At minute 08:55, Chris Vermeulen of TheTechnicalTraders.com joins Chuck Jaffe from Money Life to talk about the technicals of the stock market.
There is a lot going on beyond the technicals in the markets right now and many of these factors indicate that we are in the late stages of the stock market cycle. Momentum to the upside is slowing down and even as growth stocks are coming to life there is less supporting the overall markets.
In 2020 everyone piled into the market causing a massive euphoric phase. Now we’ve corrected and lost momentum thereby entering into the complacency phase. Typically the next comes a bear market and though we are not there yet if no stimulus arrives to change the current course, this phase is likely where we are heading next.
So, as technical traders, how do we benefit from falling stock prices?
TO LEARN MORE ABOUT THE TECHNICALS OF THE MARKET – LISTEN TO THE INTERVIEW
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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.
https://thegoldandoilguy.com/wp-content/uploads/2022/04/moneylife.jpg191332adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-04-06 10:08:022022-04-06 10:08:07Stock Market Technicals Nearing ‘Peak, Maximum Financial Risk’
The calm of the last 3-weeks has resulted in a risk-on environment. This, in turn, has led to a nice recovery rally in stocks. For the time being, volatility has subsided. However, we believe there are many underlying market risks that can still resurface without any warning.
From late 2015 to August 2020, the price of gold doubled, going from approximately $1040 to $2080. Gold then experienced a profit-taking $400 pullback. Gold’s rally over the past 12-months failed to break through its $2080 price level. After retreating back to $200, gold seems to have found support at the $1900 level.
In reviewing the following spot gold chart, it appears we have broken out of an accumulation phase and seem to be preparing to move above the $2080 high.
GLD – SPDR Gold Shares is the largest physically-backed gold exchange-traded fund (ETF) in the world. According to its founder, State Street Global Advisor’s website www.spdrgoldshares.com “the economic forces that determine the price of gold are different from the economic forces that determine the price of many other asset classes such as equities, bonds or real estate.”
Utilizing the (www.tradingview.com) Fibonacci projection tool, we see that the GLD price accumulation from July 2016 through August 2018 resulted in a 2-year rally and a profit of $82 or an approximate gain of +73%.
Additionally, we see that the GLD top made in August 2020 was at the Fibonacci 4.618 level of $193.44. The 7-month correction in GLD found support at the Fibonacci 2.618 level of $157.98. The rally in GLD during the last 12-months also failed a second time at the Fibonacci 4.618 level.
GLD now appears to have broken out of its accumulation phase and seems to be preparing to trade above the $194 high.
Newmont – Gold Mining Company (NEM) is up +33.46% year to date compared to the S&P 500 -4.62%. According to www.newmont.com, “Newmont is the world’s leading gold company and a producer of copper, silver, zinc, and lead.
Newmont’s bull market started back in September 2015. During the past 6-years, Newmont’s stock price has experienced several strong rallies that ranged from +$30 to +$40 each. Newmont’s recent price level is now four times greater than the low it made in 2016.
Utilizing the same Fibonacci tool, but this time measuring from the $15 lows to the $30 lows, we learn that Newmont had a strong reaction down after reaching the key $75 level. However, this reaction found buying support at the Fibonacci 2.618 level of $52.67. Newmont has since rallied by $30, which has allowed its price to blow through its previous $75 top resistance level.
Newmont may be showing us that the gold spot and the GLD-ETF will both make new highs.
It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels and two of which have now been closed at a profit. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.
Successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.
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.
We invite you to join our group of active traders and investors to 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
https://thegoldandoilguy.com/wp-content/uploads/2022/04/Picture1.png338624adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-04-06 10:03:532022-04-06 10:03:58Waiting For GLD To Make New Highs – Gold Rally Is Still Intact
Jim Goddard: 01:00 George, first off, can you maybe just tell us a little bit about Market Logics?
George Hartman: Well, Market Logics is a firm that is dedicated to working in the financial services industry. Generally, more specifically, with retail financial advisors, brokers, and so on. And our attempt is to elevate their business to the highest level possible.
Jim Goddard: 01:22 You’ve switched from being a kind of a person who provided financial services into becoming a business coach and mentor for financial advisors. How did you get started in that?
George Hartman: Well, I got started way back when. This is my 50th year in the business, so pretty proud of that, which means I started at the age of six, of course. I answered a blind newspaper ad for a management position, which turned out to be a recruiting ad for a life insurance company. Spent a few years there. The management position never materialized. I had some success as an advisor and was invited into head office in the training department and kind of worked around and ultimately ended up as the head of a dealer firm in Vancouver, by the way. And then on to become a vice president of marketing of a mutual fund company. So in that role, my job was to represent our funds to financial advisors across the country.
