{"id":165950,"date":"2020-03-04T18:47:12","date_gmt":"2020-03-04T23:47:12","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=165950"},"modified":"2020-03-04T18:47:12","modified_gmt":"2020-03-04T23:47:12","slug":"us-fed-panics-predictive-modeling-shows-you-whats-next","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/03\/us-fed-panics-predictive-modeling-shows-you-whats-next\/","title":{"rendered":"US Fed Panics – Predictive Modeling Shows You What\u2019s Next"},"content":{"rendered":"
March 4, 2020<\/div>
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By TheTechnicalTraders<\/u><\/a><\/strong> – March 3, 2020: the US Fed issued an emergency rate cut of 0.50% to move rates to levels near 1.0% as a result of global economic concerns related to the spread of the Coronavirus and the potential damage it may do to the global major economies.\u00a0 President Trump had been suggesting the US Fed needed to be ahead of the risks associated with future market expectations to allow for increased liquidity and global economic function.\u00a0 Yet, we believe this move by the US Fed came at the wrong time for most investors and traders.<\/p>\n

The global markets had already begun a process of revaluing risk in the markets near the end of February 2020.\u00a0 After the Q1 earnings data was digested and the newest Chinese data became available, investors suddenly understood the risks that we had been warning about for most of January and February.\u00a0 Suddenly, the US markets collapsed and traders were revaluing forward expectations.<\/p>\n

Now that the US Fed has engaged in a 0.50% rate cut, the real risk solidifies in investor minds as \u201chey, the Fed is acting in a manner to ease money supply in preparation for a broad global slowdown\u201d.\u00a0 What does this mean for skilled traders?\u00a0 We\u2019ll explore the future price action using our Adaptive Dynamic Learning modeling system.<\/p>\n

DOW JONES Weekly Chart<\/h3>\n

This INDU Weekly chart showing the ADL predictive modeling system results suggests the INDU will likely rotate near current lows (near 27,000) with very high volatility.\u00a0 Current volatility ranges on the INDU suggest the US markets could rotate 1000 points a day very easily over the next few weeks.\u00a0 Near early April, our ADL modeling system is suggesting the INDU will attempt to rally back to near 29,500 setting up a potential Double-Top formation.\u00a0 Our earlier research suggests the INDU\/YM will likely form a bottom well before the S&P and NASDAQ \u2013 so this aligns with our earlier research.<\/p>\n

Once the Double-Top sets up \u2013 all bets are off as risk will be extremely high for another breakdown event. \u00a0We believe a true bottom will form\/setup sometime between May and June 2020.\u00a0 Therefore, any recovery in the INDU to levels near 29,500 before the end of April would strongly suggest the markets are setting up for a Q1 earnings collapse \u2013 and a potential for a much deeper price low to set up as a real bottom.<\/p>\n

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Nasdaq Weekly Chart<\/h3>\n

This NQ Weekly Chart highlights a shorter-term ADL projected price outcome.\u00a0 The reason we went further back in time to produce these results is because these ADL results aligned with price quite efficiently and also illustrated the perceived weakness in price throughout the end of 2019.\u00a0 Notice the CYAN DASH lines below the price in December 2019 \u2013 these are the ADL predictive price levels for that span of time.\u00a0 Near the early January 2020 price bars, the ADL predictive modeling system identified price levels that almost mirrored the NQ price activity.\u00a0 Currently, the ADL system is predicting the NQ will find temporary support near 9000 for a few weeks before breaking lower to levels near 8000~8200.<\/p>

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This price move, which is opposite that of the INDU, suggests the tech-heavy NASDAQ may continue to experience price pressure with a potential for a downside \u201cwaterfall\u201d price event setting up.<\/p>\n

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Transportation Weekly Chart<\/h3>\n

Lastly, this TRAN (Transportation Index) Weekly chart highlights was we believe to be a more true valuation event setting up over the next 60 to 90+ days.\u00a0 This ADL chart suggests the TRAN price will almost immediately move back to levels near 11,000 (with a potential for a new high print above 11,300), then consolidate near 10,800 before breaking lower in late April or early May.\u00a0 This type of price action aligns with the Q1 results reflecting an economic contraction while optimistic investors attempt to push price levels back towards recent highs before the reality sets into the markets.\u00a0 The real forward expectations of Q2-2020 and Q3-2020 may be a fraction of levels reported for Q4-2019.<\/p>\n

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The US Fed is attempting to front-load the global markets with easier monetary policy to allow for unknown risks that may span 6 months out or longer.\u00a0 Our researchers believe the US stock market will set up a major bottom sometime between May and June 2020 (possibly a bit later) and from that point we expect the US markets to begin to move gradually higher.\u00a0 We believe this move will be similar to the downside price collapse that happened in January 2018 when the markets formed a clear Double-Bottom and began to move higher after May 2018 \u2013 eventually peaking above all-time highs.<\/p>\n

Although the Fed fired an emergency rate cut of -0.50%, the reality is that investors may see this as a \u201cmiss\u201d in terms of hitting a target.\u00a0 Yes, it eases capital flows and sets investor expectations to believe the US Fed is prepared for this risk \u2013 but it also diminishes the potential for the US Fed to take decisive action in Q2 or Q3 of 2020 if the markets collapse as we expect.<\/p>\n

As we\u2019ve been saying for many months, 2020 is sure to be an incredible year for skilled traders.\u00a0 Pay attention to our research to prepare for the biggest moves in the markets.<\/p>\n

As a technical analysis and trader since 1997, I have been through a few bull\/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive\/life-changing if handled properly.<\/p>\n

I urge you visit my\u00a0ETF Wealth Building Newsletter<\/strong>\u00a0and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!<\/p>\n

Chris Vermeulen<\/p>\n

TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders – March 3, 2020: the US Fed issued an emergency rate cut of 0.50% to move rates to levels near 1.0% as a result of global economic concerns related to the spread of the Coronavirus and the potential damage it may do to the global major economies.\u00a0 President Trump had been suggesting the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-165950","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/165950","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=165950"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/165950\/revisions"}],"predecessor-version":[{"id":165951,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/165950\/revisions\/165951"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=165950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=165950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=165950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}