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Are Equities Likely To Rally?

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.

Weakness Appears To Be Setting For This Week’s Economic Data

As the world reacts to the global economic slowdown because of the COVID-19 virus event and the massive stimulus programs and central bank efforts to support the global economy, investors still expect weakness in the US and foreign markets.  We believe this expected weakness will not subside until news of a proper resolution to this virus event is rooted in the minds of investors and global markets.

Hong Kong and China are currently concerned about experiencing a “third wave” of the COVID-19 virus within their society.  As the economies open back up to somewhat normal, people are very concerned that a renewed wave of new infections will suddenly appear and potentially result in another shut-down event or infectious cycle?  We believe all nations are watching what is happening in Hong Kong and China as they attempt to reopen their economies.

The rest of the world is still battling the rising infection rates and dealing with the economic shutdowns that have brought the global economy to its knees.  Europe, Japan, Canada, and the US are all experiencing vast disruptions to their economies and commodity prices and demand expectations are collapsing as a result.

Nearly a week ago, we issued a research article that suggested our proprietary Fibonacci Price Modeling tool’s key resistance levels may become a very valid ceiling for any price recovery.  It appears this is happening in the markets as the NQ Daily chart, below, shows.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

DAILY NASDAQ (NQ) CHART

The NQ resistance level, near 7880, has acted as a soft ceiling in the NQ over the past 4+ trading days.  Today, the NQ briefly rallied above this level, then rotated downward below this level again to confirm this key resistance level.  We believe this critical Fibonacci resistance level may continue to act as a price ceiling over the next few trading days and push prices lower as economic news and expectations hit the news this week and next.

The next downside price target for the NQ is 6565 – new price lows.

If you have not seen this important technical analysis on the Nasdaq which I posted a couple of days ago, be sure to see these charts.

SP500 (ES) WEEKLY CHART

This ES Weekly chart illustrates another key resistance level near 2679.  Although the ES price has not rallied up to reach this critical Fibonacci resistance level, we still believe this level is acting as a price ceiling and that the ES will weaken as future expectations are confirmed by earnings data, economic data and other collateral damage to the global economy.

We are still very early in understanding the total scope of this virus event.  The US and other global central banks are attempting to front-run any weakened expectations as a result of this virus event.  We continue to believe the extended collateral damage to the consumer, business and other aspects of the economy are yet to come.  Most recently, consumer delinquencies have begun to skyrocket and the news is being printed about landlords and renters being unable to satisfy obligations on April 1st.

This is part of the reason why we believe further caution is warranted at this time in the markets. We issued an Important Trade and Investment Alert Yesterday.

Our research team believes a deeper price low will likely set up over the next 30+ days to establish a true price bottom.  As we’ve warned, we believe extended collateral damage to the US and global economy will soon become better understood and the extended shutdown of the US and other economies only manages to complicate any positive expectations for a bottom.

We believe a deeper price low will set up within the next 30+ days and we urge skilled traders to pay attention to the broader expectations of the markets.  Earnings data and other economic data will continue to stream into the news centers over the next 30+ days.  Don’t get too aggressive with trying to buy a bottom in the markets just yet.  Be patient and wait for the markets to show you when the bottom has really setup.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.

The Selloff Structure Explained – Fibonacci On Deck

Many traders become very emotional when the markets turn Bearish and fail to properly understand that price structure is still driving market price movement.  This morning, I highlighted this structure to my subscribers attempting to alert them to the possibility that the markets could recover moderately over the next 3 to 5+ days attempting to set up the next “waterfall” downside price event.

On January 29, 2020, I posted a research article detailing my belief that a “waterfall” type of event was setting up in the markets.  This article was nearly 30 days prior to the peak in the markets.  It explained how events take place and how markets tend to develop a moderate recovery phase between selloff price declines.

January 29, 2020: ARE WE SETTING UP FOR A WATERFALL SELLOFF?

Skilled traders should notice the size and levels of each selloff event in the chart (above) and pay very close attention to how price initially collapsed from the peak, then recovered nearly 50% in early and late November before finally setting up a deeper waterfall price collapse in early December.

