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Global Blast-Off Trade Setup

Global Blast-Off Trade Setup

Our analysis of the global markets and metals markets are prompting us to issue a warning that may not shock a number of our followers – but may surprise others.  We use a number of custom indicators, custom indexes and other specialized features to try to keep our valued members aware of moves before they happen at ActiveTradingPartners.com.  You may recall our recent article warning of a VIX spike between June 9th and June 13th in correlation with a US market correction (NASDAQ).  We nailed this and predicted another VIX spike on June 29th, 2017.

 

Are you ready for what might become the most opportunistic setup we’ve seen in over a decade?  Well, before we get to the guts of our incredible setup, let’s go over some other data to support our predictions – the global markets.

 

On May 3rd, 2017, we authored an article regarding Global Economic Shifts that were taking place as a result of Capital Migration and renewed risk factors throughout the global markets.  Our hypothesis was that capital will always attempt to locate and migrate to financial environments where risk is mitigated and returns are sufficient.  We consider this an active and intrinsic role of global capital – the hunt for the ability to thrive and develop success/profits.

 

Since this research was completed, a number of new and interesting facets have evolved.  Two of the most interesting are the shifts within the Arabic nations with regards to Qatar and the almost total isolation recently enacted on this wealthy nation and the news from Europe that a number of smaller, regional banks are collapsing with broader, tangible relations to the EU banking system.  This type of disruption within a financial environment (think globally) causes capital to migrate rather quickly to more stable locations for self-preservation.

 

China/Asian markets appear to be developing a level of “moderately healthy financial environment” in terms of global market capital migration.  In the past, I would have warned that Asia/China could become a temporary safe-harbor for capital as it migrates out of riskier environments and I would still support that claim simple because China/Asia are less of a mature market compared to other.  Thus, the likelihood that China/Asia could see dramatic asset revaluation or some type of unexpected market function issues is still near the top of my list.  Yet, we can’t accurately predict when this will happen and until extended signs of weakness cause us to adopt a more concerned stance, we have to understand that capital will move to environments that seem suitable for success.  At this time, we believe China/Asia are viewed as just that – moderately suitable for capital deployment and investment (till things change).

 

Asia Chart

You will see from our chart that a defined support channel is in place and resistance bands appears to be setting up near the end of June and throughout September 2017.

Asia  Monthly

 

 

BRICs Chart

BRICS markets appear to have “rolled over”, as predicted, near resistance bands that indicate pricing levels may be setup for some level of correction.  It is our opinion that an 8~18% correction may be near as capital will likely migrate away from perceived increased risk and towards healthier environments.  This would put a downside target on this chart near $13k~$12.5k.

BRICS Monthly

 

 

Europe Chart

The European markets appear to be at a critical juncture near a classic Fibonacci retracement pattern.  Many people do not understand one of the basic concepts of Fibonacci theory that is; price will always attempt to develop new higher highs or lower lows.  Keeping this in mind, any failure to develop higher highs in the European markets within the next 2~3 months will likely result in perceptions being that these markets are developing greater risk.  Thus, capital may migrate away from the uncertainty and risk towards healthier alternatives.

 

The European markets chart shows clear price channels that originated near July 2016 – the date Theresa May assumed the Prime Minister role.  It is interesting how the perception of an environment of strength, protection, leadership and opportunity can change the way capital migrates from different environments.  In this case, the disruption in Europe with May’s election victory changed the way people saw the future opportunities in Europe.

 

Now, with recent elections, banking issues, further debt issues and uncertainty with leadership, we can only assume that perception will change, again, towards an environment that is more risky and unstable – prompting capital migration away from these markets.

EU Monthly

 

US charts

Meanwhile, on another continent…  The US markets appear to be the “Garden of Eden” in terms of capital migration.  It is true that the entire US/Canadian/Mexican conglomerate market is suitable and in perfect financial health, but it is also true that compared to many others, these market present the potential for the best and safest deployment of capital.  The charts show that capital appreciation has been tremendous since the US Presidential Elections and may launch much higher if extended risk exists in other global markets.

 

Again, capital is always searching for a safe and suitable environment for deployment.  Taken in global terms, there are really only two suitable locations for capital and the others are inherently more risky.  These conditions may change over the next few months, but our analysis points to one critical factor that could disrupt many aspects of this global capital environment.  One thing that could be related to a massively disruptive event.

