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Chris Vermeulen
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Chris Vermeulen the founder of 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
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Technical Trading Mastery - 7 Steps To Win With Logic
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  • Global Markets And Dow Jones Fire Warning Shot Across Investors Bow!

    Last week, the global equity markets were quite undecided. China's and Japan's equity prices have been moving higher. The Japanese Nikkei reached its highest level since 1996 on Tuesday, August 11th, but then pulled back at the end of the week. Hong Kong's Hang Seng made a new monthly low and the Australian Market fell to a new 6-month low.

    Europe was more decisive. Traders mostly sold stocks. The German DAX, London FTSE, and Zurich SMI all fell to monthly lows by mid-week and did not recover much by Friday August 14th's close. In Russia, it was much different. Moscow's MICEX index rallied to its highest mark in 3 months.

    In the US Markets, the selling was even more intense. On May 19th,2015, the DJIA topped out at 18,351. The DJIA has failed to make a new high since then and continues to sell off. The decline, so far, has been over 1,220 points which is its' greatest loss of the year. Last week, began very strong, with the DJIA up 245 points on Monday, August 10th; Tuesday was down 212 points, and by Wednesday, the DJIA had fallen all the way to 17,125, its' lowest level since February 2nd, 2015. We had a CONFIRMED BEARISH/SELL signal on August 4th, when the Dow Jones was at 17,596. Before I can take any BEARISH positions in the US Markets, this signal needs to be CONFIRMED by the SPX and the NDX-100 as BEARISH, which are currently NEUTRAL/TRENDLESS. (SPY, DIA, IWM, QQQ)

    The SPX landed at support levels and found its' footing, once again. We are getting closer to the cycle lows in September/October when the downward pressure will push it through its' support trend lines. We are still into a sideways direction. It is a little too early to tell if it will continue the sideways motion or decline in some downward momentum, next week. SPX is undergoing a consolidation in a downtrend trend using the 200- Day Moving Average as support. A daily close below 2076, which does not hold, should bring about the next challenge to the 2040 major support level. The current declining patterns are represented in those of the DJIA,, NYSE and the Dow Jones Transportation Indexes.

    (click to enlarge)

    The Dow Jones Transportation Index and the Dow Jones Industrial Average are leading the US Markets down during this topping process They are declining further than the other indexes, and the other indexes should be establishing their downtrends, in the near future. With the exception of a monumental one-day market crash, that happens once in a blue moon, bull markets that are topping undergo a drawn-out process that usually takes, at least, many months before bearish momentum finally takes over and a new downtrend emerges.

    (click to enlarge)

    Considering that US stocks have been in a 7-year bull market, it would be unreasonable to expect such bullish momentum to change overnight.

    Therefore, even though price momentum has been favoring the bulls lately, it is still my belief, that it is dangerous to be invested on the long side of these markets, as of November 25th, 2014.

    The stock market is undergoing a big trend change and most of the analysts are missing it, which is normal. They lack the access to "The Predictive Trend System Analytic's" of a Financial Forecasting Model. My clients have the access to this knowledge from our subscription service that we provide. This knowledge provides you, the client, with THE EDGE that other professional investment firm's lack.

    U.S. equity markets have been fueled by cheap dollars and cheaper interest rates. The combination of the stock market crash from 2008 - 2009, along with a declining U.S. Dollar, has been destroyed by the Federal Reserve Bank (NYSE:FRB), which has helped US Equities to become a bargain on the global market. This allowed foreign buyers to come in and purchase US Equities, at both a nominal value, based on the markets' decline, as well as, a relative value based on their home currency. Foreign investors have capitalized on the rise in the US equity market

    On November 25th, 2014 my **Global Sentiment Model signaled the "EXCESSIVE EXTREME OPTIMISM", which provided an exit point on all long US Market positions . Those traders and investors, that remained in long positions, who were not subscribers to our service, at that time, have just been channeling, without any new break outs into new highs.

    There is a huge disconnect between the popular sentiment, among the "talking heads" on the news, regarding how these events will affect the September 2015 meeting of the Federal Reserve Bank. The general consensus, that I feel currently exists, is that this could very well push any increase in interest rates, out into the year, 2016. The Federal Reserve Board of Governors has been decidedly dovish, regarding this aspect, and has continued its' quantitative financial engineering.


    High bullish readings in the sentiment stock index usually are signs of Market tops; low ones, market bottoms.


