The Daily JDV Market Timer – January 30, 2012

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)

   

1/30/12 (Commentary for Monday) The ES finished a 3-wave decline on the 5-min chart but regained 1308 (the Volume Point of Control) by the close of trading on Monday. The ES bottomed in the 1/30-1/31 turn window and is rallying into the turning point on Wednesday. The Wall Street Sentiment Survey ADDED to the Wall of Worry that the market is climbing by posting an even greater bearish majority on 1/27 (62%). The ES is currently rallying in a B-Wave test of the 2011 highs. We are currently in a 3^rd wave of C of B with a 4^th and 5^th of C still ahead over the next week weeks. Gold also bottomed in today's turn window and has started a rally into Wednesday's turning point. The HUI confirmed a MAJOR LOW last week - the cluster of a 13-month and 34-month Fibonacci step out. Gold made a Projected Weekly Low last week and then reversed up with a vengeance – buy on 3-wave corrective declines on the 5-min chart. The ES and PMs continue to climb a wall of worry in an economic backdrop that should be equity bullish until midyear – tech earnings and guidance minimize the chance of a recession until Q4 in our opinion. 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. The HUI 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 believe that the ES is rallying in a B-wave to test the 2011 highs – the alternate count is also short-term bullish – that we finished a 4^th wave on 10/4 and have started a 5^th wave up to new nominal highs. A rally to the 2/10 turn window is expected in the short term.
• 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 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 2/10 turning point window.

   

  • Stocks – The ES just gave us a 3-wave correction on the 5-min chart and then reclaimed the 1308 level before the close – looking for rally into Wednesday.
  • Gold – Gold bottomed its correction this morning – looking for a rally into Wednesday. The Full Moon on 2/7 should post an important top.
  • Silver – Look to buy brief, 3-wave declines on the 5-min chart. Looks very bullish into 2/7.
  • Bonds – Bonds are negating some near-term bearish possibilities – refraining from adding to TBT calls.
  • Crude oil – Oil is slicing through $98.83 (the volume point of control on the hourly chart) – this market is declining into February lows which could prove to be the springboard for a major price spike into summer. 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 DX hourly chart still looks bearish. 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 1/30-1/31 turn window may give us an important turn. The US markets are overbought and pregnant for a quick pull back. Wednesday is 1-Day Reversal Timing for gold from Starkey which could be a timing indication for the broad market as well.

 

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$0.92 +.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$0.38 +.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, $3.83 -.27) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
• Strathmore Mining (STM.TO, C$.46 +.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, $0.435 +.007) the spinoff of the Prophecy Platinum Company (PNIKF) has made this stock a potential takeover candidate. John Lee is determined to drive this emerging coal producer in Mongolia into an international mining powerhouse. 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, $.245 -.005) - 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.