NEW!! Check out our new junior oil stock pick. 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)
1/23/12 (Commentary for Monday) Monday's New Moon gave us a short-term peak in the ES and the PMs - looking for a mild retracement into the FOMC statement on Wednesday. The HUI is making a MAJOR LOW in the cluster of a 13-month and 34-month Fibonacci step out. We're looking to add long calls for the PM stocks here and accumulate gold juniors. The ES and PMs continue to climb a wall of worry in an economic backdrop that should be equity bullish until midyear - IBM and INTC earnings and guidance minimize the chance of a recession until Q4 in our opinion. The fact that the HUI is close to finishing an EW a-b-c decline from 1/12 argues for just a brief market correction here. Any decline here in the ES should find some support on ES=1273 – the volume point of control on the hourly chart. 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 may have finished on the on the hourly chart – a sizable rally into February is expected but we should get a pull back this week into Projected Weekly Low Timing. The GLD 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 on the New Moon on 1/22 use a brief pull back to add to longs,
- Stocks – The ES finished a 5-wave rally on the hourly into the New Moon – the pullback so far is corrective – looking for a low by Wednesday and more rally into 2/10. Holding above 1304 is very bullish.
- Gold – Gold is peaking into the New Moon - look to buy brief, 3-wave declines into Wednesday's FOMC statement for a rally into February 10.
- Silver – Silver is spiking into the New Moon Timing Window – look to buy brief, 3-wave declines on the 5-min chart. Looks very bullish.
- Bonds – The bonds are trading very weak – a major break is due in the spring – maybe by March.
- Crude oil – Oil may have peaked a B-Wave rally off the 1/13 low – a C-wave down has started on the 5-min chart – a close below $98.83 would target the $91 area. 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 hourly DX finished an EW 5-wave down pattern – looking for a bounce into the FOMC meeting. 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:
The New Moon on 1/23 and the 1/22-1/23 should dominate trading this week – the New Moon held up the indices into late Friday expiration trading and may give us a lift early Monday. We are looking for an important low in the HUI going into 1/23.
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 are 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.
- NEW PICK - Aroway Energy (ARW.V, C$0.83 -.01) – This western Canadian junior is part of a very sweet JV deal with a private partner in the Peace River basin – it's production share should climb from 669 BOE/day (75% black oil) to over 1000 BOE/day later in 2012 – management has selected a good slate of properties for drilling and it is bearing fruit. Buy on dips. Use a 20% stop from purchase price.
- Evolving Gold (EVG.TO, C$0.33 -.00) – 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, $3.82 -.03) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.46 -.03) – 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, $0.44 -.016) 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, $.225 -.013) - 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.
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