Chris Vermeulen of TheTechnicalTraders sits down with David Lin, Anchor for Kitco News to discuss gold and gold miners’. Precious metals, gold, and gold miners have all been out of favor this year. We saw panic selling hit the stock market and massive liquidation which pulled them down.
This time around, we are seeing record amounts of cash being stock-pilled. The big money just wants to sit in cash for the time being. That is because the general investors and the masses are getting really nervous. Overall, volatility continues to expand for gold. As a trade, it could be really good in about a month or two.
Chris and David also discuss:
Asset Allocation
Shorting the market
Bear markets and how to trade during one
The four stages of markets
The outlook for the stock market
TO LEARN MORE ABOUT GOLD AND GOLD MINERS, Bear Markets & market stages WATCH THE VIDEO
TO EXPLORE THE Total ETF Portfolio, PLEASE VISIT US AT The technical traders. You’vE GOT MORE TO GAIN THAN TO LOSE WHEN SEEKING INFORMATION!
Disclaimer: None of this material is meant to be construed as investment advice. It is for education and entertainment purposes only. The video is accurate as of the posting date but may not be accurate in the future.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-28 07:57:402022-06-28 07:57:42Gold and Gold miners – Are They Still Out Of Favor? – VIDEO
We are only 6-months into the year, and it seems like the inflation boom is quickly going bust.
The last few months have been very interesting as we see traders (rotating) moving out of one investment or market and into another. But as losses mount and capital diminishes, traders are eventually forced to liquidate even their favorite holdings to meet margin calls and raise needed cash.
As followers of pricing, our opinions or forecasts are not of much value. What is important is price, as price directly determines our trading profits or losses.
When market conditions change or at times when our trading begins to rack up losses, the best thing we can do as a professional is to go to cash. Going to cash allows us to get our perspective back. It allows us the possibility to enter the markets once more and provides the potential to make a lot of money.
Markets go up, and markets go down. What makes the big difference is how we manage risk and how well we do in following the direction of price. Knowing and controlling one’s emotions dictates how long we can play the game or how successful we will be at it.
As we review a few interesting and relevant long-term weekly charts, we realize that for many of us, the best option is simply to go to cash, watch, and wait.
FOOD: WHEAT -23.74%
Wheat had a 5-year run gaining more than $8 a bushel.
From December 2021 to March 2022, it gained more than $4 a bushel.
In March 2022, it made a 14-year double top at $12.
From its peak, it has now been trending lower for 31 weeks.
Wheat is a good indicator of the level of consumer food inflation.
WHEAT CFD • WHEATUSD • OANDA • WEEKLY
HOUSING: LUMBER -67.14%
Random length lumber futures experienced a 14-month exponential rally.
From its March 2020 Covid low it has rallied $1403 for a 500%+ gain.
It is now down $1125 or -67.14% from its May 2022 peak.
Lumber is a good indicator of the health of the new housing construction market.
RANDOM LENGTH LUMBER FUTURES • CONTINUOUS • LBS1! • WEEKLY
AUTOS: PLATINUM -29.15%
Platinum experienced an 11-month rally that now has fizzled rather quickly.
From its Covid 2020 low its price had more than doubled.
It is now down -$376 per ounce or -29.15% from its February 2021 peak.
Platinum is a good indicator of the health of the new automotive sales market where most auto manufacturer stocks have also lost more than -30% from their price peaks.
PLATINUM USD • XPTUSD • OANDA • WEEKLY
VALUABLE INSIGHTS FROM SUCCESSFUL TRADERS
Market Wizards by Jack D Schwager (www.Amazon.com) is packed with insights from successful traders who have shared their wisdom based on firsthand trading experiences. Here are a few of our favorites:
Jim Rogers:
“There is no such thing as a paper loss.” “A paper loss is a very real loss.”
“When government measures are implemented to counteract a trend, you should sell the rally after the government action.”
“The markets are the same, they go up and down.”
Mark Weinstein:
“Knowing when to stay out of the markets is as important as knowing when to be in them.”
“Limit losses quickly.”
“When institutions and specialists sell out, they don’t sell out at one price level, they scale out as the markets go up.”
Brian Gelber:
“It doesn’t matter if my opinion is right or wrong.”
“All that matters is whether I make money.”
“It is a good habit to wipe the slate clean and start fresh.”
