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

1.Will the a March correction continue?  Is 1.9T enough stimulus or do we “need” 3T more?

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 - Yes

 

PIVOTS         2020 Close 10%-            Nov 3           7/31

DJI 31525      30606          28808           27480           26377

SPX 3934       3756             3555             3369             3271

NAS 14000    12888          12757           11160           10745 

 

TRADERS SHOULD DO QUICK DAY TRADES OR HAVE VERY DEEP POCKETS;

• After hard rallies or market drops, it is smart to book profits.
• Current odds of another market leg down this coming week 61%.

 

BE PREPARED FOR MARKETS GO IN REVERSE

Bond investors are now believing inflation may be coming ahead of Godot’s arrival.

Given continuing 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”:

When three or more canaries sing, be ready to Head for the Hills (or your nearest bar) .

TNX:              > 1.48-1.75

VIX:               > 26-30

TSLA:            < 695

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/March).

 

Commodity Trading:

Gold             Buy on dips  

Silver            Buy on dips

Copper         Overpriced >4.18  sell

Oil                Overpriced 66 sell   

CURRENT TRADE: BUY GOLD 1792/SELL OIL 66

 

KEY DATES:        March 9, 19

DJIA:                    306063 SUPPORT?

SPX:                     3800 SUPPORT?

NASDAQ:            12888 SUPPORT?

GOLD:                 1700 PIVOT R1 1750 R2 1779 R3 1800

SILVER:               25 PIVOT/ SUPORT  R1 26 R2 28 R3 30

OIL:                      65 PIVOT S1 63 S2 60 R1 68

COPPER:             4.05 PIVOT R1 4.25

US 10 year           1.50 PIVOT R1 1.75 R2 2 R3 2.20

CNY                      6.50 PIVOT

DXY                      92 PIVOT

VIX                        26 PIVOT R1 28 R2 30 S1 24 S2 22

 

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. While it is possible some Nasdaq stocks have bottomed, it is just as possible they have not.

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 also 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. Why The Gold Price Is Sinking 

 

HW: That is one view but….  As of the ideas of April, other concerns are likely to put Gold back in the drivers seat.

 

We were happy to issue a $1692  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! 

 

GOLD’S ASTRO TURNS POSITIVE IN APRIL: Until thenl 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 $25 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!

Currently fundamentally gold and silver is Undervalued!. We expect that to change in the Spring, if not before..

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 forecast  the gold/silver ratio to drop from ~74 to ~63 when global economies & clean energy demand improves in 2021; It did, currently is 67.
6. We expect precious metal stocks to outperform physical gold & silver in 2021.

 

Gold FV $1779 = Commodity FV: 1650 + Currency FV: 1780 + Inflation Metal FV: 1686 + 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.