The Dow Industrials rose 80.75 or 0.60% to 13,575.36. The S&P 500 rose 10.41 or 0.72% to 1461.40, the NASDAQ rose 14.23, or .45% to 3149.46, and the Russell 2000 rose 5.87 or 0.70% to 844.65. Volume increased over Wednesday on the NYSE but dropped on the Nasdaq. Breadth was positive.

All nine sectors were in the green, led by financials (XLF +1.48%) for the second day in a row, with materials (XLB +1.29%) coming in second. Technology (XLK +0.29%) lagged.

Markets, including the metals, are inching higher in a timeframe (late September into mid October) where we often instead see a correction ahead of the big year-end rally.

CANADIAN SUMMARY: Leibovit Volume Reversal analysis now projects the TSX to first 13,029 and then possibly 13,529 in the months ahead based on technical action this past week!  – read more  HERE 

Political forces, especially Ben Bernanke who I affectionately call ‘Pubic Enemy #1’ are destroying all of us, especially the middle-class by laying the foundation for the ultimate default of U.S. debt and an horrific collapse in the U.S. Dollar castrating all of us. Even Kegel exercises(described below) won’t help.

Sure, Wall Street likes this as stock prices temporarily rise and, sure, investors trapped in IRAs and 401(k) plans tied to the stock market may be celebrating over the short term. But, at what price? And, for what purpose? Bernanke’s directions come from the bankers, the cartel known as the Federal Reserve System – a private corporation whose shares are owned by both domestic and foreign banks. Keeping interest rates at zero to aid the Federal Reserve partners (shareholders) and to minimize interest payments on a huge U.S. debt are criminal acts enough. But, upholding an institution who acts and conducts itself beyond the law is intolerable in a free society. The ‘rule of law’ must be upheld and, as we know, we see it slowly crumbling around us.

Back to the current reality: Unless my work has generated false signals (not impossible), upside potential in the weeks and months ahead could still be 1000 points higher in the Dow Industrials and TSX and 100 points higher in the SPX. That said, I am patient here awaiting a clearer short-term long-entry signal. A breakout to new highs (1475 S&P 500) would one such signal, but my hope is that we pinpoint a buy coming off a correction low instead. Will we get a dip or will the PPT continue to push prices higher right into the election? We will know in the fullness of time.

Mark Leibovit’s Gold Letter, # 1 Gold Timer for 10 year period & #2 Gold Timer for 2011

Mark Leibovit

VRTRADER.COM Trial Signup: Use this month to kick our tires. Pay 50% for the first 30 days (No refund) and sample our Silver or Platinum service and then decide what works best for you. Just send an email to mark.vrtrader@gmail.com” or call 928-282-1275

 IF YOU HAVE NOT SIGNED UP FOR THE LEIBOVIT VR GOLD LETTER, HERE IS YOUR CHANCE. THE October 5th EDITION IS HOT OFF THE PRESS. HERE IS THE LINK: WWW.VRGOLDLETTER.COM. YOU GET A 50% DISCOUNT FOR THE FIRST MONTH.

The Annual Forecast Model is now ‘on-line’ BUT YOU MUST SUBSCRIBE! It is a premium report. Call or email us today for a 50% discount. 
Here is the link: 

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The Annual Forecast Model (The VR Forecaster Report) is published each and every year in early February and comprises Mark Leibovit’s proprietary cyclical forecast for the Dow Industrials and Gold. Don’t miss the opportunity to see this Report that projects market direction and/or important cyclical change points months in advance. We have called it our ‘Blueprint to the Future’. Unique to Mark Leibovit it has been published since the mid 1980s. Access to the report is provided via the website using the username and password provided to you.

Did we tell you or did we tell you? It’s a bit premature to claim bragging rights but the Junior market has been trading exactly how we hoped it would. Ben Bernanke delivered the early Christmas presents gold bugs were dreaming of and the market tenor looks better than it has for a year.

(Ed Note: Very sorry – this was published on Oct 3rd & 95% of the article and no charts appeared!) 

The operative word is still “better”, not “great”. The increase in volume in the Juniors is gratifying but still not enough. It will take higher volumes still to keep a rally alive through to year end. 

