This “distortion” between “risk” and “return” has created a “bubble” effect in all global equity classes. I informed my subscribers to exit the SPX on November 25th, 2014 and to enter cash. Their equity risk exposure was reduced to zero. Momentum oscillators are now extremely overbought and are very clearly trending bearish. I wait for confirmation before entering any new long SDS and long VXX positions.
This week (Tuesday) there is another FOMC meeting. The news of this monetary policy will be released on Wednesday, June 16th, 2016. Expect choppier price going into the meeting and shortly thereafter.
The Only Chart You Need to Read!
The U.S. markets failed to break out!
Daily Chart Of Bonds
The bond rally set a record high in the rush to a new “safe haven”. We are now experiencing a global rally in government bonds’ which broke out last Friday, June 10th, 2016, while equities declined. We entered this new long term trade on for bonds.
Daily Chart Of Gold
Nothing will stop this new bull market in gold and silver. We entered this new long term trade on June 8th, 2016. Now there is a stampede into this much talked about “asset class”. Just take a look as the chart of gold below.
In short, the major trends of all asset classes which have been in place for several years are coming to an end. The majority of investors have no idea what is starting to take place and will do what the masses do every time a new bear market takes place. They will hold their positions, watch the value of their nest egg get cut 30-60% in size, and then give up and exit equities near the bear market lows 6-18 months from now. It is unfortunate, but technically we need the masses to do what they always in order for things to unfold in a controlled fashion. In a recent post, I showed where the financial markets and sectors are within this major economic cycle.
There are some new trades I will be taking very soon with my money and subscribers. If you want to be in tune with the markets and profit during chaos, then you should think about joining my morning daily video newsletter and ETF trade alerts service: www.TheGoldAndOilGuy.com
Chris Vermeulen
https://thegoldandoilguy.com/wp-content/uploads/2016/06/selloff.jpg485840adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2016-06-14 09:50:272016-06-14 09:50:27Sell Off Coming!
Gold has a clear presence to play out in this new world, which is now dominated by global economic uncertainty. Gold’s importance in today’s environment was clearly visible during the massive rally at the beginning of the year, when all other asset classes were tanking.
What does this mean for gold going into 2017 and beyond?
https://thegoldandoilguy.com/wp-content/uploads/2016/06/gergold.jpg93151adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2016-06-13 16:42:382016-06-13 16:42:38Gold Shines In A World Of Negative Interest Rates
This past Friday, June 3rd, 2016, The Bureau of Labor Statistics released their most recent report regarding new employment data and nonfarm payroll employment which indicates that during May of 2016, it was the smallest increase seen in 28 months.
During May of 2016, there were 144,592,000 payroll jobs within the US, which was up by 1.6 percent, or equivalent to 2.3 million jobs, from May of 2015 (These are all not-seasonally-adjusted numbers).
That represents the smallest year-over-year increase that has been reported since February of 2014, at which time payroll jobs increased by 1.57 percent. The largest year-over-year increase, in recent years, was reported during July of 2015, when it was up by 2.18 percent:
Since July of 2015, the general trend in growth has been down. This 1.6 percent remains well below where growth was during most of the 1990’s.
I am not fond of using the seasonally adjusted numbers, since they add an additional layer of ‘needless manipulation’. I do prefer to compare job growth, from the same time of year, over several years.
When I do this, I find that the job growth from April to May of 2016, was the lowest April-May growth total since 2009:
From April to May of 2016, there were 651,000 new jobs added, which is a significant drop from that same period of time, last year when 947,000 jobs had been added. Over the past decade, this current year of 2016, in this measure, beats out only 2008 and 2009, both of which were years of ‘economic decline’. Therefore, May of 2016 was the weakest May on record, for job growth, in eight years.
The Secretary of Labor, Tom Perez attempted to blame everything on the Verizon strike. That is a nice “spin”, however, the strike does not explain the obvious ‘decline’ in the year-over-year numbers! The strike might explain why the May numbers dropped off as much as they did, however, it cannot explain the ‘trend’. It is a bit of a stretch to blame this drop from April-May of 2015 to April-May of 2016 on the Verizon strike.
