‘Financial Reset’ Is Coming as These Charts Show ‘Topping Phase’ – Chris Vermeulen

‘Financial Reset’ Is Coming as These Charts Show ‘Topping Phase’ – Chris Vermeulen

hey everyone I’m Jeremy Safford and this is kit code news don’t forget to hit that subscribe button if you haven’t already well last month the core personal consumption expenditure or the pce price index which again strips out food and energy costs it’s also data that the FED watch has VAR closely ticked up just. 2% last month marking the smallest gain this year meanwhile consumer spending dipped unexpectedly indicating a possible pullback in economic confidence that Traders are watching data very closely here giving some hope of a cut before the end of the year so what does this mean for your Investments and is it time to brace for a Slowdown or is this an opportune moment to adjust your portfolio well that brings us our next guest Christopher Mulan founder and chief Market strategist of the technical traders now Chris often uh highlights the pitfalls of overreacting to immediate economic data arguing investors should be looking at the long-term picture here hey Chris welcome back to the show hey thanks Jeremy always a pleasure yeah let’s uh let’s talk about this a little bit let’s get into the economic data you know we showed a cooling in the core pce and a small downturn in consumer spinning you know there seems to be mixed signals in the market some say the markets are a little too quick to price in multiple Cuts how do you interpret this data in relation to the overall Market Health here Chris yeah I I believe the the general public or General market participants are are always way too sensitive way too jumpy in terms of piece of news comes out and and they overreact and I think we’re seeing some selling today or as you and I recording this people are a little worried about that number coming out and um it’s I think it’s just an overreaction uh the underlying trend for the stock market is still to the upside right now I do feel like it’s kind of on its last legs but I I never really get too excited about any move that happens around news even if it’s in favor of of what we want whether it’s higher or lower just because it’s an emotional move it’s alos it’s just a bunch of people trading around the news trying to think that they can outsmart it or know what’s going on so anything around news you really just have to like give it a day or three let the dust settle versus get caught up in in the in the news which I consider you know economic data and and a lot of that stuff can be a lot of noise especially if you get a lot of different opinions out there um you kind of get analysis paralysis so you kind of have to step back and I’m a I’m a technical analyst so I like to follow price and price is going to tell us whether we need to beong stay long or or you know bet on the downside right well I mean when we look at it on the one side we have consumer spending slowing down though and you know this could be seen as a bit of a warning signal of a potential slowdown but on the other hand it might provide the market with this necessary adjustment period so what’s your perspective on this you know do you view it as a cause for caution or is it time to recalibrate I I definitely think things are slowing down I mean we can look at a couple different charts here that that actually show it very well if we take a look at um at at this this unemployment chart so this is like a 24mon moving average and more or less whenever the moving the the unemployment starts to move up uh past one of these red lines here we we tend to have some type of recession financial crisis of some sort and so we have done that and it makes sense because people are starting to get unemployed so spending is going to go down um another another really key piece of data here is you know there was a huge amount of excess Savings in people’s bank accounts uh going in from covid there was a huge bubble everybody done had had done very well but now we’re actually there’s less Savings in bank accounts than there was preco so people have burned through their Capital they have been living the High Life thinking things are going to stay really good for a long time the reality is people are running out of money this is probably why consumer spending is starting to go down we’re going to see a down tick um and we’re probably going to see you know credit and debt start to rise which there’s big interest rates all these things are very slow moving indicators telling us that though economy to me is slowing and spending is going to slow which means lower sales for companies earnings go down and it’s a a b big Vicious Circle eventually layoffs real estate goes down right so it’s this huge um uh kind of everything’s tied together but these things really stand out in terms of why maybe spending is starting to go down and uh with inflation I mean this definitely hurts people’s bank accounts you can’t buy nearly as much as you could a few years ago with the same dollar yeah no a lot of people are struggling right now uh you know you’ve talking about the technical side you’ve always kind of emphasized the significance of long-term charts you know such as monthly and weekly we keep talking about this economic narrative we get so much of it every day uh talk to me a little bit why you look at these longer terms instead of maybe a daily