US Stock Markets Setting Up For Increased Volatility

The US stock markets took a nosedive early in the regular trading session after the QQQ briefly advanced to new All-Time Highs this morning.  With the QQQ and other symbols nearing fresh new highs, traders should expect volatility to increase as trading systems and traders to look for any signs of a top to set up.  As we start to cross into “new high territory”, some fear starts to come back into the markets and volatility is sure to increase.

The Russell 2000 took a pretty big hit today as you can see from the chart below.  This move lower is still well within our proprietary Fibonacci modeling system’s bullish parameters and we’ve highlighted a “Support Zone” for our followers to understand where real price support is located.  Any downside move below $152 would cause us to reconsider our bullish trend position, but right now this is nothing more than price rotation.  Wait it out and look for opportunities when it bottoms.

 

The YM (Dow Futures) Daily chart, below, highlights just how fractured the US stock market really is today.  While the Russell 2000 is rotating lower quite hard, the DOW futures are relatively FLAT and still trading near the recent highs.  This fracturing of the major indexes suggests money may be moving away from sectors/symbols that traders may interpret as risky at the moment – and into symbols that are more stable.  For example, we might find that Financials and the Russell 2000 symbols may present a relatively high level of fear that a downside rotation in these sectors may be bigger and more dramatic than in the NQ, ES or YM.

Still, our advice is to watch this move and wait it out a bit.  Our “Support Zone” for the YM is clearly highlighted with the Green Box on the chart.

 

Lastly, we want to highlight the Transportation Index for all of our followers to understand what is going on behind the scenes today.  The Transportation Index is a fairly strong measure of future economic activity and output.  It typically leads the US stock market by at least 20~30 days.  The price advance, today, in the Transports would indicate that many traders believe the US economy is still improving and will still continue to perform well.  If the Transports break to new highs, then we should see more continued upside price levels in many of the US stock market sectors.

 

Again, the markets are a bit fractured today with price action.  And that leads us to believe we could see a spike in the VIX and volatility over the next few days/weeks while this rotation plays out.  Eventually, we believe a continued upside price leg will resume and we want to urge traders to play it safe for right now.  Follow our “Support Zones” as a key indicator for when the price has fallen into a potentially risky level – below support.  If this happens, then we would begin to become concerned that price may be initiating a bigger move to the downside.

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Chris Vermeulen
www.TheTechnicalTraders.com

How To Play This Selloff In Gold And Gold Stocks

Chris Vermeulen, Founder of The Technical Traders has been relatively bearish on gold over the past couple months. Now that we have this down move in gold and gold stocks he weighs in on how low the metal could go and how long the downtrend could last.

Get Chris’ Trade Alerts Today!

Watch The Financial Sector For The Next Topping Pattern

A very interesting price pattern is setting up in the financial sector that could lead to a very big move in the US & Global markets.  Remember how in 2008-09, the Financial sector and Insurance sector were some of the biggest hit stock sectors to prompt a global market crisis?  Well, the next few weeks and months for the financial sector are setting up to be critical for our future expectations of the US stock market and global economy.

Right now, many of the financial sector stocks are poised near an upper price channel that must be breached/broken before any further upside price advance can take place.  The current trend has been bullish as prices have rallied off the December 2018 lows.  Yet, we are acutely aware of the bigger price channels that could become critical to our future decision making.  If there is any price weakness near these upper price channel levels and any downside price rotation, the downside potential for the price is massive and could lead to bigger concerns.

Let’s start off by taking a look at these Monthly charts…

This first Monthly Bank Of America chart is best at showing the price channel (in YELLOW) as well as a key Fibonacci price level (highlighted by the MAGENTA line).  We’ve also highlighted a price zone with a green shaded box that we believe is key support/resistance for the current price trend.

As you can see from this chart, since early February 2018, the overall trend has shifted into a sideways bearish trend.  The price recovery from December 2018 was impressive, yes, but it is still rotating within this sideways/bearish price channel.  Our belief is that this YELLOW upper price channel level MUST be broken in order for the price to continue higher at this point.  Any failure to accomplish this will result in a price reversal that could precipitate a 30% price decline in the value of BAC.  In other words, “it is do-or-die time – again”.

 

This Monthly JPM chart shows a similar pattern, yet the price channel is a bit more narrow visually.  We have almost the same setup in JPM as we do in BAC.  The same channels, the same type of Fibonacci price support level, the same type of sideways price support zone (the shaded box) and the same overall setup.  As traders, we have to watch for these types of setup and be aware of the risks that could unfold with a collapse of the financial sector over the next few weeks.

