VIX and Defensive Sectors React To Perceived Trend Weakness

Since early November 2020, the VIX has continued to decline and consolidate near the 22 level. Late in December 2020 and beyond, the VIX started setting up series high price spikes – which indicates a flagging downside pattern is setting up. You can see this setup across the recent VIX highs.

Additionally, the VIX has “stepped” higher, moving from lows near 19.50 to higher lows near 21.00. This upward stepping base is indicative of a shift in volatility. My research team and I interpret this data as a sign that trend weakness is starting to build after the strong rally that initiated in early November 2020.

Although we have not seen any clear sign that the markets are about to reverse or decline, this move in the VIX is suggesting that volatility is increasing. The high price “breakout”, yesterday, in the VIX suggests a flag setup is nearing an Apex/breakout point....Read More Here.

Technology & Energy Sectors Are Hot – Are You Missing Out?

One of the biggest movers over the past few months has been the recovery of the Oil/Gas/Energy sector after quite a bit of sideways/lower price trending. You can see from this XOP chart, below, a 44% upside price rally has taken place since early November, and XOP has recently rotated moderately downward – setting up another potential trade setup if this rally continues. Traders know, the trend if your friend. Another upside price swing in the XOP, above $72, would suggest this rally mode is continuing.

Recently, we published a research article suggesting a lower U.S. Dollar would prompt major sector rotations in the US and global markets where we highlighted the fact that the Materials, Industrials, Technology, and Discretionary sectors had been the hottest sectors of the past 180 days, but the Energy, Financials, Materials, and Industrials had shown the best strength over the past 90 days....Read More Here.

U.S. Dollar Decline Creates New Sector Opportunities to Trade

The weakness in the U.S. Dollar, which initiated after the Covid-19 peak in March 2020, has entered an extended downward price trend which is nearing a key support level near 88.33. One key consequence of a weakness in the U.S. Dollar is that other foreign currencies become comparatively stronger.

This transitional currency valuation phase creates an environment where localized foreign investments may become much more opportunistic than the U.S. stock market/sectors. Simply put, foreign investors will suddenly start to realize they are losing alpha in U.S. Dollar based investments compared to stronger, foreign currency based investments over time and move their capital.

Find out what this means for the US stock markets in my latest research report....Read More Here.

Our Custom Valuations Index Suggests Precious Metals Will Decline Before Their Next Attempt to Rally

My team prepares Custom Valuations Index charts to understand how capital is being deployed in the global markets alongside U.S. Dollar and Treasury Yields. The purpose of the Custom Index charts in this article is to provide better insight into and understanding of underlying capital movements in various market conditions. 

 Recently, we discovered the Custom Index chart shares a keen alignment with Gold (and likely the general precious metals sector). Let’s explore our recent analysis to help readers understand what to expect next in precious metals.

Weekly Custom Valuations Index Chart

The first thing that caught my attention was the very clear decline in the weekly Custom Valuations Index recently, as can be seen in the chart below. The second peak on the Custom Valuations Index chart occurred on the week of August 3, 2020. Gold also peaked at this very same time. This alignment started an exploratory analysis of the Custom Valuations Index and the potential alignment with the precious metals sector....Read More Here.

Review of our recent BAN trade in SILJ

After recently closing our SILJ BAN trade, I want to take this opportunity to dissect our trade, including the process of selecting the proper exit targets and protecting capital within a trade. The BAN Trader Pro strategy incorporates these same techniques automatically within the decision making process of generating signals and taking trades.

With our recent SILJ trade, we initiated the entry on the upside breakout in price on November 5, 2020 – near $15.50. This upside breakout move prompted a new BAN trade trigger with SILJ near the top of the BAN Hotlist, suggesting further upside trending would continue.

Of course, nothing ever happens 100% as expected... like the announcement of Pfizer's vaccine being 90% effective coming out only days after making the trade! The immediate downturn in price activity resulted in our SILJ trade staying below our entry price for more than 30 days. Read on to see how we still made money on the trade....Read More Here.

Revisiting Our October 23rd "Four Stocks to Own" Article – Part I

Just before the U.S Elections, we authored an article related to four stocks/sectors that we thought would do well immediately after the November 2, 2020 elections. The article highlighted how sector rotation in almost any market trend can assist traders in finding solid trading triggers. 

We picked four stocks from various sectors for this example....

AAL   American Airlines Travel/Leisure
ACB   Aurora Cannabis Cannabis
GE     General Electric Industrial/Specialty Industry
SILJ   Junior Silver Miners ETF Precious Metals Miners


When you review my Yahoo! Finance article from October 23 and the November 6 follow up article related to these stock picks, you will quickly see that all of these stocks exhibited similar types of technical patterns. They were all bottoming in an extended rounded bottom formation and had all started to near a Pennant/Flag Apex in price. Additionally, many of them, with the exception of SILJ, had set up a very clear RSI technical divergence pattern over the course of setting up the extended bottom in price.

