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Weakness Appears To Be Setting For This Week’s Economic Data

As the world reacts to the global economic slowdown because of the COVID-19 virus event and the massive stimulus programs and central bank efforts to support the global economy, investors still expect weakness in the US and foreign markets.  We believe this expected weakness will not subside until news of a proper resolution to this virus event is rooted in the minds of investors and global markets.

Hong Kong and China are currently concerned about experiencing a “third wave” of the COVID-19 virus within their society.  As the economies open back up to somewhat normal, people are very concerned that a renewed wave of new infections will suddenly appear and potentially result in another shut-down event or infectious cycle?  We believe all nations are watching what is happening in Hong Kong and China as they attempt to reopen their economies.

The rest of the world is still battling the rising infection rates and dealing with the economic shutdowns that have brought the global economy to its knees.  Europe, Japan, Canada, and the US are all experiencing vast disruptions to their economies and commodity prices and demand expectations are collapsing as a result.

Nearly a week ago, we issued a research article that suggested our proprietary Fibonacci Price Modeling tool’s key resistance levels may become a very valid ceiling for any price recovery.  It appears this is happening in the markets as the NQ Daily chart, below, shows.

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DAILY NASDAQ (NQ) CHART

The NQ resistance level, near 7880, has acted as a soft ceiling in the NQ over the past 4+ trading days.  Today, the NQ briefly rallied above this level, then rotated downward below this level again to confirm this key resistance level.  We believe this critical Fibonacci resistance level may continue to act as a price ceiling over the next few trading days and push prices lower as economic news and expectations hit the news this week and next.

The next downside price target for the NQ is 6565 – new price lows.

If you have not seen this important technical analysis on the Nasdaq which I posted a couple of days ago, be sure to see these charts.

SP500 (ES) WEEKLY CHART

This ES Weekly chart illustrates another key resistance level near 2679.  Although the ES price has not rallied up to reach this critical Fibonacci resistance level, we still believe this level is acting as a price ceiling and that the ES will weaken as future expectations are confirmed by earnings data, economic data and other collateral damage to the global economy.

We are still very early in understanding the total scope of this virus event.  The US and other global central banks are attempting to front-run any weakened expectations as a result of this virus event.  We continue to believe the extended collateral damage to the consumer, business and other aspects of the economy are yet to come.  Most recently, consumer delinquencies have begun to skyrocket and the news is being printed about landlords and renters being unable to satisfy obligations on April 1st.

This is part of the reason why we believe further caution is warranted at this time in the markets. We issued an Important Trade and Investment Alert Yesterday.

Our research team believes a deeper price low will likely set up over the next 30+ days to establish a true price bottom.  As we’ve warned, we believe extended collateral damage to the US and global economy will soon become better understood and the extended shutdown of the US and other economies only manages to complicate any positive expectations for a bottom.

We believe a deeper price low will set up within the next 30+ days and we urge skilled traders to pay attention to the broader expectations of the markets.  Earnings data and other economic data will continue to stream into the news centers over the next 30+ days.  Don’t get too aggressive with trying to buy a bottom in the markets just yet.  Be patient and wait for the markets to show you when the bottom has really setup.

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 short-term swing traders.

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 visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.

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 Strategist
Founder of Technical Traders Ltd.

The Bond Market Is Telling Us Some Weakness Could Be Entering The US Markets

Chris Vermeulen joins me to look at the charts for US markets, bonds, gold, and natural gas. He points out that bonds have rebounded and are showing that some of the smart big money is taking a more defensive position. However gold is lagging the moves in bonds. Also considering where the VIX had dropped to we could finally see a US market correction that could bring some fear back into investors’ minds.

I want to wish everyone a Happy Thanksgiving and if you find this type of analysis interesting be sure to visit my website and sign up to get both my swing trade and investing ETF trade signals at 41% discount, plus a free bar of silver or gold with my Black Friday Offer Today!  Visit: www.TheTechnicalTraders.com

Chris Vermeulen
Technical Traders Ltd.

Adaptive Predictive Modeling Suggests Weakness Into 2020

Our Adaptive Dynamic Learning (ADL) predictive modeling system is suggesting the Transportation Index will fall to levels near $10,000 over the next 2 to 3 weeks which would indicate moderate price weakness in the US stock market and the global stock market.

Our ADL predictive modeling system attempts to model future price activity by finding and mapping critical price and technical elements within the historical price action.  In a way, this is like mapping the future by attempting to learn from the past. You can get all of my trade ideas by opting into my free market trend signals newsletter.

WEEKLY TRANSPORTATION INDEX CHART #1

This first Weekly Transportation Index chart highlights the ADL predictive modeling results since the end of July 2019.  Notice the CYAN and YELLOW lines drawn on this chart showing what the ADL predictive modeling system suggested would happen over time.  This Technical ADL pattern consisted of SIX historical reference points and suggests the last three weeks’ price levels have a 63 to 84% probability rate.  This would indicate a fairly strong probability that prices will fall as the ADL predicts.

WEEKLY TRANSPORTATION INDEX CHART #2

This second Weekly Transportation Index chart highlights the ADL predictive modeling results from early September 2019.  The results are quite similar across these two charts.  Although the September results highlight a bit more potential price rotation than the earlier July ADL results.