WHAT STRATEGIES CAN HELP YOU NAVIGATE THE CURRENT MARKET TRENDS?
Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors. Also, learn how we identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market. The markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.
Historically, bonds have served as one of these safe-havens. This is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there? How can they be deployed in a bond replacement strategy?
HOW WE CAN HELP YOU LEARN TO INVEST CONSERVATIVELY
At TheTechnicalTraders.com, my team and I can do these things:
Safely navigate the commodity and crude oil trend.
Reduce your FOMO and manage your emotions.
Have proven trading strategies for bull and bear markets.
Provide quality trades for investing conservatively.
Tell you when to take profits and exit trades.
Save you time with our research.
Proved above-average returns/growth over the long run.
Have consistent growth with low volatility/risks.
Make trading and investing safer, more profitable, and educational.
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Chris Vermeulen Chief Market Strategist Founder of TheTechnicalTraders.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-28 07:56:012022-06-28 07:56:04Is The Inflation Boom Quickly Turning To An Inflation Bust?
The recent downward Crude Oil trend may have caught many traders by surprise. Just before the US Fed raised interest rates on June 15, 2022, Crude oil was trading above $120ppb. Less than 5 days later, it collapsed -12% and has continued to trend lower. Currently, Crude Oil is near -17% lower than recent highs.
It appears Crude Oil has confirmed resistance near $120 and is devaluing as consumers pull away from traditional driving/spending habits while the Fed aggressively attempts to burst the inflation bubble. This type of contraction in Crude Oil is very similar to what happened in 2008-09 when the Global Financial Crisis (GFC) hit – Crude Oil collapsed more than -70% after IYC started trending lower in 2007.
Consumer Discretionary Spending May Be Leading Crude Oil Downward
On June 9, 2022, I published a research article (CRUDE OIL PRICE AND CONSUMER SPENDING – HOW THEY ARE RELATED) highlighting the correlation between Crude Oil and the Consumer Discretionary ETF (IYC). In this article, I suggested any breakdown in IYC, below $60, may prompt a broad downward price trend in Crude Oil – possibly targeting the $75 to $85 price level.
Looking at this chart from our June 9, 2022 article, we can see IYC has already fallen more than -34% from recent highs. In 2007, peak oil prices were reached well before IYC declined more than -22%. So, in this case, the recent decline in IYC may already be predicting a downward price trend in Crude Oil – possibly targeting levels below $80 eventually.
(Our Crude Oil/IYC Chart from the June 9, 2022 article)
Aggressive Fed Action May Prompt Extreme Consumer Actions
In an oddly similar way, the 2008-09 GFC represented an extreme excess/speculative phase in the US Credit/Housing markets. Today, we see many similar facets after the COVID-19 event – where house prices skyrocketed from +25% to +45% in some areas. Additionally, prior to 2007-08, we saw moderately high inflation levels, Crude Oil was trading above $100 ppb, certain commodities were in very high demand, and consumers were spending aggressively on almost everything.
Today, we see a combination of some factors from the GFC as well as the DOT COM bubbles. Not only have house prices and raw commodities seen incredible rallies over the past 5+ years, but the Technology and Innovation sectors have also been leading market gains as well. Bitcoin rallied from under $1000 to a high of nearly $70,000 over the past 5+ years. The excessive speculation in the global markets recently is clearly evident in many various sectors and assets.
Global Central Banks Are Running The Show (Again)
I believe the US Federal Reserve will continue to raise rates aggressively in an attempt to tame inflationary trends. At the same time, we are likely to see many Global Central banks attempt to follow the US Fed in raising rates. This creates an economic environment many traders are unprepared for – an extended stagflation/recession period.
The downward trend in Crude Oil and IYC may be the “canary” for the global economy and what to expect going forward. When consumers pull away from traditional pending habits, we are likely to see a broad contraction in global GDP and other economic factors.
Traders and investors need to stay cautious of various global market trends and move back towards a more traditional method of managing their capital. The global markets are still 3x to 5x more volatile than at any time in recent history. Any aggressive trading style could lead to massive losses – as we are likely to see in many global Hedge Funds and managed accounts.
