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 Things have now officially gone overboard. Weekly Market Update (8-2-17) As you know I ve been calling for the Euro to rally as the European Central Bank begins to taper its current QE program. By quick way of review, it is the promise of, or the ending of, a major QE program by a Central Bank that triggers the single largest currency moves (promises of QE force currencies lower, while ending QE force currencies higher). With that in mind, the ECB has been laying the groundwork for ending its current QE program. It first tapered this program back in December And as you know, I believe that ECB President Mario Draghi is about to announce further tapering at the Fed s annual Jackson Holy Wyoming meeting in three weeks time. The Euro certainly seems to be sensing this as it has ERUPTED higher, hitting 1.19 against the $USD earlier today: its highest level in nearly three years. And therein lies the problem. 3

4 As the Euro accelerates higher, things are beginning to get NASTY in the German stock market, called the DAX. The DAX has dropped nearly 6% from its recent peak. While this isn t a massive amount, it does stand out like a sore thumb compared to most major developed markets. By way of contrast, the US s S&P 500 (blue line) and Japan s Nikkei (red line), remain near their recent highs. From a technical perspective, the DAX has taken out its bull market channel. It is now sitting on critical support. If it breaks down from here, things could get truly brutal. 4

5 How brutal? The DAX could easily CRASH 10%+ in a matter of days. 5

6 This would force the ECB to walk back any and all talk of tapering QE. Remember, we re talking about Mario Draghi here. He is the same Central Banker who couldn t even stomach a 48 hour market sell-off before he had his # 2 guy assuage investors that the markets had misinterpreted his recent hawkishness back in June. In chart form, we re talking about this: This is the single most important issue for investors this week. Why? Because if ECB President Mario Draghi even hints at walking back the ECB s taper, the Euro will correct and the $USD will rally sharply as the Euro is severely overbought and the $USD is severely oversold. Even more importantly from a trading perspective, investors are massively bullish the Euro and massively bearish the $USD. The latest data from the CFTC (a futures trading exchange) shows trader bullishness in the Euro is at a six year high while bearishness in the $USD is at a five year high. 6

7 As I said at the beginning of this update, things have gone overboard. And with so many shorts betting on the $USD falling further, even a small bounce could result in a melt your face type move in currency land. I believe the $USD could easily rally to 96 in the coming weeks. This would mean a correction in the Euro. We re up 5% on this currency play, so we re closing it now. 7

8 Action to Take: Sell the Euro Trust (FXE). With us out of the Euro, we ll be parking our cash in $USD for now. Action to Take: Buy the US Dollar ETF (UUP). The implications of a $USD bounce will be significant. If the $USD rallies like I believe it will, the move will result in a SHARP sell off in any and all reflation-based investments. This will include Oil, Industrial Metals, Emerging Markets, and, to a lesser degree, Precious Metals. I believe this will be a key theme for the month of August. On that note, I want to warn that our energy plays will be taking a hit when the $USD rallies. Indeed, Pioneer Natural Resources (PXD) fell hard today when the company cut Oil guidance for 2017 (the company is focusing more on Natural Gas). PXD shares fell 10% on the news. As usual, Wall Street is completely wrong here. PXD actually reported great results, beating both revenues and profit expectations. And the fact that PXD is producing more Natural Gas than Oil is actually a good thing: Oil is set to correct, likely down to $40, while Natural Gas is about to rally (more on this shortly). PXD shares are now at critical support. They should hold here. Indeed, if anything Oil will likely be catching up with this share price move in the near future when the reflation trade gets hit as the $USD rallies. 8

9 So while I don t like seeing PXD in the red, I m not worried. What happened here is likely what the rest of the energy industry will be facing shortly. Once the base is in, the next leg up will begin into year-end. Which brings us to Natural Gas (UNG). UNG is coming up on critical support, right at the bottom of its falling wedge pattern. While we might be a bit early here, I fully expect UNG to bottom soon and then begin its next move up to $

10 Action to Take: Buy the Natural Gas ETF (UNG) Another natural gas play I like is Energy Transfer Partners (ETP), the massive natural gas transportation and processing partnership. ETP owns nearly 12,000 miles in interstate natural gas pipelines, as well as multiple storage facilities and processing plants. It also pays out a whopping 10% in dividend yield. The company s share price is in a truly MASSIVE triangle pattern. A breakout to the upside targets a move to $30. 10

