Markets sport a less favorable Risk/Reward short term

FINANCIAL ASTROLOGY FOR THE SUCCESSFUL INVESTOR AND TRADER                                                                         

 

OCTOBER MARKETS

UP STARS/DOWN STARS

GOLDEN OPPORTUNITIES                        

QUOTES

ON THE WEB

LETTERS 

 

1.1. IS IT TIME TO MAKE THE DONUTS? YES AND NO!

Beginning this week, markets sport a less favorable Risk/Reward short term.  At the same time, downside is likely limited, if at all, and of short duration.

Given a future bifurcation market before AND after US Midterms (but not necessarily the same sectors) we think Long/Short pairing prudently profitable.

Also we again STRONGLY advise either taking some chips off the table or place trailing profit stops. Fresh Shorting, however, will be selective e.g. TSLA ~ $300.

SHORTING TRIGGERS ON WATCH:

SPX 2950+

BONDS ~3.20

 

Is there a COMPELLING REASON to SELL NOW?   No, but we repeat it is prudent to consider reducing or adding protection this week and before US Midterm Elections.

Given “reasonable” Price Targets have been reached or exceeded, it is time to Protect (stops), Rotate and/or selectively Distribute/Sell.

If you are not an active trader, it is wise to protect profits with appropriate trailing stops, but also not to miss the part of the upcoming TRADE WAR VICTORY RALLIES.

Over time employ Sector rotation into MAGA stocks;

Using stops and hedging, raising cash and/or writing calls promotes sound sleep.

New trades and some investments be in Long/Short Pairs

 

BOTTOM LINE:

Given rising inflation, geopolitical and trade war risks, emerging market concerns as well as frequent overvaluation, we advise to Take/Protect some Trading profits ahead of the Fall US Midterm elections.

While most “concerns” are merely noise; however, three factors we are watching are:

The market’s short-term reaction to trade war issues (Our view ultimately positive)

The November US election anticipation & reactions: Be prepared to buy any serious dip circa the US Midterm elections!

The 7th or 8th  Fed interest rate increase in January or December can trigger a short-term drop in markets.

 

Proper Valuations:

DXY ~ 94

TIPS  111 OB

US 10 Year Bond ~ 3+

 

IMHO “Improper” Valuations

OIL > 70

COPPER < 3.20 

BITCOIN > 4500

GOLD < 1375

SILVER < 18

 

TRADING NOTES

We are hardly bearish: given the growing strength of the US economy, company profits and labor market along with sky high US consumer confidence and stock buybacks as well as President Trump’s 2018 Horoscope. While DJIA, NASDAQ & SPX HAVE ALL REACHED PROTECT ZONES as forecasted, they easily can rally higher as THE US TRADE WARS ARE WON! 

Note we do not plan to short aggressively before early 2019 (or Late December 2018)

 

CURRENT POSITIONAL TRADES: 

Triple Long DJIA  23860, 23960 & 24,334

Triple Long Gold 1290, 1280 & 1266

Triple Short Bonds 2.86, 2.78 & 2.84

Triple Short BTC 19,000, 7400, 6200 

 

TRADING HEDGES: 

Sell Oil 73.50/Buy Copper  2.95  Oil unwound 68.00 Resold 72.50

Sell Oil 74.00/Buy Copper 2.83   Oil unwound 66.20  Resell 74 MIT

Sell Oil 73.33/Buy Copper 2.75   Oil unwound 68.20  Resell 76 MIT

 

Buy Gold 1188/Sell BTC 6380

Buy Gold 1182/Sell BTC 6650

Buy Gold 1196 /Sell BTC 7370

 

PLEASE NOTE I will be in Hong Kong Oct 8-27 AND HENCE WALL STREET, NEXT WEEK NEWSLETTER THEN WILL BE IRREGULAR.

KEY DATES:      OCTOBER 2, NOVEMBER 6/7

DJIA:                    R 1 26616  R 2 26743

SPX:                     2888 PIVOT R1 2900 R2 2950  R3 3000

NASDAQ:            R 1 8000 R2 8200 R3 8500 
GOLD:                 1198 PIVOT

SILVER:              1450 SUPPORT?  R1 1500  R2 15.50 R3 16 R4 16.98 R5 18

OIL:                      R1 72.50  R2 74  R3 76

COPPER:             STEADY ACCUMULATE: H2 2018-2019 à3.50+

US 10 year          IT à3.20

BITCOIN:             6800 RESISTANCE S1 6600 S2 6200  S3 6000 H2 2018 à 5000 OL

TIPS:                    TIP H2 2018 à 1.11-

The Market Marker remains some cautious concern.

 

2017 CLOSE:          DJIA 24719 SPX  2673 & NASDAQ 6903

2016 CLOSE:          DJIA 19762 SPX  2238 & NASDAQ 5383

2015 CLOSE:          DJIA 17425 SPX  2044 & NASDAQ 5007

AFUND Fair Value: GOLD $1375
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK.

 

2.      2. TESLA (TLSA) SHORT TIMELY BULL EYE!  P2 255  P3 215

Despite the SEC settlement this weekend, intermediate-term this may not be enough to make current shareholders happy!

NOW is a good time to begin to prepare a list of the price of stocks you own you want to Sell (or stop)  and those you wish to Buy following any BIG market rally or upset respectively.

BUSINESS & BANQUETS

At Fall Sidoti Conference, we listened and liked the story of the four companies on our Buy or Watch list:

First Choice Healthcare (FCHS), Golden Valley Mines (GZZ.V) , Piedmont Lithium (PLLL) and Trecora Resources (TREC).

3. Who in the right mind is selling gold now?  Only computers programs but with some new Saturn influence on Gold coming this week- will it be more “difficulties” or some “reality”- the latter is My best!

We continue to recommend Maximum Allocation or fresh precious and base metal investments for the intermediate and long-term, given that the precious metal sector, as well as copper, is obviously very undervalued!  Also, despite headwinds from rising US interest rates,  we see less competition from MMJ & Bitcoin “investors” intermediate and long-term.

Despite reducing the Fair Value of Gold $15 to $1375, a $1400 test before 2020 seems reasonable. With seasonal strength coming and with unfavorable astro ending, 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 $1375 = Commodity FV: 1332 + Currency FV: 1380 + Inflation Metal FV:1380 + Crisis FV: 1408.

Gold/Silver ratio à 74  Silver FV $18+.

INVESTORS: We plan to stay LONG in H2 2018 (recommending a precious metal sector hold rating and only occasional hedging, selling or profit taking).

We remain disinclined to short or sell until gold is overvalued e.g. $1400-1450. For silver our first selling numbers remain $21+. 

 

4. “In sector reallocation, momentum certainly plays a role, and we are still very early in the momentum of the healthcare sector.”

David Lafferty, chief market strategist, Natixis Investment Managers

HW: We agree a 2019 Favored Sector.

 

“You might argue our valuations are a little bit ahead of our skis.”

Paul Rosen, chief executive officer, Tidal Royalty Corp

HW: Only a little???? Cf.  Something important to remember as pot stocks go crazy…. The legal cannabis market isn't going to be that big

 

"It's actually been a U.S. bull market - very little else has done very well."

Guy Miller, chief market strategist and head of macroeconomics, Zurich Insurance Group

HW: The reason should be obvious.