Iran Strike Shock: Panic Selling Just Starting, What Gets Hit Next? | Chris Vermeulen

0:00Christopher Moulin, Chief Market Strategist, and the dedicated traders joins us today on Monday, March 2nd. And we're speaking after Iran has just been struck by U.S. forces over the weekend and the strikes intensify as we speak today. And now, as you're aware, Chris, the entire region is basically at war, a set of Arabia and Qatar both vowed today to battalion against Iran. Of course, Israel is being hit as we speak. And the UAE has been hit as well over the weekend. And the U.S. has set to deploy more forces, but we're focusing on markets today and the market impact of what has happened so far. And what may happen according to the charts. oil has moved dramatically last night. We'll talk about that. We'll talk about stocks. So the NASDAQs down about, well, the NASDAQs actually flat as we speak right now. And the S&P 500 is more less flat as well. Slightly down. Gold is up 2%, and big ones up 3%. Welcome back, Chris.

1:03Hey, thanks for having me, David. Always a pleasure. Lots of action today, for sure. Absolutely. My first thought just looking at the broad end of the season. We can talk about individual securities. You could go down to the stock level later if you like. But the broad end of the season haven't really moved much. The Dow is down about 200 points, but it's off its lows from earlier. And like I said, gold and Bitcoin both up. Oil is the biggest mover. Can we take a look at the oil price first? Yeah, sure. Yeah. We were expecting oil to move on the straight-of-formose closing. And it was interesting how it didn't really move on Friday afternoon, Friday night. Given that, you know, features are treated around the clock. But I'm going to get your tape because it just moves last night. And as it moves. Yeah, well, there's definitely the markets have been really kind of chattering and trying to figure out what to do. The equity's market, precious metals, oil has been moving higher for the last several weeks and trying to figure out what's going on. Of course, the news is just, I think it's caused a little bit of a kind of

2:06capitulation move. So when we zoom out, well, first let's look at the daily chart here of oil. We saw about 11 or 12% spike in oil in overnight trading with the news. That's initial wave of fear. Everything hits the media and algos and traders instantly panic. And of course, they created a huge move. When we have war, we tend to see gold and oil move higher. And since then, we have been seeing oil kind of pull back quite a bit. It's given back about half of those gains since that news kind of broke free. Now, when we zoom out on the chart of oil and we just kind of go way back in time, you'll notice that the long term moving average is green 150 day moving average, which is a great gauge of what the long term trend is doing. The markets really are still kind of making a series of kind of lower highs overall. The trend is down. This is a counter trend rally, kind of within a bear market that oil has been in. And we've just had this big gap more or less

3:07on news just around it. Now, we kind of had a similar scenario over here in terms of bombs being dropped and it created a huge spike. And so this is what happens. In a bear market, you get some of the strongest rallies. And a lot of times they're triggered by some type of news event. And it creates anybody who's short to start to cover. And of course, this is a big event. And it's created another huge pop in price. So the big question is, is this just a news driven pop up into and past resistance? And is it going to fade back down at this point? I kind of think that's what's going to happen. And I think we'll fall back down into this range. But when you look at a short term wise, definitely a lot of people today are thinking oil is going to go through the roof. But this type of move is typically a capitulation move. We usually see exhaustion, big gaps, big news kind of hit when prices is pushing to an extreme. And we're seeing this today across the board. This is having a gold and in the equities markets, which we'll touch on shortly. So at this point, oil is, you know, it's the fear has been worked into. It might want to rally back up,

4:09test those highs today or over the next couple days. But I think it's going to be very similar. The news is going to fade away. And we'll see the fear kind of drop as well. And that's obviously a lot more bombs and more things kind of escalate than oil will hold itself up here. So I was reading oil commentary by some oil analyst Eric Nutzel was commenting on social media. He's a well-followed oil analyst. He said, typically this your right, Chris, this will be fade the news kind of event. And I'm paraphrasing here because I don't have the exact quote in front of me. This will be a fade the news kind of event for oil. But these are escalating as we speak. And so it doesn't look like finger calming down anytime soon. We're at the beginning phases of this conflict. And you know, how would you factor that into accounts? Yeah. I mean, no one really knows how that's going to fizzle out. Maybe yeah, this could just be escalating. This could just be getting started and could ramp up. But the news magnifies, amplifies everything, right? I got some messages from people who don't really

