The Gilmo Report

January 3, 2021

January 2, 2021 1:03 am ET

Assume nothing! That has been my watch phrase for 2020 and in fact assuming anything and operating accordingly in such a bizarre dystopian year has generally been the sub-optimal path, to put it lightly. This was borne out once again as we went into the final two trading days of the year Thursday morning. At that point, I assumed that all the tricks up my sleeve in the way of that “one good trade” we always look for had been exhausted, at least until the New Year.

I wrote in Tuesday’s mid-week report, “If pressed for relatively fresher long plays, I’m leaning more towards precious metals and certain silver miners…” In this case my instincts were running in the right direction, but I also noted, “…these are also not showing much in the way of upside fireworks following the initial moves off the lows that began in early December.” Obviously, I spoke too soon.

Perhaps the Greek Goddess Theia was listening. Gatos Silver (GATO), which was holding squeaky tight along the 10-day moving average per my discussion in Tuesday’s report, shot higher in a silvery burst of FOMO-like propulsion on Wednesday morning. Not a move I would have assumed would transpire in the last two days of the year, but we’ve already covered that issue.

While all my silver names were up on Wednesday, Gatos Silver (GATO) led the way with what was at one time a 28%-plus intraday gain. It added a little frosting to the cake on New Year’s Eve before settling in for a 37.3% move in the final two days of 2020. Thus, GATO gave us the finale we needed to end a dystopian year with a smile on our faces.

 

 

The outperformance in GATO relative to the others that I showed in my silver miners group chart on Tuesday is quite stark.  While the other three, First Majestic (AG), Coeur Mining (CDE), and Pan-American Silver (PAAS) appear to be rounding out the right sides of new bases with CDE actually breaking out recently, GATO is head and shoulders above them all.

However, AG, CDE, and PAAS remain buyable on pullbacks to or near their 10-day moving averages, which can be watched for. I am tending to favor silver miners over gold miners simply because they have stronger charts and because silver has the additional sideline of being a primary component of solar panels, and solar energy is likely to gain favor, whether justified or not, in a Biden Administration.

 

 

GATO clearly stole the year-end show, at least for me, but when it comes to the general market the one-year weekly chart of the NASDAQ Composite Index speaks for itself. While many think 2021 will be a “year of recovery,” it is already clear that from the sole perspective of the market, at least, the last three quarters of 2020 played the part much better than I think 2021 likely will, but we’ll let this play out on its own without deciding ahead of time what is or isn’t possible.

 

 

While the pundits generally engage in the usual year-in-review stuff, followed by their outlooks for the following year, I prefer to remain in the present. In other words, prognostications are fine, and make for good media copy, but trading reality, at least for me, dictates that the market will make its own prognostications. This shows up, first and foremost, in the charts, which is where we will begin.

The continuing decline in the dollar, the rise of Bitcoin and other crypto-currencies, and the continued buoyancy of precious and other metals speaks to me of a year where the inflationary theme may come into play. Certainly, the action in precious metals, specifically silver miners, over the past few days speaks to that. My expectation is that going forward we will continue to see a favorable backdrop for precious metals and precious metals miners.

On Tuesday, the Sprott Physical Gold Trust (PHYS), my preferred gold ETF, although I do dabble in the others, posted a pocket pivot coming up through its 50-day moving average. That represented a long entry at the line which remains within buying range, using the 50-day line as a tight selling guide.

 

 

The Sprott Physical Silver Trust (PSLV), as we know, long ago posted a clean undercut & rally (U&R) long entry set-up at the prior 7.75 low back in late November. Since then, it has been a relatively steady ride higher as the white metal has ascended in a rising trend channel where the 10-dma has served as rough support along the way.

Pullbacks to the 10-day line in silver might bring it into a better long entry position, but I would coordinate this with the price of gold. If gold, as represented by the chart of the PHYS above, holds up well along the 50-day and the 10-dma/20-dema confluence, then look for the ascending trend channel in silver to also hold up, thus pullbacks to the lower bound of this channel may offer lower-risk entries with tight risk management.

 

 

I have discussed industrial metals names in my video reports for the past couple of months as they have trended higher, before finally pausing to build some decent bases over recent weeks. An inflationary environment is likely to be favorable for industrial metals prices, and I tend to think that the rallies we’ve seen in big-stock metals names since early October are at least in part being driven by this.

