Nasdaq 100/SPX 500 Double Top Formation. By

The mega-cap tech stocks represent extremely weighting in the Nasdaq 100. When I talked about extreme weighting, I am talking about almost 50% of the weighting based on seven companies: Apple, Microsoft, Amazon, Facebook, Alphabet, Intel and NVIDIA. Any weakness from earnings disappointment...

The Parabolic Move of the Nasdaq 100/Dow. By

Investors often made a big mistake when they thought a rally is unstoppable. The large-cap tech stocks have been the leaders in the entire pandemic crash, bouncing back as the most robust sector among all other indexes. I think the tech stocks could become...

The Illusion of a Rising Stock Market. By

We want to play an illusion game on Memorial Day with all our members. The two charts below are the Consumer Discretionary Select Sector Fund – XLY and the Communication Services Select Sector Fund – XLC. Both funds are now above the 200-days SMA. Investors who believe a bull market ahead that has started in March may...

Gold’s rally is probably Over. By

In my previous blog message about the technical picture of gold, I have talked about the existing RSI negative divergence which has been in place since April. However, gold has broken out from the triangle pattern and it tried to test the March high. The top testing may...

It is Time to look at the Market Breadth! By

This is a confusing time for investors. The U.S. market is hitting major resistance but shows no sign of exhaustion. On the surface, it seems the “QEs Infinity announced by the Fed” really igniting the rally. Everybody said: “Don’t fight the Fed”. However, the institutional investors and the Hedge fund investors are not buying the rally, including Warren Buffett are backing off the buying. Investors are emotional human beings; they may feel that they are missing out. Should investors chase the rally, or...

The Devil decided to be An Angel today. By

In an interview on “60 Minutes,” Mr. Powell said, “This economy will recover; it may take a while…It may take a period of time, it could stretch through the end of next year, we really don’t know.” The interview was taped on May 13, 2020 and The Fed Chair suggested that...

When I will get excited about Silver? By

Silver was testing the resistance zone today around $17, and it rallied more than 5% today. Silver has been underperforming gold since September in 2019. This is the first time we saw a strong relative strength of silver verse gold in May. It is a very good sign for...

This Metal turns to long-term Bullish. By

There is always a bull market somewhere. If you try to figure out the reasons why the bull market exists in a particular investment, this is the job of a fundamental analyst. As a technical analyst, I don’t care about the reason. I only care about...

Coronavirus Pandemic = Deglobalization. By

The world has completely changed due to the outbreak of the coronavirus. The pandemic is not only a tragedy. It has disrupted many aspects of human activities: Health care, education, global trade, social events, Sports, air and ground travel, isolation, jobs and business, and many others. Pandemic is a...

Hong Kong Hang Seng Index will reach 19600. By

The Hong Kong Hang Seng Index has violated the long-term horizontal support level 25000 after testing the support two times back in 2019. The 25000 level is a critical level for the Hang Seng index to remain in a bullish territory. Once this level is violated...

Is the US dollar Index Cycle broken? By

The cycle is an important aspect of investing. We know the seasonal cycle of the stock market plays a big role in the returns of the market. The presidential cycle is also affecting the stock market in 2020. The US dollar has...

The “Double 9-to-1” Down Week” has triggered. By

One of my favorite signals is the Zweig double 9-to-1 signals. This signal measures market momentum and direction by using the 9 to 1 measure. This measure simply states that within a 90-day time frame, if the market has two 9 to 1 where up volume outnumbers...

U.S. Consumers Predicted the Recession back in 2018. By

Many market participants may believe once the government reopens the U.S. economy, everything will go back to normal. The stock market will go to new highs again. It sounds like the Fed has the magic powder to cure the pandemic and prevent any stock market crash just like it did in the last 11 years. It is because...

Uranium may Surprise Investors. By

The commodity complex has been a terrible investment for investors this year. The WTI crude oil went negative in the May Futures contracts in April. The over-supply issue could keep WTI crude oil below $20 for a long period of time. However...

Technical Breakout on Gold Miners. By

The gold miners had retested the $31 resistance three times in the past. The round bottom has finally completed. After a fake break down of the gold miners in March, gold miners ultimately took out the 6 years horizontal resistance level yesterday. This is a positive confirmation about...

The Bank Index Looks Horrible! By

The major source of all financial crisis is related to debt issues. Personal debt, corporate debt and public debt are all in recorded level. The end game is a collapse of the banking system. The collapse of the energy prices is a warning signal that many energy companies will not be able to pay their debts. The casualties are not only the oil and gas companies, but...

What Negative WTI Crude Oil Price means? By

Today’s collapse on WTI Crude Oil price is mostly owing to the mechanics of the futures market, which closes for May delivery on Tuesday. The speculative traders who are holding the May contracts couldn’t find last-minutes buyers were the factor...

The Line in the Sand for the Bears. By

My previous blog talked about the US major indexes are approaching the resistance level. The Volatility Index has returned below 40 and the S&P500 has been rallying near 2900. All these market actions look totally non-sense and disconnected from reality when we know all the economic numbers don’t support the rally.

Using Market Breadth to Time Market Entry and Exit. By

If you are a trader, you probably have spent years looking for the holy grail to time the market. I have been trading for years. I can honestly tell you that there is no “holy grail” which can perfectly time the market. Otherwise, all investors will be successful, and no one will lose money in the stock market. However...

When will the Bear Come Back to Roar? By

The market is having a nice rally from the March 23 bottom after the Fed injected over $2 Trillion into the stock market. I said in the past, the Fed was doing whatever it takes to save the stock market. In fact, the Fed has almost used up all its measures to provide liquidity. The coronavirus pandemic is only...

Elder Impulse Trading System- Rate of Return in 2 weeks. By

I introduced the Elder Impulse Trading System on March 25, 2020. I have published the index -ETFs and the Bottom Fishing list for our members. The average rate of return in the last 2 weeks for the major index ETFs has generated...

Recession or Depression? By

The hot topic in the investment community now is the global economy heading to a recession or depression. There is no doubt that many developed countries have already forecasted the unemployment rate will reach 25% in many countries. The bond yield has also reached a negative yield or near-zero yield in many countries. The oil price...

What happened to Gold’s futures and Gold spot prices? By

Gold futures have rallied to $1742.60 an ounce on the Comex while the spot gold price traded at $1714.70 in London. The spread between London and New York prices is more than $50.

Where is Gold Heading according to Andrew’s Pitchfork? By

Andrew’s Pitchfork is a technical indicator that uses three parallel trendlines to identify possible levels of support and resistance as well as potential breakout and breakdown levels. The indicator uses trendlines that are created by...

WTI Crude Oil Technical Resistance. By

I posted the WTI Crude Oil on March 20, 2020, and stated that WTI Crude oil has reached its long-term support at $20. It reached as low as $19.27 to make the low and bounced back strongly to $28.67 today. Now, it is time to...

Treasury - EuroDollar Spread is Rising. By

The U.S. major indexes bounced back strongly last week. Many market participants may think the worst is probably over for now. I am not convinced that we can call the end of the bear market yet. There are two main reasons why prudent investors should stay out of this market.

Major Index ETFs- Elder Impulsive Trading System Charts. By

As we introduced the Elder Impulsive System yesterday, many members like to track the major index ETFs with the system. I have posted all the index ETF charts under Elder Impulsive Trading System in the Ratio Studies page.

Window Dressing Rally started on Turn-Around Tuesday. By

On Monday, I suspected the market has made the bottom. But the true rally came on Tuesday. Tuesday is usually a special day for reversal. Most of the reversals happened on Tuesday in the past. That’s why we call it “Turn-around Tuesday”. Besides, investors are going to receive their statement next month. I guess all the investment firms and mutual funds must dress up a bit for the show.

Blue Chips Bottom Fishing – Elder Impulse System Trading Method. By

How to select investment when we have a short-term trading opportunity? Traders love this type of market because it is volatile. They can trade both the upsides and the downsides. Not all the stocks will participate on the upsides. That’s why we need to select the...

The Greatest Bear Market in History. By

Since World War II, there were 26 corrections in U.S. that have averaged a decline of 13.7% over four months. The current correction had a decline of 10% in one day. This Coronavirus bear market has taken out the October 1987 market crash on both speed and magnitude. Here are the unprecedented declines that will be marked on the history of the stock market...

