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Where is the top for natural gas

We wrote a very telling research article on October 24th, 2019.  We never published it because we had other articles scheduled to be published over the next few weeks in the queue and because our subscribers get our trade alerts before the general public. At this point, we are sharing that past article as well as some current research for Natural Gas that should be very interesting to you.

Pay very close attention to the original October 24th article, below, and our prediction that the $2.75 to $2.85 level would be a likely target for the upside price rally from the basing level below $2.30.  Currently, Natural Gas is trading at $2.87 – reaching our initial target level.

If our research is correct, strong demand and limited supply globally may push Natural Gas well above the $3.20 to $3.40 level after a very brief pause happens near $3.00.  In fact, Natural Gas may be getting ready to rally past 2018 highs ($4.93) if the situation presents itself for such an incredible price rally.  What would it take for a rally like that to happen?  Much stronger demand for natural gas because of an early, extreme winter and extended global demand.

Price reacts to supply/demand imbalances.  In this case, if the demand far exceeds the supply capacities headed into the end of 2019, we could easily see Natural Gas rally above $4.00 very quickly.  Could it rally even higher and take out the $5.00 level?  Absolutely it could if the proper dynamics continue related to supply and demand globally.

CURRENT DAILY NATURAL GAS CHART

Remember to read the link from October 5th.  We’ve been warning of this move for more than 60+ days and have authored multiple research posts attempting to keep our followers aware of this setup.  This trade setup was telegraphed for us many months ago.  All you had to do was follow our research and stay aware of the trends as this momentum base setup in October near $2.25.

Natural Gas moved higher by nearly 2% on October 24th as our researchers predicted nearly a month ago.  This incredible momentum base below $2.30 seems to be a very strong support level for Natural Gas.  We believe this next rally may be bigger than the last rally which reached a high near 2.70.  Our Fibonacci price modeling system is suggesting a target price of $2.95 to confirm a new upside price trend.  This means the price would have to rally more than +26.5% from current levels to confirm a potentially much bigger upside price move.  Can you imagine seeing Natural Gas climb to above $4.50 again – like last year?

Near the end of October 2018, Natural Gas began an upside price move that really excited investors.  The first upside price leg began in mid-September, near $2.75 and rallied to a level near $3.35 – a +21.6% upside price move.  After a brief 12 to 15 day pause, another price rally began in early November 2018 near $3.23 and continued very aggressively over the next 11+ days to rally up to $4.93 – a +57% rally.

We issued a natural gas trade using UGAZ to members and this week we locked in 38.7% profit on a portion of our position and there is still a lot of upside potential left.

Is the same type of price advance could be setting up for an early November price rally from the $2.30 level to somewhere above $3.50?  This would result in a +50% price rally from recent lows without using any leverage which would be just amazing.

October 5, 2019: NATURAL GAS RELOADS FOR ANOTHER PRICE RALLY

PREVIOUS NATURAL GAS FORECAST DAILY CHART

Our proprietary Fibonacci price modeling system is suggesting the $2.95 price level is critical for any further upside price action to continue above $3.00.  The price must cross above the $2.95 level on a strong closing price basis before we could consider any higher price levels to become valid.  Our researchers believe that suggests the $2.75 to $2.85 level becomes a very real upside price target for skilled traders to pull some profits and protect any open long positions.

PREVIOUS NATURAL GAS FORECAST WEEKLY CHART

This Weekly Natural Gas chart highlights our Fibonacci price modeling system’s results and the Bullish Trigger Level near $2.95 (The GREEN LINE).  Pay very close attention to how quickly Natural Gas moved higher in November 2018.  If another move happens like that in 2019, we could be setting up for a big gap higher followed by about 10 to 15+ days of incredible upside price action.

Currently, the price of Natural Gas has crossed the Daily Fibonacci price modeling system’s Bullish Price Trigger level near $2.29.  This suggests that we are now in a confirmed bullish trend as long as the price stays above the $2.26 level on a closing price basis.  We would expect a continued moderate price rally from these levels to move price away from the momentum base level over time – before any breakout upside price move may begin.

This could become one of the best trades, besides Silver and Gold, headed into the end of 2019.  Get ready for some big volatility in Natural Gas as winter weather takes over much of North America.

November will be the month of breakouts and breakdowns and should spark some trades. I feel the safe havens like bonds and metals will be turning a corner and starting to firm up and head higher but they may not start a big rally for several weeks or months.

