Stock Market Analysis & Warning In Layman’s Terms

As you likely know, the stock market, trading, and even long-term investing are not easy. That’s why in this post we want to make the complex simple for you. We will do this in a way that will give you that “Eureka!” moment regarding knowing what the stock market is doing now, and where it is headed over the next 12-36 months.

Last August we spotted trends in the underlying financial system that are very early warning signs that the bull market in stocks will be coming to an end, along with this growing economy. There is a ton of data taken into account for this information, but we have broken it down into simple bite-size points that simply make logical sense, from a technical analysts perspective.

FIRST WARNING 

Back in April 2017, we posted an article showing the first set of data that most traders and investors do not see or follow, mortgage delinquency rates. Delinquency rates in Single Family Residential Mortgages and other Consumer Loans began to climb through the second half of 2016 and continue to rise today.  We shared with readers a way to take advantage of this using the Real Estate Bear Fund (DRV). This fund is now up over 20% and climbing as it rises when real estate falls.  The rise and timing of this delinquency rate increase coincide almost identically with the Fed when they raise rates. And the problem is not just mortgages defaulting, the same is happening with commercial loans, and credit card debt.

Just look at what has the fed being doing like a mad-man of late? Ya, jacking up rates like they are going out of style!

The graph below shows a red line which is the fed rate, and as that rises so do loan delinquency rates (blue line). You will also see the grey shaded areas on the graph, and these are bear markets (falling stock prices). It’s obvious that we are headed towards financial issues once again with debt and the stock market.

MORTGAGE RATES AND DELINQUENCY RATES ON THE RISE

On March 18th 2018 we post an update showing how real estate foreclosures are starting to rise dramatically! Subscribers to our Wealth Building Trading Newsletter took advantage of this as we got long SRS inverse real estate fund which jumped over 5% in the first two days of owning it.

 

SECOND WARNING – ASSET AND BUSINESS CYCLES

Because we are traders and investors our focus is on making money, so we are only looking at the blue wave/cycle on the diagram below. The blue cycle is the stock market, and the numbers posted along that cycle indicate which stocks/assets should be the most in favor, rising.

As you can see the numbers 9 and 11 at the top are both commodity based (precious metals and energy). And knowing that commodities typically perform well just before a bear market in stocks unfolds, we are on the cusp of a new trade that could last a few months and post significant gains.

COMMODITY PRICE INDEX

Take a look at the commodity index chart below. Without getting to deep in to stage analysis I will just say commodities have formed a very strong “Stage 1” and are primed and ready for a multi-month rally.

 

THIRD WARNING – PSYCHOLOGY OF THE MARKET

This market appears to be in a EUPHORIC “wonderland” moment driven by the fact that the global central banks have created a waterfall event of cheap money that is driving all of this asset valuation recovery.  And, as capital is continually searching for the best environment for ROI, it is moving into the best areas of the global economy for survival purposes which we feel should soon be commodity-related assets, then eventually cash once the bear market takes hold.

STOCK MARKET CONCLUSION:

In short, as long as the capital continues to flow into the securities (stocks) and commodities in search for the best return on investment, we will continue to see markets hold up. But, stay cautious because when the markets turn and money is no longer looking for the next top performing sector or commodity, but rather just wants to exit investments as a whole and convert to cash (cash is king), that is when the bear market starts, and it could be very quick and violent.

Additionally, as we’ve shown with these charts and graphs today, we are entering a frothy period in the markets, and we would urge all investors to be critically aware of the risks involved in being blind to these facets of the current stock market and housing bubbles.

With 53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen
Technical Traders Ltd.

Similarities For the Recent Drop In Stocks

Cory Fleck, from The Korelin Economics Report joins me for his insights into the US markets and the oil market.

Click the download link to listen on this device: Download and Listen to Show Here

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and  3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

GET CHRIS’ TRADE ALERTS HERE

Where Are We In The Market Cycle?

With the news today from the US Fed and the rate hike, we should all be asking ourselves “where are we in the market cycle” so that we can prepare for and identify proper trades that may set up in our future.  One thing is for sure; we are not in the perpetual easing environment of the past 7+ years.  The Fed indicated they are expecting at least two more rate increases are expected this year and also hinted that a forth may be possible depending on the economic activity.

