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Chris Vermeulen
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Chris Vermeulen the founder of AlgoTrades.net Algorithmic Trading Systems. This automated investing system is designed for individual investors and traders. He is also the editor of the TheGoldAndOilGuy newsletter which is designed for gold market traders providing quality ETF Trade Alerts,... More
My company:
AlgoTrades Algorithmic Trading Systems
My blog:
TheGoldAndOilGuy - Gold Market Traders
My book:
Technical Trading Mastery - 7 Steps To Win With Logic
View Chris Vermeulen's Instablogs on:
  • THE NEXT FINANCIAL CRISIS – Part I
    Protecting Yourself with Gold, Oil and Index ETF's

    Chris-VIn 2009 I shared my big picture analysis, investment forecast and strategy in a book called "NEW WORLD ORDER ECONMICS - What you can do to protect yourself". In January 2009 I forecasted that the Dow Jones Industrial Average was going to make a bottom within a couple months which it did. I also predicted the price of gold to start another major rally, and for crude oil to bottom and rally for years, which were also correct.

    You can call it luck, skill or a mix of both… but the truth is that the markets cannot be predicted with 100% certainty. With that said, the US stock market, gold and oil look to be setting up for their NEXT BIG multiyear moves.


    US EQUITIES BULL MARKET IS ABOUT TO END

    2014 was a tough year for small cap stocks. The Russell 2000 index which is a great barometer of what speculative money is doing as a whole. History has shown that small capitalization stocks are the first group to show weakness after a multi-year bull market.

    For all of 2014 this group of stocks has been struggling to hold up. Each time it nears a previous high, sellers come out of the woodwork and unload shares in large volume. This was the first tell-tale sign that institutions are starting to rotate their positions out of these high beta stocks.

    Later that year in October 2014 the S&P 500 fell 10% in just a few weeks. The speed of the selloff and the heavy volume that accompanied it are yet another warning sign that the underlying strength of the stock market is weakening. This broad market selloff included the large capitalization stocks which means the end is nearing.

    If we turn our focus to the Dow Jones Industrial Average and look at the chart below you will see my prediction for 2015/2016.

    I should be clear on what to expect during market tops because they differ than market bottoms. Most bottoms that occur are powered by fear. A

    nd fear has a price pattern on the chart that is much different than what we see during market tops when optimism is high.

    Bottoms tend to be more violent with large range bars and the process happens in half of the time than what a bull market top requires.

    Bull market tops take longer to form and for price to actually breakdown and confirm it's headed lower. My thinking is that a market top may have already started. The underlying metrics are eroding and the heavy volume selloff in Oct 2014 was the first major signal that big money is selling.

    I do feel the market as a whole can and will make some minor new highs, but will have strong bouts of selling shortly after. Late 2015 and going into 2016 is when the US stock market will likely start to get volatile and we will see the first MAJOR drop in value. It will be similar to the first breakdown bar that took place Jan 2008. A 15-20% drop that breaks the Oct 2014 low is going to be the straw that breaks the camel's back.

    Once we get the initial break in price the market should pause or bounce for a few months as investors are still overly bullish at these BARGAIN prices "they think" and buy more shares. In reality it's the worst thing an investor can do at this stage of the stock market life cycle.

    Once the bear market starts investors should expect 12-24 months of lower and sideways price action.

    So How Do We Take Advantage Of This?

    There are two ways to play the next bear market. First is to simply move your money out of stocks. This means sell long positions, pull money out of mutual funds etc… and just hold your money in cash. Cash is king and by doing this you will retain your current level of wealth and be ready to invest when the time comes later in 2016/2017.

    The second option is to do the same as above but to put a portion of your money to work in a way that will allow you to profit from a falling stock market. That is to invest in ETFs specifically inverse funds.

    Inverse funds rise in value as the stock market price falls. For example if the Dow Jones Industrial Average drops 35% over the next 24 months, your investment would rise 35%, 70% or even 105% depending on the type of fund purchased.

    (click to enlarge)

    Below are some ETFs that can be used to take advantage of the next bear market. SH, SDS,TZA,SPXU,RWM, QID, FAZ

    index-etfs

    PART 1 CONCLUSION:

    In this article we talked about how the US stock market is showing signs of a major top being put in place later this year. And in the next article PART 2 I will who you what to expect long term for crude oil and how to play this multi-year cycle.

    In the meantime, be sure to join my Free Newsletter so that you receive PART 2 & 3 over the next week plus updates as these investments take place: www.GoldAndOilGuy.com

    Chris Vermeulen

    Tags: TZA, FAZ, SH, SDS, index trading
    Mar 18 9:52 AM | Link | Comment!
  • THE NEXT FINANCIAL CRISIS – Part II
    Protecting Yourself with GOLD, Oil and Index ETF's

    Chris-VIn 2009 I shared my big picture analysis, investment forecast and strategy in a book called "NEW WORLD ORDER ECONOMICS - What you can do to protect yourself". In January 2009 I forecasted that the Dow Jones Industrial Average was going to make a bottom within a couple months which it did. I also predicted the price of gold to start another major rally, and for crude oil to bottom and rally for years, which were also correct.