Big-stock copper producer Freeport-McMoRan (FCX) has been basing for the past three weeks before breaking out from what we might consider to be a three-weeks-tight type of formation on Wednesday of this past week. While the stock is well within buying range of Wednesday’s breakout, I thought this was much more buyable along the 20-dema as discussed in previous video reports, so also keep an eye out for any pullbacks to the 10-dma as potentially lower-risk entries.

 

 

Much quieter consolidations can be found in Alcoa (AA) and U.S. Steel (X). AA is tracking sideways in a four-week base where we’ve seen buyable pullbacks along the 20-dema. The stock is now back above the 10-dma but remains in a very tight base where pullbacks to the 10-dma or 20-dema continue to offer lower risk entries.

 

 

U.S. Steel (X) has been in a steady base-building decline since peaking at $20 in early December. It posted a sharp move in the last week of November and the first week of December before beginning work on what is so far a three-week base. On Thursday X posted a voodoo pullback into the 20-dema along the lows of its current base which puts it in a buyable position using the 20-day line as a tight selling guide.

 

 

Agricultural names, which can also benefit from commodity inflation as those who played the group in the 2006-2008 commodity bull market know, have also been setting up for the past month or so. As with the industrial metals, I have been discussing agricultural names in my video reports during that time. One of my favorites is big-fertilizer (or rather, big fert) Mosaic (MOS), which is currently working on a five-week base.

The opportunistic entry here was on the U&R that occurred on Wednesday when the stock finally cleared the prior 21.87 low. I had previously discussed MOS in my video reports, and one could have acted on this basis. On Thursday MOS posted a five-day pocket pivot as it moved back up to the highs of the base. In this position, watch for constructive pullbacks to the 10-day line as potentially lower-risk entries.

 

 

Nutrien (NTR) is another player in the group that came into being when big-ferts Agrium (AGR) and Potash Corp. of Saskatchewan (POT) merged several years ago. Both AGR and POT were big runners in the 2006-2008 commodity mania. NTR has been working on a four-week base after a run-up in November.

The stock posted a pocket pivot through the 10-dma and 20-dema on Thursday on strong volume despite the pre-holiday trading environment. At the same time, NTR rallied back above the prior 47.55 low. One can look for pullbacks to the 10-dma/20-dema or the 47.55 low as potentially lower-risk entries from here, although this is actionable using either of those references as reasonably tight selling guides.

 

 

Intrepid Potash (IPI) came public in April of 2008 at the height of the commodity bull market, perhaps reflective of the euphoria that had built up in that area of the market back then. That was just about the end of the commodities run, but IPI was good for one last hurrah, pricing at $32 a share and then running up to a high of $76.24 before blowing apart with the rest of the market in late 2008.

I show the weekly chart of IPO below, and while it looks like it’s trading at 24.15, it is in fact trading at $2.41 relative to its 2008 high of 76.24. That’s obviously due to a 1-for-10 reverse split after reaching a low of pre-reverse-split low 60 cents earlier in 2020. As Zippy might say, “Yow!!!”

While the stock is obviously extended after a big move Thursday on news that it was raising its 2021 outlook. This may be one clue that things are looking up for the fertilizer industry, and thus also piques my interest in the space, which is showing constructive technical action.

 

 

Agricultural operations names have also piqued my interest as a potential sandbox to play in during 2021, IF the inflationary theme theory plays out. If it doesn’t, my guess is that it would be due to the onset of a deep economic recession brought on by a variety of potential factors. So, if these nice-looking charts we see in things like industrial metals, fertz, and other commodity-related names start coming apart, that might be a clue in this regard. Keep that in mind as we go through these names.

Bunge (BG) is what I would consider a big-stock ag operations name, and I’ve been watching this base along its 10-dma and 20-dema for the past three weeks. The last buyable move was the bounce off the 20-dema three days ago that also undercut and rallied back above the prior 63.21 in the base.

In this position, pullbacks to the 10-dma might be buyable, but the most opportunistic approach here is to watch for deeper pullbacks into the 20-dema. In either case, the corresponding moving average would also serve as your selling guide.

 

 

Corteva (CTVA) emerged into the market as an ag-tech spin-off from DowDuPont in June of 2019 and has spent most of the time since then building this big, wide-ranging base structure from which it emerged in early October. It has since trended about 20% higher as it now starts to build a new base and the 10-week line starts to play catch-up.

In my mind, this is one to keep an eye on for now. It’s bouncing along the lows of this new base, where buyable pullbacks would occur on moves down to the 10-week line at 37.29 on the weekly chart or the 50-dma at 36.74 on the daily chart.