Our research team believes the US stock markets may attempt something similar over the next 3 to 5+ days as the Covid-19 economic outcome continues to process through the global markets.

The US and other Central Banks have taken broad steps to attempt to overcome the negative economic outcomes related to the Covid-19 global shutdown.  Their biggest concern is that consumer activity could diminish and banking/credit firms could come under severe pressures because of a consumer collapse.

There are over 35 million US low-wage jobs that may become at-risk because of the Covid-19 virus event.  We believe the true economic contagion of the global virus event may now be known until well into April or May 2020.  Yet we believe these at-risk, low-wage jobs are prevalent throughout the globe and foreign nations, such as Asia and Europe, may experience a similar consumer economic contagion over the next 6+ months.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss our next special report!

We believe the data related to the Covid-19 economic crisis will not fully be known until well into April or May 2020.  Because of this, we believe the US stock markets may recover to levels near the 50% Fibonacci Retracement levels on these charts before attempting a series of further downside price moves.  Skilled traders should not become overly emotional right now and pay attention to the structure of the price action as well as other technical conditions in play at the moment.  Our objective is to execute trades with a highly targets success rate – not to trade on emotions.

SPY DAILY CHART

This SPY Daily chart shows the SPY would only need to rally 18.70 points to reach the 50% Fibonacci retracement level on this chart.  This could happen very quickly given how close the price actually is to this key Fibonacci level.  If that were to happen over the next 3 to 5+ trading days, the downward sloping price channels from our TTCharger modeling system would move lower to meet price near 278 – which would set up a new resistance zone and possibly a new wave of selling.

INDU DAILY CHART

This INDU Daily chart shows the Dow Jones would have to rally about 2025 points (to levels near 23,886) to reach the 50% Fibonacci Retracement target.  If this were to happen, the sloping price channels on this chart would likely move lower to meet price near this 50% target level – presenting a very clear resistance zone for a new wave of selling to begin.

Remember, it is not about emotions or attempting to try to force the markets to adopt your “belief”.  Skilled traders attempt to identify risks, opportunities and realistic technical setups that allow them to objectively determine where and when the markets are providing a real opportunity for success.

We may be just a few days away from the next major wave of selling, yet any trader who jumped into an emotional trader over the past 5+ days expecting the markets to continue to break down is likely under a fair amount of stress right now.  Learn to read the charts and the structure of price more effectively and you’ll find the answers are already on the charts in front of you.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

If you are a more active trader and swing trader visit my Active ETF Trading Newsletter. If you are a long-term investor looking for signals when to own equities, bonds, or cash, be sure to look into my Long-Term Investing Signals.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategist
Founder of Technical Traders Ltd.

These Index Charts Will Calm You Down

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

Take a quick watch of this video because it shows you what I expect to happen over the next 3-6 months, and beyond and it goes against what everyone else is thinking.

Before you continue, be sure to opt-in to our free market trend signals 
before closing this page, so you don’t miss my next special update!

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
www.TheTechnicalTraders.com

Market Wrap Technical Take with Moe & Chris – Audio

Yesterday I had a great call with Moe Ansari, who has over 40 years of experience trading and investing. We talked about the market and some technical analysis as to what we think about everything happening right now.

Moe and I share a comment thought which is:

IT IS NOT WHAT YOU MAKE, IT IS
WHAT YOU KEEP THAT COUNTS.

I have been pounding on the table for weeks since we closed out last trade in TLT for 20.07% profit on Feb 23rd, that cash is king, and it is more important to avoid uncertainty than it is to try and trade the random and volatile price action.

Subscribers of my ETF trading newsletter love the fact that our trading portfolio is at a NEW HIGH WATERMARK, and we completely sidestepped this market correction, which turned into a full out market crash.

I won’t lie. I knew a market correction was starting, which is why I adjusted our trailing stops to protect us if things began to turn south. But I did not expect a market collapse that would start a new bear market.

