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

1.Market risk/reward remains unfavorable into H1 September:

It is quite possible this week the question changes from “How high is UP?” to “how low and for how long?”

OUR VIEWS:

1. Given the economic damage of the Covid Crisis, fundamentally, intermediate term Risk/Reward favors the bear case. Hence, we plan to keep our short bias until late Summer. 
2. POST SUMMER INVESTMENTS WILL BE TARGETED FOR A POST COVID-19 WORLD:

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

TRADERS SHOULD DAY TRADE OR HAVE VERY DEEP POCKETS;

1. Elevated Volatility = After hard rallies or market drops, it is smart to book profits.
2. Market bulls will become frightened when DJIA 28,000 & SPX 3400 intermediate support becomes overhead resistance levels.
3. Watch AAPL & TSLA: When these Nasdaq stars lose momentum, look out below! The time is now

INVESTORS REQUIRE A LONGER TERM HORIZON THAN NORMAL.

Where appropriate, we recommend selling or placing trailing profit stops for most stay-at-home/Covid stocks that have been winners from this crisis.

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

Until then, conservative investors may prefer Water Utilities, TIPs or high quality corporate bonds and dividend-paying stocks. 

Alternately, quality overvalued stocks such as Disney (DIS) & Dollar General (DG) will maintain value on a relative basis long term.

Aggressive investors will wait and watch to pounce on misunderstood wounded winners.

Regardless of your risk preferences, precious metals will continue to shine this Fall!

INVESTING: We continue our recommendation for 100% protection into H1 September.

TRADING: Our approach is to enter early and exit early, medium risk with good profits none-the-less.

For the next week or two, we plan to keep a short basis into H1 September:

P1 Trading Target V1.9 7/31 MOC:  DJ 26377 SPX 3271 NAS 10745

The Following prices would be comfortable initial INVESTING accumulation zones for us IF/when next seen (late Summer?):

DJIA 25000-26000  

NASDAQ 8600-9000

SP 2850-3000

 Commodity Trading:

Gold + Fall Astro, ++ Astro Nov/Dec  Rebuy late Summer Current Trading Range $1850-2050

Silver Astro is generally positive  $22 Support $25-26 Pivot R1 28 R2 30

Copper 3 PIVOT 3.25+ Intermediate term target

KEY DATES:       September 17/18 22/23

DJIA:                   28508 PIVOT

SPX:                    3231 SUPPORT

NASDAQ:            10200 SUPPORT

GOLD:                 1900 SUPPORT R1 1950 R2 2000 R3 2100

SILVER:               S1 26 S2 25 S3 22 R1 28 R2 30

OIL:                      40 PIVOT

COPPER:             2.98 PIVOT R1 3.10 R2 3.25

US 10 year           WATCH

CNY                     WATCH                       

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 $1666.

Reduce Risk and Focus on Capital Preservation:

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

3. Options Traders Whipped Up Stock Boom With SoftBank Buying

 

Tesla <TSLA> will not be added to the S&P 500 in September as many expected as unveiled by S&P Dow Jones on Friday.

“The Champagne was on ice to get into the S&P 500, [it] was baked into shares. This was a bit of a shocker and the Street assumed this was a foregone conclusion. Tesla not getting into the S&P 500 club is a head scratcher and the stock will likely be down for the indexing implications.”

Dan Ives, analyst, Wedbush

HW: I disagree. It was the right decision as well as expected by us (and hence our repeated TSLA short recommendations):

Re: When Nasdaq stars AAPL & TSLA lose momentum, look out below! TSLA P1 360 P2 330 P3 288

 

We have a list of stocks to buy AFTER a correction. If there is not one upcoming soon, or before the November election (unlikely?), then we will remain highly liquid.

We continue to protect our H1 profits, and only selectively add stocks in our favorite sectors.

 

Favorite H2 2020 Sectors:

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

Short term we continue our technology downgrade into H1 September e.g. TSLA,republicans-serious-big-tech-antitrust and/or China issues.

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. However, longer Term, global heavy weights like JNJ and PFE will be safe and profitable harbors.

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.  

3. While ready and able, we continue a watchful wait before adding to our full allocation of gold and silver stocks instruments.

1. $1900 technical support level for Gold continues to hold.  Despite being overvalued, given strong astro this Fall, owning gold and silver we believe should continue to well reward investors by 2020 Year end.

Given newbie gold investors have little knowledge of the industry and many are accustomed to Tech valuations, is there an upper limit to Gold or Silver pricing? Maybe not! Currently, Gold is in an 1850-2100 trading range.

Silver $22 resistance is now support with P3 30 overhead resistance. 

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 WSNW and AFUND luncheons & conferences for many good ideas that should continue to be very profitable upcoming Fall/Winter.

 

Our Upcoming our September 11 Natural Resource & Entertainment Luncheon Symposium at the Princeton Club is now a webinar:

Company presentations: Comstock Mining, Appreciated Media & Tonogold Resources

Fri, September 11, 2020

12:00 PM – 2:00 PM EDT   

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

Now intermediate and longer term it sports favorable fundamentals – Currently we are watching previous $3 resistance become intermediate term support.

Gold: Fundamentally there was a 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. Given it is under allocated by most investment programs, this gives it even more potential room to run, especially if/when inflation fears resurface &/or if/with a falling US dollar!

We believe gold & silver valuations will largely sport well above Fair Value in this Year of the White Metal Rat (2020).

Just as they were 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 very positive for gold.

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

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

1. Gold remains cheap geopolitical crisis insurance.
2. 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!
3.  Once again some investors are hedging record equity prices by buying gold. . 
4. Ultra-low global bond yields makes gold an attractive alternative risk mitigation hedge.

Gold FV $1666= Commodity FV: 1600 + Currency FV: 1650 + Inflation Metal FV: 1564 + Crisis FV: 1850.

INVESTORS: We plan to stay LONG in H2 2020 with occasional hedging, selling or profit taking before the Fall.

Note: Our current Fair Value for Silver is ~$21. 

5. 4.“For August, we have seen a number of big trades turn sour for short sellers driving heavy cumulative losses, but as we have seen so many times throughout the pandemic, the pendulum can quickly swing the other way and it wouldn’t be a surprise to see a reversal of fortunes next month.”
6. Peter Hillerberg, co-founder, Ortex Analytics
7. HW: Computer algos love to play ping pong, do they not? 

“We might finally see some rotations that could lead to new market leadership. That’s something we’ve been lacking for a long time.”

Peter Cardillo, chief market economist at Spartan Capital Securities

HW: Especially within the S&P 500.

 

“The K-shaped recovery is just a reiteration of what we called the bifurcation of the economy during the Great Financial Crisis. It really is about the growing inequality since the early 1980s across the country and the economy. When we talk K, the upper path of the K is clearly financial markets, the lower path is the real economy, and the two are separated.”

 

Joseph Brusuelas, chief economist, RSM

HW: Separate but not equal.

4. The Crash Of 2020: Into The End Game