LEARN FROM OUR TEAM OF SEASONED TRADERS
With the market environment and crude oil trend, it’s imperative to assess our trading plans, portfolio holdings, and cash reserves. As professional technical traders, we always follow price. At first glance, this seems very straightforward and simple. But emotions can interfere with a trader’s success when they buck the trend (price). Remember, our ego aside, protecting our hard-earned capital is essential to our survival and success.
Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:
A loss of 10% requires an 11% gain to recover.
A 50% loss requires a 100% gain to recover.
A 60% loss requires an even more daunting 150% gain to simply break even.
Recovery time also varies significantly depending upon the magnitude of the drawdown:
A 10% drawdown can typically be recovered in weeks to a few months.
A 50% drawdown may take many years to recover.
Depending on a trader’s age, they may not have the time to wait nor the patience for a market recovery. Successful traders know it’s critical to keep drawdowns with reason, as most have learned this principle the hard way.
HOW WE CAN HELP YOU LEARN TO INVEST CONSERVATIVELY
At TheTechnicalTraders.com, my team and I can do these things:
Safely navigate the commodity and crude oil trend.
Reduce your FOMO and manage your emotions.
Have proven trading strategies for bull and bear markets.
Provide quality trades for investing conservatively.
Tell you when to take profits and exit trades.
Save you time with our research.
Proved above-average returns/growth over the long run.
Have consistent growth with low volatility/risks.
Make trading and investing safer, more profitable, and educational.
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Chris Vermeulen Chief Market Strategist Founder of TheTechnicalTraders.com
Market trends continue to drop due to investor concerns about geopolitical events, record inflation, rising interest rates, slowing housing, plummeting auto sales, increasing retail inventories, expanding consumer credit, and pending layoffs.
Even stocks that had previously held up or remained strong now seem to be showing signs of topping and breaking down. This is normal behavior for a bear market trend where the initial wave of vulnerable markets takes a hit which then causes traders to shelter their remaining cash in more robust markets. But as losses mount and their capital diminishes, traders eventually are forced to liquidate even their strong market assets to meet margin calls and raise needed cash.
As we review the following market trends, we quickly realize that the best option for most traders is to simply go to cash, watch, and wait.
BERKSHIRE HATHAWAY -25.34%
BRK was one of the few companies in the early part of Q1 2022 that bucked the downtrend and had remained strong.
By the end of Q1 2022, BRK had put in a top that was greater than 200% of its Covid 2020 low.
Now, as we approach the end of Q2 2022, BRK has lost -25.34% and is down -10.34% year-to-date.
BERKSHIRE HATHAWAY INC • BRK.A • NYSE • DAILY
QQQ NASDAQ 100 ETF -33.16%
QQQ put in its top at the very end of Q4 2021 primarily due to rising inflation and the strong US dollar.
After its initial Q1 2022 drop of -21.6%, QQQ had a rally back up, which was a 61.8% correction to put in a lower top.
Now, as we approach the end of Q2 2022, QQQ has lost -33.16% and is down -30.98% year-to-date.
The Russell 2000 index (comprised of 2,000 small-cap companies) put in its top at the very end of Q4 2021 due to rising inflation and the strong US dollar.
After its initial Q1 2022 drop of -20.93%, the Russell had a rally back up, which was a 38.2% correction to put in a lower secondary top.
Now, as we approach the end of Q2 2022, the Russell has lost -32.23% and is down -25.81% year-to-date.
US RUSSELL 2000 STOCK INDEX • OANDA • DAILY
BITCOIN -71-87%
Bitcoin put in its final top at the very end of Q4 2021.
Bitcoin had a 68-day rally back up, which only corrected about 35% of its initial down move to put in a lower secondary top.
Now, as we approach the end of Q2 2022, Bitcoin has lost -71.87%.
BITCOIN / US DOLLAR • BTCUSD • BITFINEX • DAILY
VALUABLE INSIGHTS FROM SUCCESSFUL TRADERS
Market Wizards by Jack D Schwager (www.Amazon.com) is packed with insights from successful traders who have shared their wisdom based on firsthand trading experiences. Here are a few of our favorites:
Willian O’Neil:
“You have to cut your losses fast.”
“You should be able to win even if you are right only half the time.”
“The key is to lose the least amount of money possible when you are wrong.”
David Ryan:
“A rigid stop-loss rule is an essential ingredient to the trading approach of many successful traders.”
Marty Schwartz:
“One of the tactics in the Marine Corps officer’s manual is either go forward or backward.”
