A Consequential Year Begins

As we've often mentioned, 2016 is shaping up to be "a year of consequence". Here's a look at where we stand before trading resumes later today.

Let's start with the overall "market". If you've been following along since last summer, you know that the S&P 500 saw a "death candle" back in August of 2015:

It then experienced a typical "green candle of hope" through September and into November:

But it began to roll over again as we headed into December:

We've previously identified the "final piece of the puzzle" to be a bearish cross of the 24-month moving average by the 6-month moving average. As you can see below, this cross immediately preceded the market crashes of 2001 and 2008. The gap between the two MAs was as wide as 200 points when 2015 began. It's now 35 and narrowing fast. We'll keep watching this all play out, of course. In the meantime, you should probably consider forming an exit strategy for your equity investments if/when these lines do cross.

The short term for the S&P doesn't necessarily look promising, either. And though the general trend is largely controlled by HFT algos, do not discount the amount of "regular investor" selling that may materialize in the days ahead. Much is made of tax loss selling into year end...but what if there aren't many losses? What if the opposite is the case? What if, instead, "investors" are sitting upon huge gains and choose to wait until the new year to sell and realize the gains? This daily chart already looks lousy and it could accelerate to the downside in January with a lot of negative momentum. (A big, down January would also serve to completely close the MA gap in the chart above.)

Other outside markets that impact gold and silver are crude oil and copper...and both just finished a very tough year. Feb16 crude closed last Thursday at $37.08. This marks the first monthly close below $40 since...wait for it...June of 2004! Yikes!!

And though copper is trying to bounce a bit, its long-term chart looks awful, too. We'll continue to watch the $2.14 level very closely as we begin trading this week.

Against this backdrop, gold and silver begin 2016 still well within their multi-year downtrends. In gold...if we are going to break the trend and make 2016 the first UP year since 2011...we'll need to first crawl back into the $1100s. From there, THE MAJOR TEST will be our "Nemesis Line" and the string of lower highs along it since the orchestrated beatdown of April 2013. A major breakthrough would be a rally UP and through $1180. Can gold get there? Will gold even be allowed to come close? The action in January and February will go a long way toward answering these questions.

And silver it at a crossroads, as well. It, too, is continually pressed lower by a downtrend that began in 2013. The area around $14 has acted as support for over a year now and we obviously need this to continue. IF silver finally begins to recover in 2016, the area near $18.50 will be pivotal for IF silver can retake that level and begin to move toward $20, we can all finally exhale and feel comfortable that the worst is behind us. Until then...and with crude and copper remaining under pressure...there continues to be downside risk in price, at least in the short term.

So, there you have it. This week will be back to regular business here at TFMR, with a full slate of posts and podcasts as well as an A2A for Thursday. In the meantime, tighten your seatbelt and place your tray table in the full upright and locked position. Trading for 2016 begins in a few hours and it's going to be a wild year.

TF

86 Comments

Mr. Fix's picture

1st

Yep, this year certainly is going to have consequences.... surprise

I can't think of a better place to watch them unfold. laugh

Thank you Turd, and everyone else who contributes to TF Metals.  angel

4 oz's picture

Yep~~~

Yep 2016 is here.

Filled with both hope and expectation; Fully plan to BTFD any chance I get!

WingsofGold's picture

2nd

keep stacking!  Thanks Turd. Happy New Year to all.

OK, thurd

-SilverIsMoney-'s picture

Speaking of...

http://www.zerohedge.com/news/2016-01-03/now-time-stand-armed-activists-militiamen-seize-federal-wildlife-refuge-office-orego

God bless these people. I think we all recognize one day we'll have to call our own numbers but lord knows no one wants to be first... except these guys. I really hope this leads to something...

California Lawyer's picture

Fix Nails First of the First!

Awesome my friend.  

Keep on posting, as your contributions are spectacular.

Happy New Year everybody!

Just now listened to Jim Willie's 1:49 podcast with Mr. TF.  Amazing.  It is all tied together.  Then, I just watched Trump blaming ISIS on Hillary and Obama!  No way.  Too much information is coalescing.  This 2016 is going to be an amazing year.

This is the site to be on for sure.

Mr. TF, keep doing all you do!

Orange's picture

Happy New Year all

Tried to paste a picture of my two lemons, but failed.

Wanted to say my lemons are bigger than yours.

In any case, they are about half the size of a bottle of beer or 4 of Turd's rounds high.

Tell that to the Donald.

Looking forward to the market open and happy I no longer have to cook for so many.

As always Turd, and Turdites, thanks for what you and we do.

Special thanks to Mrs. T and the LT's as I am sure there are times that our little Ville takes it out on them, from demanding Turd's attention. 

Yes, Turd, make sure you take time for the family and enjoy. 

Pseudozero's picture

The BIgger Short

is there going to be a movie in 2020 (based on a 2018 M. Lewis book) about a bunch of gold/silver bugs cashing in big shorting the dollar?

-the steve carrell character was priceless! i remember reading those scenes in the book, the utter frustration that nobody with a vested interest will face the truth. 

we're fucked! keep stacking!

they're going to bleed us dry this year before we get vindicated, just like in the book/movie, we're going to have to face into the wind and suffer for being on the right side of this trade. how long? nobody can know! math is out the window now.

i'm not selling a single gram, and i'm 95% pm's, but i expect new lows, perhaps this quarter that will make Turd turn the site's yellow to black! i hope i'm wrong, but i look at the past to gain insight on the future. we're not just going to sit back and get to $3000/$150...we've got to go through hell and back first. stay out of the red and the returns should be spectacular.

gold slut's picture

@ Pseudozero

You and me brother, you and me....

