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Kondratieff Full-Season Rotation – Part II

In part one of this article, I highlighted my opinion that the US and Global markets rolled through a hyper-active Kondratieff full-season rotation throughout the COVID-19 virus crisis. In 2017 and late 2018:

  • Bonds were trading lower
  • Gold and Silver were trading near multi-year lows
  • Real Estate had peaked in the short term as rates started to rise a bit
  • and the Stock market rallied to new all-time highs

All of these are components of a late Spring or early Summer type of Kondratieff Season.

If my assumption is correct, the COVID-19 crisis pushed the global markets into a 6+ month Summer, Autumn, and Winter seasonal cycle. This cycle transitioned back into an early Spring cycle in late 2020. Now, we are likely entering an Autumn Kondratieff season. Here, stocks boom, Bond Prices rise, and Real Estate and Commercial prices rise.

Gold, Bonds and SPY

The chart below shows Gold, Bonds, and SPY trends over the last 5+ years. It highlights the Kondratieff Seasons and the Kondratieff Hyper-Cycle that took place during the COVID-19 collapse. My belief is the COVID-19 crisis created a full Kondratieff Seasonal rotation in the global markets. Markets moved from a late Summer Season to an end of Winter/early Spring Season by January/February 2021. I believe that the Spring Season transitioned into an early Summer Season by June/July 2021. We are starting to shift toward a late summer season as we head into the end of 2021 and early 2022.

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If my research is correct, we’ll see large price trends last through January/February 2022. Following this, a shift in market sentiment after Q1:2022 – possibly into June or July 2022. Gold and Bonds will likely continue to trend higher over the next 5~6+ months as the Summer Season trends. The US Stock market will also continue to trend higher within the Summer Season. This means traders should prepare for increased potential volatility and more bullish trending into the first quarter of 2022.

Market Sectors Poised For Growth In The Current Kondratieff Season

I want to highlight several charts that I believe could see a continued bullish price trend over the next 6+ months. I also want to highlight why the Kondratieff cycles may play an essential role in trader/investor expectations over the next few years.

First, this continued Summer Season will transition into an Autumn season eventually. This is something for which we all need to be aware of and prepare. One could argue the current rise in Gold and Bonds may be an early indicator that we have begun the transition. Traders should be watching Gold and Bonds very closely for any continued rise in prices, which would indicate a potential end of the Kondratieff Summer Season. The Autumn Season is associated with “Disinflation.” Disinflation is more of a stalling of market trends while inflation is still trending higher. This type of activity pushes traders to become more protective of investment capital and risks.

IGF Weekly Chart

The IGF Weekly chart below shows how the Global Infrastructure sector is trending higher and about to break above all-time highs near $50. With the signing of the US Infrastructure Bill, this sector may continue to trend higher and attempt to move above $60 to $65 by April/May 2022. Should the Kondratieff cycles push markets higher as well, IGF may explode above $50 in the near future. Potentially, this could start a big rally higher.

IYC – Consumer Discretionary ETf

Consumer Discretionary ETF IYC has already rallied more than 100% from the COVID lows and begun to rally even stronger over the past 6+ weeks. Consumers continue to drive retail sales and core economic activity in the US, and this trend will continue through the Christmas holiday season. IYC will likely continue to trend higher, possibly breaking above $110 within the next 60+ days. Should the US Federal Reserve not do anything to break this trend, it may continue higher well into the end of Q1:2022.

XLI – AMEX Industrial Select ETF

The AMEX Industrial Select ETF, XLI, is just above a 100% move from the COVID-19 lows. I believe XLI may see a breakout rally above $110 over the next few weeks as the continued Kondratieff Summer/Autumn season pushes sector trends higher through early 2022. I believe the Industrial sector will rally due to the recently signed Infrastructure Bill and will rally following the S&P 50 and NASDAQ higher. In fact, given the current range between the GAP near November 2020, my Fibonacci Price Expansion technique suggests a target level near $124.

XRT – S&P Retail ETF

XRT, the S&P Retail ETF sector, is almost certainly poised for another broad move higher after US sales data came in stronger than expected, and we head into the 2021 Christmas holiday season. I would expect Q4:2021 retail numbers to be moderately strong this year – even though we hear about supply chain issues.

XRT has rallied almost 400% from the COVID-19 lows and may rally another 15% to 20% higher before the end of January/February 2022. Any pullback below $100 may present an excellent entry opportunity for new long trades.

