{"id":171144,"date":"2020-05-26T16:37:06","date_gmt":"2020-05-26T20:37:06","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=171144"},"modified":"2020-05-26T15:42:27","modified_gmt":"2020-05-26T19:42:27","slug":"is-a-blow-off-top-setting-up","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/05\/is-a-blow-off-top-setting-up\/","title":{"rendered":"Is A Blow-Off Top Setting Up"},"content":{"rendered":"
May 26, 2020<\/div>
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By TheTechnicalTraders<\/u><\/a>\u00a0<\/strong><\/p>\n

– Our research team has become increasingly concerned that the US Fed support for the markets has pushed price levels well above true valuation levels and that a risk of a downside price move is still rather high.\u00a0 Recently, we published a research article highlighting our Adaptive Dynamic Learning (ADL) predictive modeling system results showing the US stock market was 12% to 15% overvalued based on our ADL results.\u00a0 Today, Tuesday, May 26, the markets opened much higher which extends that true valuation gap.<\/p>\n

We understand that everyone expects the markets to go back to where they were before the COVID-19 virus event happened \u2013 and that is likely going to happen over time.\u00a0 Our research team believes the disruption of the global economy over the past 70+ days will result in a very difficult Q2: 2020 and some very big downside numbers.\u00a0 Globally, we believe the disruption to the consumer and services sector has been strong enough to really disrupt forward expectations and earnings capabilities.\u00a0 We\u2019ve been warning our friends and followers to be very cautious of this upside price trend as the Fed is driving prices higher while the foundations of the global economy (consumers, services, goods, and retail) continue to crumble away.<\/p>\n

Our biggest concern is a sharp downside rotation related to overvalued markets and sudden news or a new economic event that disrupts forward expectations.\u00a0 Obviously, Q2 data will likely be a big concern for many, yet we believe something else could act as a catalyst for a reversion event.\u00a0 Possibly global political news?\u00a0 Possibly some type of extended collateral damage related to the global economy? Possibly something related to earnings expectations going forward through the rest of 2020 and beyond?\u00a0 We believe things are not \u201cback to normal\u201d at this stage of the recovery and we believe the markets are moderately over-extended at this time.<\/p>\n

Before we continue, be sure to\u00a0opt-in to our free market trend signals<\/strong> <\/em>before closing this page, so you don\u2019t miss our next special report!<\/em><\/p>\n

ES ADL PREDICTIVE MODELING WEEKLY CHART<\/strong><\/h3>\n

This Weekly ES (S&P500 E-Mini Futures) chart shows our ADL predictive modeling system\u2019s expected future price level targets which suggest the current market price level is 12% to 15% (or more) above these target levels. Remember, the ADL system uses a custom price mapping technology that is designed to identify \u201cprice\/technical DNA markers\u201d within historical data \u2013 then attempt to map out future price level activity and track the highest probable outcomes of these price DNA markers.\u00a0 The objective of this research tool is to show us what type of price activity is highly probable based on historical data and predictive modeling research.\u00a0 This unique trigger on the ES chart consisted of 5 historical DNA markers and suggests a future probability of 70% to 87% regarding future price target levels.<\/p>

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One aspect of our research while using the ADL predictive modeling system and our other tools it the concept of \u201cprice anomalies\u201d.\u00a0 These are rallies or sell-offs that extend beyond support or resistance levels and when price levels trend away from ADL predicted target levels.\u00a0 We created the term \u201cprice anomaly\u201d and explain it to our members as \u201csome external force is pushing the price above or below the projected target level.\u00a0 Once this force abates or diminishes, the price will likely move, very quickly, to levels near the ADL predicted target levels.\u201d.<\/p>\n

Currently, the US Fed is engaging in a moderate support effort for the US stock market and it is reportedly buying $5+ billion a day in bonds and assets.\u00a0 Although it may seem impossible to fight the fed, we believe the markets (like nature) are almost impossible to fool and control.\u00a0 We believe that price will react to market conditions and that future price rotation (both up and down) will continue to be more volatile than many traders expect.<\/p>\n

CUSTOM VOLATILITY INDEX WEEKLY CHART<\/strong><\/h3>\n

This Custom Volatility Index chart highlights the extremely low levels recently established by the COVID-19 market sell-off.\u00a0 These new low levels have created the deepest sell-off levels on this chart in 20+ years.\u00a0 It has also established a new, highly volatile, downward price channel that our researchers are following to help us determine where resistance will likely be found.<\/p>\n

We believe a new downward price rotation is setting up for some time in the near future that will establish a tighter price channel and assist us in determining when and where the ultimate price bottom will setup and complete.\u00a0 With the VIX levels still near 27~29, we are certain that volatility has not decreased even though price levels have attempted a solid recovery over the past 8+ weeks.<\/p>\n