5:11follow the markets and they're all in a panic. Oil is going through the roof. You know, golds taking off all of this stuff and they feel like they're getting left behind. And that's usually, you know, usually a sign that this is more of a capitulation move. So we just have to let time and let price figure itself out. You can't just throw everything out and think that a one day move on news is going to change anything at this point. Okay. Just looking at this chart, this big, this big gap up. What would you typically do in a situation like this? We even counter this many, many times before you and I with silver, with gold, with mining stocks, with Bitcoin, with individual stocks within the NASDAQ. This is not a new pattern for us in our audience. So what are you doing now with this information? Yeah, typically when you have a big move, when we zoom out here, when you have a big move above a resistance level, this fallen kind of

6:13trend line, we have this huge gap. So gaps generally get filled, meaning if a gap is really high, it's usually going to fade back down as you mentioned. You fade, fade the gap. It's a trade that a lot of people do aggressive short-term traders. And so when you have a big gap, first of all, they usually fade back down once the momentum stalls. Here, we also not only have a huge gap, but it actually gaped above resistance. And it also happened on very big extreme news over the weekend, where people can start to really start to panic and build up stories in their head and start to worry and it creates these huge moves. So typically when you see a big move that happens on news, we tend to expect that market to fade back down to where it was before all of that. So these are usually a short-term trade or short-term blip on the chart. If the long-term trend is down, this is just one of the spikes, one of those blips that is just volatility within the asset class, where news and things like that just trigger these sharp pops and drops in the market.

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8:21Chris? And let's take a look at price action. How you noticing any spikes in volume? It's just a little bit surprising to me, but maybe not to you and perhaps the audience. Comment below what you think is going on, but it's a little bit surprising to me reading the charts this morning that stock markets were little moved on the Iran conflict. Oil moved a lot, like we just discussed, but stocks didn't seem to care. I'll be home. What's your take? Yeah, well, I mean, I'd argue that I would say stocks were hit pretty hard. The S&P 500 was down 1.75% this morning. The NASDAQ took a real beating. It was down over 2% this morning. It was looking really bleak. People were dumping shares. There was panic selling. But just like oil gapped up past resistance on news and gold shot higher on news. Now that the markets are opening, all that fear turned into people dumping stocks, which created a huge gap low or the opposite of oil. And so we're still in an overall kind of bullish environment for the equity's market. We're hanging on to a thread with both the S&P 500

9:26and the NASDAQ that if they start to break down from here, it's going to get ugly. But right now, whenever there's a bout of selling or a bout of fear that hits the market, we are seeing buyers step in and accumulate it. We're still in a by the dip mentality. So these fear driven spikes are short term oversold conditions for equities that push right down into a short term resistance area or support support level. And buyers are stepping back up. So everything either if it's defensive or energy based, it's spike higher and it's pulling back now. And if it's stock driven, investors were scared. They sold everything. But now they're stepping back in and buying it up, realizing the end of the world's not here right now. And they're buying the dip instead. So we're just seeing this big, you know, this huge volatility swing between risk on risk off assets of what happens around kind of war scenarios. When something gaps down intraday by 1.75%, almost 2% and then moves up immediately after within a span of hasn't even been two hours

10:29since market opened. Chris, you and I are talking right now to 11 o'clock. This type of extreme volatility, how do you feel about it as a trader? What kind of mindset does that put you in for the rest of the week? Well, when you have this type of price action, which we're seeing today, it is a short-term bullish price action. So it's selling us that the market's probably flushed had a lot of panic selling early in the morning, flushed out the scared traders, the short-term traders who were going to sell on that type of news. And buyers are stepping back in and accumulating it. So this will create a very strong reversal type candle, meaning we could see another two or three green bars after this. The Russell 2000 is a pretty good gauge of this. It had a very strong gap to the downside. I'm not sure what it was exactly, but we saw, well, it was about a 1.4% and it's rallied right back in the microcaps stocks. They had a big gap down this morning as well, down 1.7. And they have now rallied like 2.6% today. So money is still very aggressive. They're

