Wall Street next week: Financial astrology for the successful investor and trade

1. 66% of Investors Regret Impulsive or Emotional Investing Decisions, While 32% Admit Trading While Drunk

HW: Now I better understand market trading today 

YELLOW/RED ALERT: IT IS ALMOST CERTAIN (90%) THAT MARKETS WILL CORRECT BEFORE OCTOBER OPTIONS EXPIRATION!

"Managing the risk is a really important part.

It's not about trying to shoot for the highest rate of return you can; it's about protecting what you have."

Leyla Morgillo, CFP, Madison Financial Planning Group

We continue to maintain defensive protection:

High cash levels cash, low or no margin, writing calls, hedging, very short-term trading, a few October puts and buying only special situations in early Fall.

We are not buying today’s pyramid games will continue forever.  Some possible landmine triggers beyond Delta/Lambda Covid fears include: 

• Inflation > 5%
• High Taxation
• More Market Stumbles like AMZN
• Bitcoin collapses (28K support broken which it will sooner or later) would do it. Cf: bitcoin-why-you-should-be-terrified-of-owning-btc
• TNX >1.50-1.75.
• A change in perspective- comparing not to last month or last year, but a longer term horizon leaves little upside to analyst projections.
• Fall FED tapering or warning of future course shift or simply losing credibility!
• The usual assorted geopolitical threats especially US/China aggressive escalation.

I am unwilling to buy at today’s prices, especially SPX > 4000: given the downside risk & its obvious P1 correction target.

Outside of day trading and special situations, we plan to sell/short and wait to buy if/when markets are 12%-20% lower. 

PIVOTS         2020 Close  10%-            Nov 3                                                                                                                              

DJI 35000      30606          31963           27480          

SPX 4450       3756             4075             3369            

NAS 1480    12888          13842           11160

BE PREPARED

Inflation is currently solidly above 5% and I don’t believe it is just “temporary”; if/when the global economy slows, we are likely to see STAGFLATION!

Given still high valuations, we do not see sufficient FUNDEMENTALS (Fed accommodation, Vaccines & Stimulus Packages) to justify SP500 earnings.

Our recommendation continues to be maximum portfolio protection.  

TSLA, BTC, VIX, GME & TNX are our five market “canaries in the coal mine”:

When three or more canaries sing, be ready to Head for the Hills (&/or your nearest bar).

TNX:              > 1.50-1.75

TSLA:            < 695-666

VIX:               >22-26

BTC:              < 42-30K

GME:*           <50-30

*Gamestop & stocks such as AMC [>20] or COIN [>225] are like Bitcoin, their trading has little or no relationship to reality. 

Public valuations of large, mid and small cap companies remain near their highest levels in recent history.

Short of a reality check that the emperor has NO clothes, newbies learning that all stocks do NOT go UP ALL the time can also time market tops).

TRADERS DO QUICK DAY TRADES OR HAVE VERY DEEP POCKETSMARKER SHORTS: DJIA 35051, 35208 & 3515 SPX 4411, 4436 & 4468 NASDAQ 14836 & 14835

• After hard rallies or market drops, it is smart to book some profits.
• Odds of a market drop before the end of September is EXTREMELY HIGH – We stay prepared!
• We plan to add more TNX (10-year US Bond) shorts this week as well protect/dance around positional shorts as needed.

TRADING                                                                      

Gold             Buy on dips Rinse and repeat & repeat Last buys 1763, 1750, 1740 SOLD 1790

Silver            Accumulate on dips < 24 Buys 25.15, 24.33, 23.25 SOLD 24.79

Copper         4.25 Pivot

Oil                68 PIVOT Sell 71-74

TNX              1.40-1.75 Targets Sell 1.25, 125 BOUGHT 1.30

KEY DATES:        SEPTEMBER 7/8, 22-24

DJIA:                    35000 S1 35500 R1

SPX:                     4550 PIVOT S1 4500 S2 4400 S3 4333

NASDAQ:             15000 S1 14880 S2

GOLD:                  R1 1844

SILVER:                24 PIVOT R1 25 R2 26 R3 30

OIL:                       68 PIVOT  66 S1 70 R1

COPPER:              4.25 PIVOT S1 4.10 R1 4.40 R2 4.50

US 10 Year:          1.25 R1 1.30 S1 1.40 S2 1.50

DXY:                      92 PIVOT R1 94

VIX:                       16 PIVOT R1 18 R2 22 R3 26

BTC:                      50 PIVOT S1 50K R1 52

 2020 CLOSE:          DJIA 30606 SPX 3756 & NASDAQ 12888

2019 CLOSE:          DJIA 28508 SPX 3231 & NASDAQ 8823  

2018 CLOSE:          DJIA 23327 SPX 2506 & NASDAQ 6635

AFUND Fair Value  GOLD $1844

Reduce Risk and Focus on Capital Preservation:

