Mortgage Delinquency Rates Increase and 3X ETFs

By: Chris Vermeulen | Mon, Apr 17, 2017
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Delinquency rates in Single Family Residential Mortgages and other Consumer Loans began to climb through the later half of 2016 and early 2017. The timing of this delinquency rate increase coincided almost identically with the Fed increases in their Funds Rate. Additionally, commercial loan origination stalled for the first time since 2008-2011 (prior to that was a stall in 2000).

As you've been likely been following our daily video market analysis, you'll know that we believe the market is still in a bullish trend and that we expect this upward price action to continue for a while.

These early warning signs that the Fed rate raises may be pushing other factors of the US economy should be viewed as just that - early warning signs. It also means that Financial and Banking stocks may find some downward price pressure over the next few months. And protection assets (Gold/Silver and related ETFs) may see continued upward price movement as cash migrates from traditional financial assets into more protectionist asset classes.


Single Family Mortgage Delinquency Rate

The two charts below show the rate of mortgages defaulting. Additionally, real estate asset classes may start to see increased volatility as this segment of the economy struggles and has to deal with delinquencies.  The US Fed is attempting to raise rates enough to allow for more normalized economic functions without disrupting the stability of the global markets.  It is our opinion that these efforts by the US Fed will provide substantial rotation in certain sectors of the US markets that skilled traders will be able to profit handsomely from these moves.

Deliquency Rate on Single-Family Residential Homes


All Other Consumer Mortgage Delinquency Rate

All Other Consumer Mortgage Delinquency Rate

In particular, 3x ETFs may provide unique opportunities for profits. Let's review a few potentials...

Throughout all of these charts, I expect you'll notice a similar setup with regards to Financials, Oil Services and Real Estate. The Fed easing over the past 6+ years has driven asset prices to near all-time highs (or above all-time highs in some cases) and the recent oil price recovery has driven the oil service industry to near term recent highs.

The examples we are illustrating today are all contingent on the US Fed continuing to raise rates, as planned this year, which may put further pressure on these segments of the markets as well as potentially increase delinquency rates for residential, commercial and other consumer loans. In other words, we are expecting some moderate price rotation in the markets over the next few months and we are poised to take advantage of these moves if and when a setup occurs.


3x ETF: FAZ - Financial Sector Bear Fund

3x ETF: FAZ - Financial Sector Bear Fund


3x ETF: DRIP - Oil Services Bear Fund

3x ETF: DRIP - Oil Services Bear Fund


3x ETF: DRV - Real Estate Bear Fund

3x ETF: DRV - Real Estate Bear Fund

We deploy our specialized Momentum Reversal Method (MRM) trading strategy to identify exactly when to enter and exit our trades and to find appropriate trading opportunities. The MRM method is unique and proven. Our clients are able to take advantage of our specialized MRM trading strategy and receive timely and accurate trading signals from our web site, ActiveTradingPartners.com. Many of our recent trades have resulted in tremendous gains for our clients.

We want to alert you to the large potential price rotation we are expecting in the immediate future and to alert you to the unique opportunities this type of price rotation will present. Remember, well over 2 months ago we warned of a VIX SPIKE that was likely between March 15th and April 24th of this year.

Take a quick look at the VIX Daily chart to see our prediction

VIX daily Chart

We urge you to consider this information in your trading decisions as well as consider using our stock and 3x ETF trade alert service to further your trading success. Again, the trading opportunities we are presenting today are not trading signals. We are waiting for our MRM strategy to issue the trade trigger, then all our clients will be alerted to the signals.

 


 

Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
- OEC OpenECry
- The Fox Group
- Dorman Trading
- Vision Financial

He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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