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Toronto Stock Broker David Chapman
Experience
April 7, 2014

Technical Commentary

This week…..

-          The story of the week was Friday’s nonfarm payroll numbers. They looked good but the market was disappointed as they expected more. The stock market made new highs then reversed to the downside. The NASDAQ was crushed losing 2.6% on Friday as semiconductors were hit. The other story of the week was Michael Lewis’s new book “Flash Boys” outlining high speed trading.

-          Bond prices were falling this past week until Friday’s nonfarm payrolls then they rallied back.

-          Gold prices were faltering this past week until Friday’s nonfarm payroll disappointment then they reversed to the upside with a solid $15 plus gain and closed higher on the week ending two sharp down weeks. The US$ Index was up on the week but sold off Friday. Gold stocks recovered although the TSX Gold Index didn’t recover enough to get into the plus column for the week.

-          Oil prices were mixed on the week but rose Friday following the nonfarm payrolls. Seems they liked the number. Go figure. The energy stocks continued to rise to new highs defying the lethargic oil and gas prices. (more)

D.C.



Chart of the Week, Stock of the Week

Chart of the WeekMoney makes the world go around!

So what is money? Money they say has three purposes – a medium of exchange, a store of value and a unit of account. Money is used to purchase goods and services, to pay debts and to pay taxes. At one time all people did was barter. They even used cows or sheep. The Egyptians used grain. The trouble with those methods was they were perishable or in the case of barter, it was sometimes difficult to find common ground. (more)

Stock of the WeekTwo key stocks diverging with the indices

This is of interest. Bob Cote of Thirdeyeopentrades has at times noted this possible divergence so I thought it would be interesting to note it to readers as well. Apple (AAPL-NASDAQ) is a major component of the S&P 500 and one of the largest components of the NASDAQ 100. General Electric (GE-NYSE) is the oldest remaining component of the Dow Jones Industrials (DJI). (more)

D.C.



April 6, 2014

Technical Commentary

This week….

-          The US stock market faltered this past week with the NASDAQ particularly hit hard. April, however, tends to be the best month for the US stock markets. Russia remains in the news with some expecting an invasion of Ukraine. Russia denies that would take place. The IMF is lending money to Ukraine for a bailout that would appear to largely benefit Oligarchs and EU and Russian banks. The Ukrainian people will suffer as a host of prices are to be hiked, gas subsidies lost and pensions and wages cut.

-          Bond prices rose this past week continuing an up/down pattern. However, bond prices have been making a series of lower highs which is potentially negative. The yield curve continues to narrow.

-          Gold, silver and gold stocks fell sharply for the second week in a row. All are making potential bottom patterns but they are also at or near key support levels that need to hold.

-          The US$ Index faltered after jumping sharply the previous week. The 79 to 79.50 zone continues to be key and a breakdown under that level would be negative.

-          Oil prices rose and energy stocks soared to new highs. Energy stocks appear poised for a breakout vis-à-vis oil prices. (more)

D.C.



March 28, 2014

Chart of the Week, Stock of the Week

Chart of the WeekGold, Debt and Gold Reserves

The above chart had always been interesting. The chart compares the US debt limit with the rise in debt and the rise in the price of gold. As the US debt limit was increased and the US debt grew, gold prices appeared to move in lockstep. That is until about 2011 when gold prices took off. Since the gold price has gone through one of its biggest shakeouts. Now it has fallen behind the debt limit and debt about as much

Source: www.sharelynx.com

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March 28, 2014 Page 1

as it exceeded them at the top in gold prices in September 2011. So will it adjust again to bring the trend back into balance?

(more)

Stock of the WeekWill sanctions on Russia cause a problem for a Canadian gold miner?

Prime Minister Stephen Harper has warned Canadian businesses with Russian dealings that they must brace for economic pain for “the greater national interest” because of Russia’s annexation of Crimea. Mr. Harper warned that companies that invest or operate in Russia “have to be aware of the risks”. Mr. Harper believes that Russia invaded Crimea and is now occupying the peninsula that was formerly a part of Ukraine. Crimea on the other hand believes they voted to separate from Ukraine and agreed to become a part of Russia and Russia agreed to annex the peninsula. Crimea had been a part of the Russian empire or the Soviet Union since 1783 until it was transferred in 1954 to the Ukraine Republic within the Soviet Union. Crimea became the Autonomous Republic of Crimea within the newly independent Ukraine in 1991. (more)

D.C.



Technical Commentary

This week…..

-          A lot of stories this past week as the world is focused on the crisis in Ukraine/Crimea and a missing airplane. The US stock markets were up but on Friday the S&P 500 made new all-time highs then closed lower. A negative sign? Certainly there are a lot of negative signs around.

-          Bonds prices fell this past week when Janet Yellen’s first FOMC meeting announced some surprises on the interest rate front. Janet’s first meeting was deemed a disappointment by the market. A bad omen? Who knows. The economy appears to be at least humming along. But is it? And there are growing risks in China and of course in Ukraine/China. In Canada Finance Minister Jim Flaherty resigned and Alberta Premier Alison Redford also surprised and resigned. BofC head Stephen Poloz was somewhat downbeat on the Cdn economy and the Cdn$ slumped to new lows.

