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The Russell and Transportation Tell A Completely Different Story

We’ve been writing about the broader US stock market for many months – highlighting the Pennant/Flag formations that have continued to set up since early 2018.  Sometimes, the keys to really understanding what is transpiring behind the scenes in the US markets is to pay attention to various market segments and to consider applying some “outside the box” thinking. Before you continue, be sure to opt-in to our free market trend signals newsletter.

Our research team would like to fall back into price analysis using the Russell 2000 and the Transportation Index as “additional measures” that mirror the US major stock market in terms of price, volatility and future price targets.  The interesting facet of this type of analysis is that we can study any symbols we want and apply the different techniques, patterns and insight we learn to the total scope of the broader US stock market.  Thus, we can attempt to identify how and when certain price actions may become more intense or volatile while comparing how our predictive modeling systems and other tools share unique outcomes.

The Russell 2000 and the Transportation Index should be on every skilled traders radar – along with the three major US stock market symbols (ES: S&P500, YM: Dow Jones, and NQ: NASDAQ).

Additionally, all traders should follow the US Dollar, Gold, Silver, Oil, VIX and a handful of other key market sectors.  The old saying is “it is not a stock market – it is a market of stocks” is very true.

After the two day selloff, many traders still have questions about what lies ahead for the US markets.  We’re reading some reports of a “collapse taking place in the US stock market” and others, like our research team, believe this move in the markets is related more closely to a “move away from risk and a capital shift into safety”.  So which is it?  A collapse in the making or a sideways shift of capital into various safe-havens?  Let’s look at the charts.

WEEKLY RUSSELL 2000 (IWM) CHART

This Weekly Russell 2000 (IWM) chart highlights the rotation that has been in place throughout much of 2019.  The MAGENTA support level near 144.25 has proven to be intermediate support through multiple downside price cycles.  Ultimate Support resides at 125.00.  The current downside price move is still above the intermediate support level, although that could be breached over the next few trading days if price weakness resumes.  Therefore, until the 144.25 level is breached, we would presume that price may attempt to find support or form an intermediate basing pattern near recent lows.  Our ADL predictive modeling system suggests the YM (Dow Jones) may have already bottomed.  Thus, any continued weakness in the US stock market may result in a “wash-out” price low point near Ultimate Support.

TRANSPORTATION AVERAGE (IYT) WEEKLY CHART

This Transportation Average (IYT) Weekly chart shares a similar price setup as the Russell chart.  Again, we can see the recent downturn in price has only really moved back towards intermediate support near 174.25 and has yet to really attempt to breach into “new low price” territory.  Because of this, we can assume the downside moves in the ES, NQ, and YM which did result in “new low” price formations can’t be completely confirmed until the IWM and IYT also break into “new low” price formations.  Ultimately, the MAGENTA support levels are key to understanding if this is a “collapse” or a “shift in capital” as we suggest.

CUSTOM WEEKLY MARKET VOLATILITY INDEX

One of our favorite tools for understanding market price volatility and potential is our Custom Volatility Index.  This Weekly Custom Volatility Index chart highlights the current downside price rotation in historically rational terms.  Much like the two charts above, this chart shows the current price levels are still well above the previous two base/bottoming price levels – thus, we have little confirmation of a breakdown or collapse in prices (yet).  If the price of our Custom Volatility Index were to move lower and close below 8.00 on an END OF WEEK basis, then we would see a new “closing price” low that would immediately send up warning flags of a possible price collapse in the US stock markets.

Ultimately, without this type of price move happening, we are well within the standard deviation ranges of normal price rotation and strongly believe this rotation to be a shift in capital away from risk and towards value, safety, and Blue Chips.  Think of it like this, traders and investors are shifting their investments away from what has been “high flying” and moving their capital into more traditional blue chip/dividend-paying assets.

CONCLUDING THOUGHTS:

Of course, time will tell if our analysis and predictions are correct or not.  We urge you to also read our recent ADL predictions research post suggesting the ES and NQ will see broader price rotation and volatility than the YM in this recent post here.

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.