or an intraday chart and is this how you kind of cut through that noise that we talked about yeah I think it’s really important to look at the long-term chart so uh we could look at the weekly chart of the SP 500 and I like to look at the stock market uh prettyy much every Market as as a an ocean tide if the Tide’s going up it lifts all boats if it’s going down most boats go down and the key this is the weekly chart of the the SP 500 the key is to identify when the overall tide is going up that’s when you want to own equities When the tide is naturally going down you want to be very defensive and probably not in equities and we’re back into a rising tide environment right now now this is for the large cap stock this is like the sp500 the NASDAQ uh there was a very different picture being painted with the Russell 2000 uh and the majority of sectors that actually uh show a much more bearish picture and that’s because they’re much more sensitive they usually top out and reverse well before the stock market does and there’s a really good way that I like to visualize this which is through stage analysis and if somebody understands there’s four stages to a market a basing stage which is a a sideways DM difficult time to make money stage two is a bull market stage three is a topping phase which is where I believe the markets are right now and then stage four is a financial reset I believe we’re headed towards a financial reset uh in the next few months and there’s some a bunch of early warning indicators that are starting to flash on the charts from a technical standpoint um that we are getting very close to the markets running out of steam and if you take a look at this uh Jeremy this kind of blowoff top move and this this this sideways move this complacency move I call it this is where a lot of people feel like the stock market is is regaining traction and that it’s going to want to go higher the general public um but the reality is it’s most likely um you know G to fail and go to the downside and a really good visual of this is actually the Russell 2000 if we we zoom out here on the Russell 2000 which is a great leading indicator you can see it has had a very big rally um blowing off to the side and now it has this kind of complacency move that eventually I believe is going to fail and we’re going to see a big correction and this is this is the this is that stage three topping phase I just showed you on that uh that other chart and this is what the majority of stocks are doing this the NASDAQ and the sp500 are hitting new all-time highs really kind of camouflaging what’s happening behind the scenes AI big Tech has drifted those indexes to new highs making people blind to what the reality is of most stocks and the strength of the market is not nearly as as strong as people think and there it’s going to be pretty rude awakening uh when event rolls over and we go into a big stage for uh decline in the markets right so what cycle are we in then I mean I hear you saying we’re a little bit at the top of the cycle I mean we saw nvidia’s Revenue Surge and I guess the question is on the mag 7 we looking at the S&P kind of the tech side AI is there a top here in that narrative too I mean are eventually these earnings just going to kind of dwindle or maybe stay the same yeah when it comes to AI I mean it’s a pretty big wild card I don’t follow AI too specifically but there’s no doubt we are still in the infancy stage I mean Nvidia who knows how much potential it’s got I mean now that AI is so big and requires so much power uh it’s probably going to open the doors to a whole bunch of new potential video card companies that that are going to want to try and get in this space because it really is just beginning um but AI has got potential keep growing it might be that one sector or the one group of stocks that could potentially hold value or maybe Buck the trend and keep going up even if we have a market correction but Jeremy if we look at the overall stock market we’ve got some really interesting cycles that play So this blue cycle here is the stock market cycle the yellow one in the background is the economic cycle now the stock market tops out generally three six nine months before the economy does and what I want to point out here is is typically near the top of a stock market just before it’s about to roll over and more or less die we see precious metals come to life we see energy come to life and we see industrial capital goods which I’ll touch on in a minute because it’s actually really interesting and most people don’t pick up on this um but we are seeing gold hitting new all-time highs we’re seeing the energy sector um like if we go to Gold real quick and take a look at the the charts we obviously have gold pushing up to new all-time highs the big long-term picture of this is is very bullish investors Savvy investors are moving to safety and gold is one of those another one here is the energy sector stocks and uh while it may not look like there it’s it’s been screaming higher in reality longterm energy sector stocks are almost at all-time highs they have been musling their way up and that’s because these are commodity-based we’ve got Wars going on typically energy and gold do well during war they also do well just before a stock market tops and and so those are two major things and I really like Precious Metals I think gold silver miners have