We are entering into the final 13+ months of the US presidential election cycle, the trade wars between the US and China continue to drag on with is muting economic activity, the EU continues to battle to find some growth/inflation while Great Britain attempts to work out a BREXIT deal as soon as possible.  Meanwhile, we continue to try to find opportunities in the markets with these extreme issues still pending.  We don’t believe any real clarity will happen until we near October/November 2020. Be sure to opt-in to our Free Trade Ideas Newsletter to get more updates.

This ES Weekly chart highlights the range-bound price rotation that currently dominates the US stock market.  Overall, the US stock market and the economy are much stronger than any other economy on the planet.  The risk factor is related to the fact that the capital shift which has been pushing asset prices higher as more and more capital flows in the US stock market may have reached a point of correction (headed into the US presidential election cycle).  As long as price stays within this range, we believe continued extreme volatility will continue.  Our Fibonacci system suggests price must close above 3178 to qualify as a new bullish trend and/or close below 2577 to confirm a new bearish trend.

This Transportation Index weekly chart shows a similar setup.  Although the Fibonacci price trigger levels are vastly different.  Price would have to climb above 11,475 to qualify for as a new bullish trend whereas it would only have to fall below 10,371 to qualify as a new bearish trend.  Given the past rotation levels, it is much more probable that price may rotate into a bearish trend before attempting to reach anywhere near the bullish price trigger level.

Our Custom volatility index suggests price has rallied last week well into the upper “weakness zone”.  This move suggests the upside price move may already be well into the overbought levels (again) and may begin to stall.  Traders need to be cautious near these level.  We continue to suggest that skilled technical traders should look to pull some profits from these lofty levels to protect cash/profits.  Any extreme volatility and/or a bigger price rotation could be disastrous for unprepared traders.

We are excited to see what happens early next week.  News will be a big factor – as it always is in this world.  Pay attention to how the markets open early this week and keep your eyes open for any crisis events (wars, bombings or other geopolitical news).  And get ready for some really big volatility to hit the global markets.

This is the time for skilled technical traders to really shine as these bigger moves roll on.

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

So, if you believe in technical analysis, then this is the newsletter and market condition for you to really shine, especially with my trading indicators coming online.

Be prepared for these price swings before they happen and learn how you can identify and trade these fantastic trading opportunities in 2019, 2020, and beyond with our  Wealth Building & Global Financial Reset Newsletter.

Join me with a 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis.

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

FREE GOLD OR SILVER WITH SUBSCRIPTION!

Chris Vermeulen – www.TheTechnicalTraders.com

Chris Vermeulen on Gold, Silver, Miners, Crude Oil, Bonds, and Bitcoin.


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

I have had a series of great trades this month. In fact, over the past 20 months, my trading newsletter portfolio has generated over 100% return when compounded for members and most importantly we did this with very little portfolio risk. And we locking in more profits on Tuesday with the Russell 2000 index. So, if you believe in technical analysis, then this is the newsletter and market condition for you to really shine.

Be prepared for these price swings before they happen and learn how you can identify and trade these fantastic trading opportunities in 2019, 2020, and beyond with our  Wealth Building & Global Financial Reset Newsletter.

Join me with a 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis.

FREE GOLD OR SILVER WITH SUBSCRIPTION – OFFER ENDS SOON!

Chris Vermeulen – www.TheTechnicalTraders.com

Understanding Trading Risks Is Crucial For Your Success

This article will most likely open your eyes and see a side of trading you usually don’t think about or possibly don’t understand, even though it is critical for your long term success as a trader and investor.

Not many people talk about trading risks and for a good reason. It’s not that exciting to most, and its a real sobering topic because its the reality of trading: trading is risky, and that you need to know how to manage risk appropriately and we don’t know how to do this. Most of us are generally too lazy to want to learn dry/boring subjects, especially when we don’t know much about them in the first place, and I’m guilty of this as well.

I urge you to take 4 minutes and read this trading risks explained in laymen terms below. At worst is a good refresher and will make you look at your current positions and see all your capital carries the same risk and if you are positioned for steady growth or potential account implosion if the asset class moves against you.

Understanding Trading and Investing Risk Types

RISK

noun

·        1.a situation involving exposure to danger: “flouting the law was too much of a risk” synonyms: possibilitychanceprobabilitylikelihooddanger, … more antonyms: impossibility

verb

·        1.expose (someone or something valued) to danger, harm, or loss:

There are many ways to define risk and different, disparate types of risk depending on investing in a home, doing business with a bank or investing in stocks, bonds, ETF’s, mutual funds, etc.

We know inherently, given my last week’s piece on the increasing amount of foreclosures occurring in the largest cities in the US, where housing has been robust, cities like San Jose, CA, San Francisco, Phoenix, Chicago, etc, that there is currently increasing risk in purchasing real estate at lofty prices and hoping that the market stays hot; that if you had to resell the real estate in the next few years one could get out at a similar price to the purchase price or even higher.

