Similarities For the Recent Drop In Stocks

Cory Fleck, from The Korelin Economics Report joins me for his insights into the US markets and the oil market.

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53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and  3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.


Where Are We In The Market Cycle?

With the news today from the US Fed and the rate hike, we should all be asking ourselves “where are we in the market cycle” so that we can prepare for and identify proper trades that may set up in our future.  One thing is for sure; we are not in the perpetual easing environment of the past 7+ years.  The Fed indicated they are expecting at least two more rate increases are expected this year and also hinted that a forth may be possible depending on the economic activity.

Our research team at is always trying to identify trends and opportunities before they happen for our members and partners.  We have a pretty good track record at calling the markets for 2018 and have called many of the markets moves weeks in advance.  Please review some of our recent market research to see for yourself how well we’ve been picking apart this market.  Today, we are going to illustrate where we believe the US markets are in relation to a typical market cycle and what we should be watching for in our immediate future.

A typical market cycle can often be identified by watching two components of the economy: the Bonds and Commodity prices.  When Commodities rise and Bonds fall, the market cycle is considered middle to late stage expansion and traders should be playing any continue bullish price moves as late-stage opportunities in a bullish trend.  When Commodities fall and Bonds rise, the market cycle is considered middle to late stage contraction and traders should be playing early bottom picking trades as well as late stage bearish trend trades.

One can see from this simple Economic Cycle that Market Tops are typically preceded by moves in Commodities and Bonds.

When we look at the global commodity price valuations going back many years, we will quickly see that commodities have recently been historically low and this could result in a dramatic increase in commodities in the future which would be one of the primary signs of late stage expansion.  The expansion in global commodity prices rotated lower in late 2014 as oil fell to recent lows and as the global central banks eased off the quantitative easing and money printing.  Recently, just before the US elections in 2016, the global commodity price index reached the lowest level since 2004-05 and started climbing higher.

Therefore, we have already begun to experience one of the key components of a market cycle top – rising commodity prices.  We would watch for Bonds to decrease as well as Capital Goods, Basic Materials and Energy sectors to rotate out of a historical price channel.

Of unique interest is that late stage economic rallies are often identified by a rally in the precious metals markets as fear of a top or of late stage corrections become more pronounced.  Over the past few months, we’ve been warning of a potential Wave 3 leg higher in both Silver and Gold.  Many people may not understand the scope of this potential move and the potential it may have on your trading.  The size of this move could be substantial.  The last rally in the metals that originated after the prior to the 2009 market crash resulted in a price advance from roughly 78 to nearly 435 – a 557% increase in just under 7 years.

What would a similar move in the metals look like today?  Could it happen?  Would it be as dramatic?

Gold closed $1332.50 today.  A 250% increase would put gold at $3331.25.  A 350% increase would put gold at $4663.75.  A 450% increase would put gold at $5996.25.  So, is a $6000 price for Gold reasonable?  Possibly, give certain market setups that prompt a similar price advance as we had seen after 2002.  It would all depend on how this new market top unfolds and the level of fear that resides in the global markets.

The last precious metals signaled a trade was in February we profited 20% in only 7 days profiting from falling prices. The next trade setup could be much larger.

As the US fed pushes rates higher, more and more consumers will be pushed to their financial limit that will drive some level of economic contraction.  It is almost like the US fed has no understanding of supply and demand functions as related to their policies.  As they push the rates higher trying to front-run inflationary concerns, they don’t understand that many borrowers can’t sustain raising rates at this pace.  In the process, many borrowers will be pushed into foreclosure and possibly bankruptcy as the fed attempts to normalize rate levels.

As traders, our job is to find the opportunity that exists and to try to capitalize on price movements and from swings in valuations that occur throughout this game.  The US fed and global central banks will do what they do – we really don’t have any control over them or their decisions.  As traders, our job is to be ahead of these central banks and take advantage of the opportunities they provide to us.

We likely still have many months of preparation to further understand and develop our strategies for these future moves.  We invite you to visit to learn what we do and why we believe we offer the best research and analysis available to traders.  We are in the trenches just like you are.  We live and breath this stuff and we use our advanced skills and technology to try to keep our members aware of what is going to happen days and weeks in advance.  Please review some of our most recent research report to see how accurate we are.

Our articles, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors to explore the tools and techniques that discretionary and algorithmic traders need to profit in today’s competitive markets. Created with the serious trader and investor in mind – whether beginner or professional – our approach will put you on the path to win. Understanding market structure, trend identification, cycle analysis, volatility, volume, when and when to trade, position management, and how to put it all together so that you have a winning edge.

We invite you to join our other members in preparing for and profiting from the opportunities the markets generate.  Our most recent trades are already performing quite well – hope to see you in the member’s area.


Real Estate and Banking Pressures are Building

Early signs that the US Fed may be pushing the envelope of rising rates and creating pressure on banks and borrowers are starting to show up more prominently now.  One component of our research at Technical Traders Ltd. is to find data that may be overlooked or ignored by some other researchers.  We believe that any pressures or hardships related to general consumers will be seen first in discretionary debt (credit cards, autos, and entertainment/activities).  When consumers feel the debt pressure starting to build, they react by cutting back on certain discretionary spending – focusing their purchasing/paying abilities on essential items like food, human necessities (toiletries and other essentials) and maintaining essential components of their lives.