“Don’t just sit there if you are getting the hell beat out of you.”
“Even retreating is offensive, because you are still doing something.”
“As a trader, you a forced to confront your mistakes because the numbers don’t lie.”
“The most important thing is money management, money management, money management.”
“I try not to go against the moving averages; it is self-destructive.” “Is the price above or below the moving average?” “That works better than any tool I have.”
LEARN FROM OUR TEAM OF SEASONED TRADERS
In today’s market trend environment, it’s imperative to assess our trading plans, portfolio holdings, and cash reserves. As professional technical traders, we always follow price. At first glance, this seems very straightforward and simple. But emotions can interfere with a trader’s success when they buck the trend (price). Remember, our ego aside, protecting our hard-earned capital is essential to our survival and success.
Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:
A loss of 10% requires an 11% gain to recover.
A 50% loss requires a 100% gain to recover.
A 60% loss requires an even more daunting 150% gain to simply break even.
Recovery time also varies significantly depending upon the magnitude of the drawdown:
A 10% drawdown can typically be recovered in weeks to a few months.
A 50% drawdown may take many years to recover.
Depending on a trader’s age, they may not have the time to wait nor the patience for a market recovery. Successful traders know it’s critical to keep drawdowns with reason, as most have learned this principle the hard way.
HOW WE CAN HELP YOU LEARN TO INVEST CONSERVATIVELY
At TheTechnicalTraders.com, my team and I can do these things:
Reduce your FOMO and manage your emotions.
Have proven trading strategies for bull and bear markets.
Provide quality trades for investing conservatively.
Tell you when to take profits and exit trades.
Save you time with our research.
Proved above-average returns/growth over the long run.
Have consistent growth with low volatility/risks.
Make trading and investing safer, more profitable, and educational.
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Chris Vermeulen Chief Market Strategist Founder of TheTechnicalTraders.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-28 07:52:462022-06-28 07:52:48As Market Trends Continue To Drop – Where Is A Good Place To Invest?
US and Global markets recoiled from the higher inflation/CPI data last week. The US Fed raised interest rates by 75pb on June 15. The Fed also warned that other, more aggressive rate increases might be necessary later this year. Before the Fed decision, global markets opened on Sunday, June 12, and quickly started selling downward. US Indexes sold off on Monday, June 13, by more than 2.5% almost across the board. A brief rally after the Fed decision seems to have evaporated in early trading on Thursday, June 16.
It is clear that global markets expected inflation to stay elevated but were hoping for some moderately lower data showing the recent Fed moves had already dented some inflation concerns. Now, it appears the US Fed has its backs against a wall and moved rates aggressively higher to stall inflation (and possibly destroy global asset values). From my perspective, this is unknown territory for the US Fed and Global Central banks. That means traders should expect increased volatility and the possibility of a very determined reversion of price over time.
Another Global Financial Crisis May Be Unfolding
The research conducted by my team and I shows some interesting new data. In particular that the US Current Account data is very near to the levels reached just before the Global Financial Crisis (GFC) in 2006 (near -$218B). I consider this a very clear sign that the US economy, inflation, consumer engagement, and asset values have continued to hyper-inflate since the COVID-19 virus event.
The chart below highlights the US Current Account data and the Dow Jones Industrial (DJI) Average price data. Notice how the lowest level of the US Current Account data reached a deep trough (September 2006) about 12 months before the absolute peak in the DJI (September 2007). This time, the US Current Account trough formed in September 2021, and the peak in the DJI happened in December 2021 – only 3~4 months later.
The global markets have continued to consume cheap US Dollar liabilities over the past 10+ years as the US Fed kept interest rates very low for an extended period. Not only did this feed an extreme global speculative phase, but it also created an extreme credit/debt liability issue throughout the globe as rates increased. Debt holders are forced to roll debt forward at higher rates if they cannot pay off these liabilities completely – being over-leveraged. This same scenario is very similar to how the GFC started. Over-leveraged speculative trading in Mortgage-Backed Securities and other global assets.
Skilled Traders Saw This Problem Many Years In Advance
I’ve been informing my subscribers that an event like this was starting to take place throughout 2020 and 2021. Below, are some of the articles posted in our blog warning traders that the global markets were transitioning away from the endless bullish price trends from 2011 through 2021.