Mr. Perez, however, attempted some other, even less convincing, claims as well, stating that the U.S.’s insufficient mandates on paid family leave means that fewer women are entering the work force, and therefore pushing down the jobs totals. Is this IMPORTANT? The answer is NO! These bad numbers merely reflect our current poor economic situation, today!
In any case, the overall trend should not be a big surprise, as it has always has been weak. It has been dependent on the FED and their low interest rates. In recent quarters, the FED has finally been backed into a corner and has become hawkish. Realizing that more rate cuts are unlikely to occur any time soon, the economy is not receiving the usual FED-manufactured stimulus which investors and companies have both become accustomed to. With the FED talking about the need to raise ‘rates’, who can be surprised that the “recovery” is nonexistent?
The financial news, of the past few weeks, had its cadre of regional FED Presidents attempting to sway markets into believing that the Central Bank was sure to ‘hike’ interest rates during this current month of June 2016.
The jobs report sent ‘shock waves’ throughout the entire financial system. The report printed a jobs number of just 38,000 new employees, which is the lowest single month since the height of the “Great Recession”.
What is even more ludicrous than this, is the fact that the unemployment rate fell to 4.7 percent seeing as 664,000 workers are no longer being counted and included, by the government, within the labor force.
The FED relies heavily on these ‘manipulated’ government jobs numbers, the idea of “data dependency” being used to determine when to ‘hike’ or ‘drop’ interest rates shows the incompetency of a body that supposedly employs hundreds of economists who are dedicated to discover the true state of the economy and of its’ economic data. This in turn, should provide Americans with the reality that not only does the Central Bank have any idea what they are doing, but, more often than not their policy decisions are based on ‘incorrect’ and ‘outdated’ models which have only served to make matters worse, since the “Credit Crisis of 2008”.
The majority of jobs created were either part-time or low-wage service sector oriented. You can bank on the fact that the FED is now more likely to lower ‘rates’ than they are to raise them, going forward!
Today, it is both unlikely and irrational for the FED to raise interest rates either now or in the near future, despite the Central Banks’ recent “moral suasion” on mass media, of a potential rate ‘hike’ occurring as early as this month or possibly next month. The FED continues to create policies in an attempt to protect the economy and stock markets through November of 2016 so as to “spin” the election in favor of Hillary Clinton. This is due to the uncertainty from the presumptive Republican candidate, Donald Trump, who may force the Central Bank into ending its’ mission to fuel ‘stock and housing bubbles’. I, myself, as well as many economists, are seeing the ‘Summer of 2016’ as a dangerous period of time where and when a financial, economic, or monetary ‘collapse’ could take place from any number of ‘flashpoints’. The actions that are now taking place, in the equity markets, are an indication that these ‘fears’ may very well be arriving much sooner than most analysts expect.
The economy is still performing ‘significantly’ below its’ potential:
The problem is that the FED, including other Central Banks, have waited too long and gone too far in their ‘zero interest rate’ policies and ‘quantitative easing’ programs. With all of this nonsensical talk coming from the FED, the debt default levels, especially for credit default swaps on the 10-year Treasury are NOW at their highest level since the FED raised rates by a quarter of a point, back in December of 2015.
The probability of a U.S. default of its’ debt has hit its’ highest point since the FED has hiked rates in December of 2015. This is indicated by the recent dynamics in credit-default swap (CDS) agreements. The expectations that the Central Bank may raise borrowing costs still further, in the coming months, will set off this ‘time bomb’. Since the FED has turned increasingly hawkish of their policy outlook since late April 2016, market volatility has increased, with stocks swinging between gains and losses and U.S. Treasuries sliding along slide with the dollar. “Systemic risks” stemming from the CDS transactions are rising amidst the unfavorable global financial environment. This is not only true in the U.S., but its’ counterparts are also subject to greater turmoil in the coming months, as possible FED hikes, “Brexit” concerns, U.S. elections and faltering global growth are all interconnected factors thereby contributing to the recent spikes in U.S. CDS spreads.