    Last Week

    2 Weeks Ago3 Weeks Ago
    AAII Index
    Source: American Association of Individual Investors,

    Our current sentiment and technical features are consistent with a major stock market top. This model uses the market sentiment composite which is a measure of investor sentiment. This metric tracks the mood of investors, which is then translated into a probability whether the markets will advance or decline, within the near term, as well as, an undisclosed period of time. It is a contrarian indicator that produces a bullish signal, when market sentiment is overwhelmingly negative, and a bearish signal when markets are overwhelmingly bullish.

    We have not disclosed these models' methodology, and its statistical data, as it is proprietary. We have also not disclosed the correlation coefficient that is used to measure the strength of the linear dependence and its' algorithms between the market sentiment composite and the 12-month forward return. A trading friend of mine developed this model thirty years ago. For the period of time that it has been implemented, which is now 25 years, it has been predicatively accurate, 100% of the time, prior to any major changes within the US Markets. The last signal that was generated was on November 25th, 2014, which registered "EXCESSIVE EXTREME OPTIMISM" and the broad market had been trading sideways since.

    Learn how to read the market and make the same trades we do:

    Chris Vermeulen

    Tags: SPY, DIA, IWM, QQQ
    Aug 17 2:53 PM | Link | Comment!
  • Ugly Outlook – Global Economics, Quantitative Easing And Equities

    A take on the global economy and equities markets that paints a simple and clear pictures I think.

    The DJIA index has recorded seven consecutive down days in a row! These 7 distribution days are a sign that many institutions are taking profits or establishing losses.

    As we are entering the second half of 2015, financial panic is occurring globally. Currently, this tremendous financial devastation is happening throughout the world. Stock prices are crashing in China, Europe and soon I feel the United States. Puerto Rico has now defaulted on their debts. Quantitative Easing has been masking the symptom of this endemic disease. The Greek Banks are still frozen and will continue to stay this way; however, the mainstream media is not reporting on this current situation in Greece. There is a limit on weekly withdrawals of 420 Euro per (around US $455).

    The corporate leaders of the major banks were left in place back in 2008/2009 and were allowed to continue receiving their huge bonuses. Their banks only existed because of the unprecedented taxpayer subsidy. The system is still essentially the same as it was before, due to any lack of meaningful reforms that have been required. It is this lack of change in all the required global fiscal policies that I am warning you of the coming collapse of this new "Asset Bubble". This is where "profits" are Privatized and "losses" are Socialized.

    The printing of limitless sums of virtually free money under various "Quantitative Easing" programs and simultaneously slashing interest rates to their lowest levels in history has created stock markets that have been artificially "levitated" for many years now. This growth is based on virtually "free money". I am warning you that the current business valuations and calculations are NOT accurate and even NON-sustainable. Our previous "Credit Bubble" has now been leveraged and replaced by an even larger and more dangerous "Asset Bubble".

    The Federal Reserves easy money policies have left stocks and bonds on the verge of a massive collapse. Their "Financial Engineering" has created such a "horrendous bubble" that it will lead to the largest historical economic deflationary depression that we have ever experienced. This bubble, when it finally implodes, is going to be absolutely devastating to the global economies. All irrational bubbles eventually burst.

    (click to enlarge)

    What is actually required today is a universally respected reserve asset capable of filling our current void with a reliable presence that serves as a "store of value". We do not require a complex international committee to solve this new future problem. This "store of value" asset is already in existence and currently held by some central bankers and prudent individuals around the world. It is known as gold. From the ruins of our chaotic financial crisis, a degree of sanity will prevail. Gold, as a freely floating asset, will arise in stature as the only element of global monetary reserves. The floating aspect is the vital evolutionary improvement over all previous structural monetary failures which tried to use a gold standard at a fixed price (i.e: unit of account).

    When the global financial crisis hit in 2008, U.S.Dollar liquidity dried up and international financial markets experienced widespread paralysis. First to the scene was the U.S. Federal Reserve Board, pumping liquidity into the system and establishing a series of large-scale bilateral swap agreements with major central banks. This included several countries in the major emerging markets. The International Monetary Fund (NYSE:IMF) followed with a number of programs for countries hit by the crisis and it adapted its financing toolkit to meet the demands of the crisis. For the first time, policy makers looked to the Special Drawing Rights (NYSE:SDR) to provide much-needed liquidity throughout the international monetary system.

    SDR is an artificial "basket" of currency used by the International Monetary Fund (IMF) for internal accounting purposes. The SDR is also used by some countries as a peg for their own currency and is used as an international reserve asset. The SDR was created by the countries participating in this system who needed official reserves (government or central bank holdings of widely accepted foreign currencies) that could be used to purchase the domestic currency in foreign exchange markets where it is required to maintain its exchange rate. It is a potential claim on the freely usable currencies of IMF members. The Special Drawing Rights was created by the IMF in 1969 to support a fixed exchange rate system.