US Weekly
We are now at the point that you have been waiting for.  The incredibly disruptive and opportunistic setup that could change everything in the global markets (or so we hypothesize).  Before we get to the details, we want to make certain that you understand this type of research if far from 100% guaranteed or set in stone.  We develop our analysis based on a number of massively moving components within the global economy and are predicting price moves that may be weeks of month in advance.  We advise you to consider this a learning experiment in the sense that there is absolutely no way we can state with 100% certainty our research/analysis or conclusions will play out exactly as we suggest.  It is impossible for anyone to know what will or may happen, accurately, in the future.  That is what trading is all about – making an educated guess and protecting your trade.

 

Well, here it is, folks. 

The setup/opportunity that may turn into

the biggest move in the markets for the next century.  METALS.

 

Think about this for just one minute. Given the knowledge that capital will migrate to sources of safety and investment return while avoiding environments that are risky.  And, given that we’ve made fairly clear points that much of the global is setting up for some levels of disruption, uncertainty and greater risk – leaving only China/Asia and the US as the safe-harbor capital environments.  We’ve also detailed how the China/Asia markets are setting up for disruption with technical resistance levels and exposure to other global environments.  We’ve highlighted that Europe may enter a period of disruption and uncertainty with recent elections, debt, banking issues and more and illustrated that BRICs markets are rolling over as an early warning that emerging markets might contract as global capital migrates towards safer environments.  This is not doom and gloom stuff, this is just what happens when markets are disrupted.

 

Now, look at the setup in these custom metals index charts.  A clear Flag formation has setup near historical lows that is nearing the Pinnacle.  My analysis of this pattern shows that we are setup for one more lower price rotation before the rally begins.  One more attempt at buying near ultimate lows before we could see a massive, explosive rally capable of at least a 50%+ run.  Long term, this run could be much bigger..  much, much bigger.  Fibonacci theory shows the potential for 125% or 225% gains are easily possible.

 

Oddly enough, our research shows that this lower wave of metals prices should complete near or before June 29th.  Remember that date from the beginning of this article?  That’s right, this is the date that we predict would initiate a volatility spike (VIX Spike).  Just how big will this VIX spike be?  If our analysis is correct, the real VIX/volatility expansion won’t begin to happen till near the end of August or near the middle of September, 2017.

 

Our analysis shows that the Metals will begin to make a move near the end of June or early July 2017.  Our analysis also shows that the US and global markets will begin to see increased volatility near Aug/Sept 2017.  We also believe that any move in Metals will likely be the result of extended risk factors globally.

Metals  Daily

If you like receiving this type of analysis and want to continue to receive these advanced research reports, detailed trading signals and more, then visit www.ActiveTradingPartners.com and become a member. We believe our MRM research and analysis is superior and that we provide one-of-a-kind solutions for our member partners.  We guide our members towards success with advanced analysis, research, detailed trading signals and more.  Isn’t it time you invested in your future success with us?

 

Chris Vermeulen







June 17, 2017

ROTATION OUT OF THE TECH AND INTO FINANCIAL

Last Friday’s, June 9th, 2017, decline of the tech sector continued into Monday, June 12th, 2017.  I expect the NDX to test the range, as illustrated within the red box in the below chart, before continuing higher, but not closing below the red box.

NDX Chart

The banking stocks were among the beneficiaries of the tech slump, with BAC, GS and JPM all defying their head and shoulders break-down setups.

BKX

The volume in the QQQ fund has been excessive. Last Friday, June 9th, 2017, it was 8 standard deviations above its’ normal average volume. On Monday, June 12th, 2017, it was more than 6 standard deviations above its’ normal average volume. It set a new record since back in 1999.

Goldman Sachs sent a memo out to its’ clients late last week.   Goldman worries that the boom has created an “valuation air-pocket,” similar to the ridiculously high valuations for tech stocks during the Dot-Com boom.”

 

The SPX Trade!

