The G-7 global finance meeting failed to yield fresh ideas for spurring global growth.
The Finance ministers of the Group of Seven major economies ended a weekend meeting without agreement on a plan to revive global growth. Most of the G-7 governments favor official action to stimulate…
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The SPX topped out one year ago, on May 20th, 2015 at 2134.72. One year has gone by in the SPX and has still not made a new high. It could be many years before we breach that high!
The SPX chart below indicates why it is not making any new highs and why a trend change is due any day, now!
From the lows of 2009, the SPX has risen in a parallel channel while never breaking/closing below it with the exception of the beginning of this year at which time it broke down the channel and then closed below it. However, it has since recovered, as indicated in the chart below, however, it is facing significant overhead resistance in the 2110 levels.
There is a lower high formation during all of the pullbacks, after the corrections, as can be viewed, in the chart below.
Whenever a long trending channel is broken, it weakens and the odds of a breakdown increases. The next move is the break of the channel which will change the uptrend into a downtrend.
Allow me to analyze what the targets of the long-term break of the uptrend are.
The pattern breakdown becomes confirmed below the 1810 levels. The break will form a pattern target of 1490 on the SPX. The targets usually overshoot in a bearish market, therefore,1490 is merely a ballpark figure that the markets can go much lower while falling.
Along with breakdown of the channel, the SPX is also making a long-term bearish rounding pattern as indicated, in the chart below.
The long-term chart patterns are negative, however, unless the shorter time- frame also becomes negative, a buy or a sell signal is not triggered.
Let’s see what the short-term time frame chart patterns are suggesting!
The short-term pattern shows a classic ‘textbook’ example of a bearish head and shoulder pattern as depicted in the next chart below.
The pattern will be confirmed when the SPX breaks and closes below the neckline at 2040.
Below the 2040 level, the next support level comes in at the psychological 2000 level. Most traders who have been buying the dips will buy close to this level, and I expect to see a bounce.
The professional traders will use any bounce off these levels to short the market, to take advantage of it’s long awaited downtrend.
The bearish head and shoulder pattern target, on the lower end is located at the 1970 levels. However, these targets are only a rough levels for reference. The markets can easily overshoot these levels.
On the shorter time frame, there are various levels which can offer support during the next major decline.
As explained above, the 2000 level is a ‘psychological support area’ and 1970 is the pattern target. However, upon studying the charts, I can see that 1950 levels, which had earlier acted as a resistance, will now offer support.
If the markets break below the 1950 levels, then there is no support until it drops to the lows of 1810. Once the SPX breaks below the 1810 levels, it will enter into its’ multi-year bearish trend decline. The markets do not honor any support levels once it enters a confirmed bearish trend! Hence, although 1490 is the target, markets can go much lower as long as the bearish trend continues.
I have provided all of the important levels which you should watch out for.
However, no pattern plays out exactly the way we expect it should, hence, it is important that you keep watching my daily morning video forecasts, as I will keep updating new breaking market trade set-ups, to subscribers.
This way you will see the latest changes on the charts and the accompanying action to be taken. Continue watching and be prepared to engage in this market, at the right time via my ETF trade alerts.
My cutting edge analysis will reveal all of the new twists and turns in all of the markets in which all of the big investment houses trade.
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Chris Vermeulen
2016 has been a great year for gold. Its currently up 17%.
This is the best time to invest in gold for the long-term investor.
The Elliott Wave Principle is a form of ‘technical analysis’ that believes investors move between periods of bullish and bearish thinking in a reasonably consistent pattern.
The Elliott Wave Principle is based on his ‘empirically’ derived discovery in the 1930s that market prices move in recognizable, repeating patterns and that these patterns reflect a basic natural harmony manifested in the inherent herding behavior of crowds. Elliott discovered that these crowd behavior cycles appeared at every time scale and whilst they were repetitive in structure they were not always repetitive in amplitude or the time taken to form.
Applying this principle, bullish sentiment moves prices up in five moves of alternating peaks and valleys, eventually pushing price of gold to a new high. This is followed by three bearish moves pushing prices lower.
My current analysis is that gold has hit the bottom of its recent down cycle and the price gains it has made since 2016 are forming a new substantial upward trend. The U.S. dollar price of Gold is in an uptrend with a bullish Elliott Wave structure.
My subscribers know that I am bullish on gold and believe that it is one of the top asset class’ to own for the future, during the next crisis.
