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)
9/25/11 (Commentary for Sunday) The SPX is in a capitulation run to the downside – gold, stocks, the Dollar Index and bonds should stage reversals up this week. The timing for gold is the most precise - the 34-day Fibonacci step out from the 8/23 high targets the 9/27 New Moon as potential low timing – stocks, bonds and the DX may reverse on 9/27 as well. The SPX is testing the 8/8 lows on less volume and new 52-wk lows and argues for a strong reversal up by 9/27. Bullish divergence from the SPX and NDX (the NYSE and DJIA have taken out the 8/8 lows) suggests a reversal up soon. A meltdown in copper and other base metals suggests that this market decline could have some legs. Economic data from China including year-over-year electricity consumption, MET coal imports and trade data with Taiwan all suggest a harder landing in China than anticipated. The breakdown in copper below August lows is a bearish signal for the entire commodities board. Our fundamental view is that China is experiencing a "hard landing" which combined with the European debt crisis should give us another leg down in the global bear market. Our markets are being driven by news from Europe and their attempt to patch over the string of sovereign bankruptcies appearing there – the fact that the USA is also in recession only adds to the selling pressure. The Dollar Index is testing .80 overnight – we're looking for a short-term peak by 9/27 – Weekly Reversal Timing is this week. A rally to .90 resistance on the DX weekly chart by the end of October is likely.
Big Picture on Stocks (Updated) – The SPX made a B-Wave test of the 5/2 high that may have ended on 7/8/11. We only saw a 3-wave rally from the 6/16 low into the 7/8 high. Expecting an August/September correction in stocks after the 60-yr cycle peak in commodities topped out in May – stocks have been closely correlated with commodities since the blow off peak in commodities in July 2008 – the slowdown in China may have more teeth than analysts realize. The SPX peaked on 9/21 – looking for intermediate low by 9/27. A fierce bear market rally should ensue into October before the start of another leg down into January.
Big Picture on PMs (Updated) – Gold's summer break out to new highs in USD terms has very bullish ramifications. New buyers of gold and silver should wait until 12-wk cycle lows the week of 9/26before making additional purchases. Gold is targeting a low around 9/27 on the 12-wk cycle low. This low should bottom the PM complex and start a fierce reversal up.
- Stocks – The SPX is in a capitulation run – a low should be achieved by 9/27. The price action in copper and other base metals suggest a commodity washout is underway. Bullish Divergences from the SPX and the NDX as some indices take out their 8/8 lows (DJIA and NYSE) suggest a reversal up soon.
- Gold – Gold is close to an important intermediate low – a Fibonacci 34-day step out from the 8/23 high points to 9/27 as the date for a correction low. The 12-wk cycle low in due this week and Weekly Reversal Timing is also due. Trading below last week's low and reversing up will be a sign to reverse to longs.
- Silver – Silver is looking for an important low by 9/27 – Weekly Reversal Timing and Projected Low Timing is this week.
- Bonds – A rally to take out the August highs is underway - expecting a big move down this fall.
- Crude oil – The breakdown in copper below the August lows is an important signal for commodities – a flush in crude oil below 8/8 lows is expected going into October lows.
- Dollar index – The DX is breaking through .79 – Weekly Reversal Timing is expected this week and a short term top is likely. A rally to .90 is expected going into late October.
TURNING POINT DAY:
We have a strong turning point cluster for this week that suggests a strong reversal to the upside. The 34-day Fibonacci step out from the 8/23 high targets 9/27 as the time window for a low in gold.
Depression Beater Portfolio: (This portfolio this week is just a sample of my own portfolio - no recommendation to others is implied or intended) DELAY NEW PURCHASES UNTIL MID-SEPTEMBER – TIME TARGET FOR MARKET CORRECTION LOWS
- Evolving Gold (EVG.TO, C$0.47 -.04) – The stock price fell back to the level of the recent private placement – drill results coming out soon could confirm a world-class find in the Carlin trend – this stock is a buy here. 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.
- Uranium Energy (UEC, $2.89 -.07) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.48 -.02) – Very undervalued uranium stock with huge reserves (+100 M lbs of relatively high grade), lots of cash and production prospects by 2013.
- Prophecy Coal (PRPCF, $0.48 -.07) The spinoff of the Prophecy Platinum Company (PNIKF) has galvanized this stock – look to buy at key chart support as the broad market corrects into September. 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, $.2630 -.0346) - 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.
Hi, regarding the commentary for 10/06/11 (Commentary for Thursday), you mentioned that we would test the 9/27 low. However, on that day, SPX made a short term high. (119.6 on the spy)
Is the low you are taling about the 1077 SPX on tuesday?
Thanks
Robin
Posted by: Robin | October 07, 2011 at 02:02 AM