Be sure to ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar and SPECIAL OFFER – CLICK HERE

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. This quick and simple to understand guide on trading with technical analysis will allow you to follow the markets closely and trade with it. Never be caught on the wrong side of the market again and suffer big losses. PDF guide: Technical Trading Mastery

Chris Vermeulen
www.TheTechnicalTraders.com

Transportation Index Points To Stock Markets Weakness

The recent news that the US and China will restart trade talks resulted in a fairly large upside price rotation as this “good news” suggests that some resolution to the trade issues may be in the works soon. Yet we want to warn traders that the US will likely want to see progress and action regarding any trade resolution before tariffs are reduced and eventually removed.  We can’t imagine that the US would take any promises stated by China as any real progress towards balancing trade or normalizing relations.  We believe the process of resolving the US/Chinese trade dispute could still be many months away from any real opportunities for traders and the global markets.

The other issue on the table this week and in the immediate near future is the “no-deal” BREXIT.  News that the Queen assisted Boris Johnson by shuttling Parliament in the UK to help facilitate a “no-deal” BREXIT could send shock-waves throughout the global markets over the next 30 to 60+ days.  Even though the US and UK appear to have settled on some strong trade resolutions to help calm the waters, the fallout in the EU as well as the reverberations that may be felt throughout the world over the next 12+ months. Before we get into the details, be sure to opt-in to our Free Market Forecast and Trade Ideas Newsletter

Weekly Transportation Index

Overall, we are relying on some of our favorite alternate charts to help us understand what the markets are really showing us in terms of price action and direction.  One of our favorites, the Transportation Index, has recently crossed below the Bearish Fibonacci Trigger Level (early Aug 2019) and continues to trail below 10,400.

A double-bottom setup has formed near the 9695 level that appears to be a fairly strong level of support.  If this level is broken in the future, our Fibonacci price modeling system is suggesting downside price targets below 8500 (below the lows in December 2018).  This would suggest that any real downside risk could extend the US indexes below the December 2018 lows on a breakdown move.

SP500 Daily Index Chart

]As we try to translate the Transportation Index analysis into the ES chart, the very first thing we focus on is the tight, sideways price range that continues to “coil” before a breakout/breakdown move.  The low set up in early August 2019 (near 2775.75) is still the most recent critical low in price formation.  The other recent low present a very interesting setup – a potential Double-bottom setup near 2817.75, yet we also see a recent “new low” setup from the dip in price on August 26 (with a low of 2810.25).  This new low follows the Fibonacci price theory rules to support a bearish/downside price trend setup that should continue to dominate the markets until we see any type of “new highs”.  Therefore, the analysis of the TRAN chart and the current setup in the ES continues to suggest a breakdown move is likely.

SP500 Weekly Index Chart

This Weekly ES chart highlights how the Fibonacci price modeling system is interpreting the recent volatility and price rotation over the past 18+ months.  Pay very close attention to the current Bullish and Bearish Fibonacci Trigger Levels.  While you are at it, pay very close attention to the previous Bullish and Bearish Fibonacci Trigger Levels.  What you will notice is that the current price rotation over the past few weeks is right between the current and past Fibonacci trigger levels for both the Bullish and Bearish price rotation going all the way back to the downside rotation in November/December 2018.  This would suggest that the current price level is very fragile in terms of future direction.

We are not seeing any real clear price direction or trend right now, the current Fibonacci price trigger levels are more than 100 points away from the current price (either direction) and the support level near 2800 is still holding.  The Daily chart suggests price is attempting to hold above support near 2880.  Yet the new low on the Daily chart suggests price has recently shown a Fibonacci Trend with potentially confirms price weakness and a potential bearish outcome.

How are traders to interpret all of this information and make decisions?

Headed into this weekend, our research team suggests pairing back any open long positions you may have in your portfolio off of these recent highs and preparing for a bigger price move going into the end of 2019.  Our researchers still believe a breakdown in price will occur as the BREXIT, US/China trade issues and further economic contractions continue to undermine real growth opportunities going into the end of 2019.  But time will tell if we are correct in our interpretations or not. Check out these other exciting trading tools and chart full of opportunities that we will be sharing.

We believe the news events are artificially supporting the markets with expectations that may prove to be many many months away.  Watching the other “alternative” charts (like the TRAN, XLF, IWM, YINN, and others), we can clearly see the price recovery in the ES, NQ, and YM are somewhat isolated price moves related to news related expectations.  The rest of the market is not reacting like these major indexes.

We would advise traders and investors to take advantage of these higher prices to pull profits out of open long positions and take some risk off the table at this juncture in price. We entered a new trade today and our portfolio is primed and ready for big moves going into next week.

We believe super-cycle research and other proprietary modeling systems are suggesting that price weakness will dominate the markets for the next few months.