October was a boring month for most major asset classes completing their consolidation phase. Natural gas was the big mover in October and subscribers and I took full advantage of the bottom and breakout for a 15-22% gain and its till on fire and trading higher by another 3% this week already.

If you like to catch assets starting new trends and trade 1x, 2x and 3x ETF’s the be sure to join my premium trade alert service called the Wealth Building Newsletter.

Happy Trading
Chris Vermeulen
www.TheTechnicalTraders.com

Nat Gas, Crude Oil, Fed Rate Cut

If you like to catch assets starting new trends and trade 1x, 2x and 3x ETF’s the be sure to join my premium trade alert service called the Wealth Building Newsletter.

Happy Trading
Chris Vermeulen
www.TheTechnicalTraders.com

Warning: Credit Delinquencies To Skyrocket In Q4

Farm delinquencies skyrocket +24% year over year as global trade issues and the ability to service credit continues to be a problem.  This is a tell-tale sign that the US Fed decreased the Prime Rate recently as a result of broader credit issues related to higher interest rates for corporate and other borrowers.  The last thing the Fed wants is another collapse on the lending markets similar to 2008-09.

(source: zerohedge.com)

Low growth continues to plague the global economy as this extended run in the US stock market continues to mature.  There are many questions all traders are asking – will it continue higher or have we reached a new peak in price activity?  Many economists believe we are ending an expansion period related to the revaluation of the global markets after the 2008-09 credit market collapse.  The typical price cycle of approximately 6~7 years has extended beyond traditional bounds and many analysts are wondering how it may end?

If an economic cycle has truly come to an end, we should expect to see some change in economic activity levels, consumer confidence and mortgage/housing activities.  The end of an economic cycle is usually aligned with some moderate level of economic contraction and a slowing of economic activity.  The one thing that may continue throughout this end of the mature economic cycle is the “capital shift” where capital rushes away from risk and into the US stock market as long as the reversion event stays at bay. (source: zerohedge.com)

Consumer Confidence levels have fallen recently to new lows.  This is a very clear sign that consumers expect the economy to contract a bit based on continued trade-related issues and the overall maturity of the economic cycle.

Most of the “rest of the world” has continued to binge on credit/debt since the 2008-09 credit crisis.  This is a very clear sign that the US Fed and global central banks have pumped trillions of dollars out into the consumer, corporate and global markets over the past 8+ years.  The question for all of us is when and if this debt becomes a liability – when does this credit become un-serviceable?

China and Asia were some of the biggest consumers of US credit/debt since 2008-09.  This graph highlights the incredible 10,667% increase in debt in China since the 2008-09 levels – from approx 300 million to 3.2 billion in 8-9 short years.  It appears the global economic rally was really the “binge on credit” rally.

US Mortgage debt has climbed to near all-time highs recently as well.  This is a sign that the US housing market has rallied to levels that are very close to the peak levels in 2007-08 – just before the crash.  It may also be a sign that cracks may soon start to appear in the housing markets across the US as delinquencies and foreclosures may continue to skyrocket.  People need to be able to service this debt/liability effectively in order to maintain their assets.

We believe the path of least resistance in the US stock market is higher – at least until price breaks below the current price trend channel.  The continued capital shift where foreign investors continue to pour capital into the US stock market will likely continue until some event shakes the confidence of these foreign investors.

You can see from our Monthly chart of the ES, below, we have highlighted the longer-term economic maturity trend which typically lasts about 6~7 years.  The rotation in 2015-16 was very mild as the US Fed continued a type of quantitative easing process by buying bonds and keeping interest rates historically low.  Because the US stock market actually failed to experience any real price rotation near this 2015~2016 cycle date – we believe the current cycle highs are extremely extended and related to the credit binge that has taken place over the past 8+ years.

Our cycle research suggests we may have already past a cycle peak event and may be operating on borrowed time right now.  This suggests that any further upside price activity in the US stock market may be a function of the overall strength of the US stock market compared to the weakening economic activity throughout the world.  In other words, the capital shift process is still feeding large amounts of capital into the US stock market as foreign investors flee risk and uncertainty.  If and when this ends, the US stock market will likely begin a price reversion process that may result in a very deep price correction.

This last Monthly ES chart provides a closer look at the technical indicator data that we believe highlights the overall weakness that is building up in the US stock market.  Even though we’ve recently pushed to new all-time highs, our technical indicators are suggesting that price is actually weakening in the upside price trend and could break lower at any moment.

