Why Gold Miners Should Rally as U.S. Equities Fall on Fear

The US Equities markets rotated over 1.35% lower on Monday, June 25, after a very eventful weekend full of news and global political concerns. Much of this fear results from unknowns resulting from Europe, Asia, China, Mexico and the US. Currently, there are so many “contagion factors” at play, we don’t know how all of it will eventually play out in the long run.

Europe is in the midst of a moderate political revolt regarding refugee/immigration issues/costs and political turmoil originating from the European Union leadership. How they resolve these issues will likely be counter to the populist demands from the people of Europe.

Asia is in the midst of a political and economic cycle rotation. Malaysia has recently elected Prime Minister Dr. Mahathir Mohamad, the 92 year old previous prime minister (1981-2003) as a populist revolt against the Najib Razak administration. In the process, Mahathir has opened new and old corruption and legal issues while attempting to clean up the corruption and nepotism that has run rampant in Malaysia. Most recently, Mahathir has begun to question the established relationship with Singapore and the high speed rail system that was proposed to link the two countries.

China is experiencing a host of issues at the moment. Trade concerns, capital market concerns, corporate debt concerns and an overall economic downturn cycle that started near the beginning of 2018. What will it take to push China over the edge in terms of a credit/consumer market crash is anyone’s guess? Our assumption is that continued inward and outward pressures will not abate quickly – so more unknowns exist.

Mexico will have new Presidential elections on July 1, 2018. What hangs in the balance of this election cycle is just about everything in terms of North American economic cooperation and future success. It is being reported that a populist “anti-neoliberal” movement is well underway in Mexico and the newly elected leader may begin a broader pushback against President Trump regarding NAFTA, immigration, US corporations operating in Mexico and more. We won’t know the full outcome of this election till well after July 2018.

Meanwhile, back in the USA, our political leaders in Congress and the House of Representatives seem hell bent on opposing everything President Trump and many Americans seem to want – clean up the mess in our government and get a handle on the pressing issues before us. The U.S. has a growing and robust economy. The last thing anyone wants right now is anything to disrupt this growth. Yet, it seems the political divide in the U.S. is so strong that it may take some crisis event to push any resolution forward.

What does this mean for investors and traders? Fear typically appears in one place before it appears anywhere else – the Metals markets (Gold, Silver, Platinum, and Palladium). This Daily Gold Chart shows our predictive cycle analysis pointing to a near term bottom formation as well as a strong likelihood of immediate upside price action. These cycles do not represent price levels. So the cycle peak does not represent where price will go – it simply indicates future cycle trends and direction.

Given this information, it is very likely that Gold will recover to near 1320 within the next couple weeks and possibly push higher on global concerns. For traders, this means we are sitting near an ultimate bottom in the metals and this could be an excellent buying opportunity.

The Gold Miners ETF shows a similar cycle pattern but notice how prices in the Miners ETF have diverged from the Gold chart, above, by not resorting to a new price low as deep as seen above. This could be interpreted as the Gold market reacting to global concerns in an exaggerated way while the miners ETF is showing a more muted reaction. Additionally, notice how the ADL cycle analysis is pointing to similar price peaks in the future with near term bottoms forming. This is key to understanding what we should be expecting over the next few weeks in Gold.

Our interpretation is that the global fear will manifest as a renewed upside trend in Gold and Gold Miners over the next few weeks with the potential for a 5 to 8% rally in Gold. The long term upside is incredible for these trades but that is if you look years into the future.

As these fear components and unknowns continue to evolve, the metals markets should find support and push higher as fear continues to manifest and global markets continue to weaken.

As we have been stating since the beginning of this year, 2018 is setting up to be a trader’s dream. Bigger volatility. Bigger swings. Bigger profits if you are on the right side of these moves. Our proprietary predictive modeling systems and price analysis tools help us to stay ahead of the markets.

We help our members understand the risks and navigate the future trends by issuing research posts, providing Daily video analysis complete with cycle projections and by delivering clear trading signals that assist all of our members in finding profits each year. We are showing you one of our proprietary tools right now, our ADL Predictive Cycle tool and what we believe will be the start of a potential upside move in the metals markets.

 Get ready for some great trading over the next few months!

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Natural Gas Setup for 32% Move Using UGAZ Fund

As we all know a picture says 1000 words, which is one of the reasons why I gravitated to trading using technical analysis. I can look at a chart and in seconds understand what price has done and is likely to do in the near future, without knowing a single thing about the company, index, or commodity. Why spend time reading news, financial statements, and other opinions when you can fast track the entire process with a chart.

