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

1. Is August coming early this year?

• VALUATIONS DOWNGRADES &. FRESH US GOVT STIMULUS?
• COVID PROGRESS or SECOND WAVE?
• Apple,  Amazon.com and Google parent Alphabet — all reporting after the July 30 close.

HW: Regardless of the trading excitement July 30 brings, August IS coming!

Whether stocks rally next week while waiting for July 30, and whether they rally or not July 31, market risk is highly elevated this August:

While buying on dips may work at times for day traders this coming week, it will NO LONGER automatically be profitable for position traders i.e. August is coming soon, is it not?

Going forward, economic activity caused by the pandemic will bottom out in the Third-Quarter GDP.

This recovery, however, will be uneven & while a faster recovery than in the past, it will NOT a super charged V.

We see a U [or “skinny U”] US economic recovery but stock markets NOT V, L or U but W. 

Q4 US GDP will highly depend on US election outcome.

For Q3 we project 8-10+% market correction from Q2 2020 close.  

RECOMMENDATION: 100% Protection until September.

2020 Market Close Target V1.2:  SPX 3069  NASDAQ 9188

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 –
• Trillions of dollars of cash on the sidelines +
• China Risk elevated +/-  
• Central Bank Support Measures +/-
• Numerous geopolitical hotspots (black & white swan events) –

The Good News this = Opportunity 

OUR VIEWS:

1. We have a short bias given elevated market risk now until late Summer. 
2. 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;

• After hard rallies or market drops, it is smart to book profits.
• Watch +/- DJIA 26,500 NAS 10,400 & 27,000 & 10,849 

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 + Fall Astro, ++ Astro Nov/Dec First buy 14.88 Second Buy 14.80 Sold 16.50 & 1580 Rebuy late Summer

Silver Astro is becoming positive First Buy 11.80 stop 21.80

Copper + This now has MOMO and no longer just a deep pocket hold: 2.80 SUPPORT 3 RESISTANCE

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

We have a short basis into August: RISK 3250-3300 SPX REWARD 2900-2850-

2020 Market Close/Trading Target V1.2:  SPX 3069  NASDAQ 9188

DJIA SOLD 26000, 27000, 27001

SPX  SOLD 3150, 3150, 3145

NASDAQ  SOLD 9940, 10400, 10512

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

1. DJIA 22500-23830  
2. NASDAQ 7700-8300
3. SP 2600-2750

2. Could Apple, Amazon and Facebook be among companies that will be around in 100 years?

We await an August correction. Until then

We advise only fresh buying special situations &/or accumulating very undervalued quality stocks for the long term.

Favorite H2 2020 Sectors:

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

Short term we are downgrading technology for the forecast August correction.

Intermediate term we are downgrading Select Health Care (lower cost/better outcome) due to potential future political risk e.g.Trump signs orders to lower prescription drug prices.

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 near ideal prices if/when seen again [August?].

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

   

3. Wall Street Is Throwing Billions at Once-Shunned Gold Miners

Gold may soon be ready to test its all-time high, while Silver $20 resistance is now support. 

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

Here the trend is MOST definitely your friend. Review past WSNW and AFUND luncheons & conferences for many good ideas that can be quite profitable this coming Fall/Winter.

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

Now along with other commodities, a weaker US$ has helped it get it MOJO back.

Intermediate and longer term it sports favorable fundamentals.

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

Please note gold is under Highly favorable astrological influences late Q3 & Q4.

Longtime Gold bugs are happy that more generalist investors are beginning to join the party:

In addition, many 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 until Fall.

• 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 are hedging record equity prices by buying gold. They will not be unhappy. 

Gold FV $1610= Commodity FV: 1535 + Currency FV: 1650 + Inflation Metal FV: 1455 + Crisis FV: 1800.

INVESTORS: We plan to stay LONG in H2 2020 (recommending a precious metal sector buy rating, with occasional hedging, selling or profit taking before the Fall).

 

4."It's been an unbelievable ride for the Nasdaq and tech over the last two months. A well-deserved correction makes a lot of sense in our view."

Ryan Detrick, senior market strategist, LPL Financial

HW: Especially given Nasdaq’s August horoscope!

“Based on the bullish fundamentals, which include a downward trending dollar and falling real yields, it is only a matter of time until we see [gold] new all time highs though.”

Tyler Richey, co-editor, Sevens Report Research

HW: Yes.

“The pace of this thing is unbelievable. People just want to buy, buy, buy, they just want to be in -- they don’t want to miss it. People are preparing for more money printing, lower dollar in the future and hedging. And there’s no yield on Treasuries right now, so gold is a safe spot given the circumstances of the central banks and the coronavirus.”

Bob Haberkorn, senior market strategist, RJO

HW: Yes, only gold is as good as gold!

 

5. Apple, Microsoft, Amazon, Google And Facebook Make Up A Record Chunk Of The S&P 500. Here’s Why That Might Be Dangerous

 

6. READER: Hope all is well.  How are you?  I like electric vehicles  sector. This requires lots of lithium, cobalt and others. Do you see any  interesting plays?  My friend  bought  pll

HW: Our 3 favorite lithium plays are currently:

Piedmont Lithium, Standard Lithium and Lake Resources- we are watching a few others.

READER: From June end we went long. Kindly advise, when this when the longer-tern trend changes from LONG to SHORT in near future and for how long.

HW: I do not know what you are long, nor can I give you individual advice.

However, with the exception of precious metals and a few other sectors, most stocks are highly overvalued and whether markets break today or wait for Apple or geopolitical news, one should have portfolio protection for most of August.  If you have profits in your trading, then either take some of it or place trailing profit stops is my general advice.

PS You should also subscribe to our free twitter feed @tafund if you haven’t already.

 

READER: Where is Tesla (TSLA) stock headed?

HW: Last week we recommended a fresh $1650 short: P1 1400 P2 1300 P3 1150 but there is no good FUNDEMENTAL reason for the stock to be above $1000.  Then again, there is was no good fundamental reason for it to be above $1750 (our first short)!