Posts by The Trend Letter

Don’t panic! Profit in a declining market

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Below is today’s update from our hedging service Trend Technical Trader (TTT). Links to archives will not work as this is subscriber content only.  But this should give you a good understanding of how a good hedging service can not just protect you in a declining market, but  actually allow you to make significant gains in a relatively short period of time. If you wish to subscribe to TTT Click Here to receive a $250 discount and pay only $399.95.

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The DJIA dropped 1656 points this week, in what is the worst December for stocks since 1931.

Posted October 29: Please keep the DJIA chart and related commentary posted in the “General Recap” section below in mind. While the quarter isn’t over yet, we currently have a situation in quarterly momentum not seen other than on December 31 1999 and June 30 2007. Those dates immediately preceded the biggest bear markets of the past few decades. It’s still a very long way down, in points and in time, before the gross excesses of the past several years are unwound.

Posted October 03: While the senior index has made new all-time highs this week, the typically leading small-caps printed a two-month low Tuesday. That’s a historically unprecedented divergence. The only comparison was in early April of 2000, before one of the biggest market crashes of all time, when the DJIA made a two-month high while small-caps made a two-month low.

Small-caps often lead markets. The Russell 2000 Small-Caps index closed at a 2-year low and is not just down since the start of 2018 but down since the start of 2017.

GS (Goldman Sachs), our market barometer, closed at a 2-year low and below a supportive uptrend stretching back more than a decade to the low of 2008.

Don’t think this can’t happen to the DJIA or S&P500, or your favorite stocks. It can, and arguably it should since the excesses of the past decade are nowhere near unwound.

Stocks are just now finally oversold in the short term, neutral in the intermediate term, and still massively overbought in the longer term.

Keep in mind that it is from such slightly oversold conditions that crashes often occur, and that there’s been no sign of panic selling so far so that could still happen before a significant relief rally begins. The more likely short-term action however is a bounce into the new year.

Hedge position 1 (actual symbol subscriber content only) hit our sell limit today for a gain of 70% in 10 weeks!

Hedge position 2 (actual symbol subscriber content only) is up 47% for us since September. We’ll offer it up for sale as per the “Open Positions” section below.

Hedge position 3  (actual symbol subscriber content only) was recently sold for a gain of 40% in 5 weeks. We’re raising the buy limit to repurchase it.

Our 4 positions (actual symbol subscriber content only) to short junk bonds have closed at an 18-month high! We’ve raised stops on two of those.

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***Understand that these hedging strategies are simple for any investor to action, a simple click of the mouse on your online trading account, the same as trading any other stock or ETF.

Want to subscribe?

Option 1: Subscribe to TTT and have a plan to not just protect yourself during market corrections & crashes, but to actually profit from it, CLICK HERE and save $250 off the regular price and pay only $399.95.  It’s your money – take control!

Option 2:  Subscribe to both the Trend Letter & Trend Technical Trader for only $699.95, a savings of $550.00. CLICK HERE to take advantage of this offer.

Stay tuned!

S&P hits our target today, but is this the bottom?

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For months we have highlighted our model’s target of 2470 as a low for the S&P 500. In our November 11th post we showed our model’s bearish projection for the S&P 500 to have a cycle inversion targeting a drop to 2600 and even 2500 by year-end.  In our November 20th post we showed the following chart of our models’ projected path for the S&P going into year-end.

spx1120

As we can see on the chart below the S&P is trading almost exactly as our model projected, closing today at 2467, just 3 points off our target.  After the initial test of 2500, our models called for a rally back to 2600, then another re-test down to 2470. Understand that if the S&P breaks below that 2470 support area we could be in for a much deeper correction. Watch Friday’s close, we will update subscribers in Sunday’s issue of the Trend Letter.

spx1220

The fundamentals that are currently driving this correction are:

  •  The Fed’s decision yesterday to raise rates another .25%, plus targeting two more increases next year
  • Ongoing concerns about trade, especially with China
  • Brexit
  • Ongoing concerns about Italy and the EU
  • and now the threat of a US government shutdown

With trade, here is what we told our Trend Disruptors Premium subscribers this morning…

“We know that Donald Trump watches the markets closely as he feels it is virtually an arbiter of his success or failure as a President. We know that ‘The Donald’ will want a rising stock market as he enters his re-election campaign and he knows he will not get one until he gets some kind of deal with China. We believe that Chinese President Xi also needs a deal, so we expect that common interest will lead to an agreement.”

