All Star Market Timing

Market Observations for the Coming Week:  WARNING: we are looking for the August-October period to be highly volatile for several markets. 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 Chinese currency devaluation surprised global markets and now argues for a move down into the New Moon.

        

08/11/15 (Commentary for Tuesday) The first Chinese currency devaluation in twenty years shocked global markets and hammered stocks like AAPL that are heavily leveraged to Chinese consumerism. We're looking for a decline into the 8/14 New Moon Timing Window and perhaps the start of a big impulsive move lower in the SPX. We plan to load up on shorts if we get just a corrective bounce in the SPX on Wednesday. The SPX, IWM and QQQ gave us an EW 5-wave down pattern on the hourly into Friday before reversing up, but the rally into Tuesday was only a 3-wave bounce. The impulsive decline down today in the SPX argues that a big move down may have started. Gold closed above $1106 and is now primed to test $1140 going into the New Moon on 8/14. We still contend that the stock market will get a 10-20% correction as we bottom the 7-yr cycle in the Aug – Oct period. The USD reversed down after the NFP jobs report and continues to sell off after the Chinese currency devaluation – this strengthens the short-term bullish case for gold. Oil is testing the January low and should bounce into the New Moon. Oil led the CRB down to test the 2009 lows.    

      

    

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 could make a 4-yr cycle low and 7-year cycle low.

      

   

• Big Picture on PMs (UPDATED) – We're looking for gold to make a major low by September. If we can rally past $1106, a test of $1140 would be the next stop, however, a close below $1080 would imply a move down to $1030.

• Stocks – The SPX sold off hard on the Chinese currency devaluation news – we think that a big sell off has started.
• Gold – Gold closed above $1106 and is rallying up to test $1140 by Friday.
• Silver – Silver rallied above $15 but SLW lagged – this is bearish for another test of the lows after 8/14.
• Bonds – Bonds roared higher as the Chinese currency devaluation implies more buying of US long bonds.
• Crude Oil – Oil tested the January lows and should reverse higher for a bounce into the New Moon.
• Dollar Index – The Euro looks bullish as the USD reversed down after the NFP jobs report – the commodity currencies are also rallying.

TURNING POINT DAY

Our turn windows for this week are 8/14 – the New Moon.

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 for7/05/15: 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$0.0521 -0.0000) – 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 October. This vertical integration business model adds a new dimension to this company and is worth following.
• Aroway Energy (ARW.V, C$0.015 +0.005) – 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$0.055 -.02)- 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, $1.33 -.05) – 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$5.24 -.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, $0.0477 +.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, $.0250 +.0000) – UPDATE:De-listed stock. Good asset butneeds 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.