Showing posts with label charts. Show all posts
Showing posts with label charts. Show all posts

Thursday, January 2, 2020

ADL Gold Prediction Confirms Our Targets

The Gold rally we predicted to happen in late 2018 took place, almost perfectly, based on our ADL predictive modeling systems results. This rally took place in May through September 2019 and pushed Gold up to levels near $1600. The rest of the year, Gold consolidated near $1500 as a strong US Stock Market rally took hold in Q4 of 2019.

Our original prediction was that Gold would rally to levels near $1750 before the end of 2019 based on our Adaptive Dynamic Learning predictive modeling system (ADL). This did not happen in 2019 as out ADL modeling systems suggested, but it appears Gold is setting up for another massive upside rally in 2020.

Taking a look at our ADL predictive modeling systems on Monthly charts for Gold and Silver, we see two very interesting suggestions setting up :

  • First, Gold may attempt a rally to a level above $1700 before March/April 2020 and potentially extend this rally to well above $1850 by August/September 2020.
  • Second, Silver appears to lag behind this Gold rally by about 7 to 8 months. Silver does not appear to want to start a rally until well after July or August 2020.

If we consider what happened in 2008/09 with the global credit market crisis, both Gold and Silver contracted lower near the start of this crisis (in late 2008). Eventually, Gold began to move higher in August/September 2009 (well into the crisis event). Silver didn’t really start to accelerate higher will August 2010 – a full 12 months after the Gold rally started.

Our ADL system is suggesting that the Silver rally will lag behind the gold rally by about 10 to 14 months given the ADL predictions for price activity in 2020. Thus, Gold may continue to rally much higher fairly early in 2020, yet we won’t see much upside movement in Silver till after July 2020.

Monthly Gold ADL Chart

This first Monthly Gold ADL chart highlights the ADL predictive modeling systems suggestion related to future price targets. We can see the upside move in Gold should begin with an upside target near $1600-1625 over the next 60+ days. After that, the rally should accelerate higher in April/May 2020 with another move higher towards $1700-1725. By August/September 2020, Gold should attempt a rally to levels above $1800-1850 and then begin to consolidate above $1800 for a few months.



Silver Monthly ADL Chart

This Silver Monthly ADL chart suggests that Metals will react very similar in 2020 to what happened in 2008-09. While Gold began to rally in August 2009, Silver did not begin to accelerate higher till August/September 2010. This delay in the understanding that Silver presents valid protection against risk may take place in this current upside rally in Gold. If the ADL predictions are accurate, then Silver will continue to provide buying opportunities for many months near $17.50-$18.00 before a major upside price advance begin.

By July 2020, Our ADL predictive modeling system is suggesting Silver will advance to levels above $18.25, then begin a major price advance to levels above $19-20 fairly quickly. Please keep in mind the scope of these predictions related to the global markets and the U.S. Presidential elections. We read into this that a lot of chaos/turmoil may be taking place in the US/World after June/July 2020.



Weekly Gold Chart

This last chart is a Weekly Gold chart highlighting our Fibonacci Price Amplitude Arcs and the major resistance level that has just been broken in Gold. The heavy GREEN arc and the BLACKLINE that we’ve drawn on this chart represent massive resistance originating from the lows near August 2018 in Gold. We believe this resistance level, once broken, will prompt a major upside price move in Gold to levels closer to or above $1700. If this price advance in Gold aligns well with our ADL predictions, then we believe fear will continue to drive future a future price advance in Gold and that fear may be related to continued Global stock market concerns and the U.S. elections.



2020 may be a very good year for precious metals traders who are able to identify solid entry trades for these moves. If our ADL predictions are accurate, Gold should rally over 25% before the end of 2020. Silver may rally as much as 15% before the end of 2020. The timing of these moves suggests Gold traders will have opportunities for bigger price advanced early in 2020 and will begin a larger upside price move after February/March 2020. Silver will begin an upside price move after basing near the March/April 2020.

2020 is going to be a fantastic year for skilled technical traders. Join us and our valued members in finding great trades and incredible opportunities in the markets by joining The Technical Traders.

Chris Vermeulen
The Technical Traders Ltd.


Stock & ETF Trading Signals

Tuesday, September 24, 2019

Is Silver About to Become the Super Hero of Precious Metals?

If you’ve been following our research, you already know how accurately we’ve been nailing the precious metals price moves. We’ve been calling Gold and Silver accurately since early 2018 and continue to focus a good portion of our efforts in studying these incredible setups. Let’s have a little fun and start with two charts from near July 20, 2019, to help our followers understand what we’ve been expecting, but first, be sure to opt-in to our free market research newsletter.

This first Monthly Silver chart highlights what we believed would be the approximate wave structure of the silver price advance going forward. We did not attempt to accurately time these peaks of valleys, we simply used our Fibonacci Price Amplitude Arcs to allow price to tell us where these peaks may form. From those levels, we used our best “guess” to identify the trough bottoms.

You can see a “Started Here” line near the bottom of this chart. This highlights where we created this chart and where the price was when we first posted it in our research (near $16.39). As of today, the price of Silver is near $18.75 and climbing. We’ve drawn in the missing data on this chart and highlighted the endpoint with a “NOW Here!” message. Once the price of silver breaks above that BLUE Fibonacci Price Amplitude Arc, it should rally up to $23 to $25 before finding new resistance.



SILVER WEEKLY CHART

This next Silver Weekly chart was shared with our members near July 25, 2019. Pay very close attention to the arrows we drew on the chart at that time. Guess what the price of Silver actually did after this chart was shared with our readers? Yup, Silver shot up to $19.75 in early September, rotated back to the $17.50 level near the middle of September, and is starting a new rally towards the $23 to $25+ level right now. Does that look familiar to you on this chart (below)?



If this seems amazing to you because we were able to see these moves so accurately into the future and had such a keen insight into the future metals price rotation – don’t be alarmed. Our proprietary research tools are second to none. Our team of researchers have more than 54 years of experience in the markets and have studied almost all types of price theory, technical analysis, and other types of market price, technical, and fundamental analysis techniques. We put our skills to the test every day in order to help our clients find and execute the best trades. If you want to see more of our trading indicators and tools click here.

WHAT NEXT?

What next? Well, the charts above actually show you what’s next. The new charts, below, highlight new charts and new triggers that we believe will drive the current rally in Silver even higher.