11:35buying up the most kind of the more lucrative, the more speculative stocks on these pullbacks. And that's just telling us we're still in a kind of by the dip mentality. People are still thinking the markets are going a lot higher. And right now they're shifting into small and microcaps and out of the magnificent 7 because they don't see the potential with mags. They've been stalled out for too long and now people want to get into the more aggressive things that can pop and move. So it's a bullish sign and I would expect another couple of green bars after today before it potentially stalls out. All right. What else are you? Wait, so bottom line then, key levels you're looking for for stocks before we move on for the, for I think, yeah, let's do this index, S&P and NASDAQ and then we'll talk about how you position currently. Sure. Yeah, so I would think the markets will want to run somewhere all the way up to, we can very easily see the S&P 500

12:36run up to like 600 and are 6,945 somewhere up here. There's going to be a bit of a kind of a resistance level, right? A falling trend line. It's making a series of lower highs. It is making a series of lower lows. So price could could have another little bounce here of about 1%, which isn't very much. And then it could come back down and test this very critical support level that if eventually it breaks, we could see a big breakdown. So that's kind of the upward resistance 69, 60 area. If we look at the NASDAQ 100, it's kind of a similar scenario in terms of, I think it could come back up somewhere to the upper end of this range. It might want to come right back up into resistance. That's around the 25 500 level and percentage wise. I don't think it's all that much. It's probably one and a half or two percent. Yeah. It's about 2% upside. And then we're going to run into resistance from there. Perhaps there may be some miscellaneous events that could throw your bullishness off. Am I correct? Meaning right now you're not 100%

13:40certain that stocks are going to continue rallying to the upside. And if that's the case, what could what could change your perspective? What could make you sell your current holdings and hold cash and and have a more bearish short-term outlook instead? Well, believe it or not, we are. We moved to cash already. So we've already seen the NASDAQ breakdown from a short-term support level. It is already forming a bear flag. Looks like it wants to go lower. We actually moved out of the equity's market. I'm pretty bearish on this type of chart pattern. The magnificent seven look ugly. The NASDAQ looks ugly. And we've got obviously wars unfolding. So I think I think we're going to see lower pricing. I think short-term we're going to have a bounce. This is a technical oversold bounce of one or two percent. Try to capture that. I mean, how short-term are we talking about here? Is that shorter than your time horizon usually? Yeah, like this does one or two percent move up. That's not something we're

14:42looking to take advantage of. We're looking for the markets to break down and to just avoid more or less the equity's market as a whole. We don't want to hold it if it's going to the downside. So we're not looking for the upside at all at this point. We're letting the market work itself out. A one or two percent move in the NASDAQ back and forth is just noise. It's not something we're looking to trade. And just tell us about your trading philosophy and methodology a little bit in the next couple of minutes. So some traders may be initially a little bit confused at why you may be positioned for slightly longer than a one or two percent move, which may happen in a couple hours. So you're not a day trader. How would you describe your style of trading for those of us who are new to your work? Let's start there. Yeah, well, there's kind of two methods of trading and investing that everybody uses. You have buy and hold or some of your portfolio, which is really passive. Really, you don't do anything. You just ride at the market, the volatility,

15:45let time kind of heal the corrections and things like that. The other strategies, people become very active and they try to catch these one to two percent moves or bigger moves. But active trading is very difficult. And passive investing, you just waste decades worth no returns for many, many years over and over again. And you've got to ride it out. So my philosophy is like, let's focus on some some cycles that happen in the market, the waves that roll through the markets five to 12 times a year. A lot of trades we get in will last somewhere between 20 days and potentially two to three, four months. And so we're catching these larger waves and cycles that roll through the markets every year. And that's what we want to catch. And we just want to compound our growth, catch these waves, these new legs to the upside, avoid the market corrections. And I just trade ETF. So we move in and out of equities, bonds, currency, we do do some positions in precious metals like gold. And so we just navigate the markets and we're not trying to actively trade. I would say we're an active investor because we're managing our portfolio because I don't believe in holding