The market is in a very bullish posture if we remain over 2420 in the SPX. There is NO market crash in sight. Tune in every morning for my video analysis and market forecasts at TheGoldAndOilGuy.com to know where the main ‘asset classes’ Gold, Oil and SP500 are headed tomorrow, this week and next month. This daily forecast service closed out an oil trade in SCO on June 8th for a quick 21% profit!

As this bullish pattern continues to rise throughout the summer, we should then prepare for the next correction in the SPX. This next pullback can take us from the 2500 – 2550 SPX region and potentially back down towards the 2300 SPX. The next buying opportunity should occur in the fall of 2017, approximately sometime during the Thanksgiving Day holiday.

SPX Chart

 

 

 

How A ‘Market Crash’ Stops:

‘Circuit breakers’!

 Stock exchanges attempt to ease ‘panic selling’ by taking certain steps to halt trading. These moves are called ‘market circuit breakers’.

The purpose is to prevent a market or stock price ‘free-fall’ by trying to rebalancebuy and sell orders. ‘Circuit breakers’ halt trading on the nation’s stock markets during dramatic drops and are set at 7%, 13% and 20% of the closing price for the previous day. The ‘circuit breakers’ are calculated daily.

 

Level 1 halt (7%):

Trading will halt for 15 minutes if the drop occurs before 3:25 p.m. (ET)

At or after 3:25 p.m. (ET) — trading shall continue, unless there is a Level 3 halt.

 

Level 2 halt (13%):

Trading will halt for 15 minutes if the drop occurs before 3:25 p.m. (ET)

At or after 3:25 p.m. (ET) —trading shall continue, unless there is a Level 3 halt.

 

Level 3 halt (20%):

At any time during the trading day—trading shall halt for the remainder of the trading day.

 

The De-regulation of ‘RED TAPE’ in the Financial Industry Will Place the Markets at a Greater Risk!

 

The Trump Administration hopes that by unshackling businesses from all the ‘RED TAPE’ regulations, renegotiating trade deals and by cutting tax rates, that this will help the economy to grow faster. The administration hopes that these changes will create new jobs.

Last Thursday, June 8th, 2017, The House of Representatives (http://www.house.gov/) approved legislation to erase the core financial regulations implemented in the Dodd-Frank Act of 2010. Republicans moved a step closer to delivering on their promises to eliminate rules that have been perceived as strangling small businesses and stagnating the economy. The non-partisan Congressional Budget Office estimated that the bill would reduce federal deficits by $24.1 billion over the next decade.

This bill will reverse most of the protections put in place since “The Great Financial Crisis Of 2017”.

(http://frozenmail.net/2017/06/10/us-financial-choice-act-passes-house-of-representatives.html)

The Choice Act would exempt some financial institutions which meet capital and liquidity requirements from many of Dodd-Frank’s requirements that limit risk taking. It would also replace Dodd-Frank’s method of dealing with large and failing financial institutions. This is known as the orderly liquidation authority — which critics say reinforces the idea that some banks are too big to fail — with a new bankruptcy code provision.

This new legislation would weaken the powers of the Consumer Financial Protection Bureau. The bill would also eliminate the Labor Department’s fiduciary rule which requires brokers to act in the best interest of their clients when providing investment advice about retirement.

 

TRADES IN MAY:

FOLD, up 18% in 6 Weeks
TNA, up 5.9% in 11 Days
ERY, up 4.75% in 2 Days
SLV, up 3.2% in 5 Days
MOBL, up 15% in 7 Days
FOLD, up 9.5% in 40 Days
NUGT, up 81% in 27 Days
UGAZ, up 74% in 14 Days

 

If you would like to take FULL Advantage of all of my insight and expertise, tune in every morning for BOTH my daily market forecasts video and my Premium Stock & ETF Trade Alerts services!

Chris Vermeulen





June 12, 2017

GOLDMAN SACHS CRASHES TECH FANG STOCKS!

Last Friday June 9th, 2017, Robert Bouroujerdi, a Goldman Sachs analyst, “warned that the $600 billion outperformance by the 5 biggest tech stocks known as ‘FAAMG’ — Facebook, Amazon, Apple, Microsoft and Alphabet — had contributed about 42 percent of all stock market gains over the last year. Goldman worries that the boom has created an “valuation air-pocket,” similar to the ridiculously high valuations for tech stocks during the Dot-Com boom.”

