THE REMINICK LETTER   12/10/2010

Summary

The rally going on now in stocks, gold, crude oil and grains is likely to take a breather in January. These markets from late December through early February will probably fall, before rising again later in spring next year.

The decline in January is probably just a pullback, so exiting long positions and buying them again in late January is prudent for short-term traders in all of the above markets. Except for the gold market, which is likely to make a high in January and drop until sometime in May.

GOLD has risen to $1439 per ounce and we expect will probably have one more high near $1500 in January before a collapse of $200 per ounce next year. A top in the price of gold will probably develop next October, perhaps reaching even higher prices than in January. After 2011, however, gold is not favorable again until 2014.

US TREASURY BONDS are in a continued downtrend until late July of next year, with a target price of $113. After 2011, interest rates are likely to trend higher for 30 years.

CRUDE OIL may pull back to $75 per barrel just after January. But it is in a general rally phase until the month of May next year, perhaps reaching $94 per barrel.

GRAINS are likely to continue up until March or May of next year, with a January slump on the way up.

STOCK MARKET

S&P Price: 1236

DJIA Price: 11,410

Long-Term Trend: DOWN after May or August next year, until at least May 2013. There probably will develop a high in July 2012 before collapsing into 2013, but it is hard to tell the magnitude of the 2012 high. For 2011 to 2013, the potential range for the Dow Jones Industrial Average is a high of 12,500 and a low 5000.

Intermediate Trend: UP until May or August 2011, target DJIA in the area of 11,800-12,200. Major volatility possible next year from May though November. Some time next year, the DJIA market will fall, however, possibly to about 10,000.

Short-Term Trend: UP though Dec. 13 or Dec.21, DJIA target of 11,400-11,700; then

DOWN HARD through January 6-15, target DJIA 10,200

Comments:

After December 21 the DJIA is very likely to correct 7 percent to 10 percent, ending mid-January, to mount one more rally until early April. After that we should see a change in behavior in the market to more pessimism and volatility.

There is a chance of a summer rally followed by a violent decline in market prices in the fourth quarter.

By late 2013, the DJIA will manage to slide much lower. The highs could come next year in May or September, or even drag out until July 2012. Whatever the case, the next major move is down.

Gold 

Price: $1387 per ounce

Long-Term Trend: By April 2012 gold may be as low as $1100 per ounce. Before that time, however, gold could reach $1615 (maybe in October 2011).

Intermediate Trend: CLIMBING till January 2011, to perhaps $1500 per ounce; then,

DROPPING until May or August to about $1250 to $1300 per ounce.

Short-Term Trend: We may see one more spike rally ending in mid-January. Profit taking is prudent since the next move is down ending May 2011.

Comments:

We are near a high now in the price of gold and caution is in order. Gold prices in 2011 should start to consolidate, and in 2012-14 decline again. January may be the high for the year, though a rise in price might produce another in October. We will have to see how much it corrects by the end of May to determine the potential price in October.

U.S.  30-year Treasury Bonds

Price: $120 29/32

Long-Term Trend: TOPPING in 2011; then

TRENDING DOWN for 30 years

Intermediate Trend: DOWN until July next year, with a target of $113 target; then

RALLY to November 2011, targeting $130 target.

Soybeans

Price: $12.80 1/4 per bushel

Long-Term Trend: UP through June 2015, target of $18-$21 per bushel

Intermediate Trend: UP until March or May 2011, targeting $13.50-14.50; then

DOWN until March 2012; target of $8.50 per bushel

Short-Term Trend: DOWN from December 24 timeframe into mid-January lows of $12.00 per bushel.

Comments:

Soybeans and corn are in a strong uptrend until March 2011, with 13.50-14.50 price target for soybeans. Now we think there could be a pullback in January on the way up.

After January, we expect a severe collapse from May or September next year, to $8 per bushel in March 2012.

U.S. Dollar

Price: 80.67

Long-Term Trend: UP, ending 2014; target of 120

Intermediate Trend: DOWN ending this month, target 74; then

UP to February 2011, targeting 85; then

SHARP DECLINE ending May 2011, and 72 price target.

Short-Term Trend: DOWN until December 20, with a target of 74, though don’t be surprised if a quick rally develops before reaching lows in December.

Crude Oil

Price: $88.11 per barrel

Long-Term Trend: UP until early 2012, $110 per barrel target

Intermediate Trend: UP ending this month or May 2011, target $94 per barrel; then 

DECLINE in January with retest of area of $75 per barrel.

Short-Term Trend: UP until December 24, target $91 per barrel.

Comments:

Crude and the DJIA are very highly correlated for several years now and are likely to continue to follow each other and trend higher till the end of this year or April 2011, before any major correction.

Natural Gas

Price:  $4.47

Long-Term Trend: A new UP move may have started in October, with a 20 percent increase in price thus far. If this is the beginning of the expected up move, it should continue UP for two years until late 2012 with at least a $12 target.

Intermediate Trend: UP till April 2011, targeting $8-9

Comments:

The same story as in the last newsletter, we continue to expect a strong rally, which probably started in mid-October.

Natural gas remains the Best Opportunity out there right now, if one has patience to hold it long term.