George Hartman: And I found the best way to do that was to teach them how to communicate about the value of the funds and also align them with an investment philosophy that made sense to me at the time. And it’s just graduated from there. I moved from there. I wrote a book on asset allocation, probably the first retail book on that subject. And as people started to ask me to speak about it and to guide them and train them, and as they’ve gotten older and I’ve gotten older, then I went into coaching business to help them again, as I said, elevate their business. And now, in particular, we spend a lot of time on succession planning because they’re getting old like me.
Jim Goddard: 03:06 Is there anybody you really admire or influenced you to become involved in the financial markets or coaching?
George Hartman: I think it probably goes back to my early days in the insurance industry, and I moved into the head office, and I was being toured around the executive suite and introduced to the senior management in the firm. And my role was as a training person. I think it was a vice president of marketing who actually later became a great mentor of mine in life. And his words to me were. “George, we are not going to know how good a job you’ve done for us here until two years after you’re gone.” And that’s kind of a philosophy by which I have lived and tried to perform my activities as a coach, for example, not to get immediate results necessarily, but to get long-term growth.
Jim Goddard: 04:00 We’ll have more with George Hartman right after this.
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Jim Goddard: 04:27 Welcome back. We’re speaking with George Hartman. What is your business and investing philosophy? What set of principles, beliefs, or experiences drive your decisions?
George Hartman: In the role of a mutual fund company representative, there were certain investment mandates associated with all the funds quite confusing at the time. And it was a time in the industry when new funds were coming out, investing in new markets overseas, and so on. And I was looking for a way to communicate the value of putting these funds together in a portfolio. I attended a pension management conference in New York City. And one of the speakers talked about the whole concept of asset allocation, which I had never heard of before. Despite being in the financial services industry for so long. And I thought, well, that can easily be applied at the individual investor level. And so I became interested in modern portfolio theory and behavioral finance and all of those types of things, wrote a book, and just began speaking and teaching.
Jim Goddard: 05:34 You’re the author of three bestselling books. What can you tell us about them? That’s a lot of books for the average person.
George Hartman: Well, the first one was called Risk is a four-letter word. And it was about taking mutual funds and building a portfolio according to modern portfolio theory and using asset allocation as a strategy. Then along the way, as I mentioned, my clientele for coaching started to get older and older, and I shifted my emphasis to practice management to teach them how to run their business effectively. Very few advisors in the industry who run a business. They come in to practice their craft as advisors, but like many professionals, they need eventually to get serious about managing a growing business. And so, I focused on that. And then as those clients have aged and are looking forward to their own retirement, then succession planning, exit planning has become the more popular topic. So all three books, Exit Is Not A Four Letter Word is the most recent one. It’s on succession planning. Blunder Wonder Thunder was the middle one that was on practice management, and Risk is a Four Letter Word was the first one on asset allocation.
Jim Goddard: 06:47 George, how important is it for someone to have their own investment philosophy or practices? I know some people are natural risk-takers, others think GICs are the way to go because you don’t have to think about it and their low risk. How important is it to have your own style of investing?
George Hartman: I think it’s very important, and I think you hit on the right criteria, and that is a proper assessment of risk. Which is a whole topic that is an area of study that has become increasingly sophisticated over, over the past few years. You know, previously, asset allocation was kind of a self-assessment exercise, and now there’s some actual scientific, almost AI-like evaluations that are going on. I think it’s important for long-term stay stability. They call it in the market at the right time.
Jim Goddard: 07:43 At the time of our interview, the markets seem toppy, and a lot of people think, well, you can’t put money in there. Are there certain times where yeah, you just have to walk away and hold onto your cash? And you know, wait for better times are, even in bad times. Can you still go in and make money?
George Hartman: I think there are opportunities in every market. I’m not sure they should be pursued by everyone. The challenge, of course, with timing the market is you have to get it right twice; once in, once out, once out, once in sort of thing. So I’d rather have a long-term strategy with kind of guardrails on the side. There are times when I’ll deviate from perhaps the portfolio max asset allocation that I chose and then work my way back to it when things are more favorable.
Jim Goddard: 08:34 George, what’s the best advice you ever got, and who gave it to you?
George Hartman: Oh gosh. The best advice I ever got actually was from another advisor portfolio manager. I should describe him as and looking at. I asked him the question about, you know, should I keep this stock, or should I sell it? And the best advice he gave me was to ask yourself, if you didn’t own it today, would you buy it? And if the answer to that is no, then sell it. If the answer to that is yes, then keep it.
Jim Goddard: 09:13 So pretty simple. George, I’ve heard you’re working on a new program to help financial advisors grow their businesses and create a succession plan. What is that new program?
George Hartman: Well, the official name of it is Succeeding at Succession. We hope to launch it in May. It’s an online program that walks advisors through the process of putting together a succession strategy. It talks about getting ready emotionally and financially. It talks about picking the right time, choosing the right successor, selecting the best exit option, and then putting a deal together. And that’s kind of the process. Most advisors are ill-prepared to do that. And most entrepreneurs, in general, don’t think far enough ahead and plan well enough for their eventual exit from their business. So that’s something we’ve been coaching on and talking about, lecturing and speaking at conferences, and my latest book is about that. So I just decided to move some of it online.