Take notice of the HEAVY MAGENTA Fibonacci Price Amplitude Arc. The reason we highlight this MAGENTA level and the GREEN level in heavier line drawn is because these levels tend to become the major price inflection points within the arcs. In other words, these levels are where the price will either stall/reverse or breakout of a trend and possibly explode into a bigger price trend. The current Magenta line has just been crossed and the price is already exploding to the upside. If this continues as we expect, this Weekly Custom Metals Index could rally another 25% higher – which would put Gold well above $1800 per ounce and Silver well above $24 per ounce.



SILVER DAILY CHART

This last Silver Daily chart is our Silver Cycle chart. It shows that we expect Silver to reach levels above $23 to $25 before early November 2019. That means Silver could rally 20~25% from current levels within the next 30+ days to reach our current upside targets. Are you ready?



If you’ve missed any of our past analysis, please take a minute to visit our site to learn how our team of skilled researchers can help you find and execute better trades. This move in the metals markets is going to be an incredible opportunity. We’ve been alerting our members of this opportunity for months. If you are not prepared for this move and/or want to learn how we can help you, please review our trade signal Wealth Building Newsletter today.

Chris Vermeulen
The Technical Traders

NOTICE : Our free research does not constitute a trade recommendation, or solicitation for our readers to take any action regarding this research. It is provided for educational purposes only. Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed. Visit our website (The Technical Traders) to learn how to take advantage of our members-only research and trading signals.


Stock & ETF Trading Signals

Sunday, June 23, 2019

How to Time Market Tops and Bottoms

On this first full weekend of Summer, we thought we would revisit our June 3, 2019 research post regarding a price pattern we love to trade – the Fibonacci Extension Bounce. This pattern sets up fairly often and the key to understanding this pattern and where these trades present real opportunity is in understanding the price dynamics behind these extensions. There are many instances where a Fibonacci price extension level will fail to promote a price bounce or rebound – and the price will just keep trending higher or lower past the extension level.

You can read our original research post here that clearly shows the bottom and our price targets.

Pay very close attention to the price levels and setups of the charts within that June 3, 2019 post. These setups are based on what we term a “100% Fibonacci Extension” from a previous trend reversal (peak or valley). The concept of this trading pattern is that the initial “impulse” price move sets up the first leg of a move. The retracement price move sets up the entry trigger for the second price leg – the next 100% price leg. The bottom, in this case, of the second 100% price leg sets up the “end of the move” and the potential for a price rotation in the opposite direction (likely resulting in a 38% to 61%+ retracement move).

In both instances of our June 3 calls, Crude Oil and the ES followed through exactly as we predicted.

This first chart of Crude Oil shows how price bottomed near $52 and has recently advanced to levels near $58 after reaching the 100% Fibonacci extension levels. As this move higher extends to levels near the ORANGE moving average line on this chart and/or beyond the $58 to $59 target level we originally drew on our June 3rd charts, we would consider the upside price move “completed” based on our expectations. Yes, these types of trend could extend even further beyond our expectations. But our objective, as skilled traders, is to target and profit from the highest probability objectives – which was the move from $52 to near current price levels.

Follow the MAGENTA lines on these charts to see the Fibonacci Extension Pattern Setup. They are not hard to see on the charts when your eyes are trained to identify them.




This ES Daily chart shows the incredible +230 point rally that took place after our June 3 research post and after the Fibonacci extension pattern completed. It is really hard to miss the opportunity with a move like this. Again, follow the MAGENTA lines on this chart to see the Fibonacci Extension pattern setup.

At this point on the ES chart, the upside price rally has resulted in a 161% (roughly) upside price advance of the previous Fibonacci Extension pattern (last leg). This upside price leg range, 161%, suggests the upside price move should be close to ending soon. There is a possibility that price could advance to levels near 200% of the previous price leg range, but traders would be chasing a 25% further upside advance that may only be a low probability outcome.




Our advice for skilled traders is to pare back existing open long trade positions near these new all-time highs. The price advance appears to have reached levels that suggest the upside advance may be nearing an end point for the US stock markets. After such a big upside price leg, we have to be cautious near these new all-time highs that further price rotation may become a concern.

Oil, on the other hand, could continue to rally because it has only advanced 61% of the last Fibonacci 100% price leg. The global concerns regarding Iran and the US, as well as global economic concerns, could push Oil back up to the $60 to $62 level before reaching a peak.

Over the past 21+ months, we’ve highlighted some of the best tools and techniques we use to find great trading signals. This one technique, the Fibonacci 100% Price Expansion Leg, is just one of the tools we use to find trades and targets for our trade alerts for members.

The more one understands how price works and how the markets operate as a Symphony of price actions, one can find opportunities for great trades almost all the time. Skill and experience make the difference when deciding when to trade and what to trade and that’s what we provide.


We’ve now shown you two different price setups using Fibonacci price theory and the only thing we have to do is wait for a technical price confirmation before finding our entry trade. We’ll see how this plays out over the next few days and weeks. Remember, we are not proposing these as “major price bottoms”. They are “upside pullback trades” (bounces) at this point. A bullish price pullback in a downtrend.




Stock & ETF Trading Signals

Tuesday, June 4, 2019

Fibonacci Support May Signal Bounce in Crude Oil and Equities

We want to take a moment to point out that a Fibonacci 100% price move setup may prompt an upside price swing over the next few days and weeks. Many traders fail to identify this setup and get caught up in the current price trend. This happens because we lose focus on the fact that price always moves in segments or legs – from one peak or trough to another peak or trough. The process of creating these segments or legs is usually structured in these types of Fibonacci price increment, and Fib targets I have personally found to be the most accurate for spotting profit taking and turning points.

We provide two very clear examples of this type of setup and how it has worked in the past. We urge all traders to understand there are many examples of larger Fibonacci price expansion legs throughout history. These examples of the 100% Fibonacci price leg are unique instances of price movement and, after confirmation of a base/reversal, can become very valid trading signals.

This first example is the ES (E-Mini S&P Futures). You can see from this chart the earlier examples of the 100% Fibonacci price legs working in the October 2018 downward price move. The current downward price legs have set up a perfect 100% Fibonacci price expansion leg and we believe support may form near $2732.

We would normally wait for some type of price confirmation that this level is going to act as support – for example, a solid reversal bar or Japanese Candlestick price pattern. After confirmation is achieved, a price rotation equal to 60% to 95% of the last downward price leg can be expected.



