Market Observations for the Coming Week: The first week of May has a cluster of turning point days that could impact the SPX, the USD, gold and crude oil. The intermediate trends in several market could be changed this week.
5/04/16 (Commentary for Wednesday) The SPX may have finished an EW 5-waves down into Wednesday which was a cycle low - we should now see a bounce into the New Moon on Friday. We closed Wednesday with a bullish bias that may be a B-Wave bounce to test the highs at 2110. The intense sol-lunar cycles for this 5/2-5/3 argued for lows of the week on Wednesday and we may have seen them at SPX 2045 today. We bought the lows today with the idea of bouncing into Friday's New Moon. Gold may have finished 5-waves down into today's low at $1274 - we may now bounce into Friday. How gold trades into the 55-day Fibonacci step out on Friday will be telling. Bonds continued to bounce today but it could be corrective - our bias is to short this market on rallies. The Euro continued to sell off today as the USD continues its rally from its intermediate cycle low. The gold stocks continued their decline from Monday, but we may be ready for a bounce. We have chosen to focus on the precious metals, biotech and the FANG stocks for our long plays. We consider large-cap bio-tech companies (AMGN, BIIB, CELG and GILD) as excellent long-term buys on dips here but we need more consolidation in the near term before another rally attempt. The big picture remains clear to us: the SPX has rallied in 5-waves on the daily chart from 2/11 and any further pullback this week should be bought for a test of the all-time highs by mid-May. With the 7-yr Shemittah cycle and the 3-yr commodity cycle bottoming on 2/11 our bias has shifted to bullish.
Big Picture on Stocks (UPDATED) - The SPX has rallied in an EW 5-waves up from the 2/11 low and has found horizontal resistance at SPX 2100 - we broke symmetry on the decline of 58.7 SPX points last week - that means that a bounce into 5/6 may only be a B-Wave test of SPX 2110.
Big Picture on PMs (UPDATED) – Gold tested $1308 on Monday before falling in a key reversal day - how we handle the Fibonacci 55-day step out on 5/6 will be key - a B-Wave test of $1308 on Friday will have us taking profits.
- Stocks - The SPX may have finished an EW 5-wave down move today - we may now get a B-Wave bounce into Friday's New Moon.
- Gold - Gold may have finished 5-waves down from Monday's high at $1306 - we may now get a B-Wave bounce into Friday.
- Silver – Silver gave us 5-waves down from Monday - this could be the start of a correction. We're looking for a bounce into Friday. We're expecting a big run in silver into August as sugar and soybeans begin bull market runs.
- Bonds - Bonds rallied today as stocks continued to swoon - we're looking to short.
- Dollar Index – The USD may have made a cycle low Tuesday at 91.88 as the Euro tested 1.16 - we're looking for a multi-week rally.
TURNING POINT DAY
The 5/2-5/3 turn date and the 5/6-5/9 turn window are key for this week.
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$0.0524 +.0024) – 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 O-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$0.0358 -.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 t-hat the company needs a financing and could be forced to sell a world-class asset for pennies on the dollar.
- Uranium Energy (UEC, $.7610+ -.0390) - 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$2.75 -0.04) – 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, $0.0105 -.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, $.0027 +.0012) - UPDATE: De-listed stock. Good asset but needs a cash infusion and maybe a partner. Good leverage to gold.