The Direction Movement index, Momentum, and MACD of Momentum are all highlighting a weakening price trend that appears to be setting up for a broader downside price move eventually.  Traders need to be very aware of the risks in this extended upside price trend and to prepare for the potential of a new credit crisis event related to the current credit levels that are far more extended than in 2008-09.  If something breaks in the credit markets now, there appears to be nearly 5x to 10x the amount of credit extended throughout the global than there was 8 short years ago.

November will be the month of breakouts and breakdowns and should spark some trades. I feel the safe havens like bonds and metals will be turning a corner and starting to firm up and head higher but they may not start a big rally for several weeks or months.

October was a boring month for most major asset classes completing their consolidation phase. Natural gas was the big mover in October and subscribers and I took full advantage of the bottom and breakout for a 15-22% gain and its till on fire and trading higher by another 3% this week already.

If you like to catch assets starting new trends and trade 1x, 2x and 3x ETF’s the be sure to join my premium trade alert service called the Wealth Building Newsletter.

Happy Trading
Chris Vermeulen
www.TheTechnicalTraders.com

Metals Beginning Another Rally Attempt?

Recently, the US stock market rallied to new all-time highs which prompted an almost immediate celebration.  A day later, the US stock markets reacted by setting up multiple top rotation patterns.  The next day, a moderate price rally set up after the US Fed decreased rates by 25 basis points.  The next day, the markets sold off dramatically with heavier volume – prompting the metals and the VIX to rally.

We’ve been warning for weeks that the US markets were setting up into a Pennant/Flag formation within a tightening range biased to the upside.  See our index trend analysis signals here. We believe the move in precious metals today may be indicative of a breakout/breakdown move in the markets – near the apex of the pennant formation on the Gold chart, below.

We believe this Pennant/flag formation on the Daily Gold chart aligns with the longer-term pennant formation that setup in the US stock market.  We believe the breakout move in metals may be a very strong indication that the US stock market may begin a reversion price move, a deeper downside price rotation, that may result in a spike in the VIX and metals while the US, and potentially global, stock markets react to weakness that may drive a price correction over the next few weeks.  This type of price correction may be just like the correction that happened near the end of 2018.

As we’ve been warning over the past few weeks, we believe the US and global stock markets are setting up in a very fragile price pattern.  One that may result in a moderately deep price correction that may surprise investors over the next few weeks and months.  Be prepared for some very large volatility and an increased risk of a potentially very deep price correction over the next 60 to 120+ days.

If gold continues as we suspect, a rally to the $1600 to $1650 level may be seen very quickly.  Ultimately, this rally may continue to levels above $1700 to $1750 before the end of 2019.  The speed of the rally in metals will relate to the amount of fear generated by any weakness in the global markets and the speed and severity of potential price collapse.

Silver, which should lag behind Gold initially, may see one of the biggest rallies drive prices well above $22 to $23 on the initial upside move – we may just have to wait for it to accelerate as Gold will likely lead this rally.

At this point, price is the true indicator.  Technical analysis, price patterns, price theory, and other resources allow us to better understand what is likely to happen in the future.  Any price failure after the US stock market reached these nominal new highs will prompt an attempt to retest recent price lows.  This means the US stock market may attempt to retest the June 2019 lows or the December 2018 lows on deep price correction.

Read some of our past research posts to understand why this setup is so important for all traders to understand.  Failure at this level could be a critical top formation that pushes the markets into a new trend.

October 29, 2019: LONG-TERM PREDICTIVE SOFTWARE SUGGESTS VOLATILITY MAY SURGE

October 20. 2019: BLACK MONDAY 1987 VS 2019 – PART II

September 22, 2019: THE EQUITIES WEDGE AT THE EDGE – FRONT AND CENTER

CONCLUDING THOUGHTS:

October was the month of most major asset classes completing their consolidation phase. Natural gas was the big mover in October and subscribers and I took full advantage of the consolidation and breakout for a 15-24% gain and its till on fire and ready to rocket higher.

November will be the month of breakouts and breakdowns and should spark some trades. I feel the safe havens like bonds and metals will be turning a corner and starting to firm up and head higher but they may not start a big rally for several weeks or months.

If you like to catch assets starting new trends and trade 1x, 2x and 3x ETF’s the be sure to join my premium trade alert service called the Wealth Building Newsletter.

Happy Trading
Chris Vermeulen
www.TheTechnicalTraders.com

Long-Term Predictive Software Suggests Volatility May Surge

Over the past few weeks and months, a number of key economic data has continued to rally the US major indexes towards new highs, hopes of a US/China trade deal, a continued shift of capital in the US markets for protection and safety, and moderately strong US economic indicators and an earning season that appears to be moderately strong for Q3 of 2019.  The interesting facet of this move higher is that it is happening while trading volume has diminished dramatically in the SPY.  The futures contracts, the ES, YM, and NQ, continue to show relatively strong volume activity though.