Our research team at www.TheTechnicalTraders.com is always trying to identify trends and opportunities before they happen for our members and partners.  We have a pretty good track record at calling the markets for 2018 and have called many of the markets moves weeks in advance.  Please review some of our recent market research to see for yourself how well we’ve been picking apart this market.  Today, we are going to illustrate where we believe the US markets are in relation to a typical market cycle and what we should be watching for in our immediate future.

A typical market cycle can often be identified by watching two components of the economy: the Bonds and Commodity prices.  When Commodities rise and Bonds fall, the market cycle is considered middle to late stage expansion and traders should be playing any continue bullish price moves as late-stage opportunities in a bullish trend.  When Commodities fall and Bonds rise, the market cycle is considered middle to late stage contraction and traders should be playing early bottom picking trades as well as late stage bearish trend trades.

One can see from this simple Economic Cycle that Market Tops are typically preceded by moves in Commodities and Bonds.

When we look at the global commodity price valuations going back many years, we will quickly see that commodities have recently been historically low and this could result in a dramatic increase in commodities in the future which would be one of the primary signs of late stage expansion.  The expansion in global commodity prices rotated lower in late 2014 as oil fell to recent lows and as the global central banks eased off the quantitative easing and money printing.  Recently, just before the US elections in 2016, the global commodity price index reached the lowest level since 2004-05 and started climbing higher.

Therefore, we have already begun to experience one of the key components of a market cycle top – rising commodity prices.  We would watch for Bonds to decrease as well as Capital Goods, Basic Materials and Energy sectors to rotate out of a historical price channel.

Of unique interest is that late stage economic rallies are often identified by a rally in the precious metals markets as fear of a top or of late stage corrections become more pronounced.  Over the past few months, we’ve been warning of a potential Wave 3 leg higher in both Silver and Gold.  Many people may not understand the scope of this potential move and the potential it may have on your trading.  The size of this move could be substantial.  The last rally in the metals that originated after the prior to the 2009 market crash resulted in a price advance from roughly 78 to nearly 435 – a 557% increase in just under 7 years.

What would a similar move in the metals look like today?  Could it happen?  Would it be as dramatic?

Gold closed $1332.50 today.  A 250% increase would put gold at $3331.25.  A 350% increase would put gold at $4663.75.  A 450% increase would put gold at $5996.25.  So, is a $6000 price for Gold reasonable?  Possibly, give certain market setups that prompt a similar price advance as we had seen after 2002.  It would all depend on how this new market top unfolds and the level of fear that resides in the global markets.

The last precious metals signaled a trade was in February we profited 20% in only 7 days profiting from falling prices. The next trade setup could be much larger.

As the US fed pushes rates higher, more and more consumers will be pushed to their financial limit that will drive some level of economic contraction.  It is almost like the US fed has no understanding of supply and demand functions as related to their policies.  As they push the rates higher trying to front-run inflationary concerns, they don’t understand that many borrowers can’t sustain raising rates at this pace.  In the process, many borrowers will be pushed into foreclosure and possibly bankruptcy as the fed attempts to normalize rate levels.

As traders, our job is to find the opportunity that exists and to try to capitalize on price movements and from swings in valuations that occur throughout this game.  The US fed and global central banks will do what they do – we really don’t have any control over them or their decisions.  As traders, our job is to be ahead of these central banks and take advantage of the opportunities they provide to us.

We likely still have many months of preparation to further understand and develop our strategies for these future moves.  We invite you to visit www.TheTechnicalTraders.com to learn what we do and why we believe we offer the best research and analysis available to traders.  We are in the trenches just like you are.  We live and breath this stuff and we use our advanced skills and technology to try to keep our members aware of what is going to happen days and weeks in advance.  Please review some of our most recent research report to see how accurate we are.

Our articles, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors to explore the tools and techniques that discretionary and algorithmic traders need to profit in today’s competitive markets. Created with the serious trader and investor in mind – whether beginner or professional – our approach will put you on the path to win. Understanding market structure, trend identification, cycle analysis, volatility, volume, when and when to trade, position management, and how to put it all together so that you have a winning edge.

We invite you to join our other members in preparing for and profiting from the opportunities the markets generate.  Our most recent trades are already performing quite well – hope to see you in the member’s area.