The U.S. dollar price of Gold is in an uptrend with a bullish Elliott Wave structure.
Today, the first best investment opportunity is to be in is gold. Yes, you read it right; GOLD will be a top performing investment over the next three to five years. I am going to position you for the next investment set ups that you will not hear from watching financial television or listening to news.
I have been waiting, a very long time to present this ‘opportunity’ to you with my ‘’predictive analytics models’ which have confirmed the early stages of this multi-year uptrend as there are many ways to profit from this move.
Gold is a physical asset which will increase value:
Gold is one of only a few asset class’, which will maintain its value during times of ‘financial crisis’. It has done so previously in the past and I observed its performance during the beginning of the year, in which its ‘status’ affirms it as the preferred safe haven. There will be times during this next ‘crisis’ when different assets classes will be in focus. I will continue to guide you as to the best assets become in favor during this period of time.
If you are holding any stocks, this current rally is likely the last chance to liquidate your holdings; gold has given one an excellent buying opportunity and should be used to purchase this for the long-term period.
You are now prepared with your cash to take advantage of this rare opportunity in several ‘asset classes’, while profiting from the next huge stock market meltdown.
There are times when making money in stocks should not be your priority; the main goal should be to sit tight with your cash and wait for the next re-entry into gold. Do not fall for the various ‘so called’ experts who advocate being fully invested in stocks, today. If you have not made your fortune in the last 7 years’ stock market run, you certainly are not going to at this point in time.
Who else follows this strategy of holding gold and cash?
Who would you rather follow? Jesse Livermore, Jim Rogers, and Warren Buffet, all extremely successful investors or some unknown expert who is on a business television channel, giving you the next ‘hot tip’ or advice. Berkshire Hathaway, a Warren Buffet company. Has over $56.16 billion in cash and cash equivalents. Being an astute investor, he is holding large amounts of cash waiting for the next opportune moment to invest. His ability to hold cash and wait for the right time has made him the most successful investor in the history of Wall Street.
Jim Rogers, the famous commodity Guru, has a huge investment in gold. Most of the time, waiting until he finds screaming bargains. Jim stays away from the markets for long periods of time, entering only when there is “panic” all around and there is a “fire sale” on assets.
A famous quote from Jesse Livermore says it all:
“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily or sufficient knowledge to make his play an intelligent play.”
Conclusion:
Staying in cash is an opportunity to buy when everyone else is selling in panic. A smart investor should keep his shopping list ready and pick his favorite ‘asset classes’ during market downturns. What percentage of your portfolio you should hold in cash depends on your investing philosophy, but in the current scenario, let your cash holding be the maximum you have ever held in your portfolio.
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Chris Vermeulen
In May of 2008, there was a very similar stock market ‘rally’ as compared to today’s ‘rally’. Investors believed that the ‘turmoil’ during the latter part of 2007 and the early part of 2008 was permanently over and that we were headed towards a strong economic growth!
In actuality, it merely masked the ‘declining economic collapse’. The same situation is happening, all over again, even as you are reading this article. There are numerous flashing red lights, currently while the stock markets is ‘collapsing’ once again, just as it did during the beginning of the spring of 2008!
There have now been four consecutive quarters in which corporate earnings have declined. The profits from the SPX were down over 7.1 percent during the first quarter of this year.
The U.S. markets have now entered the next phase – a stock market downturn. The global financial system is now starting to ‘unravel’ which will have far reaching implications!
In fact, the real truth of the matter, is now about to worsen, from this point of time and onwards!
While this country has 100 million American people, who are unemployed and searching for work, and yet are unable to find any, I say this is a major RED WARNING ALERT that must now need be heard loud and clearly!
According to the FED, forty-seven percent of all Americans are not able to come up with $400.00 in case of an actual emergency situation, that they may incur. They would either need to sell personal belongings or borrow the money, somehow!
The majority of Americans are now living from paycheck to paycheck: (http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/).
In December of 2015, when the FED raised their interest rates, for the first time, in almost a decade, they had projected a one percent ‘hike’ in 2016. I was apprehensive of their prediction and had forecasted that the FED would not “materially” hike rates!
The FED later backtracked their estimates to half of a percentage point ‘hike’, in 2016 during their March meeting.
The chances of a June 2016 ‘hike’ are low to nil as the “Brexit” referendum is being held only one week after that FED meeting. If the U.K. votes for a “Brexit” from the European Union, then the financial implications may wreak havoc on the already fragile global economies. Hence, the FED will not chance raising it especially before such a significant and important event.
