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

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

Our Next Technical Price Targets for Gold & Silver

I have pointed out earlier, gold is forming a possible short term top. It is on the verge of completing a bearish ‘Head and Shoulder’ pattern. The pattern is confirmed if gold closes below $1220/oz. The downside pattern target for this setup is $1138/oz. 

If gold starts to rally and breaks out to the upside, then we should see the $1396 level be reached based on technical analysis.

I will open a new long gold position when the time feels right. With technical analysis strongly suggesting gold and silver have bottomed, New breakouts to the upside in metals and mining stocks can be bought.

On the other hand, silver has formed an almost perfect cup and handle pattern and has broken out of it. It has reached its first target objective; chances are that silver will either consolidate or pullback after having met its target or move up to $18.70/oz. levels, which is the pattern target of the ‘Cup and Handle’ pattern formation. However, new buying is not advised at current levels due to a poor risk-reward ratio.

If you have not read the post about what the Silver COT data is warning us about be sure to read this short post: Click Here

If we take a look and monitor the gold/silver ratio closely, recently, the ratio had touched its resistance of the past 20 years. Every time the ratio has returned from the resistance, the minimum it has retraced is to the levels of 45.

There are no reasons to believe that it will be any different this time around. Hypothetically, if gold were to remain at $1236/oz. and if the ratio corrects to 45, silver will reach $27.5/oz., which is a 62% increase from current levels.

Hence, it is prudent to stay with silver for a better return compared to gold once price has a pause to regroup before the next rally.

How to Trade Gold & Silver Conclusion:

Buying gold and silver offer different rate of returns to the investors. If an investor is able to time both the precious metals, then the total returns will be ‘astronomically high’ in the future.

My timing ‘cycles’ provide signals both for the short term and the long term. The price action of both gold and silver along with my cycles have been showing VERY strong “Cycle Skew”, which I explain in detail in my book “Technical Trading Mastery”. This cycle skew is telling us that precious metals are now in a strong uptrend and is another confirming indicator that support much higher prices long term.

During the first half of a bull market trading price patterns and upside breakouts tend to work very well. Because interest in the sector is growing and more buyers continue to enter that market, price pattern breakouts are the last chance to get a position before price has its next rally higher.

I will continue to inform my subscribers of new swing trades, and even more importantly the long term investing "Set it and Forget It" ETF trades to ride out the new bull and bear markets for massive profits.

Keep following me to know more at: www.The Gold and Oil Guy.com

Chris Vermeulen

When Will They Bottom? Crude Oil, SP500, then ExxonMobil

A full blown bear market in energy resources and energy stocks has been underway since mid-2014. History shows that the price of crude oil typically bottoms before the broad stock market. And oil related stocks bottom at the same time or later than the broad market. The monthly chart below shows how oil bottoms several months before the stock market does. This provides us with some insight on when we should start to expect a bear market to end in the US stock market.

Many traders follow and trade shares of Exxon Mobil. And while the are big money maker I do feel their share price is going to underperform oil for some time. Based on my research XOM has acquired many new oil operations, which many require $70+ per barrel to be profitable. This has cost XOM a considerable amount of capital and is now left holding and operating business that are losing money with the current price of oil sub $40 per barrel.

Base on my analysis, economic data and forecast I feel as though oil will remain low for another 3-9 months below $60 per barrel. It will do this for several reasons but what matter to us is that it forced the majority of oil producers to cap and close off well and go out of business. While this is taking place stocks and the economy will rebalance through a strong economic recession and a bear market in equities that will last most if not longer than 2016. Take a look at the US stock market average (SP500 index) in the chart below. While this chart is a very basic and simple looking forecast understand that the stock market internals and market breadth have completely collapsed just s we saw in 2000 and again in 2008 months before the index collapsed and started bear markets.

Oil, XOM, and Stock Trading Conclusion:

In short, I expect oil to find a bottom during the next 1-3 months. Oil services stocks on average are likely to trade sideways and build a basing pattern. These oil services stocks will not breakout and rally until the broad stock market has bottomed which I expect to happen late in 2016 or early 2017. Unfortunately, oil and oil stocks collapsed so fast without any retest or pause for us to get short and enjoy the ride down for profits. I feel trading oil and oil stocks will be choppy and tough in the near year. Last week subscribers and I played the energy (XLE) for a quick two-day pop of 2-4% return depending on entry and exit. These types of plays will continue, but the big trend trade in oil and energy are a long way away yet.

The easier money will be likely be shorting the stock market (buying inverse ETFs) to profit as stocks collapse which is what I provide subscribers to my ETF trade alert newsletter.

HOLIDAY SPECIAL – GET 12 MONTH OF TRADE ALERTS FOR THE PRICE OF ONLY 6!

Chris Vermeulen – www.The Gold & Oil Guy.com

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Spotting Reversals Using Simple Patterns in the Markets

With so many commodities trying to scratch out a bottom right now the timing couldn't be better for our trading partner John Carters release of his new eBook "Learn How Human Emotions Produces Patterns in the Markets".

In this eBook, you will learn....

  *  The 10 chart patterns ALL traders should know
  *  How to know when a chart pattern is producing an actionable signal
  *  What chart patterns are the most powerful
  *  Spot reversals using patterns
  *  How to call the top using patterns

And a whole lot more!

