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

1. BE PREPARED FOR ROCK & ROLL MARKETS THIS WEEK

64k Question: WILL BAD NEWS BE “GOOD NEWS” IN 2021? (Bring on more Stimulus packages!) Despite market record highs we do not see good enough FUNDEMENTALS (Fed accommodation, Vaccines & Stimulus Packages) to justify SP500 earnings. Our recommendation is maximum portfolio protection into late February.  

 

TSLA, BTC, VIX & TNX (10 year Treasury) are our four canaries in the coal mine:

WATCH for two or more

VIX:               > 26-30

TNX:               > 1.50-2.00

TSLA:            < 720-800

BTC:              < 30K 

 

Commodity Trading:

Gold +  Astro Buy on dips 1825

Silver              Buy 24 OB

Copper 3.60-3.68  Watch for Break out/down

Oil $46-53      Short 53 to 51 OB.   

KEY DATES:       January 19-/21, 28 February 3-4, 16-18, 26

DJIA:                   S1 30800 S2 30500 S3 30069 R1 31000

SPX:                    3750 PIVOT  

NASDAQ:            13000 PIVOT

GOLD:                 S1 1825 S2 1800 R1 1850  R2 1880 R3 1900 R4 1925 R5 20000

SILVER:               24 SUPORT  R1 26

OIL:                      50 SUPPORT R1 52 R2 53

COPPER:             3.60 PIVOT R1 3.65 R2 3.80 R3 4.00

US 10 year           1.08 PIVOT 1

CNY                      6.50 PIVOT

DXY                      90 PIVOT

VIX                        22<>24 DUAL PIVOTS

 

2020 CLOSE:          DJIA 30606 SPX 3756 &  NASDAQ 12888

2019 CLOSE:          DJIA 28508 SPX  3231 & NASDAQ 8823  

2018 CLOSE:          DJIA 23327 SPX  2506 & NASDAQ 6635

2017 CLOSE:          DJIA 24719 SPX  2673 & NASDA 6903

AFUND Fair Value  GOLD $1755.

Reduce Risk and Focus on Capital Preservation:

 

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

 

2. Have Large-Growth Stocks Peaked

Many analysts recommend sector rotation: Many 2020 winners are not likely to outperform as well in 2021.

We continue to recommend well protected portfolios into late February: SELL/STOP STOCKS you wouldn’t buy at current prices, write Covered Calls & reduce margin/raise cash levels.

Keep a list of stocks to buy AFTER a correction.

If this is not upcoming soon, then we will remain highly liquid and wait for the music to stop or Godot to arrive, whichever comes first.

Outside of Special Situations, we plan to only selectively add stocks in Q1 2021 in two of our favorite sectors e.g. metals & mining and entertainment.

 

Favorite Q1 2021 Sectors:

Entertainment, Mining, [Cyber] Security & Technology (Undervalued & Highly Scalable)

Currently we are watching Select Health Care (lower cost/better outcomes & Distressed Investing (New)

Stock selection is important. Whenever 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. Despite being slightly overvalued, we believe owning gold & silver into the Chinese New Year should reward investors.  Key watch this week are $1825 & 1850 support levels & $1850 R1. 

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!

Conservative investors would accept $2200-2300, while more aggressive gold and silver bugs have gold targets of 2500-3000+; silver $30 to $50+.

Silver $24 support with $30 overhead resistance. Many analysts expect $30 Silver & 2000 gold in 2021 Metal Ox Chinese New Year [February 12].

 

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

Latest YouTube Video:  Mining & Entertainment Investment Picks

Talk by Jeffrey Hirsch: Post-Election Years Under New Democrats

with Company Presentations by Bluejay Mining & E3  Metals

Updates on Mining & Entertainment by Henry Weingarten

 

Gold: Fundamentally the global political and economic situation is favorable for precious metals.

Gold & Silver will remain favorite sections into Q1 2021 with Gold bugs happy that  generalist investors have joined the party:

In addition, many major brokerage houses have keep ~$2000+ price targets in 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 US dollar weakens!

We believe gold & silver valuations will largely sport well above Fair Value into the Year of the White Metal Ox (2021).

While fundamentally gold is currently overvalued, silver is currently closer to Fair Value. Just as they were undervalued for a long time, it CAN and is likely to be overvalued for a LONG time.

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

However, we advise long term 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 positive for gold as well as low global bond yields makes gold an attractive alternative risk mitigation hedge.
5. We expect the gold/silver ratio ~74 to drop ~63 when global economies & clean energy demand improves in 2021
6. We expect precious metal stocks to outperform physical gold & silver in 2021.

 

Gold FV $1755 = Commodity FV: 1620 + Currency FV: 1750 + Inflation Metal FV: 1650 + Crisis FV: 2000

INVESTORS: We will stay LONG in Q1 2021 both as an investment and as a portfolio hedge..

Note: Our current Fair Value for Silver is $25-$26. 

 

4. In January we are presenting new issues for this SEASONED SPECULATOR feature.

These are high risk/high reward market picks but could be potentially very rewarding and/or interesting to watch. These picks are best for speculative portfolio allocation and as such bought in groups of 5 to 10 such stocks.

Remember NOT to ignore their High Risk - meaning use speculative allocation i.e. “money you can afford to lose without altering your life style.”

Always do your own due diligence first before deciding to act.

  
5."Perhaps it's back to bad news is good news situation where market expects that deteriorating economic data will motivate lawmakers to issue even more stimulus."

Max Gokhman, head of asset allocation, Pacific Life Fund Advisors

HW: Perhaps, perhaps not.

 

“At extraordinarily high valuations is where we are, and its being supported by massive amounts of stimulus.”

Jeffrey Gundlach, CEO, DoubleLine Capital

HW: Will there be a straw that broke the camels back?  See our 4 canaries for advance warning.

 

“Fervent demand for inflation protection may look seriously overbought, but relative to U.S. Treasuries may still have room to run.”

Ben Breitholtz, data analyst, Arbor Data Science

HW: It was a great run in 2020, and TIPS can well outperform TNX in 2021

 

6. Yes, Virginia. There Is A Stock Market Bubble