U.S. Bonds Bounce?

The Commercial Hedgers are considered the smart money. The Speculators are considered the dumb money.

The rise in yields corresponds with the decline in Treasury prices.  A bounce is ahead of us in 2017.

Commercial traders have built up their most bullish position since February of 2013.

Commercial traders are now long 50% more long than they are short. This is the most bullish COT Ratio reading since July of 2011.

The speculative side of this trade have built up their most concentrated short position since February of 2013 and their largest net short position since March of 2012. The speculators are usually wrong. They set their recent COT Ratio high two weeks before the market topped out. The concentration of their short position should give pause to new short sellers.

The technical picture suggests a bounce is due.

 

BOND RISK LEVELS

Latest Value(s):

  • Last Reading: 2.0 December 27th, 2016

Extreme Values:

  • Excessive Optimism: 8.0
  • Excessive Pessimism: 2.0

bb1

 

 

BOND OPTIX WEEKLY

Latest Value(s):

  • Last Reading: 33.0 December 23rd,, 2016

Extreme Values:

  • Excessive Optimism: 70.0
  • Excessive Pessimism: 40.0

bb2

 

 

The Treasury prices are oversold on the March 30-year Treasury Bond futures.

The evidence is displayed with the buyers of US Treasury Bonds. I side with the commercial traders. The dramatic imbalance in positions between the commercial and speculative traders suggests a bounce higher is imminent.

bb3

 

My Elliot Wave Of Bonds – TLT:

Elliott Wave 2 Theory

Elliott Wave (2) is the first correction against the new trend

Elliott Wave (2) corrects wave (1), but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and “the crowd” haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two

Elliott Wave 3 Theory

Elliott Wave (3) is usually the strongest and longest wave

Elliott Wave (3) is usually the largest and most powerful wave in a trend. The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to “get in on a pullback” will likely miss the boat. Trading the Wave (3) is usually the most profitable.  This will be a muti-year rally!

bb4

 

In Conclusion:

The new year of 2017 will not be a good one for global economies.  There will be a big slowdown throughout the global economies. The equity markets, as well, will be extremely negative in 2017.  The next yearly closing should be at a low level. The low of 2016,1800 in SPX, may be breached. The analysis is trying to say yes!  Be prepared to exit your long stock positions at the midpoint of 2017 and enter “safe havens”. See my gold forecast – Click Here

Bonds should start to rise and hold up through 2017. But will only rally in a big way once there is a major global event/crisis or the later stages of a bear market in US equities. Either way, likely not going to happen till late 2017 or beyond.

Get my swing trades and long-term asset positions at www.TheGoldAndOilGuy.com

Chris Vermeulen

Happier Days Ahead for Gold Bugs?

History could repeat this January… Stocks sell off, and metals rise.

This is the exact opposite of what the masses are expecting and getting positioned for.

Trump’s Financial Revolution!

Trump’s economic plans will increase national debt!

A Ticking time bomb!

Currently, U.S. debt stands at a mammoth $19.8 trillion and will continue to increase under President-elect Trump considering his lenient tax cuts and plans for infrastructure spending:( http://www.usdebtclock.org/).

The proposed tax cuts, inclusive of accrued interest and macroeconomic effects will increase the national debt by $7 trillion, over the next decade, and by $20 trillion within the next two decades, according to Forbes. There are no details on how the President-elect plans to finance these tax cuts.

trump1

‘Protectionism’ has no winners!

President-elect Trump has radical plans to tear long-standing trade agreements like NAFTA and levy taxes on Chinese imports, etc.

However, in a highly global world, every action that President-elect Trump takes will have an equally strong reaction in an already highly leveraged global economy which is already struggling with anemic growth.  This global trade war is unlikely to benefit either the U.S. or the global economy.

trump2

It is not clear whether the U.S. public embrace paying higher prices for imported goods: (http://www.economist.com/blogs/graphicdetail/2016/11/daily-chart-9?fsrc=scn/tw/te/bl/ed/atrumptradeagenda). After all, offshoring has also given a boost to American corporations which have managed to bring down their cost of production; (i.e.:   costlier iPhone is most likely to reduce the demand for the product, both at home and abroad).

Investors have taken cheap money and used it to buy stocks and property.  The “real economy” is where the money was intended to go.  Trump economic disaster is a train wreck waiting to happen.