11 Action to Take: Buy Energy Transfer Partners (ETP) On a final note, when the $USD, rallies it will hit Gold. I expect the precious metal to drop to support at $1,250 per ounce. 11

12 In contrast, Silver will probably drop to about $16.15 or so. DO NOT be alarmed by these moves, nor by their impact on our precious metals mining plays. Again, nothing goes straight up or straight down in investing, and both Gold and Silver are currently overbought. We need to shake out the hot money so that both precious metals can put in a base to prepare for their MAJOR legs up into year-end. On that note, Gold will be moving to $1,340. Below is my roadmap to this. 12

13 Silver will be spiking to $19+. Again, below is my road map. 13

14 Again, do not be alarmed by the coming moves in Oil or the ones in Precious Metals. The reflation trade needs a break. Once that break is complete, the next MAJOR wave will hit. This concludes this week s weekly market update for Private Wealth Advisory. 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 regular weekly update of Private Wealth Advisory. Until then 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 $6.32 Public Storage PSA 3/23/17 $ $ % Verizon VZ 4/26/17 $47.17 $ % Vietnam ETF VNM 6/7/17 $14.64 $ % Transocean RIG 6/15/17 $8.56 $8.63 1% Pioneer Natural -8% PXD 6/15/17 $ $ Resources Helix Energy HLX $6.16 $6.31 2% 7/19/17 Solutions Southwestern SWN $6.17 $ % 7/19/17 Energy EOG Resources EOG 7/19/17 $95.00 $ % Natural Gas ETF UNG 8/2/17 $6.30 NEW! Energy Transfer ETP $21.35 NEW! 8/2/17 Partners BONDS PORTFOLIO CURRENT GAIN/ POSITION SYMBOL DATE LOSS Long Treasury ETF TLT 7/27/17 $ $ % Emerging Market Bonds ETF EMB 7/27/17 $ $ % Prices as of market s close on 8/2/17. 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 0% GDXJ ETF*** 10/5/16 $34.72 $33.23 Wheaton Precious -11% WPM Metals Corp 10/5/16 $22.59 $19.99 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 $9.56-4% First Majestic Silver AG 5/12/17 $8.70 $ % Randgold Resources GOLD 5/12/17 $93.25 SPECIAL SITUATIONS/HEDGES/SHORTS PORTFOLIO POSITION SYMBOL DATE $92.66 CURRENT -1% 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 $ $ % Facebook FB 5/31/17 $ $ % Alphabet GOOGL 5/31/17 $ $ % Prices as of market s close on 8/2/17. 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 US Dollar ETF UUP 8/2/17 $24.08 NEW! Prices as of market s close on 8/2/17. 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 $ % Southwestern Energy SWN 3/30/17 $8.15 5/24/17 $ % Gulfport Energy GPOR 3/30/17 $ /24/17 $ % US Oil Fund USO 4/26/17 $ /24/17 $ % Exxon Mobil XOM 5/3/17 $ /24/17 $ % Energy ETF (SHORT) XLE 5/24/17 $ /5/17 $ % Emerging Mkts Bond ETF EMB 11/21/16 $ /7/17 $ % Long US Treasuries TLT 11/21/16 $ /15/17 $ % Nuveen Enhanced Free $13.12 Muni Credit Fund NVG 1/2/14 6/22/17 $ % Rio Tinto RIO 6/19/17 $ /10/17 $ % Clear Energy ETF PBW 4/19/17 $4.06 7/10/17 $ % Enterprise Products EPD $26.00 $ % 6/22/17 Partners 7/17/17 US oil Fund USO 6/28/17 $9.20 7/17/17 $9.57 4% China ETF ASHR 2/1/17 $ /24/17 $ % Uranium URA 6/15/17 $ /24/17 $ % Cameco CCJ 6/15/17 $9.14 7/24/17 $ % US Steel X 6/19/17 $ /24/17 $ % Freeport McMoran FCX 6/19/17 $ /25/17 $ % Biotech ETF IBB 4/26/17 $ /25/17 $ % Baidu BIDU 6/7/17 $ /27/17 $ % Peru ETF EPU 6/22/17 $ /27/17 $ % Chevron CVX 6/22/17 $ /2/17 $ % Euro Trust FXE 10/5/16 $ /2/17 $ % 19