    The SDR is neither a currency nor a claim on the IMF. It is a potential claim on the freely usable currencies of IMF members. Holders of SDR can obtain these currencies in exchange for their SDR. The SDR is primarily a unit of account for the purpose of accounting.

    It is my view point that the SDR, which is a "Virtual Reserve Currency", will never come close to achieving a status anywhere near that of "the principal reserve asset in the international monetary system" as envisioned by The International Monetary Fund for a future global reserve currency!

    Gold has been declining sharply since its all-time high of $1,920/ounce on September 2011. It is experiencing a historical correction that we forecasted years ago. I am expecting much lower prices over the next few months. My predictive trend and cycle strategy will inform us when we have roughly hit the bottom of these two markets (gold & silver).

    Today, the majority of investors now believe gold is dead and no longer relevant and that cash and the U.S. dollar is King. With this type of "herd mentality", investors will mostly likely miss the next historical buying opportunity for metals, and miss the ultimate short-sell trade on US equities.

    Chris Vermeulen - ETF Trade Alerts

    Algorithmic Trading Strategies Developer & Trader

    Tags: DIA, SPY, IWM, QQQ, SDS
    Aug 10 2:03 PM | Link | Comment!
  • Executive Order For Your Gold

    In 1933, with America five years deep into The Depression, the stage was set for an act of unprecedented proportions. History shows a wicked warlock at work.

    On March 6, 1933, Executive Order (EO) 6073 was passed by Franklin Delano Roosevelt (FDR), the 32nd President of the United States in an attempt to solve the dire banking crisis. Executive orders have been around since 1789, allowing Presidents to issue legally binding orders unilaterally, without the consent of Congress. During his Presidential tenure, from 1933 to 1945, Roosevelt would issue 3,728 Executive Orders.

    This was his third and it was a doozy. I could just imagine how angry and frustrated individuals would have been. I doubt this will happen again but history does have a way of repeating…

    (click to enlarge)

    Source: Wikipedia-executive order 6102

    Just two days after Roosevelt was inaugurated as President, he proclaimed a "banking holiday". From and including Monday, March 6, 1933 to Thursday, March 9, 1933 no bank "would pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever of any gold or silver coin or bullion or take any other action which might facilitate the hoarding thereof…" Sold to the American people as an attempt to control speculation and regulate interest rates, he closed America's banks, thwarting customers from withdrawing their paper money holdings or converting their holdings to gold.

    With a swish of his magic wand, Roosevelt mastered "complete control over America's banking system", expanding his Presidential powers exponentially in the process.

    In his first "Fireside Speech" (which burned the backside of many Americans) on March 12, 1933 Roosevelt declared "Let me make it clear to you that the banks will take care of all needs, except, of course, the hysterical demands of hoarders, and it is my belief that hoarding during the past week has become an exceedingly unfashionable pastime in every part of our nation. It needs no prophet to tell you that when the people find that they can get their money - that they can get it when they want it for all legitimate purposes - the phantom of fear will soon be laid. People will again be glad to have their money where it will be safely taken care of and where they can use it conveniently at any time. I can assure you, my friends, that it is safer to keep your money in a reopened bank than it is to keep it under the mattress."

    On June 16, 1933, EO 6073 passed into legislation as the "Emergency Banking Act (EBA)". After only 40 minutes' debate in the House of Representatives, with an unknown author and no printed copies available for members of the House, the Bill was passed swiftly and without due process. The wand was waved again.

    At the time, Congressman Lundeen, appalled at the reckless lack of due process involved in the passing of this Bill said "I want to put myself on record against procedure of this kind and against the use of such methods in passing legislation affecting millions of lives and billions of dollars. It seems to me that under this bill thousands of small banks will be crushed and wiped out of existence, and that money and credit control will be still further concentrated in the hands of those who now hold the power…. I am suspicious of this railroading of bills through our House of Representatives, and I refuse to vote for a measure unseen and unknown."

    Meanwhile, Executive Order 6073 paved the way for Executive Order 6102 on April 5, 1933.

    This Executive Order (EO) made it a criminal act to possess gold coins, gold bullion and gold certificates within the continental United States and ordered that the hoarded gold be delivered to the Government on or before May 1, 1933. The official price of gold was raised from $20.67 to $35/ounce.

    Although it is unknown just how much gold was confiscated by means of Executive Order 6102, numbers suggest that by January 1934, there were 195.1 million ounces and 227.9 million ounces by August 1934.