Jim Goddard: The Rogers broadcasting Dynasty is a perfect example of when things, perhaps, weren’t lined up right.
George Hartman: Exactly. It doesn’t have to be in a big deal either. I mean, the fact is, I built three books of business through my career, never sold one of them. In those days, you just kind of walked down the hall, found somebody you trusted, and said, will you take care of my clients. And as I moved around the industry and across the country and so on, today, there’s a big industry in buying and selling financial advisory practices or books or business. And some of them are trading hands for millions of dollars. We just did an evaluation on one that’s about 25 million. So it’s a big deal today. So we can’t approach it in a casual fashion. We’ve got to take control of the exit.
Jim Goddard: 11:00 What’s something you wish you had known before you started trading and investing?
George Hartman: Probably it would’ve been a better understanding of behavioral finance, my own. What motivated me to act at times inappropriately and then understand later what I had done wrong. So I became a bit of a student of behavioral finance. I wish I had done that earlier.
Jim Goddard: Now, of course, in very volatile markets, people are always being given advice or being told, oh, you have to sign up with this person. They’re a true winner. But along with good advisors, how do you avoid those scammers out there? They sound like they have a great program, but at the end of the day, you have no money and they’ve got all of it.
George Hartman: Well, and we hope that doesn’t happen too frequently, obviously, but it’s unfortunate the amount of money that’s at play in the industry or in people’s investment accounts and so on makes it attractive to all kinds of people, including those who are not so scrupulous. So the best way I’ve always found is having someone that I trust to advocate on their behalf. So someone willing to provide a referral, show me their experience, demonstrate and so to the type of work they’ve done for them, and so on. I’ve always found that to be the best. You know, online reviews, I suspect I would say, they’re people who stand out in the industry. No question, and usually, they’re very successful at what they do because they do their job well.
Jim Goddard: 12:52 Are there any investing myths that you’d like to bust?
George Hartman: I think the big one we alluded to already is that I just do not believe that we can accurately predict markets to the extent that we can do it consistently. I have a philosophy that says it’s better to be approximately right than precisely wrong. And I think that applies to investing very much. So, find a strategy that keeps you within guardrails or boundaries that you’re comfortable with; recognize that nothing goes straight up, nothing goes straight down forever, in either direction, so establish your path and stay on it.
Jim Goddard: 13:40 George, before we go, is there anything else that you think we should have covered and let people know that you’re pretty passionate about something?
George Hartman: I’m extremely passionate about the value of financial advice. No question. The markets are becoming, as you indicated, increasingly volatile; products are becoming too complex. There are too many of them to choose from. We’ve gone through periods of do-it-yourself investing that generally hasn’t proven to be true. So I would say, you know, financial advice in whatever form it comes, that you trust, whether it’s someone that you follow or whether it’s someone that you deal with directly or whatever, become educated, become smart about it. There are a lot of really good financial advisors out there who take their jobs seriously and are well qualified to assist.
Jim Goddard: George, thank you so much for chatting with us.
George Hartman: Yes, my pleasure.
Jim Goddard: We’ve been speaking with George Hartman, the President and CEO of Market Logics. Where can we find you online?
George Hartman: Marketlogic.ca.
Jim Goddard: I’m Jim Goddard. Thanks for joining us this week on the Technical Traders podcast. If you found value in our show, subscribe and give us a rating or share it with a friend that would be greatly appreciated as well. Thetechnicaltraders.com is your source for technically proven strategies to make more money with less risk. So you can take your trading to the next level. Comments made on the Technical Traders podcast are an expression of opinion only and should not be construed as investment advice or recommendations to buy or sell any financial instrument. This information is for general information and educational purposes only. Guests on the show are not compensated for their participation. If you are a full disclaimer, please visit our website at www.thetechnicaltraders.com.
If you found value in our show, subscribe and give us a rating or share it with a friend that would be greatly appreciated as well.
The technical trader’s podcast or an expression of opinion only, and should not be construed as investment advice or recommendations to buy or sell any financial instrument. This information is for general information and educational purposes. Only guests on the show are not compensated for their participation to view our full disclaimer, visit our website: www.TheTechnicalTraders.com
The yield curve plots the current yield of a range of government notes and bonds in the “primary market.” The worldwide bond market – including private and government debt — currently represents about $120 trillion in outstanding obligations. The United States accounts for roughly $46 trillion (39%).
The U.S. government finances its spending by collecting taxes and issuing debt. More specifically, the U.S. Treasury funds deficit spending by issuing debt instruments with a range of maturities.
Treasury Bills have maturities from one month to one year.