Investors have sold Everything including the Kitchen Sink. By

When there is blood in the market, smart investors are looking for opportunities. But how do you know there is enough blood in the market? We are going to use technical indicators to study this character today.

A New Financial Crisis is On the Way! By

We live in a strange world now. As many investors noticed that the zero interest rates or negative interest rates become a new normal now, the spread of the coronavirus causes the world economy to collapse and the global stock market continues to slide with unprecedented volatility. It is true that...

Is Silver a buy now? By

In a bear market, silver is not a good investment as gold. It is because silver is considered as an industrial metal verse to gold as a safe haven asset. We have already seen underperformance of silver vs. gold at the beginning of 2020. There is no doubt that...

What is going on with Gold? By

Gold came down aggressively on March 13, 2020. On my Market Watch Gold chart, I have shown gold has completed the Five Waves movement. The ABC correction is currently in progress. If gold is in C wave, it usually...

When VIX is above 50, Stop Trading! By

When VIX breaks 50 level, it means the volatility is going to stay longer than most investors expected. We haven’t seen this type of high VIX readings since the last financial crisis. So, for many young investors, this is probably their first experience of what is a bear market.

Second Punch is on the way! By

If you got hit by the first punch as an uninformed investor in the first round, you should learn your lesson to avoid the second punch. Because the second is fast approaching.

How to use McClellan Oscillator to time the bottom? By

The McClellan Oscillator is a market breadth indicator that is based on the difference between the number of advancing and declining issues on a stock exchange, such as the New York Stock Exchange (NYSE) or Nasdaq. The indicator is used to show...

Treasury Bonds are Extremely Overbought. By

The global stock market went from one extreme bullish sentiment to another extreme bearish sentiment in less than 2 weeks. If you are not a professional trader, you should not even think about entering the market with a bottom-fishing mentality. This market is not your grandpa or your grandma’s stock market. This market has been extremely overbought 2 weeks ago. The spread of the Coronavirus...

Is this the beginning of “The end of the 11-year Bull market”? By

This is a $60000 question. No one can answer this question with accuracy. As many members knew the U.S. market is heavily manipulated by the Federal Reserve with its printing machine. The market is purely liquidity-driven, not fundamentals. During the years when I was managing other’s money, I created ratios that reflect business cycle rotation accompanied by investor’s sentiment.

Buy/Sell Signals Timing Tool? By

There are many ways to time the market for entry or exit. You may have your mythology. As a technician, I have many tools to help us to make the right decision and to confirm the entry or exit. Today, I want to show one of the popular tools.

US dollar has Massive Carry-Trade Risk. By

The US dollar Index has made a marginal high and reversed strongly with the U.S. equities selloff. You may question the safe haven currency status like the US dollar. Why it has been acting like a risk asset currency.

Watch Key Levels for Gold! By

This is no doubt that we are in one of the most volatile markets in the last 50 years. Gold is used to be the safe heaven when the stock market is in trouble. Today’s big decline of gold makes investors wonder the gold uptrend is still intact or gold has started to go down with the rest of the asset class.

Don’t Catch the Falling Knife! By

Technical analysts don’t rely on the media or their emotions to make an investment decision. They use statistical data and mathematical calculations to help them to make a decision. When the stock market is in a free fall, investors will hear so much news and speculator’s recommendation about the next buying opportunities. You should not trust any of them.

What is the Gold Volatility Index Forecasting Gold Price Now? By

Gold was not acting very well in the last few days. In the weekly chart, gold has hit the upper channel resistance and reversed back. Will gold’s rally resume soon after this correction or the correction has further to go?

Volatility is Coming Back in February. By

The market sentiment hit an extremely bullish level in January. The similar bullish sentiment in the options market in 2000 signaled that a top was forming. The bull market usually ends with extreme buying from the retail investors and even the most bearish portfolio managers will start to buy equities. It is a perfect time to sell for our members. So...

Precious Metals, UP, UP AWAY! By

On my last updated Market Watch, I have talked about gold is ready for a big move, either UP or Down. This week, gold has broken out to a new uptrend. I hope all our followers have taken advantage of this new uptrend. Because the gain from our precious metal list was huge this week.

Gold is Outperforming Both the US dollar and the Government Bonds. By

Gold is breaking out to a new uptrend this week. However, the US dollar index also moves strongly to the upside. You may wonder what is going on with these two assets. Are they supposed to trade inversely?

Natural Gas – Early Signs of a Reversal. By

The Natural gas futures contract has rallied more than 7% today after a prolonged decline since November 2019. Natural gas price broke a strong uptrend in December and the short-sellers have ramped up the short interests to the record high level. This action caused natural gas futures to trade below $2 since January 21. However...

Does Copper/Gold Ratio hint Economic Contraction? By

If the Copper/Gold ratio, it’s generally a sign of a contracting global economy. A large movement of gold price in 2019 could also mean a geopolitical tension was building between nations. The copper market generally moves with ...

Emerging Market - Key Market to watch in 2020 By

Emerging market is probably one of the most important markets to watch in 2020. Emerging market central banks have been very aggressive and proactive in monetary policy. Although they have substantial debt in U.S. dollar denomination, their currencies have already gone through the correction. Any weakness in the U.S. dollar...

The Next Move for Gold. By

Gold has tried to test the last top at $1613, but it failed to make a new high. Many members asked me to update the gold chart. The current move is well expected in my February’s newsletter for our premium members. Let’s look at the wave structure and see when the next move is!

What is WTI Crude Oil telling us about the Coronavirus Impact on China? By

WTI Crude Oil is the largest component of the CRB Commodity Index. A rising crude oil price is usually a good indication of the upcoming inflation and the rising demand from China. China is the largest oil importer in the world. Chinese oil demand has fallen by about 3 million barrels per day, a 20% decline, as the coronavirus weights on its economy.

Volatility is Going Higher! Sell S&P500 By

If you have enjoyed the profit from last year, it is time for you to hedge the risk. The VIX index is currently rising faster relative to the S&P500. It means the volatility is coming back to the stock market. The chart below shows...

What is the correction target for Nasdaq Composite? By

The global market has plunged due to the Coronavirus pandemic. In the last 2 weeks, I recommended our members to take profit and even in our January newsletter, I warned that a correction was on the way. However...

The Correction of the Long Duration U.S. Treasury Bond is Over By

The iShares 20 + Year Treasury Bond ETF is near the completion of a wedge formation. A wedge formation is often a continuation pattern for the price to continue its uptrend. So, it is normal to see an upside breakout for the iShares 20+ Year Treasury Bond ETF -TLT.

Testing the Headline – Contrarian Investing By

A major financial magazine cover like Barron’s has published his bullish target for the Dow Jones Industrial Average at 30,000. For experienced investors, this is a warning signal that the bull market’s big run is near its end. All the good news is out...

Sell on News- US/China Trade Deal Signed! By

The U.S. and China signed the first phase of a broader trade pact on Wednesday. The S&P500 has rallied strongly from October to January. The RSI and the MACD both have shown negative divergence since December. The CBOE Put/Call Ratio has reached an oversold position which means...

The Death Cross of the US Dollar Index. By

This week is so important for the US dollar Index. However, I haven’t heard many macro strategists who like to talk about the US dollar index’s death-cross. The death cross is a technical term to describe when there is a cross-over point between the 50-day moving average and the 200-day moving average. When the 50-day crosses are below the 200-day moving average, we call it death cross. Technically, it means...

Natural Gas – Seasonal bullish Months ahead. By

In my January newsletter, I have talked about the seasonality of natural gas. Natural gas has declined back to its August support level. The bullish pattern that was formed from August to November has failed and we saw a large decline from November to December. If we study carefully the technical picture with the seasonality picture of natural gas, it gives us another opportunity to accumulate natural gas in January as I mentioned in January’s newsletter.