In keeping with that note of cautious optimism we are sticking with discovery stories that are already working and later stage stories that were under loved until the gold price took off. A number of these are trading impressively well. So far discoveries and undervalued developers/small producers represent most all of the positive volume. They are riding the wave but the tide has not come in for the rest of the companies in the sector. 

We still think the market may strengthen further in October but until that happens we decided to add a company to the list with built in protection in the form of a healthy back account. This company is not beholden to the market and should have news flow going forward. Like many companies, it still needs discovery news as a spark for a bigger move however.

 After months of nothing but ugly, the market for resource stocks finally took a meaningful turn for the better. We all know the reason for that. US Fed chief Bernanke delivered on QE3 and the gold market responded. 

The chart below shows how impressive the rally that kicked off in August has been.

Bernanke telegraphed his move and the markets were already cheering a push by the ECB for its own money printing. By the time the Fed announcement of $40 billion a month in mortgage backed bond purchases was announced a lot of the gain was in. Since the announcement there has been another up-leg in price but that move appears to be stalled out in the $1770-1780 range. Where do we go from here? 

The Fed’s actions have weakened the Dollar but for the trend to continue there needs to be more “risk on” trading. Even better would be progress by Europe or other currency blocks that leads to traders exiting the greenback to go long Euros or other currencies. 

QE3 has certainly taken care of the risk-on part of the equation. That was probably the Fed’s main aim, in fact. Yes the buying will lower long term yields a little more but it also goosed the major market indices which we suspect was the major reason for doing it. 

Notwithstanding anemic economic stats consumer confidence has been rising steadily in the US. This has much to do with gains in the stock market. Equities are a bigger part of the personal balance sheet for Americans than others. Seeing their 401Ks growing (those with jobs, that is) is making Americans more confident. So too is increasing evidence that the housing market is finally bottoming after five years of pain. 

This confidence is not showing up in spending numbers yet. Other concerns like the Fiscal Cliff have been holding back hiring. The US economy needs to see some follow through for consumers to start spending. It will be tough to maintain momentum unless that happens. 

In Europe, the ECB has a more complicated monetary equation to solve. Announcements of “unlimited” bond buying have helped European bourses but shareholdings are less widespread and those gains don’t impact confidence the way they do in the US. 

In the case of ECB head Draghi, it’s the bond market’s confidence levels that are the main concern. As the 3 year yield chart above for Spanish and Italian bonds shows Draghi too has had some success. 

Rates started falling as soon as Draghi decided to call the bluff of Euro area politicians in August. They fell farther as the plan to buy bonds was outlined early this month but doubts have begun to creep in. “Unlimited buying” made for good headlines but the latest European plan is as opaque as its many predecessors. 

In order to appease creditor countries the ECB plan calls for countries that need ECB backstopping their sovereign bonds to ask for help and to be willing to submit to further conditions. Three is no indication what those conditions would be. 

That was enough to spook both Spain and Italy which insist they don’t need the help. Until debtor countries ask for help ECB bond purchases will be extremely limited. Most traders think Spain at least will have no choice. Spain recently published bank stress test results that indicate its major banks need to raise $60 billion in capital, $40 billion less than the amount expected and offered by the ECB during the summer. 

Even so, Spain needs to issue about €300 billion in debt this year to cover its budget shortfall and maturing debt. The odds of Draghi turning on the printing press still look good. 

In Japan, the government seems powerless to defend the Yen from buyers, even though its export economy desperately needs a cheaper currency. The Bank of Japan has added $200 billion to its liquidity funds. Japan can least afford to pile up debt but its cornered in a classis liquidity trap and here too the printing press will hum.

With both risk-on trades and a known minimum amount of new money getting printed the path of least resistance for the Dollar is down. Even if the ECB starts printing too that might not change. ECB bond buying could actually strengthen the Euro in the short term as it would be considered a positive development in their debt crisis. Either way, the Dollar should be capped and gold and silver should see more gains in coming weeks and months. 

Base metals and materials need stronger economic stats. Most major economies published manufacturing indices in the past few days. While most readings improved marginally all of them except the US are still showing contraction. 

If Europe can complete negotiations on banking oversight and the US consumer continues to cheer up the Euro zone may also move out of contraction. China’s leadership starts its party congress on November 9th. Beijing hasn’t added any stimulus since early summer. If that is going to happen it will probably start in about a month. 