NASDAQ May Fall To $9,750 Before Attempting To Find Any Support
The Technology Sector is leading the downward price trend in the US major indexes. The NASDAQ could fall to levels close to $9,750~10,750 before attempting to find any real support.
Ultimately, the NASDAQ may fall to levels near the COVID-19 lows, near $6,500. But right now, the most logical support level exists just above the COVID-19 2020 highs.
I expect this new global price revaluation may last throughout the rest of 2022 and possibly carry into early 2023. It depends on what the US Fed does and how this event unfolds. If there is an orderly unwinding of excesses in the markets, we may see an extended decline as global expectations transition to new normal economic expectations. If a new crisis event blows a massive hole in the global economy, like in 2008-09, a very sudden decline may occur – shocking the global markets.
My research suggests the US Fed is far behind the curve and has allowed the excess speculative rally to carry on for too long. Global Central Banks should have been raising rates to moderate levels near the end of 2020 and in early 2021. Now, we have an excess phase bubble similar to the DOT COM and GFC events merged. We have an extreme Technology Bubble and an excess global credit/liability bubble.
If you have not already adjusted your assets to protect from downside risks, it’s time. When doing so, please consider the long-term risks of trying to ride out any extended downtrend in price. Are you willing to risk another -25% to -40% of your assets, hoping the global markets find a bottom soon?
WHAT STRATEGIES CAN HELP YOU NAVIGATE THE CURRENT MARKET TRENDS?
Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors. Also, learn how we identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market. The markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.
Historically, bonds have served as one of these safe-havens. This is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there? How can they be deployed in a bond replacement strategy?
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies which include a real estate ETF. We can help you protect and grow your wealth in any type of market condition. Click the following link to learn more: www.TheTechnicalTraders.com
Chris Vermeulen Chief Market Strategist Founder of TheTechnicalTraders.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-28 07:49:542022-06-28 07:49:56Will Global Markets Be Pushed Deeper Into Crisis Event By The US Fed?
Discussing the current lows, panic selling, and uncertainty in the stock markets are Chris Vermeulen, founder of The Technical Traders, and Kerry Lutz from the Financial Survival Network. We are definitely seeing very big panic selling in the stock market. There has already been a bloodbath in the stock markets this week the likes of which we haven’t seen since early 2021. When there’s panic, virtually everything goes down. People are nervous and are moving to currencies. The only thing bucking the trend is the US dollar.
Overall, we’re on the verge of a possible multi-year bear market in equities. Protecting capital and moving to cash is one of the best things you can do. If cash, being the US Dollar, holds its value or even strengthens while almost everything else is in a downward price channel, its purchasing power increases. Thus having cash reserves in times of uncertainty in the stock market can set investors and traders up in a better position to enter the markets once a clear trend emerges.
TO LEARN MORE ABOUT THE LATEST LOWS AND PANIC SELLING IN TEH MARKETS – listen to the interview
TO EXPLORE THE Total ETF Portfolio, PLEASE VISIT US AT The technical traders. You’vE GOT MORE TO GAIN THAN TO LOSE WHEN SEEKING INFORMATION!
Disclaimer: None of this material is meant to be construed as investment advice. It is for education and entertainment purposes only. The video is accurate as of the posting date but may not be accurate in the future.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-28 07:45:252022-06-28 07:45:27Current Panic selling And Uncertainty Within The Stock Market – Video
Bank of America, Michael Hartnett, Chief Investment Strategist recently stated, “The bear-market rally for stocks has disappeared as investor concerns about inflation and interest rates linger.” “We’re in a technical recession but just don’t realize it.”
Freight Waves, Henry Byers reported, “US import demand is dropping off a cliff as inbound container volumes to the US are reverting to pre-pandemic levels.” Byers went on to say that “The consumer is getting crushed as conditions for the consumer seem to be getting worse and worse as inflation takes hold and prices get more and more expensive.”
We have quickly moved from seeing the dark clouds on the horizon to the start of entering the initial storm wall. The USD put in a major low on January 6th, 2021. Since then it has been in a strong uptrend as global investors seek safety with the uncertainties about geopolitical events, record inflation, rising interest rates, slowing housing, plummeting auto sales, increasing retail inventories, expanding consumer credit, and pending layoffs.
UUP remains in its uptrend as the price continues to move up from its base of accumulation.
