[Results for 2019; Keystone's summary analysis for 2019 was on target. A swoon was expected early in the year after when central bankers would step in and pump stocks higher, which they did, but the banks panicked out of the gate and began pumping from 1/3/19 forward; the Fed did not permit the lower lows to occur. It is comical to see Keystone calling for a melt-up for the last three weeks of December, which is now occurring in real-time! That can only be explained by dumb luck. The third year of a presidential cycle is always up and 2019 delivered.
Keystone expected the SPX to top out at 2700-2800 but the thought was a flush lower would occur first. Instead, the global central bankers began pumping like madmen in early January sending stocks to the moon all year long (so price never came off lower lows). A recession was expected to begin but this forecast did not play out once the Fed went dovish again. However, Keystone's data, and the Keybot the Quant algorithm, currently say we are in a housing recession (despite the record home prices).
Speaking of the Keybot the Quant algo, it had an exceptional year up well over +40% obviously the best-performing quant on Wall Street and above the +28% gain in the SPX benchmark (a record-breaking year). If you want to avoid the daily drama, simply follow along Keybot's path which charts the smoothest path possible through the trading year.
The always-optimistic and bullish Wall Street analysts got it right in 2019 with the most bullish forecasts above 3K proving correct; so credit and congratulations are warranted. Keystone forecasted the SPX 2400-2500 range for this end of year period and, humorously, only missed it by 700 points. The central bankers are the market and their actions dictate global stock prices.
For 2019, there are 100 predictions that are correct and 91 incorrect for a correct percentage of 52%; definitely nothing to write home about. 2019 was a melt-up year in stocks due to the global central banker money printing so any call that was negative or predicted a drop in a stock was probably wrong. Everything went up on easy money. The epic stock market rally is the best that central banker money can buy.]
December 2018
The following is Keystone’s yearly predictions that will serve as comedy next December. The report is excellent bedtime reading—because it is guaranteed to put you to sleep!
Traders, investors, analysts and strategists are ready for a new year of trading as 2019 begins. The Keystone Speculator receives accolades for 2018 with the most accurate forecast on the SPX at 2440 (the S&P 500 ends 2018 at 2507). In addition, Keystone calls both the January 2018 and late September 2018 stock market tops using negative divergence techniques and other tools as was explained on the blog.
The hits keep on coming. In 2018, Keystone forecasted the demise of the FAANG’s (FB, AAPL, AMZN, NFLX, GOOGL) explaining this with the monthly charts as the roll-overs occurred in real-time. And, the piece de resistance, the Keybot the Quant algorithm, Keystone’s proprietary trading model, returning a phenomenal +35.3% in 2018. That will get your attention especially when the benchmark SPX tanked -6.3%. Keystone receives a golf clap.
But that was then and in trading it is always about where things are going not where they’ve been. Perhaps the best way to approach this year is to identify some major themes and figure out how they may fit together.
Keystone is a strong proponent of the charts and technical analysis. If the majority of Wall Street analysts would have simply looked at the monthly charts and negative divergence in 2018, they would have realized that equities were about to have a religious experience. It’s not rocket science.
For 2019, it is surprising that more pundits are not talking about the four-year presidential cycle. The third year of the cycle, 2019, is typically bullish for stocks. Politicians will grease the skids of their reelection campaigns by handing out large cardboard checks to communities to win votes in the fast-approaching 2020 elections. This government fiscal largess typically provides a mini-boost to the economy and stock market. Such is the crony capitalism system in America.
Each year at this time, Keystone comments on the 18-year cycle, the most reliable stock market cycle. 1982 to 2000 was a secular bull while 2000 to 2018 was a secular bear. It is very common to have strong sharp cyclical rallies such as 2002-2007 and 2009-2018 within a secular bear. Even though the secular bear should give way to the secular bull for 2019-2036, the Federal Reserve and other global central bankers have thrown a wrench into the works after a decade of obscene Keynesian money printing.
The global central bankers have destroyed all price discovery and the expected business and economic cycles with their non-stop intervention in world markets since March 2009. Therefore, the 18-year secular bear may right-translate and growl for another year or two (the central banker intervention has created 10-years of bullish joy interfering with the natural 18-year stock cycle).
The expected 2019-2036 secular bull market cycle lines up perfectly with expected future inflation and hyperinflation. Global inflation currently remains Godot. The reason inflation is not occurring to any great extent for the last many years is that wage growth is not occurring. Inflation cannot exist without wage growth. Keystone’s Inflation Deflation Indicator is at the lowest reading since the financial crisis indicating that America remains mired in deflation. This is consistent with a stock market in retreat.
When wage growth kicks in, and the velocity of money ramps higher (all the money sitting at banks is put to work creating a multiplier effect for the economy), probably in 2020-2022, inflation is going to take off higher like a banshee. This is when the rise in Treasury yields will be real. Then, beyond that, say 2022 and on, the economy will overheat. The velocity of money will be running rampant and the US will jump into hyperinflation which is going to be a future nightmare. However, this year’s forecasts and predictions will stick to the nightmare in the short and intermediate term which is deflation and disinflation.
The four-year cycle says there will likely be bullish buoyancy in stocks this year, at least a few month’s worth, but the 18-year cycle says the stock market malaise may continue for a year or two more in a right-translation beyond 18 years due to the perpetual central banker intervention. The monthly charts for the major indexes such as SPX, INDU (or DJI), COMPQ, NDX, RUT, NYA, TRAN and SOX all display weak and bleak chart indicators such as the MACD line, stochastics and money flow. This hints that the stock market plans on making lower lows, say, 2 to 5 months out which would be late February through May.
The SPX weekly chart is near a bottom as 2019 begins. The S&P 500 may need a couple more weeks to place a firm bottom which will then begin a multi-week stock market rally. Thus, in the immediate term ahead, stocks will likely find a bottom as 2019 begins, say the first half of January, then rally well into February. At that time, or somewhere in that late winter early spring area, stocks may top-out and take the next nasty move lower to honor the weak and bleak monthly charts.
Another market driver in 2019 is the domestic and geopolitical news. President Trump’s daily antics on Twitter can send markets one way or the other. The Tweeter-in-Chief begins 2019 holed-up in the Whitehouse due to the government shutdown. It is in both the Republican Tribe’s and Democrat Tribe’s interest to resolve the border wall situation in early or mid-January. Stocks may push strongly higher on a happy agreement which could be timed with the SPX weekly chart recovery.
President Trump and Chinese President Xi continue the trade war. A few months ago, Trump would laugh and make fun of the Chinese stock market (SSEC; Shanghai Index) for crashing more than -30% but he is no longer laughing as the US stock market crashes and slumps. Both men are slaves to their economy and markets so it is in their interests to make a deal.