This next example shows Crude Oil and the most recent downward two Fibonacci Price Legs. The first resulted in a very quick upside price rotation (highlighted by the green arrow near May 20). The second downside Fibonacci Price Leg just ended near $53.30.

It is our belief that Oil will find support near this $53.30 level and rally back above $56 from these lows. The only thing we are waiting for is some type of technical price confirmation of this bottom setup and we can expect a 4% to 8% upside price swing in Crude Oil.



Over the past 21+ months, we’ve highlighted some of the best tools and techniques we use to find great trading signals. This one technique, the Fibonacci 100% Price Expansion Leg, is just one of the tools we use to find trades and targets for our trade alerts for members.

The more one understands how price works and how the markets operate as a Symphony of price actions, one can find opportunities for great trades almost all the time. Skill and experience make the difference when deciding when to trade and what to trade and that’s what we provide.


We’ve now shown you two different price setups using Fibonacci price theory and the only thing we have to do is wait for a technical price confirmation before finding our entry trade. We’ll see how this plays out over the next few days and weeks. Remember, we are not proposing these as “major price bottoms”. They are “upside pullback trades” (bounces) at this point. A bullish price pullback in a downtrend.





Stock & ETF Trading Signals

Tuesday, August 1, 2017

Could There Be a Reversal Coming to the Major U.S. Markets?

Technically speaking, this week could be very important for the major U.S. equity markets. There is an appearance of a “TOPPING PATTERN” forming. I am now awaiting confirmation by the actions of the equity markets, this week. Expect downward pressure beginning this month of August of 2017.

The Only Chart You Need To See!



There is currently limited upside potential in the SPX relative to potential downside for the months of August, September and the early part of October 2017.

There are signs for the short, intermediate and longer term trends returning for the best six months of trading officially inaugurated in November of 2017! This is the timing framework when ‘The Next Runaway Leg Up In The Stock Market Will Resume.’

In last weeks’ market action as the profit taking rotation out of the high-tech sector rotated into the Dow Industrials, it reflected

a more defensive approach while being invested in “Blue Chips” during which time it achieved a new high. Sector rotation increased especially noticeable in the transports and technology sectors that were leading the markets higher. If they continue lower, more sectors will join the decline. I am expecting a coming pop in the VIX on Aug 4, Aug 23, Sept 11 or 12 and finally Sept 28 or 29. 2017. There was a flight to safety in the Yen as well as a strengthening of the price of Gold, Silver, Bitcoin and WTI Crude Oil.

An Unusual Anomaly

Over the past couple of weeks, there was this unusual Anomaly which occurred, as you can see in the chart below. It now makes me more cautious about our long understanding of “risk interconnectivity”.

How can the equity, gold, silver, crude oil and bitcoin markets ALL go HIGHER together?

Tune in every morning for my video analysis and market forecasts at The Gold & Oil Guy to know where the main ‘asset classes’ are headed tomorrow, this week, and next month.



In short, the major equities trend remains to the upside but its likely to take shape in a slow grinding process with downward pressure starting in August fora couple months.

Be sure to follow my daily pre-market video forecasts and ETF trades by visiting here at The Gold and Oil Guy

Chris Vermeulen


Stock & ETF Trading Signals

Wednesday, March 30, 2016

Believe It or Not, It’s Happening to Gold

Last night as I was going over my charts and running my end of the day analysis the charts jumped out at me with a trade setup and wanted to share my cycle chart for gold with you. The price chart of gold below is exactly what my cycle analysis told us to look for last week WELL ahead of the today’s news and its things play out I as I feel they will then we stand to make some pretty good money as gold falls in value during the month of April.

If you have been following my work for any length of time then you know big price movements in the market like today (Tuesday, March 29th) based around the FED news ARE NOT and SHOULD NOT be of any surprise. In fact, this charts told use about today’s pop 2 weeks ago and we have been waiting for it ever since. The news is simply the best way to get the masses on board with market moves and gets them on the wrong side of the market before it makes a big move in the other direction, most times… not always, though.

Take a look at this chart below. You’ll see two cycle indicators, one pink and one blue. The pink cycle line is a cluster of various cycles blended together which allows us to view the overall market trend of biased looking forward 5 – 30 days. The blue cycle line is a cluster of much shorter time frame cycles in this tells us when we should expect strong moves in the same direction of the pink cycles or counter trend pullbacks within the trend.

One quick point to note with cycle trading is that the height and depth of the cycle does not mean the price will rise or fall to those levels, it simply tells us if the market has an upward or downward bias. The current cycle analysis for gold along with the current price is telling us that today the short term cycle topped which is the blue line and our main trend cycle is already heading lower. The odds favor gold should roll over and make new multi-month Lows in August.
gold-collapse

In short, we have been waiting for gold to have a technical breakdown and to retrace back up into a short term overbought condition. Today Tuesday, March 29 it looks as though we finally have the setup. Over the next 5 to 15 days I expect gold to drop along with silver and gold stocks. There are many ways to play this through inverse exchange traded funds or short selling gold, silver or gold stocks.

This year and 2017 I believe are going to be incredible years for both traders and investors. If treated correctly, it can be a life changing experience financially for some individuals. Join my pre-market video newsletter and start your day with a hot cup of coffee and my market forecast video.

Sign up right here > www.The Gold & Oil Guy.com

Chris Vermeulen


Stock & ETF Trading Signals

Tuesday, October 6, 2015

Recession Watch

By John Mauldin 

“Growth is never by mere chance; it is the result of forces working together.”– J.C. Penney

“Strength and growth come only through continuous effort and struggle.”– Napoleon Hill

“We’re lost, but we’re making good time.”– Yogi Berra

The Yogi Berra quote above, which was brought to my attention this week, seems an apt description of where the markets and the economy are today. Nobody is quite sure where we are or where we’re going, but we all seem to think we’re going to get there soon.

I think it’s pretty much a given that we’re in for a cyclical bear market in the coming quarters. The question is, will it be 1998 or 2001/2007? Will the recovery look V shaped, or will it drag out? Remember, there is always a recovery. But at the same time, there is always a recession out in front of us; and that fact of life is what makes for long and difficult recoveries, not to mention very deep bear markets.