Similarly, post July 2016, the U.S. Presidential race will ‘heat up’ and the FED will not want to raise interest rates prior to knowing what the next Presidents’ ‘economic policy’ will be. However, if the world economy falters, the FED will have to follow the other Central Banks and ‘restart’ QE.
The timing of a stock market ‘crash’ is presently within our reach. All signs are pointing towards a higher price for gold; both in the near-term and the long-term. Enforced negative interest rates which are more of the FEDs’ Quantitative Easing (QE) and the race to devalue the U.S. dollar. This proves to be quite bullish for gold. The timing of all of these concurrent events are affecting the gold market!
The rise of the stock market is widely viewed today as the result of ‘Quantitative Easing’(QE). A bandage was placed on that financial crisis which was never structurally repaired. Today, I believe that investors have long since given up on the FEDs’ bond buying as a means of repairing the economy. There is so much skepticism, at this point, as to what direction the equity-market is trending – Up or Down?
SP500 Weekly Chart
The response from the FED was to ‘debase’ the U.S. dollar as reflected in its’ decline of 4.7% thus far in 2016. Treasury bond yields have dropped well below 2%. Something has truly gone horribly wrong within the economy! However, the FED is trying to put up a brave front. They have asserted that they are considering a ‘hike’ in their June 2016 meeting, but this is very misleading as there will be no “material” short-term interest rate hike in my opinion.
Monthly US Dollar Index:
Weekly SP500 Stock Index
Daily Gold Chart
These problems that exist within all of these markets are that of the global Central Banks, which are sending their mixed messages. They are actually driving the dollar higher for the time being.
Two weeks ago, the Bank of Japan did not provide more monetary accommodation, as was expected, at that time; whereas last week, BOJ announced they would do so. Therefore, the dollar rose up whereas other currencies, including the Euro and the Yen, fell rather hard. This reaction resulted in both metals and stocks going down.
The three Central Banks have now reversed their prior announcements regarding monetary policy, within the last month. First, the ECB and then the FED and now the BOJ.
The FED is currently working on a different scenario in which they are stress testing negative Treasury bills. This scenario, in which the interest rate on the three-month U.S. Treasury bill becomes negative, in the second quarter of 2016 and then declines to -0.5% remaining at that level until the first quarter of 2019.
The Fed stated, “The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities.” (http://www.bloomberg.com/news/articles/2016-02-02/rates-less-than-zero-is-bank-stress-fed-wants-to-test-in-2016 ).
Gold prices are surging this year and that has ‘the smart money’ flocking towards the yellow metal.
During this global contraction, it is only a matter of a very short period of time before the stock market reflects this reality.
Truly, this is the beginning of ‘The Great Reset’!
CONCLUSION:
In short, big things have slowly been unfolding that will be not only life changing but will change the entire financial situation of the world.
The good news is that there are many ways to profit and prosper from these events. A few simple and well time positions can yield huge results for the savvy trader and investor.
Follow my lead as we place special ETF trades to prosper during the pending market collapse: www.TheGoldAndOilGuy.com
Chris Vermeulen
There are several ways to stress test the market and to get a feel for overall strength of the overall economy and financials of the United States. Each with their own strengths and weaknesses.
Find out what these two stress tests are telling us about the stock market and economy!
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I could go on in detail about why and what price spikes provide us short term trades with, and I will in a future article and video. Keeping things short and simple we will let the charts to the speaking for now because they paint a very clear picture of what they do and how quickly we should expect our profit targets to be reached.
The chart below shows the recent price spikes in the SPY. These spikes come and go, meaning some months we may only see a couple, and other months we see 10-20 of these incredible momentum trading opportunities.
As you can see below this is a 30 minute chart going back 4 trading sessions and we saw 4 price spikes with each reaching their price targets within 24 hours of the spike alert.
Types of Price Spikes I Focus On
I only focus on price spikes that take place outside of regular trading hours, so before 9:30am ET, and spike after 4:00pm ET.
And, the spike must be a minimum of 0.23% away from the current market price. Why 0.23%? Simple really. We need enough of a move to make the trade and risk worth our while to trade.
You may be saying to yourself that 0.23% is not much of a move… well you are correct, but that is why I focus on trading these moves with a high degree lf leverage. I use the ES mini futures contract.
