It’s late, yes, but you don’t care.
You’ve been waiting for a crack at it all year.
And now that it’s finally here, all you can think about is your chance for stardom.
Your name in lights.
Your moment to shine – to show everyone who are you are.
The real market expert.
The annual Bourbon and Bayonets year-end market forecasting champion and all round superior humanoid.
Let the hammers fly and the stock-picks follow free.
Name your market, and give it a number.
Gold Oil, The Dollar, The Dow,
NASDAQ, S&P 500, 30 year bond,
10 year note, Rose bowl,
Global political prophecies,
Local mid-term electoral guesses
Even the identity of Jack the Ripper!
What have you!
Lay it on the line, and show us you got cojones.
On December 31st 2014, where will they be?
It’s less than four months away – how hard could it be?
Take a stab.
And while you’re doing the math, consider some of our own prognostications.
Well start with the commodities.
Our position on the metal is widely known, and it’s not positive. As of today, it appears you’re better off a seller than a buyer of gold.
As for the magic number, we’re still holding out for an ultimate bottom slightly under $1000. But we’re not so convinced it’ll be an express bus that gets us there.
Gold’s on a slow boat to Pearl Harbor, friends. If you’re on it, grab a lifejacket and dive into the swim now.
And look for the SPDR Gold Trust ETF (NYSE:GLD), a relatively reliable proxy for the metal, to be at her former lows of $114 when the bells of New Year come haunting.
Stepsister silver will not likely see as gruesome a future as gold. We’ll throw out an $18 figure for year-end.
Oil and Gas
We like the future of both oil and gas, though it’s the latter that gets us pumped up over the near term.
The U.S. Natural Gas Fund ETF (NYSE:UNG) is the most liquid of the gas ETFs, and appears to have found a bottom over the last two months.
Look here –
The chart has a number of positives –
First, both RSI and MACD (in blue, at bottom) are diverging sharply higher from a flat price action (blue, at top). That speaks to a gathering bullish momentum in UNG’s trade.
We also see price holding above support at the long term (yellow) moving average in the $21.50 range.
And with both the short term MA scooping price and winter fast approaching, our belief is that support will hold and UNG will wind her way higher toward her last retracement high of $26.50 by New Years.
And we call upon no less than the illustrious, acclaimed and widely feted Farmer’s Almanac, which is calling for a super-cold winter this year, to support our contention.
What about oil?
Oil will also move higher, in spite of her most recent slide.
After topping out recently at $106, crude dove like a U-Boat in the Hudson, reaching nearly $91 in her latest trade. That’s a dump of 14% in less than three months, and it can’t last, as we see it.
Look for the sludge to climb back towards $100 by year end, hitting $99 while you’re slurring Old Lang Syne in Mary-Beth McIlhenny’s ear and searching frantically through your wallet for a tab of Rohypnol.
Creep! Fire him! Immediately!
Everything in its time, my pretty.
We turn now to the U.S. Dollar (Index), which will continue looking strong and close the year precisely where it is today at DXY 84.17. The dollar has gotten overbought in recent days and will need to cool off considerably for the next eight to ten weeks.
Our little darling.
Everyone’s favorite internet stock is also our pick for bull market poster-child. She’s now at $77.43 and looks anything but overbought. Should tack on another ten bucks by January 1st . Call it $87 even.
The equity market is actually the hardest for us to call. Because while we’re bullish for the intermediate term, say, five to fifteen months, we can’t be sure what might transpire over shorter durations. We could see a pullback. We could see a drift, with trade holding in a tight range. It’s anybody’s guess.
Have a look at the Dow –
There are no obvious signs that we’re overbought here, though a double top (in red) is generally a sign of building resistance. If we don’t see a punch through the 17,200-level in the next ten days, we’d bet on sideways action until just before the November elections. And we’d play it accordingly, with a short strangle.
Over the longer haul, of course, this is a bull market, so by years end, we’d have to figure at least 17,200.
Let’s call it like this – if the Democrats keep the Senate, Dow 17,450 by the close of the year.
If the Republicans win it back…
Now, let’s hear from you.
Many happy returns,
Matt McAbby, Senior Analyst, Normandy Research