Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22
What it's like at a Stocks Bear Market Bottom - 29th July 22
How to lock in a Guaranteed 9.6% return from Uncle Sam With I Bonds - 29th July 22
All You Need to Know About the Increase in Building Insurance Premiums for Flats - 29th July 22
The Challenges on the Horizon for UK Landlords - 29th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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