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CUSTOM SMART CASH INDEX WEEKLY CHART<\/strong><\/h3>\n

This Weekly Custom Smart Cash Index chart highlights the true function of price within the US stock market and highlights the overall weakness still at play within the current markets.\u00a0 Even though the NQ has rallied to near all-time highs, the Smart Cash Index is showing the broader market is still rather weak and that recent price activity has stalled into a sideways\/flag formation.\u00a0 The broader market buying that took place near the end of March 2020 and throughout April 2020 has stalled.\u00a0 The Fed became the market for the past 8+ weeks and as the Fed diminishes its activity, it will be up to the markets to manage trends and future expectations going forward.<\/p>\n

Our researchers are concerned that a sudden breakdown in the Smart Cash index may prompt a bigger downside price move in the global markets.\u00a0 Our research team has continued to issue warnings to our members to run protective stops on any open long positions, to properly size trades to avoid excessive risks and to properly hedge your trading using precious metals, miners, and Bonds.\u00a0 In short, these risks are very real.\u00a0 You can still make a profit trading the long side of the markets, but we suggest that you take all the necessary steps to protect your trades.<\/p>\n

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CUSTOM US STOCK MARKET INDEX WEEKLY CHART<\/strong><\/h3>\n

This last Weekly Custom US Stock Market chart highlights two very important levels related to our Fibonacci Price Amplitude Arcs.\u00a0 These arcs represent critical Fibonacci support and resistance levels that arc across time and price levels.\u00a0 It is important to understand these levels will present very real inflections in price \u2013 at least we expect them to create price inflections.<\/p>\n

Currently, there is the YELLOW Fibonacci price arc that is acting as resistance near the current highs and the MAGENTA Fibonacci price arc that is much longer-term.\u00a0 This longer-term Fibonacci price arc may be stronger than the current shorter-term arc.\u00a0 Our researchers believe the current Fibonacci arc levels on this chart will prompt price to \u201cflag out\u201d in a sideways price channel before potentially breaking downward.<\/p>\n

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As we continue to watch for weakness across these charts and trends, we urge skilled technical traders to be prepared for a sharp spike in volatility over the next 4+ weeks.\u00a0 It appears we are only 2 to 4+ weeks away from reaching these major price inflection points.\u00a0 Currently, we believe a downside move is the most probable outcome based on our ADL predictive modeling system results as well as the technical patterns seen on these charts.<\/p>\n

Overall, we believe the increased volatility levels in the US stock market will present some incredible trading opportunities for technical traders.\u00a0 Big swings, near-perfect technical patterns and setups, quick profits, and broader sector rotations.\u00a0 This is the type of market where skilled technical traders can really enjoy a target-rich environment.\u00a0 We just have to be selective in how we determine when to enter trades and to not take excessive risks.<\/p>\n

I\u2019m offering you the chance to learn to profit, as I do with my own money, from market trends that I hand-pick for my own trading.\u00a0 These are not wild, crazy trades \u2013 these are simple, effective, and slower types of trades that consistently build wealth.\u00a0 I issue about 4 to 8+ trades a month for my members and adjust trade allocation based on my proprietary allocation strategy\u2013 the objective is to gain profits while managing overall risks.<\/p>\n

You don\u2019t have to spend days or weeks trying to learn my system.\u00a0 You don\u2019t have to try to learn to make these decisions on your own or follow the markets 24\/7 \u2013 I do that for you.\u00a0 All you have to do is follow my research and trading signals and start benefiting from my research and trades.\u00a0 My new mobile app makes it simple \u2013 download the app, sign in and everything is delivered to your phone, tablet, or desktop.<\/p>\n

I offer membership services for active traders, long-term investors, and wealth\/asset managers.\u00a0 Each of these services is driven by my own experience and my proprietary trading systems and modeling systems.\u00a0 I have a small team of dedicated researchers and developers that do nothing but research and find trading signals for my members.\u00a0 Our objective is to help you protect and grow your wealth.<\/p>\n

Please take a moment to visit\u00a0TheTechnicalTraders.com<\/u><\/a><\/strong> to learn more.\u00a0 I can\u2019t say it any better than this\u2026\u00a0 I want to help you create success while helping you protect and preserve your wealth \u2013 it\u2019s that simple.<\/p>\n

Chris Vermeulen
\nChief Market Strategist<\/p>\n

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

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

By TheTechnicalTraders\u00a0 – Our research team has become increasingly concerned that the US Fed support for the markets has pushed price levels well above true valuation levels and that a risk of a downside price move is still rather high.\u00a0 Recently, we published a research article highlighting our Adaptive Dynamic Learning (ADL) predictive modeling system […]<\/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-171144","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/171144","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=171144"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/171144\/revisions"}],"predecessor-version":[{"id":171149,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/171144\/revisions\/171149"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=171144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=171144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=171144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}