We are only 5 to 11 days away from a new major event 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 and recession.

In short, you should be starting to get a feel of where commodities and asset class is headed for the next 8+ months. The next step is knowing when and what to buy and sell as these turning points take place, and this is the hard part. If you want someone to guide you through the next 12-24 months complete with detailed market analysis and trade alerts (entry, targets and exit price levels) join my ETF Trading Newsletter.

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Chris Vermeulen – www.TheTechnicalTraders.com

Double Top In Transportation and Metals Breakout Are Key Topping Signals

Our researchers identified this critical Double-Top pattern in the Transportation Index after a very strong price rally on Friday, July 12.  Double-Top patterns are very important in terms of Fibonacci price structure because they reflect a complete price rejection at a certain price level.  In this case, the TRAN Double Top level is $10,655 and our research team believes weakness at this level will push a downward price swing which should attempt to break through the $10,250 level and possibly attempt to move much lower.

The Transportation Index reflects future expectations for shipping of goods and raw materials across the US and, of course, is somewhat related to global economic activity.  If the Transportation Index falls in price, then future expectations are for weaker economic activity.  If it rises, then investors expect the economy to continue to strengthen.

This Double-Top formation in the TRAN could set up to become a very ominous warning sign for traders and investors.

Recent news about the contraction of China’s economy and the fact that Q2 earnings are about to hit the US markets and global markets could become a key factor in the future for volatility and price.  We believe the markets are already setting up a topping pattern after breaching key psychological levels last week.

MINERS ARE OUTPERFORMING US EQUITIES – TOP IS NEAR!

Last month I talked about how I have been waiting for gold miners to start outperforming the US stocks market. Once miners start outperforming in a big way (just like we saw in 2007), we know the stock market is topping out and something really bad is about to happen.

In the last couple of weeks, the gold miners index is up over 20% while the SP500 is up only 4%, this feels like the start-of-the-end if you know what I mean.

Gold miners and silver broke out today in a big way which could very well be the start of an epic rally for the precious metals sector as we heading into the end of the year.

Looks at the SP500 index in the chart below which is of the 2007 bull market top. Currently, the SP500 has formed a very similar pattern in 2019 and with the precious metals rocketing higher I think it almost lights out for the US equities.

See my updated chart showing where gold miners and the stock market is today within this cycle:  https://www.thetechnicaltraders.com/next-bull-and-bear-markets-are-now-set-up/

TRANSPORTS, INDUSTRIALS, and SMALL-CAP STOCKS Confirm Market Is Topping

Based on the 2008 weekly chart below the US stock market could be literally 2-6 weeks away from collapsing. What makes this even scarier is that the market liquidity is the worst its been in my 23 years of trading. This means when the selling starts we will likely see some sort of flash crash as we saw in 2008, 2015, and 2018. Price drops so quickly that by the time you figure out what you want to do and get your money properly positioned most of the move is already finished. See 2008 and 2019 Comparison Charts here.

CONCLUDING THOUGHTS:

Pay attention to our research because we feel the market could breakdown on weakness later this week or early next week.  Our predictive modeling systems are suggesting an August 19th, 2019 breakdown date and we are only about 25 trading days away from that date.

In short, the bear market has been a long time coming, but finally, almost all the signs are showing that it’s about to start. As a technical analyst since 1997 having lost a fortune and making a fortune from bull and bear markets I have a good understanding of how to best attack the market during its various stages. Stay Tuned for My Cycle Analysis Article Next! 

Be prepared for these incredible 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.  You won’t want to miss this big move, folks.  As you can see from our research, everything has been setting up for this move for many months – most traders/investors have simply not been looking for it.

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. Join Now and Get a 1oz Silver Round or Gold Bar Shipped To You Free.

I can tell you that huge moves are about to start unfolding not only in currencies, metals, or stocks but globally also and some of these supercycles are going to last years. We go into great detail with this simple one of a kind and a real eye-opening financial market research booklet full of timely charts.

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 starting to present themselves will be life-changing if handled properly.

FREE GOLD or SILVER WITH MEMBERSHIP!

So kill two birds with one stone and subscribe for two years to get your
FREE PRECIOUS METAL and get enough trades to profit through the
next metals bull market and financial crisis!

Chris Vermeulen – www.TheTechnicalTraders.com 

Transportation Index Warns Of Trouble Ahead?