The problem is that our most reliable indicator for a recession is no longer available to us. The Federal Reserve did a study, which has been replicated. They looked at 26 indicators with regard to their reliability in predicting a recession. There was only one that was accurate all the time, and that was an inverted yield curve of a particular length and depth. Interestingly, it worked almost a year in advance. The inverted yield curve indicator worked very well the last two recessions; but now, with the Federal Reserve holding interest rates at the zero bound, it is simply impossible to get a negative yield curve.

Understand, an inverted yield curve does not cause a recession. It is simply an indicator that an economy is under stress. So now we are in an environment where we can look only at “predictive” indicators that are not 100% reliable. Actually, most are not even close. Some indicators have predicted seven out of the last four recessions. Some never trigger at all.

Recession Watch
All that said, looking at data from the last few weeks suggests that we need to be on “recession watch.” Global GDP is clearly slowing down, and the data we are getting from the US suggests that we are going to see a serious falloff in GDP over the next few quarters. I want to look at the recent (very disappointing) employment numbers, earnings forecasts (and some funny accounting), credit spreads, total leverage in the system, and the overall environment where credit, which has been the fuel for growth, is under pressure. The totality of this data says that we have to be on alert for a recession, because a recession will mean a full-blown bear market (down at least 40%), rising unemployment, and (sadly) QE4.

The jobs report on Friday was just ugly. Private payrolls increased by just 118,000, which is about the minimum level needed for unemployment not to rise. Government payrolls added 24,000. There were serious downward revisions to the last two months, as well. August was taken down by 37,000 jobs, and July was reduced by 22,000. The last three months have averaged just 167,000 new jobs compared to 231,000 for the previous three months and 260,000 for the six months prior to that.

My friend David Rosenberg dug a little deeper into the numbers and noted: Adding insult to injury and revealing an even softer underbelly to this report was the contraction in the workweek to 34.5 hours from 34.6 hours in August, which is effectively equivalent to an added 348,000 job losses.

So take the headline number, tack on the downward revisions and the loss of labour input from the decline in the workweek, and the "real" payroll number was [a minus] 265,000. You read that right.

He added: “Have no doubt that if the contours of the job market continue on this recent surprising downward path… [m]arket chatter of QE four by March 2016 is going to be making the rounds.”
While the unemployment rate remained at 5.1%, it did so largely because of a significant drop in the labor participation rate, which is not a good way to enhance employment. Further, the U-6 unemployment number is still a rather depressing 10%. Those are the people who are working part-time but would like full time jobs, as well as discouraged and marginally attached workers. Very few part-time jobs pay enough to finance a middle class lifestyle.

Earnings Recession
Leo Kolivakis of Pension Pulse has a downbeat earnings season preview, aptly titled “A Looming Catastrophe Ahead?

Analysts have been steadily cutting 3Q earnings projections, and those revisions threaten to make some richly priced stocks even more so. Thomson Reuters data shows analysts expect a 3.9% year over year decline in S&P 500 earnings. Expectations are falling for future quarters as well.

These expectations have some strategists talking about an “earnings recession.” Just as an economic recession is two consecutive quarters of falling GDP, an earnings recession is two consecutive quarters of falling corporate profits.

The headwinds are no mystery. China’s weaker import demand is hurting all kinds of companies, especially raw materials and infrastructure suppliers. Caterpillar (CAT) slashed its revenue forecast and announced 10,000 job cuts. That probably isn’t playing well in Peoria. Accompanying the falloff in Chinese demand is an increase in the number of containers coming into the US as the strong dollar allows us to buy more and sell less. Not a particularly useful combination.

I love this quote from a Reuters story: “How can we drive the market higher when all of these signals aren’t showing a lot of prosperity?” said Daniel Morgan, senior portfolio manager at Synovus Trust Company in Atlanta, Georgia, who cited earnings growth as one of the drivers of the market. As we all know, it is every portfolio manager’s job to “drive the market higher.” Daniel evidently wants to do his part.

Sadly, despite our best efforts, the stock market faces an uphill climb. More from Reuters: Even with the recent selloff, stocks are still expensive by some gauges. The S&P 500 Index is selling at roughly 16 times its expected earnings for the next 12 months, lower than this year's peak of 17.8 but higher than the historic mean of about 15. The index would have to drop to about 1,800 to bring valuations back to the long-term range. The S&P 500 closed at 1,931.34 on Friday [Sept 25].

Moreover, forward and trailing price-to-earnings ratios for the S&P 500 are converging, another sign of collapsing growth expectations. The trailing P/E stands at about 16.5, Thomson Reuters data shows. Last year at this time, the forward P/E was also 16 but the trailing was 17.6.

The last period of convergence was in 2009 when earnings were declining following the financial crisis. The Energy sector is the biggest drag on earnings, meaning that we now see analysts everywhere calculating estimates “ex energy.” I suppose this produces useful information, but if we are going to exclude the bottom outlier, shouldn’t we exclude the top outlier as well? Healthcare is carrying much of the earnings burden for S&P 500 stocks, but I have yet to see an ex healthcare or ex energy & healthcare estimate. A funny thing about earnings: they’ve been going up for the past year, even as top line revenue has not. Generally, those go hand in hand. What’s happening?

And for the answer I have a story. A few years ago I made an assumption as to how a new stream of income would be taxed. I made that assumption based on my knowledge of having had similar income in the ’80s and ’90s. It turned out the rules had changed, and I hit the end of the year owing what was for me a rather large sum, as I was also trying to finance and build my new apartment.

I told my tale of woe to my accountant, Darrell Cain, who obviously detected the distress in my voice. He smiled at me and said, “John, I have an elephant bullet.” He reached under the table and pulled out an imaginary elephant bullet. “This is a big bullet. But I only have one of them. Once you use this bullet you can never use it again. If another elephant comes down the road, there will be nothing you can do.”

And yes, there were some one time tax maneuvers that reduced my taxes to a manageable number. But as he said, those were a one time option.

There is no way to prove it, but I think corporate accountants have been using up their elephant bullets this past year, as corporations want to be able to maintain the fiction that earnings are rising, so that price to earnings ratios don’t come under stress and cause stock prices to fall. You can move expenses from quarter to quarter, put off certain spending, recharacterize certain expenses one time, and so on. I deeply suspect we are going to find that some recent corporate earnings have been of the smoke and mirrors type.

