Transcription
Welcome back to Kitco News. I'm Jeremy Saffron. Well, the world is bracing for another round of economic shock waves. This time, from the return of tariffs. President Donald Trump's Liberation Day announcement has brought in a sweeping wave of new trade policies, and the markets—they're reacting fast and hard.
Global stocks are in correction territory. US markets have seen back-to-back sessions of heavy losses. The Dow is down 1500 points today after a similar drop on Thursday. And the NASDAQ is looking to close in bear market territory. Meanwhile, yields have also tumbled below 4%, signaling recession fears are rising fast. And over in Japan, their prime minister is calling the US tariffs a national crisis, while the IMF is describing it as a significant risk to the global economy and an inflection point for financial markets.
And now we have China responding to sweeping US tariffs with retaliatory duties on all American imports and new export controls on critical rare earths, raising fears of global economic slowdown. And at the same time, President Trump has doubled down on his aggressive tariff policies amid plummeting US stock markets, stating Friday that, quote, "My policies will never change."
So where do we go from here, and what are the technical signals that matter now? Joining me is Chris Vermuan, founder and chief investment officer at technicalraders.com. Chris, always great to have you on.
Good to see you.
Yeah, same Jeremy. Always a pleasure. Uh, a crazy day as we can get started. Uh, I wanted to get started with the bigger picture though, because Trump's tariff plan has ignited what many people are calling a full-blown global trade war. China, as I mentioned, has retaliated against Trump's latest tariff with levies on all American goods and export controls of rare earth. Uh, firstly, how are you seeing these macro signals before we get into the technicals? I mean, are we in the early stages of a deeper market correction, or is this simply a volatile but tradable pullback?
I, I think we're in, I think we're starting to see a major market top. I mean, if you look at some economic data, unemployment and um, layoffs and all this stuff, and housing pricing, how it's all been moving, it has been signaling for quite a while that the economy is slowing. People's spending is coming to a grinding halt. I mean, based on what most people consider a recession, we're not close to one yet. But when you look at the details and the technicals, the trend has changed from a bullish economy to a neutral to bearish. And the whole wave of tariffs is kind of just usually the government's kick the can down the road and try and extend the markets and keep things frothy. Tariffs are more or less just taking the can and throwing it in the garbage. And the markets are just dumping out. And you know, we're going to see everything in America become much more expensive. You know, almost everything comes from China. They got massive tariffs, and we got all these other tariffs on other products. So that is not good. That means slowing sales. That means we got earning seasons coming up. I'm pretty sure we're going to see a big downturn in forecast for earnings for companies. People, investors don't want to see that. If earnings are, are, are not good for this past quarter and the projected forecast uh, for earnings is even lower than expected, Uh, you know, I, I think that the tide has changed. We've gone from a bullish environment to I believe we're now in a bearish environment. And um, I think that starts next week to be honest, is the new, new kind of bearish phase. The new Monday, we're calling it.
It's going to be interesting to see, of course, while markets are closed. And I mean, Chris, technically though, I mean, what are the most important levels that you're watching right now on the Dow and the S&P 500 and the NASDAQ? I mean, is, is there any support zones, or are we just in a free fall?
Yeah, there are. I mean, I, I use pure technical analysis. I kind of weave out and get rid of all the economic data. When we take a look at the actual price, as investors, we all want price to move in our favor. This is the weekly chart of the S&P 500, and we have the COVID low down over here. And using a Fibonacci extension, which Jeremy, you and I have talked about and I've shared before, it's one of the most powerful um, technical tools to project forward where the next two price targets are. And so if we take the COVID low and we go up to this high that we saw in 2022, and then we can gauge the strength of the pullback, we can bring that forward to where price should go. Now there's two ways, two, the two targets on here are the 618 extension, meaning the move from this low should be about 61% of this initial move. And we should uh, see the market pause and have a hiccup there. And when we do have a pause or hiccup, we almost always see a 100% measured move get hit. And so the S&P 500 hit that move, and it has been clearly, it has put in this like double top formation. It's clearly being rejected. And so the bullish phase, we're, we're, we were in a bullish environment. Now we're switching to a bearish environment. What happened right here is exactly what's happening or what happened back over here. And so that's the upside, knowing okay, we've just slammed our head into the ceiling, and now that trend is done, and now the market needs to digest. So if we drop down to the daily chart now, we can get an idea of where the price should go over the next um, uh, few trading sessions. And again, we can use Fibonacci extension to the downside. We take the high, we take the recent move to the downside and the strength of this bounce, and we carry that forward. And you can see as of you and I are recording this today, which is Friday, April 4th, we have now, it came