Additionally, the overnight Repo markets have risen to the attention of many skilled analysts.  The concern is that the continued US Fed support of the overnight Repo facility may be a band-aid attempt to support a gaping credit crisis that is brewing just outside of view.  We’ve been doing quite a bit of research over the past few weeks regarding this Repo market support by the US Fed and we believe there is more to it than many believe.  We believe certain institutional banking firms may be at extreme risks related to derivative investments, shadow banking activities and/or global commodity/stock/currency/asset risk exposure.  The only answer we have for the extended Repo facility at increasing levels is that the institutional banking system is starting to “fray around the edges”.  Thus, we believe some larger credit risk problems may be just around the corner.

Our longer-term analysis continues to suggest that “all is fine – until it is not”.  Our belief that a capital shift that has been taking place over the past 5+ years where foreign capital continues to pour into the US markets is driving US stock market prices higher.  There is evidence that the capital shift into the US has slowed over the past 5+ months, yet one would not notice this by looking at these longer-term charts.  The point we are trying to make today is that price peaks near current highs have, historically, been met with strong resistance and collapsed by 8 to 15% on average.

SP500 INDEX – 2 MONTH LONG TERM CHART

This ES 2 Month chart highlights the resistance channel initiated near the 2003 lows (the lower YELLOW price channel line) and how that level has continued to act as moderate price resistance throughout most of 2017, 2018 and 2019.  We believe that price, at current levels, must either rally above this level and be capable of sustaining higher price levels (which would be supported by stronger forward guidance, earnings, economic data and/or investments), or will attempt to rotate lower from these current highs because price is simply unable to support/sustain higher price levels given the current global economic data.

When we attempt to rationalize the potential for price given the Repo issues, the current global economic data/news, the uncertainty of a US Presidential election cycle only 12 months away, the BREXIT deal hanging out in the near future and recent currency rotations, we believe is transitional shift is taking place in the markets in preparation for some type of surge in volatility associated with a very strong potential for extended price rotation.

NASDAQ 2 WEEK CHART – ADAPTIVE DYNAMIC LEARNING (ADL)

Our Adaptive Dynamic Learning (ADL) price modeling system on this NQ 2-Week chart highlights what the ADL system suggests as a moderate price rotation setting up over the next 2 to 8+ weeks.  This data originates on August 5, 2019, and the alignment of the future predicted price levels (the DASHES) on this chart shows how accurate the ADL future price predictions have been over the past 3+ months.  Currently, the ADL predictive modeling system is suggesting a price reversion is about to take place in the NQ where price may fall 10 to 15% over the next 2 to 6+ weeks.  Then, the price will attempt to set up a momentum base and begin to move higher near the end of 2019 or early into 2020.

DOW 2 WEEK CHART – ADAPTIVE DYNAMIC LEARNING (ADL)

This YM 2-Week chart showing the same type of ADL predicted price levels suggests the YM may also see some type of price reversion, yet the size of this reversion is much smaller than the NQ.  The ADL predictive modeling system is suggesting the YM may rotate to levels near 26,000 or lower before finding immediate support and attempting a renewed rally back to levels near 27,000.

CONCLUDING THOUGHTS:

What this suggests is that the NASDAQ and S&P500 may become much more volatile than the Dow Jones index over the next 2 to 6+ weeks.  Volatility may surge on a reversion move in the ES and NQ over the next few months while the YM remains rather calm comparatively.  Skilled traders must understand that subtle risks are starting to show throughout the global markets.  Foreign markets are starting to show signs of extended contraction – China and Asia in particular.  The situation in Europe and with the Euro are open to interpretation.  Our opinion is that risk levels have already exceeded a comfort level in this arena.

Should some event take place where the global banking system and/or Repo market continue to attempt to take up the slack – traders will become even more concerned that “something is broken” and could pull massive amounts of capital out of the markets fairly quickly.  If this happens when volume and volatility are very low, we have a situation where simple price exploration could present a real problem (think FLASH CRASH).

Skilled traders need to stay very cautious near these new highs.  We may see a surge in volatility over the next few weeks unless the markets are able to settle the concerns raised by analysts and others.  Headed into the end of 2019, into a contentious US presidential election cycle and with obvious signs that something may be breaking in the global banking system, now is the time to protect and prepare for the unknown.  We can’t make this any clearer – consider this a warning alert from www.TheTechnicalTraders.com.