As we explore the Kondratieff Seasonal cycles and attempt to apply this knowledge to the current market dynamics, I believe the end-of-year rally may be much more robust than many people think is possible. US consumers are still very active in the economy, homes are still selling, and the post-COVID recovery strengthens. Unless something happens to disrupt this trend, US stock sectors are still likely to continue higher well into Q1:2022.

Now is the time to consider where and how to participate in this rally phase while we watch Gold, Bonds, and these sector trends for any shift into a late Autumn Kondratieff season.

WANT TO LEARN MORE ABOUT MARKET TRENDS?

Follow my research and learn how I use specific tools to help me understand price cycles, setups, and price target levels. Over the next 12 to 24+ months, I expect large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase. Next, a revaluation phase may begin as global traders attempt to identify emerging trends. Precious Metals will likely start to act as a proper hedge as caution and concern drive traders/investors into Metals.

Kindly take a minute to visit www.TheTechnicalTraders.com to learn about my Total ETF Portfolio (TEP) technology and how it can help you identify and trade better sector setups. My team and I have built these strategies to help us identify the strongest and best trade setups in any market sector. Every day, we deliver these setups to our subscribers along with the TEP system trades. You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Chris Vermeulen

 www.TheTechnicalTraders.com

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Kitco Gold Forecast & Stock Market Video

Chris sits down with David Lin from Kitco News to discuss the recent runs in the different stock market sectors and the largest upside potential in 2022.

Spend a bit of time with Chris and David as they discuss market strategy. Learn whether:

  • buying and holding the dips is a good idea.
  • buying into fear or selling during euphoria is as hard as it sounds.
  • altering your perspective will help you become a better trader/investor.
  • adhering to your strategy rules will help or hinder your end results.

STOCK MARKET SECTOR ROTATION

The overall feeling Chris Vermeulen has regarding the stock market is that the energy sector may be losing steam while technology, gold, silver and their miners are beginning to draw attention and investment. The economic concerns facing China and the US, in particular, are creating a situation where the stock market and gold are climbing in value at the same time.

“Stock market levels,” he says, “are determined by how we get to the lofty levels”. Parabolic moves to the upside are more likely to crash back down to earth than they are to continue their flight. If the rally takes longer and moves slower, it is more likely to chop around and then stabilize. This can offer a stronger position from which an uptrend can begin.

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Stock Market: Recent Rallies & Runs – Video

Chris joins Jim Goddard on HoweStreet.com to discuss the stock market’s recent rallies & runs over the past month. There have been roughly a ten percent rally in the S&P500 & Nasdaq, without having a pullback. Generally, a 2-3% correction, lasting for 2-5 days, is considered a healthy move. Overall, the more the market goes without a correction, the bigger the correction will be later.

When money flows out of the stock market it will usually head to the safety and comfort of defensive sectors such as consumer staples, utilities, bonds and gold.

Precious metals, in particular gold and silver, recently went into a recovery phase from a year-long bear market. Though still struggling with resistance, precious metals may begin to pick up speed in 2022.

CLICK ON THE IMAGE BELOW TO LEARN MORE ABOUT STOCK MARKET RALLIES & RUNS

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US Dollar & Precious Metals: How Do They Relate? Video

Chris Joins Tom Bodrovics from Palisades Radio to discuss the recent moves in the markets and why money has resumed the move into equities. A new rally in equities could spill over to precious metals, thus putting pressure onto the US dollar.

Currently, the dollar is trading at the critical $94 level and, should it collapse, this could also serve to drive precious metal prices higher. Precious metals, such as gold, are pushing against the US Dollar, and we’re starting to see a momentum shift in GDXJ. On the flip side, miners like GDX and SILJ rely on energy prices remaining steady to stay profitable. Thus, as energy prices increase, the pressure is put on metals.

To Learn More click on the Video link Below

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IWM Rally May Find Brief Resistance Near $244~$245 Before Rocketing Higher

Watching the US Stock Market start a big rally phase after the October 12th base/bottom raised a few questions in my head because the Small-Caps/Mid-Caps were not showing a strong upward price trend like the rest of the market. Even though I called this upward price trend many weeks before it happened, I was surprised that the Small-Caps/Mid-Caps lagged the S&P500, Dow Jones, and NASDAQ as the rally initiated.

I wrote about this setup in the IWM recently and detailed my expectations in these articles/posts:

Within my August 25, 2021 article, I was very clear that the $207 level was acting as critical support as IWM transitioned into the APEX of the dual Price Flag formation.

The $207 low, which was set on March 5, 2021, established a unique price low that traders could use as a “make-or-break” level in the event of a bigger breakdown in price. If that $207 level was breached by a strong downside price trend, then I would have expected an even bigger breakdown event to take place.

