With Monday drop in the stock markets, sentiments have temporarily turned. I think before the first week of July, stocks may be still in the “levitation” stage, meaning that a big drop won’t come yet. Plus that today and tomorrow, Fed will come out and swing again. We are sure to see some more volatility. Unfortunately, the only thing htat I’m more certain is that it may be a short-term downside on gold. Fed is losing its credibility. Whatever Ben says may backfire now, posing risks to further bond yield rise, or US dollar fall. If US dollar falls (which is less likely in the short term), then we can party on.

I have previously stated on my blog that I believed a decline will come by July/August timeframe (please post the link if you find it sometime back in April/May. I’m really too busy to blog these days). Currently, I’m still not sure if the current decline will turn out to be the retest of the low. It is still possible for stock markets to decline moderately towards late July, and rally back up in August to establish a lower high on the chart. In any case, it seems to be fairly certain that the high of 2009 AND 2010 AND 2011 is behind us. There may be a very brief year-end rally in December timeframe, but I seriously doubt that brief rally can exceed the last high. And the financial crisis will probably replay with a even bigger magnitude either second half of this year, or in 2010. In any case, I’m also certain that Bernanke won’t have his current job in 2011.

It is my opinion that one should divest everything correlated to the general economy and go to cash.

For the aggressive traders, they can look for establishing short positions.

Getting the big picture correct is by far the most important in investing. The second most important thing is timing. If you get the first right, but not the second thing right, your performance can still be good. If you get both right, you can have an out-sized performance. But if you don’t get the big picture correct, and invest in the wrong asset class, good timing cannot help you much. In that case, good timing can only happen for nimble traders. The probability of you getting it right is usually small. And the probability for profitability is even smaller because the market on the whole is losing money.

Investing can be like answering an SAT/GRE question. You can arrive the answer not just by knowing the right answer, but also by eliminating the wrong answers. The more choices that you can eliminate, the higher chance that you can get it correct. So here is THE multiple choices for everyone. Which of the following asset class should you invest in:
1. Stocks
2. Real estate
3. (longer term) Bonds
4. Commodity (and related stocks)
5. (short term) Cash
6. Gold/silver (and related stocks)

To get to the right answers, one must look at the the history, and understand what has transpired. High-tech stock bubble blew up in 2000. Based on human history, no financial bubbles can go back to its height and/or back in fanfare for about 20 years, or basically an entire generation. It takes time to forget about all the stupidity on greed. Until all the stupidity is worn out, the same asset class simply cannot be back in vogue. The general stock markets established a big double top in 2000 and 2007, the former helped by high-tech bubble, and the later helped by financial/real estate stocks. The US stock market has been in a strong bull market since 1980, for 20+ years. What is the chance of a continual annual 10+% return? These are all the questions that one must ask before putting more money into the general stock market. Portfolio allocation is about weighing percentage of your money in proportion to your projected future probabilities of return. My own answer to those questions is obviously that investing in the general stock market such as S&P 500 is not going to be the best place to be.

The second choice of real estate is much easier. It is a big NO. The bubble has just burst in 2007. If history is of any guide, your inflation-adjusted annualized return for most real estate investment will be negative for the next 20 years (if you count from year 2007). Yes, I do mean negative. And I also don’t believe that a super slow-moving market can reach a bottom in 2 years. Gosh, it even took 2 to 3 years for the fast-moving stock market to reach a bottom in 2002/2003 from year 2000. Anybody out there telling you that the housing market bottom is in is just a big fat liar, or an idiot. Real estate markets move in a much slower pace compared to other markets. I will never listen to any words spoken by any people who cannot even 1. realizing that housing market was in a bubble, 2. understanding that housing bubble cannot make a bottom in two years. And if you want to believe those lies, sorry, your greed has covered your eyes from seeing the truth. Want to flip another property for $100K? Be my guest. There is actually quite a real estate investing revival crowd in 2009, as far as I can tell. And they will probably be the dumbest crowd ever. It’s dumb enough to chase the housing market. Now, it’s even dumber to catch the falling knife just after two years of bubble bursting.