The chart below shows the turn around to date in the Venture Index. It’s still at depressing levels but the rally, such as it is, is the longest we’ve seen since the market turned down in March. Here too, confidence is needed. There have been early adopters buying (like HRA) but most are still on the sidelines. Higher volumes are the clearest sign more are joining the party so watch those. We expect the rally to run to year end. How far it climbs depends on who wins the confidence game.

2012 hasn’t been an easy year for explorers but HRA has been calling for a fall rally since early in the summer. Thanks to a surging gold price that rally appears to have arrived. It’s not a broad rally yet. Traders are looking for companies with discoveries and management that knows how to add shareholder value. HRA is your key to uncovering and profiting from extraordinary resource shares by getting ahead of the crowd. At HRA, we look for companies with the potential to at least double over one or two years based on asset growth and development of metals deposits for production or take over by larger companies. 

To download our latest HRA Journal for free–which includes a recent new recommendation that is making gains–click HERE now!

Published by Stockwork Consulting Ltd.

Box 85909, Phoenix AZ , 85071 Toll Free 1-877-528-3958

hra@publishers-mgmt.com    http://www.hraadvisory.com

CANADIAN SUMMARY: 

Leibovit Volume Reversal analysis now projects the TSX to first 13,029 and then possibly 13,529 in the months ahead based on technical action this past week!

Normally, we would expect to see a retracement back to the 12,250-12,300 zone first. Canadian equities moved higher on Thursday as the TSX Composite rose 88.21 points, or 0.71% to 12,447.68.

Note: The Great Mark Leibovit of VRTrader is Michael Campbell’s Oct 6th Money TalksGuest 

CANADIAN TSX Venture:

The Venture Composite moved higher on Thursday as it rose 15.63 points or 1.18% to 1,340.85. 

Resistance: 1348, 1436, 1473, 1573, 1588, 1609, 1650, 1696, 1771, 1804, 1814, 1833, 1851, 1954, 2107, 2127, 2254, 2291, 2400, 2465, 2535, 2575. Support: 1283, 1215, 1172, 1162, 1153, 950.

THE CANADIAN DOLLAR (using the FXC Exchange Traded Fund):

The Canadian Dollar moved higher on Thursday after a top Bank of Canada official suggested that rising interest rates are still a medium-term possibility. FXC rose .76 to 101.41.

Resistance is 103.08, 105.59, 108.00, 110.00, 113.00. Support is 95.30, 94.72, 93.20, 92.50 91.82, 91.00, 89.75, 87.50 and 85.18.

The Bank of Canada is still looking at the possibility of raising interest rates, but also believes there is some slack in the labour market that has not been taken up by the recovering economy, a top official said on Thursday. Tiff Macklem, senior deputy governor of the Bank of Canada, maintained the hawkish tone the bank first adopted in April in a speech to a business audience in Winnipeg, Manitoba. “To the extent that the economic expansion continues and the excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 percent inflation target over the medium term,” he said, using language identical to the bank’s September 5 rate announcement. The Bank of Canada has held its key overnight target at 1 percent since mid-2010, but this year it resumed signaling its intention to tighten policy. The Canadian economy has recovered more quickly from the 2008- 09 recession than its Western peers. Most of Canada’s primary dealers expect the bank to hold rates steady until the second half of 2013 because of pressures from the troubled European and U.S. economies and slowing Chinese growth. No change is expected at the bank’s next rate announcement on October 23. While the country’s job market has recovered more quickly from the recession than in other countries, it still has a ways to go, Macklem said. The central bank closely monitors labor conditions to assess how fast the economy is growing and when a rate hike might be warranted.”With a relatively quick recovery in employment, much of the slack in the labour market following the 2009 recession has been taken up. Nevertheless, most indicators suggest that some slack remains,” Macklem said. The comments indicated the bank believes the overall economy has not yet reached its full capacity either, suggesting it may be in no rush to tighten monetary policy. “Gauging the tightness of the labour market is a key element in assessing how close the economy is operating relative to its capacity, which, in turn, is an important indicator of inflationary pressures,” Macklem said. Growth has to exceed an annualized 2.0 percent for excess capacity to be absorbed, according to calculations by the Bank of Canada, which has predicted third quarter growth would rise to 2.0 percent from a revised 1.9 percent in the second. Growth expectations are fairly tepid after downward revisions to June gross domestic product growth neutralized an unexpected 0.2 percent monthly gain in July. Annual inflation in August was well below the bank’s 2 percent target.