Nominal New Highs Reached, Skilled Traders Should Still Be Cautious

The US Stock market rallied on Friday, October 25, on TESLA earnings crushing expectations as well as news that any positive US trade deal outcomes could see almost immediate removal of future tariffs that are scheduled to be implemented near the end of October.  This was enough for the markets to rally from the start of trading and continue to push higher until near Noon in NY.  After new highs were reached, the markets contracted a bit headed into the close.

Gold shot up early this morning before the news related to the US trade deal hit.  Our opinion is that this is a natural advancement in precious metals that is not new related or muted by some external factors.  Precious metals have been setting up a sideways FLAG formation for over 2 months and we believe the apex/breakout move is near.

Oil was somewhat flat to close out the week and closed trading near $56.63.  The past three days we have seen oil rise from the $53 level to the current price levels, but we believe oil is still fundamentally oversupplied and that price will continue to weaken over time.

The real question before all of us right now is will this new nominal high represent a new breakout bullish price trend heading into a US Presidential Election cycle, or is this more price rotation within a defined price range?

If you consider all the shifting aspects of the US political and economic landscape as well as the current geopolitical and economic factors, we believe any real breakout move will come as we get closer to November 2020 – not now.  We believe this is still price rotation and we believe the NQ is the likely cause of this new nominal price high on Friday.  Tesla crushed earnings and that set a positive tone for Friday’s trading.

TRANSPORTATION INDEX DAILY CHART

The TRAN, Transportation Index, is still trading near current resistance and has not shown any true new price high yet.  It will be interesting to see how the markets open up early next week and what news may drive a new price trend by then.

MID-CAP SECTOR DAILY CHART

The Mid-Cap has failed to rally to recent price highs which suggest this is not a broad market rally.  We would want to see more defined price advancement across all sectors and above recent price highs to call this a broad market rally/breakout

Pay attention to the new that originates this weekend.  We don’t believe a deal will be reached with regards to trade as quickly as some others may believe and we still believe the next 12+ months of the US Presidential election cycle will be full of surprises.  We may start to get more clarity of a true price trend after the New Year (2020).  Until then, we’re staying cautious of these price rotations and picking our trades.

I urge you visit my Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

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. 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. 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.

Chris Vermeulen
www.TheTechnicalTraders.com

The Divergence of Gold And Bitcoin – Which Represents A True Safe-Haven?

Recently, Mark Zuckerberg appeared before the US Congress to discuss his new Libra project and to attempt to calm concerns related to his new global alternate currency project.  It appears this project is putting global political leaders in a particularly powerful position of either accepting the Libra project as a viable future solution and implementing new laws and regulations in support of it or to shelve the idea while they consider the local and global risks associated with a project that creates a new class of global currency. (Source: https://www.bloomberg.com)

We believe the risks associated with a massive corporate and international backed Crypto/Alternate currency are far too great, at this time, for the US government to attempt to consider with only 12+ months to go before the US Presidential elections.  This is almost like opening Pandora’s Box in terms of total global risks and outcomes.  It becomes almost impossible for the US government, Federal Reserve or any other global central bank to be able to protect its citizens from the risks associated with any type of technology collapse, fraud, hacking or any other unknown risks associated with such an idea.

The concept of a “Safe-Haven” may come into question over the next 10+ months as investors continue to question what may happen in the global markets, global political events and asset valuations related to Cryptos, Precious Metals, and foreign currencies.  Our researchers believe mature economy currencies will quickly become new currency Safe-Havens for global investors over the next 10+ months as banking, credit and economic risks continue to shake out weaker markets.

Cryptos may see some support as price rotates over the next 10+ months prior to the US Presidential elections, yet we believe the real global asset markets (stocks, currencies, debt/credit, and bonds) will take center stage as the world transitions through a very tumultuous period prior to the November 2020 US elections.  Even for a period of time shortly after the US elections, global assets will continue to reposition as future economic and regional asset value expectations shift.

There is a very real potential that global investors continue to seek safety and liquidity in the global major markets, economies and global currencies.  Additionally, Precious Metals continue to show very little signs of weakening over the past 12+ months.

In fact, Precious Metals have continued to stay much stronger than many other investments over the past few years.  Gold is up +17.60% from October 2017.  Palladium is up 78.81% since October 2017. Silver is up 4.9% over that same period of time.  Once the next upside price leg begins in Precious Metals, we may see a massive price increase in Gold and Silver.  Supply issues continue to push Palladium prices higher as well.

