Earnings Season Kicks Off With Big Banks

1. JANUARY MARKETS                                                                     
2. UP STARS/DOWN STARS

3. GOLDEN OPPORTUNITIES                        

4. QUOTES
5. ON THE WEB

6. MARKET RESEARCH

7. LETTERS 

 

1. Earnings Season Kicks Off With Big Banks

The odds favor markets will be in bargain hunting mode short term and continue to rally.  However, we repeat:

Unlike 2018, Markets in 2019 will NOT be easy to forecast - requiring both a longer investment horizon AND a shorter trading one!

 

WE ALSO BELIEVE US MARKETS WILL CLOSE HIGHER IN 2019 than 2018! Additionally,
We expect it to TRADE ABOVE ITS 2017 CLOSE & ADVISE
Be defensive H1 2019 (esp. Q2); Be more aggressive H2 2019.

 

Our 2019 recommendations:

  • Be Selective - Stock Picking will outperform Index Investing
  • We continue to recommend trailing profit stops and hedging, raising cash and/or writing calls to promote sound sleep.
  • New trades & investments best in Long/Short Pairs in H1 2019
     

Three concerns we are watching closely are:

  • The market’s short term reaction to trade wars;
  • China Internal & External response to its 2019 Saturn influence;
  • The January & May FOMC meeting anticipation & reactions.
     

BOTTOM LINE

WE THINK MARKETS WILL REACT POSITIVELY NEAR TERM, BUT THERE IS CONSIDERABLE RISK WITH SUCH A BET.

HENCE WE ADVISE INVESTORS TO BE LARGELY CONSERVATIVE & DEFENSIVE, ESPECIALLY Q2 2019.

Proper Valuations:

TIPS  ~ 110

IMHO “Improper” Valuations

DJIA < 24719

US 10 Year Bond  <2.75

OIL < 55

COPPER < 3.20 

BITCOIN > 2500

GOLD < 1375

SILVER < 18

 

TRADING NOTES

January is potentially an up month but also with potential major hiccups: given a positive US economy [1.8%+ growth] but a mixed horoscope for President Trump in H1 2019.

DJIA, NASDAQ & SPX can rally again as THE US TRADE WARS ARE WON and especially if the FED relaxes it now seems more willing to do!

Remember our Trading Plan: Not to short aggressively before May 2019. 

TRADING HEDGES: 

 Sell Oil 73.50/Buy Copper  2.95

Oil unwound 68.00 Resold 72.50 Unwind 64 Long 50

Sell Oil 74.00/Buy Copper 2.83

Oil unwound 66.20  Resell 74   Unwind 66 Long 50.50

Sell Oil 73.33/Buy Copper 2.75    

Oil unwound 68.20  Resell 76  Unwind 68.65 Long 46 Sold 52

 

Buy Gold 1188/Sell BTC 6380

Buy Gold 1182/Sell BTC 6650

Buy Gold 1196 /Sell BTC 7370

 

Long Copper 2.70/Short BTC 6666

 

HYDE PARK SOAPBOX: Who’s right — the bulls or the bears? The answer is that it shouldn’t matter

KEY DATES:      January 14,17, 20/21

DJIA:                    Trading Target 24719

SPX:                     Trading Target 2673

NASDAQ:            R1 6903 Achieved
GOLD:                  R1 1300 R2 1325  R3 1350

SILVER:               R1 15.50 R2 16 R3 18

OIL:                       R1 50 R2 55  R3 58 R4 60

COPPER:              STEADY ACCUMULATE: H2 2018-2019 à3.50+

US 10 year          Intentionally left blank

BITCOIN:              4200 RESISTANCE S1 3800 S2 3600  S3 3000  S4 2500

The Market Marker remains some cautious concern.

 

2018 CLOSE:          DJIA 23327 SPX  2506 & NASDAQ 6635

2017 CLOSE:          DJIA 24719 SPX  2673 & NASDAQ 6903

2016 CLOSE:          DJIA 19762 SPX  2238 & NASDAQ 5383

AFUND Fair Value: GOLD $1370


THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK

2. We plan to do little this week awaiting the market’s reaction to corporate earnings and progress of CHINA Trade talks. 


3. We continue to recommend Maximum Allocation to precious and base metal investments for the intermediate and long term, given that the precious metal sector and copper are obviously very undervalued!
Now with lesser headwinds from US interest rates rising as well as less competition from MMJ & Bitcoin “investors”.

A $1350 ($1400) target test in 2019 is now closer to reality and we are happy to see our friends at Goldman Sachs give it a $1425 price target. Still, we advise patient precious metal investors to pay attention to stock selection as a slowly rising tide does not float all boats equally.

·         Gold remains cheap geopolitical crisis insurance.

·         For investors who cannot or will not buy the $US currency as well as investors who wish to safely and cheaply hedge their US$ exposure, ONLY GOLD IS AS GOOD AS GOLD!

Gold FV $1368 = Commodity FV: 1340 + Currency FV: 1368 + Inflation Metal FV: 1368 + Crisis FV: 1400.

Gold/Silver ratio à 75  Silver FV $18+.

INVESTORS: We plan to stay LONG in 2019 (recommending a precious metal sector hold rating and only hedging and/or selling Q2 or profit taking).

We remain disinclined to short or sell until gold is overvalued e.g. $1416-1450. For silver, our first selling numbers remain $19+.

However, shorter term, after the Chinese New Year, some hedging or profit taking/protection will not be unwarranted.

 

4. “Bitcoin’s attempted rebound was rebuffed at $4k resistance and so far traders seem more inclined to sell the bounce than buy the rebound. These things form sharp, V-bottoms when they go too far. BTC’s lethargic rebound tells us we still haven’t reached oversold levels yet. Until further notice, every bounce is still a selling opportunity.”

 Jani Ziedins, analyst, Cracked Market   

HW: We agree the smart money will be most often be playing bitcoin from the short-side. 

 

“In short, we believe that the crash of 2018 mirrors the mid-life crisis seen during the middle of bull markets a la 1962 and 1987 and in both bases, the bull market found its footing at the 200-week moving average. That is currently [S&P 500] 2,350 or so. And both midlife crises saw a retest at that level. Is a retest in 2019 possible? Yes, but if so, we would view that as a buying opportunity.”

Tom Lee, Head of Research, Fundstrat

HW: Yes likely coming in Q2 2019.

 

“Overall, inflation risks remain well in check and are well down the list of potential concerns for both the capital markets and the economy. That bodes well for 2019 if the Fed can slow the pace of rate hikes or pause outright.”

Jim Baird, chief investment officer, Plante Moran Financial Advisors

HW: If….

 

 5. Investors want private, not public, markets — BlackRock

The trillion-dollar giants that set alarm bells ringing

China's stock market expects 600 bln yuan inflow this year

 

6. Volatility – An Investable Asset Class

 

7. THIS LEFT INTENTIONALLY BLANK

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