If things follow the FED script, I imagine that next months’ payrolls will exceed ‘tapered down’ expectations and consequently, there will be an upward revision of Mays’ numbers. Will this continue sending the market into exuberance? NO! However, the FED officials will then restart the rate ‘hike’ talks with just enough offsetting uncertainties to mislead everyone while trying to keep the market ‘bubble’ from ‘bursting’.
The financial system is like a giant game of poker with all the major player holding a seven and two off suite (worst hand you can have), yet they are all-in with their chips (money & policies) trying to bluff their way out of this mess.
Things are going to be very crazy over the next 6-12 months and beyond, but until the US large cap stocks breakdown and start a bear market expect tough trading and investing.
Find out what I think the market is doing and where its headed with my ETF Trade Alerts: www.TheGoldAndOilGuy.com
Chris Vermeulen
https://thegoldandoilguy.com/wp-content/uploads/2016/06/jobsgrowth.jpg183275adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2016-06-06 11:33:282016-06-06 11:33:28Don’t Bank On Rate Hikes!
As you know a picture is worth 1000 words so consider this short yet detailed post a juicy 2000+ word report on the current state of the stock market and economic cycle.
The charts below I think will help you see where the US stock market and economic cycles appear to be.
The first image shows two cycles, the blue one is the stock market cycle and which sectors typically outperform during specific times within the cycle. Here you will see that during the late stages of a bull market the safe haven plays become the preferred choice for investors – Energy and Precious Metals.
Typically, the stock market tops before the economic (business) cycle does. Why? Because investors can see sales starting to slow and that earnings will start to weaken and share prices will fall, so the market participants start selling shares before the masses see and hear about a weakening economy. The stock market usually moves 3-9 months before the economic cycle change I known by the masses.
Stock Market Topping According to Sector Analysis
Elliott Wave Count – My Educated Guess
Elliott wave theory is a tough strategy to follow. Meaning, if you gave the same chart to 5 different people you would likely have 3 or 5 very different wave counts.
Recently I have seen a flurry of EW charts on the SP500 wave count which I do not think are correct. When I do Elliott Wave counts I like to use more than just price. I look into things deeper and use the market internals, volume flows, and overall market sentiment during those times. They must all be screaming extreme FEAR in the market in order for me to count it as a wave low.
Fear is much easier to read and time than greed. So based on waves of fear and I can plot the rest of the waves. By doing this, I feel it gives a truer reading of significant highs and lows we should use in our analysis.
See my analysis below for a visual… BUT REMEMBER:
I Use My Own Rules,
Which is Why Its Different Wave Count
Stock Market & Economic Cycle Conclusion:
In short, the current market analysis, in my opinion, is still very bearish and this could actually be the ultimate last opportunity to get short the market near the highs before we dive into a full blown bear market in the next 3-5 months.
I will admit, the market is trying VERY hard to convince us it wants to go higher as it flirts with the recent highs for its second time in the past 8 months. I know it is doing its job because so many traders and investors are changing their tune from bearish to SUPER BULLISH.
I don’t see it that way JUST yet, but it could happen as the market can do and will do whatever it wants. But all my analysis (much more than what you see here) points to substantially lower prices over the next year.
To learn more and get my ETF swing trades and long term investing signals join me at www.TheGoldAndOilGuy.com
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…
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 roundingpattern 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 headand 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.
https://thegoldandoilguy.com/wp-content/uploads/2016/05/markettop.jpg440900adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2016-05-25 14:46:552016-05-25 14:46:55Is There A Bear Market in Progress?
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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https://thegoldandoilguy.com/wp-content/uploads/2012/08/gold.jpg194259adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2016-05-23 08:53:112016-05-23 08:53:11The Next Top Performing Asset to 2020 & Beyond
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!
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.
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
https://thegoldandoilguy.com/wp-content/uploads/2015/10/fed.png202315adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2016-05-20 07:49:132016-05-20 07:49:13Is This the End of the Road?
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!