Bottom line is that technically speaking the S&P has followed our model’s projection to a tee and now we need to see if this 2470 range is indeed the bottom. As noted in prior issues, our model projected that after hitting 2470 we should see a rally back to 2600 and then likely another test of the 2500 level.

Are you worried?

If you are worried about your investments and are losing sleep at night because of this market collapse, seriously think about subscribing to our hedging service Trend Technical Trader (TTT).  TTT currently has two open positions that are directly hedging against a stock market decline. Those positions are up 63% (since Oct 4/18) and 38% (since Sept 5/18). In addition to these two open positions, TTT has recently closed two hedge positions for profits of 49% (in 2 weeks), and  54% (in 6 weeks).

The message here is simple, you do not need to lose money in a declining market, you can not only protect your investments and your wealth, but you can actually make significant gains in a relatively short period of time using these hedging strategies. Think of using these hedging strategies as you would think of buying fire insurance for your family home.  Understand that these hedging strategies are simple for any investor to action, a simple click of the mouse on your online trading account, the same as trading any other stock or ETF.

If you would like to subscribe to TTT and have a plan to not just protect yourself during the next market correction or crash, but to actually profit from it, CLICK HERE and receive $250 off the regular price and pay only $399.95.  It’s your money – take control!

Also…

We will make the same offer for those who are not yet subscribers to the Trend Letter. CLICK HERE to subscribe to the Trend Letter for only $399.95, a savings of $200.

Best Deal…

Subscribe to both the Trend Letter & Trend Technical Trader for only $699.95, a savings of $550.00. CLICK HERE to take advantage of this offer.

Gold

Gold is finally breaking out and has now pushed through near-term resistance at 1262 and more importantly through its 200-DMA.

Gold bottomed in mid-August, and has since slowly been moving higher, and has been increasing that pace since mid-November. Next target is the strong resistance in the 1280-1300 area.  Looking good so far!

gold1220

Stay tuned!

Stocks tumble, Bonds rise, & Gold breaking out

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Stocks:

The S&P 500 was down 62.87 points or 2.33% today and was down 4.5% for the week, its worst week since March. As we can see on the following chart the S&P 500 has been trading in a range between 2600 and 2825 and is now testing the low end of that range.  If the 2600 support level does not hold, we will likely see trading algorithms  kick in and push the market lower, with a test of 2500 a valid scenario.

Watch the 2600 support level for next week, it is key. We have warned that instead of a Santa Claus rally we could well see a cycle inversion where instead of a rally we see a correction.

SPX1207

The main noise this week was the arrest in Canada (Vancouver) of Huawei CFO (Meng Wanzhou). Ms Meng was arrested at the request of the US government. On Friday in the Supreme Court of British Columbia a Canadian government lawyer said Ms Meng was accused of “conspiracy to defraud multiple financial institutions” using a Huawei subsidiary called Skycom to evade sanctions on Iran between 2009 and 2014.  According to sources she faces up to 30 years in prison in the US. This incident has the market nervous that it will negatively impact trade negotiations between the US and China.

Next week’s vote on a deal covering Britain’s exit from the European Union as well as negotiations between Italy and the EU over its budget deficit also contributed to the risk-off sentiment with investors.

Bonds:

With a risk-off sentiment in equities, capital continued to flow into US bonds, driving yields lower.  The yield on the US 10-year has broken below its uptrend line and closed today at 2.85%.

US10y

Gold:

Gold had a good day and has now broken above near-term resistance at 1237, closing the week at 1253.

gold1207

In the bigger picture gold has been trading in a 7+ year downtrend channel, a classic bear market. Earlier this year gold managed to break through that long-term resistance level but by April gold resumed its decline and fell back into that downtrend channel. But now gold is making a run to push through this key resistance level (pink circle on chart).

gold7y1207

Subscribers were sent another new recommendation for gold and will get a full update on Sunday.

Stay tuned!

S&P 500 – November 20/18

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In our November 11/18 issue of the Trend Letter we showed a chart with our model’s bearish projection for the S&P 500 to have a cycle inversion targeting a drop to 2600 and even 2500 by year-end.  With last night’s close of 2690 being sub 2700, we now have the scenario where this 2600 target could be achieved much sooner than year-end, potentially in the next week.

