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)
1/12/12 (Commentary for Thursday) Back-to-back small changes in the McClellan Oscillator argue for a big move soon – trading above ES=1304 argues for an upside move to 1316. Any declines should find support on ES=1273 – the volume point of control on the hourly chart – a decline below 1267 argues for a more substantial pull back.The ideal trading setup this week called for a peak Monday in the Full Moon Timing Window and then a corrective pullback into 1/12-1/13 – we appear to be getting something else. The EW 5-wave rally on the hourly chart is still sub-dividing up and this creates the possibility that the 1/12-1/13 turn window may be a short-term top for risk markets. The ES has a target of around 1316 but if it takes out 1273 with volume and quickly slips below 1267 longs should be reversed to shorts. We will be cautious Friday and on guard for confirmation of a short-term peak. Gold clearly made an important low Thursday at $1525 in the 12/29-12/30 turning point window and reversed to the upside with a 5-wave impulsive rally – a sizable rally into February is expected but we should get a higher low into the third week of January. 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 a 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 – watch the PMs for a leading signal.
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.
- Stocks – The ES should be watched for signs of a short-term peak in the 1/12-1/13 turn window – exceeding 1304 will get us long into 1316. A break of 1273 on volume will reverse our longs to shorts.
- Gold – The EW 5-wave rally from 12/29 is still sub-dividing up – a peak into the 1/12-1/13 turn window will have us taking profits. The HUI appears to have finished an EW double zig-zag pattern on the weekly chart on 12/29. Since the whisper number bullishness on the HUI reached 6.9% - a multi-year low on 12/23 – we think that gold stocks are a Major Buy as we enter 2012.
- Silver – Silver's rally pattern on the hourly does not look like an impulsive 5-wave affair so caution is warranted here – we have a target of $32.10. Silver made a double bottom at 26.15 on the daily chart on 12/29 – it also appears that the 48-wk cycle low may have bottomed last week – buy on dips.
- Bonds – The bonds look weak to us as investors panic into short-term German bonds with negative yields – the US Treasury market has become less attractive to international investors.
- Crude oil – Oil plunged to $98.83 and is bouncing – taking out $98.83 will argue for much lower prices. However, oil may have bottomed today – it appears we made a low in the 1/12-1/13 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.
- Dollar index – The DX finished its 3-wave correction on the hourly chart and looks primed for a reversal up. 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 Full Moon on 1/9 should give us a reversal down in the broad market and the PMs – a spike to higher highs on Monday should be reversed into the 1/11-1/12 turning point window.
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$0.385 +.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, $3.22 +.17) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.40 -.00) – 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 +.0035) 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, $.245 -.0152) - 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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