WTI Crude Oil: Buy or Sell. By

Crude oil has pulled back with gold when the tension between the US and Iran eased. The technical picture for WTI Crude Oil is still within a defined trading range. The chart below shows

Gold Miners – A short-term Pullback is On the Way. By

Gold miners had a nice run in the last few weeks as the seasonal strength period started at the end of December. If you got in early in the middle of December, you may want to

Macro Trend has moved together with My Predictions. By

A few months ago, no one believes my call on the upcoming macro trend change. I called the bottom of Pound and the top of the US dollar. I called the correction of gold and new uptrend of crude oil and the current new uptrend of gold. I called the new uptrend of the commodity price and the rising emerging market currencies and the emerging market equities. Now,

Technical Analysis for Gold. By

Gold has been in consolidation range since August. My technical view on gold has been very accurate. Gold has formed a double zig-zag pattern which usually takes about many months to complete. I have so many members who asked me when this pattern will be completed. It wasn’t in September, but in late December.

The US dollar is at a critical support level. By

The US dollar has a major impact on commodity prices. As my last blog mentioned, the commodity index is about to make a major break out. At the same time, the US dollar index is also at a major support level. The US dollar usually makes the major reversal at the end of the year.

The Next Big Thing in 2020! By

Central Banks have only one tool left to prevent global recession- Money Printing Machine. Interest rates are already at a historic low level. Cutting interest rates to zero or even negative won’t have much impact on the economy. Many investment professionals think the United States will follow Japan’s path. A prolonged deflation will dominate the global economy. I initially agreed with this view, but...

A Major Move on WTI Crude Oil will surprise everyone. By

If I am planning for the next trade in 2020, I need to watch the US dollar and the Crude oil for the end of December. They will tell me how to position my portfolio in 2020. Our macro studies told us a few months ago that commodities have made

2020 Market Structure based on Elliott Wave Theory. By

Human activities are part of the natural law. Investing is all about human psychology which is greed and fear. To predict the future, we need to study the past. That’s why Elliott Wave is very useful in the end game. However...

Which is the best Sector to buy in the next 6 months? By

I like to own the strongest sector and the best group of stocks in this sector because I will get the strongest performance from them. It is so simple. In the last 3 months, the best sector is not financial, neither technology sector...

Is it time to buy the Gold Miners again? By

The gold miners ETF has been in a corrective price action since September. I have told my readers to wait for the end of December to buy it again. The price action for the GDX is corrective in nature. So, from this structure, I know that the GDX will move a lot higher in the future. Investors just need to be patient and wait for the next opportunity to buy.

A Deeper Look at Natural Gas? By

Natural Gas had a large decline in November due to the mild weather forecast in the first 2 weeks of December in the United States. Many readers knew I am bullish with Natural Gas. However, Natural Gas is a volatile commodity as I mentioned in my blog. We saw two big rallies in September and in October with two big declines in September and in November. Natural Gas was in a very large swing during the last few months. What is next for Natural Gas? And how to trade it

This is not Your Grandpa’s Stock Market. By

The recent Felder Report mentioned a very interesting market timing tool that many market strategists and technicians used in the past to gauge the market trend. Even today, many technicians and stockbrokers are still using this timing model: Stock index and Margin Debt...

Corporate Bond Market – Canary in a Coal Mine. By

US indexes continue to make all-time highs during October and November. The steepening of the yield curve gave a strong buy signal on the financial sector which allows the board market to move higher. The secular uptrend remains bullish where all the bad news became good news in a bull market.

Nasdaq Index- Hindenburg Omen Signal. By

Most US indexes have already made new highs, except the Russell 2000 index. The US stock market has already brushed off most of the risks from the US/China trade issues and the Repo market liquidity issue...

Investing Style Is Coming Back to Value. By

Value stocks have been forgotten in the last 12 years. Investors are chasing high growth stocks. The low-interest, low-inflation environment paved the way for technology companies to outperform the rest of the sectors in the S&P500. It’s no wonder that many investors are currently holding a very expensive valuation of big tech companies. However...

What is the Next Big Move for Commodities? By

If you have followed my videos, you’ve already known the potential of the next big move in the commodity market. The macro picture is changing, so our investment strategy is also changing with the market.

Natural Gas – Investment Instruments and Short-term target. By

Natural gas has completed the bottoming process back in August which is the hottest month of the year. It had the initial rally from August to September and pulled back substantially from September to October...

Trump and Powell: Let’s do lunch here with our friends. By

A new round of Quantitative Easing has begun last month. The Fed is aware of a grave problem somewhere in the global banking sector. Although the Fed stated this program is not Quantitative Easing, it is just another word. The Fed will...

Emerging Markets may offer tremendous Upside Opportunity. By

In the Market Watch, I have talked about the potential top of the US dollar. US dollar has fallen sharply this month. US dollar has dropped back to the 50-day moving average. If the US dollar continues to drop, it will break the uptrend channel and turn to a downtrend...

The VIX of the COT report signals high risk for Equities. By

There are so many warning signals currently flashing “Sell Signals”. I have talked about the MOVE index in my September newsletter regarding the bond market sell signal. The VIX Index or the Fear Index is also flashing a serious sell signal...

Who is buying this market? By

Institutions are the main driver of the market direction. Without the big mutual funds, ETFs, hedge funds and endowment funds, there are no other players in the market, except the Federal Reserve. Many retail investors may ask should they go long with this unstoppable stock market.

A Proprietary Indicator to trade Gold Miners. By

Many investors are waiting for the next chance to buy gold. They listened to the media or they watched YouTube for a clue. The novice investors tried to call bottom all the time. They don’t have anything to support their view or they don’t even have any model to help them to call the bottom. As Market Technician, I develop models and indicators to study the internals of the market...

The Next Big Move on Japanese Yen. By

How many times will you take a long-term view of the Japanese Yen? You can only spot the long-term trend by going to view your charts from the top. The Japanese Yen is so important for the stock market and the other asset classes. The chart below...

Long-term Treasury bonds – A major correction is coming. By

In our October newsletter, I have talked about the long duration Treasury bonds have made a short-term top and the momentum was in an extreme overbought situation...

Can History Repeat Itself? By

The stock market is all about human emotions. It is greed and fear. So, the emotion will be reflected by stock patterns. We called them Harmony Patterns. Whatever happened in the past will happen again today or in the future. That’s why we need to study the history of the stock market...

S&P500 Breadth looks Sick. By

How to dissect a health bull market or a sick bull market? This is an important question if you are still bullish for the U.S. stock market. I think we are currently in a very sick bull market...

Utilities Bull Market may have ended. By

Utilities and Real Estates (REITs) are the truly top-performing sectors in the S&P500 since January. Although Technology is still the top leader, the performance was only generated by a few large-cap stocks...

US Market has made a Rolling Top! By

The downside gap has filled and the S&P500 fall more than 60 points today. No one knows how can predict what will happen next. The market risk is going to dominate all individual securities risk. A decisive top will be confirmed when the S&P500 drops below 2750...

The Real Cause of REPO Operation. By

In the recent Ned Davis report, the Chief Global Macro Strategist has explained the weaker demand for the U.S. Treasury is the main cause of the REPO operation. The foreign demand of the U.S. Treasury has been declining since the global financial crisis...

Is the Correction of Gold Over? By

In the last few months, many members have made good money on the gold trade. The timing of the profit-taking was just about at the right time as well. Many members are interested in getting back to the gold trade. Is the correction finally over? Let’s take a closer look today!

What a Volatile Week for Oil price? By

The price action of WTI Crude was extremely volatile this week. We have to take a bigger view on the chart to study the technical picture. The Monday gap on oil gave a very bullish setup for oil...

Fed Cuts Interest Rate, it could be the last one? By

The S&P500 has tried to test the July high and failed today. The bullish sentiment is not at the extreme level yet, but bullish, and the Fear & Greed Index is now at the greed level. The Fed has delivered the 25-base point of a rate cut and the market has rallied back yesterday at the close with flat note.

ABCD Pattern on Oil Exploration ETF. By

Oil has rallied 14% after Saturday’ attack on major crude facilities in Saudi Arabia. The Abqaia facility normally produced 9.8 million barrels of oil a day. According to MarketWatch, 3 million barrels will be back online in the next two to five days, but around 2.7 million barrels will take longer…

Why did Donald Trump fire John Bolton? By

Donald Trump has fired John Bolton due to fundamental disagreement over the possibility of easing US sanctions on Iran. This is just the headline, but the motive behind it means a lot to the stock market...