Mark Leibovit

VRTRADER.COM Trial Signup: Use this month to kick our tires. Pay 50% for the first 30 days (No refund) and sample our Silver or Platinum service and then decide what works best for you. Just send an email to mark.vrtrader@gmail.com” or call 928-282-1275

Mark Leibovit’s Gold Letter, # 1 Gold Timer for 10 year period & #2 Gold Timer for 2011

 IF YOU HAVE NOT SIGNED UP FOR THE LEIBOVIT VR GOLD LETTER, HERE IS YOUR CHANCE. THE October 5th EDITION IS HOT OFF THE PRESS. HERE IS THE LINK: WWW.VRGOLDLETTER.COM. YOU GET A 50% DISCOUNT FOR THE FIRST MONTH.

The Annual Forecast Model is now ‘on-line’ BUT YOU MUST SUBSCRIBE! It is a premium report. Call or email us today for a 50% discount. 
Here is the link: 

https://www.vrtrader.com/subscribe/index.asp 

The Annual Forecast Model (The VR Forecaster Report) is published each and every year in early February and comprises Mark Leibovit’s proprietary cyclical forecast for the Dow Industrials and Gold. Don’t miss the opportunity to see this Report that projects market direction and/or important cyclical change points months in advance. We have called it our ‘Blueprint to the Future’. Unique to Mark Leibovit it has been published since the mid 1980s. Access to the report is provided via the website using the username and password provided to you

Changing fundamentals and emotion each cause price change, this week’s Market Minutes discusses how to tell the difference and make money from these changes. You can watch this week’s video on Youtube by clicking here. To receive email alerts any time I upload a new video, subscribe to the Stockscores channel atwww.youtube.com/stockscoresdotcom.

I wrote a new book over the summer, it will be available in a pre-release version to Stockscores subscribers before the end of the year. Over the next few weeks I will share excerpts from the book, The Mindless Investor – Make Money in the Market by Overcoming Your Common Sense. Here is an excerpt from the chapter, Channel Surfing.

The majority of strong price trends will begin with abnormal price action. A catalyst for a positive shift in the market’s perception of fundamentals ignites buyer interest and starts the stock higher. As the trend develops, improving fundamentals and the law of upticks help the trend to continue moving from the lower left to the upper right of the chart. An uptrend is in place.

It’s inevitable that the upward move will see pullbacks against the trend. There will be shareholders who want to take profits as the stock’s price climbs, and this causes shorter downward moves inside the upward trend. There is an increased chance of these pullbacks early in the trend because investors tend to doubt strength when it’s just getting started. As the trend progresses, stock owners grow more confident, believing that the upward climb legitimizes the company’s story.

The pullbacks are healthy. They work to shake out weak owners and build a more solid base of shareowners who will be committed to holding the stock. It’s the pullbacks that allow us to buy strong companies when they are on sale-the one time it makes sense to buy weakness.

Defining a Trend
To take advantage of the opportunity that trends provide requires the ability to define the trend. This is as simple as drawing a line across at least two inflection points in the trend. Typically, the first is the low before the trend starts, and the second is the low of the first pullback. Once defined, it is quite remarkable how well trend lines act as support and resistance for a stock.

There is a bit of an art to defining a trend line. You begin by highlighting the inflection points and then look for a line that best fits as many of those inflection points as possible. For an upward trend, the focus is on the inflection point lows, which will be rising over time. Downward trends will have a line that cuts across the inflection point tops as they fall from left to right.

Price trends usually develop as a company goes through a period of improving fundamentals. This is what carries the general rise higher in the stock, allowing it to outperform the overall market. In upward trends the tendency is for stocks to run away from their trend line and then come back to them. These fluctuations are primarily attributed to emotion. As investors feel greed and excitement about the improving fundamentals, they chase the stock higher, causing it to go up too fast. At some point, the sellers step in and limit the enthusiasm of the buyers by acting with strength, causing the stock to pull back through a round of profit-taking.

These pullbacks are shorter than the trend that came into them, allowing the stock to maintain its cycle of rising bottoms. It’s the pullbacks, and the resulting rising bottoms, that define the trend line. As chart watchers, we just have to pick out the lows of the rising bottoms and connect the dots, drawing a straight line that best fits the trend.

