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

Before the November election, what is definitely certain is that things will remain uncertain! 

WE ARE STANDING ASIDE MARKETS FOR THE NEXT 24 DAYS EXCEPT FOR SOME SPECIAL SITUATIONS & OCCASIONAL DAY TRADING.

Earnings season begin next week. Usually the best are in the first two weeks:

“I don’t care that we’re looking at down earnings, I care whether companies are going to do better than expected.”

Andrew Slimmon, senior portfolio manager, Morgan Stanley Investment Management

HW: If markets are up to YTD Highs or higher, I would happily punt a few shorts before the end of October.

OUR VIEWS:

1. The serious economic damage of the Covid Crisis fundamentally favors the bear case; there are also countervailing forces to keep markets elevated into the election. We have recommended reducing portfolio protection to 50% with high cash levels and overweight in precious metals.
2. 2021 POST ELECTION INVESTMENTS WILL BE TARGETED FOR A POST COVID-19 WORLD:

for a “Recovery” rather than the same “Quarantine” portfolio, e.g. when-covid-19-ends-these-are-the-places-you-want-to-invest

TRADERS SHOULD DAY TRADE OR HAVE VERY DEEP POCKETS;

1. Elevated Volatility = After hard rallies or market drops, it is smart to book profits. Wild swings can be commonplace.
2. DJIA 28,000, NAS 11,327 & SPX 3400 now MARKET PIVOTS & potential support.  If markets are higher just in front of October 30-November 3 time period, we may take a bearish positional stance. If markets are ABOVE YTD highs earlier, we may cautiously step in selling as well..
3. Watch AAPL & TSLA: If/When these Nasdaq stars lose momentum, look out below! We don’t expect SPI type market action, but….. 

INVESTORS REQUIRE A LONGER TERM HORIZON THAN NORMAL.

Where appropriate, we recommend selling or placing trailing profit stops for many 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.

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

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

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

PREVIOUS TRADING TARGETS P1 may or may not be seen again over the next three weeks.

P1 7/31 MOC:     DJI 26377 SPX 3271  NAS 10745

2020 YTD Highs: DJI 29568 SPX 3588  NAS 12074 

Commodity Trading:

Gold + Fall Astro, ++ Astro Nov/Dec  ADD over next 3 weeks.

It is possible Gold  $1850 & 1900 will remain short & intermediate term support. However we do not rule out a quick attack of $1840 and would welcome such an opportunity to buy.

Silver Astro is generally positive $20 Support R1 25 R2 28 R3 30.

Copper 3.10+ Intermediate term target achieved. $3.25 possible 

Oil $44+ 2021 Target. This a  very slow modest accumulate for 2021 Post Election.

 

NOTE: There will be NO Wall Street, Next Week newsletter October 19.

                                                                    

  MARKERS               DJIA                     SPX                        NASDAQ                 SILVER                   GOLD                   COPPER                BONDS                  OIL                          BITCOIN                CNY

2019 CLOSE	28508	3231	8823	17.92	1523	2.80	1.86	61.06	7229	6.96
10/9/2020	28586	3477	11579	25.30	1936	3.08	.77	40.52	11041	6.69
PIVOTS	28000	3450	11500	25	1933	3.10	.69	39	11000	6.70
RESISTANCE SUPPORT	28857 26880	3500 3222	1200 10250	26 22	1950 1850	3.10 2.88	.82 .50	42.50 36	12000 0000	6.90 6.66

 

Favorite H2 2020 Sectors:

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

Intermediate term we are just watching Select Health Care (lower cost/better outcome) due to potential future political risks

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. Precious metals will be flying November and December and little reason to expect them to fall out of favor in 2021! 

We plan to step-in add positional buys of Gold before the election, adding more to our full allocation of gold and silver stocks instruments.

1. Despite being overvalued, with 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 1840-2060 trading range.

Conservative investors can accept $2200-2300, while more aggressive gold and silver bugs are replacing their previous 2000+ gold targets with 3000+.

Silver $22 resistance is now support with P3 30 overhead resistance. Many analysts expect $30 Silver & 2000 gold by year end.

There are so many good buys in the precious metal space depending on your time frame & risk/reward desires - the trend is MOST definitely your friend!

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. Low real interest rates is very positive for gold as well as low global bond yields makes gold an attractive alternative risk mitigation hedge.

Gold FV $1682= Commodity FV: 1600 + Currency FV: 1652 + Inflation Metal FV: 1588 + Crisis FV: 1888.

INVESTORS: We plan to stay LONG in H2 2020 with occasional hedging & profit taking.

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

4.Starting soon, we plan on adding a new feature: SEASONED SPECULATOR. This will generally be a very high risk/high reward market pick.  These picks are for speculative allocation, recommended to be bought in groups of 5 to 10 stocks. Position size 10%-20% of your speculative allocation, i.e. “money you can afford to lose.

5. HW: How ture.

5.“History teaches us that this is the worst possible moment to subject the economy to the type of massive tax increases that Biden is proposing, especially the changes that would impede capital formation and make domestic job creation less attractive.”

hedge fund manager J. Daniel Plants, hedge fund manager, Voce Capital Management

HW: How true.

6. U.S. corporate earnings reports will shine a light on the uneven playing field in the year of the pandemic

7. READER: Would you keep holding on gold and silver in 2021, or do you see them correcting/dropping as of Jan 2021?

HW: This question presumes you are not owning gold as a portfolio hedge or insurance. We will give our views in December along with our 2021 Market Forecasts.