Goldman Sachs comments “market’s over-reliance on FAAMG for growth and appreciation has created positioning extremes, factor crowding and difficult-to-decipher risk narratives.”

Almost like the Dot-Com bubble, investors are piling into the tech stocks with the belief that these companies will continue to generate billions in revenues and branch out into other enterprises to drive innovation and growth. I talked about this two weeks ago;  “The Fourth Industrial Revolution, which will be referred to as: Tech Hypergrowth

Nasdaq 100

The QQQ’s were trading at $140.15 per share last Friday, June 9th, 2017, but by afternoon, they were down $3.42 (-2.38%). Year-to-date, the QQQ’s have gained 18.29% versus an 8.75% rise in the SPX index during the same period. The heavy losses were focused and contained. It was an orderly coordinated profit taking day!

There was a sector rotation in The Dow Industrials which closed at a new high. Prior to the past year, the last two times that the Dow Jones closed at a high, while the Nasdaq sold off hard, was back in 1999 and 2007.

The Tech sector has been driving the general market yet higher since November of 2016. I keep scanning the horizons in every direction and I just cannot see anything that would trigger more than a minor correction day. Of course, a minor correction could deliver outsized impacts, given the heavy weighting of a few stocks. as well, as passive index investing.

 Nasdaq

 

Are the Financials and The Small Caps Back?

Small Cap stocks, IWM, vaulted all the way up to $139, and it has had a strong follow through on Friday, June 9th, 2017, well above $140. That is a nearly 4% move from trough to peak since Wednesday June 7th, 2017, in a dramatic “V-shaped rally” in Small-Cap stocks.

The DOJI candlestick on the breakout is a sign of INDECISION! I am currently waiting for a re-test of 138.50 before entering this trade. According to decades of studying historical seasonal chart patterns, the month of June almost always closes lower than its’ open. Its’ worst days are June 15th to June 18th. MRM Traders played TNA for the recent run-up in price.

IWM ATP

In the SPY, impressive asset flows have hit SPY lately, topping more than $6 billion in this move higher in the past week.

Dr. Ed Yardeni discussed why:

“So far, the current bull market has marched impressively forward despite 56 anxiety attacks, by my count. They were false alarms. I remain bullish. My long-held concern is that the bull market might end with a melt-up that sets the stage for a meltdown. The latest valuation and flow-of-funds data certainly suggest that the melt-up scenario may be imminent, or underway.”  Article

 

In the aftermath of “The Great Financial Crisis of 2017”, Global Central Banks began to buy stocks and bonds and other financial assets in very large quantities and they continue to do so!  It is estimated that they will continue to buy $3.6 trillion dollars during 2017. They continue to pump up the global stock markets. This is their response in correcting the forces of past excesses. Their financial engineering may be able to keep this bubble growing bigger and bigger for many years to come. They have reached a point of no return and have no plans to unwind balances sheets.

 

 

Will the Financials Lead the Market Higher?

The banking stocks were among the beneficiaries of the tech slump, with BAC, GS and JPM all defying their head and shoulders setups at this time. The XLF, is suggesting further near-term gains for the financial sector while heading into this coming week’s FOMC meetings on June 13th and June 14th, 2017.

 XLF

 

 

Trade Your Way To Success!

On May 25th, 2017, I issued a trade alert, to my membership, a couple of hours before the opening bell!

We at TheGoldAndOilGuy.com purchased the SCO ETF which is a 2x oil ETF, which rocketed higher by 10.4% over the next few hours on May 25th, 2017 which we locked in partial gain and adjusted our stop to eliminate any downside risk. Members were ecstatic with our instant results. Then, oOn June 8th, 2017, we closed the remaining position of SCO for a 22% Profit!

If understanding why the markets move they way they do, and where they are headed tomorrow is something you want to know, become a member and have access to my premium pre-market video forecasts to have the necessary insights that you require to build your trading account!

Chris Vermeulen
www.TheGoldAndOilGuy.com





Active Trader Predicts Vix Spike & Nasdaq Selloff

A potential increase in risk may create massive opportunities for investors. 

Throughout our ongoing analysis of the US markets, metals, energy and other market sectors, one thing we have seen over and over is that markets can, and often do, develop longer term trends than most people believe are possible or believable.