I am going to start delaying my purchases until I see a a steady rise in cost per ounce as I don't think they are out of steam yet.

Buy when there is blood on the streets.

Swineflogger's picture

9

9

EDIT: Now to feed at the Turd trough.  Happy New Year to All.

AgAuMan's picture

10

10....   Edit: Now to read

Turd Ferguson's picture

A rosy "prediction"

MODERATOR

Fwiw...and, wow, judging by the comments there sure are A LOT of angry and bitter people out there.

Turd Ferguson's picture

Saudi-Iran

MODERATOR

Obviously, this is shaping up to be THE major, international story this week:

Turd Ferguson's picture

More from ZH

MODERATOR

"In any event, this an exceptionally serious situation that could well mushroom into a direct conflict between the two countries which are already on opposite sides of multiple regional proxy wars."

http://www.zerohedge.com/news/2016-01-03/its-saudis-sever-diplomatic-ties-iran-wil-confront-hostile-iranian-actions-region

lakedweller2's picture

Price of Oil

What's the possible outcome of two oil producers blowing the crap out of one another...except in algo driven markets

Mauritius's picture

$50 or $500 ?

smileysmileysmileysmileysmiley

AlienEyes's picture

Saudi vs Iran

If this goes "hot", much of the oil trades product could be taken out of production. Oil prices could quickly go north of $50 usd and then some. If they try to take out each others oil fields, gold could get one hell of a big boost.

The Saudi air force is way better equipped than Iran's which could bring the Russians into the fight. IF that happens, gold could go "to the moon".

kenmasters675's picture

Hey turd, are you going to

Hey turd, are you going to sell your options for a loss soon? It dosen't look like we are gonna rally in January. I hope so but things just looks like it's going sideways.

I am holding some miners and very little options this sideways actions have been pretty frustrating.

We still have that gld gap to cover...

Turd Ferguson's picture

Lets see what this week brings

MODERATOR

But, yes, I need to keep a close eye on my UGL calls.

Lemming's picture

Wrong Again?

If S&P collapses, will the market be closed, will Etrade respond "What Puts"?

If the junior miners rocket up, will Etrade respond "What Stocks?, we have no record of that".

If gold does a moon shot, will Bitgold say "What Gold?, we have no record of you having an account here".

If silver hits $100 & gold $5,000 will a presidential order be issued to relinquish these metals?

This Loser complex is insufferable.

Meanwhile Turd wonders why some are bitter........

tyberious's picture

The True History of Silver,

silver66's picture

Must Read on ZH

Our good friend Edward Bernays pops up again in the manipulation of the truth.This has everything to do with our current state of affairs

http://www.zerohedge.com/news/2016-01-02/new-research-suggests-fluoridating-water-dramatically-misguided

Silver66

Angry Chef's picture

Fluoride cont'd....

I first came across this fluoride scam when I started reading Eustace Mullins works. He spoke about it in his book " Murder By Injection ". It convinced me that not only does one have to be his own Central Bank. But his own Doctor and his own Farmer. My wife suffered for 5 years with a hyper thyroid condition. Her Doctor told her that the next step was radiation. I did my research and found selenium, copper, and the extraction of all of her amalgams ( mercury based ) might help. It did. She made a full recovery.

Why we continue to trust anything the Government and the lackey's that support it is beyond my comprehension. I'm at the point that anything them and the MSM reports I discount it immediately. If they say the sky is blue I go outside and check. Fluoride has no health benefits. But it does make the population docile. Which explains a lot.

ag1969's picture

I posted this documentary on Flouride...

...somewhere here when it came out in November.  For those of you who have not seen it:

Libero's picture

frankly...

I wish there was fluoride when I was a kid (60's).  A mouthful of cavities (8 at a time).  My daughters have 2 between them.

But perhaps it's all just a "false premise".

Then again, I can be rich with all the fillings (silver) in my mouth.

Danforth Coxwell's picture

Nice start for gold…..

and silver this evening. The P.M.'s could be getting some traction from this weekends activities in the M.E.

Texas Sandman's picture

What bothers me

Swaps still short silver despite the improvement.  In gold, situation better.  Swaps now long.

Perhaps this is saying we still have a "2008 on steroids" moment awaiting us where silver gets the stuffing kicked out of it with the rest of the commodities but gold shines.

Just a thought... Of course, this assumes we can trust the COT, a leap of faith to be sure.

Happy New Year!

lakedweller2's picture

No help

Who is going to stop the thefts?

Fred Hayek's picture

@libero, fluoride doesn't stop cavities except on contact

Fluoride tooth paste works, though there are substitutes.  Fluoride in water does nothing to diminish cavities.  They once removed the fluoride from the water in one county in British Columbia and the incidence of cavities actually went down compared to the neighboring county where it was kept in the water.  One might guess from the people in the county where it was removed taking extra care to brush their teeth, which has value.

Danforth Coxwell's picture

The Nikkei and Hang Seng….

are both rolling over.

ag1969's picture

Sorry if posted already

Outlook For SILVER & GOLD in 2016 & Beyond -- CEO Keith Neumeyer

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