Tag: technical analysis

What Should Traders Expect From Impeachment Proceedings?

Posted on by Chris Vermeulen

News of the formal impeachment proceedings came just after the markets closed on September 24, 2019. The markets had already broken a bit lower most of the day after Consumer Confidence and Jobs expectations were weaker than expected. We had just authored a public research post about our belief that the Technology sector was about to breakdown and begin to move lower. Additionally, we pushed out a post about how Silver would become the “Super-Hero” of 2019/2020 based on our expectations of further gains.

We believe the new impeachment proceedings will result in a market that is very similar to what happened when the US invaded Kuwait in August 1990. At that time, the US launched a very fast invasion of Kuwait that prompted a massive news event and resulted in hours of new invasion video that drew millions of Americans into watching the news every night. This invasion was almost like an extended Super Bowl or an extended World Series event where millions of people are actively engaged in this event, stop engaging in the local economy and focus their attentions on the news cycle, content and political circus originating in DC. But first, be sure to opt-in to our free-market trend signals newsletter

What Does This Mean For Traders

For traders, it means we have to be prepared for just about anything. It means the news events will become even bigger drivers of market rotation and trends as well as the fact that we must prepare for weaker economic data over the next 13+ months. The impeachment process is going to be a dramatic distraction for many people and business ventures. Many will simply fall into a “protectionist” mode where new expenses, expansion and other facets of life/business will be put on hold until after November 2020 (or later).

Our research team believes the initiation of these impeachment proceedings will act as a process of muting or weakening the US economy over time. Starting out slowly at first, then gaining strength as the news cycle picks up more and more “dirt” while both sides posture and position for advantage into the November 2020 election cycle. The end result will be a decidedly weaker US economy as a result of this new impeachment process and we believe the final outcome could leave some career politicians bloodied and battle-weary. Continue reading "What Should Traders Expect From Impeachment Proceedings?" →

Copper Update: Compressed Spring Could Snap Back Hard

Posted on by Aibek Burabayev

I’ve had a bearish outlook for copper for the past 2 years, starting with my post back in September 2017 when I had doubted the metal’s ability to sustain a long-term rally. Last July, we got the final confirmation of the trend reversal to the downside. And this past February I shared with you a promising trading opportunity, which had appeared in the copper market as the short-term upward correction invited the bears to sell the copper again around $3.

Indeed, copper has plummeted since then reaching the $2.48 low at the start of this month, but the following rapid bounce into the $2.70 area signaled a possible reversal ahead.

Let’s check the charts below to see if we can find some clues behind this worrisome price action.

I start with the weekly chart as I spotted a bullish pattern there already.

Weekly Cooper Chart
Chart courtesy of tradingview.com

As I said above the price printed the low of $2.48 and quickly reversed then. I added the Fibonacci retracement level of 61.8% to the chart, and you can see now that the price bounced right off it. In my February post, I applied AB/CD segments to set the target area for an anticipated drop and even used the extension ratio, where the CD is even larger than the AB segment. Continue reading "Copper Update: Compressed Spring Could Snap Back Hard" →

Semiconductor Sector; A Market & Economic Leader

Posted on by Gary Tanashian

The signals have persisted since the May lows in the Semiconductor sector and in the broad markets. Nominal Semiconductor (esp. Semi Equipment) stocks and the sector’s market leadership have remained intact into our window for a projected cycle bottom, which was the 2nd half of 2019.

This post shines a favorable light on the Semiconductor sector while at the same time acknowledging that may have little to do with the broad market’s fortunes as Q3’s reporting begins next month. In other words, while we have been projecting new highs for the S&P 500 on the very short-term, there are fundamental and technical reasons to believe the stock market could be significantly disturbed in Q4. But the Semi sector is an economic early bird. Let’s remember that.

Reference first…

Nearly $50 Billion in Fabs to Start Construction in 2020

By the end of the year, 15 new fab projects with a total investment of US$38 billion will have started construction and 18 more fab projects will kick off construction in 2020. Of the 18, 10 fab projects with a total investment value of more than US$35 billion carry a high probability. The other eight, with a total investment value of more than US$14 billion, are weighted with a low probability of materializing.

See also… Continue reading "Semiconductor Sector; A Market & Economic Leader" →

Gold Update: Is A Bear Face Showing Up?

Posted on by Aibek Burabayev

Gold has missed our main target by $20 as it topped at the $1557 on the 4th of September. The gold optimists still benefited nicely as this peak was $67 above the first target of $1490, that we hit more than one month ago. So, it was definitely worth it to keep bullish for one more month.

Let’s see below if there were a lot of gold optimists a month ago.

Gold Poll

Indeed, the majority with a large margin preferred the continuation of the gold’s rally. It means you could book more than $60 for every ounce staying bullish. Thank you for support as I also believed in that outcome.

In the meantime, we should bear in mind that this was just a considerable correction, which had started in December of 2015. It has been retracing the other drop between 2011 and 2015. So, it is evident that the considerable drop and the correction are almost equal in time it took to emerge – 4 years both. Shall we book the recent rally as “done”? Continue reading "Gold Update: Is A Bear Face Showing Up?" →

Precious Metals Were Ripe For A Pullback

Posted on by Gary Tanashian

If you hear one peep out of the gold community about a precious metals “takedown”, “attack” or any other such aggressive or war-like language you will then be hearing some old fashioned and promotional gold bug orthodoxy. Fortunately, a casual look around the Bug-o-Sphere does not yield too many obvious conspiracy theorists or importantly, cheerleaders.

Indeed, it seems that all too many bugs expected this correction in gold, silver and the miners. That is a good thing because when the real top comes these ladies are going to be out front and greed will be running rampant (quite possibly against a negative fundamental or valuation backdrop as in 2008).

 

Instead, everybody, it seems knew about the high-risk Commitments of Traders situation for gold and silver. The CoT is not a timer, but for weeks now it had been a condition that’s been in place for a correction. It’s not a “takedown”, it’s a condition of too much speculation that had to be addressed. Now it is. Other CoT data available here.

gold cot

silver cot

As the CoT, Hulbert’s HGNSI and the extreme overbought readings first in the gold price, but then dynamically in the silver price and the miners gathered to form a high-risk situation, the time to take some profits was over the last couple of weeks, not now. Gold oriented newsletters appear to have jerked over bullish with the latest head-fake rise in the gold price. Continue reading "Precious Metals Were Ripe For A Pullback" →