16:49assets that are falling in value. I don't care how much I love them. If they don't meet the criteria, they carry a lot of risk. I'd much rather step aside, wait for an opportunity to get in. And these markets that we're in right, sorry, go ahead. No, no, I thought you would finish. Please continue. No, I was just going to say the these markets are extremely volatile. And today, today's news, seeing gold have a huge pop. We're seeing oil have a pop. I mean, we're seeing even currencies. Like if we take a look at the dollar, this is what's really interesting with the scenario that we're in right now is we have this huge one point, you know, one percent rally in the dollar today. And gold is actually moving higher. And usually we see the opposite. But we're in this unique scenario. And this this clearly tells us that when the stock market crashes and there is global fear, the dollar tends to do well. And so we are seeing the dollar move up substantially. But because it's like kind of an also a war scenario here, gold is also broken this relationship and gold is moving up with the dollar. And so the big move up in the dollar

17:52today is telling us that overall, I think the stock market is very scared. The momentum has shifted from an uptrend to now, it's kind of neutral, which is why we're not involved. We want to be either in an uptrend or take advantage of falling pricing. We don't want to be stuck in a sideways market. And so the dollars got this huge move up and telling us that there is some global fear and that we need to be aware that there could be a huge leg down coming for equities. And the big question will always be, you know, if we get a move down in equities here, is money going to flow out of stocks and into precious metals? And that's what we saw in 2008 temporarily. And so we just need to see if that is going to happen over the next couple of weeks or not. Until the market, the stock market picks a clear direction. The markets are really just kind of noisy and dangerous and choppy to be involved in. Okay, Chris. So yeah, you answered my question. Gold and the US dollar moving up together. Again, short term action, anything could happen. But long term, usually they've moved inversely, proportionally together. Now, Bitcoin, interestingly, has also moved up today,

18:56even though the stock market was down the early this morning. And now it's, yeah, now Bitcoin's up 4% on the trading day. Has Bitcoin found a bottom of about $64,000, which is last week's price, Chris? I think it's found a short term bottom. It's consolidating through this. What I think is still a bear market pattern. I mean, there's no doubt it could still kind of work itself up and work itself higher, very similar to this here is a bear market pattern. And it could still kind of meander its way, it's way higher. But the overall downside target for Bitcoin, it's still in a bear market. The overall long term trend is down prices below it. All the other moving averages are sloping down. It's a series of bear flags. And using Fibonacci extension, it shows us where the next major downside target is for Bitcoin. And Bitcoin, if we were to just take a look at this chart, it is around 52, 5100 is the next level. And as you and I have talked about this before, you have the move down. And then you have the bounce back up. And based on that, using Fibonacci extension,

20:01when you fall down to this 618 ratio and pause, we almost always see it come down eventually. So, again, today we're seeing stocks bounce and get bought up in the dip. And Bitcoin likes to move with that risk on assets. So if small caps and micro caps and the stock market is getting bought up today, Bitcoin is getting the exact same thing. And so we still might see another couple green bars for Bitcoin, because I think it's going to follow the stock market. But I do feel like things are going to fizzle out and we're probably going to see it head lower. I'm definitely more bearish, very bearish on Bitcoin, because it is in a bear market. It has sold off dramatically. It has bearish price action. Everything is still pointing to lower pricing. It's just found a temporary bottom before I think it goes lower. Can you just comment on whether or not Bitcoin is basically still moving in lockstep with the stock market then? So your analysis for Bitcoin sounds very similar to what you just said about the stock market? Yeah, I would say Bitcoin is already it's leading the stock market. It's already broken down, right? It's it's clearly in a bear market.