So, let’s just jump into the 30 minute chart of natural gas which shows the regular trading hours 9:30am – 4pm ET.

Natural Gas 30 Minute Chart with Oversold and Trend Analysis

This chart could not be any more simple. Green bars and green line mean price is in an uptrend and you should only look to buy oversold dips. We got long a 3x natural gas ETN on May 3rd right near the dead low. After a few weeks, price action and longer term charts started to signal potential weakness, so we closed out the position for a simple 32% profit.

UGAZ 3X Leveraged Natural Gas Fund

Here is 240 minute (4 hour) candlestick chart of the natural gas fund.

53 years experience in researching and trading makes analyzing the complex and ever changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text.

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See you in the markets!
Chris Vermeulen

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Here’s Why We See the G7, Central Banks and U.S. Fed Will Drive Stock Prices this Week

After last weeks closing bell for stocks and the early signs of the Capital Market Shift which we mentioned previously was taking place are now clearly evident. We wanted to alert all of our followers that this week could be very dramatic with a number of key events playing into global expectations.

Our research team at Technical Traders Ltd. have been combing through the charts trying to find hints of what may happen and what to expect in terms of price volatility next week. We know our ADL price modeling system is telling us that certain price weakness will continue in certain sectors and strength in others – but we are searching for the next opportunities for great trades.

One of the key elements of the G7 meeting is the continued communication regarding global participation in key infrastructure projects and national cooperation in regards to economic stability.

Over the past 8+ years, the bulk of the global recovery has been based on the US economic stability and recovery. US interest rates allowed for a global “carry trade” that supported a large component of the economic bias in foreign countries. Additionally, the deeply discounted U.S. bonds provided a “fire sale” opportunity for many countries to secure U.S. Treasuries at a time when global central banks were printing cash to support failing economies. Overall, the economic conditions from 2009 to 2015 were such that every opportunity was provided to the global markets to make it easier to attempt a proper recovery.

Some nations were able to capitalize on this environment while others squandered the opportunity to create future growth, capabilities and new opportunities for success. Given the current global market environment, we expect some harsh comments to come from the G7 meeting as well as some wishful thinking comments. Overall, we believe the outcome of the G7 meeting will become a defining moment for the remainder of the year in terms of global economic expectations and forward intent. It will certainly be interesting to see how these leaders decide to operate within the constructs of the ever changing global market liabilities to say the least.

Right now, a lot of concern has been directed towards the Emerging Markets and what appears to be a near term market collapse. Debt spreads and global indexes have been moving in a pattern that clearly illustrates the Central Banks problems in containing the diverse economic conditions throughout the globe. Infrastructure projects, social/political shifts and currency valuations are complicating matters by creating extended pressures in many global economies recently. All of this centers around the strength of the U.S. economy and the US dollar as related to expectations and valuations of other foreign economies and currencies.

Almost like a double edged sword, as the U.S. economy/dollar continues to strengthen, foreign capital will migrate into these US assets because of the inherent protection and gains provided by the strength and growth of these markets. While at the same time, the exodus of capital from these foreign markets create a vacuum of value/capability that results in a continued decline in asset valuations and more.

Almost like the 1994 Asian Currency Crisis, the more the US economy strengthens, the more pressures the global markets feel as valuations and assets become more risky to investors. As investors flee this risk, they search for safe returns and value that is found in the US economy/Dollar – driving US equities higher and strengthening the US Dollar. It is a cycle that will likely continue until some equilibrium point is reached in the future.

The US markets are on a terror rally because global capital is searching and seeking the greatest returns possible – and the only place on the planet, right now, that is offering this type of return is the US economy and the US equities market. Our recent research shows that the NASDAQ indexes may stall and rotate over the next few months as price valuations have accelerated quite far and because the blue chips are relatively undervalued at the moment. This means, capital will likely continue to pour into the S&P and DOW heavyweights as this capital shift continues to play out.

The G7 meeting, in Toronto, this week will likely present some interesting outcomes. Early talk is that the G6 nations (minus the US) may enact some deal that they believe would be suitable for these nations going forward. Our concern is not the deal or the threat of these nations trying to engage in some deal without the US – far from it. Our concern is that their wishes may be grandiose and ill timed given these currency and valuation issues.

Imagine, for a second, the G6 nations engage in some grand scheme to engage in something to spite the USA. Some plan that seems big and bold and over the top. Yet, 5 months from now, debt issues plague these nations, currency valuations have destroyed any advantage they may have perceived they had and the member nations are beginning to feel the pressures of their own entrapment. What then? The USA to the rescue....again?