Treasury Notes have maturities from two to ten years.
Very long-term debt is issued as Treasury Bonds with 20- and 30-year maturities.
Treasury yields rise and fall depending on demand and expectations for the economy over various timeframes. Competitive bidders set yields in a “primary market” auction process with an inverse relationship between prices and yield. Note that market participants, not the U.S. Federal Reserve (a.k.a. Fed), determine these prices and yields. The Fed sets a target for a very short-term (overnight) Fed Funds Rate and a Discount Rate. Their policy of lowering or raising those rates holds significant influence but does not have direct control over the debt auctioning process.
Here’s a U.S. yield curve plot showing both a normal and an inverted curve. The red line shows what is typically viewed as a “normal” curve where longer-term debt has a higher yield than shorter-term debt. That reflects a view that inflation will erode returns over a longer period, and therefore, a higher yield is expected. The blue line shows an inverted curve where shorter-term debt has a higher yield than longer-term.
Why Does the Curve Invert?
The yield curve is typically described as steepening, flattening, or inverting.
A steep curve reflects expectations of higher inflation and interest rates that come with a more robust economy.
The curve typically flattens or even inverts when Fed policy is in a tightening cycle of raising rates in the near term. That implies that investors have less confidence in the longer-term economic outlook and expect that the Fed may have to cut rates at some point in the future to stimulate the economy.
What Does an Inverted Curve Mean?
In the past 60 years, every U.S recession has been preceded by at least a partially inverted yield curve. That delay has ranged between 6 and 36 months with an average of 22 months.
But every yield curve inversion has not been followed by a recession. As a predictor of a recession, an inverted yield curve suggests but does not guarantee a recession.
Remember that a recession is technically defined as two successive quarters of negative GDP growth. There can undoubtedly be economic slowdowns that are shallow and temporary that do not qualify as a full-blown recession.
Perhaps it’s more accurate to say that an inverted yield curve is a relatively reliable predictor of an economic slowdown but not necessarily a recession.
Is it Different This Time?
Maybe. Over the last two years, the Fed took a very unusual step of implementing “Quantitative Easing” to stimulate economic recovery after the “Covid Crash” in March 2020. The Fed has been adding to its balance sheet by buying longer-dated bonds. As the economy has strengthened, the Fed has announced that it will shift to selling bonds to reduce its balance sheet.
Many observers think that this action by the Fed has kept the long-term yields — in particular, the 10-year — artificially low, and those yields are likely to rebound when the Fed stops selling its excess. If that were to happen, then the yield curve could suddenly steepen.
There’s also debate over which parts of the yield curve to compare. Historically, comparing the 2- and 10-year yields (the “2/10”) has been a widely used benchmark. Some observers say comparing 3-month and 10-year yields is a better indicator. And without an inversion in the 3mo/10yr, there is much more doubt about an imminent recession.
What Does This Mean for Stocks?
We shouldn’t make investing decisions based just on the yield curve discussion. It’s certainly interesting and it may well be a predictor of an economic slowdown if not a recession. But it is only one piece of a many-pieced puzzle.
As a trader and investor, I focus more on technical indicators of stock price action and stock index valuations. Even in a recession, some sectors do well while others do poorly. Money is always moving. That’s the ball that I’m keeping my eye on.
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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. The head Options Trading Specialist Brian Benson, 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
According to The Bank of International Settlements, the global foreign currency exchange (FX) daily transactional turnover averages $6.6 trillion. At Technical Traders, we track a variety of markets, asset classes, and global money flow looking for clues that will help us in our quest for ETF returns. Interestingly when foreign exchange is charted as a benchmark to the SPY (S&P 500), we can see that FX has also been in a risk-on environment for the past 2-years.
Recently we looked at volatility utilizing the CBOE Volatility Index known as VIX. But there are alternative ways or tools that we can use to analyze asset prices.
GLOBAL MONEY FLOW HAS BEEN RISK-ON
As seen in energy, metals, food commodities, and real estate, the recent surge in inflation has also been taking place in foreign exchange. Commodity currencies typically refer to the Australian, New Zealand, and Canadian dollar. To a certain extent, the U.S. dollar as well due to its global ranking as one of the top producers of worldwide oil and gas.
Typically, a currency like the Australian dollar will experience global money in-flows in a risk-on environment. Whereas in a risk-off environment, the opposite occurs as money flows out of currencies like the Australian dollar and back into what are considered safe-haven currencies like the Swiss franc, Japanese yen, and the U.S. dollar.
Recently money has been re-allocating to different assets as global investors seek returns. The FX markets have also benefited from capital in-flows. Looking at the last 2-years, beginning from the Covid lows put in on March 2020, we see the SPY went from a -30% loss to early January, where the SPY touched +50%.
