Silver, Gold, And Copper Breakout, Wall Street's Last Bear Throws In The Towel

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To gain an edge, this is what you need to know today.

Metals Break Out

Please click here for an enlarged chart of silver ETF iShares Silver Trust SLV.

Note the following:

  • The chart is a monthly chart of silver to give you the long term perspective.
  • The chart shows that silver has broken out on a monthly basis.
  • The chart shows RSI is reaching an overbought level. The historical pattern is that when RSI on a monthly chart reaches an overbought level, often a pullback occurs, followed by a new high.  History does not always repeat itself, but it is instructive.
  • As full disclosure, Silver ETF SLV is in The Arora Report's core Model Portfolio in ZYX Buy.
  • Gold is also breaking out.  As full disclosure, gold ETF SPDR Gold Trust GLD is in The Arora Report's Model Portfolio in ZYX Allocations. As full disclosure, gold miner Newmont Corporation NEM is also in The Arora Report's core ZYX Buy Model Portfolio.
  • Copper is breaking out.  The best way to play copper is through copper mining stocks.  As full disclosure, copper miner Freeport-McMoRan Inc FCX is in The Arora Report's core Model Portfolio in ZYX Buy. As full disclosure, copper miner First Quantum Minerals Ltd FQVLF is in The Arora Report's ZYX Buy in the portfolio that surrounds the core Model Portfolio. FQVLF is also a buyout target. Anglo American plc Unsponsored ADR NGLOY is a diversified miner with big copper operations. NGLOY is also in The Arora Report's core Model Portfolio in ZYX Buy.
  • For those who like ETFs, metals and mining ETF SPDR S&P Metals & Mining ETF XME is is one to consider. As full disclosure, XME is in The Arora Report's ZYX Allocation Model Portfolio.   
  • Those investors who are not in metals may consider the positions highlighted above on pullbacks.
  • A rally in copper is mostly due to a short squeeze. Buying in gold and silver is real.
  • The death of Iranian President Ebrahim Raisi in a helicopter crash is supporting the metals on concerns about geopolitical problems in the Middle East.
  • Wall Street’s last bear has thrown in the towel. Mike Wilson of Morgan Stanley was the last bear. He has changed his call from a 15% drop in the stock market to a 2% rise.
  • Our decades of experience at The Arora Report shows that the time to aggressively buy stocks is when Wall Street’s last bull throws in the towel – this is one of the reasons behind The Arora Report’s back up the truck and buy stocks signal on March 9, 2009. With the benefit of hindsight, we now know that the great bull market started on March 9, 2009. Now that Wall Street’s last bear has thrown in the towel, if history is any guide, the reverse of what happened in 2009 may be ahead. There are significant opportunities, but you need to be selective.  It is certainly not the time to just aggressively buy indexes if controlling risk is part of your equation.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Alphabet Inc Class C GOOG, NVIDIA Corp NVDA, and Tesla Inc TSLA.

In the early trade, money flows are neutral in Amazon.com, Inc. AMZNMeta Platforms Inc METAand Microsoft Corp MSFT.

In the early trade, money flows are negative in Apple Inc AAPL.

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.

Momo Crowd And Smart Money In Stocks

The momo crowd is buying stocks in the early trade.  Smart money is inactive in the early trade.

Note for new investors: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very, very short term trades, consider following the momo crowd and not smart money.

Gold

The momo crowd is buying gold in the early trade.  Smart money is inactive in the early trade.

For longer-term, please see gold and silver ratings.

he most popular ETF for gold is SPDR Gold Trust (GLD). The most popular ETF for silver is iShares Silver Trust (SLV). 

Oil

The momo crowd is like a yoyo in oil in the early trade.  Smart money is inactive in the early trade.

For longer-term, please see oil ratings.

The most popular ETF for oil is United States Oil ETF USO.

Bitcoin

Bitcoin BTC/USD is seeing buying after the weekend pump.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

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