We are getting late in this rally which started March 23rd. After September 4th, smart money will have hedges on long positions and/or will have sold or lightened up short term trading positions. There is presently a bull trending market until May 2021, when a 6 month pause may come into play into early January 2022. It is impossible to get every last bit of a trade. You have to leave something on the table. The only conceivable way to get it all is to hold long term. We strongly believe you are never wrong for taking a profit no matter what happens afterwards.
There is a peak coming in the metals complex over the next 8 trading days and it possibly may have been struck today. Like the stock market, this rally from March 19th is overextended. Traders always seem to think 'this time will be different and no correction will occur,' but it rarely is ever different. Barring a binary event, banking collapse, war, etc.. expect a correction into September.
Miners topped first which is common. We feel the top is in, but completing a top is a process. We will get an intermediate degree correction into late September.
Once schools open, we expect to see more Covid cases broadcast by the media and the negative, sensationalist reporting characteristic of the past several months push to lock down and close schools. We are looking to exit and remove restaurant stocks from our short term portfolio in the near future. It was a great trade March through early June but has been a slow grinding recovery trade since mid-June. The looming presidential election, in the most divisive political climate we have seen in our lifetimes, will not make things any easier. We would like to take profits from both positions and are optimistic this can occur by September 4th. There will be other easier short term trades available to us. We feel long term investors, 3+ months, can hold for much higher prices in both BLMN and DENN. We see debt default risk being very low for both.
Recent trading action suggests someone very powerful with a lot of capital is keeping pressure on the steel sector, as they continue to quietly scoop up shares. We are days away from a recognition day in the sector. The Republican National Convention next week may be our catalyst. President Trump has hinted at a new infrastructure program.
We are looking for $15.50 near term with a pullback and ultimate spike over $20 come September.
Kodak has a great story. We like the picture technically and fundamentally. We may attempt to catch a bottom here in the days ahead.
A member asked us to look at DELL and run it through our system. We see a strong outlook for the computer maker ultimately putting in a 6 month top next May 2021 with the rest of the tech sector. We have outlined long term price levels we like for accumulation. Although it is not in our long term model portfolio, it looks like a respectable investment over the next 9 months.
USO and UNG are both slow crawling ahead. We will look to exit crude most likely in mid-September. Natural gas holders have until November for a top in our opinion.
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