It was a tough year around the globe. The indexes were hit with a downdraft. Notice the NASDAQ 100 finished marginally in the red. Two bright spots were Brazil and India; the little bar in India at 5.91% looks small, but North American markets would have been happy with a positive return like that amidst the global selling.
Commodities had a tough year. Gold shone in the 4th quarter, but even it couldn't quite swing positive. The rare earth metals sold off 50%. What's interesting about the rare earth metals is all of the bullish perspectives starting 2018. Following price action would have been a lot better than following predictions. The marijuana ETF dropped 20% on the year despite Canada's legalization of it. The silver miners had a rough year even though silver was down 10%. The miners dropped 20%. Gasoline finished lower by 27% and ended at two-year lows. West Texas Crude oil finished down 25% at $45, which has been an important level for 10 years.
The US sectors were banged up by the 4th quarter selling. The banks pulled back hard, which will be a story for the 2019 calendar. Continued pressure from downward sloping European bank charts like DB and CRZBY are going to add to the storyline. While utilities and healthcare look better, the XLU had some big downdraft weeks in December. Once again, these two defensive sectors tell the tale of market positioning heading into 2019. When oil falls, it behaves more like an economic indicator - accordingly, the exploration stocks fell hard. $45 for crude oil is a very marginal production level.
The gold and silver charts finished the year with the most promising chart shapes. Gold miners shown on the GDX chart closed above the long down-sloping trend line. Promising.
Additionally, EEM made a higher low in December compared to the October low. That should be a chart to watch.
Lastly, the $USD has been the hardest chart to figure out for November and December. It finished the year just below the nine-month trend line.
For more reading, this article got a lot of attention this weekend. I will be doing a weekend wrap every weekend rather than a Commodities Countdown article. If you would like an email in your inbox when it is ready, subscribe here. No selling spam comes with this link! Just chart articles for your perusal. Be sure to subscribe to my StockCharts blog here: The Canadian Technician.
On The Final Bar, I mentioned a lot of negative sentiment indicators. If you are not familiar with sentiment indicators, you may find this video helpful. There are some other charts to take note of as well.
The Canadian Market Review goes through the significant breakdowns on the charts and what to look for.
If you would like to learn more about the basics of charting, check out Stock Charts for Dummies. The first section of the book walks through all the chart settings to get the charts you want, the second section explores why you might use charts for investing and the third section is about putting it all together.
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Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts for Dummies
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