 

 

An obvious corollary to a commodity inflation theme is Caterpillar (CAT). It not only digs a lot of commodities out of the ground, but also helps grow other commodities in the ground. The pattern here looks tantalizing as the stock builds a short base-on-base type of formation that is very tight. The stock posted a pocket pivot on December 18th, an options expiration day, which is constructive, nevertheless.

I also like the quick low-volume shakeout at the 20-dema on Tuesday that was followed the very next day by a gap-up pocket pivot that took it right back above the 10-dma and 20-dema in one fell swoop. In this position, pullbacks to the 10-dma become your lower-risk entries.

 

 

Before we forget, lithium is also a commodity that is pulled up from the ground and is likely to see sustained increases in demand in 2021. One name that is without question the long-term, big-stock leader among lithium producers, despite also producing a lot of other stuff, and thus not a pure play necessarily, is Albemarle (ALB). Despite being diversified into other chemicals, catalysts, and the like, ALB is the low-cost industry leader among lithium producers, and is looking to aggressively grow this side of their business.

It has also been the one with the most constructive uptrend since launching out of a big base back in early November, about a month after the smaller lithium names started moving after Tesla (TSLA) made supply agreements with Livent (LTHM) and Piedmont Lithium (PLL). This has been a very clean move since the breakout, one of the few that I’ve seen, but I was never that excited by the stock because I did not consider it a pure play on the lithium theme, which shows you how much I know.

Now I’m just watching this thing as it consolidates the very nice 50% move it had after the big base breakout, waiting for a chance to spring upon this. Optimally, I’d prefer something opportunistic, like another test of the 20-dema. Meanwhile, it’s pulling into the 10-dma on light volume which can be treated as an entry point using the line as a selling guide. Stay tuned.

 

 

I’ve added ALB to my group of favored lithium names as a replacement for Chinese producer CBAK Energy Technology (CBAT).  If we compare ALB to the other three names in my group of favored lithium names on weekly mini-charts, we can see that Livent (LTHM) looks similar as it has had a strong, consistent uptrend that mirrors very closely the action and trend of ALB.

The other two, Lithium Americas (LAC) and Piedmont Lithium (PLL), are now forming bases with PLL. We can easily see which have been stronger more recently, but we should also note that PLL had the biggest gap-up move among the four. So, if we’re going to discriminate between the four, we should at least discriminate discriminatingly!

 

 

My theory regarding a potential inflationary commodity rally in 2021 may be all wet. Some might even say I’m just talking out my rear portal. But my theory is based on current evidence with respect to what I’m seeing in specific commodity-related areas of the market. And, in turn, I tend to think that the action in commodity-related names is discounting coming inflation as a result of absurd levels of QE in 2020 with more to come in 2021.

When I think back to the great commodity bull market of 2006-2008, I remember that it was correlated to a large extent to what became a parabolic move in gold. Back then the initial move in gold off the lows of the late 1990’s was driven by what were at the time extremely accommodative Fed policies, exacerbated by 9/11 when the Fed took the Discount Rate down to 0.75% by December 2002 and the Fed Funds Rate down to 1.0% by mid-2004.

Driven by the initial first waves of QE in early 2009 following the Great Financial Crisis of 2008, gold and silver both continued higher as stocks eventually ran into an economic wall that was later dubbed The Great Recession. Gold peaked in 2011 and then spent the next nine years retracing about half that prior parabolic move as it set up for new highs in 2020.

If we’re looking at another up leg in gold (and by tautology, silver as well) on a breakout from this nine-year consolidation following the decade-long parabolic move, then I think we will likely be looking at higher inflation. This should tend to be bullish for commodities, and hence commodity-related stocks. The only wild card to be on the alert for is another potential economic wall.

 

 

The big turn in gold in the early 2000’s and extremely accommodative Fed policy led to what I consider an echo bull market in commodities that many missed precisely because commodities-related stocks, at least up until that time, were considered quite boring. Coming on the heels of the great DotCom bubble market where so many shiny things were to be found among tech/internet names, often with no earnings and little in the way of sales. But, conceptually, they were exciting as harbingers of a new internet age. Commodities, on the other hand, are the dirty old man of the market, having been around for literally centuries.

When they first started breaking out in 2006, commodities-related stocks were held in the same esteem. But they ended up having tremendous moves, and eventually, things were going parabolic by 2008 once everyone caught a bad case of something like Fertilizer FOMO, as was seen in big-fert Mosaic (MOS) back then. It may have come from the wrong end of a cow, and smelled bad as a result, but it was the kind of stuff that created incredibly sexy “chart porn” as we see in the weekly chart from that era below.