Given that we are towards the end of a boom housing cycle, this is probably not a reasonable risk to take, unless of course, one would be in it for the long haul. We call this liquidity risk or also buying an asset at a very high price as compared to its historical prices in a given market.

Another risk is if an investor, flush with cash, sat in cash and inflation were to take off or the price of goods and services continue to increase even without rampant inflation. This risk would be defined as purchasing power risk and puts the investor (or holder of cash) in an undesirable position of having their money NOT grow while the cost of goods and services around them grows. This can and does occur even if we are told that inflation is flat.

How does purchasing power risk show up?
Look at the cost of food in the past few years. How much does it cost to feed a family today? When one has investable cash and does not keep it up with the increasing costs of “living,” this is the real definition of purchasing power risk.

If on the other hand, an investor decides to enter into the bond and stock market and invests in the wrong asset class, this is the best-known risk defined as asset class risk. One invests in the fixed income markets, and rates go up and while the coupon may stay the same the principal amount of the investment goes down.

Likewise, someone decides to invest in technology stocks, and they go through a correction or decline, then that sector goes down, and one’s investment is negatively impacted. This is a sector or industry-specific concentration risk.

Another potential risk asset class or even sector-specific risk is if someone decides to invest only in small-cap stocks because they like the growth rates, and this area of concentration is enticing. However, there is an inherent risk:

a) interest rates go up which puts pressure on smaller companies;

b) the economy goes into a downturn and these stocks lose value and

c) most importantly, they want to get out of these stocks at some point (perhaps due to a and b above) and they cannot get out at a fair price because too many people are selling and there is not enough volume in the stock.

Then the problem for the small-cap investor may be getting out of these thinly traded stocks when the correction ensues. This is known as liquidity risk and can have a detrimental effect on the original portfolio value.

Perhaps one decides to invest in stocks and decides to appropriately diversify their investment into a longer-term buy and hold strategy and does so with high quality, dividend-paying stocks. This seems like a reasonable investment thesis and one that both institutions and individuals participate in every day.

However, what happens when we go through normal corrections or even enter a bear market and have a steady trending downward market. What does one do? Buy more as the stocks are going down? Wait until they seemingly bottom and then put more $ to work? We call this market and price risk, and it is from having $ invested in a down-trending market with no clear plan of getting out and not being sure of what the targets are that one should exercise to get out.

Then, as an investor playing in a professional market, you always have knowledge risk and unforeseen surprise risk. Knowledge risk is not knowing the “full” story and investing in a company that you may know little about and what the forward earnings projections are. Some that come to mind in recent time is GE, XOM, BBY, JCP and many others that seemed like very good, quality companies only to announce reorganizations, problems with their business or worse, potential bankruptcy.

The unforeseen surprise element, while similar, includes accounting errors (WorldCom), corruption (ENRON), and other factors that an investor may have little to no knowledge of.

Other investors like to trade and invest where they have little or no knowledge in emerging markets like Russia, China or Brazil only to surprised when political upheaval, slowing economies, currency risk or other factors can and will hit these markets hard and decimate speculative investor capital.

Investing in individual issues or sectors like marijuana stocks, biotech stocks, and country ETF’s can be treacherous and best left up to professionals and analysts who cover these companies, industries, and markets.

 

Very important facts about investing:

If you lose 10% on your investment capital, it takes at least 11% to get back to even       

If you lose 20%, it now takes 25% just to get back to even

If you lose 50%, it takes 100% just to get back to even

 

Facts About Growth:

FIFTEEN 5% WINNERS = 107% ROI

$500 PROFIT PER/MONTH = 30% ROI WITH $20K ANNUALLY

POSITION SIZING = TRADING SUCCESS

 

Technical Traders strives to accomplish critical things:

ONE: Make it easy for you to follow our trading suggestions and take the trades. We refrain from using exotic and hard to understand instruments, stocks, or ETF’s that are not readily available and have sufficient liquidity.

In other words, we trade things that we can enter (buy) and exit (sell) easily and quickly and do not depend on us getting an exact price. If we take the trade we usually get our order filled within a few cents from our original suggestion, by design, the trade can earn a significant profit. It does not depend on split-second timing like many other trade alert newsletter services.

TWO: We are very strict and very aware of position sizing. This is ONE of the most important ways to manage our risk and put the trader/investor (YOU) in a position that if the trade does not work, it will not hurt the overall portfolio too much and, more importantly we typically diversify with other positions at a similar time which diversifies the portfolio and allows you to reap the rewards from other disparate trades.

