Financial astrology: Stocks valuation have been undervalued

1. MARCH MARKETS

2. UP STARS/DOWN STARS

3. GOLDEN OPPORTUNITIES

 

1. Debt default risks are high 2020-2021

Lebanon, Shale Oil Companies and the list will grow

The Bad News

• Q1 GDP maybe <1%, Q2 possibly 0 or n -

• Debt Defaults.

The Good News this = opportunity

Just as the markets > SP 3150 was excessive, so was it < 2600.

NO rush to buy, but smart to slowly & selectively invest ~ 2020, 2019, 2019 lows &/or as close to "ideal" prices as markets allow.

 

OUR VIEWS

TRADERS SHOULD DAY TRADE OR HAVE DEEP POCKETS;
INVESTORS MAY REQUIRE A LONGER TERM HORIZON THAN NORMAL.

Stock valuations have been UNDERVALUED this past week...
There is a 25% chance the H1 2020 bottom is in, accordingly we have or would have up to 20-25% of cash this past week selectively added.
Broadly speaking we have projected project an M market (W starting 2020) but NOT a V (or L).

INVESTORS: Distinguish between companies that will Benefit from current crisis: BioTechs, home delivery, Cleaning Services, Streaming Video services & those that have a long hard road ahead such as restaurants, cruise lines, airlines, and hotels. Also, low oil prices are a positive for consumer and some companies and despite a change in sentiment expected shortly, it will still be a difficult year. BUT AT THE RIGHT PRICE, AND RIGHT TIME FRAME THE COVID CRISIS REPRESENTS DANGER & OPPORTUNITY.

Commodity Trading buys:
GOLD ~1485 OB (+ Astro is Fall, ++ Astro Nov/Dec)
Oil ~35 OB (but + Astro is April/May).
First Buy 30 Silver ~15 OB (but Astro is negative March/April) First long term buy 13.50-14.50.
Copper <2.50 but is a deep pocket H2 2020 or 2021/2022 hold) Fully allocated otherwise 246 OB

 

The Following is subject to revision as it may not fully reflect Covid-19 or the FOMC March meeting.

• DJIA ~ 26000

• NASDAQ ~ 8500

• SP 2900

• CNY 6.97-7.03

• US$ 97.50-99

 

IMHO "Improper" Valuations

• COPPER < 3

• BITCOIN > 1000

• GOLD > 1485

• Oil < 38-40

• SILVER < 16.25

 

HYDE PARK SOAPBOX:

 

KEY DATES: MARCH 17-20

DJIA: 22000 SUPPORT R1 24000 R2 25000 R3 26500

SPX: 2600 PIVOT 2900 RESISTANCE

NASDAQ: R1 8000 R2 8500 R3 8800

GOLD: 1523 PIVOT

SILVER: 14.80 SLOW ACCUMULATE 14.50 OB

OIL: 32 PIVOT R1 35 R2 38 R3 40

COPPER: S1 2.40 S2 2.46 S3 2.50 R1 2.54 R2 2.58 R3 2.60

US 10 year WATCH

BITCOIN: S1 5000 S2 4000

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 $1444 to 1488.

Reduce Risk and Focus on Capital Preservation:

THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK.

1. 2. We are looking to buy not only special situations now but also accumulate undervalued quality stocks for the long term while keeping plenty of powder dry for August.

2. Choose your favorite stocks and (near) ideal prices and patiently bid for them. 20-25% of cash employed but NO margin before May but it isn't over the Fat lady sings.

 

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 easily outperform index funds in 2020.

2. We correctly identified a successful sell of Silver at 18.80. Given it has negative astro in March/April, we are happy to see it undervalued < 15 but may wait a little before buying.

Copper remains highly undervalued. It was a pawn of the US/China trade spat, while now Chinese coronavirus is hugely hurting sentiment. Short term is mixed to bearish, but longer term this remains a "deep pockets" BIG win.

Thanks to the FED, we raised our FV of Gold from 1444 to 1485. We note gold is generally under favorable astrological influences in Q1 2020 and then Q3 & Q4 is HIGHLY favorable.

Gold bugs are also happy now that more generalist investors are beginning to join the party: However, we still see it as somewhat expensive, albeit short term "justified" due to Central Bank action and assorted potential global swan events. In addition, a number of major brokerage houses give a $1800-$2000 year-end target. While not (yet) our bet, it is NO LONGER TOTALLY PIE IN THE SKY!

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 hence we maintain a full portfolio allocation.

We advise precious metal investors to pay attention to stock selection but only selectively add before Q3 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 were hedging record equity prices by buying gold. They were not unhappy until recently.

Gold FV $1485= Commodity FV: 1410 + Currency FV: 1480 + Inflation Metal FV: 1400 + Crisis FV: 1650. 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 at times short gold above $1650 & buy below $1500. For silver our current selling numbers remain $18.25 - $20. We will be happy to reBUY Gold cheaper ideally < 1485 & Silver <15 in Q2 2020.