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Real Estate and Banking Pressures are Building

Early signs that the US Fed may be pushing the envelope of rising rates and creating pressure on banks and borrowers are starting to show up more prominently now.  One component of our research at Technical Traders Ltd. is to find data that may be overlooked or ignored by some other researchers.  We believe that any pressures or hardships related to general consumers will be seen first in discretionary debt (credit cards, autos, and entertainment/activities).  When consumers feel the debt pressure starting to build, they react by cutting back on certain discretionary spending – focusing their purchasing/paying abilities on essential items like food, human necessities (toiletries and other essentials) and maintaining essential components of their lives.

One of the first things to watch is the delinquency rates for credit cards and autos.  Additionally, watching for early signs of weakness in the larger metro real estate can assist us in understanding the health and dynamics of regional economies.  Months ago, the levels of Foreclosures and Pre-Foreclosures were dramatically lower in major metro locations.  Pre-Foreclosures are early stage Foreclosures where borrowers are behind in their mortgage payments and the banks have issued an “intent to foreclose” notice unless the borrower repays delinquent amounts.

The Los Angeles metro is one of the largest and more diverse economies in the world.  California is rated the 6th largest economy in the world if it considered a unique country.  The ability to earn and spend efficiently within this metro is essential as it is ranked the 8th most expensive city in the world (Source March 2016 SCPR.org). There is a fine line between the balance of being able to afford to live in an area while creating opportunity and success and being priced out of an are because of constricting economic fundamentals.  We believe this balance is beginning to skew towards a massive unraveling process.

The BLUE dots on this image below are Pre-Foreclosures.  The RED dots are Foreclosures.  Our research concludes that this early stage development of increased foreclosure activities and strains on the economic fundamentals related to this large metro are showing that pressure is building for an eventual market top similar to what we saw in 2008.  We may still be many months or a year away from an eventual peak in the stock market, but the signs are starting to become more evident that pricing pressures are driving many borrowers into the foreclosure process while the regional real estate markets are about to be flooded with distressed property.

The Chicago metro area is showing similarities to the Los Angeles area.  One clear visual difference is the larger number or RED dots showing active foreclosures.

The Dallas, Texas metro is also showing signs of distress.  As thousands of people have relocated to Texas over the past 14+ years and specifically since the post-2010 economic recovery, Texas has been a hot destination for business relocation because of favorable taxation policies and cheaper real estate.  Given this continual demand for property by people moving to Texas following their employers, it appears that the fundamentals of the real estate market are changing and putting more pressure on borrowers.

The US lending giant, Freddie Mac, reported a $3.3B loss for Q4 2017 – Source.  It is our opinion that multiple factors are driving increased pressure for lenders and borrowers.  Currently, Adjustable Rate Mortgages equate to about 6~8% of all borrowing within the US.  We also believe the extended pressures related to the Affordable Care Act (Obamacare) and the US Fed raising borrowing rates are driving a fundamental shift in US economics.  Specifically, the combination of these factors, as well as relatively narrow wage growth, are pushing many borrowers over a financial cliff.

We believe the resulting wave of economic pressure will result in a dramatic opportunity for traders to capture spectacular gains from the resulting moves in specific stocks.  We believe the US and global markets could be setting up for a massive rotational move down as these economic pressures continue to froth.  As traders, we urge all investors to pay specific attention to the often-unknown economic factors at play in the markets.

One of the most important aspects of our service to is to share our analysis so that you have some real predictive analysis data for research and review.  We are not always 100% accurate in our modeling systems predictions or accuracy, but you can spend a little time reading our research reports through most of this year to see how we’ve been calling these market moves since well before the start of 2018.  Visit www.TheTechnicalTraders.com to see what we offer our subscribers and learn how we can assist you in finding great trading opportunities.  In fact, pay attention to the market moves as they play out over the next few weeks to see how accurate our research really is.  We’re confident you will quickly understand that we provide the best predictive analysis you can find and are proud to offer our clients this type of research.

