Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Treasury Yields Rally May Trigger Stock Market Crazy Ivan Event

Stock-Markets / Stock Market 2021 Mar 07, 2021 - 02:10 PM GMT

By: Chris_Vermeulen

Stock-Markets

In the first part of this research series, published yesterday, we explored the rising Yields and how my team and I expect markets to react to the new level of fear that may begin to enter the global credit markets.  Rising Yields suggest investors believe the future risks to the global economy don’t support lower Yield rates.  The talk that investors expect a super-heated global economy may have some truth to it, but we feel the rise in Yields is related more to global credit risks than any type of super-heated global economy.

Today we will explore the potential for a Crazy Ivan event in the global markets. This would be represented as a price revaluation event, causing the global markets to suddenly attempt to revalue price levels based on new levels of fear and more data. 


The Crazy Ivan Outcome – What To Expect

The most likely event related to the Crazy Ivan set up over the next 6 to 12+ months is a moderate price revaluation event. This takes place when traders/investors suddenly realize the risk levels in the markets are elevated and they quickly take stock of their positions, profits, and future expectations.  Right now, many stocks are trading at Nx multiples of earnings.  This type of setup happens when traders and investors feel exuberant related to future expectations, and is often called a “bubble rally” or an “excess phase rally”.

There are two likely outcomes from this Crazy Ivan event: (1) a broad market revaluation event; or (2) a sideways continued “melt up” event.  We don’t believe the “melt up” event will prompt any big upside price trends right now.  The recent move in Treasury Yields has set up a sideways market trend which we believe could continue through March/April before reaching a peak – depending on what Yields do.  If Yields continue to rally higher by even a little bit, then we believe the MAGENTA downside targets (see the chart below) are likely to be the immediate outcome over the next few weeks and months.  If Yields fall back below the Breakdown Threshold level, then we believe the GREEN “melt-up” trend is the most likely outcome.

Again, to make this very clear for all of you, the upside price trend in Yields has already completed the setup for a Crazy Ivan event.  What matters is what Yields do next.  If they continue higher, then a broad market correction, a Crazy Ivan event, will likely come quickly.  If Yields stall and move lower, then the Crazy Ivan event will be pushed further out into the future and the markets may move sideways a bit, possibly trending a bit higher, then setting up another upward move above the Breakdown Threshold. Take a look at the first chart in this article to learn how this setup plays out over time.  It all depends on what Yields do over the next 6+ months.

January 2009 Ratio Targets for the Crazy Ivan Event

Our research team has identified two key levels that are likely to prompt moderate support in the broad markets if a Crazy Ivan event takes place this year.  First, the rotation range from 2018, Target 1. This rotational price range on the SPY and QQQ is highlighted on the chart below, which suggests the QQQ may attempt to fall more than -35% to -45% from current levels if the Crazy Ivan event takes place.  The SPY may attempt a -25% to -30% decline as well to reach the Target 1 levels if the Crazy Ivan event takes place.

Be sure to sign up for our free market trend analysis and signals now so you don’t miss our next special report!

The Target 2 levels are drawn from the 2015~16 price rotational range and suggest a much deeper price correction could take place if the Target 1 levels fail to act as strong support.  The Target 2 levels suggest a deeper -60% to -75% correction in the QQQ may take place and a -45% to -50% correction may take place in the SPY.

The last time the Yields set up this type of process, 2007, 2008, and 2009 (the Housing Crisis), the QQQ fell -55% over the course of 13 months and the SPY fell -57% over 17 months.  So, the target levels we have identified are not excessive based on historical price relationships. 

Since the 2008-09 crisis event, global central banks have engaged in a massive credit infusion process to support the global economy’s recovery efforts.  This has led to a resurgence in various market sectors over the past 12+ years – ranging from emerging markets, corporate debt/credit, Technology, BioTech and many others.  It seemed everything was starting to move beyond the 2008-09 crisis event after the 2015-16 market rotation, then COVID-19 hit the global markets.

This global pandemic constricted global economies and consumers.  It pushed global central banks into another “crisis mode” where they attempted to ease credit facilities and push money into the hands of corporations and consumers. This last burst of easy credit prompted a recovery and rally in the QQQ and SPY (as well as some other global assets) while the Yields collapsed back to below ZERO levels again (remember, they first collapsed below ZERO in 2019).  You can see from the second, more detailed Yields chart (above) how this move prompted a very strong rally/recovery prior to COVID and after COVID.

Now, we’re reached the point where Yields must move lower to avoid a Crazy Ivan event and to support a moderate “melt up” in the markets, or, fear and greed will take over as Yields continue to rise which will prompt a global revaluation event which will likely be like the 2007-09 Housing Crisis.  If the markets start to roll over and volatility rises, we can benefit from it with our Options Trading Signals which we use non-direction trades to sell premiums. This allows options traders to profit from volatility and not worry about which way the market moves.

Traders and Investors must prepare for these eventual outcomes right away.  This Crazy Ivan event will likely become one of the biggest opportunities of your lifetime to protect and grow your wealth if you are able to navigate it properly.  Simply put, these big rotations in global asset prices present massive opportunities for traders/investors to create profits.  Please Take a few minutes to learn how we can help you by visiting www.TheTechnicalTraders.com.  We have incredible tools and services to help you navigate and profit from these big trends.

We believe we may be starting an extended “capital shift” process which may last well into March/April 2021 before real opportunities setup possibly in May or June.  The markets will do what they always do, react to traders, capital, and global central bank influence.  There are times when certain sectors enter a euphoric phase and there are times when the global markets revalue risk.  We may be nearing an end to a euphoric phase and starting a revaluation phase. 

What we expect to see is not the same type of market trend that we have experienced over the past 8+ years – this is a completely different set of market dynamics. Don’t miss the opportunities in the broad market sectors in 2021, which will be an incredible year for traders of the BAN strategy.  You can sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Staying ahead of sector trends is going to be key to success in volatile markets. 

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers.

Happy trading!

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

© 2005-2022 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