We believe the next few weeks could be critical for the financial sector and for the overall markets.  If weakness hits the financial sector as global growth continues to stagnate we could enter a period where the global perception of the future 12~24 months may change.  Right now, perception has been relatively optimistic in the global stock markets.  Most traders have been optimistic that the markets will recover and a US/China trade deal will get settled.  The biggest concern has been the EU and the growth of the European countries.

What if that suddenly changed?

 

We are not saying it will or that we know anything special about this setup.  We are just suggesting that the Monthly charts, above, are suggesting that price will either break above this upper price channel or fail to break this level and move lower.  We are suggesting that, as skilled traders, we need to be acutely aware of the risks within the financial sector right now and prepare for either outcome.

This last chart, a Weekly FAS chart, shows a more detailed view of this same price rotation and sideways expanding wedge/channel formation.  Pay very close attention to the shaded support channel shown with the GREEN BOX on this chart.  Any price rotation within this level should be considered “within a support channel” and not a real risk initially.  We want to see price break above the upper price channel fairly quickly, within the next 2 to 5+ weeks, and we can to see it establish a new high (above $78 on this chart) to confirm a new bullish price trend.  Once this happens, we’ll be watching for further price rotation and setups.  If it fails to happen, then the RED DOWN ARROW is the most likely outcome given the current price setup.

 

Any downside price move in the Financial sector would have to be associated with some decreased future expectations by investors.  Thus, our bigger concern is that something is lurking just below the surface right now that could pull the floor out from under this sector.  Is it a surprise Fed rate increase?  Is it some news from the EU?  Is it a sudden increase in credit defaults?  What is the “other shoe” – so to say. You can also check interesting credit repair tips at Credit Solvers.

Be prepared.  If all goes well, then we’ll know within a few more weeks if the upside price rally will continue or if we need to start digging for clues as to why the support for the financial sector is eroding.  This really is a “do or die” setup in the financial sector and we urge all traders to pay very close attention to this sector going forward.  We believe it will be the leading sector for any major price weakness across the global markets.

Do you want to find a team of dedicated researchers and traders that can help you find and execute better trades in 2019 and beyond?  Please visit www.TheTechnicalTraders.com to learn how we can help you prepare for the big moves in the global markets and find better opportunities for greater success in the future.  Our team of researchers and traders continue to scan the markets for new trades and incredible research for all our members and followers.

Chris Vermeulen

Oil May Be Setup For A Move Back $50

US Gasoline prices have shot up 15% to 30% or more over the past 4 weeks as the Summer Blend hits the markets and consumers continue to stay shocked at the increase.  In California, prices shot up from near $3 per gallon to over $4 a gallon over a 7-day span.  Every year, when the Summer Blend of Gasoline hits the markets, we expect a price increase that is associated with this change.  But this year, the price increase has really shocked consumers to the point that they are altering their travel plans and cutting extra spending in an attempt to deal with the new gasoline prices.

This data graph from the US Energy Information Administration shows just how dramatic the price increase has been over the past 3+ weeks.

(Source: https://www.eia.gov/dnav/pet/pet_pri_gnd_a_epm0_pte_dpgal_w.htm)

Anyone with any common sense about how consumers react to these types of price increases will understand that consumers will react to these price increases by cutting other expenses and travel from their future in order to compensate for the higher gas prices.  We’ve seen it happen many times in the past.  This means that retail shopping, entertainment, dining, and other non-essential purchases will be curtailed as consumers deal with the extra $100 to $250+ each month in gasoline costs.  Small business and other service industries that rely on driving or on-site work will also see their bottom line profits drop as a result of these higher prices.  The extra costs for these companies could be counted in the thousands each month.

We believe the reaction to these higher gasoline prices will result in decreasing demand by consumers as they cut back on certain expenses and attempt to limit travel as needed to balance their essentials and non-essential purchases.  We believe this decrease in overall purchases will likely reflect in a decrease in travel and hospitality, retail, entertainment, and restaurant purchases.  It is very likely that this decrease will be felt across the economy fairly quickly as gasoline prices attempt to stabilize near new levels.

Our researchers, at Technical Traders Ltd, believe Oil will come under pricing pressure over the next few weeks as consumers react to the higher gasoline prices.  The recent price stall near $65 aligns with a key Fibonacci retracement level near $63.98 and we believe any further upside in Oil may be limited.  Our researchers believe a downside price retracement will begin to unfold where Oil prices will fall to below $55 ppb initially and potentially target sub $50 levels eventually.

The recent rally in oil prices from last 2018 was in-line with expectations that the US and global markets would recover after the deep price correction in Q4 2018.  As the US stock market continues to rally towards new highs, we suggest watching Crude Oil, Transports and overall consumer activity to determine is a mild consumer recession sets up over the next few weeks.  Our research suggests that Q2 is typically fairly strong for Transports and Oil.  Q3, or the Summer season, is typically relatively weak.  This fall into the old trader saying “Sell in May and go away”.  We believe the rotation lower in Oil and consumer activity related to the higher oil prices may hit the markets a bit earlier this year and set up some incredible trading opportunities.

If our research is correct and Oil prices top over the next few weeks, this means that OILD and USOD are likely to be very strong buying opportunities near historical lows.  Let’s take a look at these setups and plan out the best case scenario.

USOD, the US 3x Short Oil Fund, is set up with current price levels very close to historical price lows.  We can see how any price move below $4 would set up an incredible buying opportunity for skilled traders to setup swing trade long positions going into the summer months.  The closer we get to mid-May, the more likely the historical price weakness will setup to drive these Oil ETFs higher by at least 15% to 25%.  Our believe that consumers will react to the higher gasoline prices by cutting their demand for extra travel and other expenses help to support our belief that oil prices may decline 12% to 24% over the next 30 to 60 days.

OILD, the Proshares UltraPro Short 3x ETF, is setting up very near to historical price lows slightly below $16.  We believe any price decline near these lower levels would create an excellent buying opportunity for skilled traders to setup long trades in OILD as we expect the Summer season oil price decline to push these ETFs at least 15~25% higher.

The key to understanding the potential for this trade is to watch for price weakness in the general markets and in select consumer sectors (travel, entertainment, retail, restaurants, and others).  If we see that consumers are pulling back on certain expenses, then we can assume they are also pulling back on travel, gas purchases, and Summer vacations.  This will likely cause demand issues in Oil to prompt a price decline.  We don’t expect a dramatic price decline at this point, but we do expect a 12% to 24% price drop as any protection move by consumers will have far-reaching results on the economic numbers and future expectations.

Take a minute to find out why www.TheTechnicalTraders.com is quickly becoming one of the best research and trading services you can find anywhere on the planet and last week we took another 4.5% profit on another winning trade.  We are about to launch a new technology product to assist our members and we continue to deliver incredible research posts, like this one, where we can highlight our proprietary price modeling systems and adaptive learning solutions.  If you want to stay ahead of these markets moves and find greater success in 2019 and beyond, then please take a minute to see how we can help you.  Once this move begins in Gold and Silver, there will be dozens of incredible opportunities for skilled investors – don’t miss out of them.  Join www.TheTechnicalTraders.com today.

Chris Vermeulen

Indexes Race For The New All-Time High

Without too much attention from traders, the SPY and QQQ are racing to attempt to establish new all-time highs in what may become the most exciting Spring/Summer breakout rally of the past 3 years.  While many other symbols are still flirting with November/December 2018 highs, the SPY and QQQ are both showing upside price gaps last week indicating a moderately strong price advancement is taking place.  Additionally, both the SPY and the QQQ are already well above early 2018 peak levels.

If you were not paying attention, it sure looks like these two symbols are racing to be the first to break into “new all-time high levels” and shock the doomsayers (again) as we may see this rally continue for at least another 30 to 60 days.

If you’ve been following our research, you’ll know that our short term research suggests new all-time high prices are imminent (very likely over the next 30 to 60+ days).  We made this call back in September 2018 before the big selloff prompted by the US Fed.  We also called the bottom on December 24, 2018, and warned that the subsequent rally would push hard in an attempt to target recent all-time highs.  Now, as we near this event, we need to evaluate what may happen next.

This SPY chart shows the weekly price bars and just how close we are to new all-time highs.  The SPY only needs to rally about $8 to breach into new record-setting territory.  We believe the upside rally could continue well above the $300 level as this upside price bias should last until late May or into early June 2019.  Therefore, we could see an upside potential of more than 5~8% before a new peak sets up.

 

This QQQ Weekly chart shows similar characteristics, yet shows one incredible variation to the SPY chart.  The QQQ chart shows that price is breaching the lower YELLOW price channel and this may result in an impulse move higher in the QQQ that could push it to new highs before the SPY.  The QQQ is even closer to all-time highs than the SPY – being only $2.15 away from reaching the all-time high level.  If this breach of the lower YELLOW price channel prompts a bigger rally, we could see the QQQ rally upward towards $200 to $210 before setting up a new price peak.  This represents a +7.5% to +13.5% upside potential for skilled traders.