Interestingly, the AUDJPY (Australian dollar vs. Japanese yen) went from -15% to more than +20% or a total change of 35% during the same timeframe. But how do we utilize this information to determine where we are in the current market cycle? Let’s walk through this process together to see what clues the FX market may have to guide our ETF selection and trading.
Based on the historical analysis, the GBPJPY (British pound vs. Japanese yen) tends to track the SPY, and therefore we will do a quick breakdown of the GBPJPY.
Immediately we can see on the following monthly chart that the GBPJPY reacts nicely to its 72-month or 6-year upper and lower channel. In 2011 the GBPJPY made a low and turned up at its 6-year lower channel.
During the 2015 to 2016 time frame, the GBPJPY then put in a head and shoulders top formation over a 12-month period at the 6-year upper channel. It’s important to note that the head of the top was at 166.6% of the GBPJPY all-time low in the GBPJPY, and the shoulders were made at the Fibonacci 161.8% of the GBPJPY all-time low.
The 2016 drop was 17-months down, and the 2017 reaction back up was 17-months up. The 2019-20 drop was 26-months down, and to date, the 2020-21 move back up has just completed 26-months up. Note: indicator includes or counts both the low-month and the high-month in its counts. The main point here is that the GBPJPY, in its recent past, has been mirroring its previous price wave.
Both 2016 and 2017 lows were made at 50% of the GBPJPY all-time high. But the 2020 low also turned at the 6-year lower channel.
Now we find the GBPJPY currently reacting to its 6-year upper channel after booking a 26-bar (month) rally.
It is important to note that this article is written to give us insights into some alternative research to challenge us to find clues in price. Time will provide confirmation of this research or not, but if the price continues to react at these levels, we may need to consider that market psychology or trend may be beginning to shift.
GBPJPY – BRITISH POUND VS JAPANESE YEN – MONTHLY CHART
As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers. Somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels and two of which have now been closed at a profit. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.
Being successful at trading is more than knowing when to buy or sell. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing along with the utilization of stop-loss orders can help preserve your valuable investment capital. Taking profits in stages by scaling out of positions and when appropriate moving stop-loss orders to breakeven can further boost your trading performance with the benefit of reducing your portfolio risk.
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.
We invite you to join our group of active traders and investors to 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
https://thegoldandoilguy.com/wp-content/uploads/2022/04/Picture1.jpg406624adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-04-06 09:48:422022-04-06 09:48:52Can Tracking Global Money Flow Provide Clues To Stay In The Black?
Small/Micro-Cap ETFs are the topic of today’s Trader Tip Video by Chris Vermeulen of TheTechnicalTraders.com. Small-cap stocks like the IWM and the Russel 2000 have had a strong rally, basing for a long time, and holding up very well. And now they are really popping and moving up.
Using the Fibonacci extension, we can see the small/micro caps are showing another potential 4% move to the upside. Overall, what is really important is that the small/micro caps tend to lead stock market rallies.
TO LEARN MORE ABOUT THE SMALL/MICRO-CAP ETFs – WATCH THE VIDEO
Subscribers: Please let us know what you would like to learn and we will add it to the roster of our weekly Technical Trader Tips!
Non-subscribers: Please enjoy these micro-lessons as a way to further your education and understanding of how a technical trader…well…trades!
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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.
https://thegoldandoilguy.com/wp-content/uploads/2021/12/Trader-Tip-1.jpg225400adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-03-30 07:13:562022-03-30 07:14:00Small/Micro-Cap ETFs – Trader Tip Of The Week Video
The CBOE Volatility Index (VIX) is a real-time index. It is derived from the prices of SPX index options with near-term expiration dates that are utilized to generate a 30-day forward projection of volatility. The VIX allows us to gauge market sentiment or the degree of fear among market participants. As the Volatility Index VIX goes up, fear increases, and as it goes down, fear dissipates.
Commodities and equities are both showing renewed strength on the heels of global interest rate increases. Inflation shows no sign of abating as energy, metals, food products, and housing continues their upward bias.
During the last 18-months, the VIX has been trading between its upper resistance of 36.00 and its lower support of 16.00. As the Volatility Index VIX falls, fear subsides, and money flows back into stocks.
The SPY has enjoyed a sharp rally back up after touching its Fibonacci 1.618% support based on its 2020 Covid price drop. Money has been flowing back into stocks as investors seem to be adapting to the current geopolitical environment and the change in global central bank lending rate policy.
Resistance on the SPY is the early January high near 475, while support remains solidly in place at 414. March marks the 2nd anniversary of the 2020 Covid low that SPY made at 218.26 on March 23, 2020.
SPY – SPDR S&P 500 ETF TRUST – ARCA – DAILY CHART
BERKSHIRE HATHAWAY RECORD-HIGH $538,949!
Berkshire Hathaway is up +20.01% year to date compared to the S&P 500 -4.68%. Berkshire’s Warren Buffet has also been on a shopping spree, and investors seem to be comforted that he is buying stocks again. Buffet reached a deal to buy insurer Alleghany (y) for $11.6 billion and purchased nearly a 15% stake in Occidental Petroleum (OXY), worth $8 billion.
