Gold & Dow: Santa Claws Comes To Town
Stewart Thomson | Dec 25, 2018 08:13AM ET
Weary investors who endured the September and October stock market “crash season” felt they should be richly rewarded for their incredible patience… with a wondrous Santa Claus rally.
The traditional Santa Claus rally has morphed into a hideous Santa Claws mauling of millions of U.S. stock market price chasers.
It’s a gruesome sight. The good news, clearly, is that my prediction has come true and both gold and senior miners have leaped into the limelight.
They are happily basking in their new role as safe haven beacons of safety for smart money investors.
This is the “Queen of Assets” gold chart.
While the stock market incinerates, gold is in a mighty uptrend. Note the fabulous flat line event taking place now on my 14,7,7 Stochastics oscillator at the bottom of the chart.
This type of technical action is extremely positive. The world’s mightiest metal is poised to surge above the uptrend channel supply line and roar straight to my $1300 target price zone.
Silver has held its own against the dollar and higher price enthusiasts will likely get the rally they deserve in 2019.
Because silver is used extensively in industrial applications, it tends to lag gold as the business cycle peaks. Demoralized stock market investors don’t see signs of aggressive growth in inflation yet, so they leave silver alone.
Once inflation begins to pick up more aggressively and U.S. GDP growth contracts more substantially, silver will start to rally as aggressively as gold and the senior miners are rallying now.
I see that happening by the second half of 2019, but a three-day close over $15.20 would be a strong indication that commercial traders anticipate stagflation and are getting invested in this superb metal ahead of time.
As 2018 got underway, I urged investors to focus on President Trump’s success in the private sector and use his fabulous work ethic, organization, and planning skills as an inspiration to act professionally in the major markets.
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Unfortunately, many investors believed that Trump’s power as president gave them a free pass to act unprofessionally in the major markets.
They believed the incredible success that America achieved in the 1880s “Golden Age” and the 1950s could be re-created by Trump… even though America’s demographics are now essentially the opposite of what they were in those two glorious time frames.
These investors essentially devolved into maniacal U.S. stock market price chasers, and they ignored the clear “safehavenization” of senior gold stocks that was taking place.
The bottom line: Investors will always pay a price for sloppy actions in the market and they will always reap incredible rewards for high-level professionalism.
I developed the STL (Stewart’s Traffic Lights) system to provide clear green and amber light signals for an array of assets over both the short and long term.
Horrifically, the Dow Jones Industrial Average is now flashing a weekly chart amber STL. Amateur investors like to “wait for a rally” to sell. I like to obey traffic lights.
If the light turns amber, I don’t race my stock market car through the intersection, especially when a quantitative tightening freight train on central bank “auto pilot” is barrelling through that intersection. I don’t predict when the STL will turn green. I wait for it to turn green, and then I buy.
I have the “party people” short USD versus the yen, long GDX (NYSE:GDX) via triple-leveraged NUGT, and short the stock market via SDOW. It’s certainly a very Merry Christmas today for all the GU Swinger partygoers!
This year, America awakes on Christmas day with the socialist “democrats” back in control of the House, the stock market on a major sell signal… and with gold and the senior miners acting like the brightest Christmas lights in town!
This is the superb GDX “chart of champions”.As the Dow tumbled 600 points, GDX surged above the $21 resistance zone on a closing basis!
Note the enormous rise in volume. There’s also a flat line event taking place with the Stochastics oscillator. From a technical perspective, this chart is a bullish masterpiece that looks like Michelangelo created it.
Santa Claws came to U.S. stock market town, but Santa Claus came down every gold bug’s chimney with wondrous higher priced gold and senior miner tidings. Enjoy, because the current market themes in play are poised to dramatically accelerate in 2019. Best wishes to the entire global community!
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