China's PBOC Says The Correction Is Over!

While I am less than 100% confident in the exact translation, PBOC Governor Zhou Ziaochuan said the following to G20 finance ministers this past weekend in Turkey:

“At present, the exchange rate of the Renminbi against the Dollar is stabilizing, the correction in the stock market is already mostly over and the financial markets show hope for stabilizing.” Zhou added “Following the correction, levels of leverage are clearly lower and there has been no notable effect on the real economy.”

As incredible as it may sound, I ACTUALLY BELIEVE MR. ZHOU and the People's Bank Of China, at least for the short term !! Does the PBOC have the financial wherewithal and necessary willpower to backup these reassuring remarks with any and all necessary market interventions to make it so? Probably!!

More importantly, my computer-based trading program believes Mr. Zhou as well, which is all I need right now to suggest the unthinkable. I now believe that the U.S. stock market correction is over and commodity prices have bottomed!

If the U.S. stock market correction is over, can most major indices rally back to new all-time highs before year-end 2015? I think maybe yes! 

Investor sentiment has dramatically shifted (to bearish) and even the financial media is printing "end of the world" headlines now. If you believe in contrary indicators, as I do, then all this negative talk is bullish for stocks and also for commodity prices. To me, even crude oil prices look ready for a sustained advance!

In the interest of full disclosure, I have major long positions now in mining stocks including FCX and a well diversified package of precious metals mining shares in all my managed accounts. And I also have a relatively major position in the S&P 500 Index in one of my managed accounts.

The following weekly charts have been provided with all trading signals reflected from my computer-based trading system. And if a picture is worth a 1,000 words, then these charts speak for themselves:

1. S&P 500 Index Weekly Chart (SPX)

2. Russell 2000 Weekly Chart (RUT)

3. Freeport McMoran Weekly Chart (symbol FCX)

4. U.S. Steel Weekly Chart (symbol X)

5. Oil Service Stocks ETF (symbol OIH)

6. Major Integrated Oil Index (symbol XOI)

S&P 500 Index Weekly Chart with 150-Week MA & All Computer-based Trading Signals

Russell 2000 Index Weekly Chart with 150-Week MA & All Computer-based Trading Signals

Freeport McMoran (symbol FCX) Weekly Chart with All Computer-based Trading Signals

U.S. Steel (symbol X) Weekly Chart with All Computer-based Trading Signals

Oil Services ETF (symbol OIH) Weekly Chart with All Computer-based Trading Signals

Major Integrated Oil Stocks Index (symbol XOI) Weekly Chart with All Computer-based Trading Signals

Has The VALE Finally Been Lifted On Commodities?

I hope you will forgive my attempt at a pun.

Brazilian multinational VALE, of course, is the 3rd largest mining company in the world. It is the largest producer of iron ore and the 2nd largest producer of nickel.

VALE traded as high as 44.15 in May 2008, plunged to 8.80 in November 2008, then rebounded to 37.25 in January 2011, and then collapsed (slowly) to this week's low at 4.13. Heck, VALE actually traded above $9/share on May 6, 2015, only 3 1/2 months ago. Given the fact that VALE is one of the lowest cost producers in almost everyone of its many commodity markets, and given the fact that VALE has managed its operations expertly through the carnage that litters the global mining landscape right now, I am more than a little surprised by the complete collapse in VALE's share price over the last several months.

However, VALE's stock price jumped 12.62% today (in a single day). At today's closing price of $5.00/share, VALE is now up 21% from its low set earlier this week.

In the interest of full disclosure, I bought my first share of VALE in early June at $6.10/share. I doubled down last Friday at $4.85/share, and then watched with horror as the stock printed 4.13 on Monday and then tested this low yesterday with a print at 4.20. Today's surge in VALE's stock price is exceptional, of course, but I am clearly still underwater on this trade. 

The reason for this column is not to share my sad story about a small part of my portfolio, but to reflect on the possibility that commodity prices in general may have finally found an important bottom after years of steady declines. Today's price action in VALE is significant, in my view, and I now believe that a major rebound in mining stocks is underway.

My preference for Gold and Silver mining stocks is well documented in this space, and I am still seriously over-weighted in this hated group, but VALE's price action today is more than just the result of a beaten down stock experiencing a dead cat bounce. VALE's price surge probably represents a major tone change in the entire mining sector with serious positive implications for commodities prices across the board!

Here are the latest daily and weekly charts for VALE. Please note the weekly chart buy signal now triggered by my computer trading system in VALE's stock price!

VALE Daily Chart

VALE Weekly 'Chart with Computer-generated Buy & Sell Signals