THE REMINICK LETTER   2/15/2011

2011 has been bullish for many markets, and this trend will likely continue at least until April 15. The years of 1986, 1961 and 1936 – which were 25, 50 and 75 years ago – were also Bullish for the equities market. In each case, the following year (1987, 1962 and 1937) produced a major crash for equities. The probabilities are that stock prices very soon will start to weaken, before a crash in 2012.

The UP move is exaggerated in its irrationality, creating a bubble-like psychology. This is a very dangerous environment. Even if the Dow Jones Industrial Average should reach 14,000 before the bull phase is done – which is very unlikely – the index is likely to be trading at 6000 again in the next few years.

Even with GOLD reaching $1439 per ounce, we still expect a correction to $1250 by June this year.

US TREASURY BONDS are likely to drop lower, to a target of $113. Then expect them to climb later in 2011 to $130-$135.

CRUDE OIL is in a rally phase until September when it will probably reach $100 per barrel. Before the top, however, don’t be surprised by price resistance at about $94 per barrel. We expect $110 final target by late 2012.

GRAINS are likely to continue UP until March or July of this year.

STOCK MARKET:

S&P Price: 1326

DJIA Price: 12,266

Long-Term Trend: TOPPING in 2011, targeted DJIA high of 12,500; then

DROPPING in 2012, to a DJIA of 6000

Intermediate Trend: UP until February; then

DECLINE until June of 10% or more; then

GAINS in the summer until September of this year

Short-Term Trend: UP until February, with a DJIA target of 12,200 to 12,300

Comments:

The Standard & Poor’s 500 Index is up 5.4% this year, despite our predicted pullback. At this point, due to the irrational bullishness of investors, we are due for a correction. The 203-trading-day cycle just topped out today, February 14. If the pattern repeats, the market will decline at least 10% before the end of April.

We are looking for the pullback that a healthy market would provide. This is a sick market, which is pulling in the public to a “slaughter.” If stock prices do not pullback, the situation is all the more dangerous, so beware.

Gold: 

Price: $1360 per ounce

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

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

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

Short-Term Trend: DOWN until February 24 or March 2, targeting $1290 per ounce

Comments:

Gold has topped out until lows that are expected in May or June. There is only a10% likelihood that gold prices will make new highs before June, when we expect $1200 per ounce.

U.S.  30-Year Treasury Bonds:

Price: $119 29/32

Long-Term Trend: DOWN for the next 30 years

Intermediate Trend: DOWN until May this year, with a target of $113; then
UP until October

Short-Term Trend: UP until March 17, with a target of $122

Soybeans:

Price: $14.15 per bushel

Long-Term Trend: UP until 2021; target of $18-$21 per bushel

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

DECLINE from the highs in March and October until March 2012, target of $8.50 per bushel.

Short-Term Trend: UP, and the rate of the gain will accelerate in March, until a high on March 22 of at least $15.50 per bushel

Comments:

Soybeans and corn are in a strong Uptrend until March this year, with a price target of $15.50 per bushel for Soybean futures. The rally could last until July or September this year. However, the next move down will probably be quite severe, ending in March 2012 and reaching the prices of $8-$9 per bushel again.

U.S. Dollar:

Price: 78.94

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

Intermediate Trend: UP until June, target of 86

Short-Term Trend: UP after February 20 until early May

Crude Oil:

Price: $85.48 per barrel

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

Intermediate Trend: UP until July this year, target $94 per barrel

Short-Term Trend: DOWN until February 16, with a target of $85 per barrel.

Comments:

Lately, Crude Oil and the DJIA are very highly correlated. After May, we expect the two market prices to take their separate paths, with Crude working higher and stocks lower.

Natural Gas:

Price: $3.93

Long-Term Trend: UP through 2013, with target of at least $12

Intermediate Trend: DOWN until March 22; then

UP till December 2011 and a $7-$8 target

Comments:

We still expect the strong rally that probably started in mid-October to continue for some time. This is the Best Opportunity out there right now, if you hold two to three years.