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)
1/16/12 (Commentary for Monday) The 1/12-1/13 gave us a short-term low in the ES, gold, silver and oil. There are a lot of mixed technicals for the coming week but we have the clearest timing indication from gold. Gold loves Fibonacci and obeys Fibonacci with impressive regularity – we had a 144-month Fibonacci step out from the key Sept 1999 low to the Sept 2011 high – we should always be looking at Fib step outs from important high/lows in this market. Accordingly, for the week of Jan 16, the 21-day Fib step out falls on 1/18-1/19 and we expect a high for the week and reversal in this time widow for gold, silver and the broad market. From this high, 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. 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. A break above ES=1304 could test an important "volume point of control" on the daily chart at 1316. Crude oil finished an EW 3-wave correction into 1/13 – a close below 98.83 implies a retest of 91. Taking out Friday's low in rude will get us defensive in the ES and PM sector for the very short term. 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 – 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 timeframes – 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 should be watched for signs of a short-term peak in the 1/18-1/19 turn window – exceeding 1304 will should give us a quick test of 1316. A break below 1273 on volume will reverse our longs to shorts. The ES gave us a short-term low on 1/13 and is working an EW 5-wave pattern higher. Looking for a HIGH this week and then a decline into the post-expiration 1/22-1/23 period.
- Gold – The EW 5-wave rally from 12/29 is still sub-dividing up – from a low on 1/13 we should see a short-term top in the 1/18-1/19 period before a decline into 1/22-1/23. 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 – Looking for same timing as gold. We have a target of $32.10 by 1/18-1/19 before a decline into next week. 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. We should get a bounce into the 1/22-1/23 time window.
- Crude oil – Oil plunged to $98.83 on Friday and is bouncing – taking out $98.83 on a closing basis will argue for a test of $91. Just a corrective 3-wave bounce off the 1/13 low will put us on the defensive. 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 should test last week's low before reversing up into 1/22-1/23. 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) DELAY NEW PURCHASES UNTIL LATE-DECEMBER – TIME TARGET FOR MAJOR CYCLE LOWS
- Evolving Gold (EVG.TO, C$0.38 -.005) – 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, $3.43 +.21) – The uranium supply/demand story still has legs despite the Japanese disaster. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer. Adding on weakness.
- Strathmore Mining (STM.TO, C$.41 +.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, $0.3975 -.0225) 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, $.2492 +.0042) - 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.
Comments