Archive for category: $SPY

Our proprietary Fibonacci predictive modeling system is suggesting Natural Gas is about to break down below the $4.30 level and move aggressively toward the $3.05~3.25 level.  This could be an incredible move for energy traders and a complete bust for existing longs.

This Weekly Natural Gas chart is showing our Fibonacci Predictive modeling system and highlighting the lower support price targets just above $3.00.  We believe price weakness will break the $4.30 level very quickly and drive prices well below the $3.40 level – very likely towards support near $3.25 over the next few weeks.

 

Our Advanced Adaptive Dynamic Learning predictive price modeling system is showing similar results.  It suggests a major price anomaly is setting up in Natural Gas that will prompt a massive downside price move over the next 2~3 weeks before an equally incredible price recovery takes place.  The total of this predicted price swing is nearly $2.00 ($1.00 down and then $0.85 back to the upside).  If this move takes place as our modeling systems are suggesting, this will drive a massive “washout move” pushing the long traders out of their positions on the way down and then pushing a massive short squeeze on the way back up to near $4.00.

This is the type of price swing that makes for incredible success stories if traders can play this move properly.  Pay attention to the fact that the lower predicted levels of our ADL system (shown near $3.20) may not be reached in this downward price swing.  Our predictive modeling system is suggesting these are the highest probability price outcome based on its internal price and technical analysis.  Still, when one takes a good hard look at this chart, it is easy to see the “price anomaly” setup where the current price of Natural Gas is nearly $0.80 above the currently predicted price levels (shown as YELLOW DASHES) and how the ADL Predictive modeling system is suggesting a big downward move is about to unfold.

Want to keep receiving incredible trade setups like this one and learn how our research team and specialized price modeling systems can help you find and execute better trades?  Then please visit Technical Traders Ltd. to learn more about our services and tools.  We have been helping traders find and execute better educated trading decisions with our specialized tools and research for years.  Visit www.TheTechnicalTraders.com/FreeResearch/ to read all of our most recent public research posts and to see how we’ve been calling these market moves over the past few months.

Chris Vermeulen

 

 

As 2018 draws to a close and the global equities markets continue to find pricing and valuation pressures driving prices lower, a few questions come to mind for all investors/traders – Is a deleveraging event about to unfold?  What will it look like if it does happen and how can I protect my investments from such an event?  This research article is going to help you answer those questions and should help to resolve any lingering questions you may have regarding the true nature of this market rotation and volatility.

Our research team at www.TheTechnicalTraders.com has been digging through the data and charts in an attempt to identify key elements of this recent price move.  We are starting with our Monthly Adaptive Dynamic Learning Cycles chart of the ES (E-mini S&P).  As you can see from this chart, our ADL Cycles modeling system is showing a deep downside price rotation is likely to unfold over the next 8~12 months.  One thing to remember about this chart is that these cycles and the width of the future cycle peaks and troughs are NOT indicative of price target levels.  Therefore, this downside move is NOT suspected of reaching price lows near 1000 or 1200.  These cycles are representative of a magnitude of cycle events.  In other words, this current cycle, downward, is expected to be a major cycle event that establishes a major price bottom somewhere near the end of 2019 or early 2020.

We urge traders to understand the scope of this cycle event.  Look at the previous cycle events on this chart.  Numerous downside cycle events have taken place over the past 10+ years that represent somewhat similar down-cycle price moves.  The most recent was in 2015~2016.  This event represented a moderately deep down-cycle even that equated to a 300~400 point price rotation in the ES.  If the current cycle event is relative in scope to the last, then this current down-cycle event will likely result in a 600~800 point price rotation, and we have already experienced a nearly 300 point rotation in the ES.  This would suggest a potential price bottom near 2100~2300 on the ES if the scale and scope of the current cycle event are relative to the previous down-cycle event.

 

This next chart highlights key time/price cycles on the SPY Monthly chart to help us keep the timing of these events in perspective.  As we have suggested, above, a major down-cycle even may be unfolding that results in a deleveraging even across the global markets.  If this does, in fact, take place, there are a number of elements that will likely play out.  First, currencies will fluctuate dramatically as deleveraging takes root.  Capital will seek out and identify the safest and most suitable returns by rushing away from risky markets and into safer markets.  Additionally, a prolonged deleveraging of global equities may take place where valuations are reduced as capital attempts to establish a balance between expectations and true market value.  Overall, this is a very healthy event for the markets as long as it does not result in a total collapse of price, as we saw in 2008-09.

