With holiday season upon us most were looking towards a different set of opportunities rather than what the markets have to offer in terms of volatility. The Opportunity to enjoy rest, good food and the opportunity to spend uninterrupted time with our loved ones. If lucky seizing all the above will be the proverbial calm before storm 2019 has in store for us.
In Europe, a Brexit deal seems far away, with the March exit date fast approaching. The deal on the table which led to a confidence vote on Theresa May is currently the only actionable offer. The Fed hiking rates as expected in December, but with recent falls in major US indices, the talk of this being beyond the usual 10% market correction has led to questions on what further actions maybe taken come 2019. All this not to mention the OPEC debate on where the future price is headed.
That said below are some of the markets traders will be eyeing over the next few months. Seeking volatility and opportunities as there respective fundamental storylines start to unfold.
Q1 of 2019 will be a big one in terms of opportunities for Cable. Currently sitting at $1.27, after breaking a 400 day low at $1.26, this market seems to have entered a historically bullish zone. 10/25/50 day moving averages all positioned for a seemingly upwards cross, which would mean the pound gaining strength on the dollar. With Theresa May given a vote of confidence from parliament heading to the new year. This and the US eyeing a weaker dollar may see GBPUSD heading to it’s long term range which is north of $1.40 to the pound.
Ending the year with a bull run which sees the metal reach a 140 day high. With Dollar uncertainty at a all-time high in December, with huge sell-offs in indices and equities, traders ran to gold. However with the shelter now apparently overcrowded, the markets seem to be overbought as they have passed the 70 RSI mark. In 2019, with more uncertainty of the feds hiking patterns, along with the trade war with china reconving, we may see gold try to hit it’s long-term ceiling of $1,371.
With the effect of OPECs recent supply cut deal, many are hoping 2019 starts in a similar fashion to 2018 where for the first half of the year the markets rallied to a 4-year high of $74 per barrel. This essentially was halted with the help of President Trump’s twitter fingers, calling for lower prices. Entering 2019, markets are on the oversold side, with moving averages maybe looking to consolidate around the floor of $45, before maybe heading for another run. We maybe looking at a range of $50 – $70 crude over the next few months.
Even with the US indices markets suffering some of the biggest sell-offs in recent memory, many believe this is essentially a buyers dream of entering via a low valuation. Although this has historically been the case, 2 years Since Trump, are we seeing a re-alignment on what many thought to be overvalued markets? Those Gold bulls may think so, and looking at the correlation in the 2 will be interesting. Markets have rallied, and the technicals do show signs for reversal, this may be one many long-term investors reassess there views on.
Senior Market Analyst