Stock markets set to crash 37% as ‘loser’s rally’ ends, gold and silver ‘take off’ – Chris Vermeulen
(Kitco News) – Inc Standard & Poor’s 500, which recently rose 6.6 percent over the past three months, due to a major crash, down 37 percent from current levels. This is according to Chris Vermeulen, Founder and CIO of The Technical Traders.
“I honestly think the S&P 500 could drop another potential 37 percent, roughly, from current levels,” he predicted. “It’s enough to cause a lot of damage, a lot of stress, a lot of bankruptcies, you name it.”
However, he added that gold and silver are about to “take off” amid this bear market.
“This is when precious metals and miners take off,” he claimed. “We’ve seen this happen over and over again in past bull market cycles.”
Vermeulen, who has over two decades of experience in financial markets and trading, spoke with David Lin, Anchor and Producer at Kitco News.
Vermeulen is a student of Stan Weinstein, who popularized what’s called “phase analysis,” a method for analyzing financial markets.
In explaining Weinstein’s theory, Vermeulen said that markets have four stages. The first stage, the “base stage,” occurs when the security has bottomed out, in preparation for the next rally. Phase 2, the “progression phase,” is when an uptrend occurs, resulting in a profitable trade. In stage 3, there is a ‘peak’, when the markets have peaked and there is a great deal of volatility. Finally, Stage 4 is a bear market “the regression phase” when the markets hit another bottom, returning to Stage 1.
“People think we are starting a new bull market,” Vermeulen said [Stage 2]But if we really look at the sentiments of market participants…we are really at this stage of satisfaction [around Stage 3]where people think the next rally is about to start… The more movement in precious metals and miners at this point, the more likely we will experience a Phase 4 downturn, where we go into a real, full-fledged bear market.”
In the “peak phase” of volatility, Vermeulen said he does not attempt swing trades, preferring to take a more conservative approach.
Note “we don’t really know the future”. “We just have to manage our risk and positions as the market moves… I’m no expert at forecasting or trying to predict where things are going. I don’t try to sell tops and buy bottoms. I wait for the top to happen, and get out when it starts rolling… It’s not about playing the extreme.” Boundaries. It’s about playing and capitalizing on the safe middle sections of these trends.”
He added, “All I care about is trying to get the best returns with the least amount of trading, which is the opposite of what traders want.”
To see how Vermeulen positions himself in anticipation of his anticipated crash, watch the video above.
Follow David Lane on Twitter: @tweet
Follow Kitco news on Twitter: @tweet
Not giving an opinion: The opinions expressed in this article are those of the author and may not reflect the opinions of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will not be held liable for losses and/or damages arising from the use of this publication.