down and closed at the 618 yesterday and then has sold off, and we've hit that 100% measured move, which also happens to be a pretty major support level through here. We had a very significant pivot low. We had another pivot low. We had, we had a bunch of trading above and below it. So this is a technical level that, okay, the downside is mostly I think done for this particular leg. We've got the VIX up like 10 and something percent in the last couple of trading sessions. Everyone's buying put options, betting on falling prices. So everybody's scared. They're liquidating. Now they're betting on falling prices, and they tend to do that always right near a major technical market bottom. And I believe we're probably going to start to see this market have a pretty sharp bounce. I don't think it's a rally in terms of going to new all-time highs. I think it's a bear market bounce. And eventually, I think we're going to go a whole lot lower. And uh, so this is the bias. The NASDAQ is pretty much the same, and the Magnificent 7 are in a bearish environment as well. And today, as we're hitting this technical level on the S&P 500, we're seeing the Microsoft and Google, the intraday charts to me are showing signs that it, there's big buying going on. And I think we're starting to see the Magnificent 7 starting to be accumulated from people trying to pick a bottom and seeing it as an opportunity to, to buy at a good price because they're, they're bullish long term. And that is a sign, if the Magnificent 7 are starting to firm up a bit, that probably means we're going to have a big bounce um, starting in the next few sessions. But today is a bloodbath. If we close near the lows on the session, that fear is going to carry through the weekend. People are going to percolate and get more fearful because they can't do anything. We'll probably see a big gap lower on Monday, and everybody will eject at the open, and there'll be a little wash out, and Monday could be a very significant wash out low, and that's when the bounce starts. So that's, that's my short-term take on the S&P 500 and the NASDAQ at this point.
Okay. So you said that there's a little bit of support there. Some people buying the dip. I mean, let's talk about sector pain because, as you mentioned, tech is bleeding. Apple, Nvidia, Tesla, all really down because of their exposure to China, but now, you know, bank and energy stocks are falling really fast too. What are you watching there? I mean, is there any safe haven out there?
H, I mean, I think the only safe haven, the, the best play right now, the one that, that we moved into like just before this market was rolling over, we start, we got a sell signal about 16, 17% ago. The technicals have been choppy for the past month and a half, and, and we moved to cash. Cash has kind of been the play, and that's what uh, everyone, you know, we've all been talking about. It's so nice to stand on the sidelines and avoid this um, because there really isn't a safe haven play. Gold is holding up very well. Gold is only down 5%, Uh, where the rest of the markets are down 15 to 20 or plus percent, depending on the, the, the in particular asset that we're talking about. But overall, gold is the holding up the most. I'm still, I still think gold is going to um, hold its value. It might want to push a little bit higher. My next target for gold is that is about 3275. Okay. But it, it has hit a major resistance area on the chart when, when we, when we look back at these at these, these price patterns, 3200 more or less is a pretty significant resistance area. So there isn't a safe haven, and this is a perfect example why gold is crashing and why silver is crashing and miners. You know, people see them as a defensive safe haven play, but when we are in a bear market and there's actually like pure panic and selling, there, there isn't much safety anywhere. People can still be in the right position, and they still panic, and they sell it. So the only thing that's really positive today is kind of,
Yeah, you brought up, you brought up silver there. I want to go back to that because looking at silver today, I mean, it's been wild to watch it. I thought that there was going to be some support around $30, yet here we are, man.
I know, silver, I mean, yeah, silver's got a few pretty bearish uh, patterns playing out here. I mean, it's had these three surges to a high, which when you condense the price in the speed that they go up, this is a very bearish price action. Um, as we know, the markets like to take a staircase up, and then they take the elevator down. Silver's known for this. Silver's usually has a series of big long red bars. You got to be aware of. They, they, they do a lot of damage. And I think this is a sign like silver's hit its 100% measured move based on Fibonacci. It's got, it got rejected this week. Um, massive volume. So I think the game has changed. I think we've gone from a bullish environment in the stock market and the economy to now we are in a bearish environment. And so any bounce from this is going to be like just an opportunity to, I think, trim off positions because I do think almost everything is going to go pretty much lower. Bonds are, bonds are acting as a defensive play, and they're coming back to life. I think bonds are might be the only one play that could uh, hold up and move higher while everything else kind of dumps out. I think 2025 is going to be difficult for the rest of the year. Um, there will be some big percentage bounces along the way cuz the biggest rallies happen in a bear market, but they still get sold into, and so it's going to be a volatile ride. Um, and it doesn't matter which asset you hold, but silver is down, oversold at support, and I think the whole market is ready for just a bit of a bounce after probably Monday's wash out low.