This SPY chart highlights three key components of the markets current setup.  First, the RED LINE (a 2.618 Fibonacci extension from the 2015-2016 price rotation at $266.50) is acting like a strong support level in the markets.  This level, along with the 2018 lows near $254.78, are important levels that we are watching to determine if any further downside price activity is unfolding.  As long as these two levels are not breached to the downside, we can confidently say that the upside trend is still intact.  Second, the two BLUE price channels, which originate from the 2009 market bottom, establish a powerful upside price channel that will act as critical support should price reach near the lower level of this channel.  This means that any downside price rotation will likely find solid support near $232.00 or higher.  Lastly, the vertical time/price series cycles are suggesting that May and Oct of 2019 are likely to prompt significant price reversal patterns/setups.  This helps us to understand that any potential breakout moves (up or down) will likely reach some critical inflection point, or reversal points, near May and October of 2019.

 

Next, we fall back to our Custom US Market Index chart on a Monthly basis.  This chart, again, shows the support level originating from the lows of 2009 in a heavy BLUE line as well as two price channel levels that represent current price ranges.  The first thing we want you to focus on is the breadth of the current rotation within the regression channel on this chart (the red/blue shorter price channel).  Currently, the price is within this standard regression channel and has yet to break the longer-term, more aggressive, upward price channel.  Additionally, we can see from this chart that the recent price activity is still measurably above the 2018 price lows near 374.12.  Secondly, the Pitchfork channel, originating from the 2009 lows and spanning the range of the 2015~2016 price rotation, provides additional confirmation that we are still well above the middle and lower areas of this price channel.  Even if the current price did fall by another 4~8%, the price would still be within the normal channel levels of this extended upside price channel.

So, when we consider the scale and scope of this current downside price rotation, we have to be very aware of the real expectations of the market.  Yes, it looks frightening when we see it on a Daily or Weekly chart.  But when we consider the real reality of the long-term perspective, we can begin to understand how the price is reacting to the recent upside acceleration since 2017.

 

Lastly, this Daily ES chart is showing what we believe is the most important data of all and why all traders need to understand the risks involved in this rotating market.  First, this chart shows our Adaptive Dynamic Learning Fibonacci price modeling system and the results of this chart are clear to our team or researchers – although it might be a bit cluttered to you.  So we’ll try to explain the basic components of this chart for you.

The heavy RED and GREEN levels that are drawn above and below the price action are the Fibonacci Price Trigger levels.  These indicate where and when we would consider a new price trend to be “confirmed”  As you can see, the most recent “confirmed” trigger happened on Oct 10 with a huge breakdown of price confirming a bearish price trend.  Since then, these Fibonacci Price Trigger Levels have expanded outside price as volatility and price rotation has also expanded.  This indicates that price will have to make a bigger push, higher or lower, to establish any new confirmed price trend based on this modeling system.

There are two heavy YELLO lines bordering recent price rotation on this chart that help us to understand a rather wide flag/pennant formation appears to be forming within these rotation/channel levels.  For example, the absolute low of the current bar touched this lower YELLOW level and rebounded to the upside very sharply.  It is very likely that a washout-low price pattern executed today that may provide further price support near 2626 in the ES in the immediate future.  Either way, the price will have to exit this YELLOW price channel if it is going to attempt any new upside or downside price trends.  As long as it stays within this channel, we have a defined range that is currently between 2626 and 2800.

Lastly, the LIGHT BLUE oblique has been our estimated critical support level in the ES since our September 17 market call that a 5~8% downside price rotation was about to hit the markets.  This level was predicted by our ADL predictive price modeling system and has been confirmed, multiple times, by price over the past few months.  It is very likely that this level will continue to act as major support going forward and will be the last level of defense if price attempts a downside price move.  In other words, as we stated above, 2600~2680 is a very strong support range in the markets right now.  Any breakdown below this level could push the markets toward the 2018 price lows (or lower).  As long as this level holds, we could see continued deleveraging in the markets as US Dollar, Energy, Commodity, Currency or global market price weakness while the US markets attempt to hold above the 2018 lows.