I must remind you that nothing has changed in our economy since the Trump market rally: (http://www.zerohedge.com/news/2016-12-09/dont-be-fooled-trump-rally-not-sign-economic-health).

 

President-elect Trump has been critical of Chairperson Dr. Yellen views as she understands that the economy cannot afford higher rates. The economy will collapse if monetary rates rise, as was evidenced over the past few years. Low rates will continue against the expectations of the experts who are calling for a very sharp increase in rates. When President-elect Trump takes office, he is going to need FED Chairwoman Dr. Yellen on his side, however, he has yet to realize this!

Businesses have not invested large amounts in new capital projects but rather have invested only in buying back their stocks.  In addition, they hire labour only on a part-time basis. As there is nothing particularly ‘meaningful’ supporting the markets, it is my opinion that the rise in stocks and property represents a “ticking time bomb”.

The world has been living in a low-interest rate environment for many years now. This environment came about following the global financial crisis of 2008 and has dominated global money transfers. Consequently, it must maintain that status quo. If interest rates rise, the continued huge sell-off U.S. Treasuries and the international bond markets will continue in anticipation of higher yields.

Without knowing the finer details of the proposed policies, the stock markets have run up far ahead of themselves while leaving a very small margin of error!

Therefore, it is prudent for you to be ready to buy gold, in large quantities for the long-term.  The bullish seasonally for gold will begin next month in January of 2017.

Gold is one of the best solutions that can maintain the world’s stability as well as your own future wealth when things start to crumble. Follow my lead as the markets oscillate through 2017 and beyond.

Chris Vermeulen
www.TheGoldAndOilGuy.com

The Short-Term TOP & POP!

Currently, it is still very early days and the dust has not yet settled, however, I will make a bold forecast that the SPX is still in a BULL UPTREND from 2009.

There has been a paradigm shift in the U.S. after Trump’s election. The expected fiscal stimulus and increased government spending have ‘buoyed’ financial markets. The closed at 2213, for the first time in history on November 25th, 2016. The shift in market sentiment has sent 10-year treasury yield topping at 2.3%, for the first time this year, as markets anticipate higher inflation.

The pessimism of Americans suddenly turned around into a “wave of optimism”.  The Trump victory created Investor optimism.  Americans were speaking with their wallets as they have grown tired of all the negativity.  Per the AAII survey, the bullish sentiment rose 3.2% to 49.9%.  This is used as a contrarian indicator indicating that a reversal is near in U.S. Equity markets: (http://www.aaii.com/sentimentsurvey).

Investor optimism about stock prices has risen to the highest level(http://www.forbes.com/sites/investor/2016/11/21/investor-optimism-jumps-to-nearly-47/#7e5dc620792e) Deutsche Bank believes that the SPX will reach the 2,500 level. (http://www.zerohedge.com/news/2016-11-20/why-deutsche-bank-thinks-sp-going-2500-next).

 

The New Golden Era For Investor!

Trump’s election victory speech which promised fiscal stimulus and government spending on infrastructure has inspired optimism among both investors and analysts.

According to a recent Gallup poll, ( http://www.gallup.com/poll/197519/half-americans-confident-trump-election.aspx) more than half of Americans are now more confident in President-elect Donald J. Trump than they were before the election. Americans are embracing a more positive and promising outlook for the future. This pro-business president-elect, who wants a reduction of government red tape and insisting that the U.S. negotiate better trade deals, has certainly brought about great optimism to the equity markets.

The FED is planning on allowing the economy to run HOT. Investors expect inflation to increase and defaults to drop. This is exactly what the market has priced in.

In equity markets, the hot sectors are financials, industrials and materials. These sectors will rotate back into favor in order to take the SPX to new highs. Financial stocks have lead this rally to new highs. This sector will do better under Trump as he will be able to appoint regulators who are more industry friendly than regulators appointed by President Obama.  The whole financial sector (XLF) could outperform most other sectors to have a better four years then they have had. If we start to see higher U.S. interest rates, banks will have better lending practices.

Under the new Trump administration, corporate money that is ‘parked’ overseas would be ‘repatriated’ which, in turn, could lead to huge share buybacks. (https://www.bloomberg.com/news/articles/2016-11-21/goldman-how-corporations-will-spend-their-huge-piles-of-overseas-cash).  Last week, there were cash inflows of $3 billion.