China’s intellectual property (IP) thievery must stop. The United States made China a superpower over the last 30 years handing the communists the keys to US technology. The US will likely agree to a deal concerning IP theft but it will be something phony that two years later will have done nothing to stop China’s thievery. Nonetheless, both men will likely tout a great trade deal early in the year which should provide a bump for global markets. If a trade deal occurs in January, it can add fuel to the projected rally coming on the SPX weekly, however, if the US and China continue bickering, a deal may have to wait until both markets tank, due to the weak and bleak monthly charts, in say, the April-June period. That is when a big sustainable stock market rally may begin.
No doubt that China is hoping to time a trade agreement with the US with more PBOC stimulus. China’s central bank will no doubt cut triple R’s early in the year, prior to the new year’s celebration 2/5/19; it is the ‘Year of the Pig’. Oink, oink. This would provide a double-whammy bump higher for their stock market and economy to begin the year.
Always remember, the central bankers are the market and they created the all-time record highs in equities into September 2018. The US remains in a low-rate environment. The ECB and BOJ continue to provide monetary stimulus. The world is awash in liquidity. Federal Reserve Chairman Powell is expected to grow more dovish if the weaker trend in US economic data continues which will support the stock market. The Federal Reserve dovishness (low rates for longer) and PBOC easy money (reserve requirement ratio cuts at the banks allowing more lending) should create buoyancy in the stock market early in the year. The central bankers are the market.
If a US-China trade deal occurs, that would be a triple-whammy of joy for stocks along with PBOC stimulus and Fed dovishness. The US and China are meeting on trade in a few days. The second and third tier negotiators are set to meet. This tells you that there are many details being put to paper and progress is occurring, however, it also says the trade deal is likely further away time-wise. When the bigshots become more involved in meetings showing up to take credit, the deal is likely close to closing. That is not happening now. The US-China trade deal may occur when the stock market collapses due to the monthly chart weakness (stocks bottoming in the March-July time period). A collapse in stocks both for the US, and the communists, would focus the attention of both sides to resolve the trade war.
Taking the ideas so far and molding them around in your hands, like clay, you can see stock market choppiness ahead to begin the year but the SPX should place a nice bottom during the first couple weeks or so (say mid-January) of the year and begin a multi-week rally. This will be due to the Fed likely touting dovishness and probably the PBOC pumping. A trade deal is likely pushed off for months ahead. Stocks should peak somewhere in the February-May period and take a big drop lower with lower lows printing on the charts in springtime.
This may be a May to July bottom in the stock market when a trade deal occurs. A US-China trade deal and the third year of the presidential cycle may then kick-in with a bigtime upside rally. Most people will likely be very bearish at the bottom just when perhaps a trade deal is announced. Stocks may then rally from the early summer bottom up big into August-September. Then, another Fall swoon may occur repeating this year’s behavior. Then, to end 2019, say the last three weeks of December a sharp rally higher.
A recession should take hold this year. The universal consensus on Wall Street is 100% agreement that a recession will not occur in 2019. Many say 2020 is when the recession arrives and others say 2021. No one expects the recession to be upon us in the weeks and months ahead except, of course, Keystone. He expects the recession and recessionary behavior (company layoffs, sales falling off, negative moods developing) to begin in 2019.
The stock market will likely hang in there during 2019 since the PBOC will provide stimulus, the Federal Reserve will be dovish delaying hikes, the ECB will continue a dovish path and the BOJ will keep pumping. The central bankers are one-trick ponies that only know how to print money and nothing else. The game continues until the entire system collapses. Perhaps world-wide contagion begins with Japan in the weeks ahead. As the year progresses, Keystone will be able to forecast the back half of 2019 far better with the weekly and monthly charts, but for this point in time, as the year begins, the guess would be for a major roll over lower in stocks in 2020 probably when the lows will occur for the stock market. Do not be surprised if the SPX bottoms at 1200-1800 in 2020 but thinking about and forecasting this is a year away.
In the springtime, or February forward, when the monthly charts are exerting their negativity again, the Brexit drama will be playing out and may create more global angst and downside stock market action. There are many problems in France, Italy, Germany, Spain; Europe is a continent of many sick men.
In addition, perhaps the findings of the FBI Special Counsel Mueller probe against President Trump will be released creating turmoil. It is a tricky call in the back half of 2019. Mueller’s findings and recommended charges against President Trump, if any, may crash the stock market. Rest assured, that Mueller will release findings on a Friday night after markets close to give traders a weekend to think about things before US futures and Asia trading begins on Sunday evening East Coast time. Therefore, on every Friday evening forward, listen to the news during Happy Hour to see if Mueller is pontificating his findings.
Mueller may release the result of his investigations in the February-April time frame which could exacerbate the expected selling on the monthly charts. In trading, timing is everything.
No doubt many money managers will have itchy trigger fingers to buy dips in 2019 hanging their hats on the expected buoyancy in equities due to the third year of the presidential cycle. This may create a strong summer rally with hope that the markets and economy can recover into the end of the year.
As the realization that a recession is on the come, stocks actually remain buoyant in 2019 since investors sniff out more central banker easy money.
The Q4 of 2019 may be a lot like the Q4 in 2018. When stocks topped out in October 2007, the stock market crash and real trouble began about 10 or 11 months later in September 2008. In the dotcom bubble crash, stocks peaked in March 2000 and then 5 or 6 months later fell apart in August-September. If stocks peaked in late September 2018, that February-August 2019 window is when an all-out stock market collapse and crash may begin. May can be a tumultuous (Keystone is using 10-dollar college words to make himself sound smart) month.
So perhaps the February to July period will be sick for the stock market. Keystone does not expect the 2018 highs to be taken out again. Stocks will recover and perhaps come up to back kiss the important moving averages at SPX 2710-2750, but that may be the high-water mark for 2019 in Q1.
Valuation-wise, Keystone has preached the last couple years about how the global central bankers have artificially-inflated stock market prices. The easy money sends stock prices higher. The world is awash in liquidity and all that money has to go somewhere; it pumps-up all asset class prices. In addition, companies take advantage of low interest rates and money in their company coffers to buyback stock (repurchase programs) instead of hiring workers or buying equipment. This behavior drives stock prices higher rewarding the wealthy elite class that own large stock portfolios but does nothing for common Americans. Trump and Obama are two birds of a feather both implementing legislation that benefits the wealthy class since that funds their election campaigns. This is how America’s crony capitalism system works.
It is comical to hear pundits, the so-called smart people in the financial industry, the Einstein’s that never saw the stock market top coming last year, lament how the Fed has been on a tightening path for a couple years (true) and it has not seriously damaged the stock market. In today’s sick central banker-controlled world, the nations are in collusion. It does not matter that the Fed implemented a few chintzy quarter-point hikes when the ECB and BOJ continue printing money like madmen. Duh. It is ongoing global central banker collusion.
Accounting for the obscene buyback programs over the last five years, the PE’s of stocks are artificially low. Or, put another way, the earnings per share numbers are overstated due to the buybacks. Many companies repurchased 30% or more of their shares so a company or index that touts an 18 or 19 PE, may in actually be closer to a 23 or 25 PE if the buybacks did not occur. This is important because investors have a false sense of security looking at PE’s and do not realize the extent of company overvaluation. Earnings may be inflated by 30% and more for most companies so instead of the current generally-estimated 175 per share S&P 500 earnings the number may be closer to 125 if buybacks did not occur (reflecting the true state of business).
