I told you Bitcoin was a bubble. The biggest beneficiary is the precious metals and I had a hunch when I saw the calculations for the turn in the metals the cryptos were hijacking some of the shine normally bestowed to the metals. The reason folks are interested in cryptos in the first place is they are concerned about the banking system, right? Isn’t that what precious metals is supposed to be about? The silver chart below looks very nice. It had a chance to stall and retest the bottom last week, but no bears showed up.
Elsewhere, the bond market is trying to save face at 261 days off an important low. So far, it doesn’t look encouraging. Even if we have the long-term trend change I’ve been talking about, one would think we’d get a reaction out of this window. Perhaps there are too many bond traders on vacation to care. This is a very short week as we already burned Monday and as the week wears on, volume should lighten for those who are just taking off for New Year’s Eve.
The most important market event of the year was the tax cuts, for once the GOP delivered on something. There are good elements, some very good elements to it and other portions not so much. Yes, they repealed the unpopular Obamacare fine but that doesn’t kick in until 2019. In the end, Stockman wasn’t the prophet after all although he was right about how dysfunctional the process would be. But 2017 was a year where the worst-case scenario never panned out. Markets got the tax cut they desperately wanted and we didn’t end up with the geopolitical nightmare out of North Korea.
Looking ahead to 2018, it would be hard to imagine events materializing as smoothly (if you can call it that) as it did in 2017. I listen to military experts who go right up to the line with classified information. They don’t reveal what they are not supposed to, but the whispers suggest the military is getting ready for a conflict. which is supposed to commence first half of 2018. I also expect to see the end of this Russia, Russia, Russia scandal against the President as other scandals replace it.
The “Me, too” crowd is going to come against Trump like they did with Moore from Alabama but those who throw the biggest stones had best look at protecting their own glass houses. The verdict for me is I expect 2018 to be another tough year in terms of social mood and culture even as the economy remains decent at least for the first half of the year.
For this week, I wouldn’t take conditions very seriously. This is an excellent time to study charts and get a fresh perspective while the action is slow. Part of trading success is keeping it fresh and the only way you can do that is to occasionally take a step back. If you are always rushed, you never allow yourself to go to the next level.
Yesterday, I listened to an interview of Adam Levine of Maroon 5. He said one of the secrets to his success is to take a step back to take a look at the bigger picture of his body of work. If they go from producing one album to the next without stepping back, there isn’t much improvement. I consider myself a professional stumbler and I could look at key points where slow down and enable myself to see how things set up on charts that I was never aware of before. It’s important to take a step back in order to go two steps forward. Have a happy New Year.