Further, as I’ve written in previous letters, earnings forecasts are notoriously trend-following and typically miss the turns. If earnings are beginning to fall – and it appears they are – it is highly likely that earnings estimates will miss to the downside. If we slide into a recession at the same time, they will miss to the downside rather dramatically.

Is GDP Flatlining?
The Commerce Department will release its first estimate for 3Q US GDP on Thursday, Oct. 29. By then we will be in the thick of earnings season and will already know how many companies performed.

In the big picture, income (corporate or individual) can’t grow unless the economy grows. GDP may be a flawed way to measure economic growth, but it is the best tool we have. Blue chip estimates right now are that it ran at near a 2.5% annualized growth rate last quarter. However, the Atlanta Fed has sharply revised their GDP estimate for the third quarter down to under 1%. (See chart below.)

Will economic growth come into harmony with income growth? We know they have to meet eventually. At present, it appears GDP will stay in slow growth mode. That means it probably won’t be able to pull earnings up with it.


High-Yield – Rising Defaults
High yield spreads have been tightening and interest rates have been rising for some time. This is starting to cause some distress in the high yield (otherwise known as junk bond) market. My friend Steve Blumenthal has been following and timing the high yield market for 20 years. He recently wrote the following, which I’m going to blatantly cut and paste as it clearly depicts the level of distress in the high yield market.

If credit becomes more difficult to get, then growth is going to come under stress as well. I note that corporations that I think of as issuing higher quality debt are paying 10%. Thank you very much. Ten percent interest rates don’t seem to me to be very low.

To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best selling author, and Chairman of Mauldin Economics – please click here.

The article Thoughts from the Frontline: Recession Watch was originally published at mauldineconomics.com.


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Sunday, May 11, 2014

Are Valuations Really Too High?

By John Mauldin


The older I get and the more I research and study, the more convinced I become that one of the more important traits of a good investor or businessman is not simply to come up with the right answer but to be able to ask the right question. The questions we ask often reveal the biases in our thinking, and we are all prone to what behavioral psychologists call confirmation bias: we tend to look for (and thus to see, and to ask about) things that confirm our current thinking.

I try to spend a significant part of my time researching and thinking about things that will tell me why my current belief system is wrong, testing my opinions against the ideas of others, some of whom are genuine outliers.

I have done quite a number of media interviews and question and answer sessions with audiences in the past few months, and one question keeps coming up: “Are valuations too high?” In this week’s letter we’re going to try to look at the various answers (orthodox and not) one could come up with to answer that basic question, and then we’ll look at market conditions in general. This letter may print a little longer as there are going to be a lot of charts.

I am back in Dallas today, getting ready to leave Monday for San Diego and my Strategic Investment Conference. I’m really excited about the array of speakers we have this year. We’re going to share the conference with you in a different way this year. My associate Worth Wray and I are going to do a brief summary of the speakers’ presentations every day and send that out as a short Thoughts from the Frontline for four days running. Plus, for those who are interested in my more immediate reactions, I suggest you follow me on Twitter. There are still a few spots available at the conference, as we have expanded the venue, and if you would like to see who is speaking or maybe decide to show up at the last minute (which you should), just follow this link. Now let’s jump into the letter.

Take It to the Limit

First, let’s examine three ways to look at stock market valuations for the S&P 500. The first is the Shiller P/E ratio, which is a ten year smoothed curve that in theory takes away some of the volatility caused by recessions. If this metric is your standard, I think you would conclude that stocks are expensive and getting close to the danger zone, if not already in it. Only by the standards of the 2000 tech bubble and the year 1929 do you find higher normalized P/E ratios.



But if you look at the 12 month trailing P/E ratio, you could easily conclude that stocks are moderately expensive but not yet in bubble territory.



And yet again, if you look at the 12 month forward P/E ratio, it might be easy to conclude that stocks are fairly, even cheaply priced.



In a Perfect World

Earnings are projected to grow rather significantly. Let’s visit our old friend the S&P 500 Earnings and Estimate Report, produced by Howard Silverblatt (it’s a treasure trove of data, and it opens in Excel here.

I copied and pasted below just the material relevant for our purposes. Basically, you can see that using the consensus estimate for as-reported earnings would result in a relatively low price to earnings ratio of 13.5 at today’s S&P 500 price. If you think valuations will be higher than 13.5 at the end of 2015, then you probably want to be a buyer of stocks. (Again, you data junkies can see far more data in the full report.)



But this interpretation begs a question: How much of 2013 equity returns were due to actual earnings growth and how much were due to people’s being willing to pay more for a dollar’s worth of earnings? Good question. It turns out that the bulk of market growth in 2013 came from multiple expansion in the U.S., Europe, and United Kingdom. Apparently, we think (at least those who are investing in the stock market think) that the good times are going to continue to roll.



The chart above shows the breakdown of 2013 return drivers in global markets, but this next chart, from my friend Rob Arnott, shows that roughly 30% of large cap U.S. equity (S&P 500) returns over the last 30 years have come from multiple expansion; and recently, rising P/E has accounted for the vast majority of stock returns in the face of flat earnings.



The Future of Earnings

What kind of returns can we expect from today’s valuations? There are two ways we can look at it. One way is by looking at expected returns from current valuations, which is how Jeremy Grantham of GMO regularly does it. The following chart shows his projections for the average annual real return over the next seven years.

To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – Please Click Here.



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Saturday, March 15, 2014

Is this Gold's "Best of the Breed" a Golden Rocket!

Gold and gold stocks have be stabilizing for months and have been quietly rising. Many gold stocks are up 30% even 50% in the past three months. The $HUI AMEX Gold Bugs Index is up over 30% from the lows.

If you think you have missed most of the move already you are wrong. The truth is most of the biggest rallies in stocks take place after a basing pattern with 30 -50% or more has formed. This is signaling massive accumulation in gold stocks and its happening right now by the institutions.

So in this exclusive report I want to share one golden rocket stock pick which I feel has huge upside potential “IF” the precious metals market and miners can breakout of this stage 1 pattern it has formed.

One thing that excites me is about precious metals and gold stocks is the fact that we have heard nothing about gold, silver or mining stocks in the media for months… almost like the big institutions have told the media to avoid putting the spot light on it until they accumulate all they can in terms of physical bullion and stock shares.

This is the same for a few other sectors I have been watching build massive stage 1 bases in over the past few months and will be investing and actively trading them also once they break out of the basing stage.