21:04It has broken critical support. I would say like the NASDAQ is kind of like in the S&P 500 or kind of like here, right? It's trying to hold support. And in Bitcoin is already broken down. So it's definitely leading the way money has rotated out of Bitcoin. And I it's still following the stock market when there's a big down day in stocks. We pretty much see Bitcoin go down when there's a big update in stocks. Bitcoin goes up, but there's a constant stream of selling in Bitcoin constantly pulling it down. If the NASDAQ doesn't go anywhere, we tend to see Bitcoin naturally just kind of want to fall. Okay. Chris, let's talk about anything you you do like a lot besides what we discussed so far. That I do like a lot. I mean, we have been seeing the bond market come to life. We take a look at TLT. We have been seeing I mean, it has been in a big downtrend for a long time. It's trying to build a base. We have been seeing more often than not. We have been seeing

22:05bonds move up. Well, the stock market shows some fear when we see defensive sectors moving up like consumer staples and utility isn't even gold. We are seeing the bond market move up as well while stocks fall. And so we're starting to see that relationship again. And it looks like bonds want to kind of build a new kind of launch pad here. It's had a nice little impulse move to the upside. And I think we could eventually see it start to move higher. Now when we zoom out on the chart of TLT and look at the long term picture, you can see at best it is going sideways. If not, it's still in a bear market. So it still has some room to really create a new bottom here. And this is going to be a very critical kind of level for for TLT around this $91.92. It needs to break through these highs. And once it can break through those highs, then it'll start to create this rounding formation where it'll start to be start to put in this rounding bottom. And once

23:06you break through these resistance levels, I think it'll start to build some launch pads. There will be some other key resistance levels through this chart that still will have to break through eventually to put in a giant basing formation and get out of this. And like a real level will be a back above 100. When it can hold itself back above 100, I think it'll be potentially off to the races. This could be in the equities markets are crashing. Maybe interest rates are getting cut. And we're seeing the bond market move up. But it is slowly showing signs that it's coming to life. And the other the other play that still looks good is I mean, we take a look at gold. If we look at gold's chart, it's had a series of moves that are kind of been repeating themselves. We have a rally up and then it consolidates for a while. We have another big rally. It consolidates for a while. We've had this over and over and usually each time it's around a 20% move. And we've just had another one. And so the big question is, you know, how is gold going to

24:08react? A lot of times it takes several months to work through. Usually price comes up and tests near the highs a few times and then and then eventually it has a breakout. And so we're kind of back up testing these highs. And we're starting to see I feel like it's a little exhausted and gold may pull back and it might build a launch pad to start to break through again. And if it does show signs of a breakout, then it could be very good trade because the next move for gold based on Fibonacci is telling us around 6100. So there's some pretty good upside for gold still. But there's a lot of damage done to this chart. And when we look at the chart of gold, this big red bar is something to be worried of. This is a very bearish kind of chart pattern. The body of this red bar, we have all of these bars inside acting as inside bars. This is a bearish price action. And it can mean that once you reach and breach that level, you can have a very big red bar that brings it right back down. And we saw this in silver back in 2011. Actually, if we look at the silver chart

25:12down at the bottom, we had this huge red bar. And then you have all these inside bars. It works itself back up and then it breaks and resolves to the downside. So that's like a visual of kind of how that can play out. And so that's kind of what we're trying to figure out with gold. It's either it needs to put in more time and build more of a launch pad and prove that it's not just going to get rejected here. But I do like gold. If gold builds a nice launch pad and takes some time to recover, hopefully we don't have like more war stuff that just creates it to pop and take off. Because I feel like getting up into this range at any point, I think we could actually see another big bout of selling. And if for some reason, something in the Middle East seems to kind of get somewhat resolved or bombs stop getting dropped and things like that, we could very quickly just naturally see the fear dissipate in gold pull back very quickly. So I think gold has quite a bit of risk up at resistance. And because we just had peak news and we're at peak price, I think there's more potential for it to pull back at this point. But over time, I do still like gold