Take your emotions out of trading positions like.....crude oil, gold, coffee and sugar, just to name a few.

The crude oil, gold, coffee and sugar bulls took another beating this week and it's no surprise traders are dumping positions like crazy. Don't let your emotions get the best of you, put John's simple trading methods to work recognizing those reversals and be ready for them.

Get this free material now....Just Click Here!

See you in the markets putting this to work,
Ray C. Parrish
President/CEO at the Crude Oil Trader


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Elliott Wave Forecast: Bull Market Nearing Interim Peak on SP500

Back on September 12th with the SP 500 at 1689 we forecasted a run in the SP 500 to 1829, a very specific number. We use Elliott Wave Theory and Analysis in part to come up with projected pivots for the SP 500 and this was our projection.

Elliott Wave Analysis is based largely on Human Behavioral patterns that repeat over and over again throughout time. It’s really crowd behavior or herd mentality as applied to the broader stock markets. This can also apply to individual stocks, precious metals and more. At the end of the day, an individual stock is worth what investors believe it is worth, and it won’t necessarily reflect what a private valuation may accord it.

With that in mind, the stock market as a basket of 500 stocks can pretty easily be patterned out and then we can apply our Elliott Wave Theory to that pattern and predict outcomes. Back in mid-September, we believed we were in a 3rd wave up of the bull market as part of what we call Primary wave 3. The primary waves are 1-5 and Primary 3 is usually the most bullish of the 5 primary waves with 2 and 4 being corrective. Well, within Primary wave 3 you have 5 major waves… and we projected that Major wave 3 would be running to about 1829.

This projection was based on the 1267 pivot for Major wave 2 of Primary Wave Pattern 3 which was a corrective wave. We then simply applied a Fibonacci ratio to the Major wave 1 and assumed that Major wave 3 would be 161% of Major 1. That brings us to about 1822-1829… and here we are a few months later heading into Thanksgiving with the SP 500 hitting 1807 and getting close to our projection.

What will happen afterwards should be a Major wave 4 correction. We expect this to be about 130 points on the shallow side of corrections, and as much as 212 points.

So the Bull Market is not over, but Major Wave Pattern 3 of Primary 3 is coming to an end as we are in a seasonally strong period for the market. We would not be shocked to see a strong January 2014 correction in the markets as part of Major wave 4.

Here is our September 14th elliott wave forecast chart we sent to our subscribers and you can see we continue now along the same path.....Read "Elliott Wave Forecast: Bull Market Nearing Interim Peak on SP500"


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The Market Trend Forecast....Our Latest Market and Gold Views

The staff at TMTF have continued to correctly project the wave patterns for months now for their subscribers in the SP 500 Index. Their latest views were to look for a minor wave 3 top at 1698 with a pullback minor wave 4. They hit that on the nose with a 23.6% fibonacci retracement of minor wave 3 as the index hit 1676.

Since that point, TMTF outlined a Wave 5 pattern that should take the SP 500 to 1736-1771. Several weeks ago they patterned out 1768-1771 as a perfect target for a Major wave 3 high. This will be followed by a 125-200 point SP 500 correction if we are correct.

Below is the latest chart update outlining what we project ahead. A run to 1736-1771, followed by a 120-200 point correction for Major Wave 4 in the SP 500. Subscribers get multiple updates each week.

Click here to join us today for a 33% discount at Market Trend Forecast




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Oil N' Gold: Crude Oil Weekly Technical Outlook

From the staff at Oil N' Gold.Com, their weekend market update.......

Crude oil breached 75.71 to 74.95 initially last week but that was brief. It then rebounded strongly to as high as 84.00. Initial bias is mildly on the upside this week and further rebound might be seen to 84.77 and above. But there is no change in the bearish view that decline from 114.83 is not finished. Hence, we'd expect upside to be limited well below 90.52 key resistance and bring another fall. Below 79.08 minor support will flip intraday bias back to the downside. Break of 74.95 will target 70 psychological level.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

Don't miss our most popular recent posts.......

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Technical Formations You Shouldn't Miss

Experienced traders have been using this particular technical formation for many years and it continues to produce profits for those who can spot it, and better yet, take advantage of it.

In this new short video we are going to share the market, the pattern, and a price projection where we think this market is headed based the MarketClub Trade Triangle technology.

We hope that this educational video will help you spot this very same technical formation in the future. The video is extremely short and will only take a few minutes of your time, however, the lesson is priceless.

As always our videos are free to watch and there are no registration requirements. Our only request is that you tell your friends about The Crude Oil Trader by Tweeting and sharing this post on Facebook and other social networking sites. We would also enjoy hearing from you, so please feel free to comment here about this video.

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Has the S&P Broken Final Support?

In our last video on the S&P 500 (10/27), we indicated that this market may have topped out for the year. Today’s action puts in place a weekly “Trade Triangle” which indicates that a temporary or a permanent top is now in place for this market.

In this latest video, we share with you some of the ideas that we think could potentially come into play for this market. Not only do we have some downside targets in mind, but we also see a pattern that could evolve in the next several weeks which will confirm that we’ve made a serious high in this market.

Just Click Here to watch the new video and please take a moment to leave a comment on what you think of the video and where the SP 500 is headed.