Can the markets continue to rise yet?  Yes.  With indicators being positive, as they are, it is possible that the markets will continue to move yet higher.  We are currently in the Bullish seasonality period associated with rising markets., therefore, the SPX will easily push to another new high.  My preference is for a retracement/correction, NOT a reversal here. The markets are at a level where the markets could have a ‘corrective’ move down (a little profit taking).

Using Candlestick Pattern:

BEARISH ONE BLACK CROW appeared on the last candlestick pattern of November 28, 2016. 🙁http://www.candlesticker.com/Pattern.aspx?lang=en&Pattern=2211).  understand and Implementing Elliot Wave Analysis!

 

Elliott Wave (2) corrects wave (1), but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and “the crowd” haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave (1). Wave (2) usually unfolds as a simple 3-swing abc pattern. Wave (2) is the first correction following the initial swing off an important high or low.

Elliott Wave (3) is usually the strongest and longest wave.

Elliott Wave (3) is usually the largest and most powerful wave in a trend. The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Traders/Investors desiring to “get in on a pullback” will likely miss the boat. Trading the Wave (3) is usually the most profitable!  Elliott Wave (3) is usually the longest and strongest in a completed 5 wave sequence.

The 4 Hour Time Frame:

This is the SPX 4-hour chart.  It is one of my favorite time frames to monitor.  It gave a BUY signal on November 14, 2016.  It signals an exit, on November 25, 2016, which is when the “correction” started to occur.

 

The market’s attention is shifting back to the economic data being released this week.  These reports are on GDP, personal incomes and nonfarm payrolls making headlines. The U. S. economy is forecast to add 170,000 nonfarm jobs in November 2016. I believe this will support the FED to raise interest rates next month.

The information I am sharing is pure gold. There is always something new to invest in the market place. Currently, I see several areas that are starting to look very interesting!

Last month subscribers and I closed out 3 winning trades: EDZ 20.7%, NUGT 11%, and UGAZ 74%. We did take one loss on TMF of 8.2% but overall it was an awesome month for ActiveTradingPartners.

We are currently in a new wave of winning positions in dollar, corn, and cotton.

If you want to follow my trades in real time be sure to join my trade alert newsletters.

Chris Vermeulen
www.TheGoldAndOilGuy.com
www.ActiveTradingPartners.com

The SPX will turn higher once it completes its correction!

U.S. Stock Markets are in correction!

Professor Shiller’s Adjusted SPX P/E ratio of 27 is the third highest level ever recorded in history. This ratio is right behind the 1929 and 2000 tops. Trying to create any inflationary environment is impossible here!  The perceived stimulus spending by the New Trump Administration will not achieve the desired results in our current environment. The uncertainty remains around President-elect Trump’s administration and policy stances.  Mr. Wouter Sturkenboom, Senior Investment Strategist at Russel Investments, stated ”The markets had a nice run, but it’s also in the process of running out of steam”.

The financial markets have mispriced all the many asset classes.  The increased expectations for the return of inflation are not rooted in the real underpinnings of this economy. The current debt loads are deflationary in nature which is why we are seeing a “contracting economic environment”.  The massive amounts of QE and Zero Interest Rates have been covering up the true economic picture. The reality is that we are currently in a deflationary environment.  

 

Understanding My Implementation Of the Elliot Wave Theory:

The market has moved from extremely oversold conditions to extremely overbought conditions  within a very short period. This move is not sustainable and a correction is required before the next advance will occur.

The Elliott Wave principle is based on Ralph Nelson Elliott’s conviction that social or crowd behaviors tend to trend and reverse in identifiable patterns or cycles.

Elliott used the stock market as his main source of research because it was an easy way to chart both current and past behaviors of a crowd having similar interests. He identified several patterns of movement, or ‘waves’, that reoccurred in combination with larger and/or smaller versions of the same patterns.

 

The SPX just finished WAVE 3 UP:

Wave 3:  Wave three is usually the largest and most powerful wave in a trend. The current news is now positive and fundamental analysts start to raise their earnings estimates. Prices rise quickly whereas corrections are short-lived and shallow. Traders looking to “get in on a pullback” will miss the boat.