These acquisitions seem to be well-timed as insurers and banks tend to benefit from rising interest rates, and Occidental generates the bulk of its cash flow from the production of crude oil.
As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. With that said, Berkshire is a classic example of not fighting the market. As Berkshire continues to make new highs, its’ trend is up!
BRK.A – BERKSHIRE HATHAWAY INC. – NYSE – DAILY CHART
COMMODITY DEMAND REMAINS STRONG
Inflation continues to run at 40-year highs, and it appears that it will take more than one FED rate hike to subdue prices. Since price is King, we definitely want to ride this trend and not fight it. It is always nice to buy on a pullback, but the energy markets at this point appear to be rising exponentially. The XOP ETF gave us some nice buying opportunities earlier at the Fibonacci 0.618% $71.78 and the 0.93% $93.13 of the COVID 2020 range high-low.
Remember, the trend is your friend, as many a trader has gone broke trying to pick or sell a top before its time! Well-established uptrends like the XOP are perfect examples of how utilizing a trailing stop can keep a trader from getting out of the market too soon but still offer protection in case of a sudden trend reversal.
It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.
Furthermore, successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.
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.
We invite you to join our group of active traders and investors to 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
https://thegoldandoilguy.com/wp-content/uploads/2022/03/SNAG-0000-1.png633948adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-03-30 07:10:022022-03-30 07:10:12Volatility Retreats As Stocks & Commodities Rally
Welcome to the Technical Traders with David Lyon podcast. The show that brings you technically proven strategies and trade ideas from experts around the world. We’re going to help you make more money with less risk, so you can take your trading to the next level. Now here’s your host. Jim Goddard.
Jim Goddard: 00:00 My guest is David Lyon. He’s the CEO, founder, and managing director of research and trading for E-Algo.com. Welcome to the show, David.
David Lyon: 00:11 Thanks Jim. Glad to be here.
Jim Goddard: 00:13 David, can you just give us a little thumbnail about what exactly you do at E-Algo.com?
David Lyon: 00:19 Well at E-lgo, we look at all the different markets, commodities, stocks, ETFs, and so forth, but we’re really interested in what’s going on with the global money flow in the foreign exchange market. And of course the Forex market does more than $6 trillion a day in daily volume. So it’s really a good indicator as far as what’s going on around the globe. And so I head up the quantitative research and trading, you know, analyzing the markets and putting the traits through and also overseeing all the risk management.
Jim Goddard: 00:59 How did you get started in trading or invest?
David Lyon: 01:03 Well I’ve been doing this for a while. I mean, it’s hard for me to say this, Jim, but I’ve actually been doing this for about 40 years and I got started as a kid. I grew up on a farm in Western Nebraska, a wheat farm and just being involved in the work with that and watching the price of wheat. And then I think when I was five years old, my parents bought me a calf and I started keeping track of the cattle market. You know, every spring I would go to the sale barn and buy calves and in the fall would sell them. And so starting with one calf, when I was five, by the age of 15, I had had grown that up to about 15 head of cattle. And I did the same thing with chickens at an early age; started with a hundred chickens, ended up with 2000 chickens.
David Lyon podcast : 01:53 And so that’s sort of how I got involved in the commodities aspect of things. And then it wasn’t until I was probably about 20 years old. I started looking at the actual markets, you know, precious metals and things of that nature due to a family friend. And so I got started in it, I think my first commodities trading account, I started with $7,000 that I had saved up. And within 90 days or three months, I had tripled that to 21,000. And then I experienced my first Black Swan, which was the Russian grain embargo that came out of nowhere. And my 21,000 went to minus 1000 and that was my first hard lesson in leverage and risk management. And I considered myself fortunate because in that particular brokerage office, I saw a lot of people lose six figures or larger during the Russian grain embargo. So it’s been a process and those are the things that have helped me become what I am today with understanding gaming theory and risk management.
Jim Goddard: 03:02 Is there anybody you really admire or influenced you to become involved in the financial markets?
David Lyon: 03:10 Well, early on, like I say, I had, you know, that first experience was a painful experience. And so after going through that, I said, you know, I think I better learn more. I need to study this more and learn more about what I’m doing before I do this go any further with this. And so just from a common-sense standpoint, I thought, well where would I go to find out this information? And so I started studying reading a lot of books trying to find out all the different traders, you know, that were successful. And so early on in my career, I studied, you know, the mathematician WD Gann. So I I’ve studied Gann’s works, you know, for almost 40 years now. And of course, Elliot wave theory. And then of course, other things along the way, you know, with Bollinger bands and standard deviation really looked a lot at that vibration and [inaudible 00:04:07] and things of that nature.
