The Weekly JDV Market Timer - September 27, 2015

Market Observations for the Coming Week:  WARNING: we are looking for the August-October period to be highly volatile for several markets (See our 8/6/15 talk on the Shemittah cycle - "Can the Stock Market Crash Going Into October - Weighing the Probabilities" https://www.youtube.com/watch?v=5tgPXoA9x00). Several important stock market cycles are due to bottom: the Shemittah cycle (7-yr), the 4-yr cycle, and the 50-wk cycle. We should also see extreme volatility in gold, bonds and commodities. Holding a large position in cash as we enter this period is recommended. The New Moon/lunar eclipse on 9/28 could be a catalyst for a drop into October - a drop to SPX 1820, the October 2014 low, is possible this week.

09/27/15 (Commentary for Sunday) The SPX made a top on 9/17 and gave us an EW 5-waves pattern down on the hourly chart. Our gut says that the Full Moon/lunar eclipse will be a catalyst for the next leg down to test the October 2014 lows at SPX 1820. The SPX is close to starting a Wave 3 of 3 down that could give us a big decline into October 1. We expect bonds to lead the next leg down in stocks into October and we could make a cycle high as soon as Monday. Oil looks lower into next week. Our bias is that a major low was made at $37.75 and this marked a 3-yr cycle low in both oil and the CRB - however, we could see more testing of lows into October. The late August price action confirmed a four-year cycle top in the SPX and suggests a 20% decline into October and we currently favor a corrective pattern similar to 1998 where we had a 7/20 peak and a scary decline into late August before a big reversal up into September and then a lower low into October. Gold ran up hard on Thursday and pulled back into Friday - we could see a 5th wave spike into Monday. We still contend that the stock market could manage a 20% correction as we bottom the 7-yr cycle in the Aug - Oct period and the post-Labor Day "head fake rally" into 9/17 may have set the hook for the next leg down into October.    

    

    

Big Picture on Stocks (UPDATED) -With China leading global markets down, commodities and commodity stocks are being pressured. We are expecting a big correction from August to October which should make a 4-yr cycle low and 7-year cycle low. The post-Labor Day rally ended after the FOMC decision on 9/17 - we're biased for a big leg down after the 9/28 Full Moon/lunar eclipse.

    

   

• Big Picture on PMs (UPDATED) – We believe that gold made an intermediate low at $1072 and followed that with an EW 5-wave rally on the hourly chart to $1169. Gold confirmed a cycle low at $1097.7 on 9/11 after the sharp pivot reversal above the major Daniel Code support line at 101.7 for the HUI - we started a rally to $1200-$1230 after the Fed rate hike decision.

        

• Stocks - The SPX appears close to a Wave 3 of 3 down from the 9/17 high - we're looking to short any bounce into Friday and are expecting a sharp decline after the 9/28 Full Moon/lunar eclipse.
• Gold - Gold confirmed a major low at $1997.7 on 9/11 - we are rallying hard into the 9/28 Full Moon/lunar eclipse.
• Silver – Silver is reversed up hard with gold on Thursday.
• Bonds - Bonds could make a cycle high on Monday - we're looking to sell bounces for a leg down into October.
• Crude Oil – Oil is pulling back after the lunar eclipse - we still want to accumulate select oil MLPs on retests of the $37.75 lows into October.
• Dollar Index – The Japanese Yen may have made a major low. We're looking to buy the Yen on dips. The Fed decision not to raise rates on 9/17 should give us more downside on the USD.

TURNING POINT DAY    

The 9/28 New Moon/lunar eclipse looks like a key turn window for early in the 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$0.0600 +.0025) – 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 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$0.0360 +.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 that the company needs a financing and could be forced to sell a world-class asset for pennies on the dollar.
• Uranium Energy (UEC, $1.09 +.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$4.21 +.07) – 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, $0.0395 +.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, $.0180 +.0000) - UPDATE: De-listed stock. Good asset but 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 30% stops based on purchase price. Buy a basket to diversify risk)

RULES FOR JUNIOR MINING INVESTING:

     

1) Keep to 5-10% 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.