The good news is that because I strictly use technical analysis, position-sizing, and management of positions for profit-taking and trailing stops. We will never be caught on the wrong side of the market for more than a few days. So when a market collapse happens like what we are experiencing now, it does not affect our financial outlook.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Featured on TD Ameritrade TV – Safe Plays During Slowdowns

Recently I have been asked to talk on multiple TV shows, radio stations, and podcasts during this wild market correction in almost every asset class.

The reason being I think is from some recent articles I posted publically clearly shows how a technical trader can successfully time, trade, and protect capital no matter what happens in the equities, bonds, and commodities market.

In short, I had subscribers move their money into the leading assets in January which were GDXJ (gold miners) and TLT (bonds). I also talked about consumer staples, and utilities as safe havens.

These assets were outperforming the stock market and that is where you want your money to be positioned as you will earn more over time owning leaders that increase in value more than that of the average stock market index.

Spotting the leaders is not really that difficult, but what is tough is knowing what position size you should have in any given trade, where to place profit targets, and where to place stop losses/trailing stops.

As you have likely noticed gold miners GDXJ fell a whopping 57% from the highs if you didn’t have proven strategy then your likely still holding them and have endured one hell of a rollercoaster ride. Subscribers and I exited GDXJ at the high tick the day price reversed for a 9.5% profit because we had a trading strategy and executed our trading plan.

GDXJ had reached our extreme price target using technical analysis which was a clear resistance level for sellers to unload shares and that’s what did, sold our shares as well.

TLT actually had the biggest and best-looking chart out of all other asset classes which is why we focused mainly on that position with our capital. See our trade below as it paints a clear picture.

TLT/Bonds historically show that when they rally 20% in price quickly the instantly reverse and crash. Well, our Fibonacci upside target worked out to be a 20% gain and if that level was reached we would close out any remaining position we had, which we did. During the rally, we scaled out of the position at 5%, 7.5%, 10% gain, and then the last portion once 20% was reached. The next day, TLT reversed and fall 15% over the next two weeks.

TD AMERITRADE TV CLIP

CLICK HERE TO WATCH VIDEO

Reality Check on Trading Equities & Precious Metals

As you may or may not know, the markets have a way of making it extremely difficult to trade in general almost all of the time if you do not have a trading plan.

One of the ways the market likes to pull money from traders is through morning opening gaps. For example, yesterday, the inflow of emails about gold, silver, and gold miners was insane. I keep trying to keep everyone in check with how to handle high-risk, high uncertainty, and volatile times, which, for our case right now, is a cash position for a few more days.

Unfortunately, big moves in price trigger emotions with some of you. It causes you to start trading just because you think you need to trade, which can be for many different reasons I won’t get into here. You should know my stance by now, which is cash is a position, and retaining our capital is more important than trading some times.

I know for a fact that all successful traders have a detailed trading plan, they can control their emotions, are logical, and they wait for opportunities vs. jumping at anything that moves more than normal.

Below is our portfolio equity curve, which we hit an all-time new high just days after the stock market started its crash. Maybe if you see what your portfolio growth curve would look like if you followed my trades, you will finally see the value in CASH.

I don’t trade a lot, and we are in cash when we don’t have any positions. Other times we will have 2 or 4 positions open, but it all depends on the market and volatility. You want trading to be simple, boring, and profitable, trust me on this.

PORTFOLIO GROWTH CHART

AVERAGE PORTFOLIO RESULTS THIS YEAR

Ok, enough of that rant, BACK TO MORING PRICE GAPS!
The stock market loves to do most of the day’s price range and profit potential in a way the average trader is not able to catch the move. Even more so, it is trying to get traders the worst entry or exit price.

New members over time will see and understand this when I talk about these gaps getting faded in my morning videos, which I will explain in a minute. For now, let’s take a look at the price of gold and the market sentiment from yesterday.

Yesterday gold traders were acting like a school of piranha’s. A big one day pop in price is like a drop of blood in the water, and it created a feeding frenzy. There was so much momentum going into the closing bell that the market makers will take advantage of this and walk the price up in pre-market trading the next day and try to reach the next resistance level before the opening bell.