Recently, Ben Bernanke, a Senior Fellow at The Brookings Institute, warned that Donald Trump’s economy was like a Wile E. Coyote going over a cliff. Everything seems well and fine till the road ends and the cliff begins. I would like to remind all of our readers that The Brookings Institute does not have a stellar record of predicting much of anything over the past 10+ years. Take a look at this graph showing the economic expectations and predictions from The Brookings Institute over the past decade or so. Do these people seem capable of accurately predicting anything regarding the U.S. or global economy?

Now, ignoring all of the what if scenarios that are being presented by different people. The bottom line is that the next 6+ months are going to be very exciting for traders and investors. There are huge issues that are unfolding in the global economy right now. Currency levels are about to be shaken even further and the G6 nations, by the time they complete their high priced dinners and evening events, will walk out of the G7 meeting staring down a greater global debt/currency/economic beast of their own creation.

SE Asia is in the process or rewriting and resolving issues of the past 10+ years (see Malaysia / Singapore).

China is in the midst of a massive debt cycle that is about to play out over the next 18+ months (totaling about 1.8 Trillion Yuan).

The Brasil Bovespa Index has rotated into new BEARISH territory.

The Mexican iShares (EWW) ETF is about to break multi-year lows.

The Hang Seng Index is setting up a possible topping pattern that could break down given state and corporate debt concerns.

The iShares Turkey (EURONEXT) index has already broken to new multi-year lows.

The G6 better have some rabbits in their hats that they can magically transform into big bullish projects over the next 12 months or the economic functions that are at play in the world already are likely to steamroll over the top of any news that originates from the G7 meeting.

The U.S. markets are setup for a continued bullish rally with a bit of Summer capital shifts. Our recent research called the rotation out of the tech heavy NASDAQ and a renewed capital shift into the S&P and the DOW leaders. This rotation is likely to continue for many weeks or months as global investors realize the earnings capabilities and dividends values within the U.S. blue chips are of far greater long term value than the risks associated with technology and bio-tech firms. Because of this, we believe the S&P and DOW/Transports are setting up for a massive price rally to break recent all time market highs.

Here is a Daily chart of the YM futures contract showing the recent price breakout and rally. Our expectation is that 26,000 will be breached within 30 days or so and that a large capital shift will drive a continued advance through the end of 2018 – possibly further.

Here is a Daily $TRANS chart showing a similar bullish move. Although the Transportation Index has not broken to new highs yet, we believe this upside move is just beginning and we believe the continued improvements in the US economy will drive the Transportation index to near 11,450 or higher before the end of this year.

Our opinion continues to support the hypothesis that the US markets are the only game on the planet (at the moment) and that a great capital shift is underway in terms of investment in, purchases of and generally opportunistic investment opportunities for US equities and markets going forward. Until something changes where the US dollar strength, foreign economic weakness and foreign debt cycles are abated or resolved, we believe the great capital shift that we have been warning of will continue which will put continued pressures on certain foreign markets and expand debt burdens of at risk nations over time.

Smart traders will be able to identify these opportunities and capitalize on them. They will see this shift taking place and take advantage of the opportunities that arise for quick and easy profits. If you like our research and our understanding of the global markets, be sure to join our premium research and Trade Alert Wealth Building Newsletter. Our valued members stay with us because we have continually proven to be ahead of nearly every market move this year – in many cases many months ahead of the global markets. So, with all of this playing out over the next 6+ months, we suggest you consider joining The Technical Traders to learn how we can help to keep you out of trouble and ahead of the markets for greater success.

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These Three Key Elements Will Drive Stocks Higher Into Year End

Last week was a roller coaster ride for traders and investors. After a long holiday weekend, traders were greeted with concerns originating in Italy regarding political stability and the potential that any further issues could result in a collapse of the EU. Even though the risk of this happening was somewhat minor, the US markets tanked near 2% as fear seemed to override common sense. The rest of this week has been a wild ride of price rotation within a range. We’ve been reading all types of news and comments regarding all types of “what if” scenarios from analysts and researchers while scratching our heads at some of the comments.

As we stated in our earlier article regarding the Italy political crisis [read it here], the one important aspect to trading and investing is to not lose focus on the true perspective and true market fundamentals. Yes, if you are an intraday trader, these wild price swings can either be great profits or wild losses as you try to swing with these rotational moves. As a swing traders/investor, though, we care about the overall stability and direction of the markets. We are willing to ride out some rotation as long as our core analysis is sound and the technical and fundamental basis of our trades is still in place.

