Depression Beater Portfolio: - see below for new updates on Junior Miner Favorites - (This portfolio is just a sample of my own portfolio - no recommendation to others is implied or intended)
6/30/11 (Commentary for Thursday) The SPX is finishing an EW 5-wave pattern up from Monday into the New Moon Timing Window – we're completing a corrective EW a-b-c bounce. The Option Premium Ratio has given us three consecutive declines from above 1.00 – A SELL SIGNAL. A 5-wave decline below 1300 will get us short here. The bonds have been declining impulsively – a major top was made on Monday – we should get a bounce if the SPX rolls over tomorrow, if the bounce is corrective it should be shorted. Gold is holding above $1496 but looks weak – a 5-wave decline from early Thursday has put us on the defensive. Our play book coming into this week was to buy the big reversal turn date on 6/27 and hold until the New Moon on Friday – this has worked out well. Crude oil is also an EW a-b-c bounce into the New Moon into previous 4th wave resistance – looking for setup to sell. The markets are at an important junction here. The Euro stayed strong and bounced as the Dollar Index continued to base between .73 and .75. Bonds continue to sub-divide down in an aggressive way – the end of QE2 should in theory decrease demand for bonds allowing long rates to rise – we are entering a critical period for bonds. The Dollar Index may continue to base into mid-July before launching a rally to .90 into late summer – previous instances of QE1 and QE2 curtailed Dollar Index rallies – the end of QE2 may give the buck some tail wind.
Big Picture on Stocks (Updated) – The SPX is topping the rally from March 2009. There are four signs of a major top in the making for the stock market: (1) the peaking of the OIH and XOI indices in early April, (2) the out performance of health care and other defensive sectors in April, (3) the bottom of the Dollar Index on April 28, and (4) the intermediate-term top in silver on 4/25 and gold on 5/2. The 55-day Fibonacci step out day is on 6/27 – looking for a big reversal up on Monday.
Big Picture on PMs (Updated) – Important intermediate tops were made in gold and silver – silver ($49.20) on 4/25 and gold ($1577) on 5/2. Gold made an important B-Wave top last week ($1559) and we are now getting a fast and furious C-wave down – the $1476 level is key support on Monday – we are looking for a bounce into July seasonal highs around 7/20 before descending into 36-wk cycle lows in August . New buyers of gold and silver should wait until the next 12-wk cycle low around late July/early August before making initial purchases – silver could retrace to the high $20s. Gold stocks may have made a major low on 6/16 – but the HUI failed to rally in the 6/27 reversal window and makes us a little tentative above the market rally.
- Stocks – We're looking for a top and reversal down in the SPX on the New Moon tomorrow – the Option Premium Ratio has given us three consecutive declining days from above 1.00.
- Gold – Gold is holding above $1496 but is looking weak. Gold declined in an EW 5-waves down from early Thursday – looking for more downside.
- Silver – Silver also declined in 5 waves – looking for more decline.
- Bonds – Bonds may have formed the Right Shoulder of a large H&S pattern on the daily Monday morning – this market appears to be sub-dividing down in an aggressive way. The end of QE2 and "debt-ceiling politics" could conspire to give us quite a break here. Rotation into stocks is also a factor.
- Crude oil – Crude oil is rallying hard into the New Moon – looking for a pull back tomorrow.
- Dollar index – The DX may remain in a sideways range as risk markets bounce into July. Looking for .90 on the Dollar Index by August which will bring some hard selling in stocks and commodities. The Euro is looking toppy here.
TURNING POINT DAY:
The 55-Day Fibonacci step out from the 5/2 high for gold and the SPX falls on 6/26 – we expect an important low around 6/27. An opening gap down should be filled by the end of day – the reversal signatures are strong. The New Moon on July 1 should give us a top. The New Moons in May and June gave us important tops – rallying through the July 1 New Moon would imply a correction of a higher degree.
- Evolving Gold (EVG.TO, C$0.66 -.00) - Lackluster management and marketing have kept this gem back during a period of speculative enthusiasm for PM junior miners. But 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. It is remarkable that this company with two rather obvious world-class deposits is failing to get any traction – this company is at the verge of a major rating in price – recent drilling results from the Carlin trend, the JV with AEM at Rattlesnake Hills, and the refocusing of Quinton on the exploration effort are all very positive signs.
- Uranium Energy (UEC, $3.06 -.01) – The Japanese nuclear plant cooling issues caused panic selling today in all things uranium – we are holding for higher prices. Uranium stocks are playing catch up to the rest of the commodity complex. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.51 +.02) – Very undervalued uranium stock with huge reserves (+100 M lbs of relatively high grade), lots of cash and production prospects by 2013.
- Prophecy Resource (PCY.V, C$0.60 +.00) - Normal profit taking going on here after a large run up last year. 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, $.1500 -.00) - 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.
4) Sell half of position on a double.
5) In this speculative environment with many junior miners coming to life, put a TIME stop on your junior investment. If your position is DEAD MONEY, consider rotating it to a stock that has more favorable technicals - juniors should have a PERFECT STORM behind their back between now and April 2011 - it's a time to MAKE HAY.
Comments