    You can call it luck, skill or a mix of both… but the truth is that the markets cannot be predicted with 100% certainty. With that said, the US stock market, gold and oil look to be setting up for their NEXT BIG multiyear moves.


    GOLD BEAR MARKET IS ABOUT TO END

    Gold and silver have a little trickier of a situation to navigate and invest for maximum returns over the next 2+ years.

    The most important thing to realize is that when a full blown bear market starts virtually all stocks and commodities drop including gold, silver and oil. Knowing that, investors must be aware that when the stock market starts its bear market the fear will rise and investors will inevitably sell their holdings and this means we could see gold and oil continue to fall much further from these levels before a true bottom is in place.

    Is this time different than the 2008/09 bear market? Yes, this time we have possible wars starting, oil pipelines overseas being cut off, counties and currencies failing and even negative bond yields in some parts of the world - it's a mess to say the least. There are a lot of things unfolding, most seem to be negative for the economy.

    The currency problems and possible war breakout will be bullish for gold and oil. So if a bear market starts in equities, and a war or currency fails gold and oil should rally while stocks fall.

    But if we don't have those sever crisis' then if gold and oil break below their critical support level which is the red line on the charts and a bear market in stocks start you do not want to be long stocks or commodities.

    I have drawn a line in the sand for gold at $1050. If this level is broken then $815 per/ounce is not out of the question. It seems everyone is bullish on precious metals and have been buying like crazy. But as I wrote in 2009 this bullish sentiment actually pointing to much lower prices if support is broken. GLD, GDX, GDXJ

    (click to enlarge)

    LISTEN TO LIVE FORECAST OF GOLD & OIL

    howegold
    Click Here

    Below are some ETFs that can be used to take advantage of rising gold prices. While there are other funds that cover gold miners I feel they may not perform well during the equities bear market. Investing in physical gold is the best play at this stage of the game but when the equities bear market looks to be nearing an end, gold mining stocks will be the best place to be.

    gold etf fund alerts

    PART 2 CONCLUSION:

    In this article we talked about gold and gold stocks which are showing signs of a major bottom being put in place this year. And in the next article PART 3 I will who you what to expect long term for crude oil, how we are up 28% in our short oil trade, and how you can play this multi-year cycle bottom when the time is right.

    In the meantime, be sure to join my Free Newsletter so that you receive PART 3 along with more trade ideas:www.GoldAndOilGuy.com

    Chris Vermeulen

    Mar 18 9:50 AM | Link | Comment!
  • Three Fear Resistant Commodities That Look Tasty

    On Friday, March 6 the US jobs report hit the wires. Equities were trading higher in premarket, and the previous session we had seen strong selloff followed by an equally strong high-volume rally. No one was expecting the massive selloff that was about to hit the stock market when the good jobs numbers were posted.

    Later that day after 6 1/2 hours of heavy volume selling in the stock market the closing bell rang. The big selloff pulled most stocks and commodities into an extremely oversold market condition. Traders were waiting all day for some type of bottom to be put in place so they can reenter a long position and day trade the rebound.

    But as we learned when the closing bell was ringing, there was no bottom and there was no bounds in equities. From looking at my trading platform dashboard virtually every stock sector country and commodity ETF was trading sharply lower.

    Only four things were green on my dashboard. The first one was the VIX which makes sense as people become fearful the sell stocks and the volatility index rises. But what was interesting was that the other three were food commodities.

    EatAndDrink

    The first commodity trading higher was coffee. This makes sense because it was a stressful day and everyone was drinking coffee. The second was sugar. Obviously the majority of coffee drinkers enjoy sugar in their coffee.

    The last commodity which rallied late in the day was the ETF cow. COW is a livestock commodities fund. And so it seems after a long hard in the financial market we find comfort in a big juicy steak. Subscribers to my newsletter and I just happened to get long this fund recently. The chart from a technical stand point is very bullish. Symbols: COW, JO, SGG

    On a more serious side of things… though, the stock market is still in an uptrend. Today's news was a surprise and surprised data will always cause a severe reaction in the market. History has proven that news based selloffs tend to be a blip on the chart and market recovers within a couple days and the previous trend once again continues.

    After the weekend when the stock market reopens and traders had time to digest the news about the FED possibly raising rates if the economy continues to show strength it is going to be interesting to see how the market reacts. My guess is that we see higher prices early next week for US equities.

    GET MY FREE TRADING NEWSLETTER: www.GoldAndOilGuy.com

    Chris Vermeulen

    Tags: COW, JO, SGG, commodities
    Mar 09 11:02 AM | Link | Comment!
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