Below is our model’s updated bearish chart. If we do test 2600 in the next week watch for a further decline to test 2500 in early December.  A gap down to 2500 should then trigger a rally back up to 2600, but then look for a double bottom to re-test 2500, and even our initial target low of 2470 by year-end.

We are now short-term bearish and we would need a rally and close this week above 2700 to open the door for a run to test the key resistance at 2830.

Long-term trend is  bullish

Immediate trend is bearish

Our current position is neutral

Stay tuned!

S&P 500 and Gold

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S&P 500:

Another wild day in the equity markets with the S&P hitting a high of 2746.80, then hitting a low of 2685.75, before closing at 2701.58. As we warned in Sunday’s issue of the Trend Letter, instead of a year-end rally we could see a cycle inversion if the S&P cannot push through the 2830 resistance level. In Sunday’s Trend Letter we showed a chart of a bearish scenario with a test of 2600 in December, and a potential low of 2475 before year-end.

The S&P has fallen below both its uptrend line (green diagonal) and its 200-day MA (pink line),

spx1114

One of the negative drivers was that Apple has now dropped below its 200-day MA and is down almost 20% since its high in October. Tech stocks which have been the darlings of the bull market are being sold-off and are leading the way down. Apple has Key Support at 182, its uptrend line (yellow shaded area).

AAPL1114

S&P 500 trends:

Long-term trend is bullish

Immediate trend is bearish

Our current position is neutral

Gold:

Gold was finally able to have an up-day closing up 8.70 after declining all through November.

Gold1114

In our very first issue of the Trend Letter in 2002 we recommended buying gold when it was trading at 290. We rode that bull market all the way up to August 2011 when it hit our SELL Stop at just under 1800, a  500% gain. Since then gold has been in a 7+year downtrend channel.

Goldlong1114

So what happened? After the peak in 2011, after years of decline, investors got tired of waiting for gold to rebound, to the point where today gold is hated by the investment community. Over the past month based on the Commitment of Trader (COT) data, gold is oversold to an extreme. It means that future traders are massively pessimistic on gold and even more so on silver. As contrarians will love these scenarios because at the extremes futures traders often get it wrong.  When these speculative traders all bet in one direction, the opposite usually occurs. This opens a scenario where we could see a very good run for gold, silver, and other precious metals.

But understand, while we are looking for gold to have a good run up here, we do not see this as the ultimate low for gold. So if adding gold or gold stocks at these levels be sure to determine your SELL Stops to protect yourself in case this expected rally does not materialize, or does not last long. Gold must push through 1370 before we even consider a long-term rally.

Long-term trend is bearish

Immediate trend is neutral

Our current position is buy

Stay tuned!

November 8/18

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S&P 500:

After a huge up day yesterday the S&P 500 consolidated today, closing down 7 points. The S&P is trading above its 200-day MA (pink line) and within its 2-year uptrend channel. The S&P needs to push above the 2830 level by Monday or it re-opens the door for a possible cycle inversion where instead of a rally through to year-end we see a re-test of the 2600 level with a potential challenge down to the 2475-2500 level we discussed in Monday’s blog

Long-term trend is bullish

Immediate trend is bullish

Our current position is neutral

Subscribers to the Trend Letter will get a full update on Sunday.

Stay tuned!

November 7/18

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S&P 500:

In Monday’s update we highlighted a potential scenario where depending on the election results we could see a quick drop to test the previous 2600 support level and if that level gave way, black box algorithmic SELL Stops would be triggered, causing a potential spike lower to 2500. We also noted that a quick run to 2800 would diminish the odds of a move to 2500. Fortunately for the bulls, we saw the latter scenario.

As we can see on the chart below, the S&P closed the day at 2813, an impressive 58.44 point or 2.12% move  higher, putting it back into its 2-year uptrend channel, and above its 200-day MA…bullish action.

spx1107

Long-term trend is bullish

Immediate trend is bullish

Our current position is neutral

Note that the S&P must close above 2830 this week to maintain its immediate bullish trend.

Stay tuned!

Really, the S&P 500 below 2500 this week?