 

If our research continues to be correct, we should expect at least another 30 to 60 days of upward price trend/bias before any real resistance sets up to potentially create a peak in price.  Our research suggests late May or early June 2019 is the time traders should protect open positions and prepare for extended volatility.

Don’t wait for the ES, NQ, YM or TRAN to break the all-time highs.  Watch the QQQ and SPY for this event and pay attention to the Russell 2000 and Blue Chips as they will likely be the early warning signs of a price peak or price weakness.  We warned that price volatility will likely increase over the net 30+ days – so be prepared for some bigger price swings going forward as the bull and bears fight for control as we near these resistance areas.

With a total of 55 years experience in technical analysis and trading between Brad Matheny, and myself Chris Vermeulen, our research and trading signals 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 Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen

Natural Gas Continues To Offer Opportunities for Longs

Historically, April has been a pretty consistent upside opportunity in Natural Gas for over 20 years.  Over the past 24+ years, the upside opportunity in Natural Gas has been accurate over 68% of the time with the average upside potential ranging from $0.60 to $0.85.  With Natural Gas sitting down near recent lows and seeing as though we are still fairly early in the month of April, our researchers believe the opportunity still exists for some quick profits in UNG with an upside move from below $23.95 to a target level of $26 to $28 (roughly +9 to +18%).

The downside risk is rather limited with clear support visible below the recent lows (near $22.75) and a historical likelihood of any further downside price swing being below 33%.  Our research team believes an opportunity to establish new longs in UNG below the current Daily price gap (below $23.50) would be ideal.

 

Historical data mining shows that average upside rallies at this time of the year are typically ranging just below $1.  Thus, the upside potential for this move being about +9 to +12% should be sufficient for quick profits.  Skilled traders can hold a small portion of the trade for any potential run beyond these initial target levels, but we caution traders that $28.50 to $29.00 is an area of strong resistance. Our last trade in natural gas with subscribers netted us 30% profit in UGAZ within 10 days back in February.

Our research team is still waiting for the Daily Upside Gap to fill with prices below $23.50 before we look to enter any new trades.  We have been patiently waiting for the bottom in Natural Gas to form knowing that we have this trade setup with a relatively high success rate.  Keep an eye on Natural Gas and look for any good entries below $23.50 in UNG – the deeper the better.  Our Fibonacci modeling systems are already suggesting a bottom has set up and any upside price move above $24.30 will likely prompt a bigger rally towards $26 to $28.

Are you ready for this next move?  Want to know how we can help you find and execute better trades?  55 years of combined 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 Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen

 

Intra-day Fibonacci Modeling Shows Volatility Is About To Spike

Our research team, at Technical Traders Ltd. alerted us to a Fibonacci technical pattern that is setting up in the US stock market right now.  This pattern suggests that volatility will increase dramatically over the next few days/weeks as intra-day price action suggests deeper sideways price action may continue.

One of the key benefits of our proprietary Fibonacci price modeling system is that it automatically learns and adjusts to price action on different intervals.  So, by watching the results of this adaptive learning model on various intervals shows different types of setups and expectations, we can develop a consensus among the result to assist us in determining a likely outcome.  These models are showing that volatility will increase by expanding out the Fibonacci Trigger Levels for Bullish and Bearish price action.  As price begins to consolidate, the proprietary Fibonacci price modeling system adjusts internal computational measures to determine where and when the opportunity exists for trends to form.  When these Fibonacci Trigger levels move away from price, it typically suggests bigger moves are about to happen and that volatility will increase.

This 120 minute NQ chart highlights the expanded range of the Fibonacci Trigger Levels (called the Volatility Zone).  This is the clearest example of what we expect to become a normal price rotation zone for the NQ.  Right now, our expectations are that a range from 7500 to 7660 is expected.  This means we could see deeper price rotation closer to the 7500 level and up to near the 7660 level without any real trend being established.  Eventually, as price rotates and consolidates, these Fibonacci Trigger levels will adjust to better identify future trends.  Currently, they are warning of increased volatility and the likelihood of bigger price rotation ahead.

This 120-minute YM chart highlights the range of the volatility zone based on Fibonacci Projected Target levels.  Although the YM chart does not include the wider Fibonacci Trigger levels, we believe this increased volatility suggested by the NQ chart will carry over into the YM and ES charts as well.  Therefore, we believe the entire US stock market will enter a period of increased volatility over the next 5~15 days.