US Treasury Yields Due for Rally. By

US Treasury yields have declined sharply in an orderly fashion since 2018. This has spurred recession concerns for the next 12 months. With the upcoming US election in 2020, the Fed will...

How to trade Platinum like a Pro? By

It is a lot of fun to trade precious metal because they are volatile. Volatility gives us fast return if you are a fast trader and a professional trader. Platinum has a big move from the last year’s low. How to trade it professionally and make large gain?

How to make money with the Gold/Silver Ratio? By

Gold has rallied strongly in August. Silver went up parabolically. Gold and Silver are all commodities. It is very risky for inexperienced investors to jump in with all their money. First, it is never a wise thing to do if you...

The Daily Ratio of Gold and USD- A Good Timing Indicator. By

Everybody wants some gold in their pocket. The chance is coming. The time to buy more gold is not now. Let’s look at the short-term daily chart of the US dollar and gold ratio to time this purchase!

Silver ABCD Pattern has completed! By

Silver has rallied from $14.27 to $18.20. It has completed the ABCD pattern with a big SELL signal. ABCD pattern or Gartley pattern sometimes works very well, and sometimes it doesn’t work at all.

A Massive Ticking Bomb in the Banking System! By

The KBW Bank Index is a benchmark stock index of the banking sector. The index is specialized in the financial sector. It includes a weighting of 24 banking stocks selected as indicators of this industry group. The stocks represent large U.S. national money center banks, regional banks, and thrift institutions.

Is Natural Gas a buy or a sell? By

Natural Gas was in a strong downtrend since November 2018. Trading Natural Gas is a seasonal trade that means we buy natural gas in summer when the weather is hot, and the demand of natural gas is weak, we sell natural gas in winter when the weather is cold, and the demand of natural gas is strong. That’s how “buy low and sell high” works...

Profit Taking on Gold and the next Entry Point! By

Congratulation for members who followed us and bought gold! Now is the time to take your first pot of gold! If you are a short-term investor, you want to wait for the next pullback for re-entry. Let’s look at the chart!

Falling Interest Rates hit extreme low level. By

Many followers of our website have invested in the long-term US Treasuries and have done very well in 2019. If you want to protect the profit, it is wise to...

Hibernating bears always wake up. By

The 2-year and the 10-year yield curve has finally inverted today. As many of our readers knew, the 3-month and the 10-year yield has already inverted back in May. The 1-year and the 10-year yield curve was inverted last week. Finally, all durations have come to inversion.

How to trade Gold in the next 2 months? By

At, we picked Gold and US 20-year Treasury bond as a top investment at the beginning of 2019. Both have outperformed the market. Gold had one of the strongest rallies in the last 6 years.

The Broadening Top works perfectly this time! By

The broadening top formation that I have talked about since January has finally completed, and we saw the reaction of the selloff in August. The pattern gives up a serious downside target of 2300 for the S&P500.

Global Leadership is changing. By

In the last 11 years, commodity-related countries like Australia, Canada, Russia, and Brazil were not performing well because of the declining energy price and commodity price. However, the commodity countries ETFs have recently shown strong relative strength verse the U.S. market.

The Paradigm Shift from Stocks to Gold. By

The investment community is focused on what Ray Dalio said, the world largest hedge fund manager, about the paradigm shift. Gold may be the key investment in the future in an era of low rates or a new QE environment...

10 Market Topping Signals! By

The U.S. stock market rally seems unstoppable. However, the technical picture has been deteriorated for many months now. I created a checklist of the market top signals in this blog message...

Buy the Dips on Gold! By

Gold is in a bullish uptrend structure. In a bullish uptrend, traders are only interested in “buy the dips”...

What is the Consumer Discretionary/Consumer Staples Ratio warning us? By

Consumer Discretionary sector is one of the strongest sectors in the S&P500. They often rally strongly with the Technology sector. Consumer Discretionary seldom underperforms the market or underperforms the Consumer Staples sector.

Did you miss the Gold rally? By

If you are our blog followers or our members, you are definitely enjoying this gold rally. We already notified our readers that gold was ready to make a big move 2 months ago.

The Broadening Top of the S&P500 is near completion. By

My June newsletter has talked about the potential peak of the US market. As the U.S. economy is heading into a recession, the Federal Reserve has tried to give a false hope that a rate cut could potentially delay the economic slowdown. No one wants to say about the “R” word.

The 10-years Uptrend of the Transportation Index is finally broken. By

The Dow Theory is one of the most important tools to study the relationship between the Dow Jones Industrial Average and the Dow Jones Transportation Average.

S&P500 Head & Shoulder Pattern is forming. By

S&P500 broke the uptrend in May. It is about time to look at the pattern. For short-term traders, this is the level you should be aware of.

The Internal Breadth of Nasdaq is flashing Red Light. By

The Nasdaq Composite has been the leader since the beginning of the bull market from 2009. It is very common to see market participants chase the technology sector and the high beta stocks at the top of the market. They may be late to the game.

Will you buy the dip again? By

Should you buy the dip in the next rally? I think this is a million-dollar question. Many technicians may blindly tell everyone to buy the dip again. I totally understand their technical views. Sometimes, trading is not about who is right or who is wrong. It is all about

Major Topping Signal: Negative divergence between Stocks/Bonds Ratio and S&P500. By

In the last 20 years, the S&P500 has outperformed the 30-year US Treasury bond all the time, except during the topping process. The ratio $SPX/$USB will give us the Stocks/Bonds ratio...

Copper Price reveals “No Deal” on U.S./China Trade War. By

Things could change drastically with a little twitter message! As a technician, I warned about this selloff last week with the bearish rising wedge pattern. This week we saw the outcome with the pattern...

The Bearish Rising Wedge on the S&P500. By

After today’s FOMC meeting, the FED signaled that it has no intention to cut interest rates. The decision triggered an afternoon selloff in the market. Looking at the technical picture...

Less than 10% of the Companies on Nasdaq Composite made 52-week high! By

The Nasdaq Composite has been the leading index among all others. The rally from December is mainly lead by the Technology sector. There are more than 3,300 companies listed on the Nasdaq Composite...

Breadth Divergence could signal a “Double Top”. By

Investors have heard enough all the bad news since last quarter, but the stock market kept going higher irrationally without many fundamental supports...

When will Crude Oil price turn bullish? By

Energy sector has been the worst sector among all the sectors in the S&P500. It has bounced back strongly with the stock market, but the overall performance is lagging the indexes. When will the bearish trend turn bullish? Here are the minimum requirements:

Can Corporate Buybacks continue to pump up stock price? By

Supply and demand for stocks are the key drivers of stock prices. In recent years, the total outstanding shares in the stock market has fallen substantially due to corporate buybacks. These buybacks have kept the market...

Bond Market is flashing strong SELL Signals for Stocks. By

When the global economy falls into recession, bond yields always give us early warning signal before the stock market entering the bear market. Now it is time to take a longer view about the interest rates. Before each recession, the yield curve will...

Today is the Historical Moment-Yield Curve Inversion! By

After the US Federal Reserve announced there would be no interest rate hike in 2019 on March 20, 2019, in 2 days, the US 10-yr Treasury yield dropped below the US 3-month Treasury yield. The last time when this happened was...

No Interest Rate Hike in 2019! Where to invest? By

In our February newsletter, I mentioned that the U.S. FED has turned dovish since January. Today’s FOMC announcement reaffirmed its dovish outlook on interest rate in 2019...

Negative Divergence on the Momentum Stocks! By

In a strong bull market, strong momentum stocks are usually the leaders that lead the stock market uptrend. They represent the top performing large caps stocks in the index.

Transportation Index reveals more corrections for the S&P500.

The rally from the December low has finally stalled out. The rally has taken out Line 1 and Line 2 resistance, but it has trouble to advance after piercing Line 3. At this level, S&P500 is facing resistance zone colored in yellow. This zone was the area where prices have been...

