Tag: Chris Vermeulen

Are The Markets Sending A Warning Sign?

Posted on by Chris Vermeulen

After an incredible rally phase that initiated just one day before the US elections in November 2020, we’ve seen certain sectors rally extensively. Are the markets starting to warn us that this rally phase may be stalling? We noticed very early that some of the strongest sectors appear to be moderately weaker on the first day of trading this week. Is it because of Triple-Witching this week (Friday, March 19, 2021)? Or is it because the Treasury Yields continue to move slowly higher? What’s really happening right now, and should traders/investors be cautious?

The following XLF Weekly chart shows how the Financial sector rallied above the upper YELLOW price channel, which was set from the 2018 and pre COVID-19 2020 highs. Early 2021 was very good for the financial sector overall; we saw a 40%+ rally in this over just 6 months on expectations that the US economy would transition into a growth phase as the new COVID vaccines are introduced.

We are also concerned about an early TWEEZERS TOP pattern that has set up early this week. If the price continues to move lower as we progress through futures contract expiration week, FOMC, and other data this week, then we may see some strong resistance setting up near $35.25. Have the markets gotten ahead of themselves recently? Could we be setting up for a moderately deeper pullback in price soon?

markets

The following SSO, ProShares S&P 500 ETF Weekly chart, shows a similar setup. Although the rally in the SSO is not quite the same range as the XLF, we see a solid TWEEZERS TOP pattern setup on the SSO chart over a period of many weeks. We also found the moderate weakness in the US indexes interesting this morning. Last week, we continued to see very strong buying trends. Today, we see those trends have almost vanished. Are the markets setting near highs waiting for some announcement or news to push them into a new trend? Continue reading "Are The Markets Sending A Warning Sign?" →

Predictive Modeling Suggests A New Gold Rally

Posted on by Chris Vermeulen

One of our readers’ favorite tools is the Adaptive Dynamic Learning (ADL) predictive modeling system. This tool maps out technical and price patterns into an array of similar setups using historical data, then applies that data to current and future price bars. Using the ADL predictive modeling tool, we can see into the future based on historical technical analysis that maps statistically relevant price activity and shows us the highest probability outcomes.

Monthly ADL Gold Predictions

In this research article, we’re going to focus on Gold and how current price action suggests a bottom is likely near the $1720 level. The YELLOW price channels on this Monthly Gold chart highlight exactly where we believe support is located for Gold. If this $1700 price level is breached to the downside, then the previous lows, near $1400, are the next support level for Gold.

Our ADL predictive modeling system suggests the $1720 support level will hold, prompting a new rally to levels above $2200 within 30 to 60+ days. The ADL system predicts an aggressive move in Gold near May or June 2021. The move higher may happen earlier than the ADL Monthly predictions indicate. There is a chance that a move back above $1850 starts the move higher before the end of March or April 2021 – propelling Gold toward the $2300+ peak. The actual peak level predicted by the ADL predictive modeling system is $2315.

predictive modeling

2-Week ADL Predicts Gold May Start To Rally Near Mid-March

This 2-Week Gold Chart highlights a similar ADL price prediction. What we find interesting about this ADL predictive modeling outcome is the similar price predictions originating from vastly different origination points. The Monthly ADL prediction originates from a date of August 1, 2020 – the peak price bar. This 2-Week ADL prediction originates from a date of November 23, 2020 – the intermediate low DOJI bar before the recent continue downward trend targeting the YELLOW price channel. Continue reading "Predictive Modeling Suggests A New Gold Rally" →

Bonds And Stimulus Are Driving Big Sector Trends

Posted on by Chris Vermeulen

Falling Bonds and rising yields are creating a condition in the global markets where capital is shifting away from Technology, Communication Services and Discretionary stocks have suddenly fallen out of favor, and Financials, Energy, Real Estate, and Metals/Miners are gaining strength. The rise in yields presents an opportunity for Banks and Lenders to profit from increased yield rates. In addition, historically low-interest rates have pushed the Real Estate sector, including commodities towards new highs.

We also note Miners and Metals have shown strong support recently as the US Dollar and Bonds continue to collapse. The way the markets are shifting right now is suggesting that we may be close to a technology peak, similar to the DOT COM peak, where capital rushes away from recently high-flying technology firms into other sectors (such as Banks, Financials, Real Estate, and Energy).

The deep dive in Bonds and the US Dollar aligns with the research we conducted near the end of 2020, which suggested a market peak may set up in late February. We also suggested the markets may continue to trade in a sideways (rounded top) type of structure until late March or early April 2021. Our tools and research help us to make these predictions nearly 4 to 5+ months before the markets attempt to make these moves.

If our research is correct, we may have started a “capital shift” process in mid-February where declining Bonds, rising yields, and the declining US Dollar push traders to re-evaluate continued profit potential in the hottest sectors over the past 6 to 12+ months. This would mean that Technology, Healthcare, Comm Services, and Discretionary sectors may suddenly find themselves on the “not so hot” list soon. Continue reading "Bonds And Stimulus Are Driving Big Sector Trends" →

Gold Could Be Setting Up For A Breakout

Posted on by Chris Vermeulen

There has been quite a bit of chatter related to precious metals lately. The rally in Cryptos, particularly Bitcoin, and various other stocks have raised expectations that Gold and Silver have been overlooked as a true hedging instrument. As these rallies continue in various other stocks and sectors, Gold and Silver have continued to trade sideways over the past 6+ months – when and how will it end?

Gold Support Near $1765 May Become A New Launchpad

My research team and I believe the recent downside trend in Gold has reached a support level, near $1765, that will act as a launching pad for a potentially big upside price trend. This support level aligns with previous price highs (May 2020 through June 2020) after the Covid-19 price collapse, which we believe is an indication of a strong support level. As you can see from the Gold Futures Weekly chart below, if Gold price levels hold above $1765 then we feel the next upside rally in metals could prompt a move targeting $2160, then $2400.

Gold

The February 2021 Gold contract expires on February 24 – only a few days away. The CME Delivery Report shows an incredible amount of contracts already giving notice of a “Delivery Request”. This suggests that on or near February 25, a supply squeeze for Gold and Silver may become a very real component of price. Continue reading "Gold Could Be Setting Up For A Breakout" →

Will 2021 Prompt A Big Rotation In Sector Trends? - Part 2

Posted on by Chris Vermeulen

In the first part of this research article, we attempted to provide some details to the question of “sector trends in 2021 and what may shift over the next 10 to 12+ months”. In that section of this article, we covered the broad market sector trends and highlighted how the COVID-19 virus event changed the way the global economy functioned for 8+ months. It also highlighted a number of trends that were already taking place in the global market – Technology, Healthcare, Discretionary, and Comm. Services. Quite literally, the past 20+ years have been a digital revolution for most of the world and that is not likely to change.

What will likely change is the demand for Commodities, Raw Materials, Agriculture, and Manufacturing/Distribution related to these core materials. We believe any resurgence of the global economy post-COVID-19 will consist of a resurgence in the demand for commodities and raw/basic materials as consumers extend their normal consumption growth at exceptional rates.

The question in our minds is how will this transition take place and over how much time? Will it happen suddenly as new global policy and restructuring take place? Will it happen more slowly as the global economy re-engages and rebuilds? Will it happen aggressively, disrupting other sector trends? Will it happen in a way that supports continued growth and appreciation of major sector trends? Continue reading "Will 2021 Prompt A Big Rotation In Sector Trends? - Part 2" →