Is It Really 2018? Traders Should Be Ready for Anything
12/27/2017 3:56 pm EST
Obviously, we didn’t get the hit like 1937 this year but nothing has changed in geopolitical risk. I’m going to continue to look for a market correction. There hasn’t been a real one since 2011, says Jeff Greenblatt, editor of The Fibonacci Forecaster.
Time flies when you are having fun. First, let’s look at the incredible calculation I’ve discussed on the Silver chart. I’ve shown you the importance of the last leg down tendency. This is where the last leg of a move squares out in some shape or form to price or time.
In this case, the precious metals bitcoin buster turned up at 67% (last leg is 67% of the range) at 67 trading days. Now it came all the way up to the regular 61% retracement in near record time. It’s interesting to see how precious metals took it on the chin while bitcoin (BTC) was going through the roof but since our precious metals vibrations heated up, cryptos really cooled off.
It would be very reasonable to see the precious metals cool off a bit right now.
It was an interesting year for the markets. Whatever could’ve gone wrong did not go wrong. Ultimately, markets were not disappointed as the tax cuts came in right under the wire. Congress even managed to repeal the most unpopular part of Obamacare, the individual mandate. Recall the reason the Supreme Court upheld Obamacare in the first place was due to it being considered a tax. While this tax won’t be immediately repealed, it will be off the books beginning in 2019.
War never came between the U.S. and North Korea although intelligence experts I listen to are still concerned it could happen in the first quarter of 2018.
The market apparently liked the economic growth agenda so much it overlooked the attack on Las Vegas, rallying big on October 2, the other major story of the year.
While I’m not in the predicting business, I do have some thoughts on 2018.
The economy should stay strong at least through the second quarter because the stock market is a leading indicator capable of projecting up to ten months into the future.
The stock market shouldn’t be nearly as strong. There’s nothing special about making a call like that. Count me in the camp that was surprised we didn’t get a correction this year.
I’m also the guy who quoted Lord Rothschild any number of times. He believes 2017 was like 1937. Following that line of thinking, we are now coming to 1938. For those of you who studied the 1930s, 1937 became known as Great Depression II. The market got hit but recovered half the losses in 1938 and held on until the war started in 1939.
Obviously, we didn’t get the 1937 hit this year but nothing has changed in terms of geopolitical risk. I’m going to continue to look for a market correction. There hasn’t been a real one since 2011.
The year 2018 also brings an important midterm election which will create a certain amount of drama.
How many remember Duane Thomas? He was the star running back of the Cowboys in the 1970s. While he was preparing to play in the Super Bowl the media asked him how he felt about playing in the most important game of his life. He said, “If this is the ultimate game, why are they playing it again next year?”
Some are already calling 2018 the most important election in our history. I thought we just lived through it in 2016. Markets will be watching political developments just as in 2017.
No matter what happens, traders should be ready for anything. The year 2017 was important to this column as we discussed how out-of-the box thinking on retracements opened the door to recognize greater opportunity such as the precious metals situation first discussed here two weeks ago. Amid bitcoin bubble, do we finally have a turn in precious metals?
We will expand on our retracement strategy discussion here next year as well with timely examples from current charts.
I hope all Moneyshow.com readers have a very healthy and prosperous New Year.