Right. Right. Uh, you know, it's funny. I think you must have got the same, the same memo as Warren Buffett there. You're all cash, huh? That's your play.
Yeah. Yeah. I mean, when there isn't a signal, you know, we don't want to gamble. You don't want to gamble your life savings. If there's not a clear signal, just stand aside and collect interest. It's uh, pretty easy.
Let's go back to the macro front for a second because we also got these strong job numbers. I mean, we had 228,000 back in March, Uh, but the unemployment rate kind of ticked up slightly. How we know that this isn't reliable data because obviously it gets revised later down the line, but can you comment on the latest number and more importantly, I mean, does it even matter now, or I mean, are the markets completely focused on trade war narrative?
Well, I definitely think the market is totally focused on tariffs right now. Everybody's all concerned, and you know, countries feel threatened or, or, or hurt from, you know, tariffs being slapped on them and things like that. So tariffs are definitely taking the front headline news, but economic data, I think, is important. I think uh, unemployment rate has been rising. It's had a series of little bull flags when you look at it from a big picture. Uh, it's pointing to much higher uh, unemployment rate in the, in the very near future. And I think this is one thing we've been waiting for. And I've been talking about this with the crude oil chart. Oil has been holding up above $65 a barrel. I said if, if, if oil clearly breaks below $65 a barrel, that is a sign I think that we're going into like a global recession. And I said there'll probably be some type of economic news that, that changes the pivot that pivots the market. And we've seen that now. We got tariffs. We're probably going to see sales slow down, which means earnings slow down, which means people, investors sell stocks because the PE ratios won't be as good. Um, and, and so all these things are coming about. So I think unemployment will creep up, and the macro picture to me is very bearish. A lot of people don't realize, like I'm in Ontario, Canada. I think the unemployment rate here is like 7 and a half percent, but nobody's talking about it. It's high. Um, things are, are not as rosy as people think, and the news, I think a lot of the news uh, on TV covers, covers it up. And as you said, they revise numbers. They change the calculations of which data is even in it. So we can't, we don't even know how it compares to how it should have been based on old formulas that the, the Fed and government uses. Canada had some crazy job numbers come out today that were not looking good either. Uh, of course, Q1 just ended, so we should be able to at the end of at least Q2 see what the effect of some of this tariff call is.
I wanted to step back a minute though, because you know, you've been doing this a long time, Chris. How do you prepare as a technical trader for an environment like this where political shock is overtaking traditional economic signals, especially when Trump doubles down saying his policies will never change?
Well, I mean, you really have to fil, try to filter out the news. Obviously, the political stuff, there are land, they are landmines. They, you don't know when one's coming, when it's going to go off, and how big it's going to blow off. Um, so you just have to be very cautious. You have to manage positions. You need to, what I do is I follow trends. Typically, the market leads you to the data, leads you to the news. The charts have been pointing to this happening for the last uh, several months. The market put in a major top. It's been selling off like the stock market for the past month and a half. It formed a very bearish chart pattern that pointed to an imminent sell-off this week, and then, you know, the tariffs hit. So I've always found that the charts will paint the picture, and then news comes out, and then, and then the rest of the picture's done from the news, and everybody's like, "Oh well, that was a news-driven move. It was all," I'm, I'm like, "No, no, it was already factored into the markets and the momentum. It was already set up. So you're best to follow price and not react to news. If you just follow price, the news tends to fall in your favor. You don't know what it is or what it's, what's going to happen, but the news tends to follow the price, believe it or not. And the price paints the picture and the direction before the news comes."
Right. Yeah. And it moves very quick, as we know in these times. Uh, speaking of which, we got to talk about the Fed because I was watching Jay Powell all morning. He was speaking at the Society for Advancing Business Editing and writing annual conference. And Jerome Powell pointed out that tariffs are higher than all forecasters had predicted and that the economic effects will include higher inflation and slower growth. But at the same time, the Fed chair stressed that the US central bank will wait before making any rate uh, changes, stating quote that it is too soon to say what will be the appropriate path for monetary policy. And following Powell's comments, the CME Fed Watch tool is pricing in only a 35% chance of a rate cut in May. And overall, investors obviously are expecting four rate cuts this year with the first one kicking off in just the summer months. First, I want to get your reaction on Powell's comments in this very volatile time. But how do you see them responding to the tariffs? Do you see a rate cut coming?
