SD Outlook: It may seem like a boring few days, but that could all change by the end of the week…
There are some important events to consider this week.
Or should I say, lack of events.
U.S. Markets are closed today for what used to be called Washington’s Birthday but is now called President’s Day.
There is some light trading – for example, gold & silver can be traded up until 12:00 p.m. EST today, but there will be light volume in a thinly traded market.
Markets in China are still closed through Wednesday as the Lunar New Year celebrations continue.
So it seems like we will either have three days of boring, or three days of smash in front of us.
To make matters worse, we have a barrage of Fed Heads to round out the week:
Notice the morning, afternoon, and then late afternoon speeches on Friday, you know, just in case.
Don’t be surprised if this week gets off to a slow start, but come Friday, we see some fireworks.
The gold to silver ratio climbed again last week:
Once again, we are completely over 80: Open, High, Low and last price are all telling us that silver is severely undervalued right now.
It looks like for the time being, the cartel will succeed in smashing silver back down below its 50-day moving average:
It would be nice to see the open interest come down even more over the next few days, but for now, e’ll have to see if the short-term lows put in two Fridays ago holds.
If that low does not hold, that’s very bearish and will signal a bearish trend change of two lower-highs and two lower-lows, but it would give us a great starting point for the next rally.
If the cartel will succeed in smashing silver down look for it through Wednesday.
Gold had that nice surge last week, but it seems the yellow metal is in a “pullback” right now:
Again, let’s not get our hopes up for the next few days or we might be let down.
It’s more likely that if we see some positive price action this week, it would happen in the latter part of the week.
Palladium is still trying to get above its 50-day:
The Moving Averages Convergence / Divergence (MACD) is certainly looking bullish now.
Platinum looks the strongest of all the precious metals right now:
Of course, platinum had a terrible 2017 finishing basically “unch” (unchanged), so it stands to reason that platinum has some catching up to do.
Copper looks like it’s going back down to re-test the 50-day:
With China closed for another three days, it certainly looks like it will get there.
However, if the United States escalates the Trade Wars on China and if China retaliates, both the precious metals and the base metals could be in for one wild ride.
We’ll have to see.
Crude is back above $62:
Is it possible the correction in crude is over?
If it is, expect to test $70 in the coming weeks.
For now, all is quiet in the markets.
It all seems (from a MSM/Cartel/Government/Fed point-of-view) fixed:
The Dow is awesome again.
Fear and uncertainty is even taking the express elevator back down:
Which is exactly why an upside surprise in the VIX should come as no surprise, and why further pressure on the stock market shouldn’t come as a surprise either.
The yield on the 10-year seems to be range-bound:
Will yield wallow in a range of 2.8% – 2.9% as it did between 2.3% and 2.4%?
I wouldn’t count on it. Everybody is looking for what happens when yields pop above 3.0%, so it’s almost become a self-fulfilling prophecy that they will. And most likely 3.0% is already priced in. Now 3.1%, that’s a different story.
The Dollar hit a new low last Friday:
Although it is a “bullish engulfing” candle, but the Trade War is not fully priced in to the dollar, so we’ll have to see.
Bottom line: Be on guard for continued pressure through Wednesday. It appears to be a boring start to the week, but come Thursday, that could all change on a pre-1965 dime.
– Half Dollar