 

The SPX is currently in WAVE 4 DOWN:

Wave 4: Wave four is ‘corrective’ in nature. Prices may meander sideways for an extended period. Volume is well below that of WAVE THREE. This is a good place to buy a “pullback” if you understand the potential ahead for WAVE FIVE. FOURTH WAVES are very frustrating because of their lack of progress in the larger trend.

WAVE 5: Is the final leg in the direction of the dominant trend. The news is universally positive and everyone is ‘bullish’. Unfortunately, this is when many traders finally buy in, right before the top!

w4d

 

The SPX sector rotation, of the presidential election, which led to the financial markets new highs.  Now, these leading sectors, financials, energy and industrials are in correction.

sctr

 

FED to Hike Rates in December?

U.S. jobs reports from November 2016 point towards a Fed rate hike in December 2016:

The government’s latest jobs report noted a decline in the unemployment rate.  It was largely embellished with distortions and misrepresentations. John Williams, Shadow Government Statistics, reports on the latest of Uncle Sam’s statistical discrepancies. This report runs completely counter-intuitive to all those glowing reports coming out of Washington D.C. which would have us all believe that unemployment is at a nine-year low and that economy and labor markets are improving. There was a reported decline in average hourly earnings which is the only information, from the report, that I believe to be valid.

Mr. Williams stated that “The 23% unemployment rate is consistent with the declining Civilian Employment-Population Ratio and the declining Labor Force Participation Rate. The rise in discouraged workers is reflected in the decline in these ratios,”

 

Conclusion:

It will be difficult for corporations to continue to grow earnings in this environment. Business investment is falling.  Corporations will continue investing their money into stock buybacks rather than into new capital spending projects. This does not and will not increase construction and/or industrial production. It merely gives the equity markets an artificial sense of security. GDP will never increase!

 cc1

 

Construction spending is slow. President-elect Trump’s proposed infrastructure spending will not be the solution to our economic problems as it will only increase our federal deficit exponentially ((http://www.usdebtclock.org/).

What is necessary is to pay down the federal deficit as the Debt to GDP, (http://www.tradingeconomics.com/united-states/government-debt-to-gdp) is currently at 104.17%!  In financial terms, this means that the U.S. government is slightly bankrupt!

 cc2

Industrial production has been declining since 2014.

cc3

,

Special Details Regarding Stock Picking Process

Nearly a month ago, my trading partner shared some details regarding his stock picking process and explained how this process will assist in achieving far superior returns; well, the proof is being delivered today.  The reason I’m sharing this is to assist all of our followers and clients in understanding that superior stock picking, as well as successful trade execution, will lead to consistent and superior overall results.  Take a look at our recent results.

ATP-Perf-Nov

These four trades are the only trade triggers we provided to members for the entire month of November.  I’ve included the late October trade trigger simply because it extended into early November as a live trade.

TMF we closed at 8.2% down from our entry price. But UGAZ was closed out with over 74% profit in less than 20 days.  The NUGT trade was completed in less than 4 days with an 11% profit and the EDZ trade was completed in about two weeks with nearly 21% profit.

Who says you need to trade every day
when you have results like this!

MRM Momentum Reversal Method

It is not in our nature to try to pick excessive numbers of trade triggers because lets face it, who wants to be chasing 10-15 stocks charts around all day… It’s tough enough with just a few live swing trades open.

We simply want to find the best opportunities we can find that deliver the greatest opportunity for success.  These recent four trades resulted in an astounding 97.5% ROI (profit) in 30 days for those who follow our trades. All they had to do was to follow my exact trade details (entry, stop, target price) and let the broker orders and market do all the rest of the work.

Consider the advantage of having these trade triggers delivered to you as they happen and allowing you to determine the size and scope of your trading actions.  Think about the potential to simplify your trading by including our analysis into your trading routine.  We’ve been doing this for many years for ourselves and sharing what we do with clients. And we believe the results speak volumes in terms of what we continue to deliver.

I invite you to take advantage of my efforts and start profiting with us today.  Follow the triggers for a month if you are skeptical or want to start slowly.  Once you understand how valuable these stock reversals can be to your future, you can set your own trading limitations with regards to how you execute your trades.

I wish you all a very happy holiday season and the best success through the end of this year and in 2017.  Let’s make 2017 a year full of opportunity, happiness, success, and health – together.

Chris Vermeulen & John Winston
www.ActiveTradingPartners.com