 Recently, numerous analysts have been warning of potential “critical crashes” and “deep retracements” because of the fear that this rally is nearing some type of end cycle.  We believe the charts tell the story of the investor sentiment and that, at some point in the future, these predictions may become true – but not today. 

The VIX chart tells us quite a bit in terms of volatility, trend and potential market changes.  One can see from this chart that the VIX has been trending within a “flag formation” that reaches a pinnacle in October 2017.  This contracting flag formation is telling us that, unless the VIX breaks this range substantially, it should continue trading within this range for some time.  At some point in the future, the VIX will break this flag channel and we could, then, see much more dramatic price volatility and corrections.  But, until that time, contractions will continue to be muted in size and the bullish trend is likely to continue for a while.

 Notice the averages are near the 12~13.  There is a strong likelihood that the VIX could pop into and above these levels, briefly, through natural market contractions in the near future.  By our analysis, roughly every 10~15 trading days (2~3 weeks) the VIX attempts to make some attempt at these levels from extreme lows. 

I originally wrote this article on June 7th, but was not able to get it edited and posted until this weekend. See my statement below regarding when the VIX was set to spike:

This cycle indicates we should expect a VIX spike near June 9th or 12th and June 29th. Well, Friday the VIX spiked big as the NASDAQ crashed. In fact, I did take a net short position on the VIX as I expect stocks will continue their trend higher and thus the VIX will fade back down. I took this swing trade with my automated VIX trading system AT VIX

 VIX Daily

 The NASDAQ has been the driving force in the US majors for quite some time and the chart of the NASDAQ below proves why.  The Tech heavy NASDAQ has been driven to new highs on what we believe is a “capital migration” from local and foreign sources into the stability of the US markets.  Almost like the Dot Com bubble, investors are piling into the tech stocks with the belief that these companies will continue to generate billions in revenues and branch out into other enterprises to drive innovation and growth. I talked about this last week “The Fourth Industrial Revolution, which will be referred to as: Tech Hypergrowth

  

One point of interest is that we have recently reached a Fibonacci 1.272 expansion level that will likely prompt a bit of price consolidation/rotation.  This level is substantial enough to prompt some level of concern for price rotation, but not enough concern (yet) to warrant panic.  Remember, the VIX will tell us when to panic and that will be when it breaks the flag channel and the majors drive lower in correlation with the VIX.

This 1.272 level is cause for “tightening and revaluing open positions”.  It means we should be aware that price may attempt a contraction period at this level before attempting to resume trending.  One thing to always keep in mind is that price is always seeking new highs or new lows.  One way or another, it will get to one of those objectives.

 Additionally, the clear price channel (red levels) on the NASDAQ chart shows us normal price boundaries.  A short period of price contraction here would, potentially, allow for resumption of the bullish trend and allow for an additional 2~4% bullish run.

 Nasdaq Daily

Nasdaq Weekly

Metals are the other symbols we pay close attention to in regards to trending, correlation to the majors and to determine overall fear/greed factors within the markets.  Pay close attention to Gold and Silver over the next few months.  Gold has recently broken out of a SIX YEAR downward price channel temporarily last week and may attempt a move higher on global uncertainty.  News from Europe, China and South America are concerning for the markets in general.  Defaults, bankruptcies and “bail-ins” are the standard practice for these types of events.  No reason to panic in regards to these events (yet) as they are fringe events – smaller, localized and isolated.  Still, the metals markets will react to these concerns by factoring in the fear/greed levels globally.

Gold is also setting up a massive Flag Formation originating from December 2015.  This formation tells us that potential upside targets, should a metals breakout/run happen, would be $1457, $1547 & $1788.  We’ll keep you informed of opportunities as they play out with the metals.
 Gold Futures

 Do you find this analysis helpful and insightful?  Want more of it and my trades?  Consider joining ActiveTradingPartners.com where our analysts and researchers are hard at work finding the best possible opportunities for you every day and deliver this high-quality research to your phone, PC/laptop or another device instantly.  Our objective is to make you a better trader and help you become more successful – take a look at some of our recent trades.