    The Government had to have some place to hoard the confiscated gold. So, Executive Order 6102 paved the way to Fort Knox. The U.S. Treasury Department began construction of the United States Bullion Depository (USBD) in 1936. Completed in December of that year, at a cost of US$560,000, the Gold Vault sits in a 109,000-acre Army enclave in Fort Knox, Kentucky.

    The U.S. Mint states that 147.3 million ounces of gold are now tucked into Fort Knox. Guarded by Apache helicopter gunships and tucked into a bunker with a bomb-proof roof and thick granite walls, you'd think that 147.3 million ounces of gold would be safe in the vault. While Treasury officials insist that the "gold is all there", why the resistance to a public audit? Congress begs off, saying it will cost US$60 million to test the gold. Other figures bandied about suggest US$15 million. Other so-called experts contest both figures, stating that an independent audit and assay could be conducted for as little as US$15,000.

    More nefarious are that the numbers don't add up…and never have. In his article The Great American Disaster: How Much Gold Remains In Fort Knox?, dated August 27, 2010, Chris Weber states that, at their peak in 1949, the Fort Knox reserves reputedly numbered 701 million ounces - 69.9% of all the gold on the planet. The latest figures reported by the U.S. Mint state that 147.3 million ounces of gold are now tucked into Fort Knox. Treasury subsequently downgraded this figure from 264 million ounces of gold, a decline of 79%! Lucy, you got some 'splainin' to do.

    Clearly, the road to - and from - Fort Knox is paved in gold and not-so-gold intentions. Tales of pillaging, profiteering and skullduggery abound at the crossroads of Bullion Boulevard and Gold Vault Road. Masked interlopers didn't rob the USDB. Reputed to be the second most secure place in the world (as reported in The Blogington's post of September 21, 2010), the video cams, armed guards, attack helicopters, armored personnel carriers, and 30,000 soldiers guarding Fort Knox guaranteed that.

    For over 50 years, while domestically it was a crime to hold gold, there is little doubt that well-heeled Americans - and America's enemies, operating offshore, were able to procure gold at the bargain basement price of $35/ounce.

    Not surprising that Fort Knox's 22-ton door is locked to an audit. For almost 40 years, no visitors have been allowed in the grounds of the Gold Depository. Considered one of the eight most secure places in the world, we're not getting in for a sneak peek anytime soon. In the last recorded "audit", in the early 50's, a group of Congressmen and Senators were taken on a quick tour of Fort Knox and allowed to peek into a few vaults. They reported seeing "orange-hued gold bars". Lucy, you got more 'splainin' to do.

    In his article "The Great American Disaster: How Much Gold Remains In Fort Knox?", Chris Weber outlines details about the one "audit" of Fort Knox, as follows:

    "The only audit that has ever been done of the gold inside Ft Knox was done days after Dwight Eisenhower became President in January of 1953. After 20 years of Democratic presidents, the American public wanted to be sure that the gold confiscated from them was still there. Thus, the new President ordered an audit within hours after taking office.

    The central problem was that it wasn't much of an audit. To sum it up:

    1. Representatives of the audited group were allowed to make the rules governing the audit. No outside private experts were allowed.
    2. Those government bureaucrats involved were inexperienced in their tasks, by their own admission.
    3. The entire audit of the largest gold hoard ever concentrated in history lasted only seven days.
    4. Only a fraction of the gold was actually tested. Later, the officials put this fraction at just 5%.
    5. Based on that fraction, the official committee reported that, in their opinion, all the holdings would have matched their records if they'd all been tested.
    6. If the audit was accurate, the fact remains that almost 80% of it went overseas in the coming years. If the audit was not accurate, the amount of gold lost could have been even more. "

    On September 23, 1974, Mary Brooks, the Director of the United States Mint, led a tour of members of Congress and the news media through the USBD. There was no audit or inventory of the gold and no other public "inspection" has been allowed since then.

    Why won't the Mint comment about how much gold is there? Perhaps the acid test is not so much as what has happened to the gold in Fort Knox; but rather is there gold in Fort Knox? And if so, how much…..or how little?

    In a feat worthy of The Great Houdini himself, the Fort Knox gold may be the World's Greatest Vanishing Act ever.

    In Conclusion:
    There are other ways to take advantage of gold's next bull market that can add leverage and protection against a gold confiscation. One of the best ways is through the ownership of gold producing companies. The key here is in buying the right companies (GLD, GDX,GDXJ,DUST,NUGT) as the right time within the market cycle.

    If you are interested in accumulating shares in what I believe will be some of the best performing stocks in the near future join my FREE gold newsletter:

    Chris Vermeulen

    Kal Kotecha

    Aug 04 5:46 PM | Link | Comment!
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