1. Yellow Alert: It is almost certain (90%) that markets will correct before October options expiration!
"Managing the risk is a really important part.
It's not about trying to shoot for the highest rate of return you can; it's about protecting what you have."
Leyla Morgillo, CFP, Madison Financial Planning Group
We continue to maintain defensive protection:
High cash levels cash, low or no margin, writing calls, hedging, very short-term trading and buying only special situations in August.
We are not buying today’s pyramid games will continue forever. Some possible landmine triggers beyond Delta/Lambda Covid fears include:
- Inflation > 5%
- High Taxation
- More Market Stumbles like AMZN
- Bitcoin collapses (28K support broken which it will sooner or later) would do it.
- TNX >1.50-1.75.
- A change in perspective- comparing not to last month or last year, but a longer term horizon leaves little upside to analyst projections.
- Fall FED tapering or warning of future course shift or simply losing credibility!
- The usual assorted geopolitical threats especially US/China aggressive escalation.
I am unwilling to buy at today’s prices, especially SPX > 4000: given the downside risk & its obvious P1 correction target.
Outside of day trading and special situations, we plan to sell/short and wait to buy if/when markets are 12%-20% lower.
PIVOTS 2020 Close 10%- Nov 3
DJI 35000 30606 31963 27480
SPX 4450 3756 4021 3369
NAS 1480 12888 13406 11160
Inflation is now above 5% and I don’t believe it is just “temporary”; if the global economy slows, we are then likely to see STAGFLATION!
Given still 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: > 1.50-1.75
TSLA: < 695-666
BTC: < 42-30K
*Gamestop & stocks such as AMC [>20] or COIN [>225] are like Bitcoin, their trading has little or no relationship to reality.
Public valuations of large, mid and small cap companies remain near their highest levels in recent history.
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 tops).
TRADERS DO QUICK DAY TRADES OR HAVE VERY DEEP POCKETSMARKER SHORTS: DJIA 35051, 35208 & 3515 SPX 4411, 4436 & 4468 NASDAQ 14836 & 14835
- After hard rallies or market drops, it is smart to book some profits.
- Odds of a market drop before the end of September is EXTREMELY HIGH - Stay prepared!
- We plan to add TNX (10 year US Bond) shorts this week 118-125
Gold Buy on dips Rinse and repeat Last buys 1763, 1750, 1740 SOLD 1790
Silver Accumulate on dips < 24 Buys 25.15, 24.33, 23.25
Copper 4.10 Pivot 4 Support
Oil 60 Support 66 PIVOT
HYDE PARK SOAPBOX: The Bull Is Broken
NOTE: NO WALL STREET, NEXT WEEK NEXT WEEK
KEY DATES: August 23/24, SEPTEMBER 7/8, 22-24
DJIA: 35000 PIVOT
SPX: 4450 PIVOT R1 4500 S1 4400 S2 4333
NASDAQ: 14880 PIVOT
GOLD: 1750 SUPPORT R1 1780 R2 1800 R3 1836
SILVER: 23 PIVOT S 22 R1 24 R2 26 R3 30
OIL: 64 PIVOT 66 S1 60
COPPER: 4.10 PIVOT S 4 R1 4.25
US 10 Year: 1.25 R1 1.30 S1 1.20 S2 1.18
DXY: 92 PIVOT R1 94
VIX: 18 PIVOT R1 22 R2 26
BTC: 48 PIVOT S1 46K R1 44K R1 50K
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 $1840
Reduce Risk and Focus on Capital Preservation:
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: HEDGE AND PROTECT AGAINST DOWNSIDE RISK.
2. Worried about frothy markets? It's time to hide in Canada's 'Dividend Dynasties' stocks
HW: While these are very good intermediate term investment picks, outside of special situations we do not plan to add positions until early Fall.
- Review your Portfolio Holdings for possible changes.
- Prepare a list of GOOD stocks to buy AFTER a 15-20% correction. Choose your favorite stocks and patiently bid for them.
- Stock selection is important. Include some stocks sporting strong cash flows, sound balance sheets & growing dividends.
- Include some investments that can benefit from higher inflation such as gold, TIPS, utilities, Art/Blue Chip collectibles and selective real estate etc.
Favorite H2 2021 Sectors:
Entertainment, Mining & Technology [AFTER a 20% correction if Undervalued & Highly Scalable]
Currently we are also watching some Select Health Care (lower cost/better outcomes, & Distressed Investing for H2 2021.
3."Gold backing up to its upward-sloping 24-month moving average in what we see as a dip in a bull market."
Mike McGlone, senior commodity strategist, Bloomberg Intelligence
HW: Gold is entering its favorable seasonal cycle.
Note: One can only imagine when Bitcoin meet reality, how it would likely to usher in a rapid source of many new gold investors.
Gold Fair Value is $1836 with $1750 support and $1925 overhead resistance.
Silver Fair Value $27 with possible support tests upcoming (possible opportunity for long term accumulation) and $30 overhead resistance.
There are 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 very favorable for gold but mixed for Silver (as also an economic metal).
Precious metals remain favorite sections. Many generalist investors now have some interest in Metals and Mining.
Also, it is under allocated by most investment programs, this gives it even more potential room to run, especially as inflation fears resurface &/or if US dollar weakens!
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 $US currency as well as investors who wish to safely and cheaply h [email protected] their US$ 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 expect precious metal stocks to outperform physical gold & silver in 2021.
Gold FV $1840 = Commodity FV: 1670 + Currency FV: 1808+ Inflation Metal FV: 1832 + Crisis FV: 2050
INVESTORS: We will stay LONG in H2 2021 both as an investment and as a portfolio hedge.
4. Summer seasoned speculator picks: On Hold
Many picks are best for speculative portfolio allocation and as such bought as a member of a group of 5 to 10 such stocks.
Remember NOT to ignore potential High Risk - meaning use speculative allocation i.e., “money you can afford to lose without altering your lifestyle.”
Always do due diligence before deciding to act.
5. We have a lot of macro risks at the moment surrounding markets. We have the risk of a slowing Chinese economy, rising Delta cases in the Asia-Pacific region, and slower growth generally."
Simon Harvey, senior FX market analyst, Monex Europe
HW: To name a few.
“Cryptocurrency is 95% fraud, hype, noise and confusion.”
Neel Kashkari, President, Minneapolis Federal Reserve
HW: Interesting given some technical analysis have 3K (5% of BTC High) as their intermediate term target price.
“Barring some dramatic change in the economy, tapering of asset purchases will begin in the next few months and end by the middle of next year.”
Tim Duy, chief U.S. economist, SGH Macro Advisors
HW: If not sooner as long overdue!
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