The third choice of bonds is a little difficult, especially after you’ve partially eliminated the first two. But history can help us out here a little. Note that long term bond yields (or 30 years treasury) have been falling since year 1981/1982 in the above chart. Falling bond yields mean that bond prices are going up. So from 1982 to 2009, that is also a very very long 27 years of bull market. Again, the question that should be asked is that what is the chance of bond prices to continue going up after 27 years? Of course, the factor in favoring bonds is that bonds are an interest-yielding instrument. So besides the raw prices that go up and down, you get partially covered by the paid interests. My own forecast for bonds is that it will probably drop a lot for the next two years. After that, it may go up for some 3 to 5 years. But beyond that timeframe, I believe that inflation will be with us for a long time. Because it is hard to time the market, I choose to stay out of long term bonds too, especially since I believe the magnitude of fall will be much bigger than the interest yields that you can get. Just this year since January, long term bonds have fallen by 25%, giving back all the gains made from the anomaly rising of last year (caused by front-running the Fed’s purchase of long term bonds). The market strain is quite evident in this usually stable bond market. If bonds can go up and down by 25% in 5 to 6 months, you know stock markets can double that volatility easily.

The fourth choice of commodity was one of the favorite choice, and is the most favorite choice among inflationists. There are people who group the last choice of gold together with commodity, and I was one of them also. But after the 2008 stock market crash, I realized an important distinction: gold is money, and almost as good as cash (if not better), but commodity is NOT. In fact, gold does quite well during liquidity crisis and deflation, but commodity will do very poorly in a deflationary environment. If one chooses to invest in commodity, then one must believe in mild to high inflation. Inflation can be caused by two things: 1. currency drop or loss of purchasing power in one’s domestic currency, 2. excessive demand of goods versus available supply. While I believe in the long term story of a commodity bull market, and a continual and possibly sudden loss of purchasing power of US dollar, for the time being, based on the current economic reporting, I see an immediate deflation. That is I simply don’t see #2 (excessive demand of goods versus available supply) happening. Given all the (leveraged) debt defaults happening, they are destruction of money. Yes, I reckon that Fed has printed some 1.2 trillion dollar worth of money. But those money are simply sitting in the accounting books of the insolvent banks. Those cash are NOT lent into the economy at all. It’s just good for nothing. It is extremely difficult to time when those cash will get lent and circulated in the economy. But at this very moment, the overall climate appears to be very deflationary. In fact, a short term (2 to 3 years) deflation will create even more supply destruction, which will boost the long term commodity prices a lot once the current deflation is over. For now, I remain short-term (2 to 3 years) bearish in commodity, but long-term (very) bullish in commodity.

The fifth choice cash is usually not on anybody’s radar. But one must always remember that cash is also a position that one can take. I also want to say that I prefer to stay in senior currencies: Yen and US dollar, because senior currencies tend to rise in a liquidity crisis. My belief is that the worst of the financial crisis is still ahead of us, not behind, and therefore, I want to stay in senior currencies, instead of those commodity currencies (Australian, New Zealand and Canadian dollars). Euro economy can easily be worse than US, due to lack of economic policy coordination among euro economy. Therefore, I don’t want to take part in euros either. In a deflation, cash is a very good choice.

At last, we have gold & silver. Gold is more like cash/money, while silver can behave more closer to commodity. In a deflation, you want to put your money in gold rather than silver because of those characteristics. In a deflation, gold/silver ratio tends to go up, as demonstrated in the last liquidity crisis (see the chart below). Although silver may eventually track the upward movement in gold at a later stage, you don’t want to be in too early, especially since the volatility and the potential loss/gain of silver is much higher. My advice is don’t get too greedy. Anyway, gold made its last bubble high in 1980, and has fallen until 1999/2001 with a double bottom. It has risen by about 3X to 4X from the low of about $250. Again, we should ask ourselves, what is the chance of gold continuing to rise after 8 years into bull market? Are we still in the bull market? Or is the top of $1000 behind us? Technically speaking, gold, as one of the best performing asset class coming out of 2008, is obviously still going strong. The top of $850 in 2006 was certainly a little parabolic and bubble-like, but the last top of $1033.90 made in 2008 was more of a steadily climb-up. In all fairness, given a very low participation rate from public, the bubble top in gold cannot possibly be in yet. The bubble top of any financial assets is always marked by public participation in a dramatic way (such as the recent housing bubble, and high-tech bubble). Therefore, gold is probably not the investment choice to be eliminated.

Going through all six investment choices, for the longer term (4+ years), I believe that we can probably cross out choices #1,#2,#3,#5, which are stocks, real estates, bonds, and cash. That doesn’t leave much choices left at all. If my reasoning is correct, it will be quite obviously that most people who invest in the traditional investment of stocks, real estates, and bonds, will not gain much at all. What kind of scenarios can result in such turnout? It is long term INFLATION, resulting losses of purchasing power for majority of people. In another word, our living standards in the US as a whole will go down. Coupling with a long term fall in US dollar, this would fit “very nicely”.