got potential to run for a few more months before they might start to get pulled down with the stock market that’s kind of my take my take on those um there is this really interesting angle around industrial capital goods so this is like um this is where I think there’s a big disconnect you’ve got CEOs you’ve got Factory managers they’ve had amazing sales since covid everybody’s in this bubble phase companies are making record profits so these these Factory managers are upgrading their their assembly lines their equipment their machines they’re spending millions and there’s a huge delay when they order these this type of equipment it takes a year or two to get delivery takes forever to install and uh you know this is this is the example of what the typical kind of business person is doing on this yellow cycle they’re really ambitious right now they still think we’re having a little slow down in business but bit their business is booming and strong they don’t realize we’re about to walk into a recession and uh they still think we’re in this this expansion phase and so they’re all gonna you know employ or bring all these new assembly lines in with huge interest rates huge margins or markups or sorry uh uh interest rates uh and then we’re going to go into this recession and then they’re going to be kicking themselves saying ah why didn’t we just keep our old assembly line it was paid for now our demand’s down we could have run so that’s the interesting phase is and that tells us we’re kind of in this hump here between the stock market topping and the economy getting very close to a pullback and when we look at the industrial um Goods sector you can see here it is screaming up to new all-time highs because all these factories are upgrading thinking they’re going to be rich and they’re going to be have amazing earnings but they don’t realize they’re spending all this money just before we’re going into a down cycle that could last two three four five years because I actually believe we’re very close to a a 2,000 Tech bubble type of scenario because Commodities the the commodity to equity ratio is is at alltime lows meaning stocks are the most valued they’ve ever been Commodities are the most undervalued they’ve ever been and that is very similar to what happened during the tech bubble same setup so how long do you think until we start to see this I mean you mentioned 3 four months bullish on the metals side specifically gold when the markets come down it’s not that may you know sell and may go away when the markets come down everything else is kind of cyclically going to top it as well yeah so I I think by the end of this year we’re going to probably be in a very deep sell-off in the markets I don’t know if we’ll have start fully started a stage for decline we need a lot of downside damage before we’re actually that huge trend has changed but um uh I I do think we’re going to see a big pullback in the markets and um let me just see where uh where we’re at oh yeah so there’s this interesting um scenario here of the commodity and equity ratio where we are down at these crazy lowest levels ever for Commodities and this when we saw this back in the tech bubble that was like a three-year bare market and it took forever for the stock market to come back 16 years for the NASDAQ uh to come back so I do think this year is most likely going to be a top in equities and you need to protect your Capital because the Buy and Hold could be out of favor for a very very long time and uh there’s ways that we can take advantage of this Market yeah when it is falling um through Commodities or through inverse ETFs or just stand aside and collect interest until the storm kind of passes is well then this is interesting because you know you talked a little bit about that market top and you know the potential risks associated with it then what are the strategies here Chris you know what do you recommend to investors right now is there is it time to shift towards more defensive assets or do you see you know value in maintaining positions and equities yeah so I’m a huge fan of following an asset hierarchy so I have a hierarchy that I follow and whatever is highest on the list carries the most waiting it’s usually the most volatile I focus on the stock indexes and I’ll move down this list to slower and slower assets depending how the markets unfold now they need to be in favor for us to get long but for example we naturally always want to be long stocks they have the most upside potential but if the stock market maret rolls over we’re going to go and look at TLT which is long-term treasury bonds I believe they’re getting closer to a major bottom and we’re probably going to start to see those rally uh by the end of this year and they could have some pretty good upside potential uh so my strategy is quite different than everybody else I don’t believe in diversifying across stocks and bonds and and a whole bunch of different assets uh when it comes to focusing on stock and U the stock and kind of commodity markets I focus on owning I just want to own equities if equities are in a stage two bull market if they’re not I’m going to go to the next asset are bonds starting a new bull market if yes I jump into bonds we’re 100% into bonds we want to ride that up forget falling stocks there’s no point of holding an asset going down so as you said Jeremy that I like to rotate to