This is what happened to gold, and miners this morning.  Market makers know there are still a ton of gold and miner stock buyers out there who are going to BUY as soon as the market opens, so what happens?

The general public pays the high price, way up at resistance, and the market makers get to sell any access shares they have for a huge profit. After that, the price generally fades (falls) back down, and the majority of buyers that day just bought at the high because of pure emotions and a lack of understanding. This happens for gaps to the downside as well in a similar manner.

Now, keep in mind, this is a very short term price action. The gap may fade down over the rest of the session or a few days, but it does not mean the uptrend is the price is finished longer term.

My point is, the market has a way to get you a bad fill MOST of the time if you do not understand how and why the price moves the way it does. Even if you know all this, sometimes we have no choice to pay the price depending on the trade setup if we want to get into a position. I just wanted to share this small tidbit on how the market moves with price gaps because almost all price gaps fill, fade back down to the previous days high for the stock indexes. Commodities gaps don’t always fill, because they are a very different asset class than equities.

MY CURRENT OUTLOOK AND THINKING FOR GOLD, SILVER, AND MINERS?

In short, gold is the only one in a bull market, and it’s been the definite leader time and time again for the past year almost. It remains in a bull market, and all the money printing/QE, and zero interest rate things are very bullish on metals long term. I like gold a lot, have for a while. I think it’s going higher still as I pointed out in yesterday’s afternoon video, $2600 is my primary target long term. If you didn’t watch yesterdays afternoon video be sure to do so here:

Members video: https://www.thetechnicaltraders.com/memberships/wbn/monday-afternoon-video-update/

As for gold miners and silver, well today is the same story as yesterday, everyone wants to own them and thinks they are missing the train. How you should see these charts and how to best trade them I tell you in yesterday’s afternoon video.

Trading now, in my opinion, is pure speculation and emotionally driven. Sure, you could be right, and this could be the bottom, but as technical traders using rules, logic, and a proven strategy, we are not cowboys trying to pick a bottom to be early. A broken clock is right two times a day. You may get lucky, but because bottom picking without any technical confirmation is a sucker’s (gamblers) game in the long run.

As our portfolio graph above speaks for its self, in that we do not need to catch every move, in fact, we just need to catch a couple of low-risk trades and slowly build our capital.  I was told by one of my mentor traders years ago, once trading becomes slow and boring to you, that’s when you finally understand the market and have a proven trading strategy.

I hope you find this helpful, and if you want this type of info every day, plus my videos, and winning trading strategy, become a member right now!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTrader.com

Part II – We Are Concerned About The Real Estate Market

In this second part of our research into the potential collateral damage, the Covid-19 global virus event may cause in the housing and commercial real estate markets, we want to start by sharing some information that severe cracks are already starting to appear in the entire system.

Hedge funds and banking institutions may already be feeling the pressure to attempt to contain the losses that are piling up (source: https://www-bloomberg-com).

An extended decline in the global markets will continue to place pressure on institutional financial markets, banks, hedge funds, and other traditional lending and investment firms.  Investors will start to pull investment capital away from risk (out of the markets and funds) and may expose some of these larger institutions’ excessive leverage and risk exposure in the process.

This is almost exactly what happened with Bernie Madoff when his firm, Bernard L. Madoff Investment Securities, collapsed in December 2008.  As long as there was no pressure on his firm from clients pulling out capital or asking too many questions, he was allowed to continue running his Ponzi scheme.  Once investors started pulling capital out of the firm and questioning the transactions/reports, it became evident that it was all a house of cards and would come crashing down quickly.

If larger investment firms and hedge funds are attempting to “buy the dip” at this point in time, we believe they are making a grave mistake.  We believe the downside risks associated with the Covid-19 virus event are just starting to unfold and the collateral damage that may come from this massive global shutdown that is currently taking place will be unprecedented.  We don’t believe there has been anything like this happening in any recent history – even WWII pales in comparison to this event.

News is starting to hit the wires about large investment firms and Real Estate investment companies sounding the alarm  The one news item out this weekend that caught our attention was this one from https://www-bloomberg-com. The fear is evident in the short content of this news article.