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Stocks:

In our October 24th Market Update we stated:

S&P has been trading above its 9+ year uptrend channel, although it has now fallen below the upper level of that channel.  All this action is bearish, suggesting that the S&P will very possibility test the 2600 level.  Given that markets decline much faster than they rise, we could see this support level hit this week

Five days later the S&P hit an intra-day low at 2603, just 3 points from our target.

spx1105

Tomorrow is the US mid-term election and over the next few days we could see some wild action in the markets. Below is one of the scenarios our models are projecting, so be prepared. If the market gets nervous and re-tests the 2600 level, a breach of this level could trigger black box algorithms initiating a series of SELL Stops that could quickly push the S&P down below key support levels at 2535 and 2500.  This scenario would then validate our model’s Feb’18 call for an ultimate low of 2470. If this scenario plays out, the market would be then be extremely oversold opening the door for a significant rally right back through 2600, potentially closing the week close to 2725.

An immediate push through 2800 would diminish the odds of a bearish decline to 2500 target and would signify a likely early resumption of the uptrend.

spx1105altrig

Let’s watch and see how the mid-term elections play out.

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In the recent market correction Trend Technical Trader (TTT) recommended 4 plays to profit during a market decline. At their peak these plays gained 24%, 46%, 49% & 54% in  less than 2 months. If you would like to subscribe to TTT and have a plan to not just protect yourself during the next market correction or crash, but to actually profit from it, CLICK HERE and receive $250 off the regular price and pay only $399.95

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Stay tuned!

November 1/18

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Stocks:

The S&P 500 rallied over 1% for the 3rd straight day for the first time in six weeks after Trump tweeted that he and Xi of China had a good conversation on trade.

TrumpChina

However, in after market trading Apple shares were down up to 7% after it warned that it could miss its December revenue target due to weakness in the emerging markets.

The S&P is now back above its 9+ year uptrend channel (green shaded area). What we are looking for is that 2600 support level to hold. We have resistance at 2770 and if the S&P cannot get up through that resistance level we could see a sharp decline testing 2600.  If 2600 is tested and does not hold, then we have 2580, 2535 and 2500. Our previous long-term projection was after 2930 we would see a sharp correction with a potential low of 2470 – that projection is still valid.

spx1101

There are lots of reasons for the market to drop dramatically and do not underestimate the impact of a Democratic win in the upcoming elections. As investors we do not participate in political discussions other than to say if the markets felt that Trump’s tax and regulation policies were to be rolled back we would see a violent reaction.

Key support levels to watch tomorrow and next week are  2700, 2600, 2580, 2535. Expect a wild ride over the next month.

Long-term trend is bullish

Immediate trend is neutral

Our current position is neutral

Once again we implore every investor to have a hedging or exit strategy.  As an investor you need to be prepared for a serious market correction, or potential crash.  If the recent market action has caused you to lose sleep at night then you are not properly protected.  Now is the time to protect your investments.

If you have not done so already, for each of your positions determine how low you are willing to let them go before selling. Then use SELL Stops and if they are hit, SELL, do not change your mind and talk yourself out of  selling. Or if you do not want to sell for tax or other reasons, use a hedging service like Trend Technical Trader. TTT subscribers who have followed its lead have booked gains of over 40% in a number of trades in just the last 5 or so weeks. If you want to subscribe, we will extend our earlier offer of a $250 discount, meaning you only pay $399.95.

If you had been a TTT subscriber and actioned those trades, they could have covered a decades’ worth of subscriptions. Click here to take advantage of this offer. It’s your money – take control!

Gold:

Gold had a solid day gaining 23.60 and closing just above its previous high.  If it can continue higher, 1260 is its next resistance level.

gld1101

Long-term trend is bearish

Immediate trend is bullish

Our current position is bullish

Stay tuned!

October 29/18

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Stocks:

Another wild day as the markets opened strong, dropped dramatically, recovered some of those losses, but finally closed lower. The Dow had a swing of over 900 points during the day with the S&P and Nasdaq also having tough days. At the end of the day the tech heavy Nasdaq was down 2.02%, the Dow down .99% and the S&P down .66%.

The big talking points today were more China/US trade tensions, trading algorithms, and the US elections, where polls are showing that the Republicans will lose the House.

We now must watch to see if the 2600 level holds and particularly the 2580 level (green horizontal line).

spx1029

Key support levels to watch this week are 2600, 2580, 2535

Understand that the long-term trend is still bullish and will be as long as the S&P 500 holds above 2300.

Long-term trend is bullish

Immediate trend is bearish

Our current position is neutral

Gold:

Gold continues to struggle to maintain any ‘safe haven’ status as it was down 8.20 today, even with all the market angst.

gold1029

Currency:

Global capital seeking a ‘safe haven’ continues to flow into the US dollar.

USD1029

Stay tuned!