Tag: Chris Vermeulen

Credit Delinquencies To Skyrocket In Q4

Posted on by Chris Vermeulen

Farm delinquencies skyrocket +24% year over year as global trade issues and the ability to service credit continues to be a problem. This is a tell-tale sign that the US Fed decreased the Prime Rate recently as a result of broader credit issues related to higher interest rates for corporate and other borrowers. The last thing the Fed wants is another collapse on the lending markets similar to 2008-09.

credit
source: zerohedge.com

Low growth continues to plague the global economy as this extended run in the US stock market continues to mature. There are many questions all traders are asking – will it continue higher or have we reached a new peak in price activity? Many economists believe we are ending an expansion period related to the revaluation of the global markets after the 2008-09 credit market collapse. The typical price cycle of approximately 6~7 years has extended beyond traditional bounds and many analysts are wondering how it may end?

If an economic cycle has truly come to an end, we should expect to see some change in economic activity levels, consumer confidence and mortgage/housing activities. The end of an economic cycle is usually aligned with some moderate level of economic contraction and a slowing of economic activity. The one thing that may continue throughout this end of the mature economic cycle is the “capital shift” where capital rushes away from risk and into the US stock market as long as the reversion event stays at bay. source: zerohedge.com

Consumer Confidence levels have fallen recently to new lows. This is a very clear sign that consumers expect the economy to contract a bit based on continued trade-related issues and the overall maturity of the economic cycle. Continue reading "Credit Delinquencies To Skyrocket In Q4" →

Adaptive Dynamic Learning (ADL) Suggests Volatility May Surge

Posted on by Chris Vermeulen

Over the past few weeks and months, a number of key economic data has continued to rally the US major indexes towards new highs, hopes of a US/China trade deal, a continued shift of capital in the US markets for protection and safety, and moderately strong US economic indicators and an earning season that appears to be moderately strong for Q3 of 2019. The interesting facet of this move higher is that it is happening while trading volume has diminished dramatically in the SPY. The futures contracts, the ES, YM, and NQ, continue to show relatively strong volume activity though.

Additionally, the overnight Repo markets have risen to the attention of many skilled analysts. The concern is that the continued US Fed support of the overnight Repo facility may be a band-aid attempt to support a gaping credit crisis that is brewing just outside of view. We’ve been doing quite a bit of research over the past few weeks regarding this Repo market support by the US Fed and we believe there is more to it than many believe. We believe certain institutional banking firms may be at extreme risks related to derivative investments, shadow banking activities and/or global commodity/stock/currency/asset risk exposure. The only answer we have for the extended Repo facility at increasing levels is that the institutional banking system is starting to “fray around the edges”. Thus, we believe some larger credit risk problems may be just around the corner.

Our longer-term analysis continues to suggest that “all is fine – until it is not”. Our belief that a capital shift that has been taking place over the past 5+ years where foreign capital continues to pour into the US markets is driving US stock market prices higher. There is evidence that the capital shift into the US has slowed over the past 5+ months, yet one would not notice this by looking at these longer-term charts. The point we are trying to make today is that price peaks near current highs have, historically, been met with strong resistance and collapsed by 8 to 15% on average. Continue reading "Adaptive Dynamic Learning (ADL) Suggests Volatility May Surge" →

Indexes Retest Critical Price Channel Resistance

Posted on by Chris Vermeulen

News, again, drives the US stock market and major indexes higher as optimism of a US/China trade agreement floods the news wires. As we’ve been suggesting, the global markets continue to be news-driven and are seeking any positive news related to easing trade tensions and capital markets. We believe any US/China trade deal would be received as very positive news by the global capital markets – yet we understand the process of achieving the components of the “deal” would likely still be 6 to 24 months away.

Still, with the strength of the US economy and the potential that some deal could be reached before the end of 2019 setting positive expectations, the US stock market and major indexes rallied last Thursday and Friday (October 10 and 11). As the long holiday weekend sets up with no trading on Monday, it will be interesting to see what is potentially resolved between President Trump and the Chinese before the markets start to react on Sunday and Monday nights. Make sure up opt-in to our free-market trend signals newsletter.

Our research team wanted to highlight some very key elements related to technical price theory and technical analysis. These weekly charts highlight what we believe is “key resistance” in the US major indexes and share our research team’s concern that the markets may be reacting to news more than relying on fundamental economic and earnings valuations. In past articles, we’ve highlighted how a “capital shift” is continuing to take place where foreign capital is actively seeking safety and security for future returns. This leads to a shift in how capital is being deployed throughout the globe. Continue reading "Indexes Retest Critical Price Channel Resistance" →

ADL Predicts Oil Prices Will Fall Below $40

Posted on by Chris Vermeulen

There are times when our research team interprets our advanced predictive modeling systems so well that we call a move in the markets 3 to 10+ months in advance of the move actually happening. It has happened for our team of research so often lately that we are somewhat used to the accolades we receive from our followers and members. Our October 2018 Gold price predictions are still playing out accurately and continue to amaze people – even though we made these predictions over 12 months ago.

Today, we wanted to highlight our Adaptive Dynamic Learning (ADL) predictive modeling systems expectations for Crude Oil. The research post we made on July 10, 2019 (see below). At that time, we warned that crude oil was about to head much lower and that our ADL modeling system was suggesting that oil prices would rotate between $47 and $64 before breaking much lower in November 2019. Ultimately, oil prices will fall below $40 ppb following our timeline and could begin a broader downside move before the end of October 2019. Read our full prediction/research report from the link below.

Oil

SOURCE: July 10, 2019: PREDICTIVE MODELING SUGGEST OIL HEADED MUCH LOWER

We believe the support level near $50.50 will act as a temporary support level over the next 3 to 10+ days before a moderate price breakdown below this level begins. Our expectations for November 2019 are that oil prices may fall to levels below $45 ppb on a deeper downward price move, yet will recover to levels near $47 near December 2019/January 2020. Continue reading "ADL Predicts Oil Prices Will Fall Below $40" →

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?" →