I’m getting tired of the constant warnings of economic collapse, as it falls on deaf ears. So today I will focus strictly on the current market conditions and our current trades within our model portfolio.
The chart below shows the year to date relative performance across all markets for 2016. As you can see, precious metals lead the pack with a few commodities, like soybeans, sugar and orange juice performing well.
2016 YTD Relative Performance
Precious metals are the best performing asset so far this year and they are just getting started. If you’re not already in, you are running out of time to get positioned for the greatest ‘home run’ of the decade.
Gold had a nice surge after the FOMC meeting on Wednesday, but lest we forget, Friday is options expiry on the London exchange, so the pull-back in gold and silver this week was not a surprise to me.
The chart below shows the date where the daily cycle lows ended for the past 3 months due to options expiry. The June low probably would have been a little later in the month, however, the Brexit vote put a stop to the Cartels manipulation during that month.
That being said, next week is a new start for the next daily cycle up in precious metals. I’m looking for a big move over the next two weeks with expectations for gold & silver to hit new highs. I’m expecting gold to possibly reach 1400 – 1425 before hitting resistance for the next cycle down.
After that we have very little resistance up to the 1800 level. Things will get very interesting after gold breaches the 1425 level.
Stock Market: (SPY) (QQQ)
We had a very steep surge in stocks over the past two weeks as the Fed manipulations pushed stocks to new all-time highs on very little volume. The roll-over has commenced and I expect a significant drop from this level over the next couple of weeks.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Crude oil has been in a descending wedge pattern since 2014 with lower highs and lower lows and after hitting a double top back in August of 2013 at 110.
The current cycle is now heading down into a new low but should meet support around 26. If it breaks 26, the lower trend line would be the next support zone, so we could see it go into the teens, but I think that’s an extreme scenario.
If you’re thinking about going long in an energy trade, I would wait till oil reaches the 26 handle and see what happens. We should see at least a short term bounce at that point.
Commodities: (FCX) (JJG) (DBA) (JO)
DBA is in the final stages of completing its weekly cycle down. I expect it to bounce off of support at 20 and head higher, at least for the short term. If you’re thinking of a trade in DBA, wait until you can confirm the bounce at 20 before entering.
(SLW) January 2017 CALLS
(GDX) January 2017 CALLS
(ABX) January 2017 CALLS
(FNV) January 2017 CALLS
(RGLD) January 2017 CALLS
(SPY) December 2016 PUTS
(IYF) January 2017 PUTS
Paul Craig Roberts – We Are About To Witness The End Of The World As We Know It (Must Read)
Former U.S. Treasury Secretary, Dr. Paul Craig Roberts, just warned that we are about to witness the end of the world as we know it.