Market Observations for the Coming Week: The SPX gave us a 5-waves down move on the hourly chart into 6/16 - then, we got a B-Wave rally into Monday's Full Moon - we're looking for a C-wave down into 6/23-6/24. Gold and gold stocks gave us a key reversal day on 6/16 and we declined into Monday's Full Moon - buy dips as we consolidate into 6/23-6/24.
6/20/16 (Commentary for Monday) The SPX rallied in a B-Wave on Monday but the leadership participation was not good - we are now looking for a C-Wave down into 6/23-6/24. We are bullish the SPX after the 6/23 Brexit vote and we will be looking to buy weakness going into 6/23-6/24, especially on gold stocks. Gold showed resilience on today's stock rally and PM positions should be accumulated as the GDX consolidates into 6/23-6/24. We are viewing the 6/3 low in gold as a major Wave 2 low (on the New Moon Timing Window and 1 day shy of the 34-day Fibonacci step out) and the 6/16 high at $1318 as a Wave 1 peak of a 3rd wave higher from the December low - we're looking for a Wave 2 correction into the 6/23-6/27 turn window which includes the 6/25 55-day Fibonacci step out from the 5/2 high. Crude oil may have made an important intermediate cycle low on 6/16 and continues to find higher support levels - the rally into the 6/20 Full Moon may be a B-Wave test of last week's high. On 6/8, we sold a large piece of our biotech holdings since the large declines in BIIB (poor Phase II trial results) and VRX ( earnings miss) have given us a short-term top in this sector. However, we still consider large-cap bio-tech companies (AGN, AMGN, BIIB, CELG and GILD) as excellent long-term buys on market pullbacks. The IBB still needs to clear 285 on a closing basis to confirm a rotation back into a leadership position. The big picture remains clear to us: the SPX has rallied in 5-waves on the daily chart from 2/11 to 5/2 and completed a Wave 2 pullback to SPX 2025 on 5/19 - buy dips here for a Wave 3 rally that should test SPX 2134 after the "Brexit vote". With the 7-yr Shemittah cycle and the 3-yr commodity cycle bottoming on 2/11, our bias shifted to "bullish" since February and we do not expect another bear leg down.
Big Picture on Stocks (UPDATED) - "Brexit fears" may be driving the SPX down for a retest of 2025 but this market does not want to stay down - we should test 2134 after the 6/24-6/27 time window.
Big Picture on PMs (UPDATED) – Gold spiked to $1318, a two-year high but ended 6/16 with a "key reversal" down. We're looking for a consolidation into the 6/23-6/27 "Brexit turn window" which includes the 55-day Fibonacci step out from 5/2. Buy dips in GLD, ABX, SLW, GG, NEM and AEM this week.
- Stocks - The SPX may have finished a B-Wave rally on Monday - we may have started a C-Wave down this afternoon. "Brexit fears" may still drive us down for a retest of SPX 2025 by the 6/23-6/27 turn window but we will be buyers.
- Gold - Gold rallied to $1318, a two-year high, but then gave us a "key reversal" day down on 6/16 - Friday gave us a bounce but we got a leg down into Monday's Full Moon - buy dips in the gold stocks as we consolidate into 6/23-6/24.
- Silver – Silver failed to make a new rally high last week - bearish divergence - we are looking for a consolidation into 6/23-6/24.
- Bonds - Bonds peaked on 6/16 and are correcting into Tuesday - we are looking for a bounce.
- Dollar Index – The USD is declining impulsively from last week's high - the British pound and the Euro may have made important lows.
TURNING POINT DAY
We have a turn date from 6/23-6/27 which includes the "Brexit" vote. We are looking for a low.
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$0.0550 -.0000) – 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, $1.01 +0.02) - 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$3.27 -0.016) – 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, $0.0150 -.0000) – 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, $.0024 +.0000) - UPDATE: De-listed stock. Good asset but needs a cash infusion and maybe a partner. Good leverage to gold.