After having a brief 2-week pullback of -3.45% UUP has found support and is now looking to extend its bull market trend.
Investors who are liquidating stocks and moving to a cash position could consider UUP to capitalize on the strengthening US Dollar.
INVESCO DB USD INDEX BULLISH FUND ETF • UUP • ARCA • DAILY
20+ YEAR TREASURY INVERTED ETF: TBF +38.89%
TBF remains in its uptrend as the price continues to move up from its base of accumulation.
After having a 3-week pullback of -6.21% TBF has found support and is now looking to extend its bull market trend.
Investors who are liquidating stocks and moving to a cash position could consider TBF to capitalize on the FED raising interest rates to try and curb inflation.
PROSHARES SHORT 1X 20+ YEAR TREASURY ETF • TBF • ARCA • DAILY
S&P 500 SHORT INVERTED ETF: SH +19.33%
SH remains in its uptrend as the price continues to move up from its base of accumulation.
After having a 2+-week pullback of -7.19% SH has found support and is now looking to extend its bull market trend.
Investors who are liquidating stocks and moving to a cash position could consider SH to capitalize on the falling stock market.
PROSHARES SHORT 1X S&P 500 ETF • SH • ARCA • DAILY
VALUABLE INSIGHTS FROM SUCCESSFUL TRADERS
Market Wizards by Jack D Schwager (www.Amazon.com) is packed with insights from successful traders who have shared their wisdom based on firsthand trading experiences. Here are a few of our favorites:
Paul Tudor Jones:
“If you have a losing position that is making you uncomfortable, the solution is very simple; get out, because you can always get back in.”
“There is nothing better than a fresh start.”
Ed Seykota:
“There are old traders and there are bold traders, but there are very few old, bold traders.”
“Losing a position is aggravating, whereas losing your nerve is devastating.”
“Good traders; Many are called, and few are chosen.”
Larry Hite:
“We always follow the trends, and we never deviate from our methods.”
“I have two basic rules about winning in trading as well as in life; If you don’t bet, you can’t win.”
“If you lose all your chips you can’t bet.”
WHAT STRATEGIES CAN HELP YOU NAVIGATE THE CURRENT MARKET TRENDS?
Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.
Historically, bonds have served as one of these safe-havens. This is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there? How can they be deployed in a bond replacement strategy?
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies which include a real estate ETF. We can help you protect and grow your wealth in any type of market condition. Click the following link to learn more: www.TheTechnicalTraders.com
Chris Vermeulen Chief Market Strategist Founder of TheTechnicalTraders.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-27 17:10:322022-06-27 17:10:34Investors Who Are Liquidating To A Cash Position – What To Do Next?
Buckle up – it’s a crazy day in the stock market with everything selling off in a big way. The only asset rising in value is Cash/USD, which we hold in our accounts. I read a book over the weekend called “Win By Not Losing,” and the author and I are on the same page for how we view trading/investing and protect our capital as technical and tactical traders.
Stock Market Video Analysis Delivered Every Morning
For those of you who are not a subscriber, today is a ‘sneak peak’ day in which I share with everyone an example of a morning video report that I deliver to BAN Trader Pro subscribers EVERY MORNING before the opening bell. I have some interesting, new, and disturbing information in today’s video, which is 18 minutes long. So grab a coffee and get caught up on what’s unfolding in the stock market.
TO EXPLORE THE TOTAL ETF PORTFOLIO, PLEASE VISIT US AT THE TECHNICAL TRADERS. YOU’VE GOT MORE TO GAIN THAN TO LOSE WHEN SEEKING INFORMATION!
Disclaimer: None of this material is meant to be construed as investment advice. It is for education and entertainment purposes only. The video is accurate as of the posting date but may not be accurate in the future.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-27 17:08:342022-06-27 17:08:35Buckle Up – Get Ready For A Blood Bath In The Stock Market
There are times when markets consolidate and move sideways in a relatively narrow range. We often see low volatility, little trending, and “choppy” price action when the market is slow.
Range-bound, consolidating markets eventually resolve in one direction or the other. Breaking out of a narrow range often takes a catalyst event like a highly anticipated economic report or – in the case of individual stocks – something like an earnings report or FDA approval. Quite often, it is the anticipation of the event itself that keeps price range-bound. Without knowledge of the event outcome, both bulls and bears are waiting it out before making large commitments.
