Stocks & Equities
The Markets
Stocks traded sharply lower on Wednesday following another weak set of economic data out of China, as well as concerns that North Korea successfully tested a hydrogen bomb. The panic sent shockwaves around the globe, fuelling another selloff in what has been a dismal start to the new year. The S&P 500 broke below the lower limit of the multi-month declining trend channel, as well as horizontal support at 1990, although the benchmark did manage to end at this level of support at the closing bell. This is the first significant crack to emerge in the market since the start of November peak in equity benchmarks, possibly suggesting the conclusion to the two month old period of consolidation. While trying to avoid becoming too anxious to conclude a longer-term topping pattern, shorter term, the market is oversold around present levels. At the lows of the session, buyers did appear, potentially covering short positions given the employment report on Friday and the start of earnings season next week. Investors will be hesitant about holding negative bets into these pivotal events. Short-term resistance on the S&P 500 Index is apparent around 2020 and then around 2040.
Quotable
“Nobody gets justice. People only get good luck or bad luck.”
Orson Welles
Commentary & Analysis
If you feel lucky, buy oil today…
Harry Callahan: Uh uh. I know what you’re thinking. “Did he fire six shots or only five?” Well to tell you the truth in all this excitement I kinda lost track myself. But being this is a .44 Magnum, the most powerful handgun in the world and would blow your head clean off, you’ve gotta ask yourself one question: “Do I feel lucky?” Well, do ya, punk?
That little monologue above is from Clint Eastwood, aka Harry Callahan, in the classic movie, Dirty Harry. As I viewed my wave chart on oil this morning, I thought: Do I feel lucky? You may believe investing/trading is not about luck. I would disagree. Give me luck over being good any day. Here is what we have in the chart and what I wrote in our 2016 Outlook & Global Macro View report:
One of the reasons I have focused on commodity currencies in this macro section is my expectation/guess, based on a symmetrical Elliott Wave setup for the oil market. As you can see in the chart below oil prices (WTI futures) are heading into to a test of the credit crunch bottom, which came in at $32.40. The extension target for what appears to be a quite symmetrical 5th wave is 31.54—how nice to pierce the old support, take out a whole bunch of sell stops, and rally sharply into the new year to throw a monkey wrench into all the dire forecasts for oil and commodities in general. It’s almost too perfect a scenario to verbalize.
I show a 32.10 low in oil today, on Reuters. We also know markets seek out levels to find the most activity, usually before turning. And as I said, I would imagine there is a lot activity here at the major swing low–$32.40 (labeled Wave A).
I am not sure if I feel lucky enough to plunge in. My trading of late has been far from lucky, unfortunately. But it’s worth a look and some consideration with panic starting to fill the air.
Jack Crooks
President, Black Swan Capital
Twitter: @bswancap
This coming New Year of 2016 is the year of the Monkey, according to the Chinese calendar. Will this cause wild gyrations in the Chinese and World stock markets, which are symbolized by the volatile nature of the Monkey? Many do not believe that China can derail the world economy, however, but here I explain why they are missing the point. Directly or indirectly, China’s slowdown will definitely lead to a global meltdown.
Warren Buffett, the billionaire “Oracle of Omaha” continues to be involved in some of the biggest investment playsin the world.
Buffett is undoubtedly the most successful investor in history. His investment philosophy is no secret, and he has repeatedly shared bits and pieces of it through a lifetime of quips and memorable quotes.
His brilliance is timeless, and we find ourselves referring back to them over and over again.
We compiled a few of Buffett’s best quotes from his TV appearances, newspaper op-eds, magazine interviews, and of course his annual letters.
With equity markets tumbling, escalating tensions between a Saudi-led Sunni bloc against Iran, ongoing hostilities in Syria, North Korea testing what it claims to be a hydrogen bomb, the once precious yellow metal is looking perky.
A six-year low was recorded in early December (on the same day the euro fell to $1.0525 when the ECB met). That low (~$1046.45) was retested a fortnight later (~$1047.75). Between the two lows, gold reached almost $1089. If this is a double bottom, the minimum measuring objective is near $1132.
The potential double bottom is marked by circles in this Great Graphic created on…..
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