Imagine being able to trade the precious metals sector easily with little downside risk and only being involved during the rallies and not the selloffs, all while generating 2x the return that GDXJ has return in 2019. Take a look at this trading strategy here.

Gold is setting up in a manner that is very similar to what happened in April 2019 – a sideways momentum base pattern that eventually broke to the upside in early June 2019.  Once that move higher began to take place, the continued move to the upside was very quick and extensive.  We believe the next upside move in Gold and Silver will be very similar – a moderately slow rotation out of the momentum base, then a fast acceleration to the upside as global investors realize the shift to safety has begun again.

We believe Cryptos may be left on the sidelines as investors prefer more traditional assets as a measure of safety as global concerns continue to weigh on investor’s minds headed into a very contentious US presidential election.  Currencies, Metals, Mature global market assets and true value stocks may become the investment of choice until we see some real clarity for the future from the global markets, global central banks, and global political leaders.

I urge you visit my Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

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. 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. 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.

Chris Vermeulen
www.TheTechnicalTraders.com

US Markets “Roll Over” On Earnings and Economic Data At Channel Highs

As we near the end of October 2019, a very interesting price setup is taking place across many of the US market sectors recently.  We only have a total of about seven trading days left in October 2019 and the Financial Sector ETF is rolling over with what appears to be an Engulfing Bearish price pattern near price channel highs.  Additionally, the tech-heavy NASDAQ (NQ) has been mostly weaker compared to the ES and YM.

On September 30, 2019, we published this research post that highlighted why our predictive modeling systems suggested the S&P 500 and NASDAQ market sectors would become much more volatile than the Dow Jones Industrials: MODELING SUGGESTS BROAD MARKET ROTATION IN THE NQ & ES.

We believe this research is still very valid given the current price rotation near these price channel highs and given the potential that the Dow Jones stocks may become relatively stronger alternatives than the S&P 500 and NASDAQ sector stocks.

We believe a downside price rotation is setting up in the US and global stock markets and we believe the potential for large price moves exists in at-risk sectors like the Financials, Technology, Biotech, Energy, Services and other sectors that do not directly relate to what we feel are “essential consumer staples”.  The Dow Jones Industrials Index is full of companies that traditionally perform better in a consumer-based economic contraction for investors – which is why we believe the YM will present a very unique opportunity going forward for skilled traders.

FAS DAILY CHART, THE DIREXION FINANCIAL BULL ETF

This first FAS Daily Chart, the Direxion Financial BULL ETF highlights the price channel in YELLOW and highlights the recent price rotation near the $80 price level which constitutes a potential “new lower high” price rotation.  Our longer-term cycle analysis tools predict a downside price move initiating over the next 7 to 10 trading days.  We believe this new downside price trend could push price levels below the lower price channel level if this move is associated with external news or economic data that panics the markets.

IWM, RUSSELL 2000 ETF, DAILY CHART

This IWM, Russell 2000 ETF, Daily chart highlights an “island Doji top” formation that is setting up as a very unique price formation.  When Doji type candles form with a gap above the previous bars, this is often considered an “island top” type of formation.  Doji candles represent indecision and uncertainty.  They are often found near-critical top and bottom formation.  In this current formation, we believe the island top formation is a very clear warning that a major price top is setting up in the Mid-Caps which would also be considered a “new failed price high” formation.  Ultimately, the $144.50 level becomes critical support if price falls.

SSO, PROSHARES ULTRA S&P 500 ETF, DAILY CHART

This SSO, ProShares Ultra S&P 500 ETF, Daily chart highlights a similar price range setup.  Notice how all of these sectors have rotated into these ranges over the past few months – very similar to what happened in 2015/16 prior to the 2016 elections.  We believe the uncertainty related to global trade, global economics and the US political “circus” will continue to put pricing pressure on the US stock market and global markets.  We believe the inability to achieve “new price highs” throughout many sectors is a very clear warning that a larger downside price move, a type of price reversion, maybe setting up and we have been trying to warn our followers to be very cautious in taking unnecessary risks at this time while trading.

If our cycle research and predictive modeling systems are correct, we could be setting up for a downside price move that may act as a “true price exploration/reversion event” and potentially target levels that may be below the June 2019 lows.  If this move is associated with some external news event or global crisis event, we may see prices fall to levels below the December 2018 low price levels.

Overall, we urge all skilled technical traders to stay very cautious over the next few months.  Target solid trades that present very clear opportunities and properly position your trades to attempt to mitigate unknown risks.  This is not the time to go “all-in” on anything as the markets are far more capable of being irrational than you are likely to be able to handle the risks that are associated with a crazy market move.