Recent Winners

The markets are complex and sometimes it helps to have a team of dedicated professionals providing you with opportunities and advanced research to assist in making better decisions.  ActiveTradingPartners.com is that team and we welcome you to join our exclusive membership partners.  Want to know when the next opportunity hits, our members will be alerted the instant we identify new opportunities for success – join www.ActiveTradingPartners.com today.

 Chris Vermeulen






June 7, 2017

Gary Savage​ 
Author of

Smart Money Tracker
A financial blog with an emphasis on the secular gold bull market.

Today's Chart of the Day - Gold Breakout?

Text: Gold actually broke its bear market trend line last year.

Gold Chart





June 2, 2017

Gary Savage​ 
Author of

Smart Money Tracker
A financial blog with an emphasis on the secular gold bull market.

Today's Chart of the Day - Euro at Major Resistance

Text: Once the Euro cycle tops it will break the trend line. That will also mark the intermediate cycle low in the dollar.

SPX Chart





May 28, 2017

Gary Savage​ 
Author of

Smart Money Tracker
A financial blog with an emphasis on the secular gold bull market.

Today's Chart of the Day - Just as I Predicted...

Text: I’ll tell you when it’s time to buy miners and it’s not time yet. We need to generate some excessive bearish sentiment first. That will come only at the intermediate cycle bottom. And that’s not due until June.

SPX Chart





Credit Downgrades May Prompt Market Capital Shift

Recent news regarding Moody’s credit downgrades in China will likely continue to roil the global markets and present multiple unique opportunities for strategic investors.  As debt concerns grow throughout some areas of Asia and new US policy efforts shake up some common perceptions, a shift in capital is likely to occur over the next few months.

 

Today, I read about massive layoffs in India’s technology sector as a reaction to decreasing engagement of foreign IT services/support is a result of President Trump’s policies.  When we take this news in combination with Moody’s credit downgrades for China and the fact that almost all of South East Asia is interconnected in terms of economy and trade, we begin to see a picture that is fairly clear in terms of transitional economic shifts.

 

If India and a portion of South East Asia suffer a technology driven economic contraction as a result of US policy shifts, how can we evaluate the approximately $900+ billion economic shift that may be unfolding.  As this unfolds, unemployment, consumer spending and growth rates will differ vastly from projected levels.  A minor 2~3% decrease in business activity for the Asian technology sector may have  massive results if it persists over a longer term period of time (say 3~7+ years).  This is exactly why we, as investors, need to be aware of these economic shifts and be able to profit from these moves.

 

SIII (Indian Index)

The SIII has already rotated nearly 2% over the past two months from a near perfect Double-Top.  The potential for a 10~20% market correction is rather strong knowing that massive layoffs in India will put further pressure on economic growth, consumer spending and economic outlook.

SIII Weekly

 

HSI (HangSeng Index)

The HSI is not showing signs of any market corrections yet.  This is likely due to the fact that China is currently experiencing a technology/stock market bubble effect as a result of recent wealth creation.  I would expect that any extended contraction in the bulk of South East Asia will also be seen and felt in China.

HSI Weekly

 

Custom BRICs Index

A custom BRICs Index shows a more defined price rotation and a clear series of lower high and lower low price trends.  This would indicate that that the BRICs economies may have quite a large range of price volatility going forward with a potential for a 20~30% decline over the next few months. (

BRICS Weekly

 

US/EU Custom Index

As this potential economic shift plays out, I suspect the US and European market will see a dramatic influx of capital investment and renewed economic activity.  This chart of a custom index of US and EU indexes clearly shows the strength of these markets in relation to the economic shift that has been transacting.  It is clear to see that shortly after the US Presidential elections (Nov 8th, 2017), this index has shot up 15%+ and has begun to retest 2015 highs. Could this be a massive double top to form later this year? It’s very possible.

EU Daily

 

Watch for this economic shift to continue to play out over the next 6~12+ months and watch for unique opportunities that will be presented by these moves. We alert our clients to these types of opportunities every day at ActiveTradingPartners.com and attempt to keep our members aware of strong trading signals using our proprietary Momentum Reversal Method trading system.