Recent Sample Spike Alert Trade Setup
See the sample Spike Alert that took place a couple days ago. It was small only 0.43%, but amplifying the leverage can turn a small move into big profits. In this case, the spike alert generated a quick $425.50 profit within 24 hours, which is a 7.5% ROI base on one ES mini futures contract. Here is another live example with my broker statement.
CONCLUDING THOUGHTS:
In short, spike alerts not only provide a steady stream of quick winning trades each month, but they also tell what the market bias/trend will likely be for that trading session.
If you day trade, then spike alerts are the ultimate tool for knowing which direction you should focus on trading that day, or at least until that price spike level has been reached.
Learn More At: www.TheGoldAndOilGuy.com
Chris Vermeulen
Currently, a ‘sharp fall’ is now anticipated within the equity markets! This decline will be accompanied with ‘new volatility’. There is a great deal of ‘uncertainty ‘within the U.S. markets. Currently, we are viewing a ‘textbook’ ‘head and shoulders pattern’ in the SPX and is going to be a big inflection point we look back on months from now.
There are less and less stocks that are participating in the recent move upwards which suggest a technical breakdown is likely to happen.
The ‘cycles’ of the SPX have recently confirmed that we have now witnessed the ‘highs’. The ‘top’ is currently in place and I expect that the ‘negative trend’ will continue to persist.
See my live analysis charts and forecast click here
The ‘smart money’ has been exiting the equity markets during the last few weeks with strong waves of selling volume taking place on a consistent basis.
Yesterday morning, Monday, May 16th, 2016, I alerted my subscribers to two new positions to enter into so as to take advantage of during this next significant market move and change in volatility.
Consequently, consumers have already started to slow down in their spending. They will change their past behavior, and, as a result, will begin to save (whatever funds that they may still have) as stocks start to fall in value along with the average investors retirement accounts. The present day spending behavior will come to a grinding halt in due time!
Before “The Great Credit Crisis of 2007 -2008”, the ‘smart money’ exited the equity markets in November of 2006. And it appears that the NDX-100 and the Russel 2000 are leading the ‘charge’ downward once again for the pending market correction.
We are, once again, repeating this same technical pattern, now!
Concluding Thoughts:
In short, the first chart I showed in this article paints a very clear picture of where stock prices are headed – Lower.
Large cap stocks over the past year have been making lower lows and lower highs. The most novice of traders knows what that means… It means, we are in a down trend.
There are many ways to take advantage of what is about to unfold next and subscribes and I are already in position for the first big and quick trade, but there are many more just around the corner!
I share a few ways I am taking advantage of this with followers of my newsletter at: www.TheGoldAndOilGuy.com
Chris Vermeulen
Central Bankers are continuing to use ‘old discredited’ models. In these models, the ‘interest rate’ is the key policy tool, which are being used to be ‘dialed’, up and down, so as to ensure good economic performance.
If a positive interest rate does not suffice, then a negative interest rate should do the trick, right???
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This week will very likely be one we look back on as a big inflection point. We will see that the bears are coming back.
It appears the market is forming a head and shoulders topping pattern. Thre are a couple different ways to trade this pattern depending on the level of skill and aggressiveness.
One can wait for a closing bar below the ‘neckline’ on the time-frame in which you have identified the pattern. By operating on a closing bar basis you significantly reduce the risk of entering on a ‘false’ breakout. Entering prior to the close of the bar increases the risk of becoming part of the wick of a reversal candlestick should it close back above ‘neckline’ support.
Another way is to try and time the right shoulder and short into the bounce or pause just before you think a neckline break is about to occur.
Both, have then pro’s and con’s, which is better, that all depends on the overall market conditions and that of the trader making the trade.
Take a look a couple charts below so you can see where I feel the stock market is within this pattern.
iViewMarkts.com Bullish Sentiment Indicator: This shows active traders have been very bullish and are just now starting to become bearish. As more short term traders start to sell their long positions and build up short positions this will put downward pressure on stocks and likely start the new trend down.
SP500 Bullish Percent Index: This chart is telling us more stocks are starting to form bearish price patterns after being overbought the last couple months.
Head & Shoulders Pattern: This is the pattern I speak of showing where most traders enter positions for this price pattern. There is always a possibility that the market does not do a Kiss goodbye (retest of breakdown). The strongest moves to the downside will not retest the breakdown in most cases so playing the breakdown I think is vital.
SP500 Head & Shoulders Pattern:
That is a quick snapshot of the market and where it stands…
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Chris Vermeulen