SD Outlook: It may be party-hardy today as we ring in the New Year, but the markets may get all too real by the end of the week. Here’s why…
Editor’s Note: Markets will be closed tomorrow in observance of New Year’s Day. There will be a small midweek update on Wednesday, so those who entered into our American Silver Eagle giveaway contest, be sure to check that post as we announce the winner of the contest!
Happy New Year in advance!
The markets have been very volatile this holiday season, and the volatility may not be over just yet.
Today ends the month, the quarter, and the year, and tomorrow the markets are closed.
While many people will be celebrating the holiday today and tomorrow, by Friday, it is going to be all business in the markets. Friday we get the December BLS Employment Situation Report (otherwise known at the Jobs Report). Since the jobs report comes from the Department of Labor and not the Department of Commerce (where the Bureau of Economic Analysis resides), the report should be released on Friday, even with the government shutdown.
The Employment Situation Report is not the only potentially market moving event on Friday either. At 10:15 a.m. EST, Fed Chair Jerome Powell, and prior Fed Chairs Janet Yellen and Ben Bernanke are all participating in the same Atlanta, Georgia, American Economic Association “panel discussion”.
I’m looking for more volatility in the markets this week, even with the week being holiday-shortened.
I’m liking the way the gold-to-silver ratio is topping:
Remember, generally speaking, gold moves first (which it did), and silver follows.
The gold-to-silver ratio sure looks like silver is about to start outperforming gold to me.
The month of January has been kind to both gold & silver for the last several years.
In fact, silver has seen a good start to the year in six of the last seven Januaries:
With January gains in 2012, 2013, 2015, 2016, 2017, and 2018, and with the momentum established here at the end of December, I’m looking for a good start to the year for silver in 2019 as well.
Zooming-in, we see silver has seen overnight strength on its daily chart:
Silver bulls should be feeling pretty good right about now.
Gold is also up six of the last seven Januaries:
With January gains in 2012, 2014, 2015, 2016, 2017, and 2018, and with the momentum we see in gold here at the end of 2018, I’m also looking for a good start to 2019 for gold.
Zooming-in on gold’s daily chart, we also see what looks like follow-through momentum to start the week:
The “golden cross” will happen very soon.
If the metals are turning higher, there’s no reason to think platinum will not break-out:
With the grueling, steady decline over the last year, platinum’s 50-day moving average and 200-day moving average are now parallel to one another and with minimal gap. It will not take much of a break-out in price to see an upside surprise “golden cross” on platinum’s daily chart.
If the metals are going to rally, we need to see palladium break-out above $1200 with authority:
Palladium has spent most of December consolidating, and if palladium does break to the upside from here, then wow, that chart’s gonna look super bullish.
I blew my crude oil call this year:
One of the personal areas of improvement I plan to focus on in 2019 is gaining a wiser, more refined understanding of how the various “markets” interact with one another.
For example, I have been expecting a stock market crash, but at the same time, I was expecting crude oil to rise to $80 a barrel to close out the year. It is now clear that this year’s “crash” in the price of crude oil was a warning of the coming stock market crash. Additionally, in the first half 2008, the stock market was generally declining, and oil was going parabolic to the upside. As we passed the mid-point of 2008, crude oil absolutely crashed in price a couple of months before the stock really started crashing hard.
Now I get it, past performance is not indicative of future something or other, and history does not repeat but does something or other too.
Translation: The action in crude is very bearish for the stock market in general.
Copper is still finding support in the mid-$2.60s:
Copper dropped much earlier in the year than crude oil, and I do think copper’s next big move is up.
The move in the Heartbeat of America index looks like it could be running out of steam:
I’m not looking for a January rally in the stock market.
In fact, I think we see even more volatile downside price action.
Speaking of volatility, we sure had a big VIX spike early in the year:
The VIX also looks like we could see continued volatility as we ring in 2019.
Yield on the 10-Year Note has been falling for months to finish out the year:
If 2019 starts with spiking volatility and stock market drops, I would be looking for yield to come down even more.
I’m also looking for a weak start for the dollar in 2019:
To me, the dollar looks very, very toppy here.
While gold & silver bulls should be feeling pretty good right about now, dollar bulls should be feeling pretty nervous.
The bottom line?
The markets could very well end the year with some fireworks.
And the markets could get very real come Friday.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.