The Strongest Sectors in the S&P/TSX composite. By

The global stock markets are all near an extreme over-brought territory. It is the longest rally in the last 10 years. U.S. markets continue to be one of the strongest stock markets in the world. However, with a dovish Fed policy and a weakening US dollar, it may provide the best investment opportunities for...

Why 2019 is a year for gold investment? By

After the January FOMC meeting, Federal Reserve has turned to a dovish monetary policy. The new Dot Plot expects zero chance of a rate hike in 2019. This is totally opposite to what the Fed Chairman Jerome Powell said in the December FOMC meeting.

Take a closer look at the Yield Curve! By

The Federal Reserve’s recently communicated change in its outlook for monetary policy has led to concerns that the Fed’s policy influenced by political pressures. As we know, the Federal Reserve has continued to raise interest rate in December when...

Is the Bear Market Rally ended? By

The January market rally caused many investors to doubt about the validity of the bear market. The rally had 4 weeks steep rise of price with strong positive momentum created by the breadth thrust in early January. The breadth thrust was a 90% upside double volume accumulation day. The bull took over the control and drove price to retrace more than 61.8% of the last swing high. Many technical analysts called the end of the bear market and the bottom was in.

US Indexes Countertrend Rally Continues. By

All major U.S. stock indexes have regained their 50-day moving average. The countertrend rally has surprised many technicians. The market internals continue to show us this is a ...

The RVX will give us signal to short the market. By

The above chart is the Russell 2000. The bottom is the volatility index of Russell 2000 - $RVX.  I like to short the small cap index in a bear market.  The reason is very simple because it has the most volatile index during a bear market. Shorting requires different trading skills.

This Gold Chart Worth a Million Dollar. By

The above chart is the Gold Continuous Contract in the last 20 years. In a bear market, money flows into gold as a safe haven trade. In the last 20 years, after a parabolic blow-off top, gold had a major correction.

No Christmas Gift from the FED! By

The Fed has decided to raise another quarter point today and expected 2 more rate hikes in 2019. Many portfolio managers have expected the Fed to announce a more dovish statement after the rate hike.

NAAIM Exposure Index is not oversold yet. By

n a bear market, an oversold situation could be extended to more oversold. That’s why if you try to find a short-term bottom, you better not. However, NAAIM Exposure index could give us hints about an oversold market.

Santa Claus Rally is at risk. By

Banks and Transportation sectors are the most important sectors in the entire stock market. When they both give us a major sell signal, we'd better respect these signals.

S&P 500 2019 Forecast. By

If you are our blog follower, you probably have read all our bearish articles about the S&P 500 in 2018. 2018 did turn out to be a bad year for investors. Global stock indexes have performed poorly and most of them are already in a bear market.

Long-term Bond is the best Asset Class Now. By

During a bear market, the best performing asset class is cash and long-term bonds. But when to buy is the most important question. Technical analysis can use relative studies to find the right timing...

Declining US 10-years Treasury yield confirms Bear Market. By

The above chart is showing the long-term chart for the US 10-year treasury yield in the last 20 years. In October, the US 10-year treasury yield hit the 20 years declining trendline and reversed direction immediately. The red shadow zones represent...

The SPX Yield and SPX Earnings ratio reveals the Bear Market. By

When you watch BNN and Bloomberg TV, you find that many Market Strategists were afraid to call the bear market. We could understand their arguments like the yield curve, employment numbers, leading indicators are...

The Decline on FINRA Margin Debt level is the Bear Market Confirmation. By

Margin Debt level on the NYSE has been a good barometer as a contrarian indicator about the top of the stock market. FINRA provides statistics on monthly data regarding FINRA member firms margin account requirement and the total of all the debt balances in securities margin accounts.

How low WTI Crude Oil could fall? By

The long-term uptrend of WTI Crude oil is now broken. The fall was so fast and not many traders expected such move. This is a collective action done by major institutional sellers. We could call this move is A Wave impulsive move.

The Party is Over! By

It is time to revisit our long-term monthly chart of the Nasdaq 100 and the Dow Jones Industrial Average Ratio. The Nasdaq 100 has been outperformed the Dow since 2009 and it has been the leader among all the indexes.

Technology Sector is forming the top. By

Technology sector has been the leader in the S&P500. Since 2009, it has outperformed the S&P500 in most of the years. The FAANG stocks have been outperformed by a large degree than most of the indexes.

The Zahorchak Method has signaled the SELL signal for the TSX. By

The Zahorchak Methode (ZM) is a digital indicator who can provide a mechanical buy/sell signals based on Michael Zahorchak measures. The process of the ZM is the ongoing relationship of the 5, 15, and 40 week moving averages of the index and the weekly Advance Decline Line.

Is Crude oil breaking down? By

Crude oil has pulled back from the high of $76.90 to $62.21. This is a 19% correction from the high. Crude oil has broken a short-term support of $65 and may test the low of $58.

Why November is an important month for NYSE Composite Index? By

The October market crash has created many questions about the continuity of the U.S. bull market. The global stock market has already entered bear market in 2018. U.S. stock market cannot be isolated by itself much longer.

Is this the Beginning of the Bear Market or the End of the Bull Market correction? By

This is a billion-dollar question for many Market Technicians. No one can perfectly answer this question. Given the high volatility of global market in October, I try to give everyone the big picture from the monthly chart of the S&P500. At the same time, I want to use the NYSE McClellan Summation Index (Ratio Adjusted) to show how the tops of the market completed in the past.

What is the Market Breadth telling us? By

You have heard many market strategists and Investment Advisors calling the top of the US stock market in the last 3 weeks. The current correction has been well predicted from multiple Hindenburg Omen sell signals on the Nasdaq Index, the breadth divergence and the S&P500 yield level in my October Newsletter. Will this correction become a reversal of the secular uptrend?

20 years uptrend of the Shanghai Stock Exchange is broken. By

Since February, I already pointed out that China is going into a major secular bear market. The Shanghai Stock Exchange Composite index has now violated the 20 years secular uptrend line this month.

Did you prepare for this kind of drop of the S&P500? By

The signs of a market correction which I called out at the end of September from my October newsletter have begun to play out last week. The sharp drop has been anticipated in my September and October newsletter as I pointed out the market was not in a healthy uptrend since April.

The 36 years Bond Bull Market is finally over! By

Since 2017, I have mentioned many times that the longest bond market bubble is near the end. The last bond bear market started in 1950 and ended in 1980. The bull market started in 1980 and ended in 2016. And today we finally witnessed this historical moment.

The Rising Interest Rate is no longer helping the Financial sector. By

If you are a follower of our blog, you must read about the slumping lumber price and home builders stocks price. Now, I am going to add one more sector to the list: Financial sector.

The Big Picture of the US dollar index. By

US dollar direction has major impact on almost all other markets. Strong US dollar hurts emerging markets, commodity prices, foreign currencies and all major US companies that do business aboard and receive foreign currencies as revenue.

What is the E/P of the S&P 500 telling us? By FiveStarCharts.Com

Everybody knows about the P/E ratio of the S&P500 which is the total dividend yield generated by the all the stocks in the S&P500. The above chart is not that complicated, the top is the S&P500 shown in 20 years, the middle is the US 10-year Treasury yield (blue shadow) and its KST (smoothed rate of change momentum indicator) and the bottom is the yield of the S&P500. For investors...

Late-Cycle Rotation- A Technical View. By

You may have heard from the media that many analysts mentioned that we are in the late-cycle of the US bull market. Most of them talked about higher inflation, rising interest rates, higher oil prices, low unemployment numbers… No one knows when this late-cycle will end...

Strong break-out from the Pharmaceuticals ETFs. By

Pharmaceuticals index is one of the strongest indexes as I mentioned in my September Newsletter. Although September is one of the weakest months in the year for the stock market, it doesn’t mean that we can’t find good investment during this period.

TSX Composite is testing the Fan Line Support. By

There are lots of internal weakness for the TSX Composite Index. The new high in July has never been confirmed by any internals. Only 53% of the stocks in the index are above the 200 days moving average.