Any weakness in the Transportation Index near current levels would indicate investors and traders believe the global economy may continue to contract going forward and may be an ominous sign for the global stock markets.

The Transportation Index is a measure of the current expectations related to shipping, trucking, trains and all measure of forward expectations for goods, products and raw materials to be moved across nations, seas, states, and locations.  When the economy is gaining strength, we typically expect to see the Transportation Index moving higher.  When the economy is weakening, we typically expect to see the Transportation Index moving lower.

Since the peak in September 2018, the Transportation Index has moved much lower to establish a base near $8625 in December 2018.  After that base formed, a series of price rotations pushed the Transportation Index up to $11,148, where it peaked, then began to trail a bit lower since May 2019. Our concern is that the Support/Resistance level, highlighted by the GREEN rectangle on this Weekly chart, represents a critical historical price that must be breached before any renewed strength in the global markets will be seen.

After the G20 meeting, last weekend, and the rally in the US stock market on Monday, we were a bit surprised that the Transportation Index failed to move dramatically higher following the global markets.  This leads us to believe investors were taking advantage of a pricing issue related to the G20 and US/China trade war news that was not rooted in strength seen in the global economy.  In other words, buy the rumor, sell the news.  It would appear the rumor hit the markets Sunday in Tokyo and the news hit the US markets on Monday.

We talked about the G20 meeting results and how G20 will move gold and the US stock indexes.

Skilled technical traders already know we must be cautious near these current all-time highs.  Volatility can increase dramatically on news or other earnings data which may drive prices higher or lower over the next few weeks.  As we start July (Q3) 2019, we should be preparing for earnings data to be released over the next 30+ days as well as continued news related to global trade issues.  Additionally, the items which will be sold for Christmas and the holidays are already being shipped across the globe and being distributed to warehouses over the next few months prior to the start of the holiday season.

Historically, July through September are somewhat weak for the Transportation Index.  Overall, the Transportation Index loses approximately 500 to 600 points over this 90-day span with a range (potentially) of over $3000 points in volatility.  Bullish trending strength returns in October and November where the Transportation Index typically rallies approximately $5000 pts with a volatility range of about $7000 points.  These historical trends suggest we could see quite a bit of volatility over the next 90 days with a decent chance at seeing a downward price move targeting recent December 2018 lows.

CONCLUDING THOUGHTS:

In previous articles, we’ve suggested a simple trade setup technique we use to identify entry and exit points – the 100% Fibonacci Extension Move.  If this move holds true for the Transportation Index, then a move to levels near $8250 is about to unfold based on the move from Sept 2019 to Dec 2019.  It would make sense that this move would likely happen between now and September 2019 – followed by a solid rally into the end of 2019 as our historical data suggests.

Now is the time to stay on top of these moves and to target the opportunity these bigger price rotations provide for technical traders.  Simply put, we have just described a downside price move of about $2000 points in the Transportation Index followed by an upside price move of over $4000 to $5000 points.  You don’t want to miss this one, folks.

I can tell you that huge moves are about to start unfolding not only in real estate, but metals, stocks, and currencies. Some of these super cycles are going to last years. 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. PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime

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 urge you to 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, get a FREE BAR OF GOLD and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next set of crisis’.

Chris Vermeulen
Technical Traders Ltd.

Financials Setting Up An Island Top Formation

As we continue to scan the charts for setups and trigger to alert our followers, we’ve come across a setup that may be more ominous than what it appears.  Recently we’ve posted articles about how the SPY and the NQ have pushed into new all-time high price territory and how Gold is setting up for a momentum base that should launch precious metals to near highs.  We’ve also discussed how we believe the current upside price bias in the US stock markets should last another 10~35+ days before new price weakness sets up – possibly pushing prices lower in late May or early June 2019.

Our research team has been scanning the charts looking for anything that could give us an edge to the potential setup for this price weakness in the future.  We believe the Transportation Index and the Financials could be keys to understanding how far the upside rally can continue and when a price peak may begin to warn of a potential price top or rollover.

An Island Top is a pattern that sets up with an upside price gap followed by sideways price action above that gap.  In theory, this type of setup should promote the gap to be filled with downside price action before any further upside price move can continue.  Although, gaps to the upside are fairly common in strong uptrends.  Given the strength of the earnings data released early this week and the expectations that we have for some continued upside price bias over the next 10~35+ days, we are watching these Island Top formation in the Financials for any signs of weakness to alert our followers.