Gold Stock Trading & Investing Success Formula

1. KISS – Keep It Simple Stupid! – Non one likes or follows complicated trading strategies

2. Understand and know how to identify the four market stages – Read My Book: Click Here

3. Know why and how stages must be traded for timing your entry, profit taking and exits.

4. Scan the market for the top performing sectors and focus on stocks/ETFs within those sectors.

5. Review all stocks and funds to meet setup criteria and trade only the best looking charts primed to start a new bull market (low overhead resistance nearby, strong relative strength, strong volume on breakout, 30 week SMA moving up etc..) Get this done for you: Click Here

6. Sit back, watch and monitor position for possible change in the stage, to adjust stops and identify profit taking levels.


Golden Rock Stock Pick

The chart below is top quality gold stock which has all the characteristics of a big winner. Just to be clear, I normally do not mention individual stocks within public reports. I am not compensated in any way to post this report. This is nothing more than my technical outlook on a stock and not investment advice. I do plan on buying some shares of this company this week or next.

Gold Forecast - Gold Stock Picks



Golden Rocket Conclusion:

While it still my be a little early for precious metals to bottom, it looks as though the stage (pardon the pun) has been set for a precious metals bull market to start. As they say, there is always a bull market somewhere… the key is finding it and taking the proper action.

If you want simple, hassle free trading and investing join my newsletter today.

  Just visit The Gold & Oil Guy

Sincerely,

Chris Vermeulen
Founder of Technical Traders Ltd. - Partnership Program

Check out our other "Gold and Crude Oil Trading Ideas"


Wednesday, March 12, 2014

Elliott Wave Theory - Keys to Investor Success

Elliott Wave Theory - Plenty of people will freely offer you advice on how to spend or invest your money. “Buy low and sell high,” they’ll tell you, “that’s really all there is to it!” And while there is a core truth to the statement, the real secret is in knowing how to spot the highs and lows, and thus, when to do your buying and selling. Sadly, that’s the part of the equation that most of the advice givers you’ll run across are content to leave you in the dark about.

The reality is that no matter how many times you are told differently, there is no ‘magic bullet.’ There is no plan, no series of steps you can follow that will, with absolute certainty, bring you wealth. If you happen across anyone who says otherwise, you can rely on the fact that he or she has an agenda, and that at least part of that agenda involves convincing you to open your wallet.

In the place of a surefire way to make profits, what is there? Where can you turn, and what kinds of things should you be looking for?

The answers to those questions aren’t as glamorous sounding as the promises made by those who just want to take your money, but they are much more effective. Things like careful, meticulous research. Market trend analysis. Paying close attention to extrinsic factors that could impact whatever industry you’re planning to invest in, and of course, Elliott wave theory. If you’ve never heard of the Elliott wave, you owe it to yourself to learn more about it.

Postulated by Ralph Nelson Elliott in the late 1930’s, it is essentially a psychological approach to investing that identifies specific stimuli that large groups tend to respond to in the same way. By identifying these stimuli, it then becomes possible to predict which direction the market will likely move, and as he outlined in his book “The Wave Principle,” market prices tend to unfold in specific patterns or ‘waves.’
The fact that many of the most successful Wall Street investors and portfolio managers use this type of trend analysis in their own decision making process should be compelling evidence that you should consider doing the same. No, it’s not perfect, and it is certainly not a guarantee, but it provides a strong framework of probability that, when combined with other research and analysis, can lead to consistently good decisions, and at the end of the day, that’s what investing is all about. Consistently good decision making.

We use Elliott Wave Theory in real time by looking at the larger patterns of the SP 500 index for example. We deploy Fibonacci math analysis to prior up and down legs in the markets to determine where we are in an Elliott Wave pattern.  This helps us decide if to be aggressive when the markets correct, go short the market, or to do nothing for example.  It also prevents us from making panic type decisions, whether that be in chasing a hot stock too higher or selling something too low before a reversal.  We also can use Elliott Wave Theory to help us determine when to be aggressive in selling or buying, on either side of a trade.

For many, its not practical to employ Elliott Wave analysis with individual stocks and trading, but it can be done with experience.  We instead use a combination of big picture views like weekly charts, Wave patterns within those weekly views, and then zoom in to shorter term technical to determine ultimate timing for entry and exit.  This type of big picture view coupled with micro analysis of the charts gives us more clarity and better results.

One of our favorite patterns for example is the “ABC” pattern.  Partially taken from Elliott Wave Theory, we mix in a few of our own ingredients to help with timing entries and exits.  This is where you have an initial massive rally or the “A” wave pattern. Say a stock like TSLA goes from $30 to $180 per share, which it did.  The B wave is what you wait for and using Fibonacci analysis and Elliott Wave Theory we can calculate a good entry point on the B wave correction.  TSLA dropped from $180 to about $ 120, retracing roughly 38% (Fibonacci retracement) of the rally $30 to $180.  The B wave bottomed out as everyone was negative on the stock and sentiment was bearish. That is when you get long for the “C” wave.  The C wave is when the stock regains momentum, good news starts to unfold, and sentiment turns bullish.  We can often calculate the B wave as it relates often to the A wave amplitude.  Example is the TSLA “A” wave was 150 points, so the C wave will be about the same or more.

When TSLA recently ran up to about $270 per share, we were in uber bullish “C” wave mode, and we had run up $150 (Same as the A wave) from $120 to $270.  That is when you know it’s a good time to start peeling off shares. Often though, the C wave will be 150-161% of the  A wave, so TSLA may not have completed it’s run just yet.

Elliott Wave Theory

Knowing when to enter and exit a position whether your time frame is short, intermediate, or longer… can often be identified with good Elliott Wave Theory practices.  Your results and your portfolio will appreciate it, just look at our ATP track record from April 1 2013 to March 3rd 2014 inclusive of all closed out swing positions.  We incorporated Elliott Wave Theory into our stock picking starting last April and you can see the results:

ATP Elliott Wave Trading



Join Us Today And Start Making Real Money Trading - Click Here


Sincerely,

Chris Vermeulen
Founder of Technical Traders Ltd. - Partnership Program


Friday, February 28, 2014

This Might be our Most Important Post EVER!

This has been a big week around here. Our trading partner John Carter has been sharing some game changing videos that have culminated into his wildly popular webinars, "Being the Architect of the Big Trade".

If you haven't seen the videos or the webinar please do that asap after finishing reading this entire article.

Here is John's video from two weeks ago.

