Thoughts for the 2020 Stock and Commodities Markets

December 23, 2019

Mish's Daily

By Mish Schneider

blankAlthough we are still a few weeks away from the Chinese New Year, it’s not too early to share some of my favorite Chinese Astrologer’s thoughts on the coming Year of the Rat.

Raymond Lo is not perfect in his predictions.

However, he does offer some incredible food for thought.

Lo talks about the Rat, and he refers a lot to the elements for the year.

In 2020, Yang Metal (The main element) is cold and can be destructive.

Furthermore, because the Fire Element is totally absent to control the strong Water energy, we can expect to see water- and fire-related disasters.

I will get into that more at a future date.

For the economy, Lo says “The pessimistic energy of Water—also the symbolic emotion related to fear— has begun. Hence, the world economy has been greatly affected by the trade war talks between the U.S. and China, which generated a lot of fear and uncertainty for global investors.”

Sounds bizarre given the strength of the overall market.

Nonetheless, we should prepare for anything and everything.

I may not be a famous Chinese Astrologer, but I’ve gotten a few calls right.

For example, I’ve pinpointed the bottom in the metals, oil and sugar.

I have led my followers to profit from the flip in favor of silver in the silver to gold ratio

And, we did very well catching big moves in many equities and country funds.

Now, as my last Daily until January 2nd, I wish to share a few thoughts for what I am watching in 2020.

The only predictable aspect of the market is that it will be unpredictable.

Perhaps the market is forward thinking and assumes the economy begins to expand in 2020.

Or, the Federal Reserve and Central Banks keeping interest rates near zero or in some cases negative, has incentivized corporations to continue their record share-buybacks, and economic growth, as Lo says, is questionable.

Either way, we will be able to tell if the economy is indeed expanding by watching one index and two key sectors.

The Russell 2000 IWM is the best representative of the U.S. economy. The small cap companies in the IWM basket all manufacture or produce goods in the U.S. To date, IWM has begun to move out of a base, but is still well off the all-time highs made in 2018. We can look at IWM as the “supply” side of economics.

Transportation IYT, has also lagged the SPY, QQQs and DIA. The “demand” side of economics has a major job to do to prove goods are robustly moving throughout the country.

Brick and mortar Retail XRT, has been the biggest laggard. With retail sales weak, this sector has been the ugly duckling, reflecting high consumer debt, likely to increase during the holiday season. Therefore, XRT must hold above 44.00 and clear over 47.00 or the 2019 highs.

Since 1979, inflation has remained muted. Given statements by Dallas’ Federal Reserve President Steven Kaplan that interest rates will remain low and the future of the dollar as the world’s reserve currency is uncertain, the best trades for 2020 could be in commodities.

I will have a lot more specific picks and pans for you as we head into the New Year.

Until then, have a very healthy and happy holiday and New Year. Thank you so much to all my subscribers and devoted followers. You keep me going!

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S&P 500 (SPY) Inside day.  318.50 or the 10 DMA support. 321.97 new all-time high.

Russell 2000 (IWM) 164.40 support with 165.10 pivotal

Dow (DIA) 282.75 the support with a ATH at 285.66

Nasdaq (QQQ) Potentially huge with an inside day and 2 doji days or a much clearer shooting stars scenario. 208.50 or the 10 DMA support 212.52 new ATH.

KRE (Regional Banks) 57.52 support, 59.50 resistance

SMH (Semiconductors) Want to see this hold 140.22, 143.97 the ATH

IYT (Transportation) 195 is still key pivotal area with 192.35 key support. 200 key resistance

IBB (Biotechnology) 121 support

XRT (Retail) 45.41 cleared now pivotal. 46-47 resistance

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