The Weekly JDV Market Timer – December 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)

   

12/26/11 (Commentary for Monday) We're looking for a short-term peak in the ES in the New Moon Timing – Weekly Reversal Timing is due. Taking out Friday's high on Tuesday and reversing down to close in the lowest third of the daily range would confirm a reversal. We have inter-market bearish divergence with the DJIA taking out it's 10/27 high while the ES and QQQ remained far below their respective 10/27 highs. The ES is tracing out a "large contracting triangle" pattern on the daily chart which is close to reaching the apex – we still expect a break down into the New Year before reaching a tradable low. Bad earnings from Oracle suggests that tech earnings are softening and that the US economy could be in recession by Q2 but there is a time window in Q1 for the ES to test the highs from 2011. Gold should also reverse down into 12-wk cycle lows due this week – looking for the 12/14 lows to be slight eclipsed by the end of the week.

Big Picture on Stocks (Updated) – We bottomed the first phase of a global bear market on 10/4 and we are in a large corrective rally that has morphed into a contracting triangle on the daily chart. We believe that this triangle will break to the downside after the 12/26 New Moon Timing Window. We should get a tradable bounce in early January.

Big Picture on PMs (Updated) – The daily chart of gold shows a clean wave count for an almost completed EW a-b-c zig-zag decline – we started a 4^th wave of C bounce on Tuesday and we should get a 5^th wave down to the low 1500s to finish the pattern. The 12-wk cycle low is due the week of 12/26 or the first week of January.

• Stocks – The ES is bouncing into the 12/24 New Moon but the contracting triangle formation on the daily chart is close to reaching an apex – we are looking for a top early Tuesday and then a reversal down to close in the bottom third of the day's range to confirm Weekly Reversal Timing.
• Gold – Gold is due a 12-wk cycle low this week or next. Taking out $1591 on gold on Tuesday will bring a rapid decline to $1525 by next week.
• Silver – Silver gave us a weak bounce into the New Moon (12/24) – looking for a break lower on Tuesday. Major cycle lows are due in early January – this should mark an important intermediate low.
• Bonds – The bonds appear to be tracing out a corrective leg down on the hourly.
• Crude oil – Oil looks strong on the hourly – looking for a pull back into late this week before a strong move higher. Iranian tensions and a rolling supply shock from the 2008-2009 washout should give us another price spike above $100 going into the first half of 2012.
• Dollar index – The DX finished an EW a-b-c correction on the hourly and is diverging up against the stock market rally – looking for higher highs after the weekend. Our target of .90 appears to be farther off in time – perhaps in early 2012 as the next stage of the European debt crisis rears its head.

     

TURNING POINT DAY:     

The New Moon on 12/24 should dominate trading this week – looking for a rally into the weekend and then a reversal down early next week.

 

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 LATE-DECEMBER – TIME TARGET FOR MAJOR CYCLE LOWS

 

• Evolving Gold (EVG.TO, C$0.305 +.03) – 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, $3.01 +.06) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
  • Strathmore Mining (STM.TO, C$.39 +.035)– 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, $0.423 +.023)  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/October. 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, $.266 +.002) - 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.