Buying a long Strangle
A long strangle consists of buying both an out-of-the-money call and put on the same underlying with the same expiration date.
A long strangle is opened for a debit and can profit from a large move in the underlying. The profit potential is unlimited on the upside and can be substantial on the downside. The potential loss can be as much as the total cost of the strangle. Both options will expire worthless if the stock price is equal to or between the strike prices at expiration.
Since we are buying all-time value on both options, we might expect volatility crush and rapid theta (time value) decay after the price has broken out of the range. Therefore, we want to close such a trade after the price breakout but well before the option expiration date.
It can be tempting to have a simplistic view of buying a strangle and thinking it should be profitable regardless of direction. But there are no such giveaways in options markets.
We often see that implied volatility is high ahead of known upcoming events. That “juices” the options prices ahead of the event, and then there can be a volatility crush when the event has passed. That can make it very challenging to profit from a long strangle, which is why I rarely do them.
To consider putting on a strangle, I’m looking for a particular setup where the price is range-bound, and volatility is low before the catalyst event. That puts the probability of profit much more in my favor.
To Strangle or To Straddle?
A straddle is similar to a strangle, but the strike prices on the put and the call are equal. Traders often debate which strategy is better.
The cost and maximum risk are lower for a strangle than for a straddle. The breakeven points for a strangle are further apart than for a comparable straddle. There is also a greater chance of losing 100% of the cost of a strangle if it is held to expiration. Long strangles are more sensitive to time decay than long straddles. When there is little or no price movement, a long strangle will experience a greater percentage loss over a given time period than a comparable straddle.
An advantage for a straddle is that the breakeven points are closer together than for a comparable strangle. There is less of a chance of losing 100% of the cost of a straddle if it is held to expiration. Long straddles are less sensitive to time decay than long strangles. When there is little price movement, a long straddle will experience a lower percentage loss over time than a comparable strangle.
I generally lean towards the strangle because of the lower debit and risk. And since I put on the trade because I’m expecting a large move, I don’t see much wrong with my strikes being a bit away from the underlying. If I’m right and there is a significant move in price, the straddle should also perform well.
Example Setup
This chart shows prices consolidating sideways in a narrow support/resistance range (shaded area). This is a zone to look at putting on the strangle.
At the yellow arrows, we see a well-qualified entry point. The price action is slow, and the volatility (purple line) is low.
Then we see the price break – in this case, to the downside along with an increase in volume (green arrows). As price breaks out of the range, we see an increase in volatility. At this point, we may have a profit in the trade. Don’t be greedy. Take what the market gives and move on. This particular trade had a >23% return on risk in a matter of hours when the price broke down.
Summary
If a market is range-bound before an expected catalyst event and volatility is low, consider putting on a long strangle (or straddle). The relatively low volatility is an essential part of the setup that tilts the odds in our favor. We don’t want volatility crush and rapid time decay to rob us of the profit opportunity. The key is to put this trade on before the price breaks out and before the implied volatility is elevated. Once the range is broken, take profits quickly.
Every day on Options Trading Signals, we do defined risk trades that protect us from black swan events 24/7. Many may think that is what stop losses are for. Well, remember the markets are only open about 1/3 of the hours in a day. Therefore, a stop loss only protects you for 1/3 of each day. Stocks can gap up or down. With options, you are always protected because we do defined risk in a spread. We cover with multiple legs, which are always on once you own.
Our Options Trading Specialist, Brian Benson, continues to knock his trades out of the park. Since he has joined our team at The Technial Traders he has a 78% win rate, and of the last 27 trades, 23 were winners equalling an 85% in-the-money finish!
If you are new to trading or have been trading stock but are interested in options, you can find more information at The Technical Traders – Options Trading Signals Service. Brian, who has been trading options for almost 20 years, sends out real live trade alerts on actual trades, such as TSLA and NVDA, with real money. Ready to subscribe, click here: TheTechnicalTraders.com.
Enjoy your day!
Chris Vermeulen Founder & Chief Market Strategist TheTechnicalTraders.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-27 17:07:072022-06-27 17:07:09Trading the Calm Before the Storm – Consider Putting On A Long Strangle
Crude Oil & Gasoline prices have been a hot topic for almost everyone recently. As inflation surges, consumers are feeling the increased pricing pressures from all sides right now. It is starting to reflect in the use of credit cards, discretionary spending habits, and summer holiday travel plans.
