Wall Street Next Week: Financial astrology for the successful investor & trade

1. JULY MARKETS                                              

2. UP STARS/DOWN STARS

3. GOLDEN OPPORTUNITIES                        

4. QUOTES

5. ON THE WEB

6. LETTERS

 

1. 7 reasons the stock market may face a severe bout of turbulence next week and beyond—only one is rising coronavirus cases

HW: You are ignoring perhaps the most important reason- #8: Astrology!

At SPX 3000 & DJIA we may be close to the year end Market Close.  Hence still too early to buy in general, both in time and price.

Stocks are down today Time to BUY? Hell NO! Smart investors will be buying when market valuations on a risk adjusted basis are more compelling. Then we also rotate from a “quarantine” to a “recovery” portfolio. @tafund 6/26/20

 Markets Can be nearsighted or farsighted = Vol

M/Mov the economy looks good, Y/Y terrible

Focus can shift from the Fed put to Covid to ?? = Vol

No matter August is coming & we played it again Sam at SPX 3150

 Going forward, economic activity caused by the pandemic should bottom out with Third-Quarter GDP Bottom Bouncing due to Reopening Efforts.

This recovery likely will be uneven and while faster recovery than in the past, it will NOT a super charged V. We see a U US economic recovery but stock markets NOT V, L or U but W. 

Q4 GDP will highly depend on US election outcome.

 For Q3 we project 8-10+% market correction from current levels.  

RECOMMENDATION: 75% Protection now & 100% Before August.

 SOME KNOWN UNKNOWNS: 

• US Politics (July & August - November ?)
• Oil Low oil prices are a positive for consumers and most businesses +
• Covid Vaccine/treatment/testing & Reopening Progress
• Debt Defaults - (ongoing)
• US GDP Negative - (Negative Q2 2020 with High Unemployment )
• Rising (Record) bankruptcies H2 2020
• Stock Buybacks & Dividends reduced or dropped -
• China Risk elevated (– June)
• Numerous geopolitical hotspots (black & white swan events) –

 The Good News this = Opportunity 

OUR VIEWS:

• We have a short bias into August as there is high risk in the market now until late Summer. 
• POST SUMMER INVESTMENTS SHOULD BE TARGETED FOR A POST COVID-19 WORLD:

for a “Recovery” rather than “Quarantine” portfolio.

 TRADERS SHOULD DAY TRADE OR HAVE VERY DEEP POCKETS;

• Current high volatility making directional bets dangerous.
• After hard rallies or market drops, it is smart to book profits. 

INVESTORS REQUIRE A LONGER TERM HORIZON THAN NORMAL.

We are no longer accumulating but selling stay-at-home stocks that have been winners from this crisis.

We will be planning a different strategy for the post November US Presidential Election.

Conservative investors may prefer Water Utilities, TIPs or high quality corporate bonds and dividend-paying stocks

AT THE RIGHT PRICE, AND RIGHT TIME FRAME THE COVID CRISIS REPRESENTS DANGER & OPPORTUNITY.

 Commodity Trading:

Gold + Astro is Fall, ++ Astro Nov/Dec) First buy 14.88  Second Buy 14.80 Sold 16.50 & 1580 Rebuy < 1600 OB

Silver Astro is no longer negative cf March/April) First Buy was 11.80 stop 17.20

Copper + This is a deep pocket H2 2020 or 2021/2022 hold Fully allocated from current & higher prices.

 TRADING: Our approach is to enter early and exit early, lots of profit none-the-less.

We have a short basis into August: RISK 3150-3200 SPX REWARD 2900-2850-

DJIA

SPX  SOLD 3150, 3150, 3145

NASDAQ  SOLD 9940

 The Following prices are comfortable accumulation zones for us if/when next seen (late Summer?).

• DJIA 22500-23830  
• NASDAQ 7500-8300
• SP 2600-2750 

HYDE PARK SOAPBOX: Investment Guru Jim Rogers: The Value of Bitcoin Will Drop to Zero

SAVE THE DATE:

July 15, 2020 2:44 pm ET AFUND 2020 Stock Market Update Online Seminar

KEY DATES:       June 30 July 2/3, 30

DJIA:                   25000 SUPPORT?

SPX:                    3000 PIVOT S1 2980  S2 2958 S3 2900

NASDAQ:            S1 9800 S2 9500 S3 9000

GOLD:                 1750 SUPPORT/PIVOT  R1 1800

SILVER:              17.80 PIVOT

OIL:                     38 PIVOT 40 RESISTANCE 35 SUPPORT

COPPER:            2.58 PIVOT

US 10 year          WATCH

CNY                    7.10 PIVOT                       

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 $1592.

Reduce Risk and Focus on Capital Preservation:

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

 

2. Our current focus continues to be reducing portfolio risk:

Before Fall, we advise just buying special situations and/or accumulate highly undervalued quality stocks for the long term.

 

Favorite H2 2020 Sectors:

Entertainment, Mining, Safety & Security & Technology (Undervalued & Highly Scalable)

We are intermediate term downgrading Select Health Care (lower cost/better outcome) due to political risk.

Stock selection is important. When possible, we prefer to recommend stocks sporting strong cash flows, sound balance sheets & growing dividends.

Choose your favorite stocks and patiently bid for them at “ideal prices” if seen again [August?].

Avoid margin and always remember that it isn’t over the Fat lady sings [August?].  

 

3 HW: Goldman Sachs just updated its three, six and 12-month gold price forecasts to $1800/1900/2000 from $1600/1650/1800 and maintained its long December 2020 gold trading recommendation. Seems like gold investors have more friends these days!

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

Review past WSNW and AFUND luncheons & conferences for many good ideas that can be quite profitable this coming Fall/Winter.

Copper remains undervalued largely as a pawn of the US/China trade spat & Wuhan Virus.

Intermediate and longer term it is attractive and longer term this remains a “deep pockets” BIG win. 

Gold: Fundamentally there is short term decrease in mine supply COUPLED with increasing investor interest.

We note gold is generally under Highly favorable astrological influences later in Q3 & Q4.

Longtime Gold bugs are happy that more generalist investors are beginning to join the party: In addition, major brokerage houses have $2000+  price targets into 2021.

These views now seem achievable especially if/when inflation fears resurface and/or a falling US dollar!

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 & Winter, 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 until August.

• 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!
•  Once again some investors were hedging record equity prices by buying gold. They will not be unhappy. 

Gold FV $1592= Commodity FV: 1525 + Currency FV: 1625 + Inflation Metal FV: 1450 + Crisis FV: 1768.

INVESTORS: We plan to stay LONG in 2020 (recommending a precious metal sector buy/hold rating and occasional hedging, selling or profit taking before the Fall).

We will be happy if allowed to BUY more Gold cheaper ideally < 1592 & Silver at that time.

 

4. “Any disappointment should be fleeting; this is old news, and the leading indicators for home sales are soaring.  The summer will be strong.”

Ian Shepherdson, chief economist, Pantheon Macroeconomics

HW: There is pent up demand along with record low mortgages.

 

“Valuations are a clear negative for the US equity market.”

Lori Calvasina, head of U.S. equity strategy, RBC Capital Markets

HW: For the SPX above 3050 that is true.

 

“As good as the recent economic data has been, we want to make it clear, it could still take years for the economy to fully come back.”

Ryan Detrick, senior market strategist, LPL Financial

HW: Yes.

 

5. ‘Black Swan’ author says if investors don’t use a ‘tail hedge,’ he recommends ‘not being in the market’—‘We’re facing a huge amount of uncertainty

 

6. This intentionally left blank.