My research team and I selected these stocks because of key expectations related to the post election mentality of investors related to various sectors. First, the cannabis sector had a number of new US states approve cannabis legislation – providing for an expected increase in business activity for the entire cannabis sector. Second, no matter who won the election, another round of stimulus was likely to be approved resulting in increased economic opportunity for companies like GE and AAL. The Travel and Leisure sector still had its risks as a surge in COVID cases could greatly disrupt future travel expectations. Junior Silver Miners was our “hedge trade”. If none of these other stocks started to rally, then Silver Miners would likely move 15% to 20%+ higher over time....Continue Reading Here.

Long Term Gold/U.S. Dollar Cycles Show Big Trends for Metals - Part II

In the first part of our U.S. dollar and gold research, we highlighted the U.S. dollar vs. gold trends and how we believe precious metals have recently bottomed while the U.S. dollar may be starting a broad decline. We are highlighting this because many of our friends and followers have asked us to put some research out related to the U.S. dollar decline. Back in November, we published an article that highlighted the Appreciation/Depreciation phases of the market. This past research article – How To Spot The End Of An Excess Phase – Part II – is an excellent review item for today’s Part II conclusion to our current article.

Custom Metals Index Channels & Trends

Our Weekly Custom Metals Index chart, below, highlights the major bottom in precious metals in late 2015 as well as the continued upside price rally that is taking place in precious metals. If our research is correct, the bottom that formed in 2015 was a “half cycle bottom” – where the major cycle dates span from 2010 to 2019 or so. This half cycle bottom suggests risk factors related to the global market and massive credit expansion after the 2008-09 credit crisis may have sparked an early appreciation phase in precious metals – launching precious metals higher nearly 3 to 4 years before the traditional cycle phases would normally end/reverse....Continue Reading Here.

Custom Index Charts Suggest U.S. Stock Market Ready for a Pause

Weeks after the Election Rally initiated a moderately strong upside breakout rally, our Custom Index charts suggest the US stock market may be ready for a brief pause in trending before any new trends continue. Global traders and investors jumped into the US stock market just days before the US elections expecting something big to take place. The rally that initiated just days before the US election pushed our Custom Index charts well into the upper range of the 2016 to 2018 upward sloping price channel. This suggests the US stock markets have ended the downward price reversion and are now attempting to extend into the upward price channel....attempting to resume the upward trending that started after the 2016 elections.

Weekly Smart Cash and Volatility Indexes

The Weekly Smart Cash Index, below, highlights the impressive rally recently and the upward sloping price channel that is back in play for price. The highlighted range of the upward sloping price channel is actually the lower half of the std deviation range of the 2016 to 2018 price channel. So, as of right now, the Smart Cash Index price level has yet to really breach the middle of this channel and is still only within the lower half of the channel. Still, the support near the lower boundary of this level has been retested two or three times over the past six months and held. This suggests the lower channel level (the lower heavy BLUE line) is now acting as moderate price support....Continue Reading Here.

Gold Wave Forecast - Is Gold Going to $3,750 or Higher?

Watching gold fall to recent lows over the past few weeks has been heartbreaking for gold bugs. We know the real value of precious metals has continued to be under appreciated over the past 24+ months – even though gold has rallied from $1165 to over $2085 (an incredible 79%). The recent 15% decline in gold has shaken some investors away from the longer term opportunities, so we wanted to share our research and highlight some simple Elliot Wave structures with you.

My research team and I believe the recent downward price trend in gold is an ideal setup for an intermediate wave 4 pullback of a broader wave 3 advance. In other words, we believe gold is in the midst of a broad advance cycle that may eventually push price levels to $5000 and above. But, we’ll focus on right now and what we believe is setting up from a technical analysis perspective.

The first thing to remember about Elliot Wave Analysis is that we must consider the broad market trends, the intermediate market trends, and the short term wave formations. With almost all types of technical analysis, we focus on different time perspectives of price trends and setups to help us better determine opportunities and outcomes....Continue Reading Here.

Gold's Momentous Rally from 2000 Compared to SPY and QQQ - Part I

My research team and I went off on a wild tangent trying to identify how the markets could react to the recent spike in price activity on Monday, November 9, 2020. This is the day that Pfizer announced a 90% effective rate with its new COVID-19 vaccine, causing the US stock market to skyrocket higher before the opening bell in New York. As with most pop and drops, this incredible upside spike trailed lower for the remainder of the trading day. My research team was curious if this type of setup presented any real future outcome or trends. To this end, we focused on the QQQ and the SPY in relationship to Gold.

9 to 9 1/2 Year Gold Depreciation Cycle Ended in 2018 – What’s Next? 

Gold has been and continues to be a store of value for many around the world. At some times in history, Gold becomes undervalued in comparison to other assets (like stocks, real estate, and other tangible assets). At other times, Gold becomes more highly valued in comparison to other assets. This cycle has taken place throughout hundreds of years of history, and is rooted in the changing perceptions of market participants regarding “what/where is true value in the markets”.

When other assets are skyrocketing higher, Gold is out of favor in terms of real demand. It may still be moving higher in value, but as long as other assets seem to be increasing in value faster than Gold, demand for Gold will diminish. When most other assets enter a time of great concern or devaluation, Gold and Precious Metals usually begin to see stronger demand as the ratio between Gold prices and more traditional investment assets may be near extremes....Continue Reading Here.