THREE: We have a set goal in mind when we put on the trade. These are well-defined targets as well as STOPS. If the trade works, we know where it is headed and what we will do along the way, usually resulting in taking off part or all of the trade with our targets being reached. If the trade does not work, we are out rather quickly with minimal damage to the overall portfolio.

FOUR: We always back up our rationale for why we put on the trade. One only need to watch our pre-market daily videos to get a view of why the trade set-up is occurring and what our expectations of the market are.

FIVE: We trade in a wide variety of markets and with a wide variety of instruments, mostly ETF’s that are 1x, 2x, and 3x leveraged.

If we have a strong conviction about the trade or a limited amount of capital left to put into a trade, we would instead use a levered 2x instrument, or 3x occasionally because we want to capture the move with some extra juice (leverage) to hit the target and get out. Many of our subscribers have seen us go into SSO or SDS inverse SP500 ETF’s for a day or two turnaround in the markets and experience a 1-3% move. We typically get out on those trades quickly, and YOU have benefitted from the use of leverage.

SIX: We like small but quick winning trades knowing that this helps compound wealth in the portfolio. Are you aware that short cab rides (or UBER) are much more profitable for the driver than all of the long runs, say to the Airport? Making a quick profit from a few swing trades lasting 2-20 days over and over is much more profitable than taking a long-term position. Nothing more frustrating than watching a long term position you have had for months or years turn south and give up all the profits. Months of mental stress and risk on your portfolio for little to no gain. Not our cup of tea.

SEVEN: We minimize Risk and Utilize Capital efficiently by making precision trades that have a high outcome of success and keeping our powder dry (in cash) while waiting to take advantage of optimal technical set-ups consistent with our approach of finding markets that present an excellent opportunity. If we have high conviction, then we may recommend you use a 2x or 3x levered ETF instrument with ample liquidity to get in and out of the trade. Examples of these would include our recent trade on SDS 2.5% (2 days), UGLD 24% (2 weeks), and plenty of others.

Please note that our suggested ETF trade recommendation portfolio from January 1, 2018, to June 30, 2019, produced a 70% return, non-compounded and close to a 100% return if you compounded the trades.

However, we did so on a capital base of approximately 50%. Meaning, that we took probably half of the risk a similar, fully participating portfolio in the market (buy and hold) might take. Our capital efficiency was extremely high since we were sitting in a safe asset class, about 50% of the time without incurring risk. Most of the time, the whole portfolio might have been 100% in cash when there was too much uncertainty, and trends were changing.

Factor in that there were occasions when we only had 25% or 50% invested and other times when we were fully invested. We guess that we were sitting in cash with part or all of the portfolio upwards of 50% of the time. That also means that we had a BETA of 0.5% to the market (for you technical gurus), and a return on equity probably close to 150% on invested capital during that 18 months which factors out to risk to about 1/3 to ½ less than an S&P 500 index fund, and an ALPHA so high it would be off the charts and our telling you what it is would be far too boastful.

I hope this detailed explanation of risk has helped you see risk in a new light and just how vital risk and position sizing are to the long term growth of your trading and investing account.

Our Wealth Building ETF Newsletter and our Professional Technical Wealth Advisor Newsletter and Trading Indicator Tools make trading and investing simple, logical, and profitable. With customers from over 182 countries of all types from individual traders with a few thousand dollars to billionaire money managers, we have the markets covered for you.

Get our world-class market analysis each day and our low-risk ETF trade alerts today!

Chris Vermeulen
Founder of Technical Traders Ltd.

My index trend and trading strategy signal

Last week was a great week for trading as we locked in profits on a trade and raised our stops to protect the rest of our open positions.
take a look at how my trading system identifies trends, trades, and targets in the chart below.

If you want to become profitable technical traders join my educational trading newsletter and trade alerts complete with entry, targets and stop pricing.

Today we closed two winning trades at the open, and entered a NEW trade this morning markets are getting very tradable again. So ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next set of crisis’.

Soon I will be adding this trading system chart in the member’s area where it updates through the day for you to follow alone and trade with me. I should mention that the newsletter pricing will be going up soon. If you subscribe before the price increase you are grandfathered in at the old/lower rate.

EDIT: September, 26, 2019. New Terms and Conditions are in effect. Grandfathered rates may no longer apply. Please read the Terms and Conditions available on the sign-up page of www.thetechnicaltraders.com.

GET WINNING TRADES AND A FREE BAR OF GOLD – CLICK HERE

Chris Vermeulen

Precious Metals Breakout Rally or Reversal Time?

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.

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these super cycles are going to last years. These super cycles starting to take place will go into 2020 and beyond which we lay out in our new PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime

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:

1-Year Subscription Gets One 1oz Silver Round FREE
(Could be worth hundreds of dollars)

2-Year Subscription Gets TWO 1oz Silver Rounds FREE
(Could be worth a lot in the future)

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

Chris Vermeulen
Founder of Technical Traders Ltd.