 

Pay very close attention to our Fibonacci price modeling and US Custom Index charts, above, because we believe these charts paint a very clear picture.  Yes, a deleveraging event is likely already unfolding in the global markets.  It has been taking root in various forms over the past 12+ months in all reality.  The US markets are continuing to shake off the downside pricing pressures that we’ve seen in other global markets, and this is likely due to the “capital shift” event that is also unfolding throughout the globe.

Our advice for active traders would be to consider drastically reducing your trading sizes as well as pare back your open long positions if you are concerned about a market breakdown.  Our modeling systems are suggesting we have many months of rotation within the market to reposition and evaluate our plans for future success.  Unless the 2018 lows and the multiple critical support levels we’ve highlighted are threatened, we believe this rotation is nothing more than standard price rotation with acceptable ranges (see the charts above again if you have questions).  Yes, there is still concern that a price breakdown may unfold and we are certainly seeing a deleveraging event taking place.  We are not calling for a price collapse at the moment, and we have explained the reasons why we believe our research is accurate.

Use the best tools you can to assist you, just as we do for our members.  The only thing you can do in a situation like this is taking factual data, evaluate the true price data and make an educated and logical conclusion about the markets.  If you want to learn how we help our clients find and execute better trades and how we are preparing to make 2019 an incredibly successful year with our members, then visit www.TheTechnicalTraders.com and see what we offer our members.

Chris Vermeulen

The US stocks are already up 1.5%, and gold 1.1% or more on news originating from Argentina from the G20 meeting.  The commitment from the US and China to restore talks and hold off on new trade tariffs for a 90-day period of time allows the markets some breathing room and some time to digest future expectations.  Combine that with the US Fed talking about taking a more dovish approach to rates and that rates are near “neutral” and we have a perfect setup for the global equity markets to rally back towards recent all-time highs.

This type of equity opportunity will push the metals markets towards recent price ranges/lows with almost no attempt at upward price activity.  In our opinion, we are looking for the next 14 days to be quite explosive in the equities markets and quite mute in the metal’s markets.

Gold will likely stay below $1250 for the next 10~14 days as a renewed global equities rally takes hold.  This is an excellent time to establish new long positions as our predictive modeling systems are suggesting that the metals markets should start to move higher near the end of 2018 and into early 2019.

Silver will likely stay below $14.40 for the next 10~14 days with the possibility of falling below $14 on a washout low price rotation near Dec 10^th or 11^th.  This would be an excellent time to look for and set up positional long trades in metals miners or SIL in preparation for the late December and early Jan price pop that our predictive modeling system is suggesting will happen.

 

The initial upswing price activity in the metals will push prices above recent price peaks ($1260 for Gold and $15.00 for Silver).  Our modeling systems suggest this price move will stall in late Jan 2019 and continue to stay muted till April or May of 2019.  At that point, a new upside price advance will push metals prices much higher.

This may be the last time you see prices near these lows, so be aware of the risks that are ahead of the markets.  Remember, the EU and the Brexit deals will likely play a role in the rise of the metals prices over the next few months, so take advantage of these setups before they vanish.

Follow our analysis to stay on the right side of this move.  Our predictive modeling systems have been calling these market moves 30~60+ days in advance.  Visit www.TheTechnicalTraders.com to learn how we can help you find and execute better trades.

Chris Vermeulen

The continued efforts of our research team to identify and quantify the possibility that the capital shift which has taken place over the past 18+ months may be shifting to other assets is in the interest of all global investors.  Is there a new, more opportunistic investment that will take away from the capital that has been rushing into the US equity markets over the past 2+ years or is the capital shift towards the US equity markets still intact?  These are the questions before us and these are the questions that will determine if the US equity markets continue to rally or continue to top out.

In part one of this research article, we began to explore the aspects of our research that we believe are key to understanding the future of the global capital shift phenomenon. In short, the capital shift is the movement of investment capital from one asset to another asset (from country to country, from one form to another or from one asset class to another) in an attempt to seek out and secure the best, safest and most secure ROI on the planet.  We believe this process has been a driving force behind much of the global markets success or malaise over the past 4+ years (actually starting near 2013 when wealth in China and capital controls forced investors to seek outside investment sources).

