Market Observations for the Coming Week: The SPX bounced in a B-Wave into the New Moon Timing Window on Friday - we're looking for a C-Wave down to start on Monday.
03/26/15 (Commentary for Thursday) The SPX filled the gap left from Wednesday morning but still closed below the 50-day MA. The market has a bearish feel to us here and today's rally looked corrective - low volume and negative breath. Both the ES and NQ looked like they traced out 4th wave corrective bounces into Thursday evening and could give us a 5th wave down on Friday. The New Moon/solar eclipse on Friday brought in $33B of new cash - one of the highest readings in years. This could be "exhaustion buying" that could leave a significant top in its wake. The market is reacting to a number of economic indicators that are portraying a slowing US economy. The ES and NQ are bouncing correctively overnight and this opens the possibility of a gap down opening early Friday. We have a C-Wave target around SPX 2000, but with broad weakness in the semiconductors and biotech, there could be a more significant retracement. The NDX did not take out Friday's high on Monday and this gave us a case of inter-market bearish divergence. Like last Sept/Oct, the SPX is setting up for another quick 8-10% correction as we head into late March but we expect that higher highs are due in April. A declining USD is giving commodities a tradable bounce - oil, oil stocks and gold were higher today. Gold tested our target of $1220 early Thursday and pulled back - we still would like to buy a dip below $1200. Crude oil rallied today on the Saudi military action against Yemen and oil stocks rallied hard in defiance of the overall market. US shale oil production appears to be leveling off which may give fundamental support as we enter spring. The USD bounced today as the Euro pulled back.
Big Picture on Stocks (UPDATED) - The NDX gave us a high on the New Moon/solar eclipse during a record money flow day that hints of a :buying exhaustion"- this may be an important top. We're looking for at least an 8-10% correction.
- Big Picture on PMs (UPDATED) – Gold tested $1220 overnight before pulling back - we may have established an important low on the retest of $1130.
- Stocks – The SPX filled the gap from Wednesday morning but still closed below the 50-day MA - a weak bounce in the ES overnight suggests a possible gap down open on Friday.
- Gold - We tested our $1220 target and are pulling back - looking to buy dips.
- Silver – Silver stocks are underperforming silver - negative for the PM complex.
- Bonds - Bonds may have pulled back in an EW a-b-c correction today on the hourly. The 34-year Fibonacci step out from Feb 1981 does argues for a big reversal down at some point in 2015.
- Crude Oil – Crude oil rallied hard on the Saudi military action against Yemen - oil stocks pulled back after a spike open
- Dollar Index – The USD bounced today as the Euro pulled back hard.
TURNING POINT DAY:
Our turn window for this week is 3/23-3/24 which includes the Tuesday after expiration - we're looking for a possible low.
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 2/14/14: On the CDNX, the 50-day MA has crossed up through the 200-day MA giving us a buy signal on the junior resource sector. At this stage we would only focus on those stocks that were washed out in 2013 and have adequate financing to carry them through 2014 drilling activity.
- Aroway Energy (ARW.V, C$0.045 -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$0.0220 +.0000) - 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, $1.47 -.03) - 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$5.74 -.17) – 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, $0.0509 +.0000) – 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, $.030 -.000) - 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 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.