In closing, don’t fall for the fear and panic articles. Stay aware of the evolving market conditions by relying on expert research and analysis like ours.  Yes, the market is extended.  Yes, the market may correct sometime in the future.  Yes, the Fed has likely created a massive bubble.  But it’s not over yet and the real trade is market segment rotation that is setting up.  Hope to see you in our member’s area where we can share more data and research to help you profit from these moves – visit www.TheTechnicalTraders.com to learn more.

Eye Opening Index, Volatility, Charts and Predictions

Volatility setting up like 2014/2015, Get ready for some interesting range rotation and price swings.

Our recent research shows that the current US markets are setting up for what could become a very interesting price range rotation as well as increased volatility.  Our team of researchers at Technical Traders Ltd. have identified a number of key elements that appear to be in place similar to 2014/2015 where the market setup an initial deep price rotation, followed by a deeper price rotation only to end with an advanced price rally on the news that the US Fed would continue buying US debt.

Let us take a look at the 2014 price activity first.  You may not be able to see the similarities like our team of researchers, and I will confess, these charts have a lot of analysis on them making it a little noisy and hard to sort through, but if you focus on the September 2014 date range, you may notice a similarity to right now in the use markets (primarily the NQ).  The focus of this article is to alert you that the market dynamics are evolving quickly and you need to stay aware of the changes as they happen.  There is a huge amount of capital at play in the US markets and if our analysis is correct, our advanced price modeling tools will assist you in understanding what to expect in the near future.

 

This next chart shows us the ES (S&P) chart as of today.  It is clearly a different setup from the 2014 price setup – but still similar enough for our modeling systems to catch this event.  The volatility range of price is increasing in a sideways channel.  This could be a good thing for traders like us.  The volatility could present some real issues for trend followers like Hedge Funds and other modeling systems as they are not likely to see this price pattern setting up.

We believe the ES will rotate lower over the next few days to attempt to retest support near 2660 before attempting another short rally likely ending near, or just above 2800.  This would represent a failed price rotation with a new double top or higher high price level very similar to the second top near the end of September 2014.  We believe this second top could produce another deeper dive in prices sometime in early April 2018.  Still, the 2660 level is support and we would have to be cautious near those levels.

 

This next chart is the NQ (NASDAQ) and is showing a pattern that is much more similar to the 2014 ES chart.  Support at 6820 is our critical price level and we are expecting a downside market price move immediately to retest this level as well as the upward price channel (in light blue).  You can see the range expansion levels drawn in YELLOW and if you study this price rotation to the 2014 price chart, you’ll see some strange similarities.

What is happening is that price is lacking direction and is attempting to hammer out peaks and valleys in an attempt to find support and resistance.  The chance of a deeper price move as well as increased volatility is quite high the further this pattern continue to form.  Any price move lower will likely cause the VIX to increase back above 20 and any price swing below 6600 on the NQ will likely cause the VIX to spike well above 25 again.  As you can see, the downside price volatility range is near 5900.

In fact, we called this rally nearly to the day over a month ago completing the bullish outlook portion. Now, the question is if our current analysis and our 6-week old prediction are correct with a big selloff.

 

See this near perfect stock market prediction we posted the day the market bottomed!

Our Adaptive Dynamic Learning (ADL) price modeling system is showing the VIX is setting up for a massive increase over the next two to three weeks.  VIX is currently trading near 16 and could spike to as high as 40 within just a few weeks.  The only way the VIX could attempt a move like this is with a moderately deep downward price move that would take out or test our support levels.  This is part of the analysis we conduct on a Daily basis at www.TheTechnicalTraders.com.  It is not just about one or two charts – we look at all the puzzle pieces to see how they all fit together to give us a very clear picture of what is likely to happen in the future.

This could set us up for a good short volatility trade much like the last one in Feb where we shorted UVXY for a quick 42.5% profit.

 

Want to know what you should be trading and how you can profit from these setups?  First thing to do is to understand this is a “trader’s” market and that you probably need some help understanding these moves.  Second thing to consider is how will you identify opportunities from this move while protecting your investment capital?  The last thing to consider is if http://www.thetechnicaltraders.com/#video is the right solution to assist you moving forward to help you navigate these markets and stay aware of these opportunities?