 

 

The technical backdrop combined with current and developing underlying conditions make the inflationary commodity rally theme a viable one in my view. It doesn’t have to play out, however, but my main point is that this is something to watch for in 2021, and thus we go about the business of looking for the confirming evidence as things develop in the New Year.

If the theme pans out, then we should also be alert to any confirming technical evidence in other names within the overall commodities space, such as chemicals, shippers, materials, etc., similar to what we saw in 2006-2008.

Thematically, the electric-vehicle space may remain an area to watch in 2021. The Chinese EV names that all topped out (at least on a short-term basis) in November are now building bases of several weeks in duration at this point. Li Auto (LI), Nio (NIO), Niu Technologies (NIU) and Xpeng (XPEV) can all be watched for possible price and moving average U&Rs along their base lows.

However, expecting them to immediately shoot out of the gate after their prior hot & steamy upside moves may asking for too much. From the weekly mini-charts, below, we can see that NIO is the strongest-acting of the four as it bases very tight along its 10-week moving average. That may be the one to focus on for now.

 

 

While EV makers, both Chinese and American, mostly flounder, the steady mover in the group remains the big-stock EV leader, Tesla (TSLA). The stock cleared the $700 Century Mark on Thursday, which can be treated as a fresh long entry trigger using the $700 level as a selling guide. Otherwise, you are left to trying to fish for bottoms in other EV names that continue to correct.

 

 

Looking for lows in all the wrong places pretty much characterizes the action in EV names outside of TSLA. Fisker (FSR) is now back below its 50-dma as buyers didn’t seem too interested in taking shares ahead of the New Year. I tend to think that Cinderella has left the ball on this one and isn’t likely to return any time soon. We’ll see whether FSR can regain its FOMO mojo in 2021, but I tend to think that will take some time.

 

 

On weekly mini-charts the EV battery/charging names Ballard Power (BLDP), Blink Charging (BLNK), FuelCell Energy (FCEL) and Plug Power (PLUG) all show some very strong trends. All are currently extended, but the one thing that I find very interesting about all four of these names is that just a few months ago they were all junky penny-stock names. What changed?

Well, the sudden FOMO interest in all things EV, including battery and charging names. Otherwise, the fundamentals for all these names look pretty sketchy, with more players coming into the space at a rapid clip. For now, I’m content to let these base and set up properly again after some volatile FOMO action over the past several weeks while remaining alert to any opportunistic Ugly Duckling set-ups on pullbacks.

 

 

Semiconductors may continue to build on their performance in 2021, so my favorites remain on my watch list for the New Year. The weekly mini-charts below show Advanced Micro Devices (AMD) and Marvell Technology Group (MRVL) holding very tight after recent breakouts, which keeps them in buyable positions using their 20-demas as references for support on the daily charts.

Qorvo (QRVO) and Qualcomm (QCOM) have been steadily recovering from sell-offs three weeks ago on news that Apple (AAPL) was looking to start manufacturing its own chips. Both are extended but were buyable along their 10-dmas and 20-demas a week or more ago. These remain on my watch list for 2021.

 

 

Lumentum (LITE) is also classified as a semiconductor group member although I have also considered it to be telecom-related as well since its 3D sensors are used in smart phones and other devices. They may eventually also be used in electric vehicles, and when a report surfaced about an Apple iCar last week the stock made a run for the $100 Century Mark.

That, however, turned out to be a very opportunistic short-selling entry as it failed and reversed at the $100 level. It has since descended about 6% lower as it appears to skid to a halt just below its 10-dma. I’m watching this from a 360-degree perspective, as a possible long if it can reverse back up through the 10-day line or find support along the 20-dema.

Another weak rally into the $100 level might also bring it back into play as a Livermore Century Mark Rule in Reverse short-sale entry. There is enough dynamism in this chart, combined with the potential thematics, to make LITE a potentially interesting name in 2021.

 

 

First Solar (FSLR) is a solar name, obviously, but has a similar look and feel to its chart as LITE. It was also an opportunistic short-sale entry at the $100 level earlier in the week but is now pulling right back into the top of its prior base. This puts it in an interesting 360-degree position after Thursday’s failure to retake the $100 level.

The pullback to the top of the base and the 10-dma clearly puts the stock in a lower-risk long entry position. However, the $100 level serves as upside resistance and continued resistance at that level may play out better on the short side. At this point the situation is extremely fluid, and could resolve in either way, as I see it.