2019 begins the year at SPX 2507. Many analysts are touting a 175-ish number for earnings in 2019 which would correspond to a 14.3 multiple. Many analysts think stocks cannot go any lower saying valuations are at a base now. They are simply moving their S&P 500 price targets of 2900, 3000 and higher, from 2018 into 2019. That’s convenient for them. Using the 175 earnings number, a multiple of 17 places the SPX at 2975 (175x17) and this is the general expectation of the Wall Street crowd for 2019. Some of the analyst Einstein’s are calling for an 18 multiple which targets SPX 3150 (175x18).
As the economy falters, which is Keystone’s expectation, the phony inflated earnings will be in retreat. The already low multiples will venture lower. Keystone targets 2475 (155x16; 165x15; 177x14) for the end of the year a -1.3% drop for the S&P 500; flattish on the year. As explained above, however, the path will likely be very wild and volatile.
Keystone takes the above words, places them into a sorcerer’s bowl, sprinkles magic dust on top, and, while waving his hands over the concoction, forecasts, in an Edgar Cayce-tone, that the stock market (SPX) will place a bottom during the first 2 weeks of the year (say, before 1/18/19).
The S&P 500 probably wants to come down to test the 2400-ish level but should rebound quickly. January is likely going to be a lot of chop through SPX 2450-2600. Then rally for multiple weeks into February or March to SPX 2730-2750 the high for the year. Fed dovishness and PBOC stimulus will create a happy mood to begin 2019. The SPX monthly chart will then reexert its ugliness and stocks will tumble lower taking out the prior lows and plummeting to 2243 say, from March through August.
There may be Brexit negativity occurring during this March-May time period. The Mueller stuff may create negativity and the US-China trade talks may be at a standstill. There is nothing like a stock market crash to focus the politician’s feeble minds. The low for the year will occur at SPX 2243 in the May-August time period. The PBOC will pump like madmen and Fed Chairman Powell will be flying above America flapping dovish wings. Former Fed Chair’s Bernanke and Yellen will be in a helicopter dropping money from the sky to boost the stock market for all their crony friends. The US and China will agree to a trade deal to save the global stock markets.
Stocks should then rally in the summer into the early Fall with everyone believing the worst is over for the stock market. The pundits appearing on television will be touting the third year of a presidential cycle which creates more excitement for equities. The SPX will likely rally back to 2600-2700 but then roll over and sell off again in September and October. The SPX may drop to 2400 then in the back half of December rally to the SPX 2475 to end the year. The year will be volatile with an elevated VIX so the stock market will mainly chop wildly sideways all year long with the huge moves described and end up nowhere.
Keystone predicts a recession will begin in Q2 and Q3 2019. This, however, will not be realized until the end of the year and in 2020 when the data is revised and we all look backwards and say, ‘oh, I see, the recession began in Q2 and Q3 2019’. In Q3 and Q4, companies will steadily ramp up layoffs. By the end of the year, the soft economy will be obvious. The economic data will be hard to interpret in 2019 because of the never-ending central banker intervention; they can’t help themselves. People will be losing their jobs as the holidays approach.
The Federal Reserve will not hike rates in 2019. Economic weakness will develop. Housing and auto sectors will remain challenged. When stocks take the big tumble in March-July and the economic outlook becomes soggy, the Fed may begin hinting about a rate cut to stimulate the economy. The Fed will jawbone first in the summer and Fall, and then cut the key rate by 25 bips at either the September meeting or anytime in Q4.
The theme from 2018 was lack of demand and lack of inflation in the economy both bold calls by Keystone considering that all of Wall Street disagreed. Keystone was correct. The lack of demand tanks oil and the stock market in 2018. He expects the lack of demand story to continue in 2019 leading into recession. America remains mired in deflation.
When the stock market collapses due to the continued weakness on the SPX monthly chart, we will find out if the country falls into a deflationary spiral, or not. If so, that will create a couple-year Armageddon scenario. Currently, the thinking is that stocks will recover in the back half of 2019 and then collapse in 2020. If, however, the expected late winter, spring, perhaps early summer sell off in the stock market gathers legs lower and crashes, well, that will be the Armageddon ending this year instead of next with the SPX on its way to sub 2K.
One of Keystone’s ongoing themes is that the central banker largess has only served to enrich the wealthy and the spending from this privileged class has supported the economy since March 2009. Now, the US is at the point where the filthy rich, that control the rigged system, are decreasing their purchases. After all, how many McMansions, fancy cars, furs, jewelry, fine clothes, electronics and yachts does anyone really need? The economy and markets are going to be waiting a long time if they expect the average American to now pick up the slack in spending. Joe Sixpack will be cutting his spending going forward. The theme of low demand and deflation (disinflation; low inflation) should continue in 2019.
Keystone is forecasting SPX 2475 (165x15) at the end of 2019.
The Wall Street analysts are forecasting numbers all over the map from SPX 2750 to SPX 3350. Wow. CS strategist Jonathan Golub proclaims SPX 3350 (174x19.3). What’s he smoking? That would be a +35% gain. At this stage, however, one person’s guess is as good as another’s. DB analyst Binky Chadha forecasts SPX 3250 (175x18.6). UBS strategist Keith Parker says SPX 3200 (175x18.3) is on tap in the year ahead.
BMO strategist Brian Belski targets SPX 3150 (174x18.1) for 2019. JPM strategist Dubravko Lakos-Bujas proclaims SPX 3100 (178x17.4). C strategist Tobias Levkovich says SPX 3100 (173x17.9) is the target for this year. WFC strategist Chris Harvey says SPX 3079 (173x17.8) is on tap.
Goldman Sachs strategist David Kostin declares SPX 3000 (173x17.3) as the target for this year. BCS strategist Maneesh Deshpande must be comparing notes with Kostin because he also forecasts 3000 (176x17).
Oppenheimer strategist John Stoltzfus says 2960 (175x16.9) is the SPX target for 2019. BX strategist Byron Wien forecasts a +15% gain in the S&P 500 saying the SPX will take out the all-time high at 2941. Humorously, Wien is going to actually need a +17.3% rally in 2019 to achieve that goal; he should have looked at his math more carefully.
BAC strategist Savita Subramanian forecasts SPX 2900 for the end of 2019 after the S&P 500 tags 3000. Jefferies strategist Sean Darby targets SPX 2900 (173x16.8). MS strategist Mike Wilson targets SPX 2750 (176x15.6) for 2019.
