Weekly Market Update

Transcription

1 1 Weekly Market Update Phoenix Capital Research, Phoenix Capital Management Inc. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Phoenix Capital Management Inc. All Rights Reserved.

2 Disclaimer: The information contained on this newsletter is for marketing purposes only. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this newsletter constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information in the newsletter is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Opinions and estimates expressed on this newsletter constitute Phoenix Capital Research's judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service. Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this newsletter. Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Phoenix Capital Research is not responsible for the content of other newsletters to which this one may be linked and reserves the right to remove such links. OmniSans Publishing LLC and the Phoenix Capital Research Logo are registered trademarks of Phoenix Capital Research. OmniSans Publishing LLC - PO BOX 2912, Alexandria, VA 22301

3 As I expected, the market is now turning in a big way. When markets peak and begin to break down, they never simply collapse. Instead they first break through support and then stage a bounce. The reason for this is due to investor psychology: the bulls don t initially throw in the towel, but instead buy the dip. It is when the bounce fails to break to new highs that you have confirmation that the top is in. So the pattern is: Weekly Market Update ) A breakdown below support 2) A bounce back to retest former support 3) The REAL collapse. The markets are now on stage #2. And #3 is just around the corner. This is particularly true when you consider the reason that stocks bounced so hard. On Friday (today) during a Q & A session, St Louis Fed President James Bullard stated that the 3

4 Fed should retain QE as a policy option in the future if it is needed. Stocks erupted on the news. How Bullard s comments are original or newsworthy is beyond me. The Fed never once disavowed QE as a policy tool. So his comment that the Fed should continue to see QE as an option is not even insightful. This is what tells us that the bounce was largely stock bulls looking for any excuse to ramp stocks higher. It also tells us that the momentum is indeed broken for the markets. I expect stocks to fall HARD next week. This bounce will be the final gasp to maintain the rally. The next downside target is 2,300 at the red circle. 4

5 The single worst performers during the decline will be FANG stocks. Apple (AAPL) is going to

6 Amazon (AMZN) will be moving to $850. Alphabet (GOOLG) will also be falling to $850. 6

7 And Netflix (NFLX) will be going to $130. This move will coincide with the $USD bouncing. The greenback is currently sharply oversold. 7

8 This bounce in the $USD will hurt precious metals. I fully expect our precious metals portfolio to take a hit next week. However, this will be the final drop before a MAJOR bottom is formed. Gold will correct to $1220 or so before beginning its next MAJOR leg up to $1,350+ by August. Silver will revisit $16.00 before making its move to $18.50/$19.00 by August. 8

9 I also think we ll see this $USD strength hurting Oil. USO will drop to $21.00 or so. At that point the MAJOR leg higher for Oil and Oil stocks will hit. 9

10 Elsewhere in the markets, European stocks are ready to drop hard. The relief rally based on the French election results is misguided. France and Europe in general are in very serious trouble from an economic and financial perspective. The France ETF (EWQ) will be dropping to $24 and change in the next six weeks. Spain s ETF (EWP) will be going to $26 and change. 10

11 We ve covered a lot of ground here. I d like to take a moment to review just where we are and where we are going from a Big Picture. Big Picture: For the financial markets, the first half of 2017 was dominated by two key themes, both political in nature: 1) The market s perception of the Trump economic agenda 2) The market s concerns regarding the French Presidential election Both of these themes were generally risk on for the markets with stocks pushing higher. However, both are mistaken. The Trump economic agenda as I ve noted time and again will be unfolding much more slowly than most realize. The fact is that there is TREMENDOUS pressure to stop Trump accomplishing anything coming from both sides of the aisles. The establishment Republicans and the Democrats all want Trump to accomplish as little as possible. Their hope is that if Trump accomplishes next to nothing, his win will be seen as a 11

12 fluke and things can return to what they consider normal from 2018 onward. For this reason, I expect Trump to find any movement in the so-called swamp to be slow going. The market has completely mispriced this. The second theme, (the French Presidential election) will prove to be also be misinterpreted by the market. The so-called relief rally that stemmed from Macron winning the Presidential election is not going to last. The fact is that Macron has no traditional party supporting him in France. He faces TREMENDOUS headwinds in forming a functioning Government. Moreover, it s not as if the EU s issue with debts, immigration, and the like are somehow fixed because he won. That was the first half of The second half will involve the market realizing all of the above as well as the fact that the global economy is weakening. This will result in additional Central Bank easing, and higher inflation with the $USD plunging, Emerging Markets soaring and precious metals moving to new highs. The transition from the first to the second has now begun. I expect it will take 2-3 weeks for this transition to complete, but I believe that in June: 1) Oil will bottom and begin its move to $65 by year-end. 2) Precious metals will bottom and break to new highs by year-end. 3) Emerging markets will bottom and begin breaking to new highs by year-end. 4) US stocks will have officially topped (this may have already happened) and begin breaking down. By year-end they might be break-even but only after grinding lower for several months. The NASDAQ will be the worst performing index of the bunch That is the big picture game plan. The only question is timing. This could take several weeks, or it could happen all at once. Specifically, and I want to be blunt here it s quite possible that the stock market will crash. And I mean CRASH as in drop 15% in a matter of days. Right now, I put the odds of this at 20%. But that is MUCH higher than usual. 12

