Stock Market Commentary, March 2, 2016

We want to emphasize that we are always nearly fully invested in stocks representing either industrial stocks or in commodities related stocks. Unlike many, we emphasize that profits when made, should be taken which too few investors do. We believe that whether we are in a bull market or bear market, there are always tremendous opportunities for exceptional capital gains in both industrial stocks and commodities related stocks. Key point: Bear markets offer investors superb opportunities for exceptional capital gains as stocks are literally “on sale.”

Our analysis suggests that we are commencing a bull market in gold and gold (and silver) mining stocks and finishing up their bear market. We foresee a much more positive market for some but not all commodities. Our analysis suggests that we are now in a bull market in many gold and silver mining stocks; that is our focus and approach. We expect a moderate bear market in the industrial stocks such as the TSE 60 and Dow Jones Industrials that would enable a bull market in commodities and many mining stocks.

Few investors realize that approximately 50% of listed U.S. stocks have already suffered declines of over 20% which would be classified as bear market phases. Is that sufficient to again see another major move up? Perhaps, we see another 5% to 10% upside market possibility here, but we think it is late in the rally. 

Two key indicators that we use for the stock market have seen recent levels that the two previous times led to market declines of 40%. We do not believe that a minimum 30% overall decline for the S&P 500 can be avoided. However,with near zero interest rates such a decline could be avoided as artificially low rates have so far prevented the stock market from undergoing justified and normal corrections.

                              *Insiders’ (officers and directors) Activities    

     Last week we saw over $400,000,000 in total dollar value of officers and directors selling their own personal shares; that is the highest level that we have seen in months.

                                                   *Cyclical Analysis  

      Cycles? As I have always been a believer and studied them diligently, they are projecting a generally weak stock market for several years at best to a brutal bear market at worst. Moreover, some cycles are projecting a long term bull market in gold…for years! If you wish for a bull market in gold mining stocks understand that it would almost require a bear market in industrial stocks.