SPX
(S&P Targets) for 2019:
CS
3350
DB
3250
UBS
3200
BMO
3150
JPM
3100
C
3100
WFC
3079
BCS
3000
GS
3000
BX
2941
JEF
2900
BAC
2900
MS
2750
The
Keystone Speculator 2475 (looks like it’s another year where Keystone sits
on a deck chair by himself while everyone else is partying on the other side of
the boat donning ‘SPX 3K’ hats)
Below
are The Keystone Speculator’s predictions for 2019. 2019 Broad Market Predictions
SPX High for 2019: 2740 (n)
SPX Closing Price for 2019: 2475 (2019 begins at 2507; -1.3% loss)
SPX Low for 2019: 2243
Fine-tuning the above discussion, the year begins at SPX 2507. The SPX may dip to 2350-2450 during the first-half of January, then rally into a March-April top at 2740, then down big to a July bottom at 2243, which may be the low for the year, then an early September high at 2620, then a late October low at 2400, then end the year at 2475. The year will have these wild and huge swings but overall the S&P 500 will not go anywhere.
The following year, 2020 is currently expected to be extremely bad, especially the beginning of the year as all the chickens come home to roost. The SPX will likely plummet like a rock perhaps to the 1200-1800 range. There is a chance that during the next big flush lower in the stock market in Q2 2019, perhaps into Q3 2019, may create a deflationary spiral, if so, the Armageddon sub 2K SPX is on the way in 2019 not 2020. This activity should wrap up the 18-year secular bear and the 18-year secular bull market can begin. The secular bull which is 2019-2036, but may be delayed a couple years from starting, will result in hugely higher prices for stocks in the 2020’s but inflation and hyperinflation will be rampant so the stock gains will not mean anything. Are you having fun yet?
Dollar Range ($USD): 91-98 (94-99) (y)
Dollar Closing Price ($USD): 92.80 (96-97) (n)
Dollar/Yen Range (USD/JPY): 100-112 (104-112) (y)
Dollar/Yen Closing Price (USD/JPY): 103.00 (109-110) (n)
Euro Range ($XEU): 1.09-1.20 (1.08-1.15) (y)
Euro
Closing Price ($XEU): 1.17 (1.12) (n)
2-Year Note Yield Range
($UST2Y): 1.40%-2.50% (1.4%-2.6% dead-on) (y)2-Year Note Closing Yield ($UST2Y): 1.80% (1.59%) (n)
5-Year Note Yield Range ($UST5Y): 1.70%-2.50% (1.3%-2.6%) (y)
5-Year Note Closing Yield ($UST5Y): 1.97% (1.7%) (n)
10-Year Note Yield Range ($UST10Y; $TNX): 1.90%-2.70% (1.50%-2.80%) (y)
10-Year Note Closing Yield ($UST10Y; $TNX): 2.30% (1.90%-ish) (n)
30-Year Note Yield Range ($UST30Y; $TYX): 2.70%-3.30% (1.9%-3.1%) (n)
30-Year Note Closing Yield ($UST30Y; $TYX): 2.78% (2.32%-ish) (n)
2-10 Spread at End of Year: 50 Bips (about 25 or 30) (n)
Will Yield Curve Invert for the 2-10 Spread? No, but the damage is done. (n)
Unemployment Rate % Range: 3.7%-4.6% (sub 4%) (n)
Unemployment Rate % December 2019: 4.4% (n)
GDP Average for 2019: 2.4% (y)
Will GDP Print a 1-handle for a quarter?: Yes, for three quarters. GDP will trend lower each quarter forward. (n)
WTIC Oil Range ($WTIC): 34-63 (44-66) (y)
WTIC Oil Closing Price ($WTIC): 48 (62-ish) (n)
Brent Oil Range: 37-71 (52-75) (y)
Brent Oil Closing Price: 53 (67-ish) (n)
Natty Gas Range ($NATGAS): 2.60-4.90 (2.03.6) (n)
Natty Gas Closing Price ($NATGAS): 3.30 (2.23-ish) (n)
Gold Range ($GOLD): 1180-1420 (1260-1570) (y)
Gold Closing Price ($GOLD): 1300 (1520-ish) (n)
Silver Range ($SILVER): 13-22 (14-20) (y)
Silver Closing Price ($SILVER): 19 (18-ish) (y)
Copper Range ($COPPER): 2.20-2.95 9 (2.4-3.0) (y)
Copper Closing Price ($COPPER): 2.48 (2.83) (n)
Commodities Range ($CRB): 166-195 (167-190 dead-on) (y)
Commodities Closing Price ($CRB): 178 (187-ish) (y)
China Growth Rate % Average for 2019 Above or Below 6.5%?: Below (y)
2019 Sector Predictions (everything is up in 2019 on central banker largess)
Financials (XLF or KRE) Higher or Lower in 2019? Lower (many of the ‘Lower’ calls below are mainly ‘Flat’ calls for 2019) (n)
Technology (XLK) Higher or Lower in 2019? Lower
Semiconductors (SOX, SMH or XSD) Higher or Lower in 2019? Lower
Communications (XLC) Higher or Lower in 2019? Higher (y)
Airlines (XAL) Higher or Lower in 2019? Lower
Energy (XLE or XOP) Higher or Lower in 2019? Higher (y) although XOP lower
Industrials (XLI) Higher or Lower in 2019? Lower
Materials (XLB) Higher or Lower in 2019? Lower
Transportation (TRAN or IYT) Higher or Lower in 2019? Lower
Retail (XRT or RTH) Higher or Lower in 2019? Lower
Consumer Staples (XLP) Higher or Lower in 2019? Higher
Consumer Discretionary (XLY) Higher or Lower in 2019? Lower
Homebuilders (XHB) Higher or Lower in 2019? Lower, but should rally early in the year
Home Construction (ITB) Higher or Lower in 2019? Lower
Health Care (XLV) Higher or Lower in 2019? Higher
Biotech (IBB or XBI) Higher or Lower in 2019? Higher
Real Estate (XLRE) Higher or Lower in 2019? Lower, perhaps big drop maybe crash
Utilities (UTIL or XLU) Higher or Lower in 2019? Lower
Telecom (VOX) Higher or Lower in 2019? Higher
2019 Predictions for the 26 Multi-Year Bull Market Leaders
AAPL (Apple) Higher or Lower in 2019? Lower
ADBE (Adobe) Higher or Lower in 2019? Lower
AMZN (Amazon) Higher or Lower in 2019? Lower
AVGO (Broadcom) Higher or Lower in 2019? Higher
BA (Boeing) Higher or Lower in 2019? Lower
BKNG (Booking; Priceline) Higher or Lower in 2019? Lower
BLK (Blackrock) Higher or Lower in 2019? Lower
CELG (Celgene) Higher or Lower in 2019? Higher
CRM (Salesforce) Higher or Lower in 2019? Lower
FB (Facebook) Higher or Lower in 2019? Lower
GE (General Electric) Higher or Lower in 2019? Higher
GOOGL (Google) Higher or Lower in 2019? Lower
HD (Home Depot) Higher or Lower in 2019? Lower
INTC (Intel) Higher or Lower in 2019? Lower
JPM (JP Morgan Chase) Higher or Lower in 2019? Lower
MA (MasterCard) Higher or Lower in 2019? Lower
MSFT (Microsoft) Higher or Lower in 2019? Lower
NFLX (Netflix) Higher or Lower in 2019? Lower
NKE (Nike) Higher or Lower in 2019? Lower
NVDA (NVIDIA) Higher or Lower in 2019? Higher
RTN (Raytheon) Higher or Lower in 2019? Lower
SBUX (Starbucks) Higher or Lower in 2019? Lower
STZ (Constellation Brands) Higher or Lower in 219? Lower
ULTA (Ulta Beauty) Higher or Lower in 2019? Lower
UAA (Under Armour) Higher or Lower in 2019? Higher (y)
V (Visa) Higher or Lower in 2019? Lower
Further 2019 Prognostications by Keystone:
The US dollar index will move generally sideways but the multinational companies such as AAPL, MMM and others will not be hurt as bad by a rising dollar like 2018. The flatter and slightly lower direction of the USD in 2019 will help support the multinationals. (y)
The Federal Reserve will stop shrinking its balance sheet this year.