Watch For Resistance Near $245 On IWM

In early October, IWM started to narrow into a price range between $217 and $225. Then, on October 14, 2021, a mild upside price gap was set up. I expected more volatility in price at this time as the other US major indexes were starting to rally quite strongly. IWM started a bigger upside price trend nearly two weeks later, near October 29, 2021, and started a big breakout rally phase in early November 2021.

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Long-term resistance, near $244~$245, may briefly pause this rally before price levels continue higher. This rally phase is showing very strong volume and accumulation as traders pile into the Christmas Rally trends.

Extended Congestion In Price Suggests $263~$264 Is Upside Target For IWM

When I look at the extended sideways price congestion phase on this Weekly IWM chart, below, I typically expect the price to break the congestion phase by a 100% range of the congestion. Using this theory, I believe the $263~$264 level will become the next immediate upside price target for IWM as this rally continues.

Another key facet of the extended congestion phase is the longer price stays in a congestion phase, the more volatile the breakout/breakdown in price may become. At this point, after more than 8 months of congestion, we may see IWM rally well into Q1:2022 and quite possibly rally well above my $263~$264 target level.

In closing, the most important aspect of this rally in the Russell 2000/IWM is that we are now seeing a very broad US stock market rally phase set up ahead of the typically strong Christmas Rally to close out the year. This is very exciting and opportunistic for traders that were positioned for a big rally.

My analysis suggests this rally may continue into early January 2022 – where my cycle analysis suggests a change in price trend may initiate after January 18th or so. Follow my research and learn how I use specific tools to help me understand price cycles, set-ups, and price target levels. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start 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 start to drive traders/investors into Metals.

Please take a minute to visit www.TheTechnicalTraders.com to learn about our Total ETF Portfolio (TEP) technology and it can help you identify and trade better sector setups. We’ve built this technology to help us identify the strongest and best trade setups in any market sector. Every day, we deliver these setups to our subscribers along with the TEP system trades. You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Chris Vermeulen

 www.TheTechnicalTraders.com

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Precious Metals & Miners Flash Short-Sell Signal

It has been a bumpy ride for precious metal investors over the past couple of years and it unfortunately I do not think its over just yet.

The good news is that the bottom has likely been put in for gold, silver and gold miners BUT the recent rally in these metals and miner looks to be coming to an end. While we could see another pop in price over the next week or so the price, volume and momentum see to be stalling out.

What does this mean? It means we should expect short term weakness and lower prices over the next month or two.

Below are three charts I posted several months ago on my free stockcharts list. These forecast were based off simple technical analysis using cycles, Fibonacci and price patterns. As you can see we are not trading at my key pivot level which I expect selling pressure to start to increase and eventually overpower the buyers sending the prices lower.

 

Gold Trading Weekly Chart:

Here you can see that gold is technically in a bear market when viewing it on the weekly chart. If you were to pull up a daily chart you would likely notice how the price of gold is trading at a key resistance level on the chart and has reached its full flag measured move.

What does this mean? It means the odds are pointing to lower prices for gold in the next few weeks. Keep in mind though I do feel as though a major bottom has been put in place for the precious metals sector. So buyers are likely to step back in around the $1300 area.

goldoverbought

 

Silver Trading Weekly Chart:

Silver has a little bit different looking chart but the same analysis applies here as it did in gold.

silveroverbought

 

Gold Miners Trading Monthly Chart:

Gold miners may have bottomed on this monthly investing timeframe chart but the daily chart which you will see next clearly shows short term weakness has started.

GDXLongtermBottom

 

Gold Miners Trading Daily Chart:

This daily chart really shows my thinking for miners and the overall precious metals sector as a whole. The recent weakness in gold miners to the down side point to distribution of shares. This is very negative for the price of physical gold and silver as gold mining stocks tend to lead physical metals.

The yellow box shows a possible major stage 1 basing pattern forming. If this is the case, then we will have a great opportunity in the coming months when the precious metals down trend completes a reversal and start heading higher.

gdxoverbought

 

How to Trade Precious Metals & Gold Miners Conclusion:

In short, I think that staying in cash or shorting metals is the play for the next couple weeks. After that anything can happen and until price breaks down or finally completes the basing pattern and confirms a market bottom I would be very cautious trading here.

In the last week members of my trading newsletter took profits on our short SP500 trade and we closed a long trade in natural gas for a quick 6.5% gain. Join our community of traders and have your money on the right side of the market!

