The Daily JDV Market Timer – January 18, 2012

NEW!! Check out our new WEEKLY COMMENTS section for our junior stock picks. Uranium and gold juniors have been breaking out.

 

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)

   

1/18/12 (Commentary for Wednesday) We were wrong about Weekly Reversal Timing for gold being confirmed yesterday but we feel that the time 1/18-1/19 will top gold for the week and give us a pull back into 1/22-1/23. The decline yesterday in the ES was only a 4^th wave on the 5-min chart – we're getting a 5^th wave rally into our weekly turn window. The ES also gave us an EW 5-wave decline. We should get a corrective bounce into the 1/18-1/19 turn window but the high should be in for the week. From the expected high on 1/18-1/19, a correction should ensue into the post-expiration period 1/22-1/23 – this should give us a key secondary low for gold – ideally around 1614. The ES should find some support on ES=1273 – the volume point of control on the hourly chart – a decline below 1267 argues for a more substantial pull back. Crude oil finished an EW 3-wave correction into 1/13 – we are working on a 5-wave rally on the 5-min chart into the 1/18-1/19 turn window. Gold clearly made an important low 12/29 at $1525 in the 12/29-12/30 turning point window and reversed to the upside with a 5-wave impulsive rally that is close to finishing on the hourly chart – a sizable rally into February is expected but we should get a pull back into the third week of January – around 1/22-1/23. The GLD also gave us a capitulation volume on 12/29– we're looking for a bounce to the top of the daily range – buy gold, silver and gold stocks on dips. The HUI may have finished an EW double zig-zag corrective pattern on the weekly chart – multi-year lows in bullish sentiment on the whisperumber.com poll argue that a Major Buy Point for gold stocks is at hand.

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 upside into the New Year. We should get a tradable bounce into January that could extend into the February 10 timeframe – watch the PMs for the clearest timing signals.

Big Picture on PMs (Updated) – The daily chart of gold appears to have finished the Wave C of a large EW a-b-c corrective pattern from the September high on 12/29. Gold made a major low today at $1525 as the 12-wk cycle low bottomed in the 12/29-12/30 turn window – buy the PMs on dips. We're looking for a short-term peak in the 1/18-1/19 time window followed by a pull back into a higher secondary low in the 1/22-1/23 window.

• Stocks – The ES only gave us a 4^th wave correction on Tuesday – the ES is extending a 5^th wave to peak in the 1/18-1/19 time window – a target of 1316 is possible. A break below 1273 on volume will reverse our longs to shorts. Looking for a HIGH this week and then a decline into the post-expiration 1/22-1/23 period.
• Gold – Gold should finish a 5-wave advance on the hourly from 12/29 into the 1/18-1/19 turn window before a pull back into 1/22-1/23. Bearish divergence from the HUI is arguing for a short-term peak here.
• Silver – After a rally peak into 1/18-1/19 – we should see a decline into 1/22-1/23 that will give us an important low.
• Bonds – The bonds are rallying and may give us a wedgy new high on the hourly. We should top into the 1/22-1/23 time window.
• Crude oil – Oil is giving us a 5-wave rally off the 1/13 low – more bounce is expected into the 1/18-1/19 turn window. Iranian tensions and a rolling supply shock from the 2008-2009 wash out should give us another price spike above $120 going into the first half of 2012 but we may get a typical seasonal low into February first.
• Dollar index – The corrective pattern on the weekly DX argues for a bounce into the 1/22-1/23 turn window. Our target of .90 appears to be farther off in time – perhaps in Q2 of 2012 as the next stage of the European debt crisis rears its head.

     

TURNING POINT DAY:     

Looking for highs in gold, silver and the ES in the 1/18-1/19 turn window. If gold takes out 1662.9 and reverses down impulsively – a decline to 1614 by 1/22-1/23 is underway.

 

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: The uranium sector (UEC, STM.TO is breaking out from a depressed level – buy these stocks on dips). The gold juniors (EVG.TO ad GYPH should play catch up with gold this year). Coal stocks have been really beaten down but PRPCF is a special situation stock that is trading at a substantial discount to core assets – buy on dips.

 

• Evolving Gold (EVG.TO, C$0.36 -.01) – 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, $3.65 +.00) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
  • Strathmore Mining (STM.TO, C$.45 +.01) – 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, $0.444 -.014)  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, $.25 -.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.