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 visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-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 Free 1oz Silver Bar!

Chris Vermeulen
www.TheTechnicalTraders.com

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.  Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed.  Visit our web site to learn how to take advantage of our members-only research and trading signals.

Indexes Struggle and TRAN Chart suggests a possible top

Nearing the end of October, traders are usually a bit more cautious about the markets than at other times of the year.  History has proven that October can be a month full of surprises.  It appears in 2019 is no different.  Right now, the markets are still range bound and appear to be waiting for some news or other information to push the markets outside of the defined range.

We still have at least one more trading week to go in October, yet the US markets just don’t want to move away from this 25,000 to 27,000 range for the Dow Industrials.  In fact, since early 2019, we have traded within a fairly moderate price range of about 3200 points on the YM – a rotational range of about 11% in total size.  Historically, this is a rather large sideways trading range for the YM – nearly 3x the normal volatility prior to 2015.

DAILY YM CHART

This Daily YM chart highlights the trading range that has setup over the past 5+ months with the YELLOW LEVELS.  Price continues to tighten into a more narrow range as we progress towards the end of 2019.  Our researchers believe a moderate price breakdown will occur near the apex of this move which will act as a “price reversion event” and allow the markets to rally into 2020 and beyond.  We are using our proprietary price modeling tools to attempt to identify any signs that can help us validate this research.  Until we have some type of validation of the move, we can only wait as the risks associated with taking trades at this time are much higher than normal.

The SP500 cycle analysis I did last week provides some solid forward-looking direction as well.

TRAN – TRANSPORTATION INDEX

The TRAN (Transportation Index) is also confirming our analysis of a sideways price range with very little opportunity at the moment for a high-risk trade.  The TRAN gapped higher on October 21 which may set up a massive top pattern formation, possibly a Three River Evening Star pattern of a massive Engulfing Bearish pattern.  We’ve highlighted the resistance range in RED on this chart and the support range in GREEN.  Caution is the name of the game right now.  Let the markets tell us what is going to happen next.

THE WEEKLY CHART OF THE TRAN

This Weekly chart of the TRAN shows a clearer picture of the sideways price range that is setting up and how close we are to the APEX of the Flag/Pennant formation.  Again, we know the markets are going to break clear of this Flag/Pennant formation, but the direction of the breakout will likely depend on future news events that we can’t predict.  Any global failure or crisis may push the markets lower.  Any global victory or success may push the markets higher.  Right now, we believe the risk factors are very high and we are suggesting that traders need to be extremely cautious throughout the end of the year.

CONCLUDING THOUGHTS:

There are still massive opportunities in sector ETFs and commodity ETFs for traders that want to find quick/short-term trades.  Gold and Silver are setting up major momentum bottoms.  Natural Gas continues to set up a massive momentum bottom and Technology continues to set up a major topping type of pattern.  The shift in capital away from risk will surely drive some really big trends over the next few weeks and months.  A clear picture of what to expect looking forward up to 45 days I still rely on my market trend charts to know when I should be buying or selling positions. Skilled technical traders will be able to find incredible opportunities if they are patient and don’t “blow up” their accounts chasing risky rotation.

I urge you visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-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 Free 1oz Silver Bar!

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.

Chris Vermeulen
www.TheTechnicalTraders.com

Black Monday 1987 vs 2019 – Part II

Our research team has been attempting to answer the question that seems to be on everyone’s minds right now – are we setting up another Black Monday type of event in the global markets and what should traders/investors know before the event potentially takes place.  Our research team has spent the past few weeks trying to better understand the global economic events that took place 8 to 20+ years before the Black Monday event happened and have been particularly interested in the 10+ years just before the Black Monday event.  Additionally, we’ll focus on the recovery event that took place after the Black Monday collapse completed.

In Part I of this article, we attempted to highlight some of the similarities of today’s global economic world to the scenario in the early 1980s.  Many of you may not be old enough to remember the 1960s or 1970s, but at least one individual on our research team is old enough and was actively trading in 1985.  His interpretation of the economic events prior to the 1987 Black Monday collapse and how they may be similar to today highlight some very interesting facets for our readers.