We believe our research is as beyond compare.  We don’t believe you can find any other firm that can accurately predict what is going to happen in the future and that our advance price modeling systems and predictive analysis models assist us in keeping our clients keenly aware of future moves and relatively safe from unexpected events.  Want to know how we can help you, visit www.TheTechnicalTraders.comand review some of our recent research reports and see how well we’ve been nailing these market moves for 2018.  We hope to see you in our members area so we can share more insight with you.

Chris Vermeulen

Are US Equity Markets Topping?

53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and  3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

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Weekly Predictions for Gold, Oil, and SPX – VIDEO

Our articles, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors to explore the tools and techniques that discretionary and algorithmic traders need to profit in today’s competitive markets. Created with the serious trader and investor in mind – whether beginner or professional – our approach will put you on the path to win. Understanding market structure, trend identification, cycle analysis, volatility, volume, when and when to trade, position management, and how to put it all together so that you have a winning edge.

Get This Video Every Day Before the Markets Open!
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Economic Pressures To Driving Metals Higher Long-Term

The analysis we have been conducting regarding the US and global markets shows one very interesting component that many people are overlooking – the pricing pressure in precious metals.  Our research team at Technical Traders Ltd. has attempted to understand and this pricing pressure in relation to the strong international demand exhibited by China, India, Russia, and others.

The below chart showing top gold reserves being accumulated by countries.

The United States holds the largest gold reserve of any country on the planet.  Yet, China, India, and Russia have all been increasing their reserves dramatically over the past few years.  We believe this is a move to support their currencies and economies by moving away from fiat currency and preparing for an eventual massive price advance in precious metals.

Comparatively, the Gold to Silver ratio is indicating that it would take nearly 79.66 ounces of Silver to equal 1 ounce of Gold (in terms of price comparison).  This level typically indicates that Silver is dramatically undervalued compared to Gold. Yet, as we believe the price of Gold is about to launch to new highs and potentially push much higher into the future, this would indicate that opportunities for investment in either Gold or Silver could be substantial.

Currently, the price ratio between Gold and Silver points to the opportunity that Silver will advance in price faster than Gold, yet we believe these ratios could remain relatively stable as both price levels advance substantially.  Should this ratio level remain relatively constant between both Gold and Silver, projected price levels should be as follows:

Should a similar disparity in price advance occur as it did in 2009~2010 moving from near 80 to near or below 50, then the price advance in Silver will become dramatically more pronounced.

We believe this type of move will likely become more evident as any greater market crisis event becomes more visible to global investors.  In other words, there is a massive opportunity right now for strategic investments in physical precious metals as well as select equities that correlate to these potential moves.

Just recently, we profited 20% from the gold miner’s pullback taking advantage of our downward prediction. Now, we are looking at what could be the beginning of a new bullish leg upwards.

Our predictive modeling system is showing a very strong likelihood that Gold will rally to near $1380 within just a few weeks and continue to rotate near this level for a period of many weeks.  This move, establishing a new recent high price level as well as potentially prompting a rising fear level in global investors may prompt a disparity in the Gold to Silver price ration resulting in a much more dramatic price advance in Silver.

Investors should prepare for a moderately strong price advance in the precious metals that may be associated with a US Dollar price decline as well as a moderate price advance in certain commodities.  Now is the time to think about how you can profit from these moves and the potential disparity in the Gold/Silver price ratio.

We share our analysis so that you have some real predictive analysis data to research and review.  We are not always 100% accurate in our pricing or timing modeling systems predictions, but you can spend a little time reading our research reports through most of this year to see how we’ve been calling these market moves since well before the start of 2018.  Visit www.TheTechnicalTraders.com to see what we offer our subscribers and learn how we can assist you in finding great trading opportunities.  In fact, pay attention to the market moves as they play out over the next few weeks to see how accurate our research really is.  We’re confident you will quickly understand that we provide some of the best predictive analysis you can find and we are proud to offer our clients this type of research.

In closing, don’t fall for the fear and panic articles.  Yes, the market is extended.  Yes, the market may correct sometime in the future.  Yes, the Fed has likely created a massive bubble.  But it’s not over yet and the real trade is this 80%+ rally that is setting up in Silver while Gold is setting up for a 10~20% rally.  Hope to see you in our member’s area where we can share more data and research to help you profit from these moves – visit www.TheTechnicalTraders.com to learn more.

 

Chris Vermeulen