For the shorter term however, I believe both cash and gold are probably a better choice because of the unfolding deflation. At some point, one must make the switch back to inflationary investing due to all the supply destruction. However, I think we are still at least 1 to 2 years away from that.

Keeping a history of all the numbers force me to be honest with myself. After blogging for three years already, there were so many up & down in my own money.

2006/5/9 was the first day of the record of my own net worth. My scaled down net worth number had $555629.93, which I knew was not sustainable. It was right around the time that precious metals made an almost parabolic new high, and my company stock was at a very high point. 31% of my net worth was in my company stock (options) at that time. I chose not to sell, knowing fully well that the stock market high should come in early 2007 (my guess at that time). Unfortunately, my bets were wrong. Even though my company is more like a leading company and more like a mid to big cap stock, it didn’t track the general stock market at all. This part of my 30% net worth dwindled by 84% twice. Even today, the total loss is 63% since May of 2006. I had a chance to sell my company stocks in 2007, but I was too busy with my daily job, and before I could gather my thoughts, it went down big time again. I failed to be always mentally prepared. The window of opportunity is always fleeting.

Going forward in the later part of 2006, my net worth suffered mainly from the big loss of 84% in my company stocks, and a small hit from the precious metal temporary setback. During the period from 2006 to 2008, my net worth fluctuated mostly between positive 20% to negative 20% at $500000 (scaled down number), depending heavily on how my company stock behaves, and/or precious metal prices.

Early (Feb/March) in 2008 however, just when I was reducing my stakes in precious metals, my relatives sent some big amount of money under my custody. Because I always managed the entire portfolio in terms of a bigger extended family, even though those cash was not mine, I felt compelled to hold on to my existing positions in precious metals. Frankly, I did not know whether $US/gold will continue to go down or up. The increase in my total family cash was so big that it was more than my own entire cash position. The timing practically couldn’t be worse. The $US cash increase was at about the highest point of gold. For the benefits of the entire family, I decided to hold on to my precious metal positions. In fact, I tried to seek permission to invest part of the cash from my relatives.

Well, what happened later in 2008 was a total crash in everything, with $US staged a dramatic comeback. From 2008/5/16 at $558131.75, my net worth crashed to $240512.41 on 2008/11/20, a 57% loss in about six months. What’s worse was that the cash that I’ve prepared on the sideline for about $350000 (scaled down) plus more in the banks was not really usable. I was told that about one third of my relatives’ cash needs to pay for tax in the following year, and that they are going to remove the cash too next year.

Since last November, I have almost doubled my net worth to $479758.93, without putting those big pile of supposedly prepared, but “phantom” cash much into use. In fact, I have also accounted a 33% drop in my home value since the rise. I’ve learned extremely hard lesson through this. I can never rely on anyone else for my own financial success. If other people lose their money, it is truly their own choice and their own business. I should always simply mind my own business, even when “other people” are my close relatives. I can give them advice, but whether they take my advice or not, it is their business. I should never make ANY financial decisions, including the effects of other people’s money. If other people get rich, they won’t give it to me. If I get much poorer because my decisions taking others’ money into consideration, they couldn’t care less because of my own wrong decisions. The bottom line is that unless I am given very explicit instructions with very explicit timeframe for the management of money, I should never invest with the combined portfolio in mind, even when the combined portfolio is my extended bigger family. Money is always the most sensitive issue among people. I should always mind my own business.

I could have come out of 2008 market crash with a big gain easily, if my investment plan was not meddled up by a big phantom cash infusion at the peak of the (precious metal) market (Feb/Mar 2008), and all withdrawn at the bottom of the market (Nov 2008). But I’m content with just about breaking even finally. I can’t possibly describe how terribly I felt when my care for my relatives totally backfired on me.

Another big mistake that I made was that I simply did not hedge my positions in my company stock in 2007, even though I knew that a big fall was coming. Such hedge was very hard to implement due to the raw size of my leveraged positions through company stock options. To cross-hedging of this position using market double-short ETFs also has a lot of complication because my company doesn’t track the general market that well at all.