The moment of truth of the US interest rate direction. By

The US economy is so strong due to the Trump tax cut. 80% of the corporate earnings report this quarter beat expectations. S&P500 made all time high today. If there is so much bullish sentiment out there, you want to see rising interest rate

Health Care sector is emerging as the best leading sector in the S&P500 By

Health Care sector is a defensive sector in the S&P500. When the S&P500 topped out in year 2000 and in year 2007. Health care sector rallied as the one of the strongest sectors with Utilities sector and the US long-term treasury bonds.

7-year Cycle of US dollar index with Assets correlation. By

The US dollar index has a major impact in almost all asset classes: Equities, Bonds, Commodities, Currencies, world trade in a macro picture. His cycle could be divided by every 7 years. In 2002, US index...

What Lumber Price is telling us about the US economy? By

Many analysts pay a lot of attention to lumber prices. Higher lumber price normally points to healthy economy with rising interest rates.

The US-China trade war has killed the Copper bull market. By

The COPX- Copper Miner ETFs has violated a major horizontal support level last week. All the moving averages are now below the 200 days moving average. When price made a lower low and a lower high accompanied with the “death-cross” confirmation (50 days MV crossed 200 days MV). This is a classic bear market...

Bitcoin-Make it or Break it moment! By

In our February issue of our Five Star Monthly Newsletter for premium members, I have called the top of the Bitcoin may be in. Bitcoin lost almost 65% from the top. I am not calling the bottom here now...

The TSX Telecom sector is coming back. It means a lot! By

The TSX has been underperformed the global markets for the last few years. If we consider all the sectors in the S&P/TSX, not many sectors give you better technical pictures, except the information technology, discretionary and some of the REITs...

Strong Out performance of the Small Cap Health Care ETF! By

The small cap health care ETF-PSCH is one of the strong leaders this year when the S&P500 has almost zero return.

Semiconductor Trade War! By

Semiconductor index-$SOX has been the leader of the technology sector in US. Today China temporarily banned Micron technology’s chip sales, cutting the U.S. company off from the world’s largest semiconductor market. It is time to look at the technical for the $SOX to give us a clue.

Avoid these markets when U.S./China Trade War becomes inevitable! By

The short side of the U.S./China Trade War has many implications in the global market. If I ranked the weakest markets that could be affected badly by the trade war, here are the following markets:

Investment Opportunities from the U.S. and China Trade War. By

“There is always a bull market somewhere.” You heard this all the time. Where is the investment opportunity when we have a trade war between U.S. and China?

Investors are getting too complacent after February correction. By

Last week, I have pointed out that the S&P500 was near the horizontal resistance. We expected profit taking and volatility will come back at this level. Friday market sell off due to US-China tariff announcement kicked start the pullback when S&P500 near 2800. The question now is the market going to test the bottom again?

A Hawkish Fed with Strong US dollar Policy. By

The spread between the German bond yield and the US bond yield is widening. As the Fed raised its short-term rate by a quarter point yesterday as the market expected. The hawkish Feb signalled 2 more rate hikes is on the way, however the European Central bank delay their rate hike, it won’t raise any rate until the middle of 2019. This will allow the spread of interest rate widening even more in the next few months.

The impact of the rising of the US dollar for the world market. By

The US dollar index is ready to make a golden cross which means the 50-day moving average is about to cross the 200-day moving average. The implication on the macro trend of a rising dollar is problematic for the emerging market and the foreign currencies.

US regional banks outperformed Large cap banks can foretell macro trend. By

Bank stocks are very important for the stock market. Mega big banks like JP Morgan, one of the largest banks in the world and it is the major component in the XLF, is currently underperforming the S&P500 and the regional bank ETF: KRE. If US dollar continues to outperform the foreign currencies...

Crude Oil Pulled Back- Buy the Dip. By

Crude Oil pulled back below the 50-day moving average, but remains above the 200-day moving average. The current sharp pull back is nothing but noise in a bullish uptrend. Since oil formed “the bottom” in 2015, oil has been trading quite volatile. Especially, oil stocks have been trading even more volatile than crude oil itself.

Transport/Utilities Ratio tells us the risk sentiment. By

The Dow Jones Transportation Average is a measure of business activities and has a strong correlation with the Dow Jones Industrial Average. The Dow Theory explains this relationship very well.

S&P Small Cap internal breadth has confirmed the bull market By

Although S&P500 Equal Weighted Index is still trading in a range, the small cap has already made a new high. When we compare the new highs of the S&P500 and new highs of the S&P Small Cap index, the S&P Small Cap index has already shown 60% of the stocks are making new highs.

Chart in Focus: Momentum break out: Cree inc.- Cree (Nasdaq)

Cree is in our standard membership Opened position. We recommend buy price at $38.00. It is trading now at $45.54 on May 21, 2018. A new daily closing high was recorded last week. Price is going to...

Russell 2000 Closed at New Highs – By

The Russell 2000, the small cap index closed at a new all time high yesterday is a good sign that the market correction is ending. During the consolidation, the Russell 2000 didn’t breach the 200-day moving average. The small cap index is a risk barometer for investors.

The bounce of utilities sector is near the end. By has issued a short signal on the utilities, REITs and long-term bond since 2017. The US 10-year Treasury yield is back to 3% after a minor correction. Utilities sector has a nice bounce from January low. However...

What will be the impact for Emerging market stocks if US dollar has turned around? By

US dollar index has been in a downtrend since 2017. If you invested in emerging market and foreign currencies, you already have made a very nice profit. Because during the downtrend of the US dollar index, foreign market has outperformed US stock market if you use the SPY/ACWI ratio to compare, you can see it very clearly. However, the recent bounce of the US dollar index from the support level is giving a warning signal on ...

Is this market correction near the end? By

To answer this question, we need to study the historical data from a quantitative perspective. According to Stock Almanac, a normal decline between 10 to 20% since 1945 has lasted an average of 4 months and the average of percentage loss is 13%. The average time to recover the loss takes about 3 months.

Commodities are taking over the leadership. It means stock market is entering... By

Since 2011, commodities have experienced extended bear market condition. Energy price crashed, metal price crashed, agriculture price crashed and everything related to commodities crashed...

Equal Weighted S&P500 vs. S&P 500- Breadth is improving. By

How to measure the S&P500 breadth by using the equal weighted index? The capital weighted index is focus the largest capitalization companies in the S&P500.

iShares 20+ Year US Treasury Bond ETF – A MEGA Head & Shoulder is completing. By

A text book head and shoulder pattern is perfectly showing on the iShares 20+ Year US Treasury Bond ETF (TLT). This Mega H&S pattern took more than 4 years to form which means the pattern has a high degree of accuracy and more likely to trigger the mega crash. The pattern is nearly perfect because the right shoulder is lower than the left shoulder and distribution volume is higher.

Hedged or Not Hedged? By

Hedged or Not Hedged? This is probably the best question to ask for next few days. The S&P500 has regained the 50 days and the 200 days moving average. You may have heard from many market commentators that the correction is over and this is the time to look for buying. I would say “Not too fast”. Here are the remarks:

Dow Jones US Airlines Index is in topping process! By

Airline stocks have been a good performing sector in the S&P500. Railroad, trucking and airlines are very important sectors for the Dow Jones Transport index. The Dow Theory requires the Dow Transportation Average (DJTA) must confirm all the tops and bottoms with the Dow Jones Industrial Average (DJIA).

What is Stock/Gold Ratio forecasting next for the stock market? By

You must remember back in 2016 before the US election. The stock market had all the ingredients to become a major bear market. What I found interesting is the stock/gold ratio plays very well in forecasting the downturn.

SPY Resistance and Support -By

After 2 months of correction, it is about time to take a close look at the support and resistance of the SPY. I have predicted a “W” shape bottom back in February, it turned out the pattern is quite like a “W” shape, but a very complex “W” shape.

Is US retail making a big come back? By

In 2017, one of the worst sector to invest is the US retail sector. We had a raging bull market in 2017, however the retail sector was not participating. The media was promoting the end of the US retail business because...

The last support for TSX – Make it or Break It! By

The TSX has been underperformed the world market since 2017. TSX is currently facing a critical support level which is the blue line on the chart. It touched the blue line in February to mark the low.