13 The reason for all of this is that rigs and manipulation have propped up the market. Stocks have been FAKE for several months now. Anytime the market gets this fake you can have a crash. Here s what I m talking about: stocks are EXTREMELY overbought from their long-term trendline courtesy of the Trump election win rally. Given that this rally was based on the market s misconceptions, it is not unrealistic for stocks to Crash back to reality (around 2,050-2,100 on the S&P 500). I m watching the markets closely for signs this might prove to be the case. But for now, my base case is what I already outlined: a major turn is happening now and it will take 2-3 weeks to unfold before the dominant trends for the remainder of 2017 hit in the second half of the year. There will be opportunities to see HUGE returns here. But we will need to be patient and wait to buy at the right time. Right this moment, while the market is transitioning, the best thing to do is watch and wait. This concludes this week s weekly market update. I m watching the markets closely and will issue updates as needed. Barring any new developments you ll next hear from me next Wednesday in our usual weekly market update. Until then 13

14 Best Regards, Graham Summers Chief Market Strategist Phoenix Capital Research 14

15 OPEN POSITIONS STOCKS PORTFOLIO CURRENT GAIN/ POSITION SYMBOL DATE LOSS RPX Corp RPXC 8/5/15 $15.48 $ % Agricultural -2% RJA 1/12/17 $6.46 Commodities ETF $6.30 China ETF ASHR 2/1/17 $24.98 $ % Public Storage PSA 3/23/17 $ $ % Southwestern -13% SWN 3/30/17 $8.15 $7.11 Energy Gulfport Energy GPOR 3/30/17 $17.17 $ % Clear Energy ETF PBW 4/19/17 $4.06 $4.06 0% US Oil Fund USO 4/26/17 $10.37 $ % Biotech ETF IBB 4/26/17 $ $ % Verizon VZ 4/26/17 $47.17 $ % Exxon Mobil XOM 5/3/17 $82.70 $ % BONDS PORTFOLIO POSITION SYMBOL DATE CURRENT GAIN/ LOSS Nuveen Muni. Fund NVG 1/2/14 Emerging Market Bonds EMB 11/21/16 Long US Treasuries TLT 11/21/16 $13.12 $ $ Prices as of market s close on 5/19/17. Gains include dividends $ % $ % $ % 15

16 PRECIOUS METALS/ MINERS PORTFOLIO POSITION SYMBOL DATE CURRENT GAIN/ LOSS Gold 3/17/10 $1,120 $1, % Silver* 3/17/10 $16.23 $ % Gold Miners ETF** GDX 10/5/16 $22.45 $ % Gold Mining Juniors -2% GDXJ ETF*** 10/5/16 $34.72 $32.61 Wheaton Precious -7% WPM Metals Corp 10/5/16 $22.59 $21.00 New Gold NGD 10/5/16 $3.88 $ % Barrick Gold ABX 4/26/17 $16.92 $ % Silver Mining ETF SIL 4/26/17 $34.44 $ % Silver Standard SSRI 4/26/17 $9.94 $ % First Majestic Silver AG 5/12/17 $8.70 $8.92 3% Randgold Resources GOLD 5/12/17 $93.25 SPECIAL SITUATIONS/HEDGES/SHORTS PORTFOLIO POSITION SYMBOL DATE $95.06 CURRENT 2% GAIN/ LOSS France ETF (SHORT) EWQ 9/16/16 $23.38 $ % Italy ETF (SHORT) EWI 9/16/16 $21.56 $ % Russell 2000 ETF (SHORT) IWM 12/14/16 $ $ % Apple (SHORT) AAPL 3/23/17 $ $ % Prices as of market s close on 5/19/17. Gains include dividends *Average price of $17.50 and $14.97 ** Average price of $22.83 and $22.07 *** Average price of $37.52 and $

17 CASH/ CURRENCIES PORTFOLIO POSITION SYMBOL DATE CURRENT GAIN/ LOSS Euro Trust FXE 10/5/16 $ $ % Prices as of market s close on 5/19/17. Gains include dividends 17

18 RECENTLY CLOSED POSITIONS POSITION SYMBOL DATE SELL DATE SELL GAIN/ LOSS American Eagle AEO 5/26/16 $15.36 Outfitters (SHORT) 1/31/17 $ % Cliffs Nat Resources 19% CLF 2/8/17 $10.15 $12.10 (FIRST HALF) 2/13/17 Ambev ABEV 11/25/16 $4.96 2/23/17 $ % Cemex CX 11/25/16 $8.07 2/23/17 $8.69 8% Cliffs Nat Resources 10% CLF 2/8/17 $10.15 $11.13 (SECOND HALF) 2/23/17 Exxon XOM 9/24/14 $ /8/17 $ % Enterprise Products 9% EPD 11/31/16 $25.93 Partners 3/8/17 $27.83 Natural Gas ETF UNG 2/22/17 $6.57 3/8/17 $7.11 8% Emerging markets ETF EEM 1/12/17 $ /10/17 $ % Barrick Gold ABX 10/5/16 $ /10/17 $ % Uranium ETF URA 6/8/16 $ /12/17 $ % Cameco CCJ 1/4/17 $ /12/17 $ % Coal ETF KOL 1/4/17 $ /12/17 $ % Silver Standard 10% SSRI Resources 10/5/16 $ /12/17 $11.32 Royal Gold RGLD 2/8/17 $ /12/17 $ % Silver Miners SIL 3/15/17 $ /12/17 $ % US Steel (SHORT) X 2/1/17 $ /13/17 $ % Copper Miners ETF COPX 3/23/17 $22.64 (SHORT) 4/18/17 $ % Financials ETF (SHORT) XLF 12/21/16 $ /26/17 $ % 18

19 RECENTLY CLOSED POSITIONS CONTINUED POSITION SYMBOL DATE SELL DATE SELL GAIN/ LOSS 5% EPU 12/7/16 $33.23 Peru ETF 5/17/17 $34.77 Brazil ETF EWZ 2/8/17 $ /17/17 $ % Utilities ETF XLU 2/8/17 $ /17/17 $ % Solar Energy ETF TAN 4/19/17 $ /17/17 $ % Royal Gold RGLD 4/26/17 $ /17/17 $ % 19