What to Look for in 2017

There are many assets that are sitting at or running into some of the largest inflection points we have seen in a very long time.

2016 has been a crazy year

We have witnessed the Rio Olympics, Brexit, and Trump becoming President. We have weathered Zika, the Russian hackings, and many world terror attacks by ISIS. We have said good bye to some of the greatest people including David Bowie, Prince, Merle Haggard, Muhammad Ali, Arnold Palmer, and MANY others.

In Markets – 

We have witnessed one of the largest Gold rallies in multiple years only to have seen all of those gains almost completely wiped out by year end. The Dollar is on Highs. The euro is testing major, major support. The USDJPY dropped over 19 points the first half of the year and have gained 18 of those back in the last two months.

We have witnessed the Largest 5 day drop in the stock market to start a year, and the largest sell off to start a year in stock market history.

We have also witnessed 4 Major Buying Opportunities that very few people bought and are ending the year at All Time Highs pushing Dow 20,000 into year end.

I mentioned above that many assets are at very important inflections points to end the year and start 2017. What happens at these points are very important and I believe will determine the direction of the next major moves across each of these assets.

Let’s look at some of these and what I am talking about starting with the Yen.

 

screen-shot-2016-12-26-at-10-38-06-am

I believe much of what has occurred is due to the carry trade of the Yen over the past 2 months. It has killed and boosted EVERYTHING.

The Yen is sitting right back at long term resistance. It has fallen the whole year and bottomed. Then with one of the quickest devaluation I have seen in a while ripped back up to almost flat for the year. So where does it go from here? 125? or 110?

This has led the rallies, boosted the dollar, and killed commodities since the election. I am bearish this down to the 110 level and then we will sort out where this goes, up or down.

This leads me to the Euro…

screen-shot-2016-12-26-at-10-51-06-am

I believe the Euro is a telling signal of what is to come. It is sitting at one of the MOST IMPORTANT spots in over a decade. Does this continue lower or does this rebound and rip through the 2015 and 2016 levels? If you were looking for any time to buy the Euro over the last 2 years, this is your best chance. Many people think this is going to parity versus the dollar, and it very well may. I however see so much more reward on the non-consensus side and see this going to 1.20. See the arrows on the chart. If the Euro rebounds I expect RSI to start turning up and break through that trend line on the next test.

Another commodity that has been killed, Gold. 

screen-shot-2016-12-26-at-11-07-27-am

Gold has been taken to the slaughter house for 7 consecutive weeks. Again, starting the year by Shorting Gold is not the best play here. It’s actually a god awful play. Gold is about to have a mean bounce back above 1150 and what it does there is what matters.

Not to mention that this is the least long the funds have been of gold in the past 4 months.  Buy when no one likes it, and sell when everyone wants to be long. 

screen-shot-2016-12-26-at-11-09-32-am

 

I believe that the global markets are all at important inflection points to start the year and these are the ones I am keying on. The SPX and DJIA are dead, seeing as they have been taking to extreme levels above fair value and boosted by the devaluation of the Yen. They are coming down to start the year in my opinion, and IF they continue higher short term then it will only be worse in the intermediate. If you missed the 4 major buying opportunities in 2016. Wait for an appropriate one in 2017.

screen-shot-2016-12-26-at-10-35-31-am

 

The beginning of 2017 I am looking for:

Bonds Up.

Gold Up.

SPX Down.

USDJPY Down.

EURUSD Rebounding Up. 

You can find my top 10 predictions for 2017 at the link enclosed. 

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