(Kitco News) - The recent escalation in global trade tensions, driven by sweeping tariffs announced by U.S. President Donald Trump, has sent financial markets into a tailspin.
"The tide has changed. We've gone from a bullish environment to, I believe, we're now in a bearish environment," said Chris Vermeulen, founder and Chief Investment Officer at TheTechnicalTraders.com, in an interview with Kitco News.
U.S. equities have suffered sharp back-to-back losses, with the Dow plunging 1,500 points and the Nasdaq approaching bear market territory. Treasury yields have fallen below 4%, signaling heightened recession fears. China responded swiftly with retaliatory tariffs on all American imports and export restrictions on critical rare earths.
"Tariffs are more or less just taking the can and throwing it in the garbage, and the markets are just dumping out," Vermeulen said. He added that while traditional metrics don’t yet confirm a recession, "people's spending is coming to a grinding halt."
Technically, Vermeulen pointed to key Fibonacci levels showing that the S&P 500 has hit its 100% measured move and a major support level. "The downside is mostly, I think, done for this particular leg," he explained. However, he warned the bounce would likely be short-lived: "I think it's a bear market bounce and eventually I think we're gonna go a whole lot lower."
The volatility index (VIX) has surged over 100% in recent sessions. "Everybody's scared. They're liquidating. They're betting on falling prices, and they tend to do that always right near a major technical market bottom," Vermeulen noted.
In terms of safe havens, he said, "There isn't a safe haven. This is a perfect example of why gold is crashing and why silver is crashing and miners." Still, he remains bullish on gold longer-term: "Gold is only down 5% where the rest of the markets are down 15 to 20 or plus percent... My next target for gold is about $3,275."
On silver, Vermeulen warned: "Silver's hit its 100% measured move based on Fibonacci... I think the game has changed. We've gone from a bullish environment to now we are in a bearish environment."
Vermeulen also addressed macro signals. "Unemployment rate has been rising... It's pointing to much higher in the very near future," he said, citing trends in crude oil as a signal of incoming recession: "If oil clearly breaks below $65 a barrel, that is a sign I think that we're going into like a global recession."
He urged investors to focus on price trends rather than headlines: "I've always found that the charts will paint the picture. Then news comes out... Follow price, and the news tends to follow the price."
Regarding the Federal Reserve, Vermeulen reacted to Fed Chair Jerome Powell's cautious tone: "I think the Fed is standing back. They're gonna 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."
Vermeulen concluded with a stark warning about the broader outlook: "I think we are going into a crisis... A reset is normal. A reset is an opportunity. The question is, are you gonna avoid it? Can you benefit from it? Or are you gonna ride it down?"
Watch the full interview with Chris Vermeulen on Kitco News for more insights into market technicals, gold forecasts, and strategies to navigate this historic moment in the markets.