1. Is a March correction dead ahead? Will investors ask “How low & How long” instead of “How far is UP” or will it be “Buy the Dip” yet again?
Inquiring minds want to know.
If markets disagree with me, we will add more long/short strategies and/or recommend hourly long short day trading.
FEBRUARY 2021 REPORT CARD
A) Silver $30 - Yes
B) Gold $2000 - No
C) Market TOP then beginning a correction - So far, so good
PIVOTS 2020 Close 10%- Nov 3 7/31
DJI 31525 30606 28764 27480 26377
SPX 3934 3756 3543 3369 3271
NAS 14000 12888 12698 11160 10745
TRADERS SHOULD DAY TRADE OR HAVE VERY DEEP POCKETS;
- After hard rallies or market drops, it is smart to book profits.
- Current odds of intermediate market top in February 84%.
- BE PREPARED FOR MARKETS GO IN REVERSE
Bond investors are beginning to notice inflation may be coming ahead of Godot’s arrival.
- Given market sky high valuations, we do not see sufficient FUNDEMENTALS (Fed accommodation, Vaccines & Stimulus Packages) to justify SP500 earnings.
- Our recommendation continues to be maximum portfolio protection.
TSLA, BTC, VIX, GME & TNX are our five market “canaries in the coal mine”:
Friday we saw three. If this continues, Head for the Hills (or your nearest bar) .
TNX: > 1.34-1.75
VIX: > 28-30
TSLA: < 695-720
BTC: < 30K
GME:* < 25
*Gamestop & friends such as AMC are Like Bitcoin, its trading has little or no relationship to reality.
Short of a reality check that the emperor has NO clothes, newbies learning that all stocks do NOT go UP ALL the time can also time market top (FEB).
Gold Buy on dips
Silver Buy on dips
Copper Overpriced >4.18 possible sell
Oil Overpriced 60-62 sell
KEY DATES: March 1, 9, 19
DJIA: 306063 SUPPORT?
SPX: 3800 SUPPORT?
NASDAQ: 12888 SUPPORT?
GOLD: 1718 PIVOT R1 1750 R2 1776 R3 1800
SILVER: 26.50 PIVOT/ SUPORT R1 28 R2 30 R3 33
OIL: 62 PIVOT S1 58 S2 56 R1 63
COPPER: 4.05 PIVOT R1 4.20
US 10 year 1.35 PIVOT R1 1.50 R2 1.75 R3 2
CNY 6.50 PIVOT
DXY 90 PIVOT
VIX 26 PIVOT R 30
2020 CLOSE: DJIA 30606 SPX 3756 & NASDAQ 12888
2019 CLOSE: DJIA 28508 SPX 3231 & NASDAQ 8823
2018 CLOSE: DJIA 23327 SPX 2506 & NASDAQ 6635
AFUND Fair Value GOLD $1778.
Reduce Risk and Focus on Capital Preservation:
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK.
2. Jim Cramer: What History Tells Us About Bond-Rate Scares Like This
Keep a list of stocks to buy AFTER a correction.
SELL/STOP STOCKS you wouldn’t buy at current prices, write Covered Calls & reduce margin/raise cash levels.
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 VERY selectively add stocks largely in two of our favorite sectors - 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. We were happy to issue a $1718 gold buy on Friday
It seems some computer programmers were negligent in NOT noting that one of the four drivers of gold’s price is perceived inflation!
While we saw our $30 Silver before February 12, not so for $2000 Gold. Still not only would we continue day trading buy gold often on weakness as well as strength but keep it as an investing market hedge.
Given newbie gold and silver 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!
Should/When Bitcoin meet reality, it is likely to usher in a rapid source of many of these new investors.
Conservative investors would accept $2200-2300, while more aggressive gold and silver bugs have gold targets of 2500-3000+; silver $35 to $50+.
Silver $26 support with $30 overhead resistance.
There are still many good buys in the precious metal space depending on your time frame & risk/reward desires.
Gold: Fundamentally the global political and economic situation is largely favorable for precious metals.
Gold & Silver remain favorite sections. Generalist investors have joined the party and many major brokerage houses still keep ~$2000+ price targets for 2021.
Also 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 in the Year of the White Metal Ox (2021).
Currently fundamentally gold and silver is currently close 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.
- 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.
- Low real interest rates is positive for gold as well as low global bond yields makes gold an attractive alternative risk mitigation hedge.
- We forecast the gold/silver ratio to drop from ~74 to ~63 when global economies & clean energy demand improves in 2021; It did, currently is 65.
- We expect precious metal stocks to outperform physical gold & silver in 2021.
Gold FV $1778 = Commodity FV: 1650 + Currency FV: 1780 + Inflation Metal FV: 1682 + Crisis FV: 2000
INVESTORS: We will stay LONG in H1 2021 both as an investment and as a portfolio hedge. We expect gold to largely perform better April on
4. There will be no SEASONED SPECULATOR picks until after the IDEA of March
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.“Despite the Fed’s massive ongoing Treasury purchases, it is highly likely we have entered a bond bear market. Treasuries are getting cheaper every day, expect stocks to follow bonds.”
- Mike O’Rourke, chief market strategist, JonesTrading
- HW: As well they should and long past due!
“We still think the uptrend in (stocks) is very much intact and that they’ll outperform bonds in the coming year.”
Sameer Samana, senior global market strategist, Wells Fargo Investment Institute
HW: We agree with your later statement but not the former. Time will tell who is right.
"It is not the beginning of a correction in equities, more a logical consolidation as price-to-earnings ratios were excessive,"
Francois Savary, chief investment officer, Prime Partners
HW: Possible, but not my bet.
READER: With gold hitting an 8th month low today, what are thoughts? Does tonight's full moon have any significance?
HW: We just recommended $1718 buy and hold.
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