This September ADL predictive modeling chart suggests the TRAN price will fall dramatically to levels below $10,000, then recover a bit.  After that, the price will continue to settle near the $9,700 to $10,000 level throughout the end of 2019.  This downside price move in the Transportation Index suggests the US and Global markets will experience some extended price weakness over the next 3 to 6+ weeks.

The decline in the Transportation Index suggests an overall weakness in the global economy.  If that translates into true price action in the global markets, we could see a series of lower lows set up in the US Stock Market over the next 4 to 6+ weeks.

General price weakness may become a waning anthem for the global stock market headed into the start of 2020.  Take a look at this NQ (Nasdaq) Weekly ADL chart to see what our predictive modeling system is suggesting will happen over the next 60 to 10+ weeks.

If our ADL predictive modeling system is correct, the NQ will fall to price levels near or below $7,700 over the next 2 to 4+ weeks before attempting to settle near $8000 near the end of 2019.  A couple of days ago I shared an interesting article talking about the VIX ready to rocket higher which is linked to this pending decline. As a word of warning, the price can, and often does, move beyond the ADL predictive levels on extended/volatile price swings.  So be prepared for what may happen as price rotates.

As we are nearing the US Thanksgiving holiday weekend, we wanted to alert you to the fact that we’ve created incredible Black Friday membership subscription options for all of our followers to take advantage of.  These special savings rates will run through the end of November – so don’t miss out by joining the Wealth Building Newsletter right now!

Chris Vermeulen
Technical Traders Ltd.

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

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.

Are Real Estate ETF’s The Next Big Trade?

A subscriber recently mentioned getting into a real estate ETF so we started going over the data which may suggest the Real Estate sector could become the next big trade over the next 12+ months.  The news that the US Fed may decrease rates in an attempt to front-run global economic weakness and real estate market weakness may result in a waterfall event in local and regional real estate markets.  This type of event could become a fantastic trading opportunity for technical traders.

Recently we have been talking about the unit and very different opportunities in other physical assets like precious metals. Each metal is unique for market timing has its own personality. Our gold predictions are an eye-opener, why silver is awesome, and our most recent analysis on platinum is timely.

Overall, our research has been focused on one of the hottest markets anywhere in the US, California.  Los Angeles, Ventura County, Orange County, San Diego, and San Francisco make up the entire massive Southern California real estate market.  The California real estate market is a fairly strong indicator for weaker market segments because the number of transactions taking place across the 400+ miles spanning San Francisco to San Diego represent multiple trillions of dollars, vast segments of consumers and types of housing as well as an incredibly diverse economic landscape ranging from coastal regions, farming regions, cities, technology hubs, agriculture and dozens of others (source).

Our concern is that a rate decrease by the US Fed may be interpreted as a “move to attempt to abate fear” instead of a “move to support the markets”.  If this decrease in rates does happen and at-risk homeowners fear the Fed is trying to push buttons to adjust the consumer environment toward a “buying bias” and sellers become scared, then the race to sell faster (decreasing prices to attract buyers) may become the norm.  In other words, in an effort to support the markets, the Fed could take actions that remove the floor from the markets as sellers attempt to get the best price possible before buyers become aware of the “race to the bottom” in terms of pricing.

At-risk homeowners are under increasing pressures as pricing, income and other expenses seem to have wreaked havoc with what was a traditionally strong real estate market just three years ago.  It appears the Fed has raised rates just enough to start to show the cracks in the dam in Orange County and LA County, California.  The increasing number of blue dots, as well as the continue “price drops” in these areas, are a very clear sign that the “hot market” is now just “mildly warm and cooling fast”.  Prices are past the peak and are already starting to decline fairly rapidly.

Additionally, delinquency levels for commercial and industrial loans are starting to rise dramatically – much like what happened in 2007 – just months before the credit market crash in 2008.  Commercial and Industrial loan delinquencies rose sharply from 1.14 in Q2 2007 to 1.45 in Q1 2008 – eventually peaking at 447 in Q3 2009.  Currently, Delinquency levels are at 1.17 – up from 0.93 for Q4 2018.  If this trend continues past September, we could be looking at a very different real estate economic picture by the end of 2019 or early 2020 (Source).

CONCLUDING THOUGHTS:

Our interpretation of the US housing market is that buyers are becoming more opportunistic as they are watching the markets and watching how sellers are dropping prices in an attempt to attract a sale.  Buyers have not seen this type of activity since early 2007-08 or so when sellers were getting desperate to get out of their homes near the top of the market.  At the same time, watching how sellers attempt to push their home into the hands of buyers creates a shifting dynamic in the Real Estate market.  All the sudden it went from a seller’s market and is now shifting into a buyers market.

The rates of delinquencies, consumer confidence, and levels of disposable income all factor into the market’s reactions to price and sales activity.  When buyers believe it is opportunistic to buy, they will move mountains to attempt to acquire a home or an asset.  When buyers believe it is not opportunistic to buy an asset, they will likely decide to wait for a more opportunistic time to make their purchase.

In part II of this article, we will share our research that highlights the incredible trade setup related to the Real Estate market and how technical traders can position their portfolios for this move.

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 market and build wealth while others lose nearly everything they own during the next set of crisis’.

Chris Vermeulen
www.TheTechnicalTraders.com