As the US Fed adjusts rates to burst inflation trends, consumers are left trying to navigate a minefield of unknowns. How far will the Fed have to raise rates – and how quickly? Will this affect the jobs/housing markets? How will this affect credit/borrowing costs? Will a US recession risk a bigger collapse in US jobs/economy – creating broader issues for consumers?
The natural reaction of consumers at times like these is twofold. First, they pull away from making huge purchases. Second, they watch every penny being spent. Therefore, we are seeing consumer discretionary spending, auto sales, vacation rentals, and other types of spending sharply falling right now.
IYC Collapsed In 2007-08 – Just Before Peak Oil Prices
I remember watching the Consumer Discretionary ETF (IYC) collapse throughout most of 2007-08, just before the Global Financial Crisis (GFC) hit. As the US Fed continued to raise rates in 2005-06, and as the US economy started to weaken, Consumers acted like a “canary in a coal mine” – pulling away from normal spending habits as fear and uncertainty levels rose.
What I found interesting about the rising Crude Oil prices at that time, was that they appeared to compound the speed at which consumers pulled away from the economy. This resulted in a much more aggressive collapse eventually.
As you can see from the Crude Oil/IYC chart below, is that Crude Oil rallied more than 100% (from $70 to above $140) at the same time consumers were pulling away from the economy. The speed of the rally seemed to push consumers further away from normal activities. In a way, this is like a self-fulfilling price event.
Are we seeing the same thing happen right now?
IYC Collapsed More Than -34% Already – Are We At Peak Oil Now?
When the GFC finally hit, IYC collapsed another -55%, and Crude Oil fell from $147 to $33 ppb, more than -77%. The GFC resulted in one of the biggest market declines since the Great Depression.
The increased volatility and peak in oil prices seemed to take place as the end of an excess phase bubble was starting to unwind. Consumers were already pulling away from the economy at that time.
More recently, IYC has been falling since early November 2021 (for over 7 months). Crude Oil has already risen from $62 to $130.50 (more than 100%). This begs the question: have we already reached peak oil prices while the consumer discretionary sector is nearing a major breakdown event (see chart below)?
The Three Factors At Play: Consumers, Refiners, US Fed
In 2008, when the GFC crisis started, the factors that initiated the collapse were related to consumer/institutional/global finance and credit markets. The US Fed played a role by raising interest rates above 5% while the excess of the housing market boom (an excess phase bubble) started to unwind.
Now, we have different factors at play. The US Fed is still a major player in this equation – attempting to raise interest rates to combat inflation. Consumers are still doing what they do – reacting to the fear and uncertainties of a changing economic future while trying to provide for their families. This time, COVID and supply-side issues drive some aspects of Oil/Gas price levels. Yet we have to also understand the excessive stimulus and capital creation that has taken place over the past 3+ years.
In some unique way, the current global economic situation is not that different than what was taking place in 2006-08 throughout the globe. The primary difference this time is the COVID virus event and the disruption of supply across the globe.
$120 Peak Oil Appears Likely – Watch IYC For A Breakdown
Watch IYC for any continued breakdown below $60 as a sign the US/Global economy, and Oil may start to breakdown as well. Remember, Consumers are the “canary in the coal mine”. We will likely see a big shift in consumer spending, and how much credit they are using to pay their bills before we see a big breakdown in Crude Oil.
Watching IYC move lower over the past 7+ months and seeing the -34% price decline recently suggests the $120 Crude Oil price level may be the critical resistance level going forward. Watch for Oil to retest and fail near $120 as confirmation of this potential peak level.
WHAT STRATEGIES CAN HELP YOU NAVIGATE THE CURRENT MARKET TRENDS?
Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.
Historically, bonds have served as one of these safe-havens. This is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there? How can they be deployed in a bond replacement strategy?
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies which include a real estate ETF. We can help you protect and grow your wealth in any type of market condition. Click the following link to learn more: www.TheTechnicalTraders.com
Chris Vermeulen Chief Market Strategist Founder of TheTechnicalTraders.com
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-06-14 09:39:452022-06-14 09:39:47Crude Oil Price And Consumer Spending – How They Are Related