David Lyon: 04:08 As far as the specific person, one of the things that’s really helped is the books, of course, that Jack Swagger came out with called the market wizards. And my copies are of course just worn out cover to cover. I even have my own version; electronic version of cliff notes of his books. And so in sort of studying all of those different traders, a lot of them have a lot of different styles and techniques. I put that all together, you know, the money management so forth with, you know, [inaudible 00:04:42] Bollinger bands on standard deviation and things of that nature, and just came up with my own style. And even some of the traders going back into the twenties and thirties, like GM Lobe. Is one of the guys I learned a lot from his writings about risk management. And you know, a lot of people talk about diversification. I know GM Lobe always said, Hey, take all your eggs and put ’em in one basket and then keep an eye on that basket because sometimes we can get over diversified. And then if a black Swan or some event hits the market we just don’t have enough time to manage our holdings or make changes. And so I tend to focus specifically on one or two markets at a time. And then that way I can really keep a tight handle on risk.
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Jim Goddard: 05:33 What’s your trading philosophy? What set of principles, beliefs, or experiences drive your decisions?
David Lyon: 05:41 Well, because of living through and trading through many market events you know, like the crash of 1987 and of course more recently the drop that we had in 2007, 2009, and knowing how quickly things can go south. That’s really been the basis for a lot of my trading rules that I have now and the development of those you know, is through experience. And so in my trading that I do for myself and a few friends and family, is I always use a stop. So I always know where I’m gonna get out, reassess things. And then I try to manage my expectations. And so I try not to, you know, obviously this is customizable, but I try not to exceed over an annualized basis, a 10% draw down. And I look to make about a 30 to 40% rate of return because the draw down really has a big impact as far as how fast you can come back and make money.
David Lyon podcast: 06:45 So the shallower, the draw down that you can keep it to the better your chances are of course, to generate a great return for the year. And so in doing that, Jim, what I do is on a trade by trade basis I typically will not risk more than 1% on any particular trade. And many times the risk is actually 0.5% of my portfolio. So I’ve got a proprietary, you know, Excel calculator that I use and I plug in my account balance and you know, my stop loss that I’m going to use and I calculate it out. And that actually gives me my position size then to be able to do that consistent position sizing every time.
Jim Goddard: 07:59 David, what’s your favorite type of analysis or indicator you find helpful when you make your trades or investments?
David Lyon podcast: 08:09 Well I have a lot of different things that I use, but one of the things that I really do like is the Bollinger band. I know it’s a very common indicator, but there’s so much that you can do with it. I mean, you can use multiple bands for instance and you can use on any particular timeframe that you want. So the standard for the Bollinger is a 20 period with a 2.0 standard deviation. But what I do is I take that into different realm based on like I say Gann mathematics and [inaudible 00:08:45] and so forth. And so I, I utilize a Bollinger maybe, you know, like on a daily chart. I might look at you know, instead of setting it on 20 days, I set it on like 60 days, which of course is three months or one quarter.
David Lyon podcast: 09:00 And then instead of using a 2.0 standard deviation, I’ll probably use like a Fibonacci number, like a 1.618 or a 2.618. And then that gives me a pretty good idea where the market is moving up or down, you know, if the trend is a bull or a bear market. And then what I tend to do with that indicator is I will look with my other indicators and other tools that I use I’ll look to, if it’s an up market, I’ll look to buy when the market retraces or goes to the bottom of the band or if it’s a down market, I’ll look for the market to rally up to the bands and then I will sell, you know, short. And so I really like that particular indicator, Jim,
Jim Goddard: 09:44 David, what is something you wish you would’ve known before you started trading and investing?
David Lyon podcast: 09:50 Well? there’s a lot of things about trading and investing that are not in books. And of course a lot of it is personal because what might be best for me may not be necessarily best for you. But I think the thing that applies to all of us is just really understanding the emotional part of the trading and then understanding the risk management. So early on, if there was some way other than having to live the experiences and some of the painful experiences early on, it would’ve been nice to just understand that being a successful investor trader is more than just using an indicator or using a system strategy. That really the biggest part of the battle is just having a system or a plan in place to manage the risk, manage the exposu.re to your portfolio. And then that allows you to control your emotion.
David Lyon podcast: 10:51 Trading, as a friend of mine taught me, you know, trading is all about mathematics and, and it’s not complicated mathematics, but you need to run the math and decide at what level are you, are you satisfied with trading? And so trading can either be as risky as you want it to be, and as exciting as you want it to be, or it can be downright boring depending on what your personality style is. And so you just calculate out the math and that’s something that I learned over time that I could control the process and not let the process control me. And then of course, the other thing I was thinking about too, is that there’s a lot of wisdom, and as they say, keeping your powder dry. So the beautiful thing about the markets too, is that you don’t always have to be doing something every day. There’re many times where it’s actually wise to just keep some of your capital, you know, waiting in the wings for the right opportunity when everything comes together, where you have a high probability trade and then implement that capital. So a lot of what I needed to learn or wish I could have learned earlier was that patience and just how to utilize that, all of those things to my advantage.