And Here is the Replay of John's Webinar, which will only be up until midnight Friday evening February 28th

John sent us this message this morning and I want you to read it, because it could be our most important post ever.


John Carter here......

This may be the most important email I’ve ever sent to you. (Print Now)

In 1984 I read a book about Arnold Schwarzenegger and ever since then he has been one of my idols. Arnold’s dream was to come to America to become rich and famous. He had no idea how he would do this.

Arnold said, “I was a 15 year old farm kid growing up in Austria when I was first inspired by a bodybuilding magazine with a picture of Reg Park on the cover from one of his Hercules movies. My life was never the same. Reg Park became my idol and I could not have picked a better hero to inspire me. Reg went from bodybuilding to the movies. He became a smart and successful businessman, and he was the first person who gave me a glimpse of what my life could someday become if I dreamed big and worked hard.”

The biggest thing he said that stuck with me is, “I read this magazine and there was the whole plan laid out. I had my blueprint to accomplish my dreams.”

When I was 18 and decided that I wanted to become a trader I knew I only needed to find a blueprint for success. Since then I’ve developed and implemented several blueprints for successful trading.

My most important blueprint is for building wealth

Every trader would love to start with a million dollar trading account, but this rarely happens. Today I trade a few seven figure accounts, but 25 years ago I funded my first account with $1,000 (equivalent to about $5,000 today). What I needed and I what I discovered was a blueprint for building wealth.

LAST CHANCE LINK

Did you know most trading strategies taught out there are designed for accounts larger than $25,000 yet they are taught to traders with a $5,000 account as if they will have the same edge as someone with a larger account? This is simply not true.

Most traders start with under $25,000 in their account and those accounts need to utilize specific strategies to build wealth.

How does a trader go about building wealth?

1) You have to start with a goal. I think a reasonable goal with the strategies I’m going to share is to double an account and do it in a year.

2) You need to develop the right money management and trading mindset

3) You have to control your risk through appropriate position sizing

4) You need to have a written trading plan with the strategies you’re going to use and when

5) You need to know where your targets are so you don’t leave money on the table

LAST CHANCE LINK

For the first (and last) time I’m going to share my exact blueprint for wealth building.

The blueprint will include:

1) Step by step, A and B happens you do C blueprint. There will be nothing left to interpretation.

2) How to manage your risk – when to go big, and when not to “piss away your chips.”

3) How to structure your wealth building trades so that even when they don’t work out you still make money

4) The 3 “how to crush it” strategies that were most profitable in 2013

5) Identify the exact levels when a stock will “rip the market makers heads off”

And much more…

My goal with this course is to leave with you the exact blueprint for building wealth like Reg Park gave to Arnold.

Here is what you'll get when you join the Ultimate Options Trading Blueprint and 3 day mentorship:

1) Access to the Saturday course and 3 full days of live trading, analysis, and follow up sessions

2) You Get to Keep Everything - All audio and video will be recorded and you will get the on demand links and DVD. You will be able to download all my notes, the action plan, and PDFs I share with you during the course.

3) Fast Answers to Your Relevant Questions Answered by Henry, Darrell, Brian, Jeff, and myself throughout the course.

4) Homework: Special Bonus - Beginners Guide to Option on demand link

5) Homework: Options 101 Class on demand link

6) How to prepare your mind for the class and success

LAST CHANCE LINK

Here are the answers to some of the biggest questions we've been getting:

Q: I’m new to options should I go to this class?

A: Every journey starts with a single step. As part of the class we have included a few homework assignments that will quickly get you up to speed. I can teach anyone options in 1 hour and that exactly what I do in your options 101 homework assignment.

Q: When is this class?

A: The strategies class will be held Saturday March 1st from 2:00PM – 6:00PM New York time or 1-5 central. The 3 day live trading mentorship is Tuesday, Thursday, and Friday March 4th, 6th, and 7th during market hours with a lunch break midday.

Q: Will the course be RECORDED?

A: YES. Every single second of the 4 day course will be recorded. You will have online access to the recording PLUS you will get a DVD of the entire course in the mail.

Q: I am in the live trading room and I’ve taken most of your other courses will I learn anything new in this course?

A: Yes this course will be chock full of brand-spanking-new, never-before-revealed strategies and setups. If you’re in the live trading room and participated in every course there may be a few things in the class that will overlap, for example, you will already know what a squeeze is. However, the overwhelming majority of this course is material I have never presented on before.

Q: Do I need to be there live to get the most out of the course?

A: No, the course will be recorded and you will get all the information regardless if you attend live or not. The strategies I will teach can be universally applied at any time. As I go through live trading examples, although you will not be able to follow along live, I will be describing in detail what I am looking for in these live trades so when you watch the recording you will have the exact blue print I used determine which trades I got into and why.

Q: What if I have a full time job and I can’t trade intraday?

A: All of the strategies will work on any time frame. This means if you can only do end of day trading you can use daily and weekly charts. I find that people who are able to watch the markets all day end up over trading which is a death sentence for your trading account.

Q: Is there a Members Discount?

A: For a limited time we are making this class available for everyone at the member price because this class is so crucial. After the class is over the price will be raised for non-members.

LAST CHANCE LINK

I believe this will be the best course I've ever done and I’m really excited about presenting this material to you and hearing about your success.

Good Trading,

John

Visit John Carters "Simpler Options and Trading"


Thursday, December 5, 2013

Is it Too Late to Get into this Monster UNG Trade?

Natural gas looks to be breaking out and it has John's attention. With monthly and weekly charts breaking out he is looking at futures contracts having the possibility of easily moving up to the 4.48 level which means there is a lot of options open for us options traders. And if you have been following us this week you know John is on a roll.

John has put together a detailed free video to show us just exactly how to play UNG and natural gas while limiting our risk, just click here to watch "Is it Too Late to Get into this Monster UNG Trade?"


And if you haven't had a chance to see it yet take a few minutes to watch John's wildly popular webinar replay....."Nine Reasons Why You Should Trade Options on ETFs"

See you in the markets, the natural gas markets!

Ray @ The Crude Oil Trader 


Friday, November 29, 2013

Silver, Gold & Miners ETF Trading Strategy – Part II

It’s been over a week since our trading partner Chris Vermeulens last gold & silver report which he took a lot of heat because of his bearish outlook. Last Friday’s closing price has this sector trading precariously close to a major sell off if it’s not already started.