Additionally, if FSLR fails to hold support at the 20-day line then it could quickly transpose into a late-stage, failed-base (LSFB), short-sale set-up at that point. The short-sale entry trigger would first occur on a break back below the 10-dma, which is one penny below where FSLR closed on New Year’s Eve with the expectation of a quick test of the 20-dema, and if that fails then we’re looking at a potential, full-blown LSFB in progress at that point.

Overall, this is a fascinating chart from the perspective of the technical dynamics. You have a big-volume breakout that failed after two beat-backs near the $110 level, a breach of the $100 level on Tuesday with intraday support near the 20-dema, while the $100 level again acted as upside resistance on Thursday. It has bullish and bearish characteristics, and so lacks clarity, but this will likely be an interesting one to watch this week as a clear resolution eventually materializes.

 

 

SunPower (SPWR) is another solar standing at the precipice of support. Here you have another breakout that has essentially given up the ghost and is back at the 20-dema, and near the prior new-high breakout point from a short flag formation nearly three weeks ago. Initially, with volume drying up at the 20-day line, this becomes a lower-risk entry using the line as a tight selling guide.

Otherwise, a break below the 20-dema would trigger this as a potential short-sale at that point. Note that while I think the solar energy theme could be a strong one in 2021 thanks to a Biden Administration that would likely tend to favor the Climate-Change Industrial Complex, I still evaluate these on the basis of their chart action first. Ultimately, grand thematic theories or not, everything else is just conversation.

 

 

VivoPower International (VVPR) failed on the prior week’s big-volume stalling breakout, which was not that surprising, but successfully filled the BGU gap and held support at the 50-dma on Tuesday of this past week. That put it in a lower-risk entry position, as I discussed in my mid-week report at that time.

You’re now extended from the 50-dma, as well as the 10-dma and 20-dema, but back above the 8.72 intraday low of the BGU day. It’s now extended from that low and the 10-dma at 8.51, but pullbacks to either could offer lower-risk entries from here.

 

 

Checking in on the S&P Five, consisting of Apple (AAPL), Amazon.com (AMZN), Facebook (FB), Alphabet (GOOG) and Microsoft (MSFT), we can see that these were all uniformly weak as they all pulled back in the final trading week of the year. But the pullbacks did all come into support, with the exception of FB which has repeatedly been a short-sale entry on rallies into the 50-dma.

AAPL and AMZN have pulled into lower-risk entry positions at their respective 10-day lines, while MSFT found support at its 20-dema on Thursday and GOOG continues to edge up along key support at its rising 50-dma. Pick and choose based on your preferred set-up and entry point!

 

 

Netflix (NFLX) posted a strong-volume pocket pivot and trendline breakout on New Year’s Eve, an impressive feat for a stock that looked down and out for the count back in early November. This is extended in my book, having been more buyable at the 20-dema on Monday per my comments last week. However, it is certainly within range of Thursday’s trendline breakout for those who wish to chase breakouts.

 

 

While I’ve been able to continually short FireEye (FEYE) successfully, the fact is that these have been quick, intraday short-sale scalps and nothing more. Each time I hit the stock, volume runs out and it finds support along the lows of what is now a very short five-day flag formation. Meanwhile, volume is drying up sharply.

Thus, from both a visceral perspective and the action on the chart, this looks like it wants to go higher, surprisingly enough. In fact, you can check the charts of all the cyber-security names I’ve discussed in the last couple of reports and which have rallied sharply on the U.S. Government hacking news and see that they are all holding relatively tight sideways.

FEYE and the rest of these names may continue to track sideways for a while longer before moving higher, assuming they do at all. But it is impossible to view the current action over the past five days as anything but bullish. Thus, the short side of this is far from being cut and dried, unless we saw it slash below the 10-dma, at which point it would trigger as a clear short-sale entry. Stay tuned.

 

 

Cloud names continued to underperform this past week. Some see the mythical “high, tight flag” (HTF) forming in Appian (AAPN) on the weekly mini-charts below, which of course is something I find good for a bit of a chuckle. It’s been buyable along its 20-dema on the daily chart, but has remained in a tight formation for the past four weeks without any significant resolution. Note that it worked out well as a short when it failed at the $200 Century Mark.

Perhaps APPN’s HTF will work out the way most of these mythical patterns do, which is to fail in the manner that both JFrog (FROG) and Snowflake (SNOW) have after forming similarly high and tight flag patterns. Again, this pattern is no guarantor of a huge upside move, as some try to pitch it. Both FROG and SNOW need to find support, but there is none to be found on the weekly charts, so far.