The Fed will not hike rates in 2019.
The Fed will cut the key rate one time, a 25-bip cut, during September-December. (no, they cut 3 times) (n)
The United States will slip into recession in Q2 and Q3. It will go largely unnoticed until the layoffs start piling up late in the year. Claims will rise dramatically, and by the end of the year, folks will say, “wow, you know what? I think we may be in a recession’.
Oil prices will remain sideways and subdued in 2019 reinforcing the general deflationary and disinflationary vibe. China is likely stockpiling oil (as evidenced by its PMI’s sinking below 50 into contraction but oil imports are steadily higher month after month) and a lot of these imports were mistakenly assumed to be solid demand. Oil prices will remain challenged since global demand is lackluster.(y)
Keystone’s Eclipse Indicator points to potential significant stock market tops occurring on 2/21/19 give or take 2 weeks (2/7/19 through 3/4/19) and 6/9/19 give or take 2 weeks and 8/9/19 give or take 2 weeks and 11/11/19 give or take 2 weeks and 12/2/19 give or take 2 weeks and 2/2/20 give or take 2 weeks. (good calls except for the end of year melt-up due to central bank pump) (y)
Many key words and phrases will drive the narrative in 2019; Populism, nationalism, protectionism, isolationism, anecdotal arguments, Republican Tribe, Democrat Tribe, President Trump, President Xi, President Putin, Brexit, trade, tariff, protests, riots, social unrest, Gilded Age, rich, poor, wealth, violence, political pawns, political prisoners, impeachment, Mueller, inflation, deflation, disinflation, recession, Great Depression, 1929, 1930’s, shadow leverage, data scandal, IP, AI, 5G, Dow, stock market, crash, layoffs, firings, jobs, stimulus, central banks, PBOC, Fed, BOJ, ECB, Powell, Kuroda, Draghi, monetary policy, lack of demand, over supply, inventories, Middle East, war, Turkey, Israel, Temple Mount, Facebook, Apple, Amazon, Google.
The acronym IP will be a common word by the end of the year (intellectual property). Ditto AI (artificial intelligence).
The US Congress will tighten the screws on social internet companies especially Facebook with new regulations.
The US Congress will start pursuing a goal of splitting up the social internet companies starting with Facebook. (not yet although several are going in this direction) (n)
The House will not pursue impeachment against President Trump in early 2019. Congress will wait for the Mueller investigation findings.
FBI Special Counsel Mueller will release all or part of his findings in March-May. The report will be devastating for President Trump far worse than he ever expected.
Mueller will release his findings on a Friday evening after the stock market closes. Stocks will plummet on Monday morning.
Congress has not funded a bill to protect the country’s computer systems, internet and electronics against a solar flare, plasma event or an EMP (electromagnetic pulse). It’s too late. A solar event occurs damaging electronic systems on Earth which is a wake-up call for the globe.
The democrats will launch their presidential runs. By the end of the year, the main candidates for the Democrat Tribe will be Kamala Harris, Amy Klobuchar and Sherrod Brown. Elizabeth Warren, Joe Biden, Bernie Sanders and Beto O’Rourke will slip in the polls. The chosen candidate will not pick a running mate until 2020 but potential running mates are Harris-Klobuchar, two women, or Harris-Brown. Brown would bring the coveted state of Ohio to the table and may emerge as the top dog this year. (Harris went down in flames, her speech is slurred, Klobuchar rising, Biden in scandal, Warren fading but Sanders also hanging in there. Also Buttigieg. Jury remains out) (n)
Biden may propose running for one-term only but this receives a lukewarm reception. Joe is a team player for the democrats so instead he will act as a kingmaker for the democrat party. Harris, Klobuchar and Brown will kneel in front of Biden daily kissing his ring.
Warren will be a loud voice about the financial system and corrupt banks. In late 2019 and as 2020 begins with elections ahead, the US economy will likely be sputtering and the American public will be anxious to crucify the banksters, corporate executives and other ‘fat-cats so Warren’s words will resonate strongly with the American public. However, she does not have the charisma needed for the top job and the Indian-heritage claim sunk her boat. Warren likely knows this and simply wants more name recognition because that will lead to lucrative speaking gigs for a few years.
Just when the republicans thought they would be fully committed to President Trump’s re-election run for November 2020, and thought it would be a cake-walk, trouble surfaces. The Mueller findings will create big problems for Trump and the Republican Tribe in 2019. There will be immediate talk that Pence or others will run for the top job on the republican ticket in the 2020 presidential election. Trump will not seek re-election. It may be a different reason than Mueller, such as health, but by the end of the year Trump will announce plans to not seek reelection.
President Trump will also resign by year-end and Pence will take the top job. Trump will cite heath reasons for his resigning but it will likely mainly be due to a back room deal with Mueller. Pence will be the president from late 2019 into the November 2020 election (the new president takes control in January 2021).
Mike Pence will pick either Kelly Ayotte, Condoleezza Rice, Nikki Haley, Jeb Bush or Scott Walker as vice president. Maybe a Pence-Ayotte, Pence-Rice or Pence-Haley ticket will set up for 2020 for the republicans.
Lindsay Graham, Ted Cruz, Mitt Romney, John Kasich and other republican presidential wannabe’s will come out of the woodwork to fight for the candidacy but America wants fresh faces not tired old losers.
The problems that Mueller creates for Trump will dissipate and start to fade into the background after Trump announces plans to not run for reelection. There will likely be a backroom deal that if Trump agrees to disappear, a lot of the Mueller charges will be dropped and fade away. Washington, DC, is a corrupt cesspool where backroom deals rule the day. Over the last five decades, non-transparency destroyed capitalism in America.
As the Republican Tribe and Democrat Tribe strategize and battle one another, a charismatic person, man or woman, will emerge during 2019, declaring a pox on both their houses. The charismatic person’s popularity will soar with the independents and the 2020 presidential election will set up as a three-way race.
