Have You Seen Palladium's Tradable Price Pattern?

Are you prepared for the next big move in the metals markets? Would you like to know what to expect in the immediate future that could save you thousands of dollars? Then pay attention to this message as we share something most traders are overlooking right now.

Our research team at Technical Traders Ltd. have spent years developing our skills and financial modeling systems. Right now, many traders are seeing the big upward price swings in the metals as a sign that prices will continue higher. Well, in the long run, they are correct. But right now we believe the metals will roll over and trend lower for the next few weeks setting up for the next leg higher.

Palladium is a perfect example of this Rollover expectation. Both the current long term monthly chart shows signs of a massive double top, and the daily chart WEDGE/Pennant formation is likely a washout high rotation pattern that will prompt lower prices over the next few days/weeks.

MONTHLY PALLADIUM CHART

This monthly chart to us is nothing more than a reason for the overbought Palladium market to have a minor pullback before potentially running to new highs. We could see a couple weeks or potentially a few months of weaker prices, but the point here is that price is overbought and at resistance on the long-term chart and imminent pullback is likely to occur for a tradable short or to re-enter after the price has corrected and shows signs of strength for another run higher.

DAILY PALLADIUM CHART

As you can see from this chart, we are expecting a rotation lower based on our modeling systems predictive capabilities that will result in a substantially lower price swing – possibly as much as -8 to -10%. We believe support will be found just above the $1000 price level.

Additionally, our Adaptive Dynamic Learning (ADL) modeling system is designed to scan historical price activity of any chart and find the unique price and technical indicator formations that operate as DNA markers for the price. It then continues to scan for new or repeating DNA markers in the market to determine probable outcomes of the price going forward. In this case, the ADL system is predicting a lower price swing to near $1020 near or after February 8th. After this price contraction, the ADL system is expecting a solid rally to form.

This should be important to all investors because long traders in the metals should wait for this pullback to happen before getting into heavy positions. Our analysis shows we should see a -4 to -8% price pullback within the next week or two before support will be found. Obviously, buying near the lowest point is the objective of trading and we believe the February 5th through February 8th time frame should provide the optimal bottom rotation period for metals traders.

Would you like to receive daily video analysis of our research for all the major markets as well as continue to receive our advanced research reports? Want to know that the US majors Indexes are going to do tomorrow or next week? Take a minute to investigate The Technical Traders [just visit here] to learn how we can assist you in your trading. Learn how we called this move in the US Indexes for 2018 and how we can continue to identify market moves before they happen with our proprietary modeling systems.

Chris Vermeulen

Will The Bubble Pop Regardless if the Fed Never Raises Rates?

The current overall SPX pattern is a broadening top, which is usually a very reliable pattern. The market continues to look as though it wants to go even lower. The momentum shift, which I have been expecting, has been slow to start, however one should be prepared for this occurrence ahead of time. Nevertheless, the large divergences which I have been viewing, in my proprietary oscillators, are most real, and, once the selling starts, the momentum should quickly move to the downside.

The current market is being supported by a lack of sellers more so than aggressive buying. With investors still thinking that there is no other place to store their money, they appear to be content with leaving their money with risk on assets within a market that is pushing to all time highs. This type of mentality usually leads to large losses rather than big gains. There isn’t any real opportunity for growth in the SPX that I can see right now.

Dow Theory: Market Indexes Must Confirm Each Other

The Dow Theory was formulated from a series of Wall Street Journal editorials which were authored by Charles H. Dow from 1900 until the time of his death in 1902. These editorials reflected Dow’s beliefs regarding how the stock market behaved and how the market could be used to measure the health of the business environment.

Dow first used his theory to create the Dow Jones Industrial Index and the Dow Jones Rail Index (now Transportation Index), which were originally compiled by Dow for TheWall Street Journal. Dow created these indexes because he felt they were an accurate reflection of the business conditions within the economy, seeing as they covered two major economic segments: industrial and rail (transportation). While these indexes have changed, over the last 100 years, the theory still applies to current market indexes.

Market indexes must confirm one another. In other words, a major reversal from a bull or bear market cannot be signaled unless both indexes (generally the Dow Industrial and Transports Averages) are in agreement. Currently, They are DIVERGING, issuing MAJOR NON-CONFIRMATION HIGH the Dow Jones Industrial average. If one couples this with the volatility index, this is a warning sign and a recipe for disaster.