different asset classes and bonds are a different class uh uup udn those are the long and the inverse US dollar Index and in 2022 uh that was that was the trade of of the year really was um that particular play if we actually look at the long-term chart here of our strategy um we had 2022 was a down year for the stock market well the US dollar which is one of the slowest moving most stable um ETFs that I like to play it rallied 18% and it and the biggest pullback along through that year was a 4% pullback so it’s very low volatility low risk and you can catch these beautiful Trends and currencies so the key as you said is to literally just step out of the asset that’s now going down and step into one that is going up or if none of them meet the criteria we’ll actually just move to uh like a money market or a cash equivalent that pays us literally daily or monthly dividend payments as cash it’s sometimes better to make a third percent return a month um and make your four percent a year sitting on the sidelines than it is to lose four five percent a week for the next you know several weeks or during a bare Market phase so it is critical to step to different asset classes as we go and one thing that a lot of people don’t realize Jeremy is they look at the stock market and they’re like oh I’m Diversified I have a whole bunch of different um sectors and stocks I’m all over the place I’m completely Diversified but my strategy of if the tide is going down if the stock market is going down almost all stocks go down it doesn’t matter and believe it or not we see a lot Commodities we see almost everything go down so it doesn’t matter how Diversified you are all of those stock positions you have are probably going to go down it’s just some go down more than others so I’m a firm believer of if the Tide’s going down step out of it or take advantage of falling pricing uh don’t don’t get stuck thinking oh I have all kinds of different sectors I’m I’m I’m Diversified because all you’re doing is spreading your wealth Out Among something that’s still going down naturally right yeah can you take the trade though Chris like can you you know you you pointed out a little bit about certain market segments specifically small caps and sectors including the ark ETF they’re currently underperforming if this indeed happens are you putting your money into other areas maybe Emerging Markets somewhere where you can see a bit of an upside when you know all the dominoes start to fall um I know because generally if you go and look at all the global indexes when the US markets like I I found the SP 500 if if you can identify the trend and the money flow of the SP 500 you’ve pretty much identified almost every stock and every stock index around the world they almost all follow suit they’re not perfect there’s the odd one that will Buck the trend but why try to pick the one when you you the odds are with you to just play the downside so I wouldn’t move to Emerging Markets I personally just love the US equities markets there’s the volatility there’s the liquidity um I’m just comfortable with it and it seems to kind of be the engine if you know what the SP 500’s doing you know what the rest of the market more or less is doing in my opinion so um when the market turns down I believe you know you need to find an inverse ETF to to benefit from the natural you know month after month lower pricing uh or you need to move to a different asset class that goes up and um you know the like the AR ETF for example I have on the chart you can see it’s gone through the the entire stage one it has stage two blow off it had its complacency move it went into a stage four now it’s back into a lot of people think this is a stage one that the whole cycle is going to rinse and repeat I actually believe you know we’re going to go into a much deeper recession and we’re going to see this down into the 20 or the $16 range because this is actually a large bare flag pattern pointing to lower pricing so I I I don’t believe that this is a way to get in I know a lot of people are loading up on the arc ETFs thinking looking at this cycle saying okay we’re back at a bottom um but there’s there’s a lot of downside risk there isn’t a whole lot of safety there isn’t a stock you can really move into or stocks that will Buck the trend if we go into a another uh bare Market good talk to me a little bit about you know the investment philosophy yours usually prioritizes price trends rather than predicting Market moves kind of like what we talked about I’m curious how responsive is this approach to sudden Market shifts you know is there triggers or something strategic where you go okay I’m going from bullish to bearish and that’s my stance or vice versa yeah good question well the strategy that I follow it’s more or less kind of like position trading meaning trades can last several months uh we got long last November it lasted all the way up until really just about a month ago so we can catch trades and trends that last several months big Returns the strategy like I look at the stock market like the ocean and and there’s waves that roll through and you look at like a surfer you know out past the break they’re sitting out there floating waiting for a clean set of waves to roll through that’s what I do in the stock market I have a strategy we can identify we see these momentum waves rolling through a sector or index or