Chris Vermeulen
www.GoldAndOilGuy.com

 

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Precious Metals Life Cycle Nears an End – Final Stage of Denial

The life cycle of most things not matter what it is (living, product, service, ideas etc…) go through four stages and the stock market is no different. Those who recently gave in and bought gold, silver, mining stocks, coins will be enter this stage of the market in complete denial. They still think this is a pullback and a recover should be just around the corner.

Well the good news is a recovery bounce should be nearing, but if technical analysis, market sentiment and the stages theory are correct then a bounce is all it will be followed by years of lower prices and dormancy.

I really do hate to be a mega bear or mega bull on anything long term but the charts have painted a clear picture this year for precious metals and I want to share what I see. Take a look at the chart below which shows a typical investment life cycle using the four stage theory.

The Four Stages Theory

Classic economic theory dissects the economic cycle into four distinct stages: Accumulation, Markup, Distribution, and Decline.  Stock, index or commodities are no different, and proceeds through the following cycle:

  • Stage 1 – Accumulation: After a period of decline a stock consolidates at a contracted price range as buyers step into the market and fight for control over the exhausted sellers.  Price action is neutral as sellers exit their positions and buyers begin to accumulate.
  • Stage 2 – Markup: Upon gaining control of price movement buyers overwhelm sellers and a stock enters a period of higher highs and higher lows.  A bull market begins and the path of least resistance is higher.  Traders should aggressively trade the long side, taking advantage of any pullback or dips in stock price.
  • Stage 3 – Distribution: After a prolonged increase in share price the buyers now become exhausted and the sellers again move in.  This period of consolidation and distribution produces neutral price action and precedes a decline in stock price.
  • Stage 4 – Decline: When the lows of Stage 3 are breached a stock enters a decline as sellers overwhelm buyers.  A pattern of lower highs and lower lows emerges as a stock enters a bear market.  A well-positioned trader would be aggressively trading the short side, taking advantage of the often quick decline in share price.

Stages1

 

Gold Price Weekly Chart – Stages Overlaid

gold11

 

Silver Price Weekly Chart – Stages Overlaid

silver11

 

Gold Mining Stocks – Monthly Chart

This chart is a longer term picture using the monthly chart. I wanted to show you the 2008 panic selling washout bottom in miners which I think is about to happen again. While physical gold and silver are in a bear market and should be some a long time, gold mining stocks will likely find support and possibly have a strong rally in the coming months.

Many gold stocks pay high dividends and are wanted by large institutions and funds. The lower prices go the higher the yield is making them more attractive. So I figure gold miners will bottom before physical metals do. A bounce is nearing but at this point selling pressure and momentum continue to plague the entire PM sector.

gdx11

 

Precious Metals Investing Conclusion:

In short, I feel with Quantitative Easing (QE) likely to be trimmed back later this year, and with economic numbers slowly improving along with solid corporate earnings the need or panic to buy gold or silver is diminishing around the globe.

While there are still major issues and concerns internationally they do not seem to have any affect on precious metals this year. Long terms trends like the weekly and monthly charts shown in this report tends to lead news/growth/lack of growth by several months. So lower precious metals prices may be telling us something very positive.

The precious metals sector is likely to put in a strong bounce this summer but after sellers will likely regain control to pull prices much lower yet.

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Chris Vermeulen

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Gold, Silver & Precious Metal Miners Signals

It has been a very long couple of years for the precious metal bugs. The price of gold, silver and their related mining stocks have bucked the broad market up trend and instead have been sinking to the bottom in terms of performance.

Earlier this week I posted a detailed report on the broad stock market and how it looks as though it‘s uptrend will be coming to an end sooner than later. The good news is that precious metals have the exact flip side of that outlook. They appear to be bottoming as they churn at support zones.

While metals and miners remain in a down trend it is important to recognize and prepare for a reversal in the coming weeks or months. Let’s take a look at the charts for a visual of where price is currently trading along with my analysis overlaid.

Weekly Price of Gold Futures:

Gold has been under heavy selling pressure this year and it still may not be over. The technical patterns on the chart show continued weakness down to the $1300USD per once which would cleanse the market of remaining long positions before price rockets towards $1600+ per ounce.

There is a second major support zone drawn on the chart which is a worst case scenario. But this would likely on happen if US equities start another major leg higher and rally through the summer.

PriceOfGold

 

Weekly Price of Silver Futures:

Silver is a little different than gold in terms of where it stands from a technical analysis point of view. The recent 10% dip in price which shows on the chart as a long lower candle stick wick took place on very light volume. This to me shows the majority of weak positions have been shaken out of silver. Gold has not done this yet and it typically happens before a bottom is put in.