Today markets are again at a high point, and I expect my net worth to go down in the coming months. However, hopefully this time around, I can correct my previous errors. Not all of my current cash position belongs to me right now, but I think I’ve raised sufficient amount of my own cash. The second half of 2009 will be again full of volatility. I think a high cash component in portfolio is good for safety.

I’ve obviously out-performed S&P500 in the last 3 years, but an almost flat performance is nothing to brag about. I could have done much better, if I mind my own business and follow through with actions on my own thoughts.

Did I go under my 1st Million in 2008? Hell, a resounding yes! Am I back above now? Well, you can take a guess.

Ten large banks are paying back treasury with 68 billion dollars, so that they can be freed from government meddling in paying their executives. Now that all of their accounting book is blessed with marked-to-fantasy, they don’t need the cash anymore. Can we put in a clause in the payback that “please don’t come back again even if you’re insolvent (after squeezing out more bonus for executives)?”

I’ve said many times, and I will repeat it again. Option ARMs and AltA are resetting starting from about now until the end of 2011. The wave of notice of defaults is already coming (Dr. Housing Bubble has got all the charts here). It’s not a question of if, but when (the next wave of financial crisis will hit). Mark-to-fantasy by thinking that you have not sold your stocks (mortgages on the book of these banks) after 60% losses and that they will come back to full value after 10 years will not help at all. The end game will come, when the homeowners stop paying mortgage and/or walk away from properties. When the properties go into foreclosures and get sold, banks have to mark down the losses without a choice. The fact that banks are not in a hurry to foreclose all the properties tell you that the level of losses in a foreclosure will probably destroy the banks. By choosing not to foreclose (and not mark-to-market), insolvency can persist in fantasy land.

And before they go down, CEOs are going to squeeze out more from shareholders, bondholders, and taxpayers. They’re definitely a smart bunch.

The amount of “irrational exuberance” is simply amazing in the US stock markets. I am always amazed by such eternal positive spirits. In fact, going against irrational exuberance has hurt my performance several times, back in 2000 near the high-tech mania, and back in 2007 May/June, right before the stock market collapse. I was forced to stop my horrendous losses, whenever my shorts were initiated too early.

After 10+ years of experiences, I am truly in awe of the human stupidity. And I learned not to be greedy. So this time, I have sold December 2009 $3.00 calls for just 9000 shares (or rather 90 calls) when GM shares were trading around $1.60. I actually shorted GM at about $35 back in 2007, and was forced to stop loss at $40. Anyway, GM should have gone bankrupt years ago in my opinion.

Going through some of the messages on Yahoo’s message board for GM, I can see that there are many retail traders in GM. For one thing, I know whoever is trading GM in a regular retail account, most likely, initiate the trade from the long side (by buying first). Why? Many brokerages that are available to retail traders have a $5 rule, not allowing people to short stocks below $5. So in order to play or trade, you will need to do it by buying first. Secondly, GM shares mostly cannot be borrowed at all (because it’s heavily shorted at about 20% of the float). With the exceptions of hedge funds and the big guys, where they can do whatever they want including FTD (failed-to-deliver) to short without borrowing shares, retail investors simply cannot short. I was able to short GM via selling naked calls on GM. This option also is not available for most retail/online brokerages (except through qualified accounts at TDAmeritrade and InteractiveBrokers). You can see that the play is not stacked up fairly for retail traders.

In 1999, I was daytrading a low price stock for just a penny difference on Etrade. A penny was enough profitability for me. Eventually after a couple of months, the company went bankrupt. Even though I’ve successfully earned 1 penny profits for probably more than 20 times, a single bankruptcy event wiped out all of my profits and then more. So I made a trading rule for myself: never ever touch a company that can potentially go bankrupt from the long side. Doesn’t matter how fast or how smart I think I can be day-trading or minute/seconds-trading (that’s how long I was trading), if my position in the market is on the wrong side, then it’s simply a big open invitation for Murphy’s law. Unfortunately, I bet that this is the lesson that every traders/investors including all the traders that got stuck in the bankrupt GM, that need to learn for themselves.

Another trading rule that I want to share is “don’t be greedy”. Walking into Scottrade retail office the other day, I overheard that some person’s account had a margin call buying GM. The only way that could happen is 1. you use margin. 2. you bet the farm. Both are the “big NO NO”. I agree that you may be able to double or triple your account size maybe 2 to 5 times doing that. But you actually just need 1 time of mishap to wipe you totally clean and then some. You really think that the trading gods are always with you, and that you can always ride it out with markets going up and down? Gamblers truly will have better odds playing slot machines in Las Vegas, rather than playing with margins in stock market. The same rule applies to the short side. Even shorting 90 calls of GM require about $25000 of margin money in my account. Yes, I could bet even bigger, and use lower strike price. But I could easily use up all of my margin power in my account in no time. And you know the next thing that will happen is a margin call, which will wipe you out.