We have highlighted a price range from 25,750 to 26,500 as an expected rotational range.  It is highly likely that the 25,980 level will act as support, thus we believe any price move below this level will present a key buying opportunity for the final leg higher.  Overall, the extended volatility we expect should be a moderate price rotation before the final rally to new all-time price highs for the US stock market.  This rotation will present key buying opportunities for skilled traders wanting to catch that last 4~12% upside swing in the US stock market.

It is highly likely that the YM falls to near the 25,980 level (near the ORANGE Moving Average level) before finding key support.  Pay attention to this level going forward as it would be a good indicator of buying opportunities in the broader markets/stocks.

Do you want to find a team of dedicated researchers and traders that can help you find and execute better trades in 2019 and beyond?

Let our 55 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 Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen

Is this the last leg higher for the DOW Index?

Our researchers, at Technical Traders Ltd., believe this current upside price move is nearing the end of any immediate upside potential.  Yes, back in December 2018 and before, we called for an “Ultimate Low” pattern setup followed by an incredible run to new all-time highs when almost everyone else was calling for a continued downside price move.  Now, that the YM/DOW is only 640 points away from reaching all-time highs again, we believe a new price peak will setup sometime near June/July 2019.

Our researchers believe the continued upside price bias will stay in place for at least another 30 days and that the YM.DOW will establish new higher all-time highs in late April or early May 2019.  We believe once a “scouting party” type price move completes above the all-time highs near $27,000, a sideways price rotation will begin that may last as long as 25 to 55 days.  Our predictive modeling systems are suggesting that June/July are important months for the global equities/stock markets and we believe we’ll know more about the setups that will prompt bigger moves as we get closer to these dates.

Right now, our researchers are suggesting the upside move in the YM/DOW is likely to push higher by +2.5 to +3% or slightly more.  Once the $27,000 level is breached to the upside, traders should begin to become much more cautious of price rotation and volatility.  As we head into June/July/August 2019, be prepared for a spike in volatility/VIX as price rotation is likely to become much more aggressive.

 

Read our most recent research to learn more about what we believe will happen over the next few months.  Get ready for some bigger price swings and prepare for the last bit of upside price trending before a price peak sets up near June/July.  Ultimately, we believe there is an opportunity for skilled traders that can see and create opportunity from these moves.  We’ve been warning that 2019 is going to be an incredible year for skilled traders – our call near the end of 2018 that this move higher would target new all-time highs is proof of the opportunity that exists if you pay attention to our research.  Do you know of any other firm that called this move as accurately as we did?

On September 17, 2018 our Predictive Trading Model Suggests Falling Stock Prices During US Elections.

Please visit www.TheTechnicalTraders.com to learn more about how we help our members learn to find and execute incredible trading opportunities.  We’ve recently launched a new technology solution for our members that delivers our incredible research and trading solutions.  2019 is going to continue to be an incredible year for skilled traders – you won’t want to miss these big moves that are setting up.

Chris Vermeulen

Watch For +15% Move In Chinese Stocks

Last week we had strong numbers out of China and our research continues to suggest the Chinese stock market could be poised for an upside price rally of at least 15% over the next 30+ days before possibly reaching a peak in June or July 2019.  Our Fibonacci predictive modeling system is suggesting a target level of $30.50 to $31.50 (in YINN) as an immediate upside profit range.

We believe the continued pricing pressures of 2018 are easing as continued negotiations with US trade officials have everyone in high hopes for a suitable and equitable outcome.  Our researchers believe the upside in the Chinese stock market could be as high as $32 to $36 in YINN before the June/July peak is reached.  This would represent a +25% to +40% upside price objective from recent highs.

It is our belief that the continued US/Chinese stock market rally that initiated after the December 24, 2018 bottom will continue until a June/July 2019 peak is reached in the global markets.  Pay attention because this could be an excellent short term price move for skilled traders to pocket 10% to 20% over just a few days or weeks.

Another pocket of stocks also starting to breakout are small-caps which I shared in a detailed technical analysis video last week. While we have suggested the US stock market is poised for further upside price activity with a moderately strong upside price “bias”, our research continues to suggest the SP500, DOW, NASDAQ stock markets will not break out to the upside until the Russell 2000 breaks the current price channel, Bull Flag, formation which is why I am starting to focus on small-cap stocks using my MRM Trading Strategy.

Please visit www.TheTechnicalTraders.com to learn more about how we help our members learn to find and execute incredible trading opportunities.  We’ve recently launched a new technology solution for our members that delivers our incredible research and trading solutions.  2019 is going to continue to be an incredible year for skilled traders or those who follow our analysis – you won’t want to miss these big moves that are setting up.

Chris Vermeulen
Technical Traders Ltd.