The Next Financial Crisis-TRADE WAR or QT! By

In our technical studies, we barely study the “Why” because we only care about the price action. So, I don’t talk much about any reason why the stock market suddenly changed to a volatile market. Stock market is no longer driven by earnings recently. Stock market now focuses on

The Big Cycle Picture on the S&P 500 -Be very cautious! By

A normal business cycle is about four and half years and it is called cyclical cycle. But in a secular long-term uptrend, it could be 3 times or even 4 times business cycle within a large cycle. Each cycle will go through 4 phases: Accumulation, Mark-Up Phase, Distribution Phase and Mark-Down phase.

Don’t Touch This! Oil & Gas stocks By

Energy sector is the weakest sector among all sectors in the February crash. Energy stocks haven’t bounced back at all if we look at XOP and XES. Both ETFs are still trading at the bottom of the range. The divergence...

The Dow and the S&P500- 2 different patterns have formed By

After the sharp sell off back in February, the U.S. market has bounced off the low from February 9. The Dow Jones Industrial Average has formed a symmetric triangle which represents a period of consolidation before the price is forced to break out or break down. If a break down happens,

What does a “W” shape bottom look like from now to the end of the March?

I have mentioned in the last blog that a “W” shape bottom will be more likely developing right now. You can find in the last 20 years, the “W” shape bottoms were pretty much the norm in most of the major market correction of 10% or more. In 2016, 2015,2011,2007, the correction normally took 2 months to complete. So, we are only in the early phase of the correction, and we should expect the market will test the low in the first 2 weeks of the March.

Buy on Dips on Sell on Rallies?

Market correction usually takes 2 forms: A immediate “V” shape recovery or A gradual “W” shape recovery. Can we say we are absolutely in a market correction phase? Not necessary! WE COULD BE ALSO AT THE BEGINNING OF A TRANSITION PHASE FROM BULL TO BEAR MARKET. If you are just a retail adviser, how can you spot that the market is changing trend. Here I can just somethings to keep you await at night: When market tops out: Speculations are everywhere in the market: ex. Bitcoin, Marijuana stocks. CHECKED Margin Debt: Highest level in history. CHECKED Bullish Sentiment: All Time High. CHECKED High Valuation: Technology stocks. CHECKED

Chinese Stock Market Could be in Serious Trouble.

The last week global stock market crash was intensive. Technically, one market has serious technical damage. The Shanghai Stock Exchange Composite Index has violated the long-term uptrend line from 2016. Chinese market has been always very volatile in the last 15 years. The violation of trend line is critical because the big picture of the Shanghai index has become a large A-B-C pattern. The big drop in 2015 was impulsive, the wave structure was fast and intensive. This time the wave structure is also very impulsive, so we could say the B wave was a corrective wave. We are going to see a Five Wave Structure on the downside which means we are going to see very volatile market.

How to call a short term bottom by using the volatility index?

Calling a bottom is not an easy thing even you are a professional trader. When the Dow was down over 1200 points, amateur investors were afraid and pushed the sell button with high volume trading. Today’s stock market, 50% of the volume are trading by computers.

Buy Alert on Katanga Mining- KAT.TO (TSX)

Katanga Mining- KAT.TO (TSX) Entry Price: $1.68 Target: $3 Stop loss: $1.30 Risk: High Katanga Mining -KAT.TO is a mining company operating in Congo claims to have the potential of becoming Africa’s largest copper producer and the the world’s largest cobalt producer. Technically speaking, KAT.TO retraced back the gain from $2.83, the price has respected the horizontal support which is around $1.50.

What is the US dollar and Japanese Yen relationship forecasting the direction of US stock market?

The currency market is much bigger than the stock market. NYSE is now about 18 trillion total market capitalization, the currency market trades about 4 trillion a day. USD/YEN relationship in the last 20 years has been the main driver of the Yen carry trade in the forex market.

Hudbay Mineral – Such a good looking chart By

Most investors don’t really have time to study long term charts, like monthly candlestick chart on 10 years for a chart like below. You can see this stock has experienced multi years horizontal consolidation in a total of 6 years. However, last month investors on this stock made a decisive decision to bring the stock price above the long term monthly horizontal resistance which is around $15. This is a bullish and collective push that it shows buyers are ready to push the stock price higher after long term accumulation phase.

Which Canadian company is technically ready to go a lot higher for many years to come?

Most investors don’t really have time to study long term charts, like monthly candlestick chart on 10 years for a chart like below. You can see this stock has experienced multi years horizontal consolidation in a total of 6 years. However, last month investors on this stock made a decisive decision to bring the stock price above the long term monthly horizontal resistance which is around $15. This is a bullish and collective push that it shows buyers are ready to push the stock price higher after long term accumulation phase.


US 10-year Treasury yield is approaching 2.62% which is the 2017 high. This is confirming one of our blog message and our research, when I posted a blog message back in Oct. 2017 “Should you own more US banks now during the earnings report?” I have mentioned that the market was going into a phase of sector rotation from technology to energy. From October until now, banks and energy has become the leaders of the US market. Chart 2 is showing XLF is outperforming the $SPX.

Buy Alert on Gilead Sciences- GILD (NYSE)

Gilead has completed the first leg of correction. It pulled back from $85 to 70. Our members must recall that we play this stock quite successfully last year when we traded the break out from Aug. 09. Check out our closed position page:

Buy Signal

1. Buy Alert on Ecopetrol SA -EC (NYSE) Entry Price: $14 Initial Target: $23 Second Target: $28 Stop Loss: $10 Risk: Medium to High Ecopetrol -EC (NYSE) is our premium member’s pick back in December. EC has finished an horizontal consolidation which lasted for 2 years. EC started to break the resistance line in October with extremely strong volume and momentum. Although EC has risen almost 50%, EC still have a long way to go to hit my first target. It may have some consolidation between $15 to $16, but it could be only temporary. This is one of the strongest momentum stock in the energy sector.

Time to review the 2017 Profit from Five Star

2017 was a good year for many US investors. Our Premium Portfolio focused on US equities has delivered better average returns than the Standard members. However, the model portfolio has been created since September 2016 for Premium members. So it is not enough time to justify the actual return yet. Our premium portfolio will always guide you into the strong sectors and the leaders of the stock markets.

Watch Out! Market is too complacent.

The CBOE pull/Call ratio is showing extreme buying on call options in December which is a contrarian signal that the market has topped out in the short term. With the iShares High Yield Bond ETF underperformed the Investment Grade Bond ETF for since April. (HYG vs. LQD). I think as cautious money managers will take profit soon. This long rise of the Dow Industrial and Nasdaq was showing negative divergence in December. The high return leadership sector like Semi-conductor stocks – SMH has been topped and reversed down at the end of November which is a bad signal that the leaders are given up their rally. If you are money managers, it is so easy to push the sell button to safekeep your gains during the whole year. However, as market is so complacent now. Any serious sell off will bring a correction immediately.

Gold has more downside to come vs USD is getting stronger

My last blog message gave a warning signal about gold. This week gold has violated trendline support. As I suspected US dollar is not yet completed the zig-zag bounce which means gold has more downside risk to come in the next few weeks. This is not a good sign for commodities in general. Now gold could bounce back to $1258 and resume the down trend. For short sellers, this is the area to short gold. If $1258 is taken out, gold could resume the sideway action. Gold is largely affected by the strong USD.

Commodities could be in trouble

Commodities could be in trouble The CRB index has declined substantially in December. Copper broke $3 support level. Oil is testing the $55 level. Gold just broke down from a head and shoulders pattern. It is time to look at the Intermarket relationship now. CRB Index

What is the Consumer Staple vs Technology sector ratio telling investors?

If you a smart investor, you should read this ratio constantly to get you a clue what this market sentiment is. XLP – Consumer staple sector ETF is a low growth and high dividend sector (Defensive). XLK – Technology sector ETF is a high growth, high risk and zero dividend sector (Aggressive). If you put these 2 sectors together and create a ratio. The slope of the ratio can tell you how the market sentiment is and reflect the risk level of the market. You could see the chart below:

What is the Consumer Staple vs Technology sector ratio telling investors?

If you a smart investor, you should read this ratio constantly to get you a clue what this market sentiment is. XLP – Consumer staple sector ETF is a low growth and high dividend sector (Defensive). XLK – Technology sector ETF is a high growth, high risk and zero dividend sector (Aggressive). If you put these 2 sectors together and create a ratio. The slope of the ratio can tell you how the market sentiment is and reflect the risk level of the market.