TRADES THIS MONTH:

ERY 4.75%, in 2 Days

SLV 3.2%, in 6 Days

MOBL 15%, in 7 Days

FOLD 9.5% in 40 Days

We invite anyone interested in this type of opportunity to visit our website to learn more

www.ActiveTradingPartners.com






May 25, 2017

Gary Savage​ 
Author of

Smart Money Tracker
A financial blog with an emphasis on the secular gold bull market.

Today's Chart of the Day - Boring Summer for Stocks

Text: "I predict it’s going to be a boring summer for stocks. Price will just churn sideways for the next 2-3 months and allow the long term averages time to 'catch up'".

Nasdaq Chart






May 21, 2017

STOCK MARKET FORECAST AND FEAR TRADING

The broad US stock market last week took a tumble sending a massive wave of fear through investors’ minds. On Wednesday May 17th the S&P 500 index plummeted 1.7% causing the fear index to jump a whopping 48% in a single session.

What does this mean and what should we expect going forward? I don’t see the recent drop as being anything to worry about at this point. It’s important to remember that some of that larges drops in stocks happen during a bull market (rising trend). In fact, these stand out sharp drops on the charts are nothing more than the market trying to buck investors out of the bull market (scare them out) before it continues higher.

 

The Market Trend Forecast Prediction

Look at the chart below courtesy of TMTF website. This chart was originally posted back in April with two potential price paths for the SP500 to reach the next price target of 2500. The overall forecast points to higher prices this summer with the potential of a major top forming late July or August.

I should caution that I believe there is potential for another washout low with the SPX dropping to the 2300 level still to reach that Elliott Wave level. Even if this level is hit, the overall market trend will remain bullish and would be fully rejuvenated for the next big leg higher.

SPX Chart

 

Fade the Fear – Swing Trading Fear

Let’s face it, we all know the feeling of when so one jumps out and scares us. The surge of blood pressure, adrenaline, and how our body jolts into action is a natural human response.

Fear among investors is almost identical when there is a sharp drop in price. Other than the fact that investors don’t typically scream, put up their fists and/or run away, instead they hit the SELL button to close out losing position in order to remove the fear/pain of further losses.

Typically, most traders panic out of positions at the same time (within a few trading days) and this sentiment shift can be seen as a price spike on the VIX chart.

Below you will see a chart and recent trades executed based on a strategy I have been testing for some time and recently started trading live. It is based around the fact that fear/panic is very short lived and fades away quickly. It is also based on the fact that leveraged VIX ETFs also fall in value over time because of how they have been designed. This allows us to short the long leveraged VIX ETF adding further potential gains to a falling VIX price.

VIX _ ATN

 

Momentum Trade Extreme Panic & Greed

The two previous charts above were based on daily charts of the markets. This portion shows you the potential turning points and trade setups each week based on the 30-minute intraday chart. Some weeks can provide multiple trade setups if property identified.

The below chart is the SP500 continuous contract futures chart which I created and use for identifying turning points and trades in the broad market using SPY, SSO, SDS, or ES Mini Futures. This chart and its analysis also helps me identify when the VIX (Fear index) should be topping or bottoming as well.

Obviously, these moves are small and quick only lasting a day or two. But keep in mind if you have high probability trade setups and apply leverage like ES mini futures one can profit handsomely from small but frequent moves like this ranging between $250 – $1500 profit.

Panic Selling

 

In Conclusion:

In short, the longer-term trend for US equities remains up (bullish). Based on the short-term 30-minute chart above stocks are a little overbought so a small pullback or pause is likely. While this week is a full trading week, it is going into a holiday weekend which typically favors higher stock prices by the closing bell on Friday.

In my next article, I plan to share with you what gold, silver, and miners are setting up for and it’s likely bigger and in the opposite direction than you think, stay tuned!

Finally, I want to mention that I will be getting back to my roots and passion in terms of article content. The past two years I changed gears to write more about the global economy and news. Recently I realized that I just don’t enjoy writing about these types of thing. Its all doom, gloom, corruption, and ridiculous actions but leaders around the world and not fun to write or read. So, I am thrilled to say that things will be back to how they were: Simple, technical analysis based forecasts and weekly trade setups.

Learn more about my daily price forecasts and turning points video:www.TheGoldAndOilGuy.com

Chris Vermeulen



Dailydart




Dailydart.com Previous, 2017