“Loan repayment demands are likely to escalate on a systemic level, triggering a domino effect of borrower defaults that will swiftly and severely impact the broad range of stakeholders in the entire real estate market, including property and homeowners, landlords, developers, hotel operators, and their respective tenants and employees,” he wrote.

Just take look at the foreclosures in the major cities starting to spike in the maps below. This was before the virus closed down most businesses, and everyone losing their jobs. Give the fact that 70% or more of the world lives pay-check to pay-check, foreclosures and real estate values are likely to plummet lower to an extreme similar to how overpriced they are now.

I have talked about his in some presentations, and in videos in the past how real estate is grossly overvalued and when the music stops, prices will tumble. Huge opportunities for those who can preserve their capital until the recession matures enough will be able to buy real estate, businesses, and equipment for pennies on the dollar, but this will take another 1-2 years from now I imagine, but it will be great for those with money on hand when things get ugly.

Be sure to opt-in to our free market trend signals before closing this page, so you don’t miss our next special report!

CURRENT LOS ANGELES FORECLOSURE MAP
(SOURCE: ZILLOW.COM)

CURRENT SAN FRANCISCO FORECLOSURE MAP
(SOURCE: ZILLOW.COM)

CURRENT NEW YORK FORECLOSURE MAP (SOURCE: ZILLOW.COM)

Many of you may remember my Crunching Numbers article from just a week ago where I attempted to model what I believe would be the likely outcome of US GDP over the next 5+ years?  Well, it now appears others are following up with their own predictions for US GDP.   Based on some of the expectations within this Bloomberg article, my predictions pale in comparison to these comments.  Source: https://www.bloomberg.com

Now, let’s try to be realistic about how this entire process is likely to take place.  We know the economy will find a base (at some point) and attempt to recover from this virus event.  The question is what does that base look like and where is the bottom?

We won’t really know where the bottom is in the global markets until most of the unknowns have been processed, most of the collateral damage has been identified and processed, and consumers realize the bottom is in sight.  At that point, there is a real chance that the global markets will begin a recovery process that may eventually push to new all-time highs.

What we’re concerned about right now is the Q1 and Q2 economic activity and how that relates to consumer markets, credit markets, existing business enterprises and the potential collateral damage to hard assets like homes, commercial real estate and other foundations of wealth.  We believe the first few dominos of this event will be the collapse of jobs, earnings, and consumer spending.  The longer the global stays in a mostly shutdown economic environment, the greater the risks these critical numbers will implode – possibly taking with it the rest of the economy.

We believe the suspension of Foreclosures for a potential 12 month period may not reduce the total number of foreclosures across the US, we believe it may compound the problem.  The suspension effort is designed to help people stay in their homes if their incomes become threatened or lost.  But the reality is that a Foreclosure suspension will simply start to build larger and larger numbers of properties in foreclosure (waiting for the suspension to be lifted) while home prices potentially collapse.

We’ll dig into more data in Part III of this article and attempt to illustrate the data we believe will point to a clearer picture of how all of this may unfold in the near future.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
www.TheTechnicalTraders.com

Concerned About The Real Estate Market? Us Too!

The current global Covid-19 virus event has upended everyone’s forward expectations related to the US and global economy.  Recently, President Trump has announced a 12-month reprieve for homeowners who find themselves without income, or a job, because of the US National Emergency related to the Covid-19 pandemic (source: https://www.npr.org).  All of the recent repositionings of the global markets and forward expectations got us thinking about “what happens after 8 to 12+ months?  How will the US and global markets attempt a recovery process – if at all?”.  Today, we are going to try to start digging into the data that we believe is relevant to the future in terms of hard asset prices (home and other property) and more liquid asset prices (global financial markets).

First, we want to preface this article by stating that humans are somewhat predictable in terms of how they will react in emergency or panic situations like this current Covid-19 pandemic.  Initially, they will react to protect what is vital to them (family, assets, safety).  This same thing happened in the 2008-09 credit market crisis market collapse.  Then, after a bit more time, people change their thinking and start to adapt to the situation as it unfolds.  We believe that 30 to 60 days from now, as more information becomes available and consumers globally are more capable of addressing the true longer-term risks of this virus event, a social process will begin to take place where valuations and expectations will adjust to the new perceived outcome (whatever that may be).

