Key Topping Signals For Transportation Index And Precious Metals
Chris Vermeulen | Jul 18, 2019 12:31AM ET
Our researchers identified this critical Double-Top pattern in the Transportation Index after a very strong price rally on Friday, July 12. Double-Top patterns are very important in terms of Fibonacci price structure because they reflect a complete price rejection at a certain price level. In this case, the TRAN Double Top level is $10,655 and our research team believes weakness at this level will push a downward price swing which should attempt to break through the $10,250 level and possibly attempt to move much lower.
The Transportation Index reflects future expectations for shipping of goods and raw materials across the U.S. and, of course, is somewhat related to global economic activity. If the Transportation Index falls in price, then future expectations are for weaker economic activity. If it rises, then investors expect the economy to continue to strengthen.
This Double-Top formation in the TRAN could set up to become a very ominous warning sign for traders and investors.
Recent news about the contraction of China’s economy and the fact that Q2 earnings are about to hit the U.S. markets and global markets could become a key factor in the future for volatility and price. We believe the markets are already setting up a topping pattern after breaching key psychological levels last week.
h3 MINERS ARE OUTPERFORMING U.S. EQUITIES – TOP IS NEAR!/h3Last month I talked about how I have been waiting for gold miners to start outperforming the U.S. stocks market. Once miners start outperforming in a big way (just like we saw in 2007), we know the stock market is topping out and something really bad is about to happen.
In the last couple of weeks, the gold miners index is up over 20% while the S&P 500 is up only 4%, this feels like the start-of-the-end if you know what I mean.
Gold miners and silver broke out today in a big way which could very well be the start of an epic rally for the precious metals sector as we heading into the end of the year.
Looks at the S&P 500 index in the chart below which is of the 2007 bull market top. Currently, the S&P 500 has formed a very similar pattern in 2019 and with the precious metals rocketing higher I think it almost lights out for the U.S. equities.
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Based on the 2008 weekly chart below the U.S. stock market could be literally 2-6 weeks away from collapsing. What makes this even scarier is that the market liquidity is the worst its been in my 23 years of trading. This means when the selling starts we will likely see some sort of flash crash as we saw in 2008, 2015, and 2018. Price drops so quickly that by the time you figure out what you want to do and get your money properly positioned most of the move is already finished.
h3 CONCLUDING THOUGHTS:/h3
Pay attention to our research because we feel the market could breakdown on weakness later this week or early next week. Our predictive modeling systems are suggesting an August 19th, 2019 breakdown date and we are only about 25 trading days away from that date.
In short, the bear market has been a long time coming, but finally, almost all the signs are showing that it’s about to start. As a technical analyst since 1997 having lost a fortune and making a fortune from bull and bear markets I have a good understanding of how to best attack the market during its various stages.
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