The Reminick Letter:  1/10/2011

2011 is likely to be a year of great volatility. The Dow Jones Industrial Average is likely to top out before a new decline phase into lows during 2012-2013.

A double-dip recession has a high likelihood of happening. Note: 2012 is 25 years from the 1987 crash; 50 years from the 1962 crash; 75 years from the 1937 crash; and 100 years from the 1911-14 bear market. We are due for a serious decline most likely starting later in 2011 and ending in 2012-2013.

US TREASURY BONDS are likely to drop lower, with a target of $113, then rally back later in 2011 to $130-$135.

GOLD will start to weaken. The yellow ore has risen to $1439 per ounce, and we expect a correction to $1250 by June 2011.

CRUDE OIL is in a rising phase until May or September. It may top at $94 in the near term. We target $110 by late 2012

Commodities, which are bullish overall, will weaken in the later part of the year.  GRAINS are likely to continue to rise until March or July this year. However, expect a January 2011 decline on the way up.

STOCK MARKET:

S&P Price: 1221

DJIA Price: 11,406

Long-Term Trend: TOPPING in 2011-2012; and then

DECLINING in late 2012, 2013, and 2014.

Intermediate Trend: UP, ending April 14 or July, with a DJIA target of 11,800-12,400

Short-Term Trend: DOWN until January 26 or February 12, targeting DJIA between 10,300 and 10,500; then

RALLY into the middle of April.

Comments:

The Dow Jones Industrial Average is entering a six-week corrective period, until mid-February. See attached 2011 forecast, which is a composite of the best-correlated daily patterns over the last 90 years.

We are expecting 14-month-cycle highs in the DJIA this week. A 10% correction is likely, ending January 26 or February 12-15. After this week, we are bullish again until April or July or possibly September. In the later part of the year, we could see some shock waves and sharp volatility. Be very careful after April 15.

Gold: 

Price: $1,369 per ounce

Long-Term Trend: UP till 2012, with a price target of $1600 per ounce.

Intermediate Trend: DOWN until June this year, targeting $1200; then

UP until September, with a target of $1500 per ounce.  

Short-Term Trend: UP until January 26 or February 12, with a target of $1450; then

DOWN until March 2 this year, targeting $1250 per ounce.

Comments:

Gold has probably topped out until May or June, when we expect lows. Prices for the ore are 15% likely to hit $1500 in March, before collapsing. If the March high happens, there is a chance to exit and buy back in May or June.

U.S.  30-year Treasury Bonds:

Price: $119 29/32

Long-Term Trend: UP until the end of September 2011, with a target of $130

Intermediate Trend: Down until May 2011, targeting $113; then

UP until October 2011.

Short-Term Trend: UP until January 27 or March 17, with targets of $124 and $128

Soybeans:

Price: $13.63 per bushel

Long-Term Trend: UP until the end of June 2015; target of $18-$21 per bushel

Intermediate Trend: UP until March 2011, with a target of $14.50-$15.00; then

DOWN until March 2012, targeting $8.50 per bushel

Short-Term Trend: DOWN until February 11, with a target of $12.50-13.00; then

UP until the highs of March.

Comments:

Soybeans and corn are in a strong uptrend until March this year, with $14.50-$15.00 price target for soybean futures. The soybean rally could last until July or September 2011. However, the move down after that will probably be quite severe, ending March 2012 and reaching prices of $8-$9 per bushel again.

U.S. Dollar:

Price: 81.45

Long-Term Trend: UP until the end of 2014, target of 120

Intermediate Trend: UP until the end of April 2011, with a target of 86-88 

Short-Term Trend: UP until February 12 this year, targeting 86

Crude Oil:

Price: $88.48 per barrel

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

Intermediate Trend: UP until the end of July this year, targeting $94 per barrel

Short-Term Trend: DOWN until February 10, with a target of $80 per barrel.

Comments:

Crude and the Dow Jones Industrial Average have been very correlated for several years now and are likely to continue to follow each other and trend higher until AT LEAST April 2011 before any major correction in the price of oil takes place. We expect a 10% drop in oil in January this year, however.

Natural Gas:

Price:  $4.41

Long-Term Trend: A new up move has started. We think there is a general uptrend now, to end in 2013, with at least a $12 target.

Intermediate Trend: UP until April this year, with a target of $7-$8

Comments:

The story for Natural Gas is the same as last month. We continue to expect a strong rally, having probably started in mid-October. This remains the Best Opportunity out there, if you hold the contracts for two to three years.