Additionally, in part one of this research article, we highlighted the traditional range channels of the US equity market and how these ranges have played an important role in identifying price support.  Currently, the US market is sitting at the middle support level of historical ranges after retracing from recent highs.  This is far from the “crash moment” that many are predicting.  The reality is that this is more of a reversion to support in a strongly upward sloping price channel.

Let’s start out by asking the question “what will happen to Asia/China over the next 2+ years and what will happen with the capital from Asian investors?”  Should we believe that China/Asia capital markets are healthy and robust for sufficient ROI in current form or are these investors seeking outside sources for healthier and safer ROI solutions for their capital?  And what should we expect over the next 18~24+ months beginning in early 2019?

Our Custom China/Asia Index has clearly shown that prices have reflected a downward trend since the top in early 2018.  This price decline has already breached the 50% Fibonacci retracement level and appear to be attempting a deeper price move lower.  We believe the banking/credit/expansion issues in Asia/China are related to this capital contraction and won’t abate until the majority of these issues are resolved.  In other words, there is far too much uncertainty in this area of the investment world to support a change in investor sentiment.  Yes, everyone wants to see Asia/China settle these economic issues and become poised for a stronger growth model going forward, but everyone is also waiting for the next shoe to drop to detail these expectations.  Housing, Trade, Credit Markets, Banking, Global Objectives, Regional Issues, Manufacturing??  Pick one and wait a few months for some news.  At this point, there is so much news originating from China/Asia that is pointing to a broad market correction that we are simply waiting for the next news item to hit.

The One Belt, One Road project is another concerning aspect to what China/Asia is capable of achieving.  This project is incredibly diverse – spanning dozens of nations/countries.  The reality of this project is that uncertainty abounds from all angles when one considers the routs this project is taking and the global uncertainties that originate from many of the areas on these routes.  Tehran, Kenya, Pakistan, Sri Lanka, Kuala Lumpur, Jakarta??  Sure, the land and sea transport solutions offer a very interesting and dynamic shift for economic growth, but this is all based on the assumption that wars, graft, politics and local/regional tensions don’t flame up to halt or block any of these routes and the future success of this project.

Already, Malaysia has terminated multiple projects related to the One Belt, One Road objective because of corruption and fraud against the Malaysian people.  We are reading news stories of Pakistan and other nations questioning the deals made with China in support of this project.  In our opinion, the land routes are much more fragile than the sea routes.  Ships can change course and head to another port if needed.  Train tracks are not easily relocated and shifted around to address regional issues.

 

Additionally, the global commodities pricing index (from Bloomberg) is suggesting that global commodities have reached a peak and are declining.  This puts pricing pressures on larger global projects like the One Belt, One Road project because profits from mining or manufacturing raw commodities and secondary commodity products are dramatically decreased.  This would also suggest that suppliers and manufacturers may be experiencing an economic stall in terms of growth expectations over the next few years.  If the commodities futures prices are declining, then global investors are not seeing any aspect of the global markets that would relate to higher demand, manufacturing or increased general consumption/use of global commodities.

 

Watch Crude Oil for signs of life in the economy.  The price of Oil is often a very good gauge of economic activity and expectations in terms of freight, shipping, consumer activities and more.  Oil has seen a very dramatic selloff over the past 2 months and is nearing levels that should be concerning for producers.  Oil price levels below $40 ppb could be a game changer for much of the Arab world.

Our conclusion is that until global investors see the true opportunity for Asia/China and see real strength in the global commodities markets, risks continue to outweigh opportunities in much of Asia/China.  Therefore, we believe the capital shift phenomenon originating from this region will continue to source more suitable returns in other global investments.  Should the commodity index break down or the Chinese/Asian markets collapse further, we believe the push for outside safety will increase.  This may be likely near the start of 2019.

Want to know what our predictive modeling systems are suggesting will happen in 2019 and beyond?  Are you searching for a dedicated team of researchers that can help you understand where opportunities are and how to find great trades?  Take a minute to visit www.TheTechnicalTraders.com to learn how we can assist you and help you find greater success.  Want to see how we’ve been calling the markets, visit www.TheTechnicalTraders.com/FreeResearch/ to review all of our public research posts.  2019 and 2020 are setting up to be incredible opportunities for investors – get ready for some incredible success with these bigger price swings playing out.

Chris Vermeulen