Archive for month: March, 2016

The group of charts is this article may look a little noisy and overwhelming but this is really simple analysis if you look at in bite size pieces. Let me explain each chart and you will start to see the power that technical analysis provides those who accept this so-called witchcraft…

So here it is, No Fluff, Just Trading Stuff…

ES 24hr Trading – 240 Minute Chart:

This 24-hour moving chart gives you the ultimate view of the current stock market trend and overbought/oversold levels. I use simple moving averages to gauge trend and how far price is from a mean average price for a visual of how far the market is overbought or oversold.

Also, I use these MA’s as possible support and resistance levels to add confirmation when other indicators I use confirm at the same price and time.

At the bottom of this 24 hour chart you will see my custom panic selling volume indicator. When this spikes I know traders and investors are fearful and panicking out of positions. That is when I start looking for bottoms because I want to take the other side of these emotional trades placed by the masses.

SPY Daily Chart:

The daily chart of regular trading hours has many different characteristics from the 240 intraday chart. Where the 24-hour chart above shows ALL PRICE ACTION, the SPY only shows 1/3 of the days price (9:30am – 4pm ET). This is when most of the day’s volume is traded and I like to see how the masses/average joe traders perceive the market.

I use these time frame just for my cycle analysis which allows me to identify the market trend/direction (pink cycle line), to identify short-term noise or counter trend moves within that uptrend using the shorter cycle analysis (blue line).

Both of these cycle lines use a combination of the most active cycles in the market across multiple time frames and then are blended and weighted into one line. This tells subscribers and me where the market is most likely to move and when it should be struggling or reversing.

In fact, I saw the pullback coming in stocks and shorted the market for a quick counter trend trade, and exited it Thursday morning, and then go long again and this new SSO long SP500 trade is already up 3% within a few hours for us. Very exciting stuff to say the least.

ES Regular Hours 9:30am – 4pm: 30 Minute Chart

This is one of my trading signal systems that I am building which will identify these market conditions and will eventually autotrade them. This is my newest improvement and is still a work in progress, but I expect it will replace some of my other systems later this summer. My focus is to have something like this trade futures and the SP500 ETFs.

CONTINUE TO NEXT PAGE:

Gold’s Next 10% Move is Down, Not Up

Gold has been on a tear since the start of this year. It is the best performing asset with a 16% rise in 2 months, however, if you are planning to enter gold at these current levels, you are likely in for a big surprise. Gold is overbought and technical analysis is pointing to a drop in gold price to the $1150/oz. level, a good 10% lower from the current levels.

The equity markets are in a bounce/rally mode and likely to remain buoyant till end of March. Oil prices, which were causing a scare worldwide are also on the mend, the bottom is likely in place at $26/barrel.

The Nonfarm Payroll data, released on March, 4th 2016, has given a green signal to the FED to move ahead with the next proposed rate hike. Whether they go ahead with the hike or postpone it till the next meeting is difficult to assess, but the U.S. Dollar will likely trade with a bullish bias as long as the chances of a rate hike remains on the table.

A strong dollar dims the sheen on the yellow metal, if the dollar continues to remain strong, gold will likely come off towards our target low area of $1150.

Technically, gold has risen from its lows without any retracement, as shown in the chart below. Though gold has broken out of its long-term downtrend, the market participants should remain cautious on it. Many bulls will want to pocket their profits as gold is nearing a resistance area.  The bears will enter shorts closer to resistance. With both of these events coinciding together, gold will retrace back to its breakout level.

The bulls will buy closer to $1190/oz., which was the earlier resistance, they will attempt to defend the level and support the market. The market can either take support at $1190/oz. or drop down towards $1150/oz. area to shake out many long positions before rising again.

Take a look at my gold cycle analysis. The pink line is a blend of multiple cycles and follows the actual price very closely and allows me to predict into the future if the bias will be downward or rising.Both Societe Generale and Goldman Sachs are negative on gold with targets of $1150/oz. and $1000/oz. I totally disagree with them on their longer bearish views, I want to make it clear that I am not bearish on gold from a longer term perspective. Gold price will make new highs in the coming months, however, the next 10% move for gold is down rather than up.

Gold is still more than 30% below its highs. Traders and investors should buy 10-15% of their portfolio allocation in gold, when it drops to $1150-$1190/oz. levels which I expect will happen over the next 1-4 weeks.

In fact in a recent conversation I had with Kyle Winn the Founder and COO of Gold Gate Capital. A firm that specializes in precious metals, gold investing. He agrees with my forecast of what is to unfold and he has a free book called “The Looming Financial Crisis” that focuses specifically on how to properly invest in metals and how to do it properly within your IRA and 401k. He went on to mention that those between the ages of 65-85 can benefit the most.

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Chris Vermeulen

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