I don't know. I mean, inflation state wants to linger around. I mean, if they cut rates, it's going to, it's going to hurt inflation, is going to hurt people more. I think the Fed is, is standing back. I think they're going to see this shock that's hitting the market right now, and they're like, "Whoa, this is way too much. Let's not throw another, you know, something into the fire. Let's just let things simmer a bit and not look like we're reactive and that we're in control, and then we'll do something." Well, so I think they're, they're just like, the market is a mess. It's haywire. Let's not poke, poke it anymore right now. And I think they're going to do something. I don't think they're going to drop rates very fast if, if, if inflation is here to stay, and we're going to see um, things, I think we're gonna have to still see more pain in the stock market uh, for Main Street. I mean, yeah, it's been a big down move, but really, in the grand scheme of things, I think there's a lot more downside. I think we have to kind of hit more so financial crisis level down, maybe 25, 30%, and this needs to drag out for a little while, and, and earnings need to slow down. Then, then we'll probably see the Fed say, "Okay, these companies need a break. They sales are down. We got to cut the interest rates so that their borrowing costs drop, and they don't have, you know, all this overhead. Um, so I don't think rates are going down anytime soon, which um, I do think they eventually will go down, but I do think we need more time. And I think the Fed's right. I think they need to hold off a little bit, say, save a bunch of those cuts to, to try to support the market later and let the noise get shaken out from the tariffs right now.
Hey, the financial crisis, I mean, you just talked about the financial crisis, and I mean, before I let you go, when we look at this at the longer term, I mean, how would you describe the moment in time because Japan's prime minister is calling it a national crisis as Tokyo suffers its worst 5-day run since COVID. Europe is pledging a huge response here. I mean, are we watching a, a geopolitical unraveling, or are we looking at a global trade reset, and you know, what does that mean?
I, I think it's a global reset. I think we're coming into a, when I say financial reset, I mean, I don't just mean in America, America. I think it's a global reset. I think that's why gold has done so well. I think people all around the world are nervous. People who have wealth want to move it into something that is somewhat stable and is outside of the financial system because I think we're going to have a financial crisis. Um, and so they moved to physical gold and, and silver. And that's why, you know, gold is holding up so well because, you know, you're not going to lose 10% a day in gold. You can lose it in silver. But investors are savvy. They want, if they have large wealth, they move it to something that is as stable as they can that might not be wrapped up in stocks and the financial system and banking and all that stuff. Um, so I think we are going into a crisis. I think um, you know, the market, the PE ratios are still way out of whack. Just because prices have dropped doesn't mean they're actually cheap. Like, and we're all, all people are doing who are still holding are just giving back gains that they've made over the years from what I think are overpriced stocks. And a reset is normal. A reset is an opportunity. The question is, are you going to avoid it? Can you benefit from it? um, or are you going to write it down? And most people don't know what to do. That's the whole reason why I try and share what I do, which is how to avoid these and understand when we're in a bullish environment or bearish environment. There's times to be greedy and own stocks and, and you know, live, ride a bull market up. And there's times when you really preserve capital, and you have to protect. You never know which pullback is going to turn into the one that crushes your account, changes your, your projection on lifestyle. So that's what we need to be aware of. And um, always protect your capital by, if the trend turns down, just move to cash or something else. Could be the dollar index. Dollar's oversold. It's been beat up with tariffs. It's starting to come to life. As you and I are talking today, I think when chaos hits, we tend to see the US dollar index do very well. And it just hit a major support level. The stock market just hit a major resistance level. Everything is hitting Fibonacci targets. So the market is actually playing out from a technical standpoint pretty crystal clear. And I track it every day and every week with, with followers and subscribers. And you know, none of this is you a huge shock to us. We've already been positioned. We're expecting it. We're waiting for a bounce, and then we'll be looking to play the downside on the next leg with an inverse ETF or uh, potentially a different asset class. Could be the dollar, could be bonds. I don't know. It depends on how things move and when that trigger happens.
Yeah, good work. Okay. Well, keep calm. Carry on. Appreciate it, Christopher Muan, the, from the technical traders joining us. Uh, great to see you, my friend. Have a great weekend, and hopefully all goes well on Monday.
Appreciate it. Take care.
Thanks, Chris. I'm Jeremy Safford. Thank you for watching. We'll continue to have and watch the markets here. And in the meantime, give us a like, subscribe, and tap the bell so you're the first to catch the next big move. More at kick.com. See you next time.