The late 1970s was a period where most Americans worked hard, tried to play by the rules and struggled to attempt to get ahead in a world that seemed to be a little out of order.  The 1960s was a period of awakening in America where music, culture, and people shifted away from the WWII era and post-WWII era thinking.  Vietnam, Korea and a host of other issues, as well as rising US interest rates, presented very real problems for many Americans.  By the time the US entered the 1980s, Americans had already experienced the assassination of John F. Kennedy, the race to the moon, multiple wars, victories and defeats, a cultural shift to near the extremes and another shift moving our culture back closer to center, Oil/energy crisis events, a moderate malaise of economic prosperity, and continually higher US interest rates.  Then the US elected Ronald Reagan.

It seemed to everyone that Ronald Reagan had unlocked secrets to the American opportunity that had been somewhat lost over the previous few decades.  In reality, the first 2 to 3 years of the Reagan Presidency resulted in very mixed economic results – almost identical to President Carter’s.  The biggest identifying factor that our research team found was that the US Federal Reserve altered its rate policy in the early Reagan years from a “raising stance” to a “declining stance”.  Throughout Carter’s term, the FFR rate change averaged +2.08.  Throughout the first four years under Reagan’s term, the FFR rate change averaged -0.7825.  By 1984, the US Federal Reserve had lowered rates, twice, by an average of over 7% after raising rates every year since 1977.

(source: https://einvestingforbeginners.com/us-gdp-growth-history/)

Is this similar to what is happening today?  The US Federal Reserve began raising rates in December 2015 and continued to raise rates until August 2019 – nearly 3.7 years of rate increases after nearly a decade of near-zero interest rates prior to 2016.

Another interesting facet is what our research team calls the “capital shift” that has taken place since just before 2015 – where foreign capital has poured into the US stock market and asset markets for safety, security, and returns.  Prior to the point where capital controls were instigated in China (in 2015), a moderate capital shift event was already taking place.  Once China installed these new capital controls, attempting to prevent capital from fleeing their local economy, a broader shift took place where the US markets began to rally and where foreign capital was more actively attracted to the US stock/asset markets because of the strength of the US Dollar and the continued rally in the US stock market.  This is similar to what happened in 1983 through 1987.

These comparison charts of the 1980s and the current 8+ years of the S&P 500 charts highlight some very interesting facets of both peaks.

_  Support set up nearly 24 months prior to the collapse in 1987. This support channel became the ultimate price channel level to break as Black Monday hit.

_  Price was able to rally above the upper price channel three times before the breakdown event began.  This upper price channel mirrors the lower price channel slope and is anchored near the tops after the initial support bottom is setup.

_  The final rally attempt before Black Monday initiated near early January 1987 – nearly 9 months before the peak and 10 months before the price breakdown began.

Within the current S&P 500 chart, some slight variations are present.

_  Support set up nearly 44 months prior to the peak in 2019. This support channel is the ultimate price channel level that acts as ultimate support for the price trend.

_  Price has been able to rally above the upper price channel four times since the ultimate support level was set up in 2016

_  The most recent rally attempt initiated near early January 2019 and has lasted nearly 9 months before the current peak.  As of today, we are nearly a full 10 months into this new price rally.

Although there are subtle differences in the price setup, rotation, and trend lengths, we can certainly see a similarity in between these two chart and we believe the recent price advance in the US stock market, along with the fact that capital has continued to pour into the US markets over the past 3+ years, sets up a similar type of event where current price levels, valuation, and risks may have been under-weighted dramatically.

Could another Black Monday type of event happen in today’s global markets?  Certainly, it could.  All it would take is for global traders/investors to suddenly realize there is a new degree of risk or excessive price valuation that currently exists in the markets and to begin liquidating assets in a mass event.

What would it take for something like this to happen?  Quite possibly, China or Hong Kong could, again, present a very real risk for the global markets if a threat to the lower price support channel becomes threatened.  A collapse in true value would relate as a potential “true price exploration” event (a reversion event) where global traders may attempt to retest substantial historical support.

Our belief is that true historical support currently resides near 1860 on the S&P 500 – which aligns with the same type of price reversion that occurred in 1987.

Time will tell if we are currently set up for another Black Monday event.  In fact, we may know as early as Monday, October, 21.  Until the lower support channel is seriously threatened by any new downside price move, the chances of this type of event happening are fairly low.  As you are well aware.. things can change very quickly.  Pay attention to near originating out of Hong Kong, China or Asia over the weekends as any type of real risk could spill over into the UK and US markets very early on Mondays.

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 visit my ETF Wealth Building Newsletter and if you like what I offer, join me with the 1-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 Today to Get a Free 1oz Silver Bar with a subscription – Offer Ends This Week!

Chris Vermeulen
www.TheTechnicalTraders.com