asset class whatever it is and then we pick the one that fits our our risk criteria one that we know well and we hop on that wave and we ride it so we don’t try to predict anything there’s no point in trying to predict what we do is identify trends that have lots of power behind them we hop on that Trend we ride it and the nice thing about jumping on something that has got strength is we also know when it’s starting to lose its strength so we can start trimming off profits we can move up our stops and if we just wait Jeremy for these like these waves that roll through every year there’s about five to 12 trades just think five to 12 waves that roll through the market and we just pick the ones that fit our strategy so we’re not active as a as an active Trader we don’t have a lot of Trades but we’re definitely not a passive investor sitting on the sidelines just riding these you know these storms these waves out we are just hopping on catching a wave carving off waiting for another one we sit in cash about four months of the year if you were to accumulate all the times we sit in cash we’re in cash and we collect monthly interest you know a third or more percent every month just sitting in cash safely waiting for that next wave to roll through yeah Chris are you watching the metal prices in comparison to the you know the mining equities and that misbalance is there anything you’re jumping into to take this upside that you say is maybe you know three to four five months of upside here any any any insight into some of those specific equities yeah so we’re long SJ which is the uh silver Miner Juniors uh I’m I’m heavy long in physical medals I have been for a long time I I slowly accumulate more and more I do believe um I’m a huge fan of physical medals I think there will be a time probably next year hopefully next year where the financial markets reset it’ll pull the the miners down in Precious Metals as well um which they almost always get pulled down during a bare Market just because of panic selling and force liquidation all kinds of things um I believe after this next Market pullback is going to be like the ultimate buying opportunity for physical gold and even more so it’ll be that rare opportunity to see like once every 10 15 years in miners where you can pick up miners for pennies on the dollar catch them for like hundreds or thousands tens of thousands of percent like huge and I mean anybody who’s caught one of these gold runs from like 2002 or or 2009 kind of 2008 uh were put in a bottom I mean we’ve been drooling for the next one and I believe it’s coming I hopefully in the within the next so I will be looking at gold miners specifically long-term holds once we have a market correction right now it’s a short-term play we’re we’re just trying to catch a move up in in the precious metal space because I do think they’ll be coming back down a little bit uh in due time in due time as things do happen and it’s healthy to take some profits hey thanks for this Chris I appreciate it chrisopher muet from the technical traders joining us today uh great Insight here we’ll have you on again soon thanks Jeremy always a pleasure thanks thanks man I’m Jeremy Safford for all of us here at K Cod news thank you for watching don’t forget to subscribe of course go tell your buddies and be sure to leave a comment of who you’d like to see on the show next we’ll see you next time [Music]

Jeremy Szafron, Anchor at Kitco News, interviews Chris Vermeulen, founder and chief market strategist of The Technical Traders. They dive into the current state of the stock market, exploring the potential for a ‘Financial Reset’ and the significance of the ‘Topping Phase’ as indicated by various market charts. Vermeulen discussed the pitfalls of overreacting to immediate economic data, analyzing the core PCE data and its implications for market health. Chris shares his predictions for an impending financial reset, signs to watch for in the AI sector, and the cyclical nature of markets. They analyze the small caps, particularly the Russell 2000, and discuss investment strategies to protect against market tops, indicators signaling a market peak, and the roles of gold and commodities. Additionally, Chris provides insights into bonds and treasuries as part of a diversified investment approach, strategies for managing risks in volatile markets, and his predictions for future market conditions.

Follow Jeremy Szafron on X: @JeremySzafron (https://twitter.com/JeremySzafron)
Follow Kitco News on X: @KitcoNewsNOW (https://twitter.com/kitconewsnow)
Follow The Technical Traders on X: @TheTechTraders (https://twitter.com/@TheTechTraders)

0:00 – Introduction
1:25 – Core PCE
2:22 – Market Sensitivity to Updates
5:04 – Long-Term Chart Analysis
6:58 – Financial Reset Predictions
10:17 – Understanding Market Cycles
12:06 – Small Caps Topping Phase
15:30 – Market Top Indicators
17:00 – Gold and Commodities
18:30 – Bonds and Treasuries
20:00 – Managing Risks
21:30 – Future Market Predictions
23:00 – Final Thoughts

#ChrisVermeulen #StockMarketAnalysis #FinancialReset #InvestmentStrategy #KitcoNews #MarketTrends #EconomicData #TechnicalAnalysis #SmallCaps #Russell2000 #EconomicIndicators #MarketSignals #ChartAnalysis #FinancialPredictions #investorinsights #technicalanalysis #energyinvestments #gold #commoditiesmarket #sp500 #stockmarket
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