The FEDs’ monetary policy over the last eight years has led to unproductive and reckless corporate behavior. The chart below shows U.S. non financials’ year on year change in net debt versus operating cash flow as measured by earnings before interest, tax, depreciation, and amortization (EBITA).

The growth in operating cash flow peaked five years ago and has turned negative year over year. Net debt has continued to rise, which is not good for companies.

This has never before occurred in the post World War II period. In the cycle preceding the Great Recession, the peaks had been pretty much coincidental. Even during that cycle, they only diverged for two years, and by the time EBITA turned negative, year over year, as it has today, growth in net debt had been declining for over two years. Again, the current 5 year divergence is unprecedented in financial history. Today, most of that debt is used for financial engineering, as opposed to productive investments. In 2012, buybacks and M&A were $1.25 trillion, while all R&D and office equipment spending were $1.55 trillion. As valuations rose, since that time, R&D and office equipment grew by only $250 billion, but financial engineering grew by $750 billion, or three times this!

You can only live on your seed corn for so long. Despite there being no increase in their interest costs while growing their net borrowing by $1.7 trillion, the profit shares of the corporate sector peaked in 2012. The corporate sector, today, is stuck in a vicious cycle of earnings manipulation management, questionable allocation of capital, low productivity, declining margins and growing debt levels.

Conclusion:

In short, I continue to pound on the table to help keep you and fellow investors aware that something bad, financially, is going to take place – huge events like the tech bubble, the housing collapse a few years back, and now national financial instability. Experts saw all these events coming months and, in some cases, years in advance. Big things typically don’t happen fast, but once the momentum changes direction you better be ready for some life changing events and a change in the financial market place.

Follow my analysis in real time, swing trades, and even my long term investment positions so you can survive from the financial storm The Gold & Oil Guy.com

Chris Vermeulen

Correction near but Bull Market has LONG waves to Go!

Are you using Elliot Wave theory in your trading? Today David Banister of Market Trend Forecast is laying out the Elliot formations in detail. Do yourself a favor and take a few minutes to make sure you are looking at this market through his eyes. Can any of us call the pull back exactly and reliably? No, of course not. But we should all be taking this into consideration.

The SP 500 has been on a tear as we all know especially since the SP 500 bottomed at 1343 several months ago. My work centers around forecasting using Elliott Wave Theory along with other technical indicators. This helps with projecting the short, intermediate, and longer term paths in the stock market and also precious metals. This larger picture Bull Cycle started in March of 2009 interestingly after an exact 61.8% Fibonacci retracement of the entire move from 1974 to 2000 lows to highs. At 666, we had completed a major cycle bottom with about 9 years of movement to retrace 26 years of overall bull cycle. That was a major set of 3 waves (Corrective patterns in Elliott Wave Theory) from the 2000 highs to 2002-3 lows, then 2007 highs to 2009 lows. Once that completed its work, we were free to have a huge new bull market cycle off extreme sentiment and generational lows.

It’s important to understand where we were at in March of 2009 just as much as it is today with the market at all time highs. Is this the time to bail out of stocks or do we have a lot more upside yet to go? Our short answer is there is quite a bit more upside left in the indexes, but there are multiple patterns that must take place along the way. We will try to lay those out for you here as best we can.

Elliott Wave theory in general calls for 5 full wave cycles in a Bull pattern, with 1, 3, and 5 bullish and 2 and 4 corrective. We are currently in what is often the most bullish of all the patterns, a 3rd of a 3rd of a 3rd. In English, we are in Primary wave 3 of this bull cycle which will be 5 total primary waves. We are in Major wave 3 of that Primary 3, and in the Intermediate wave 3 of Major wave 3. That is why the market continues its relentless climb. This primary wave 3 still has lots of work to do because Major wave 3 still has a 4th wave down and a 5th wave up to finish, then we need a major 4, then a major 5.

That will complete primary wave 3. This will then be followed by a Primary wave 4 cycle correction that probably lasts several months, and then a Primary wave 5 cycle to finish this part of the bull market from March 2009 generational lows… and all of that work is going to take time. Once that entire process from March 2009 has completed, then we should see a much deeper and uglier correction pattern, but we think that is at least 12 months or more away.

What everyone wants to know then is where are we at right now and what are some likely areas for pivot highs and lows ahead? We should complete this 3rd of a 3rd of a 3rd here shortly and have a wave 4 correction working off what will likely be almost 300 points of upside from SP 500 1343. We could see as much as 90-120 points of correction in the major index once this wave completes. Loosely we see 1528-1534 as a possible top and if not then maybe another 30 or so points above that maximum into early June. This should then trigger that 90-120 point correction, and then be followed by yet another run to highs.

