Market Observations for the Coming Week: Gold made a trading low at $1072 on 7/24 and we are looking for an EW zig-zag bounce to test the $1130 horizontal support line which is now resistance - a failure to take out $1106 soon would make this market look very weak. The SPX bottomed in a key geo-cosmic turn window on 7/27 leaving just a 3-wave decline from 7/20 on the hourly chart - we're looking for a reversal up to test the highs into August.
07/30/15 (Commentary for Thursday) The SPX finished an EW 5-wave rally from early Monday on the hourly chart - we're looking for a brief correction into the Full Moon tomorrow before moving higher. We are looking to buy weakness in the SPX Friday or Monday for a test of 2134 by the August 14 New Moon. Gold looked weak today on Comex option expiration and we are testing $1080 again - a close below $1080 will argue for another leg down despite the apparent capitulation in the gold Comex COT report last week. Bonds bounced again today as a surge in the USD brought foreign buying of US Treasuries, but we are still looking for a reversal soon. brought The global bond markets have been correcting in unison since April and we feel that TLT will be much lower by October and that could create great stress in the world financial system. We still contend that the stock market needs a 10% correction to recharge the batteries for a run higher into 2016 and we should get that in the Aug - Oct period. With the global blow off in bond prices in March, the low in crude oil in January and the parabolic blow off in the USD in March, we feel that the subsequent sell off in bonds into yearend could be more chaotic than most analysts realize. One of the key fundamental triggers for this sell off is the "lack of liquidity" that has been reported for high-yield bond sellers which we see as a "canary in the coal mine" - this lack of liquidity breeds volatility which could accelerate when the Fed raises rates sometime later in 2015 against the wishes of the IMF and other world central bankers. The Euro looked today weak as the USD rallied on the GDP revision - this weakens the bullish case for gold. Oil continued to rally into the Friday Full Moon.
Big Picture on Stocks (UPDATED) - The SPX and NDX bottomed in our 7/27-7/28 turn window leaving just a 3-wave pullback on the hourly charts - we're looking for a rally to test highs by the 8/14 New Moon. We are expecting a big correction from August to October which could make a 4-yr cycle low and 7-year cycle low.
- Big Picture on PMs (UPDATED) – Gold gave us a trading low at $1072 in our reversal window on 7/24 - the Comex COT report argues for at least an EW a-b-c zig-zag bounce to $1130 but the technicals argue for a retest of $180 into the Full Moon.
- Stocks – The SPX rallied in 5-waves into Thursday on the hourly chart - we're looking to buy a pullback into Friday or Monday.
- Gold - Gold is being pulled down into the Full Moon on 7/31 and looks to retest $1080 - a weekly close below $1080 would be very bearish.
- Silver – Silver is going sideways into the Full Moon - looking for a reversal up.
- Bonds - Bonds bounced again but a reversal down still looks likely.
- Crude Oil – Oil reversed higher in our turn window - looking for a rally into the 7/31 Full Moon.
- Dollar Index – The Euro got hit after the Fed statement and we are questioning its rally potential.
TURNING POINT DAY
Our turn windows for this week are 7/28-7/29.
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 7/05/15: The CDNX remains mired in a deep, historic bear market since the April 2011 which led the turn down in the gold and silver market by a few months. To us, junior mining stocks are just trading affairs unless the 50-day MA crosses up through the 200-day MA. In our best guess, we feel that the CDNX and the gold mining juniors could bottom by October in advance of our target of April 2016 for a final low in gold and silver - typically the gold mining stocks bottom 6-9 months before final lows in gold and silver. We have read that up to 45% of junior gold/silver stocks only have enough cash on hand to continue operations for the next quarter. Many recent equity-based financing are small and done just to keep the lights on. Until the CDNX turns up , it is best just to focus on well-financed juniors with great assets and positive cash flow. Now is the time to follow these stories since we are in the late stages of this brutal bear market.
- Great Lakes Mining (GLKIF, C$0.050 -0.0000) – NEW Recommendation 7/5/15 - This is a unique situation in the high-end graphite market. This company is scheduled to open a factory to upgrade graphite for specialty applications by October. This vertical integration business model adds a new dimension to this company and is worth following.
- Aroway Energy (ARW.V, C$0.010 -0.000) – 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 (EVGD.TO, C$0.0695 +.0325)- UPDATE: This stock has two world-class finds in Wyoming (Rattlesnake) and a potentially huge find on the Carlin Trend in NV. The problem is that the company needs a financing and could be forced to sell a world-class asset for pennies on the dollar.
- Uranium Energy (UEC, $1.35+.01) - UPDATE: Uranium prices are recovering and the fundamentals are getting a perfect storm. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer.
- Energy Fuels (EFR.TO, C$5.05 -.05) – 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, $0.0403 -.0119) – UPDATE: This stock needs to get its Mongolian coal mine into a positive cash-flow situation to support its power plant project and other endeavors without diluting the common shareholder to zero.
- Gryphon Gold (GYPHQ, $.0250 +.0000) - UPDATE: De-listed stock. Good asset but 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 30% stops based on purchase price. Buy a basket to diversify risk)
RULES FOR JUNIOR MINING INVESTING:
1) Keep to 5-10% 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.