A preliminary guess at the political landscape one year from now is three democrats vying for the future presidency; Harris, Klobochar and Brown. For the republicans, if Trump is out of the picture, it will be Pence and perhaps Ayotte or Rice making plans to win in 2020 (If Trump miraculously makes it through the year, it will be the Trump-Pence ticket). For the independents, it will be the charismatic person, whoever that is, and this fresh face, not associated with either the Republican Tribe or the Democrat Tribe, will be very attractive for many Americans that are sick of the two-party bickering. This charismatic independent person will perhaps lead in the overall polls with the democrats battling neck and neck, and the republicans slightly trailing.
There will be lots of drama around setting up and conducting presidential campaign debates. Scandals will develop. The democrats are going to have a huge field. Republicans will be involved in a primary race unexpectedly since they were expecting Trump to go the distance; this will require debates. With an independent candidate gaining popularity, there is confusion and scandal about how to conduct three-way debates ahead of the general election in 2020.
A few judges that President Trump appointed will be asked to rule on different matters impacting his future in 2019 and Trump will be mad and feel betrayed that they are not supporting him as he expected.
The US and global financial system will be exposed as having far more “shadow leverage” than anyone realized. Of course this will lead to global financial contagion.
The problems with the global Catholic Church continue. Rome keeps covering up sex scandals which only serves to discourage and demoralize more Catholics.
Countries become more hostile to one another as trade wars and protectionism increase. Foreigners are seized and used as political pawns and political prisoners.
Protectionism increases hand and hand with growing mistrust between countries around the world. Nations take on the attitude of worrying about themselves first and foremost and screw everyone else, however, this is exactly why protectionism sends everyone down the rabbit hole together; as they stab each other in the back on the way down.
Russia President Putin continues playing games. His Napoleon complex demands that other global leaders pay him respect. Putin will stir up war in eastern Ukraine.
The Russia, Ukraine, Crimea, Turkey, Syria, northern Iraq area will be an intense area of unrest and violence. People whisper that this region will be where World War III begins.
New technology weapons will be on display this year including sound weapons, lasers, and/or supersonic missiles in use by either Russia, the US and/or China.
As Turkey steps up aggression against the Kurds, terror attacks increase within Turkey sending the country into another crisis. The lira begins weakening again. Internal terrorism in Turkey will be the worst in the nation’s history.
The Brexit deadline on 3/29/19 will be delayed. If not, the hard Brexit causing lots of disruption will occur.
The Brexit drama creates chaos and confusion but the UK and EU both grow-up and handle the problems. The Brexit situation works out but instead of Prime Minister May receiving a pat on the back, the calls intensify for her ousting.
Deutsche Bank will slip into a major crisis in 2019 creating global contagion fear. The Bundesbank will step in and combine Deutsche Bank and Commerzbank into one bank (two drunks holding each other up). The ECB will also be involved to smooth over the problem and make sure liquidity is available. The central bankers are the market.
ECB President Draghi will be asked to stay on one additional year due to the ongoing turmoil in Europe with Brexit, Italy angst, German banks, France riots and many other problems. Draghi is supposed to be finishing up at the end of 2019 but he will be asked, and will agree, to stay on until the end of 2020.
German Chancellor Merkel’s power continues to shrink. Her Christian Democrat party will continue losing power. The writing is on the wall. Merkel is ineffective and Germany will be anxious to send her packing. Merkel’s leadership is in jeopardy.
Italy’s MIB should rally strongly early in the year after the budget was approved on the last day of 2018. However, a nice rally in MIB will then lead into a crash. (yes rally no crash)
European indexes rally early in the year along with US stocks on hopes of the PBOC stimulus. Germany will be happy that China’s central bank stimulus will boost the automakers. The joy will end as the year proceeds.
Italy will fall into recession.
European yields will rise this year. (all yields drop) (n)
Populism continues to increase around the world. Peak populism has not occurred as yet. A lot of the populism movement will morph into a class war situation, rich versus poor, where the common people rise up against the elite privileged class that controls the corrupt and rigged governments and markets.
Here is a big call. The BOJ fails at reflating its economy. Once this realization sets in, it triggers a global contagion event. This financial crisis event in Japan will exacerbate the projected selloff in the stock market in the March-July period.
Regardless of whether the BOJ triggers global contagion, in 2019 the realization sets in that the global central banks were the reason for the big stock market party from March 2009 to October 2018. Confidence is lost in the central bankers. All is lost. This loss of trust is going to set up the big crash in stocks likely on tap for 2020 if it does not occur in Q2 and Q3 2019.
China celebrates its 70th anniversary of its filthy communism government. President Xi will want to look strong and will want the markets and economy looking good so the PBOC will be pumping the stock market with easy money and manipulating the yuan.
China and the US will continue fighting for worldwide tech dominance. The race to 5G systems continues since the one with the fastest data speeds wins.
Global data transaction laws will be a major growing industry. The US, Europe and Asia handle data differently which is a major sticking point hurting international commerce.
The North Korea situation proves problematic for Trump. It was touted as such a great deal and agreement to denuclearize the Korean Peninsula but the efforts unravel. Trump will explore increasing tariffs. Kim Jong-un and Trump have a falling-out.
North Korea Leader Kim Jong-un and South Korea President Moon, however, strengthen their relationship which worries the West.
North Korean Leader Kim Jong-un conducts an underground test which either angers Trump, or if Trump is not in office, the test is conducted to test newly-installed Pence.
REIT’s that build gated communities are an excellent long term investment. The wealthy will be worried about their security.
Ditto security equipment and services companies that provide protection for the privileged elite class. Violence against the wealthy class will increase dramatically once the recession begins.
Verbal and even physical attacks will increase on politicians and corporate executives.These are the seeds of the coming social unrest and class war in the United States.(y)
Apathy increases across America due to the new Gilded Age. The divide between rich and poor is the widest in 50 years and rumblings occur about a potential class war in the offing. One decade of frustration by common Americans will explode into a hatred for the wealthy class that rigged the financial system in their own favor.
Biometrics will be called into question this year. Fingerprints can be hacked which turns the whole industry on its head. Ditto face recognition systems. AAPL is hurt later in the year since it placed a lot of trust in these biometric systems.
The IPO activity will be strong early in 2019 but then fade and drop off a cliff as the year progresses. There are 230 unicorns (companies with a $1 billion or more valuation) and 20 deca-unicorns (over $10 billion) that are capable of going public.
The Uber and Lyft IPO’s will begin publicly trading and both will disappoint.
As the recession nears, many different industries will be impacted. Budgets will be slashed. The meal kit and delivery services such as Hello Fresh and Blue Apron, APRN, are going to be crushed. Once folks lose jobs, they do not order this stuff.
Same dealio with monthly service providers such as VZ, T, CMCSA, HULU, NFLX, ROKU, and many others. As people are laid off, they will decrease their subscription services at these companies and others.
Budgets in wearables technology, autonomous vehicles and AI will be cut as the recession is upon us. Folks in these industries will be losing their jobs when they thought they were in a solid and hot sector. The technological move forward in electric and driverless vehicles, wearable computers and AI will slow.