It’s a sad day for all the GM holders. I truly cannot understand their eternal hopes. Unfortunately, such hopes do come to an end in stock markets, and that is bankruptcy.

And to even consider the argument of buying this GM “shell” company for its potential tax losses, it’s simply beyond my realm of logic. As far as I understand, a bankrupt entity is a different legal entity than before. And to “buy the company for its tax losses” before bankruptcy, the buyer needs to inherit all the debts and obligation (pensions).

What is the value of GM? It’s insolvent and has a negative worth. Even if you assume that the common shareholders can get 1% of the new GM (which is a smaller GM), and that the new GM can have a valuation like Honda (105.36 billion market cap) and Toyota (125.67 billion), that is only 1.2 billion for the common shareholders, which will be valued at about $1.97 (using a total of 610.56 million shares). I guess I will never understand this eternal hopeful spirit. Facts and reality works better for me.

I have not been able to post much. Almost everyday, I’m selling some stocks. No complaint at all. It’s always better to sell at a good price than at a bad price. I’m even selling some of my PM mining stocks, since they’ve really gone up too fast. Some stocks that I previously owned has almost doubled in less than 3 months from last low. However, I’m still holding the majority of my PM mining stocks.

I will update my networth next month. It has been the biggest roller-coaster ride ever in my life, plus some most unimaginable unplanned terrible side shows. But I’m on my track of coming back. If I tell my parents how much money I’ve lost from peak to trough, they will probably have a heart attack. And I’m pretty sure none of you want to go through that experience.

Be extra careful of going forward. The good days are counted in weeks, if not in days.

Stock markets remain exuberant, and possibly will remain so until the end of May. If June turns out to break new recent height, it will defy all experts on advising to “sell in May and go away”. However, it shouldn’t be taken lightly at all. We are simply on borrowed time. The further out and higher we go, the bigger drop later it will be.

Due to the stock market drop last year, some of my colleagues invite me to regular monthly investment discussions in a small group of 5 people. This has been going on awhile. The last discussion has been one of the most optimistic ever. I’m obviously the standalone bear, while everyone else have turned bullish or slightly bullish. The mood was gradually happy. My own forecast for that last week gathering was that
“stock markets will have a very shallow correction, but I’m not optimistic for the remainder of the year. Furthermore, I believe that in 2010, there is a possibility for stock markets to break new low.”

I was not surprised by the upturn in the mood. Surprisingly, even given my words, my colleague concluded that even I, the super-bear, have turned slightly more bullish than last month, and interpreted the turn as a bullish sign. I didn’t say anything, but I actually interpreted his interpretation on my words as a very bearish sign.

In any case, I have been continuing to liquidate my non-PM (precious metal) positions gradually, knowing very well that the intermediate high may be still weeks away, and also that I cannot sell at the absolute top. I’m about 50% sold-out, and I will continue to take advantages of this rally. Yeah, I plan to go to 0%, plus some more in inverse ETF and shorts.

In case you followed my-networth page, don’t be fooled by changes in the “cash+leverage”, or “everything_else_besides_home” (which are my stock holding primarily) columns. All of my numbers are faithful posted, but were designed not to be easily decoded. Under “cash+leverage”, the leverage that I have is some hefty cash from my relatives which have become a super-nightmare throughout the last stock market drop, totally disrupting my own investing plan. The “leverage” goes up or down without any direct relationship to my actual buys & sells. And the increase/decrease of my stock holdings usually don’t correlate to the general stock market very well because I have more PM than anything else.

Anyway, I just want to make sure you’re not mis-led. I do say what I think, and I try to act on what I think (although not with a perfect 100% efficient execution). You can take my advice, or take advice elsewhere. Invest on your own risk.

With the exception of uranium, I am not so hopeful on energy industry for this year. If you don’t sell them this round, there may be one more chance after some 1 or 2 weeks of the current short-term corrections. After that, energy stocks will probably drop along the general market, with bigger percentage of course.