Buy signal on Avigilon Corp (TSX:AVO)

Avigilon Corp (TSX:AVO) is a provider of business intelligence and security solutions. It designs, manufactures and market video surveillance and access control software and equipment. It announced record earnings today. The stock gaped up and gained almost 9.72% today. The gap could be a runaway gap. Support is at $17.72. The weekly chart is showing a break out of inverse and shoulder pattern which gives a target of $35. Short term pullback is unlikely.

Buy signal on Pengrowth Energy (TSE:PGF)

Pengrowth rallied strongly in September and spent one month in October to consolidate. The pattern is a flag formation which is a continuation pattern. Price could break the $1.50 resistance line and start a new uptrend. The move from the bottom is very impulsive, so I expect the same movement from $1.50 to $2.30. The stock is so cheap as you can see it is trading only 0.72 book value and the debt level is only 0.69. This stock will survive from low oil price.

The Critical Moment for Energy is Coming has issued the buy signal of energy service companies back in September 15th this year. That day marked the bottom for most of the oil service companies since January. Now, oil weekly chart is currently dealing with a key long-term resistance line as the chart below shows:

Should you own more US banks now during the earnings report?

US banks starts announcing their earnings this week. Many investors and portfolio managers are interested to see if they should buy more US banks. Here at, we teach you how to make your right decision to investing. There are many factors why the banks will rise. Here are the few good reason:

Buy signal on Westport Fuel Systems Inc (TSE:WPRT)

Westport Fuel Systems Inc (TSE:WPRT) has completed the inverse head and shoulder pattern with strong volume break out to the upside. The bottom has formed with strong momentum trading. Now the price can reach first target $8 and second target is $12.

Which energy stocks to play in this rally?

Energy service sector is the most attractive sector for investors to make money in this rally. Last year, the big gain was made from Trican Well Service Ltd ( This time, Cathedral Energy Services Ltd (, Calfrac Well Services (, Paramount Resources Ltd ( and Questerre Energy Corp ( - speculative) will be in focus. They are all included in our opened position now. Here is the technical chart:

Crude Oil finally shows the Buy Signal West Texas Intermediate (WTI) crude oil broke $50 today and resumed the uptrend. The bottom is a inverse head and shoulder pattern. I can see oil could trade around $55 to $56 by year end.

How to deal with Currency risk?

Since April this year, the USD/CAD dropped from 1.37 to 1.208 now. It was a drop of 11.8%. Did your portfolio generate 11.8% in the last 4 months. If you are Canadian investor, your portfolio was hurt badly by the currency exchange. Have you consider how to hedge your currency risk? Five Star Charts recommended the best way to hedge risk is having a US dollar currency trading account instead of using CDN currency trading account. The other way is to use the currency hedged ETF to mitigate the risk of declining US dollar. Our website will soon provide premium membership with the investment list of currency hedged ETFs. But now let’s look at our research on the us dollar.

Gold breaks out, is it a buy?

Finally, this triangle is ending. Gold made a break out to the upside. GLD, the ETF of Gold needs to break the last high $131.15 to justify this break out. This is the first time gold is outperforming S&P 5000 since 2011. Let's see this spark can catch the fire.

Opened position on Gilead Sciences Inc. – NASDAQ:GILD

Gilead Sciences Inc. seems a turnaround story, the moment has recently reversed from the down to up. A beautiful breakout in June and now the stock is outperforming S&P500. Buy the right at the time is important. US Biotech currently is the leading sector, Gilead is a major component of the health care sector. I could see this one going back to $82 and even $95 level in near term.

A pending US market correction is on the way

Seasonality speaking, we can entering the summer boring trading season. In US, the Dow keeps making all time high, but the rest of the index like Nasdaq, S&P500, Russell 2000 couldn’t make new highs. It is about time to look at the bond markets and see what bonds are telling us.

The Chicago Board Options Exchange (CBOE) Put/Call ratio UPDATES

The CBOE Put/Call ratio is telling us the market is vulnerable in the short term. The CBOE Put/Call ratio is a contrarian sentiment indicator. It gauge the overall mood of the market. As the ratio increases, it means the investors are putting their money into put options rather than call options. An increase in call options signals that investors are well to bullish and speculate that the market will move higher.

Copper is leading all the commodities

The industrial miners and the material sector has experienced quite a correction in the first half of the year. Now, it seems this correction is over as you can see copper is breaking a short term and long term resistance.

WATCHLIST Updates - Guggenheim Solar ETF (NYSE:TAN)

Guggenheim Solar ETF (NYSE:TAN) has been added to WATCHLIST under 'Exchange Traded Fund (ETFs) Watchlist' table.

Take advantage of Rising Canadian dollar

Most investors will invest in energy stocks, mining stocks when they see the Canadian dollar is rising. The recent rise of the Canadian dollars surprised a lot of investors and made them to think how to invest in a rising rate environment in Canada.

WATCHLIST Updates - Guggenheim Solar ETF (NYSE:TAN)

Guggenheim Solar ETF (NYSE:TAN) has been added to WATCHLIST under 'Exchange Traded Fund (ETFs) Watchlist' table.

New Chart on Oil has been updated

Updates on Oil Price: The sideways movement is over. The new trend starts here at $43. A normal retracement in this downfall will be around $37.12 as the Fib Ratio 61.8% retracement.

Market Sell off due to Rate Hike- Should you buy or sell?

The rate hike of ¼ point brought lots of volatility into the global stock market. Nasdaq has dropped the most and GS said the tech sector is well over valued. Everyone knows the tech sector and the small cap sector are way over valued, but is the uptrend ending here?

Dow Transport vs. Dow Industrial

The Dow Transport Index has not confirmed the recent high of the Dow Industrial Average Index. The Dow Industrial has topped out in March around 21000 and since then the top has not been tested. A flat top is normally bearish. When we look at the Dow Transport, the divergence is clearly shown on the second chart. A lower and a lower high. According to the Dow Theory, this divergence is enough to tell the next move the industrial index. So, we should see some type of correction at the end of May.

Gold & Silver Miners ETFs

Last week I talked about US dollar could break down and it happened this week. So gold and silver both are moving fast to the upside. However, the conviction to buy the gold and silver miners ETFs is not very strong, the reason is mining stocks haven’t outperformed the commodities price. Now, silver miners ETF is facing major resistance at the moment. If silver can clear this major hurdle, this is clear sky to trade the miners ETFs. Watch out closely.

US Dollar is in critical week

US dollar has been the major focus for the last few years. The Fed raised interest rate in March and the US dollar reversed to the down side. The Gap was filled last week. Now this chart is very interesting because it is time for US dollar to show which way it wants to go. A fake break out usually will have more down side. If the US dollar breaks down from this little head and shoulder pattern, we should see Japanese Yen and Euro dollar rally. The emerging market will rally and the commodities should rally as well. Interesting time ahead!

Time To Buy Energy Stocks

Seasonally, we are entering the summer driving season, refiners are forced to buy oil to prepare for the summer driving demand. However as a technical analyst, I don’t look at the fundamental reason. Last year, our top gainer in the energy service sector like now looks like it is ready to buy again. This year, smaller oil service companies, like Cathedral energy service, is poised to go higher. After 2 months accumulation with strong volume, this stock is ready to rock n roll.

Where Is The Next Big Move?

Last blog I mentioned we got to watch closely the emerging market, US market has been very strong in the last few years. But this may about to change, EEM is showing a long term change of momentum to the upside. It is going to test the upper resistance soon and the chart below is the ratio between S&P500 against the Emerging market EEM, if the ratio is going down that means the S&P500 is no longer outperforming than EEM.

Emerging Markets Are Ready To Test Resistance

The S&P500 has been outperforming many foreign markets since 2011. The main reason is because the strong US dollar attracts foreign money to flow into the US market. A strong US dollar has a big impact on commodities, foreign currencies and emerging market economies. Rising interest rate in US and strong US dollar can badly hurt emerging markets like Brazil, India, Indonesia, South Africa, etc…