Everyone knows something bad is brewing not just in the USA but globally within the financial systems. Most countries are bankrupt, and almost all currencies have been losing value for the past year. Everyone is playing the game of musical chairs and getting creative with how they borrow, lend, create, and steal money in hopes the world does not catch on to just how corrupt and bad things really are.
It’s just a matter of time before we see another financial market meltdown and what I show you here today gives you an idea of just how close we could be to a market collapse.
The financial markets rarely repeat the same type of crisis, but most crisis’ cause the stock market to sell off and crash in the same way. Human nature and emotions do not change, and because traders and investors drive the price action of stocks we are able to profit from bear markets.
In fact, bear markets can be life-changing in a good way for those who know how to trade these market conditions. Because stocks fall 3-7 times faster than they rise, you can generate the same amount of returns someone who invested at the beginning of a 10-year bull market and sold at the top, but you can do this in 8-12 months because of how quickly prices fall.
Three Leading Sectors To Watch Transports, Industrials, Small-Cap Stocks
The transportation sector refers to the transportation of goods or customers using major and regional airlines, railroads, shipping firms, ocean freight haulers, trucking, etc… It is these companies that see a slow down in the economy before almost everyone else as less shipping is required when sales slow or the economy is tightening using less food, fuel, or buying things in general.
The second sector is industrials. This works much like the transportation sector.
Last but not least is the Russell 2ooo small-cap stock index. These small and volatile stocks are the first to show signs that traders and investors are tightening their risk-reward ratios because they feel the stock market is overpriced and that a bear market could be near, and the last type of stock you want to own during a bear market are small-cap stocks.
2016 – 2019 Custom Chart of Three Sectors Trans (IYT) + Industrials (XLI) + Russell (IWM) / 3
The chart below shows the recent and current day price action of these three leading sectors.
Notice the long multi-year rally into the high of 2018 followed by the sharp distribution selling that warns the big money players unloaded their positions in these leading and leveraged sectors.
The 2019 rally has been strong but when you look at the big picture, the price is far from its 2018 highs and the price pattern is bearish (it points to lower prices) from a technical analysis standpoint.
![](https://www.thetechnicaltraders.com/wp-content/uploads/2019/07/chart1-11.png)
What I want you to notice is the fact that these charts have moved nearly the same. Just like I mentioned earlier how bear markets price patterns repeat, so do bull market price patterns.
The 2009 price action and 2019 price action are nearly identical and when you see the next chart you will see why the financial market is scary close to the next crisis/bear market.
![](https://www.thetechnicaltraders.com/wp-content/uploads/2019/07/chart2-14.png)
2009 Market Crash Custom Chart Trans (IYT) + Industrials (XLI) + Russell (IWM) / 3
![](https://www.thetechnicaltraders.com/wp-content/uploads/2019/07/chart3-10.png)
The chart below shows you what the stock market and gold miners did just before the bull market topped and what they did after. Be aware, if you’re a gold bug you may not like this chart but you can’t argue with the truth of what miners did during the bear market and other bear markets for that matter.
See my updated chart showing where gold miners and the stock market is as of today within this cycle: https://www.thetechnicaltraders.com/next-bull-and-bear-markets-are-now-set up/
![](https://www.thetechnicaltraders.com/wp-content/uploads/2019/07/chart4-2.png)
Be prepared for these incredible price swings before they happen and learn how you can identify and trade these fantastic trading opportunities in 2019, 2020, and beyond with our Wealth Building & Global Financial Reset Newsletter. You won’t want to miss this big move, folks. As you can see from our research, everything has been setting up for this move for many months – most traders/investors have simply not been looking for it.
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