This Daily FAS chart highlights the GAP as well as the Resistance levels that are currently acting as a ceiling.  A breakout above the resistance level would indicate that we have more room to run higher.  Any failed breakout to the upside, where price briefly rallies above the resistance level, then falls back below it, would be a pretty strong indication of a rotational peak.  The Financials could fall 10% from current levels and still be within the range of the March/April lows.  It would take a much bigger move to qualify as a breakdown bearish trend.

 

This Daily XLF chart highlights a similar pattern to the FAS chart.  The key element of the XLF chart is that the Resistance level provides more key fundamental price peaks than the FAS chart.  On this XLF chart, we can see that the current Resistance level aligns perfectly with the Nov/Dec 2018 highs.  We can also see a short GREEN Fibonacci trigger level line in early March 2019 above the Resistance level.  That Fibonacci trigger level is still valid and any move above that level would constitute a new bullish price trend trigger.

Any failure to break the Resistance level would qualify as a price rotation to fill the GAP and potentially set up a move back to near $25 looking to find new support.  Overall, the Financials are poised for a move – up or down.  Our research suggests the US stock market is not done rising, thus we are concerned that certain sectors may begin to show signs of weakness as the broader market continues to rise.

 

Our research team believes a critical peak formation is likely near the end of May or in early June 2019.  It is because of this belief that we are warning traders to play the next 15~25+ days very cautiously.  Watch the Financials, the Transportation Index, the US Dollar, and Precious Metals.  We believe any early signs of weakness will be found within these symbols.

With a total of 55 years of technical analysis and trading between Brad Matheny, and myself Chris Vermeulen, our research and trading signals makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen

Why Are The Markets Ignoring The Treasury Inversion?

Our research continues to support a Bullish price bias over the next 30+ days, very likely reaching to new all-time highs again, before June/July 2019.  For many months, other researchers have continued to predict “doom and gloom” with warnings of Treasury yield inversions, global collapse events, and other crisis events.  Yes, we believe continued price rotation will drive future price swings and they could be volatile moves – yet we believe any crisis event will actually become an incredible opportunity for long traders to BUY into the markets at extreme lows.

Recently, our researchers focused on OIL and the Transportation Index as key elements suggesting this upside move is far from over.  Oil has moved from below $55 ppb to well above $60 ppb.  We believe this move will continue higher to target the $64 ppb level were resistance is likely to be found.  We do believe that some price rotation in Oil is likely to happen in the Summer months – when travel increases and Summer blend gas hits the markets.  Winter has been uniquely difficult this year and the rise in Oil prices, where OPEC and foreign market events have attempted to push prices above $50 ppb, is warranted given global economic activities.

 

While Oil continues to climb, the Transportation Index is also rallying above recent resistance near $10,500 and pushing higher targeting the $11,250 level.  This is important because the Transportation Index typically leads the US economy by about 3~6 months and is a key indicator of investors future expectations for the US and global economy.  Any push above $11,000 in the Transportation Index would likely mean we are going to attempt to reach all-time highs near $11,634.  A move like this would likely push the US Stock Market Indexes well above recent all-time highs as well.

 

Much of our recent analysis has been an attempt to relate the opportunity that exists over the next 30~60 days in the US Stock Market.  For well over 12 months, we’ve been suggesting a capital shift is taking place where the US stock market, and the US Dollar, are uniquely positioned to become safe-haven investments for foreign investors.  We believe this process is still taking place and we believe the US market could continue to push up to new all-time highs before another rotational move sets up.  Our most recent research suggests a peak may form near June/July 2019 that should concern traders.  Until then, we believe the upside price bias will continue and we still believe new all-time highs are about to be reached.

As of today, we have technical confirmation that a renewed upside price move is taking place and we continue to watch the precious metals for any signs of a base/momentum bottom.  Follow our research and learn how we can help you find and execute better trades.

Take a minute to find out why Technical Traders Ltd. is quickly becoming one of the best research and trading services you can find anywhere.  We are about to launch a new technology product to assist our members and we continue to deliver incredible research posts, like this one, where we can highlight our proprietary price modeling systems and adaptive learning solutions.  If you want to stay ahead of these markets moves and find greater success in 2019 and beyond, then please take a minute to see how we can help you.  Once this June/July peak begins, you won’t want to miss the next big move…  Join www.TheTechnicalTraders.com today.

Chris Vermeulen