The global stock market has collapsed nearly -35% based on our Custom Indexes.  The SPY has collapsed -32.25% since February 23, 2020.  During the 2008-09 Credit Crisis, the SPY collapsed -57.50% before finding a bottom near $67.10.  We believe this initial price decline in the global markets is just the first downside price collapse of what may become many.  Ultimately, we believe the 2015/2016 lows will become the ultimate support for this downside move in the US markets.

Be sure to opt-in to our free market trend signals before closing this page, so you don’t miss our next special report!

SPY WEEKLY CHART

CUSTOM REAL ESTATE INDEX WEEKLY CHART

CUSTOM EUROPEAN INDEX WEEKLY CHART

The data that is currently being reported and posted is data from January and February 2020.  Current expectations for March data look grim (at best).  Jobless claims, hours worked, and other economic data for the US and global markets may shock investors and the general public for many months to come.  In 2008-09, these types of large economic contraction numbers were not uncommon.  We want to prepare all of our friends and followers that we believe the next 6 to 12+ months could somewhat mirror what we saw in 2008-09 – be prepared.

If our assumptions are correct, the reprieve in Foreclosures and Mortgage repayments for US consumers may not do much to resolve the ultimate problem.  The problem will quickly revolve around the issue of how quickly the US economy can resume somewhat normal functions after the virus event subsides.  We believe the reprieve offered to US consumers will assist in making the data a bit more tolerable for a short period of time, but ultimately any extended disruption in the US and global economy will result in extended risks in hard assets like homes, commercial property, and future valuation expectations.

(Source: realtytrac.com/statsandtrends/foreclosuretrends/)

This multi-part research article will dig deeper into the data and expected data to help you prepare for what may be likely in the markets (hard and soft).  Now is the time to prepare for what could become one of the biggest disruptions in the global markets and global society we’ve ever seen.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
www.TheTechnicalTraders.com

Cash Is King, Not Gold, Not Bonds

Exactly one month ago, on February 20th, the SP500 made an all-time high and reversed its trend to the downside. What a wild ride the last month has been across virtually all asset classes.

Out of all the major indexes, commodities, and currencies, only one asset and trade moved higher. It’s no surprise given the title that cash or the US Dollar is the asset of choice having rallied over 9% while everything else fell with bonds down 22.75%, stocks 30%-40%, gold miners 58%, and crude down 62%.

My team and I have talked about this rotation to safety into USA/US Dollar) since the lows back in 2018. During the recent stock and commodity price crash, we have seen where investors are dumping their money. It’s not gold, it’s not bonds, but the US Currency. Stocks and commodities are being sold around the globe, and that money is buying up the US dollar.

US DOLLAR RISES ABOVE THE REST
PROOF THE GREENBACK IS STILL THE #1 CURRENCY WORLD WIDE

DAILY S&P 500 INDEX – SUPPORT, BOTTOMING SIGNAL, AND RESISTANCE

The 30+% correction in the ST&P 500 index has been an extraordinary event. Those who have proven trading strategies and abide strictly to position, and risk management rules have been able to not only avoid the market crash but profit and reach new account highs. While those who trade for the thrill, expect oversized gains regularly, and who don’t have a clear trading plan or position management are suffering from the recent selloff.

Last night I watched a great video talking about performance and the winning mindset that both traders and top athletes share. The different ways someone can trade profitably in the markets is fascinating. If you want to be inspired to be a better person and trader, take a look at this video by Real Vision with Dr. Gio Valiante.

Ok, so let us jump into the charts. As a technical analysis and trader since 1997, I have been through a couple of bull/bear market cycles. I have a good pulse on the market and timing key turning points for short-term swing traders and long-term investors.