Jim Goddard: 12:08 David, thank you so much for chatting with us.
David Lyon podcast: 12:11 Thank you, Jim. I, I enjoy
Jim Goddard: 12:13 My guest has been David Lyon, CEO, founder, and managing director of research and trading for E-Algo.com.
If you found value in our show, subscribe and give us a rating or share it with a friend that would be greatly appreciated as well.
The technical trader’s podcast or an expression of opinion only, and should not be construed as investment advice or recommendations to buy or sell any financial instrument. This information is for general information and educational purposes. Only guests on the show are not compensated for their participation to view our full disclaimer, visit our website: www.TheTechnicalTraders.com
Chris Vermeulen sits down with Patrick Vierra from Silver Bullion TV to review the signs that point to a further correction in gold and silver. Silver had a strong run from very early February – we’ve broken two significant standout highs on the charts. Typically this means we’ve got very strong upward momentum, and now silver is pulling back, starting what looks to be a new trend.
Overall, we are in a cautionary phase for gold, silver, and miners. Everyone piles into precious metals at the same time based on news, and what goes straight up usually comes straight down. We can very easily see gold trade sideways for another year or spark that next big rally when people start piling into gold once more.
TO LEARN MORE ABOUT FURTHER CORRECTIONS IN GOLD AND SILVER – WATCH THE VIDEO
TO EXPLORE THE strategies in 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.
https://thegoldandoilguy.com/wp-content/uploads/2022/03/admin-ajax.jpg300400adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-03-25 16:17:092022-03-25 16:17:14Has A New Bull Leg For Gold and Silver Begun? Video
Investors and traders alike are concerned about what investments they should make on behalf of their portfolios and retirement accounts. We, at TheTechnicalTraders.com, continue to monitor stocks and commodities closely due to the Russia-Ukraine War, market volatility, surging inflation, and rising interest rates. Several of our subscribers have asked if changes in monitor policy may lead to a recession as higher rates take a bigger bite out of corporate profits.
As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. We review our charts for both stocks and commodities to see what we can learn from the most recent price action. Before we dive into that, let’s review the various stages of the market; with special attention given to expansion vs. contraction in a rising interest rate environment which you can see illustrated below.
PAY ATTENTION TO YOUR STOCK PORTFOLIO
We are keeping an especially close eye on the price action of theSPY ETF. The current resistance for the SPY is the 475 top that happened around January 6, 2022. This top was 212.5% of the March 23, 2020, low that was put in at the height of the Covid global pandemic.
The SPY found support in the 410 area at the end of February. If you recall (or didn’t know), 410 was the Fibonacci 1.618 or 161.8% percent of the Covid 2020 price drop. Now, after experiencing a nice rally back, of a little over 50%, we are waiting to see if the rally can continue or if rotation will occur, sending the price back lower.
COMMODITY MARKETS SURGED
The commodity markets experienced a tremendous rally due to fast-rising inflation, especially energy, metals, and food prices.
The GSG ETF price action shows that we recently touched 200%, or the doubling of the April 21, 2020, low. Immediately following, similar to the SPY, the GSCI commodity index promptly sold off only to then find substantial buying support at the Fibonacci 1.618 or 161.8 percent of the starting low price of the bull trend. Resistance for the GSG is at 26, and support is 21.
A STRENGTHENING US DOLLAR
The strengthening US dollar can be attributed to investors seeking a safe haven from geopolitical events, surging inflation, and the Fed beginning to raise rates.
The US Dollar is still considered the primary reserve currency as the greatest portion of forex reserves held by central banks are in dollars. Furthermore, most commodities, including gold and crude oil, are also denominated in dollars.
Consider the following statement from the Bank of International Settlements www.bis.org ‘Triennial Central Bank Survey’ published September 16, 2019: “The US dollar retained its dominant currency status, being on one side of 88% of all trades.” The report also highlighted, “Trading in FX markets reached $6.6 trillion per day in April 2019, up from $5.1 trillion three years earlier.” That’s a lot of dollars traded globally and confirms that we need to stay current on the dollars price action.
Multinational companies are especially keeping a close eye on the dollar as any major shift in global money flows will seriously negatively impact their net profit and subsequent share value.
The following chart by www.finviz.com provides us with a current snapshot of the relative performance of the US dollar vs. major global currencies over the past year:
KNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDED
It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades earlier this week, two of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.
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.
We invite you to join our group of active traders and investors to 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
https://thegoldandoilguy.com/wp-content/uploads/2022/03/SNAG-0001.png7101031adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2022-03-25 16:13:062022-03-25 16:13:15What Will Be The Impact Of Rising Rates On Stocks & Commodities?