On a percentage bases Chris feels precious metals mining stocks as whole will be selling at a sharp discount in another week or three. ETF funds like the GDX, GDXJ and SIL have the most downside potential. The amount of emails he received from followers of those who have been buying more precious metals and gold stocks as price continues to fall was mind blowing.

Precious metals continued to fall on Monday and Tuesday of this week and selling volume should spike as protective stops will be getting run and the individuals who are underwater with a large percentage of their portfolio in the precious metals sector could start getting margin calls and cause another washout, spike low similar to what we saw in 2008.

Here is Chris' updated ETF Trading Charts with Friday’s closing prices showing technical breakdowns across the board....Read "Silver, Gold & Miners ETF Trading Strategy – Part II"



We are doing it again....This week's FREE webinar, "How to Boost Your Returns With One Secret ETF Strategy"
 


Monday, November 18, 2013

Silver, Gold & Miners About To Sell Off Again

A couple weeks ago I posted these same charts talking about the pending breakout (in either direction) with silver, gold and mining stocks. Fast forwarding to this week its clear this sector continues its struggle to rally. Key support levels are now being tested and if these levels fail prepare for a sharp correction with mining stocks showing the most downside potential of roughly 25% for the GDX ETF trading fund.

Let’s take a quick look at what is going on.

Gold Trading Chart:
The chart of gold shows price being wedge into the apex of the down sloping resistance trend line and the rising support trendline. Gold was trading below this level but has since bounced. But if gold closes the week below this line in the sand the price could start to fall quickly and test the $1200 per ounce within a week or two.

gold18


Silver Trading Chart:
Silver is under performing gold and trading below its support level currently. If silver does not recover by Friday’s closing bell then things could get ugly for a few weeks as investors start to exit their positions. That being said, I need to point out that silver is more of a wild card when using trend lines like this. Both gold and gold miners should be confirming this breakdown in silver if it is the real deal.

silver18


Gold Mining Stocks ETF:
The chart of gold miners I like the most. I like it because it’s pointing to lower prices, roughly 25% lower if the breakdown takes place. Gold mining stocks could be a fantastic long term investment if we see the $17.50 level reached on this GDX etf.

gdx18

Last week I talked about ETF trading strategies and the big picture on gold, silver, miners and bonds. They look to be nearing a major bottom and once they do bottom it should be a great buying opportunity for specific stocks or the entire sector.

The next few weeks are going to be crucial for precious metals and we will keep an eye on them as this bottom unfolds.  

Get more reports like this here: www.Gold & Oil Guy.com

Chris Vermeulen


Get our Gold, Crude Oil & Index ETF Trading Analysis Newsletter


Monday, May 13, 2013

How to Spot & Time Stock Market Tops

Since the middle of April everyone and including their grandmother seems to have been building a short position in the equities market and we know picking tops or bottoms fighting the major underlying trend is risky business but most individuals cannot resist.

The rush one gets trying to pick a major top or bottom is flat out exciting and that is what makes it so darn addicting and irresistible. If you have ever nailed a market top or bottom then you know just how much money can be made. That one big win naturally draws you back to keep doing it much like how a casino works. The chemicals released in the brain during these extremely exciting times are strong enough that even the most focused traders fall victim to breaking rules and trying these type of bets/trades.

So if are going to try to pick a top you better be sure the charts and odds are leaning in your favor as much as possible before starting to build a position.

Below are a few charts with my analysis and thoughts overlaid showing you some of the things I look at when thinking about a counter trend trade like picking a top within a bull market.

Utility Stocks vs SP500 Index Daily Performance Chart:

The SPY and XLU performance chart below clearly shows how the majority of traders move out of the slow moving defensive stocks (utilities – XLU) and starts to put their money into more risky stocks. This helps boost the broad market. I see the same thing in bonds and gold this month which is a sign that a market top is nearing.

That being said when a market tops it is generally a process which takes time. Most traders think tops area one day event but most of the times it takes weeks to unfold as the upward momentum slows and the big smart money players slowly hand off their long positions to the greedy emotion drove traders.

Look at the chart below and notice the first red box during September and October. As you can see it took nearly 6 weeks for that top to form before actually falling off. That same thing could easily happen again this time, though I do feel it will be more violent this time around.

SPYXLU

SPY ETF Trading Chart Shows Instability and Resistance:

Using simple trend line analysis we see the equities market is trading at resistance and sideways or lower prices are more likely in the next week or two.

SPYResistance

Stocks Trading Above 150 Day Moving Average Chart:

This chart because it’s based on a very long term moving average (150sma) is a slow mover and does not work well for timing traded. But with that said it does clearly warn you when stocks are getting a little overpriced and sellers could start at any time.

General rule is not to invest money on the long side when this chart is above the 75% level. Rather wait for a pullback below it.

BarC150

Stocks Trading Above 20 Day Moving Average Chart:

This chart is based on the 20 day moving average which moves quickly. Because it reacts quicker to recent price action it can be a great help in timing an entry point for a market top or bottom. It does not pin point the day/top it does give you a one or two week window of when price should start to correct.

BarC20

How to Spot and Time Stock Market Tops Conclusion:

As we all know or will soon find out, trading is one of the toughest businesses or and one of the most expensive hobbies that one will try to master. Hence the 95-99% failure rate of individuals who try to understand how the market functions, position management, how to control their own emotions and to create/follow a winning strategy.

With over 8000 public traded stocks, exchange traded funds, options, bonds, commodities, futures, forex, currencies etc… to pick from its easy to get overwhelmed and just start doing more or less random trades without a proven, documented rule based strategy. This type of trading results in frustration, loss of money and the eventual closure of a trading account. During this process most individuals will also lose friends, family and in many cased self-confidence.

So the next time you think about betting against the trend to pick a top or a bottom you better make darn sure you have waited well beyond the first day you feel like the market is topping out. Stocks trading over the 150 and 20 day moving averages should be in the upper reversal zones and money should be flowing out of bonds and other safe haven/defensive stocks to fuel the last rally/surge higher in the broad market.

Also I would like to note that I do follow the index futures and volume very closely on both the intraday and daily charts. This is where the big money does a lot of trading. Knowing when futures contracts are being sold or bought with heavy volume is very important data in helping time tops and bottoms more accurately. And the more experience you have in trading also plays a large part in your success in trading tops and bottoms.

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