The inventory picture for crude oil is simply terrible. Too many speculators have been playing the contango in the commodity futures market. What has been happening is that short-term price dropped too fast, while the longer term prices held up much better. A contango (higher future prices than current prices) in the futures market encourages traders to take current delivery, store it, and sell the futures at the same time. What resulted is basically additional (false) current demands that cushion the oil producers, at the expense of increase in future supplies from the release of inventory.

When inventory increases, it simply means that oil producers are not cutting production fast enough to match the fall in demand. That doesn’t bode well at all for the future prices.

I maintain my position that we will probably see something like a double-top formation in the general stock markets, with a second top forming at about June 15, plus or minus 1 week. After the second top falls off from the support trend line, the “sell in May, and go away” will reassert its power.

If you believe in Bible, what kind of investment choices should you make? One of the most mysterious chapters in Bible is the Revelation which predicts the end time. The most interesting part I would have to say are the seven seals. When I first read them, some were kind of clear, indicating wars and plagues. Some were not so clear at all, like the third seal (Revelation 6:6):
“A measure of wheat for a penny; and three measures of barley for a penny; and see thou hurt not the oil and the wine.” (King James Version)

My first reaction was what does that mean?? A penny? I learned much later what the penny means in Bible. Some versions use a shilling or (the Roman) denarius which is essentially a silver coin about the size of a dime, or about the wage of one day work (Matthew:20:2) at the time when Bible was written. In the New International Version, this is what it states for the same Revelation passage:
“A quart of wheat for a day’s wages, and three quarts of barley for a day’s wages, and do not damage the oil and the wine!”

Once you understand the units, it is more clear. First of all, silver which was the monetary unit was worth much more in ancient time, compared to our modern time. If we use an hourly (federal) minimum wage of US$6.55, and 8 hours a day, that will be $52.4, or about 3.75 one-ounce (28.35 gram) silver coins (at US$14) or about 23.5 denarius (4.5 gram of silver content). We are earning 24X in silver than ancient workers. So either it means that silver is vastly undervalued, or our wages are so much better valued than ancient workers. I’m guessing it’s probably somewhere in between, especially silver is no longer used as monetary units.

Secondly, the other part is that the wage of one entire day can only buy you very little amount of wheat or barley, barely enough to satisfy one man’s hunger. It is obvious that it means at the minimum that there is a great food inflation, if not inflation in general. However, it’s basically impossible to only have food inflation. Food is the most essential commodity. Food inflation will drive all other inflations.

As I contemplate what Bible means for the current global economic pictures, it is also important to note that United States is a predominantly Christian country. I think those scenarios if it comes unfolding could apply to US more than other countries through a US dollar depreciation.

We are obviously not through the current phase of economic deflation possibly until 2012. However, the next phase of great inflation is probably just around the corner. Keep the goal in sight.

As I have stated, people needs to take advantage of this rally to sell out of their stocks. This is the “prayer answered” for those who have suffered big losses.

What’s ahead? My own opinion is that the rally is soon going to stall a little at about here. Many people are looking for selling out at Moving Average of S&P500 reaching 950. I’m not going to count on that. The market will always do the least unexpected. So either it stops just short of 950 at maybe 935, or it surprises every bear out there with a much stronger recovery to 1000 or above. I’m a bear, and I would definitely like to be pleasantly surprised.

The energy stocks are the stronger ones that have staying power through this counter rally. I have not sold out my energy stocks. In fact, I only just started to lighten up a little. There is a not-small possibility that they will stay strong until early July. I will continue to watch them very closely for a clean sell-out in the coming days/months.

Looking at upturns in gold stocks in the last few days, it appears that the last sector has waked up to the bullish train. And that is a bad omen. Once the last bullish guy joins, you know what happens next. Precious metal mining stocks will be subjected to stock market fluctuations. I think there is still room to run in both PM and general stock markets. The initial reaction of a stock market fall for PM stocks will be down for sure. I expect them to hold support this time, although the magnitude of fall will always be more exaggerated than general stocks due to its higher volatility.

I have pinned that stock markets with a high likelihood will not be able to go beyond August/September timeframe. In my opinion, it’s more likely that it will drop starting in mid-July with a bigger magnitude. Nevertheless, towards the year end in November/December, another counter-rally will be attempted. I hold the opinions that the second counter-rally will reach a height that is going to be at least 5% lower than the current or July height. I will not wait for that to sell, nor I won’t be shorting into Nov/December.

Let’s enjoy the temporarily sunshine for now. Best luck trading.