Financial astrology: Coronavirus reducing Chinese and global production
|1. FEBRUARY MARKETS
2. UP STARS/DOWN STARS
3. GOLDEN OPPORTUNITIES
4. QUOTES
5. ON THE WEB
6. LETTERS
1. Bad news is "good news"?
“With the coronavirus spreading faster and set to have bigger economic effects than initially assumed, many people are asking how and when central banks will respond. The People’s Bank of China (PBOC) and the central banks of Sri Lanka, Malaysia, the Philippines and Thailand have already cut interest rates, citing the effects of the virus. And even in advanced economies, financial markets have shifted from an assumption of no policy change to pricing in at least some chance of rate cuts since fears about the virus escalated in mid-January.”
Capitol Economics
SOME H1 2020 MARKET POSITIVES & NEGATIVES
PLUS
- Trump
- US Fed & other Central Bank monetary policies
- IRA tax season
- Trade Spat better with hard issues largely postponed until after US election
- TINA (There Is No Alternative)
MINUS
- High market valuations
- Coronavirus reducing Chinese & global production & consumption
- US Presidential Election Concerns
- Many people hate stocks an offset to FOMO (Fear Of Missing Out)
As long as markets remain above SP 3150, MOMO BULLS are not worried unless/until DJIA 28K becomes a firm ceiling!
Should/when markets drop below SPX 3150 next support levels are circa 3125, 3065-3070, and 3025-3030.
Will markets be higher in March? Perhaps- the next week COULD challenge that thesis.
Will they be higher in [July to] August 2020- almost DEFINITELY NOT!
OUR VIEWS
TRADERS: Note the odds favor another down market test in February.
Stock valuations are generally unappealing [not cheap] for most stocks.
OUR CASH POSITIONS ARE CURRENTLY MAXIMUM!
We advise fresh IRA money should be left in cash & we recommended more selling of 2020 portfolios.
Proper Valuations:
• US$ 97.75-99
• CNY < 7-7.03
• SILVER 16.80-18.25
• Oil 50-54
IMHO “Improper” Valuations
• DJIA > 28000
• SP > -3150
• NASDAQ >-8800
• TIPS > 117.50
• COPPER < 3.11
• BITCOIN >4000
• GOLD > 1433
• US 10 Year Bond < 1.70
• VIX < 16
HYDE PARK SOAPBOX: Are US Stocks Immune To The Coronavirus?
KEY DATES: February 20
DJIA: 28500 SUPPORT 29500 RESISTANCE
SPX: 3380 PIVOT
NASDAQ: R1 9800 R2 10000 R3 10200
GOLD: 1550 PIVOT R1 1568 R2 1608 R3 1650
SILVER: PIVOT 17.50 RESISTANCE 18.20-18.80
OIL: 52 PIVOT
COPPER: 2.55 SUPPORT/PIVOT
US 10 year WATCH
BITCOIN: WATCH
2019 CLOSE: DJIA 28508 SPX 3231 & NASDAQ 8823
2018 CLOSE: DJIA 23327 SPX 2506 & NASDAQ 6635
2017 CLOSE: DJIA 24719 SPX 2673 & NASDA 6903
2016 CLOSE: DJIA 19762 SPX 2238 & NASDAQ 5383
AFUND Fair Value: GOLD $1433
Reduce risk and Focus on Capital Preservation:
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK.
2. Up stars / Down stars
We continue to largely stand aside with an inclination to reduce market exposure except for attractive special situations such as obviously the companies we invited that we presented last week at our XXVIII Triple Gold Conference at the Princeton Club. If they have appropriate portfolio allocation characteristics, worth spending time on due diligence and perhaps buying.
AFUND SHORT WATCH:
Netflix (NFLX) $360-380+, Tesla (TSLA) $780 & $940, Bitcoin (BTC)
AFUND BUY WATCH: After a real correction Prices TBD
Chewy (CHWY), Disney (DIS), Microsoft (MSFT), TIPS ~ 120+
With the exception of special situations, we would rather continue to REDUCE market exposure.
Favorite 2020 Sectors:
Entertainment, Mining, Selective Health Care (lower cost/better outcome) & TECHNOLOGY (Undervalued & Highly Scalable)
Stock selection is important. When possible, we prefer to recommend stocks sporting strong cash flows, sound balance sheets & growing dividends.
Active well managed portfolios should outperform index funds in 2020.
3. Copper prices may still have more to lose even after touching a nearly 3 year low
HW: Copper remains highly undervalued. It was a pawn of the US/China trade spat and now it seems that Chinese coronavirus is hugely hurting sentiment. Short term can be mixed to bearish, but longer term this remains a “deep pockets” BIG win.
We note gold is generally under favorable astrological influences in Q1 2020.
Gold bugs are happy now that more generalist investors are beginning to join the party: However, we still see it as somewhat expensive just now, albeit short term “justified” due to Astro, seasonal strength & Middle East.
We believe gold valuations will largely sport at or above Fair Value in this Year of the White Metal Rat (2020).
Just as it was undervalued for a long time, it CAN and is likely to be overvalued for a LONG time. While fundamentally gold is currently overvalued, in much of the Fall, the astro is positive for gold.
We advise precious metal investors to pay attention to stock selection and only selectively add Q1 2020.
- Gold remains cheap geopolitical crisis insurance.
- For investors who cannot or will not buy the $US currency as well as investors who wish to safely and cheaply hedge their US$ exposure, ONLY GOLD IS AS GOOD AS GOLD!
- NEW: Some investors have been hedging record equity prices by buying gold.
Gold FV $1433 = Commodity FV: 1388 + Currency FV: 1400 + Inflation Metal FV: 1388 + Crisis FV: 1556.
INVESTORS: We plan to stay LONG in 2020 (recommending a precious metal sector buy/hold rating and occasional hedging, selling or profit taking).
However as traders we may periodically short gold above $1555. For silver our current selling numbers remain $18.25 - $20.
We will be happy to reBUY Gold cheaper ideally < 1450 & Silver < 16.80 in Q2 2020.
4. Quotes
"Being out of the market at the moment is one of the biggest mistakes you can make."
Matt McCall, president, Penn Financial Group
HW: Bigger than being IN the market this August?
5. On the web
Gold price hits all-time highs in euro yen, USD next!
6. Letters
READER: Any astro opinion on TESLA?
HW: No astro opinion haven’t done the work but technically we think 780 and 940 were good R/R tactical shorts. $767 financing will shortly become its new Pivot.
Depends on what happens to the markets in general.
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