Investors appear to have officially lost interest in Fastly (FSLY) as rumors of a buyout by Cisco Systems (CSCO) evaporate like so many aerosolized water particles in the hot sun. It is now testing its 10-week moving average where one might test it on the long side, but also note that it is forming what looks like a pinhead & shoulders type of pattern. If it busts the 50-day line, then it could easily trigger as a short-sale entry at that point.

 

 

Other clouds that I’ve discussed recently continue to look quite a bit more constructive. In the group of weekly mini-charts below, Coupa Software (COUP), CrowdStrike (CRWD), Okta (OKTA) and ZScaler (ZS) remain in uptrends and near the tops of prior bases. COUP and OKTA appear to be in buyable positions but only COUP is still holding above its 20-dema on the weekly chart while OKTA has slipped below the line.

Meanwhile, ZS is attempting to scale the $200 Century Mark but so far has failed, closing the year at 199.71. I’m leaning toward treating this as a short here while using the $200 level as a tight covering guide with the 10-dma sitting just above at 200.10.

 

 

Yalla Group (YALA) failed to hold the prior 15.72 low on Tuesday’s U&R attempt and has since moved lower as it looks set to test its 50-dma. This was a promising new thematic idea that has simply not held up well at all. It has now given up nearly 3/4s of its prior blistering 122% run from the 10-dma in late November into early December.

It’s clear that Cinderella left the ball in early December and not only is she not coming back, but it appears that she’s left town for good. Nothing to see here until this thing reaches the 50-dma, but the bottom line is that since it peaked at 23.18 in early December, YALA has worked out better as a short than a long.

 

 

Notes on Terminology

Note #1 – Moving Averages: When I use the term “20-day moving average,” “20-day line,” or “20-dema” I am referring to the 20-day exponential moving average. I use four primary moving averages on my daily charts: a 10-day simple (the magenta line), 20-day exponential (the green line), 50-day simple (the blue line) and 200-day simple moving average (the red line). On rare occasions, I will also employ a 65-day exponential moving average (black line). In all cases I will mostly use the shorthand version of “10-dma,” “50-dma,” etc.

Note #2 – U&R Set-ups: A U&R, or undercut & rally, is a long entry signal that occurs when a stock undercuts (moves below) a prior meaningful low in its chart pattern and rallies back above that low. The precise entry occurs at the prior low, which then becomes your selling guide. There are no other special requirements for a U&R other than the price action. It is similar to Wyckoff’s Spring. A MAU&R, or a moving average undercut & rally, is essentially a shakeout at a moving average where your entry point occurs at the moving average as the stock is coming up through the line. This then becomes your selling guide. You can run things tight by using the actual price levels as stops or allow for 1-3% of further downside (otherwise known as downside porosity) before being stopped out.

____________________________________________________________

 

If you want to get a sense of just how useless a 2021 “outlook” would be, just consider how useful such a discussion would have been for 2020. The market is a fluid beast that can change quickly. Underlying conditions can change just as quickly, as we saw in March. I don’t care what kind of crystal ball one is trying to use, nobody predicted what 2020, a year that defied logic, would be like. So you can take all the 2021 Outlooks you read around this time of year and send them right up the rear portal from whence they came.

About the only thing I got right about the year beforehand was the idea that the Fed would be looking for an excuse to unleash another wave of QE in 2020. That certainly proved to be true, but the conditions under which it occurred were completely unpredictable. I expect the QE firehose to remain in place in 2021, and while the extent to which it maintains traction in the markets may be tested at some point, it will also serve as a potent force for market dynamism as it was in 2020.

While it was in many ways a complicated year, the essential message of 2020 was actually a very simple one that dovetailed nicely with and confirmed the utility of an unbiased 360-degree approach. In a nutshell, that message was: Play it as it lies! And that, my friends, will suffice as my outlook for 2021. Be well.

Gil Morales

CEO and Principal, Gil Morales & Company, LLC
Managing Director and Principal, MoKa Investors, LLC
Managing Director and Principal, Virtue of Selfish Investing, LLC

At the time of this writing, of the stocks mentioned in this report, Gil Morales, MoKa Investors, LLC, Virtue of Selfish Investing, LLC, and/or Gil Morales & Company, LLC held a position in GATO, PHYS, and PSLV, though positions are subject to change at any time and without notice.