In our opinion, there are three things that are core elements of our analysis at the moment and these three things are likely driving the economic future of the US equity markets.

The US Dollar continues to strengthen as the US economy shows solid signs of a broad based economic increase. Oil/Energy prices have continued to decline recently, now down nearly 10% from the recent peak, and this decrease relates to supply and demand expectations throughout the end of this year (roughly 4 - 6 months into the future). The Transportation Index is pushing higher as stronger economic activity is expected throughout the rest of 2018 and into 2019.

These Three Key Elements Cross-Populate as Follows

1.  The strong US dollar is acting like a magnet for foreign capital investment as the strength of the US dollar in combination with the strength of the US economy/equities markets creates a triple-whammy for foreign capital investments. Not only are foreign investors trying to avoid capital devaluation (currency price devaluation) and debt risks in their own local markets, they are trying to find ways to achieve ROI and stability for their capital investments. With almost nowhere else to go, the US equities markets and debt markets are pretty much the only place on the planet for this triple-whammy opportunity.

2.  The strong US jobs numbers and robust economic activity, in combination with the past capital market stimulus and lowered interest rates, are creating a fuel heavy economic environment in the US not that President Trump’s deregulation and policies have injected the Oxygen needed to create the “economic combustion” that is driving this current growth. Energy prices are moderate and dropping as a result of the shift in technologies attributed to electric and hybrid transportation enterprises. All of this, jobs growth, earning growth, economic growth, moderately low interest rates and a true combusting economy, provides for much greater opportunities for an advancing US equities market.

3.  The US equities markets are rotating higher throughout the global weakness and debt concerns while the Transportation index pushes higher as a sign that US investors expect the US economy to continue to grow. Transportations lead the us equities markets by about 4 to 6 months (on average). Lower oil prices, strong jobs numbers, dynamic opportunities in the US economy and a stronger US dollar drive continued US and foreign investments into the US equities markets and debt markets.

As we have stated in earlier research posts regarding “capital migration”, capital (cash) is always seeking the best environments for stability, growth and opportunity in a continual effort to balance risk vs. reward. Capital is capable of moving across the planet relatively quickly in most cases and is always seeking the best opportunity for ROI and stability while trying to balance unknown risks and devaluation. Right now, the only games in town are the established economies, the US, Canadian and UK markets.

As you can see in the graph below US investments continue to grow as the best risk/reward for capital.

Our opinion is that until something dramatic changes this current global economic environment and risk unknown, capital will continue to rush into the US markets even if the US dollar continues to climb or oil continues to fall. The only thing that can change this equation is the one key factor in understanding risk vs. reward – when does the opportunity for reward outweigh the risk of complete failure by applying capital into any other foreign or non-established market environment? When investors believe the reward of moving capital out of the US equity markets in search of new opportunities or advantageous risk/reward setups in foreign markets exists, that is when we’ll see a change in investment dynamics resulting in more downside pricing pressure in the US markets – and we don’t believe that will happen within the immediate 4~6+ month span.

Pay attention to our most recent research as we have been dead-on in terms of calling these market swings. The NQ chart, below, shows how the tech heavy NASDAQ is leading the breakout while the YM and ES markets lag a bit. We believe all of these US majors are in the process of breaking to new all time price highs and as the foreign market turmoil slowly unfolds, we may see some moderate price rotation. Yet we believe the global economic dynamics that are currently in place create a very opportunistic, rich, green opportunity for continued capital infusion into the US equity markets and a continued moderate advance of the US Dollar.

Remember, there is now over $12 trillion in capital that has been created and introduced into the global markets over the past 10+ years. All of this capital is searching for projects and investments to develop suitable ROI and gains. Where do you think this capital is going to go for the most stable, most capable and most successful ROI available on the planet? Think about that for a minute – where else would you consider putting capital to invest for safe and consistent returns right now?

This weekend could prompt a massive upside price breakout early next week on continued positive economic news or lack of any foreign market concerns. The bias of the US equity market is, and has been, bullish – just as we have been telling our members. If you have been fooled by this recent price rotation or other research posts, please consider Technical Traders Ltd. services to learn how we can help you profit from these moves.

We know you value our research and hard work trying to keep you ahead of these market turns and swings. Please consider joining our other loyal members where you’ll receive exclusive updates, video content, trading signals and access to our proprietary price modeling systems and proprietary research reports. Our proprietary research is already showing us where this market should be trading well into July 2019. If you value our research, analysis and detailed reporting like this article, then please visit The Technical Traders to learn how you can join our other members and begin receiving our exclusive research and more.

See you in the markets!
Chris Vermeulen

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