One of the first things to watch is the delinquency rates for credit cards and autos.  Additionally, watching for early signs of weakness in the larger metro real estate can assist us in understanding the health and dynamics of regional economies.  Months ago, the levels of Foreclosures and Pre-Foreclosures were dramatically lower in major metro locations.  Pre-Foreclosures are early stage Foreclosures where borrowers are behind in their mortgage payments and the banks have issued an “intent to foreclose” notice unless the borrower repays delinquent amounts.

The Los Angeles metro is one of the largest and more diverse economies in the world.  California is rated the 6th largest economy in the world if it considered a unique country.  The ability to earn and spend efficiently within this metro is essential as it is ranked the 8th most expensive city in the world (Source March 2016 There is a fine line between the balance of being able to afford to live in an area while creating opportunity and success and being priced out of an are because of constricting economic fundamentals.  We believe this balance is beginning to skew towards a massive unraveling process.

The BLUE dots on this image below are Pre-Foreclosures.  The RED dots are Foreclosures.  Our research concludes that this early stage development of increased foreclosure activities and strains on the economic fundamentals related to this large metro are showing that pressure is building for an eventual market top similar to what we saw in 2008.  We may still be many months or a year away from an eventual peak in the stock market, but the signs are starting to become more evident that pricing pressures are driving many borrowers into the foreclosure process while the regional real estate markets are about to be flooded with distressed property.

The Chicago metro area is showing similarities to the Los Angeles area.  One clear visual difference is the larger number or RED dots showing active foreclosures.

The Dallas, Texas metro is also showing signs of distress.  As thousands of people have relocated to Texas over the past 14+ years and specifically since the post-2010 economic recovery, Texas has been a hot destination for business relocation because of favorable taxation policies and cheaper real estate.  Given this continual demand for property by people moving to Texas following their employers, it appears that the fundamentals of the real estate market are changing and putting more pressure on borrowers.

The US lending giant, Freddie Mac, reported a $3.3B loss for Q4 2017 – Source.  It is our opinion that multiple factors are driving increased pressure for lenders and borrowers.  Currently, Adjustable Rate Mortgages equate to about 6~8% of all borrowing within the US.  We also believe the extended pressures related to the Affordable Care Act (Obamacare) and the US Fed raising borrowing rates are driving a fundamental shift in US economics.  Specifically, the combination of these factors, as well as relatively narrow wage growth, are pushing many borrowers over a financial cliff.

We believe the resulting wave of economic pressure will result in a dramatic opportunity for traders to capture spectacular gains from the resulting moves in specific stocks.  We believe the US and global markets could be setting up for a massive rotational move down as these economic pressures continue to froth.  As traders, we urge all investors to pay specific attention to the often-unknown economic factors at play in the markets.

One of the most important aspects of our service to is to share our analysis so that you have some real predictive analysis data for research and review.  We are not always 100% accurate in our modeling systems predictions or accuracy, but you can spend a little time reading our research reports through most of this year to see how we’ve been calling these market moves since well before the start of 2018.  Visit to see what we offer our subscribers and learn how we can assist you in finding great trading opportunities.  In fact, pay attention to the market moves as they play out over the next few weeks to see how accurate our research really is.  We’re confident you will quickly understand that we provide the best predictive analysis you can find and are proud to offer our clients this type of research.

In closing, don’t fall for the fear and panic articles. Stay aware of the evolving market conditions by relying on expert research and analysis like ours.  Yes, the market is extended.  Yes, the market may correct sometime in the future.  Yes, the Fed has likely created a massive bubble.  But it’s not over yet and the real trade is market segment rotation that is setting up.  Hope to see you in our member’s area where we can share more data and research to help you profit from these moves – visit to learn more.

History Is Repeating Itself This January

The SPX and the Dow Jones have closed at new highs. The following closing prices: Dow Jones: 19910.93 and SPX at 2271.71. They have reached an extreme point. This is an extreme strong signal that price is most likely at a short-term high here. The NYSE composite reached a high at 11256 which could be a double top from 2015 highs.


I expect stocks to sell-off into December 19th or 20th followed by a strong rally into December 30, the last trading day of the year.
Bonds will now rally into December 19 or 20 high. After that expect again a sell-off in bonds again from Dec 20 to 28 – 30.


The market is expecting a rate hike by the FED, and consequently, the dollar would be expected to get strong. Based on the current market dynamic I can expect US Dollar to trade higher after FOMC rate decision for at least 1 more swing.


I see it likely that DXY Index (US DOLLAR) will gain after the FED announcement, these gains should be short lived. Gold will likely fall after the FED announcement. If this occurs, the level of $1100 – $1140 should hold the low on a closing price basis.


I indicate that Gold is nearing a long-term closing price low this week. The closing price of gold will be crucial, and I would not like a closing price above 102.56 (DX futures) for this short-term scenario to play out.




A close above oil at 52.59 will be a strong signal of further advancing prices to occur, which I can see occurring shortly.


After the correction in the SP500 the next leg higher towards 2300 -2360 should be reached, provided the pivot at 2189 low remains intact in over the next couple weeks.


John Winston
Chief Market Strategist