26:15if it can build a bull flag and then eventually have a nice breakout. How are you bullish on silver right now? Let's talk about silver real quick. Sure. Silver I'm still pretty bearish on it. There's a lot of damage done to this chart. It's kind of it's got this massive red bar. These are kind of inside days. We are seeing selling with silver today, we saw a lot of fear in the markets early on and silver was trading higher, but it's quickly gotten sold into. So I'm not a big fan of silver at this point. I definitely prefer gold because it's more stable, but it also has a much stronger price pattern. And investors go to gold when there's actually some real fear going on in terms of war and things like that. And that's the scenario we're in. So silver I think could could sell off and pull back very sharply. I would temporarily still avoid silver. It might be a very good play. When the time when gold builds a launch pad will take a look at silver, we'll see how it looks. And it could be a very good play. I think silver has potential to pop to about 140. That would be the

27:18next upside target based on technical patterns. So there is potential, but I definitely want to wait for silver to prove that it's built a base that it is starting to go up and then I'll jump on that train. Okay. Chris, let's wrap up now with gold minor stocks. Just take a look at the GDX. Sure. Yeah, when we take a look at this, the miners have definitely, they've already pushed to some some highs. They've definitely been leading the way with gold. And there's been a huge talk in the precious metal space of gold and silver having or especially silver having just so much value added to it so quickly. A lot of people have been moving from physical and moving into miners. And I think there's been a huge tsunami of investors doing that. And so that's one of the reasons why I think gold miners have done so well and silver miners as well because money's come out of physical silver and it's moving into the miners. And so there's a money flow. And that's probably

28:22why silver is underperforming us because people aren't looking to jump into it. I think a lot of people are buying into get into the miners. And because the multiples aren't quite there. Depending how you look at the fundamentals, we should see miners way, way higher. But so that's what I think is going on. The fact that we've seen gold stocks and miners stocks, they've pushed to new highs. I think that's a good sign overall. But there's definitely a movement of away from physical silver and into miners. And I think that's why we're seeing miners push to all time highs and silver has stagnated. So again, when gold has a bullish chart pattern and when I believe it's breaking out for for real and not just based on some type of news, I want to look at miners as well. Typically, gold, silver and miners, they are the same play. You can generally hop on any of them at the same time and they should move. It's just which one has the best potential for gains with the least amount of downside risk. And that's just the way I look. The miners, they're stocks at the end of

29:27the day. So let's say if you're a bearish on the stock market, but still a collection of golds, what do you sit? Yeah. So if the stock market based on our strategy, our asset investing strategy, has the stock market in a downtrend saying, don't hold stocks. Generally, we're not going to hold stocks. And we're not even going to we're not going to touch miners simply because they are a stock stock in the stock market. And if the tide is going down and stocks are falling, miners are going to have this this headwind to battle to keep moving up. So that's one reason why I really like gold is because it kind of breaks free of the stock market and gold can provide very exceptional high probability trades. It can provide great returns. And you don't have the downside risk or the that third dimension of like our gold miner is going to move up if the stock market falls. And a lot of cases they do, but not very much. And you know, it could take two or three weeks to move up in price like we've had right now. And then one day it all gets wiped out. And that's the problem with with the way the stock markets and things move is the markets fall four to seven times faster

30:32than they rise. And so you got to be very cautious of the volatility because you know, it's looking good right up until it doesn't. And you wake up one morning and suddenly you've just like how did how did I wipe out a whole month's worth of gains? And so. Fair enough. Miners carry that risk. Okay, Chris. Thanks so much. We'll talk again soon. Tell us about where we can follow you and follow your work. Yeah, sure. The best spots to go to my website, thetechnicaltraders.com or go to my YouTube channel, the technical traders. And you can get an idea of what I do, how I navigate these markets. And it's highly educational. And I manage my own portfolio. And I share my exact poor folio trades. We put on the positions at the same time with subscribers to my newsletter. And we just kind of navigate these markets together in a controlled environment. All right. Thank you. We'll put the links down below. So make sure to follow Chris. Thank you for watching. Don't forget to like and subscribe.