While I figure gold will make one more minor new low, silver I feel will drift sideways to lower during until gold works the bugs out of the chart.

PriceOfSilver

 

Silver Mining Stock ETF – Weekly Chart:

Silver miners are oversold and trading at both horizontal support and its down support trendline. Volume remains light meaning traders and investors are not that interested in them down where and it should just be a matter of time (weeks/months) before they build a basing pattern and start to rally.

SilverMiningStocksETF

 

Gold Mining Stock ETF – Weekly Chart:

Gold mining stocks continue to be sold by investors with volume rising and price falls. Fear remains in control but that may not last much longer.

GOldMiningStocksETF

Gold Junior Mining Stock ETF – Weekly Chart:

Gold junior miners are in the same boat with the big boys. Overall gold and gold miners are still being sold while silver and silver stocks are firming up.

GoldJuniorMiningStocksETF

 

Precious Metals Trading Conclusion:

In the coming weeks we should see the broad stock market top out and for gold miners along with precious metals bottom. There are some decent gains to be had in this sector for the second half of the year but it will remain very dicey at best.

If selling in the broad market becomes intense and triggers a full blown bear market money will be pulled out of most investments as cash is king. Gold is likely to hold up the best in terms of percentage points but mining stocks will get sucked down along with all other stocks for a period of time. This scenario is not likely to be of any issue for a few months yet but it’s something to remember.

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Chris Vermeulen

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Precious Metals & Miners Start Bottoming Process

Precious metals and their related mining stocks continue to underperform the broad market. This year’s heavy volume breakdown below key support has many investors and trader’s spooked creating to a steady stream of selling pressure for gold and silver bullion and mining stocks.

While the technical charts are telling me prices are trying to bottom we must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices). Right now and for the last twelve months when looking at precious metals cash has been king.

Since 2011 when gold and silver started to correct the best position has been to move to cash or to sell/write options until the next trend resumes. This is something I have been doing with my trading partner who focuses solely on Options Trading who closed three winning positions last week for big gains.

In 2008 we had a similar breakdown in price washing the market clean of investors who were long precious metals. If you compare the last two breakdowns they look very similar. If price holds true then we will see higher prices unfold at the end of 2013.

The key here is for the price to move and hold above the major resistance line. A breakout would trigger a rally in gold to $2600 – $3500 per ounce. With that being said gold and silver may be starting a bear market. Depending what the price does when the major resistance zone is touched, my outlook may change from bullish to bearish. Remember, no one can predict the market with 100% accuracy and each day, week and month that passes changes the outlook going forward.

The chart below is on I drew up on May 3rd. I was going to get a fresh chart and put my analysis on it but to be honest my price forecast/analysis has been spot on thus far and there is no need to update.

LongTermWeeklyGold

Gold Daily Technical Chart Showing Bottoming Process:

Major technical damage has been done to the chart of gold. Gold is trying to put in a bottom but still needs more time. I feel gold will make a new low in the coming month then bottom as drawn on the chart below.

Gold27

Silver Daily Technical Chart Showing Bottoming Process:

Silver is in a similar as gold. The major difference between gold and silver is that silver dropped 10% early one morning this month which had very light volume. The fact that silver hit my $20 per ounce level and it was on light volume has me thinking silver has now bottomed.

But, silver may flounder at these prices or near the recent lows until its big sister (gold) puts in a bottom.

SIlver27

Gold Mining Stocks Monthly Investing Zone Chart:

Gold mining stocks broke down a couple months ago and continue to sell off on strong volume. If precious metals continue to move lower then mining stocks will continue their journey lower.

This updated chart which I originally drew in February warning of a breakdown below the green support trend lines would signal a collapse in stock prices, which is exactly what has/is taking place. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for new positions when the time and chart turn bullish or provide a low risk probing entry point.

While I focus more on analysis, forecasts and ETF trading another one of my trading partners who focuses on Trading Stocks and 3x Leveraged ETF’s has been cleaning up with gold miners.

GDX27

Gold, Silver and Mining Stocks Conclusion:

Precious metals continue to be trending down and while they look to be trying to bottom it is important to remember that some of the biggest percent moves take place in the last 10% of a trend. So we may be close to a bottom on the time scale but there could be sharply lower prices yet.

The time will come when another major signal forms and when it does we will be getting involved. The exciting this is that it could be just around the corner. So if you want to keep current and take advantage of the next major moves in the market be sure to join our newsletters.

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Chris Vermeulen