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

2. The Astrologers Fund2021 Stock Market FORECAST update - YouTube

HW: Outside of special situations we do not plan to add positions until at least the Fall equinox.

General Advice:

• Review your Portfolio Holdings for possible changes.
• Prepare a list of GOOD stocks to buy AFTER a 15-20% correction. Choose your favorite stocks and patiently bid for them.  
• Stock selection is important. Include some stocks sporting strong cash flows, sound balance sheets & growing dividends.
• Include some investments that can benefit from higher inflation such as gold, TIPS, utilities, Art/Blue Chip collectibles and selective real estate etc.

Favorite H2 2021 Sectors:                                                                          

Entertainment, Mining & Technology [AFTER a 20% correction if Undervalued & Highly Scalable]

Currently we are also watching some Select Health Care (lower cost/better outcomes, & Distressed Investing for H2 2021.

 3."Gold backing up to its upward-sloping 24-month moving average in what we see as a dip in a bull market."

Mike McGlone, senior commodity strategist, Bloomberg Intelligence

HW: Gold has entered its favorable seasonal cycle.

Note: One can only imagine when Bitcoin meet reality, how it would likely to usher in a rapid source of many new gold investors.

Gold Fair Value is $1836 with $1750 support and $1925 overhead resistance.

Silver Fair Value $26 with possible support tests upcoming (possible opportunity for long term accumulation) and $22 Support & $30 overhead resistance.

There are many good buys in the precious metal space depending on your time frame & risk/reward desires.

Gold: Fundamentally the global political and economic situation is very favorable for gold but mixed for Silver (as also an economic metal).

Precious metals remain favorite sections. Many generalist investors now have some interest in Metals and Mining.

Also, it is under allocated by most investment programs, this gives it even more potential room to run, especially as inflation fears resurface &/or if US dollar weakens!

Hence, we recommend a full and over weighted precious metals portfolio allocation.

However, we advise long term precious metal investors to also pay attention to stock selection.

• Gold remains cheap geopolitical crisis insurance.
• For investors who cannot or will not buy the $US currency as well as investors who wish to safely and cheaply h nbakish@outlook.comedge their US$ exposure, ONLY GOLD IS AS GOOD AS GOLD!
• Once again, some investors are hedging record equity prices by buying gold.
• Low real interest rates is positive for gold as well as low global bond yields makes gold an attractive alternative risk mitigation hedge.
• We expect precious metal stocks to outperform physical gold & silver in 2021.

Gold FV $1844 = Commodity FV: 1680 + Currency FV: 1812+ Inflation Metal FV: 1844 + Crisis FV: 2040

INVESTORS: We will stay LONG in H2 2021 both as an investment and as a portfolio hedge.

4. Summer Seasoned Speculator picks: On Hold

Many picks are best for speculative portfolio allocation and as such bought as a member of a group of 5 to 10 such stocks.

Remember NOT to ignore potential High Risk - meaning use speculative allocation i.e., “money you can afford to lose without altering your lifestyle.”

Always do due diligence before deciding to act. 

5. “If you look back at the last five post-Labor Day weeks that have happened with the market near all-time highs, the post Labor Day week is the worst for September.” 

Art Hogan, chief market strategist, National Securities

HW: Worse than week four & September 22-24, maybe NOT!

 “My outlook for the last several weeks is sideways to moderately higher, and that seems where they’re headed. There isn’t a lot of bearish data accumulating. At worst we go sideways.”

Randy Frederick, managing director of trading and derivatives, Charles Schwab.

HW: Not our bet.

 "I don't think there's any question that back-to-school is going to be far stronger than last year."

Michael James, managing director of equity trading, Wedbush Securities

HW: Duh!