The Weekend JDV Market Timer – June 26, 2011

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)

   

6/26/11 (Commentary for Sunday) The SPX and other key markets are declining into the 55-day Fibonacci step out from the 5/2 highs – looking for a spike low and reversal up on Monday – look for reversals in tech stocks and financials to turn the tide. Gold broke $1520 in a big way on Friday – key support is $1476 on Monday – looking for a big reversal up led by gold equities. Crude plunged after an EW 3-wave bounce – the news of the SPR oil release may have set a short-term low – looking for a bounce into July. The Euro should test recent lows on Monday but we should get another relief rally. Bonds are struggling to rally here and we could see an important top on Monday if we get a spike low in stocks. We believe that the Martin Armstrong Pi-Cycle date on 6/13-6/14 correlated to a turn in world capital flows and we suspect that this will manifest as a flight out of the Euro and into the USD. We feel that the period between 6/1 (New Moon/partial solar eclipse) and the 6/15 lunar eclipse (including the 6/13 PI-cycle turn date) marked important turns in several markets – the grains, oil, Dollar Index and stock indices all reversed hard in this time window. The Dollar Index may be on its way to a summer target of .90.

 

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 – the HUI showed a lot of relative strength on Friday and should lead in a rebound on Monday.

      

• Stocks – Looking for a spike low in stocks and a reversal up on 6/27 – an opening gap down should get filled. Gold stocks, tech stocks and financials should lead the reversal up. Looking to sell puts and bear funds early.
• Gold – Gold broke through $1520 support on Friday - $1476 is key support on Monday – relative strength by the HUI argue for a strong bounce into July.
• Silver – Looking for silver stocks to reverse up early on Monday.
• Bonds – We expect bonds to finish their topping process early Monday and then decline if we do get a spike reversal up in stocks Monday.
• Crude oil – Crude oil plunged today after the 3-wave bounced that finished yesterday – the release of the SPR reserves may have put a short-term low in this market – looking for bounce into July.
• 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.

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.  

• Evolving Gold (EVG.TO, C$0.61 -.02) - 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 Hiils, and the refocusing of Quinton on the exploration effort are all very positive signs.
• Uranium Energy (UEC, $3.09 -.08) – The Japanese nuclear plant cooling issues caused panic selling today in all things uranium – we are holding for higher prices. Uranium stocks are playing catch up to the rest of the commodity complex. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
• Strathmore Mining (STM.TO, C$.52 +.01) – 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$0.58 -.01) - 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, $.1580 +.0060) - 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.