-          Gold had its worst week since the current up leg got underway back in January. It was expected that there would be strong resistance at $1,380/$1,400. Gold slipped following the Crimea referendum and seeing that sanctions were really not much at all. But gold rose on Friday as it was cited that there was a large Russian troop buildup on the Ukraine’s eastern border. There is unrest in the predominately Russian speaking Eastern Ukraine. The US$ Index was up on the week on the revised FOMC interest rate guidance.

-          Oil prices were higher on the tensions in Ukraine/Crimea. Natural gas on the other hand fell. But the energy stocks were up and the TSX Energy Index moved to new highs.

D.C.



March 21, 2014

Chart of the Week

Chart of the Week –  That Sinking Feeling III

Gold is at a crossroads. No the gold chart is not “that sinking feeling” but gold has reached point where it must either break out or fail. That would turn gold into that “sinking feeling”. The bullhorn pattern is rather interesting. I first learned about the bullhorn pattern from Thirdeyeopentrades (Bob Cote). Bob has a public place at www.stockcharts.com. What the pattern is suggesting is that gold has a lot further to rise. Gold has been through a considerable shakeout over the past two plus years. It has shaken the confidence of many and the result has seen many exit the market possibly for good. (more)

D.C.



Technical Commentary

This week…..

-          A number of things scheduled this weekend had me preparing a shortened commentary.

-          A common theme for stocks, bonds, gold, currencies and oil is the looming geopolitical crisis in Ukraine/Crimea and serious signs of the Chinese economy slowing down. It is against this backdrop that saw stocks fall, metals fall, bonds rise (prices, yields fell), gold rise and oil falter and fall.

-          The S&P 500 may have made a significant top. 1,760 is the line in the sand.

-          Bonds rallied but there were some negative signs in the background including central banks withdrawing from the Fed.

-          Gold soared breaking out over a key resistance zone that ranged from $1,330 to $1,360. Next up $1,400 and the August 2013 high at $1,428. Copper and other metals fell sharply this past week as signs gathered that the Chinese economy is slowing. The gold stocks soared 6% plus.

-          The US$ Index fell again and is clinging just above a major breakdown zone at 79/79.25. The strong currencies were Japanese Yen and Swiss Francs.

-          Oil prices fell sharply following a release from the Strategic Petroleum Reserves but they recovered some of the losses as the situation in Ukraine/Crimea deteriorated.

-          All eyes will most likely be on Ukraine/Crimea situation this week possibly even pushing the FOMC meeting of March 18/19 and thoughts of further “tapering” into the background.

D.C.



March 4, 2014

Technical Commentary

This week…..

-          The world is facing potentially the most dangerous crisis since the Guns of August 1914 and September 3, 1939. Q4 2013 GDP was revised down. Q1 2014 could see a contraction against the backdrop of the cold and stormy weather. Yet the stock market defies and the S&P 500 made new all-time nominal highs. There remains the potential for the S&P 500 to reach 1,900. But time is running out and dark clouds are gathering.

-          Bonds rallied this past week responding to the downward revisions of Q4 2013 GDP and a raft of weaker than expected economic numbers.

-          Gold fell this past week despite a sharp 60 cent drop in the US$ Index. I had noted considerable resistance at $1,330/$1,340 and I am sure others noted it as well. Some are suggesting that gold’s fall was the result of intervention by the ESF (or as some would call it the PPT). That may be true then again it may not.

-          Oil prices rose this past week and natural gas prices plunged. Too early to tell whether the crisis in the Ukraine might cause oil prices to rise. (more)

D.C.



March 1, 2014

Chart of the Week, Stock of the Week

Chart of the WeekGold sentiment

With the improvement in gold prices and the gold stocks since the beginning of 2014 there has also been an improvement in sentiment. The above chart illustrates the improvement in the gold sentiment as a ratio chart with the global stock market. It tells an interesting story given that the above chart goes back to 1984. (more)

Stock of the WeekA gold/silver mid-tier headed by a player.

With the improvement in gold and silver prices, it is not surprising that gold stocks have been the stars so far in 2014. A mid-tier gold and silver producer investors may wish to keep an eye on is McEwen Mining (MUX-TSX, MUX-NYSE). McEwen also trades as McEwen Mining Minera Andes Acquisition (MAQ- TSX). MAQ shares are convertible on a one-for-one basis at any time into shares of McEwen Mining. (more)


D.C.



Technical Commentary

This week…..

-          The US stock markets waffled although the NASDAQ moved to new highs. Weaker than expected economic numbers and the ongoing crisis in the Ukraine seemed to steady the stock markets. Some comments on the ongoing crisis in the Ukraine.

-          Bonds also waffled this past week seemingly caught between weaker than expected economic numbers and the Fed continuing to “taper”. Many dismiss the weak economic numbers as temporary because of the bad weather seen over the past few months.

-          Gold, silver and the gold stocks were all up again this past week. However, gold is at resistance and there is only another week to go before PDAC and a time when gold, silver and the gold stocks seem to stall. Despite the strong rise thus far in 2014 the up move is not as strong as was seen in 2008 following the financial crisis low in October.

-          The US$ Index was up slightly this week but it was mostly up against the Pound and Yen. The Euro seemed to strengthen when an agreement was found in the Ukraine to at least temporarily put the crisis on the hold.

-          Oil prices broke through $100 and natural gas prices soared with the bad weather. Both might be expected to slow and even fall once the cold weather abates. Then again there are numerous conflicts in oil producing countries.

D.C. (more)



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