As you will see from the chart below, I keep things easy for you to see visually and get the idea of what to expect moving forward. The green line is a very significant long term support level on the S&P 500 index. Knowing that price has fallen straight down to this level gives us a much higher chance of a bounce at a minimum.

Trade Tip: The faster the price moves to a critical support or resistance level, the higher the chance you will have a bounce back from that level for a candlestick or three.

The pink arrow on the chart points towards a candlestick pattern, which I call Tweezers. These should be seen as a possible reversal signal.

Lastly, is the red resistance zone. I know it’s a huge range, but at this point, it’s the area we will zero in on once/if price starts to near that level.

30 MINUTE S&P 500 TRADING CHART

This chart is the 30-minute chart of the index and only shows regular trading hours between 9:30 am ET and 4 pm ET. While this is only 1/3rd of the trading day for futures, it is when the majority of contracts/shares are traded, so that is my main focus for analysis.

Since 2001 I have been building and refining my trading strategies to make them somewhat automated. This chart below shows my trend colored chart, which is the basis of my trading for almost all asset classes. What the S&P 500 does directly relates to how I trade or avoid other asset classes.

Recently, we created a market gauge showing you visually where the market is within its 30-50 day price cycle.

When the trend changed, and the bars turned orange on Feb 25th subscribers, and I closed our equities position because they were now out of favor. This allowed us to avoid the market crash through trend analysis, and from our trailing stop order.

FIRST WAVE OF SAFETY WAS IN BONDS

The two charts below of bonds show the same trend and trades but share some different trading tips.

The first 30-minute chart shows a pink line, which was our trend trade. The strategy is to look for large patterns, wait for a trend change, and then take advantage of the new trend. This trade we entered mid-January.

The key points from this chart are to know when the price goes parabolic in any direction and with huge price gaps, know its time to start scaling out of a trade, or close it.

BONDS DAILY CHART – SPOT LARGE PATTERN, TRADE THE BREAKOUT

The second point is that you must have a trading plan and actively manage your trade by moving up protective stop orders, so when price corrects, you are taken out of the trade automatically.

This daily chart of bonds shows the large bullish chart pattern (bull flag). I waited for price to breakout, the trend to turn green, and then entered the trade using Fibonacci extensions for price targets, which I have found are the absolute best way to spot our price targets. If bonds were to rally to the 100% measured move, we would close the trade, and that is what happened exactly.

A few things took place at that price level, which has the charts screaming at me to sell. First, the 100% target was reached. The second was that price was going parabolic with a 10% gap higher above my target, and volume was extremely high, meaning everyone, including their grandmother, were buying bonds. If everyone is buying the same thing, its time to move on to a new chart.

GOLD AND GOLD MINERS AS A SAFE HAVEN

While subscribers of my ETF trading signals and I profited on GDXJ as an early safe-haven trade exiting our position at the high tick of the day before it reversed and fell 58%, most traders I know still hold their gold miner’s positions.

For most of us, it is tough to sell a winning trade, and it is even harder to sell a losing trade. And knowing most trades will turn into a losing trade if you hold them long enough, the odds are clearly stacked against you as a trader.

This pullback in metals and miners, which turned into something much larger than I ever expected, is a huge shock to most people. The reality is history shows during extreme volatility/fear both gold and bonds collapse, and it is nothing new or unexpected.

In fact, I posted a warning that both will fall two days before they topped and collapsed in this special report.

CONCLUDING THOUGHTS:

In short, we are experiencing some unprecedented price swings in the financial system, but other than extra-large market selloffs, and rallies the charts are still moving and telling us the same things for trading and investing.

There are times when the markets are untradable as a swing trader, which is has been the last 15 days because of how them market has been moving. It is a fantastic time for day traders, but with some sectors moving 10-25% a day back to back like the gold miners or crude oil, it is high-risk trading (gambling) right now.

With all that said, my inter-market analysis is pointing to some tradable price action potentially starting next week. The potential is larger than normal because price volatility remains elevated, meaning 10-20% moves over a week or two are expected.

Visit my ETF Wealth Building Newsletter and if you like what I offer, and ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
www.TheTechnicalTraders.com