The point-of-sale payment platforms will struggle in 2019. SQ and PYPL will perform poorly. The young folks are the main users of this technology and once they lose their jobs, they will not be buying their café latte at SBUX anymore or using these payment services in general.
Corporate debt becomes a major concern and liability for the stock market in 2019. It is out of control over $9 trillion and growing.
Companies with strong cash flows that can make debt payments will survive better in the months and couple-years ahead than marginal companies in debt. Assessing companies on these fundamentals are key.
Travel companies will suffer in 2019 as folks avoid Europe due to all the unrest and turmoil. As nations seize each other citizens playing political games, people shy away from traveling to foreign countries especially China, Russia, and other countries unfriendly to the West such as several nations in the Middle East. (y)
TRIP, CTRP and EXPE will show lackluster performance.
Ditto hotels and other travel and leisure stocks such as MAR, H, etc…
Ditto airlines. As travel decreases so does airline passenger traffic. XAL, DAL, UAL, AAL, LUV and others will show lackluster performance. SAVE, ALK and other smaller carriers may perform better. The airlines may actually rally early in the year but then sag and roll over to the soggy side as the year plays out.
The electric car industry is punched in the face this year. People’s expectations are way overinflated for electric vehicles. Tesla sales will fall like a rock and the electric car sales in general will sag. The subsidies are disappearing. Competition increases. Many people that wanted electric cars already own them. They may begin moaning about battery replacements. One-half of the electric car owners live in California.
The autonomous car industry is punched in the face this year. The practicality of driverless cars for public consumption is a long way away perhaps one or two decades. Autonomous vehicles are great in open-pit mining applications or driverless trucks on the interstates but that is about it so far. Analysts do not realize that it was easy to take the technology the first 80% but the last 20% will be difficult. The billions spent on research and testing will have to be tripled and quadrupled to take the autonomous car revolution to fruition. The coming recession will slash budgets. Driverless cars for the public’s robust daily use are likely way in the future.
Fast-food joints and restaurants will continue having trouble finding workers willing to toil for low wages. Instead of teenagers working at MCD, DNKN, WEN, YUM and QSR, senior citizens will take their place. Can I have some Geritol with those fries? All these tickers can be shorted going forward. YUM is right at its peak now so if you want a juicy short take a look at that one to begin the year.
The marijuana and hemp industries will grow rapidly in the United States and the calls will increase towards full legalization for recreational and medical use. SMG, TLRY, CRON, MJ, IIPR, GWPH, GWPRF, CARA, CBIS, INSY, ZYNE, APHA, ACB and other pot stock plays will likely bump sideways but may be a good place to park some dough where these stocks will not fall as much as the broad market. Pot use is growing rapidly, which is a plus for society since many young people are steering away from dangerous alcohol choosing less harmful marijuana instead. The need for SMG, Scotts, potting soil and fertilizer products will likely jump strongly higher in the months and years forward.(mixed bag) (y)
A flat to weaker US dollar is expected so a flat to stronger euro would occur.(n)
A flat to weaker US dollar is expected so gold will be higher.
Bitcoin, NYXBT, will be higher in 2019. Rumors of bitcoin’s demise are greatly exaggerated. Bitcoin will likely bottom in Q1 and then rally sideways to sideways higher for the remainder of the year. GBTC, RIOT, LFIN, BLOK, BTSC, KODK and OSTK are potential plays in the cryptocurrency arena but your money may disappear fast in this shark tank. As 2019 begins, KODK, BLOK and RIOT are attractive, albeit highly speculative, longs. GBTC will be a long buy probably not until February or March.
The banks and financials are headed for a tough year ahead. The financial industry will be disrupted by more investors using bitcoin and other cryptocurrencies to avoid using the banks as middle-men in transactions.
Copper will travel sideways despite the PBOC likely providing stimulus to begin the year.
FCX will print a multi-week rally to begin the year but then roll over lower again and chop sideways in 2019. Keystone holds a long position in FCX and will likely hold it to begin the year for a few-week potential rally but it should roll back over for lower lows. The FCX long will likely have to be exited in January-February.(y)
Platinum, PLAT, is ready to rock and roll in 2019 and should move sideways to sideways higher all year long. Investors are concerned about Peak Auto and weaker demand for catalytic converters, however, platinum has been massacred from 2000 to 822. This is a buy with possie d on the monthly chart. Go for it. PPLT is the platinum ETF. It can be scaled-into during Q1 and an investor should be able to let the long trade on auto pilot for 2019.
Palladium, PALL, will continue feeling love in early 2019 and may seek 1280. PALL, the palladium ETF should pop to 140. Palladium may pull back initially in 2019 but should run to the targets listed in Feb-Mar. Palladium should top out for 2019 in the Mar-May time period and then likely set up as an attractive short.
Buy iron ore.
Buy GE, it is beaten to a pulp and its monthly chart shows beautiful possie d. If someone is looking for a place to park some money, General Electric is a good place to stash some dough in 2019.
Buy IBM not particularly for big gains bur rather a place to park money. Big Blue should not drop as much as the broad stock market this year and the charts have a sideways feel. IBM may be a quiet play that likely moves sideways with a slight upward bias by year-end. IBM has been working on hologram technology for many years and this is an ace in the hole for the stock that is never discussed. Holograms will likely be the next major technology breakthrough in the years ahead.
Buy ALB this year but not right away. ALB will probably bottom in the Feb-Mar time frame and that should be a good long holding for the year after that.
Buy SLCA, Silica Holdings has crashed over the last two years. Monthly chart is setting up with possie d so SLCA should bottom in Q1. Perhaps begin entering a long in January and then add to it in February, then March, then let it ride the rest of the year.
Buy CHK; Chesapeake should travel sideways to sideways higher all year long.
Buy DBA which is a conviction buy from Keystone for this year.
Buy MGPHF and other graphene plays. Keystone will likely pick a couple more of these small graphite and graphene plays going forward. Mason Graphite crashed last year after it rocketed to a euphoric high; a big punch in the face for Keystone. The graphene space, however, remains very interesting and attractive and a place for long-term speculation. Keystone currently holds ongoing long positions in MGPHF and NSRCF. Other companies worth investigating in the space include SYAAF, CBT, NGPHF GRPEF, REPYY, GPHBF, GPHOF, LMRMF, NMKEF and TLGRF but all are penny stocks, except Cabot, and extremely dangerous where you will likely lose your money if you play them. They are lottery tickets.
Buy BECN, Beacon Roofing, going forward since the many McMansions in America will need new roofs and the cost to replace these fancy roofs will cost as much as a small house.(y)
Buy NTNX for a play on virtualization.