We could go on but then we will lose our readers here for sure, and as it is… this is all projections and postulations, so it’s best to keep the forecast to the next many weeks or few months. Below is a chart we have put together showing the structure of Major wave 3 of Primary 3 since the 1343 lows. Once that Major wave 3 tops out (see the blue 3) then we will have Major 4, then Major 5 to complete Primary wave 3 since the 1074 SP 500 lows. Whew!



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Top 3 Trading Indicators for Profitable & Simple Trading

Many investors and traders make the same mistakes assuming that one needs a complex trading system to consistently profit from the stock market. On the contrary, some of the top performing strategies are the ones with the least amount of moving parts and are simple. Because their simplicity they can be easily and consistently followed.

The methodologies we use for timing the market, picking stocks and option trades are very simple because we focus mainly on price, volume and momentum. These three indicators are the key to success. When these are used together you are able time your entries and exits during key turning points, clearly define risk and reward levels while maintaining a clear unbiased state of mind which allows one to trade almost emotionless.

As my Trading System Mastery coach taught me, if you do not have a detailed trading plan which a five year old could trade, then you do not have a solid strategy and will have unnecessary losses and emotional stress.

So here are a couple tips to keep things simple and emotionless: 





Our recent trade in Infoblox Inc. (BLOX):

This stock was flashing several signals (price, volume and momentum) that a bounce or rally was likely going to happen within a few weeks. This is a good example of a swing trade based purely on our main indicators.



Our Broad Market Outlook: Current stock market prices are starting to warn us that a market correction is near. You can read more about this in detail in our last report “Stocks Preparing for a Pullback, Buy Bas News, Sell the Good”.

We all know the market works with the saying.....

“If the market doesn’t shake you out, it will wait you out”.

How does this work? Simple really, during down trends and just before a market bottom we tend to see capitulation spikes in selling. These scare the last of the long positions out of the market and suck in the greedy shorts after the move has already been made.

During an uptrend which is what we are in now the market makes spike highs designed to scare out the shorts and get greedy long traders to buy more. Once again after the move has already been made and likely near the market top.

If you are the type of trader who always tries to pick tops and bottoms against the current trend then you may like to know this little tip… The largest percent moves typically happen during the last 75% of the trend. What does this mean? It means when you take your position against the trend trying to pick the dead top or bottom you are most likely going to get be caught on the wrong side of the market in a big way.

Most traders I know based on recent emails have been short the market for 1-3 weeks and many keep emailing me that they are adding more shorts each day because they feel the market is going to top. So me being a contrarian by nature in terms of what the masses are doing, if everyone is still holding on to their shorts we likely have not seen the top just yet. Another 1-2% jump from here should be enough to shake them out though.

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General Stock Market Commentary For Monday Evening

The U.S. stock indexes closed firmer today after being under modest selling pressure much of the session. Prices rebounded from Friday's sell off as worries about the Dubai debt crisis eased a bit.

The stock index bulls still have the overall near term technical advantage. However, don't be surprised to see some more profit taking pressure in the stock indexes heading into the holidays. Traders are awaiting Friday morning's important U.S. jobs data.

Monday evening's crude oil pivot point 76.85
1st resistance 78.57 2nd 79.72 3rd 81.44
1st support 75.70 2nd 73.98 3rd 72.83

Natural gas pivot point 4.947
1st resistance 5.075 2nd 79.72 3rd 5.447
1st support 4.703 2nd 4.575 3rd 4.331

The U.S. dollar index closed down 22 points at 75.18 today. Prices closed nearer the session high today. Bears still have the solid overall near term technical advantage.

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Crude Oil Closes Near The Session Lows Again

May crude oil closed up $0.12 at $49.53 a barrel today. Prices closed nearer the session low again today. Trading has turned choppy. A bearish weekly DOE storage report did limit gains in crude and kept prices under pressure most of the day. Crude oil bulls and bears are still on a level near term technical playing field.

The U.S. stock indexes closed mixed but nearer their session highs today following more weak U.S. economic data. However, there were some minor positives in the data that gave stock traders some confidence the worst of the economic crisis is past. Stock index futures prices are still in uptrends from the March lows.

The June U.S. dollar index closed up 32 points at 85.25 today. Prices closed near mid range today. Bulls and bears are back on a level near term technical playing field. Bulls' next upside price objective is to close prices above solid technical resistance at 86.61.


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