Market Observations for the Coming Week: The SPX peaked on the 12/2 New Moon and gave us a 5-wave decline on the hourly - should at least get a corrective bounce followed by another impulse leg down. The NFP jobs number on 12/6 are key, and if strong, could give us another leg down in the SPX. Gold reversed down hard on the New Moon and looks to test $1182 in the 12/6-12/10 turn window. The forecast for an inflationary cycle that begins in late 2013 - early 2014 now looks like early 2014 at the earliest - DEFLATIONARY FORCES still seem to have the upper hand in several commodities.
12/4/13 (Commentary for Wednesday) The SPX gave us an "irregular B-Wave" correction today after completing 5-waves down on the hourly chart Tuesday - we should get at least another leg down into the 12/6-12/9 turn window. The lack of strong "put buying" on today's decline argues for a deeper correction than many expect. The SPX hit an all-time high on the 12/2 New Moon and then declined impulsively - we may be seeing the start of a 5-8% correction especially in lieu of the "extreme bullish sentiment". The NFP jobs number on 12/6 will be key - a strong number combined with the strong ISM number Monday could rekindle taper talk for early 2014. The PMs bounced after overnight selling drove gold down to $1210 - may be just a short-covering rally. The rally spike found resistance at $1251. We'll need to see strong leadership by the mining shares on Thursday to take this gold rally seriously. We're looking for a move down to $1182 in gold by 12/6-12/9 but today's early low may have been a successful test of the summer low. Bonds fell hard after the ADP jobs report - looking for another leg down to finish an EW 5-waves down on the hourly chart. The USD remains within the "congestion pattern" on the hourly chart - still favoring this pattern as a "bull flag" with a target of .83.
- Big Picture on Stocks (UPDATED) - The SPX peaked on the 12/2 New Moon and then declined in 5-waves on the hourly - we may have started another 5-8% correction.
- Big Picture on PMs (UPDATED) – The technicals and fundamentals for gold and silver look very weak at this juncture. We're looking for a move down that could test $1182 (the summer lows) this week. The December 6-9 turn window could give us an important trading low.
- Stocks – The SPX completed an EW 5-waves down on the hourly and then gave us "an irregular B-Wave" bounce today - looking for another leg down into the 12/6-12/9 turn window - a 5-8% correction may have started. Our option sentiment indicators show bearish complacency.
- Gold – Gold reversed up hard after a test of $1200 but failed to breach resistance at $1251 - the GDX needs to follow through tomorrow to the upside - a failed rally will see a test of $1182 by 12/9.
- Silver – Silver stayed positive as gold tested $1210 this morning - bullish divergence - need to see silver lead gold higher.
- Bonds - Bonds got hit after the ADP payroll numbers came out today - sell 3-wave bounces.
- Crude Oil – Crude oil has only given us a 3-wave correction on the daily before - if the recent rally takes out $97 that would be bullish.
- Dollar Index – The USD remains locked in its congestion pattern - if it's a bull flag, the target is .83.
TURNING POINT DAY:
We have a turn window for the PMs on the 12/3 New Moon and the 12/6 NFP jobs report.
Depression Beater Portfolio: (This portfolio this week is just a sample of my own portfolio - no recommendation to others is implied or intended)
WEEKLY COMMENTS: Update for 11/25/13: The junior PM sector has been a WASTELAND in 2013 and the metal of PM junior investors has been sorely tested in the past year ….. getting financed is the name of the game and those with meager share prices may be forced to sell world-class assets at a deep discount to bigger companies - this horrendous market does have some bright spots as our uranium stocks are breaking out.
- NEW PICK – Aroway Energy (ARW.V, C$0.180 -.01) – This western Canadian junior is part of a very sweet JV deal with a private partner in the Peace River basin – it's production share should climb from 669 BOE/day (75% black oil) to over 1200 BOE/day later in 2012 – management has selected a good slate of properties for drilling and it is bearing fruit. Buy on dips. Use a 20% stop from purchase price.
- Evolving Gold (EVG.TO, C$0.03 +.00) A world-class deposit in Wyoming (Rattlesnake) and a potentially huge find on the Carlin Trend in NV argue that this stock will be a big winner. Goldcorp took a 15% interest and that says it all.
- Uranium Energy (UEC, $1.80 +.02) - The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Energy Fuels (EFR.TO, C$5.87 -.28) – Finished acquisition of STM.TO in early September - building up a position as a strong US producer of uranium in a tight market.
- Prophecy Coal (PRPCF, $0.068 -.007) – John Lee is determined to drive this emerging coal producer in Mongolia into an international mining powerhouse. Started production last fall with a favorable off-take agreement. Very aggressive business plan in place to make it a billion dollar company. Following the path that Robert Friedland took with South Gobi. This stock has obvious 10-20 bagger potential.
- Gryphon Gold (GYPH, $.0016 +.0006) - Got plan from management to begin phased production by early 2011 - financing details have yet to be announced. Has >1M oz AU proven, mining permits and a highly prospective land package. Needs a cash infusion and maybe a partner. Good leverage to gold.
JUNIOR MINING FAVORITES:
(These companies are speculative - best to keep them to 10% of a portfolio with 50% stops based on purchase price. Buy a basket to diversify risk)
RULES FOR JUNIOR MINING INVESTING:
1) Keep to 10% of a portfolio.
2) Due your own Due Diligence.
3) Maintain a price stop of 30% of purchase price or whatever your Technical Analysis suggests is prudent.