The Daily JDV Market Timer - September 22, 2016

Market Observations for the Coming Week:   The key central bank action for the week was the BOJ announcement of an Operation Twist for their Japanese debt market which caused US bonds to briefly take out last week's low Tuesday night before reversing higher - this got global stock markets and the PMs in rally mode. Our bias is to buy dips in the SPX for a rally to all-time highs by mid-October.

9/22/16 (Commentary for Thursday) The BOJ action late Tuesday only briefly pressured global stocks, bonds and gold before we got a strong reversal higher. The SPX managed another rally day today and validates a run to test resistance at SPX 2195 soon. We are bullish on the market and expect the NDX to lead the market higher to a mid-October high - we plan to buy dips in gold stocks, oil stocks, and biotechs. The Presidential cycle argued for weakness from early September through October and we got it into 9/12, however, the NDX retested its breakout above year-2000 highs and should now lead the market higher into all-time highs into October led by FANG, SMH and biotech. Our bias is for the SPX to reach 2200-2300 by mid-October. We are still focused on our favored groups: energy, precious metals, and biotech, and plan to add positions on weakness early Friday. Crude oil may be in a large consolidation pattern that could last into October, but we did a pivot reversal below the Full Moon low ($43.35) Tuesday morning and could move a lot higher. The GDX started the day strong but pulled back in a 3-wave correction - Friday's tape will be key. Biotech (IBB) finished its large EW a-b-c correction on 9/12 and looks very strong - we still like large-cap bio-tech companies (AGN, AMGN, BIIB, CELG and GILD) on dips early Thursday. With the 7-yr Shemittah cycle and the 3-yr commodity cycle bottoming on 2/11, our bias remains "bullish but short-term cautious" despite the Brexit vote to leave the EU and all the "crash talk" that permeates social media currently. We think that a major 4th wave correction ended on 2/11 and a 5th wave higher to SPX 2200-2300 all-time highs is still in effect.

   

• Big Picture on Stocks (UPDATED) - BOJ action only briefly reversed global stock and bond markets Tuesday night before a strong rally started . Our bias is that the SPX will reach SPX 2200-2300 by mid-October.

             

• Big Picture on PMs (UPDATED) – The GDX made an import low on the Full Moon/lunar eclipse - BOJ action started a big rally in the PMs today that could have legs into October.
  • Stocks - BOJ and Fed action today started a rally that could take us to SPX 2200-2300 in October. We're looking to buy gold stocks, oil stocks and biotech on dips early Friday.
  • Gold - The GDX reversed after BOJ action Tuesday night and looks higher. A 5th wave higher from the Full Moon low on 9/16 should take us above 28.56 by Monday.
  • Silver – Silver's impulsive move off of Friday's Full Moon/lunar eclipse was a huge bullish signal for the PM sector - we're looking for at least a test of the $20.80-$21.35 zone by 10/7.
  • Crude Oil - Crude oil made what appears to be a 4th wave correction today on the hourly chart - we're looking for a 5th wave higher above $46.57 by Monday.
  • Bonds - BOJ actions early Wednesday caused bonds to take out last week's low and then rebound in a strong pivot reversal - we plan to buy TLT on dips early Friday.
  • Dollar Index – The USD fell in 5-waves on the hourly and then bounced today - this bearish action favors commodities in the short term.

TURNING POINT DAY    

The turn window on 9/21 (BOJ and Fed rate decisions + Fall Equinox) will be key for several markets this week.

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: Update for 7/05/15: The CDNX remains mired in a deep, historic bear market since the April 2011 which led the turn down in the gold and silver market by a few months. To us, junior mining stocks are just trading affairs unless the 50-day MA crosses up through the 200-day MA. In our best guess, we feel that the CDNX and the gold mining juniors could bottom by October in advance of our target of April 2016 for a final low in gold and silver - typically the gold mining stocks bottom 6-9 months before final lows in gold and silver. We have read that up to 45% of junior gold/silver stocks only have enough cash on hand to continue operations for the next quarter. Many recent equity-based financing are small and done just to keep the lights on. Until the CDNX turns up , it is best just to focus on well-financed juniors with great assets and positive cash flow. Now is the time to follow these stories since we are in the late stages of this brutal bear market.

• Great Lakes Mining (GLKIF, C$0.0780 +.0040) – NEW Recommendation 7/5/15 - This is a unique situation in the high-end graphite market. This company is scheduled to open a factory to upgrade graphite for specialty applications by O-October. This vertical integration business model adds a new dimension to this company and is worth following.
• Aroway Energy (ARW.V, C$0.010 +0.000) – 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 1200 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 (EVGD.TO, C$0.0358 -.0000) - UPDATE: This stock has two world-class finds in Wyoming (Rattlesnake) and a potentially huge find on the Carlin Trend in NV. The problem is t-hat the company needs a financing and could be forced to sell a world-class asset for pennies on the dollar.
• Uranium Energy (UEC, $1.06 +0.00) - UPDATE: Uranium prices are recovering and the fundamentals are getting a perfect storm. Favoring the near-term producers here like UEC - the fundamentals are much more dramatic that the typical emerging gold producer.
• Energy Fuels (EFR.TO, C$2.20 -0.04) – Finished acquisition of STM.TO in early September - building up a position as a strong US producer of uranium in a tight market.
• Prophecy Coal (PRPCF, $2.78 -0.0200) – UPDATE: This stock needs to get its Mongolian coal mine into a positive cash-flow situation to support its power plant project and other endeavors without diluting the common shareholder to zero.
• Gryphon Gold (GYPHQ, $.0018 +.0008) - UPDATE: De-listed stock. Good asset but needs a cash infusion and maybe a partner. Good leverage to gold.