Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19
US Tech Stock Sector Setting Up for A Momentum Breakout Move - 12th Feb 19
Key Support Levels for Gold Miners & Gold Juniors - 12th Feb 19
Socialist “Green New Deal” Points the Way to Hyperinflation - 12th Feb 19
Trump’s Quest to Undermine Multilateral Development Banks - 12th Feb 19
Sheffield B17 US Bomber Crash 75th Anniversary Fly-past on 22nd February 2019 Full Details - 12th Feb 19
The 2 Rules For Successful Trading - 12th Feb 19 -
Financial Sector Calls Gold ‘Shiny Poo.’ Are They Worried? - 11th Feb 19
Stocks Bouncing, but Will They Resume the Uptrend? - 11th Feb 19
EURO Crisis Set to Intensify: US Dollar Breakout Higher
Stock Market Correction Starting? - 10th Feb 19
Gold Stocks Gather Steam - 10th Feb 19
Are Gold Bulls Naively Optimistic? - 9th Feb 19
Gold, Silver Precious Metals Update - 9th Feb 19
The Wealthy Should Prepare to Be Soaked - 8th Feb 19
US Business Confidence Is Starting to Crack - 8th Feb 19
Top Myths and Facts about ULIP Plans - 8th Feb 19
A Major Stocks Bear Market in 2020? - 8th Feb 19
Gold Market Extremes Test Your Mettle - 8th Feb 19
The Venezuela Myth Keeping Us From Transforming Our Economy - 8th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Global Economic Perceptions Are Shifting Imnplications for Stock Market

Stock-Markets / Stock Markets 2018 Nov 30, 2018 - 02:25 PM GMT

By: Chris_Vermeulen

Stock-Markets

Our researchers spent a good portion of the holiday weekend researching a continued capital shift that is taking place in the US equities markets and throughout the global market.  Over the past 20+ months, a massive capital shift has taken place where investment capital fled weaker global economies and rushed into the US stock market because of a tremendous value opportunity that existed at that time.  Technology, Biotech and many others equity sectors were skyrocketing – in some cases 2~3% a month.  This ROI, along with the benefit of a stronger US Dollar, created a very unique environment where foreign capital could rush into the US markets, land pretty much anywhere and become relatively safe from foreign risks/devaluation.


Yet, over the past 45+ days, the US equity markets have declined dramatically and our researchers wanted to investigate if this capital shift dynamic had abated or ended recently.  This could be a very important question for investors to understand because the most to safety for capital is one of the most critical functions of capital preservation.

Capital operates under the premise that certain risks will be allowed as long as ROI is sufficient to offset those risks.  Capital tends to move away from hostile environments and towards environments that are stable and capable of generating returns with limited risks.  The only time capital rushes towards high-risk returns is when managers become greedy with their client’s money.  Yes, these types of returns can be tremendous when there is little risk, but these high-risk returns often result in “unknowns” that can be catastrophic for investors (think Greece or Puerto Rico).  Overall, far greater capital is deployed in more traditional investment sources that are lower risk and produce lower ROI as a means of supporting long term objectives.

The question before our research team is “has the capital shift that we believe has taken place over the past 18+ months changed direction or changed focus and how can we profit from this dynamic?”  It is our believe that capital is still searching for the safest and most capable ROI on the planet in comparison to global economic and currency risks.  Has the economic environment changed so much that capital is now searching for new sources of safety and return?

Our researchers focused on four key aspects of the global economy in an attempt to answer these questions :

_  China/Asia Future Economic Expectations/Realities

_  Europe/EU Future Economic Expectations/Realities

_  Arab/Russia Future Economic Expectations/Realities

_  US/North America Future Economic Expectations/Realities

By focusing on these different regions of economic power and capital, we believe we can attempt to develop a better understanding of where capital will find suitable investment environments and stability over the next 12 to 18+ months and better understand how capital will be deployed in the future.

The new cycle is full of concerning headlines from all over the planet.  Russia and Ukraine appear to be headed into a conflict.  Turkey and Saudi Arabia have already entered a war (of sorts) over the Jamal Khashoggi murder with could conflate into broader issues for Iran, Syria, Russia, the US, and many other nations.  China is experiencing an economic slowdown that could result in a populous uprising if conditions don’t improve soon – as we are starting to see in Hong Kong.  Regions of Europe are already cracking under a severe banking/credit risk scenario with little to no hope of support from the EU.  And thousands of migrants are rushing the US border attempting to flood into the US illegally as they feel it is their right to invade a nation that is offering entitlements to all invaders.  If we step back and really consider all of this, the world certainly appears to be unraveling before our very eyes.  The fabric of society that was in place 20+ years ago seems to be tearing apart more and more each second.

As long as the US Dollar continues to strengthen above $92 and Gold/Silver continue to form a deep price base (as we recently suggested here: https://www.thetechnicaltraders.com/metals-moving-in-unison-for-a-massive-price-advance-part-ii/) we believe the US equity markets will quickly find support near current lows and attempt a new price rally that should push prices back towards new price highs before the end of January 2019.  Take a look at this Weekly chart of our Custom US Equity Market Composite Index.

Although the recent price decline has been dramatic and concerning, the reality of this price correction is that it has dropped to the middle level of longer-term support originating from the 2012 to 2016 price range.  When we take a very long-term view of the markets, the middle (green area) of price rotation has continued to act as resistance and support for price over the past 2~3 years.  In 2015~2017, this area acted as resistance.  In late 2017 and early 2018, the US equity markets began a dramatic acceleration that resulted in this same area becoming support for the price (seen in Feb 2018).  Overall, this recent price decline is likely a result of the US Fed prompting longer-term concerns and the US elections prompting some levels of uncertainty in the markets.

How will investors digest the remaining 30+ trading days for 2018 and early 2019 in light of this retracement and new price valuation?  Will these price levels be viewed as advantageous buy levels of will further pricing concerns prevent investors from pulling the trigger?  We’ll continue our research and attempt to more clearly illustrate our findings in the next part of this multi-part research article.  Right now, think about how the global markets are set for the next 30~90 days of trading action and think about what you believe will be the likely outcome of the new year (the end of the Christmas season, the start of a new year and the continued shifting global economic headlines).

We believe 2019 and 2020 will be incredible years for skilled traders with big price swings and fantastic opportunities for traders.  Please take a minute to visit www.TheTechnicalTraders.com to learn about our research team and how we can assist you in finding great trades.  We have been calling these market moves with incredible accuracy over the past 18+ months because of our proprietary research tools and skilled researchers.  Try our services and see for yourself how we can help you become a better trader. Stay Tuned for Part II

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules