Tag: Chris Vermeulen

Election Year Cycles - What To Expect

Posted on by Chris Vermeulen

Every election year over the past five US Presidential election cycles has presented a unique set of price rotation events. Particularly evident in strongly contested US Presidential candidate battles where the voters are consumed with pre-election rhetoric. The 2007-08 election cycle was, in our opinion, very similar to the current market cycle in terms of consumer sentiment and economic function. The 2015-16 election cycle was less similar, yet still important for our researchers.

The economic conditions of the US economy and the global economy were vastly different prior to each US Presidential election cycle and continue to evolve throughout the current 2020 election cycle. Yet, our researchers believe the correlation of price volatility and rotation combined with the distraction for consumers as the election process occupies the hearts and minds of almost everyone across the globe takes a toll on the markets. Prior to almost any US Presidential, price volatility and trends tend to become much more exaggerated and extended.

We’ve published research articles about this technical setup/pattern that occurs in the markets nearly 8 to 15+ months before the US Presidential election cycle before. The basic theory of the setup/pattern is as follows…

  • 12+ months prior to the election date, the parties consolidate around specific candidates where the first battles of the US presidential election cycle conclude.
  • Over the next 12 months, the battle between the selected candidates becomes more heated and aggressive as voters are pushed information and disinformation related to their decisions.
  • The process of the election and the decision-making process for consumers/voters is very stressful and distracts from the normal economic activity for many. This distraction translates into an indecisive market where future expectations (optimism and pessimism) greatly depend on the outcome of the election. Thus, the markets are stuck in a “no man’s land” type of “stasis” waiting for the election event to conclude.

Depending on the events that lead up to the election date, the stock market could be biased towards a bullish trend or a bearish trend which can have a big impact on the pre and post-election outcomes.

S&P 500 Index 2006-09 US Presidential Election Cycle

Let's start by taking a look at the 2006-09 (2008 US election cycle) data/chart. Continue reading "Election Year Cycles - What To Expect" →

Is A Blow-Off Top Setting Up

Posted on by Chris Vermeulen

Our research team has become increasingly concerned that the US Fed support for the markets has pushed price levels well above true valuation levels and that a risk of a downside price move is still rather high. Recently, we published a research article highlighting our Adaptive Dynamic Learning (ADL) predictive modeling system results showing the US stock market was 12% to 15% overvalued based on our ADL results. Today, Tuesday, May 26, the markets opened much higher, which extends that true valuation gap.

We understand that everyone expects the markets to go back to where they were before the COVID-19 virus event happened – and that is likely going to happen over time. Our research team believes the disruption of the global economy over the past 70+ days will result in a very difficult Q2: 2020 and some very big downside numbers. Globally, we believe the disruption to the consumer and services sector has been strong enough to really disrupt forward expectations and earnings capabilities. We’ve been warning our friends and followers to be very cautious of this upside price trend as the Fed is driving prices higher while the foundations of the global economy (consumers, services, goods, and retail) continue to crumble away.

Our biggest concern is a sharp downside rotation related to overvalued markets and sudden news or a new economic event that disrupts forward expectations. Q2 data will likely be a big concern for many, yet we believe something else could act as a catalyst for a reversion event. Possibly global political news? Possibly some type of extended collateral damage related to the global economy? Possibly something related to earnings expectations going forward through the rest of 2020 and beyond? We believe Continue reading "Is A Blow-Off Top Setting Up" →

Critical Price Level Could Prompt A Big Move

Posted on by Chris Vermeulen

As technical traders and researchers, we’ve been paying very close attention to the GREEN ARC Fibonacci resistance level on the SPY as a key level for the US stock market and any hope of a continued upside price rally. The SPY has traded near this level for the past three weeks and appears to be attempting a bit of an upside breakout right now. Yet, we understand a long holiday weekend is upon us in the US, Memorial Day, and after a big upside GAP on Monday, the US stock market has stalled over the past few days. We've also include charts and analysis for the Russell 2000 and the Transportation index.

Our researchers believe this GREEN ARC is still acting as critical price resistance and believe the SPY may sell off into the end of the week resulting in a failed attempt to breach this key resistance level. If this happens, the failed attempt to break this resistance could prompt a change in price trend and initiate a new downside price trend. If this resistance level is broken by the end of this week, then we have a pretty solid indicator that continued bullish price trending may continue.

Absent of any real news that may drive the market trend this holiday weekend and with most of the US still in shutdown mode, we believe the US stock market has continued to trade within this no man’s land area for many weeks now. From the end of April till now, we’ve seen moderate upside price action in certain sectors, yet other sectors continue to show signs of weakness. Continue reading "Critical Price Level Could Prompt A Big Move" →

Is Real Estate The Next Shoe To Drop - Part 3

Posted on by Chris Vermeulen

Our continued research into the state and status of the Real Estate market continues to point to a process that is starting to unfold in the US which may put price and activity levels at risk. Within the past two segments of this research article, we’ve highlighted how market cycles and recent market data point to a Real Estate market that may be in the early stages of a downward price cycle.

Additionally, within Part II of this article, we highlighted the human psychological process of dealing with a crisis event which also suggests a deepening price contraction event may take place within the next 12 to 24+ months.

US New Home Sales Data Was Just Released

We believe the psychological process is just starting to become evident in the current data. For example, the US New Home Sales data was just released and it shows the sharpest decline in activity since June 2010 (nearly 14 months after the actual bottom in the US stock market in March 2009).

Real Estate

Our researcher team believes investors/traders and many consumers have become complacent with the current data and are simply in denial in attempting to relate future economic outcomes to the current set of circumstances. There has never been anything like this to disrupt global economic activity and consumer engagement over the past 100+ years. Not even the Great Depression or WWII was on this scale. Continue reading "Is Real Estate The Next Shoe To Drop - Part 3" →

Is Real Estate The Next Shoe To Drop - Part 2

Posted on by Chris Vermeulen

As we continue to delve into the looming Real Estate crisis that will likely hit the US and globe over the next 12 to 24+ months, we want to focus on the human psychological process of dealing with a crisis event and how that relates to economic engagement. In the first part of this research article, we discussed how the time-line and events that have unfolded over the past 120+ days have setup a continuing global crisis event. The best of our knowledge, there has been nothing like this, other than massive wars like WWII, that have taken place on the planet over the past 75+ years.

This presents a very real possibility that human psychological processes have engaged throughout the planet that may disrupt how effective the recovery efforts are in the near future. If humans engage in a traditional psychological crisis-cycle process, then there is little chance that the economic recovery will reach 2018-2019 levels very quickly. Let’s review the psychological process of a crisis event.

The Normal Psychological Reactions To A Crisis Event Are

Vicarious Rehearsal: People that are distanced from the crisis event (location or expectations) tend to react in a way that reflects their belief that “it won’t result in any dramatic changes to their lives”. Thus, they continue behaving and acting as they would without the crisis.

Denial: The process of denial takes on many forms. Some people simply ignore the warnings or information related to the crisis. Others become agitated or confused. Some simply chose to believe the threat is not real and others may believe the threat does not relate to themselves.

Stigmatization: Sometimes, segments of society may become stigmatized by their community as anger or blame drives people to believe infected people or segments of society that may promote the crisis event are identified. We’ve already seen some of this type of activity throughout the globe take place. Continue reading "Is Real Estate The Next Shoe To Drop - Part 2" →