The US Stock market rallied on Friday,
October 25, on TESLA earnings crushing expectations as well as news that any
positive US trade deal outcomes could see almost immediate removal of future
tariffs that are scheduled to be implemented near the end of October. This was enough for the markets to rally from
the start of trading and continue to push higher until near Noon in NY. After new highs were reached, the markets
contracted a bit headed into the close.
Gold shot up early this morning before the
news related to the US trade deal hit.
Our opinion is that this is a natural advancement in precious metals
that is not new related or muted by some external factors. Precious metals have been setting up a
sideways FLAG formation for over 2 months and we believe the apex/breakout move
is near.
Oil was somewhat flat to close out the week and closed trading near $56.63. The past three days we have seen oil rise from the $53 level to the current price levels, but we believe oil is still fundamentally oversupplied and that price will continue to weaken over time.
The real question before all of us right now
is will this new nominal high represent a new breakout bullish price trend
heading into a US Presidential Election cycle, or is this more price rotation
within a defined price range?
If you consider all the shifting aspects of
the US political and economic landscape as well as the current geopolitical and
economic factors, we believe any real breakout move will come as we get closer
to November 2020 – not now. We believe
this is still price rotation and we believe the NQ is the likely cause of this
new nominal price high on Friday. Tesla
crushed earnings and that set a positive tone for Friday’s trading.
Transportation Index Daily Chart
The TRAN, Transportation Index, is still trading near current resistance and has not shown any true new price high yet. It will be interesting to see how the markets open up early next week and what news may drive a new price trend by then.
Mid-Cap Sector Daily Chart
The Mid-Cap has failed to rally to recent price highs which suggest this is not a broad market rally. We would want to see more defined price advancement across all sectors and above recent price highs to call this a broad market rally/breakout
Pay attention to the new that originates this weekend. We don’t believe a deal will be reached with regards to trade as quickly as some others may believe and we still believe the next 12+ months of the US Presidential election cycle will be full of surprises. We may start to get more clarity of a true price trend after the New Year (2020). Until then, we’re staying cautious of these price rotations and picking our trades.
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I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. A gentleman by the name of Brad Matheny goes into great detail with his simple to understand charts and guide about this. His financial market research is one of a kind and a real eye-opener. PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime
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.
Chris Vermeulen
www.TheTechnicalTraders.com
