Financial astrology: February markets
|
1. FEBRUARY MARKETS
2. UP STARS/DOWN STARS
3. GOLDEN OPPORTUNITIES
4. QUOTES
5. ON THE WEB
6. MARKET RESEARCH
7. LETTERS
1.1. DJIA: 26K before 24K? - 73% current odds.
1. 2. WE WILL REPEAT OVER AND OVER BEFORE MAY PROTECT YOUR ENTIRE PORTFOLIO or
Take an early and long Summer Vacation and don’t worry as markets will most likely recover later in the year.
Or perhaps markets may just turn down just 3-5% in May BUT it may be the beginning of a real correction or more….
In addition to the astrological indicators we watch, the following are four potential EARTHLY reasons:
- Disappointing corporate earnings - we may see the first earnings decline in nearly three years.
- FOMC Meeting April 30-May 1 unsettling markets
- A classic “Sell in May and Go Away” (unlike last year)
- Assorted geopolitical swan events.
The odds favor markets will continue to rally more than fall until at least the first round success of the US/China Trade War given Trump aims for a 'very big deal' with China ahead of March 1 deadline However, we repeat:
Unlike 2018, Markets in 2019 will NOT be easy to forecast - requiring both a longer investment horizon AND a shorter trading one!
- WE BELIEVE US MARKETS WILL CLOSE HIGHER IN 2019 than 2018! Additionally,
- We expect it to TRADE ABOVE ITS 2017 CLOSE – it just has reached that level last week & ADVISE locking in with trailing stops as well as
- Be defensive H1 2019 (esp. Q2); Be more aggressive H2 2019.
Our 2019 recommendations:
- Be Selective - Stock Picking will outperform Index Investing
- We continue to recommend trailing profit stops and hedging, raising cash and/or writing calls to promote sound sleep.
- New trades & investments best in Long/Short Pairs in H1 2019
Four major concerns we are watching AHEAD OF A MAY CORRECTION
- The market’s short term reaction to trade wars progress;
- China Internal & External response to its 2019 Saturn influence;
- The May FOMC meeting anticipation & reactions;
- US geopolitics games & potential global swan events
BOTTOM LINE
WE THINK MARKETS WILL CONTINUE TO REACT POSITIVELY NEAR TERM, BUT THERE IS CONSIDERABLE RISK WITH SUCH A BET.
HENCE WE ADVISE INVESTORS TO BE LARGELY CONSERVATIVE & DEFENSIVE, ESPECIALLY Q2 2019.
Proper Valuations:
TIPS 108-111
DJIA 24, 719+
OIL 52-58
IMHO “Improper” Valuations
US 10 Year Bond < 2.75
COPPER < 3.20
BITCOIN > 2500
GOLD < 1375
SILVER < 18
TRADING NOTES
February, like January, is potentially an up month but also with potential major hiccups: given a positive Q1 US economy [1.8%+ growth] but a mixed horoscope for President Trump in H1 2019.
DJIA, NASDAQ & SPX can rally as THE US TRADE WARS ARE WON and especially now that the FED signaled it is taking it foot off the breaks [as forecast]!
Remember our Trading Plan: Not to short aggressively before SPRING 2019.
TRADING HEDGES:
Sell Oil 73.50/Buy Copper 2.95
Oil unwound 68.00 Resold 72.50 Unwind 64 Long 50 Sell 54 OCO 58
Sell Oil 74.00/Buy Copper 2.83
Oil unwound 66.20 Resell 74 Unwind 66 Long 50.50 Sold 55
Sell Oil 73.33/Buy Copper 2.75
Oil unwound 68.20 Resell 76 Unwind 68.65 Long 46 Sold 52
Buy Gold 1188/Sell BTC 6380
Buy Gold 1182/Sell BTC 6650
Buy Gold 1196 /Sell BTC 7370
Long Copper 2.70/Short BTC 6666
HYDE PARK SOAPBOX: If everyone invested like John Bogle, markets couldn’t work right
KEY DATES: February 6, 7/8
DJIA: Trading Target 24719 Achieved
SPX: R1 25500 R2 26000 R3 27000
NASDAQ: 6903 SUPPORT
GOLD: 1310 PIVOT R1 1325 R2 1350 R3 1365
SILVER: R1 15.50 R2 16 R3 18
OIL: 54 PIVOT R1 55 R2 58 R3 60
COPPER: STEADY ACCUMULATE: H2 2018-2019 à3.50+
US 10 year WATCH
BITCOIN: 3800 RESISTANCE S1 3400 S2 3300 S3 3000 S4 2500
The Market Marker remains some cautious concern.
2018 CLOSE: DJIA 23327 SPX 2506 & NASDAQ 6635
2017 CLOSE: DJIA 24719 SPX 2673 & NASDAQ 6903
2016 CLOSE: DJIA 19762 SPX 2238 & NASDAQ 5383
AFUND Fair Value: GOLD $1370
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK.
2. We plan to do little in February until knowing more about the market’s reaction to Trump, corporate earnings and progress of CHINA Trade talks.
3. Record-93b-private-capital-flows-natural-resources/
HW: Follow the money!
We continue to recommend Maximum Allocation to precious and base metal investments for the intermediate and long term, given that the precious metal sector and copper are obviously very undervalued!
Now with lesser headwinds from US interest rates rising as well as less competition from MMJ & Bitcoin “investors”.
A $1350 target test is now almost here and we are happy to see Goldman Sachs give it a $1425 price target. Still, we advise patient precious metal investors to pay attention to stock selection as a slowly rising tide does not float all boats equally.
- 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!
Gold FV $1368 = Commodity FV: 1340 + Currency FV: 1368 + Inflation Metal FV: 1368 + Crisis FV: 1400.
Gold/Silver ratio à 75 Silver FV $18+.
INVESTORS: We plan to stay LONG in 2019 (recommending a precious metal sector hold rating and only hedging and/or selling Q2 or profit taking).
We remain disinclined to short or sell until gold is overvalued e.g. $1416-1450. For silver, our first selling numbers remain $19+.
However, after the Chinese New Year, some hedging or profit taking/protection will not be unwarranted:
We advised Traders in our 2019 Market forecasts, BUY FEB 2019 GOLD; THEN SELL JUNE GOLD & BUY DEC GOLD
4. THIS LEFT INTENTIONALLY BLANK
5. How low will the S&P 500 go? Buffett and Shiller know
The evidence is in: Stocks are in a ‘bull trap’
7. READER: What do you think about cannabis stocks? When do you think it is the best time to buy?
HW: This is not one of the sectors I cover. While personally, I like medical marijuana, I avoid recreational MMJ somewhat as we do Uranium stocks as unhealthy”.
That being said, MMJ as a sector is set to rise in the next few years while most of the stocks have valuations that are more than sky high. So if you are playing momentum, you have to watch your back. If you are playing company fundamentals then you will likely be well rewarded.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.