Buy TTWO for a play on the growing spectator sport of e-sports. Idiot young people will pay to sit and watch other dolts play video games. This fad has been known for a couple years so TTWO has catapulted from 44 to 140 now down to 99 to begin the new year. Investors will be looking for a tradeable bottom. TTWO should hold up better in a broad market turn-down so it may be a place to hide money. TTWO will likely place a bottom in January, so it would be a long buy Jan-Feb, then a multi-week rally should occur, but do not marry it. The monthly chart is weak so TTWO will top-out, and roll over and take another strong leg lower this year.
Buy gene-editing stocks. DNA analysis is all the rage in the United States ever since the blue dress in President Clinton’s Oval Office. The gene therapeutic stocks will likely feel love going forward. The DNA and gene technology discussions will only increase as the science bumps-up against human decency and morality. CRSP, EDIT, NTLA and SGMO are plays in the space. It is likely prudent for long-term investors to tuck one of these four into their portfolio going forward.
Buy sensor companies. Some possibilities are SNE, APH, CTS, DYSL, ELSE, LFUS, ST, TEL, TDY and VPG. The monthly charts, however, are not looking good. The sensor theme has been out of the bag for a couple years. Look for a potential tradeable bottom in these plays in the March-June time frame.
Buy drone-makers. Drones will rule the skies. AVAV, GPRO, AMBA may be potential plays. The defense stocks such as RTN will weaponize the drones. GPRO and AMBA are attractive long buys to begin the new year. There is likely lots of sideways in this space ahead but AVAV should not drop as far as the broad stock market in a downturn.(y)
KMB, Kimberly Clark, may be a place to park a little money since more and more adults will be needing adult diapers going forward due to the aging demographics. KMB may retreat like other stocks this year but it may hold up better if the market flushes lower.
The movie theater, media and entertainment stocks such as AMC, FUN, CNK, ISCA, FOXA, DIS, CMCSA, MSGN, SEAS and MGM may move sideways this year and weather any potential market storm. Saudi Arabia is westernizing its culture building movie theaters and so forth a trend which may increase in the Middle East and elsewhere. The Khashoggi murder throws a wrench into the works but it will blow over. Greedy humans value money more than life.
VNM, Vietnam, is an attractive ETF going forward. Companies will continue using Vietnamese labor since it is some of the cheapest in the Pacific theatre. Companies that want to cut expenses and increase earnings are anxious to hire workers that will toil all day for a hotdog and a Coke.
EEM, the Emerging Markets ETF, will likely chops sideways all year long through 37-42. EEM may be a nice trading stock all year long buying at 37-38 and selling at 41-42, repeat.
Keystone likes Indonesia. EIDO may feel love in 2019.
Mexico, EWW, is likely a safe long play this year.
Brazil, EWZ, land of beautiful women, is an attractive play this year as the economically-troubled and corrupt nation vows to push the economy towards free market principals and rules of law.
MCD, PG, MRK and KO are potential short trades this year. Ditch these stocks on the long side and play them short.
XLRE, SBUX and ULTA are potential short trades this year. Short any pops on these puppies. (y)
The technology sector falters this year. Everybody and his brother suggest buying technology as a safe play going forward. XLK, the chips such as SOX, SMH and XSD, and the FAANG’s, FB, AAPL, AMZN, NFLX and GOOGL will all underperform this year and finish negative. AVGO and NVDA may sneak out a small gain by the end of the year.
TSLA will crash -20% to -50% in 2019. It will be ugly. In 2020, Tesla may be a $50 to $100 stock. The Tesla shorts will finally dance their jig of joy in 2019.
Utilities, UTIL and XLU, should drop and trend lower to begin the year which will be a bad omen for the broad stock market when it tops out in the Feb-May time frame.
Short VRTX going forward.
Short DG during January and February. Dollar General should be far lower in price by mid-year. The monthly chart is negatively diverging. Keystone will likely play this short.
Short VMW but not until it flames-out in the months ahead. The monthly chart is setting up with negative divergence so an epic top for VMware is likely to print say, in the Feb-May time period. Short VMW then and it will likely fall hard.
Short AMT. Mighty American Tower has grown to the sky for over a decade. Well, it is about to become the Tower of Babel and crumble. The monthly chart is set up with neggie. Do not walk to the exits, run! Sell, Mortimer, sell! AMT is about to have a religious experience early in 2019. If you enjoyed that multi-year joyous rally, lock in the profits and exit stage right or flip the trade short. CCI can also be shorted. (no, everything got pumped higher on central banker largess in 2019) (n)
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Further musings,
The Keystone Speculator also Plays a Futurist and Think Tank Consultant on the Internet
While sitting on a lawn chair in late 2018 watching the last of the Fall leaves tumble by, Keystone ponders the months and years ahead.
A class war will likely begin in the United States once the recession hits. The middle class, poor and disadvantaged have been beaten-up for a decade as they watch the central bankers reward the wealthy class with more riches. This new Gilded Age has created a new America, the land of the have’s and have not’s. The divide between rich and poor is the widest in five decades. All the ongoing social unrest and ethnic tensions, the demonstrations against police, and so forth, will morph into a class war rich against poor.
If wealthy, it would be wise to play-down your riches. Once the recession hits and the class war begins, anyone wealthy will be a target. The Mercedes will be keyed and tires slashed in the grocery store parking lot. Bricks will be thrown through McMansion windows; other mansions will be set ablaze. Large demonstrations with tens of thousands of Americans will occur in the major cities. Shop windows will be broken and looting will be rampant. Much of America will feel entitled to seek retribution from the rich since they are the greedy bast*rds that used the rigged crony capitalism system to gain their wealth (however, the typical shop owner is not very wealthy).
The need for gated communities will rise greatly. The wealthy will prefer to live in a setting where a security guard is on duty overnight. This will be the new America in a few years. Others in the privileged class will hire bodyguards for protection.
On the nightly news, stories about politicians, corporate executives and other wealthy individuals getting attacked in public will become common. Protestors will demonstrate in front of corporate executive’s McMansions demanding resignations or claw-backs on wages to compensate the loss in stock prices and jobs.
A cash society will flourish again just when everyone thought things were going digital. Of course the US Congress will try to enact legislation to go digital with all transactions because that way they will receive tax money. As the global recession bites, folks will choose instead to use cash to pay for services and products under the table (to avoid paying taxes). This behavior will serious hurt the coffers at local, state and Federal governments placing strains on public services. The local tax bases will erode.
A couple years of deflation will likely occur with a further collapse in the stock market in 2019-2020, and recession, which then will give way to rampant inflation and then hyperinflation in the 2020’s a whole new set of problems.
In a few short years, when the hyperinflation kicks in, the US dollar will crash and a whole new global monetary system will likely be implemented.
Holograms will be the next major technology breakthrough. A little box will shoot out a virtual keyboard and a floating display screen and bloop, you can make it disappear in an instant and be on your way again. No more squinting at a tiny screen or typing with finger tips on a smartphone.
Drones will rule the Earth’s skies in the decades forward. The only way to escape the surveillance is to live underground. Drone warfare will be all the rage.
@ 2019. 2018. 2017. 2016. 2015. 2014. 2013. 2012. 2011.
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