I did a custom scan this week to look for Canadian stocks that have potential. I set the Market Scan up to seek stocks breaking through 5 day resistance, up at least 2% and trading at least 500 times. That found 33 stocks. Here are stocks that have charts showing early signs of an imminent upward trend:

1. T.BXE
T.BXE started to move higher early in September and then trended sideway for the rest of the month. Today it started to move up again and traded higher than normal volume. Should continue higher so long as it can hold above support at $3.80.

2. T.BIR
T.BIR has been on my feature list for my daily newsletter for some time after it showed good signs late in July. Since then, it has been a sleeper but it came alive again today, moving up through a downward trend line and trading with higher than expected volume. Support now at $6.40.

Reminder: Tyler Bullhorn will appear in Calgary on Monday evening, October, 29 and Tuesday evening, Oct. 30 in Vancouver in an exclusive seminar that will teach you the essential techniques of when to buy and when to sell in order to achieve greater profits. For more information click on EVENTS on the Money Talks home page.

Thanks Mike

References

• Get the Stockscore on any of over 20,000 North American stocks.
• Background on the theories used by Stockscores.
• Strategies that can help you find new opportunities.
• Scan the market using extensive filter criteria.
• Build a portfolio of stocks and view a slide show of their charts.
• See which sectors are leading the market, and their components.

  Disclaimer
  This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don’t consider buying or selling any stock without conducting your own due diligence.

   

The Gist

These five stocks are U.S. S&P 500 basic materials companies with market caps of 2 billion or better which pay dividends all yielding more than 3.% to as much as 6.4%. Furthermore, these companies have great stories, positive catalysts for future growth and solid fundamentals. Some have been pushed lower by recent negative comments by analysts and present a buying opportunity in my opinion.

This may be a good point to start a position in these high-yield dividend-paying opportunities for two reasons. These dividend-paying stocks have the potential for both capital gains and income production. With central banks across the globe playing a game of catch-as-catch-can regarding the competitive devaluation of their currencies, these basic materials names should benefit from a reflationary trend. The combination of potential capital gains and income production makes these stocks attractive for the long run.

The Goods

In the following sections, we will perform a review of the fundamental and technical state of each company to determine if this is the right time to start a position. 

Cliffs Natural Resources Inc. (CLF)

The company currently pays a dividend with a yield of 6.40%. The company is trading 49% below its 52-week high and has 36% upside potential based on the consensus mean target price of $53.13 for the company. Cliffs was trading Wednesday for $39.09, slightly up for the day.

Fundamentally, Cliffs has several positives. The company has a forward P/E of 5.83. Cliffs is trading for 88% of book value. EPS next year is expected to rise by 28%. The company has a net profit margin of 24.43%. The company has an ROE of 24.31%.

Technically, Cliffs is definitely still in a long-term down trend. Nonetheless, all the major moving averages are starting to change the angle of decent and flatten out somewhat. The stock is cooling off from a recent spike off the 52 week low of $32 on heavy volume at the beginning of September. Cliffs’ beta is 2.34.

The company is down over two-fold from its 2008 high of $110. The stock recently bounced off a multi-year low and has moved substantially higher smashing through the 20 and 50 day smas only to give half the gains back in recent days. The turmoil in Spain has many taking profits as the third quarter comes to a close. The significant dividend yield combined with the fact the stock is near 52 week lows makes this a buying opportunity in the name. Yes, this stock is currently out of favor. Counter intuitively, that is exactly the time to buy. If you want to reduce risk further, wait until earning due out on October 22nd.

ConocoPhillips (COP)

COP pays a dividend yielding 4.63%. The stock is trading down 3% from its 52 week high and has 10% upside potential based on the consensus mean price target of $62.47. COP was trading Wednesday for $57.01, down nearly 1% for the day.

The company has many fundamental positives. COP has a forward P/E ratio of 9.59. COP is trading for 1.5 times book value. The company has a net profit margin of 10.55%. ConocoPhillips plans to achieve growth by focusing on high margin production. The company plans to reinvest cash flows to achieve organic reserves replacement of over 100%.

The stock has been in a well-defined uptrend since the start of June. The stock has pulled back to approximately 1% above the 50 day sma and is near the bottom of the current uptrend channel. I see the recent pullback as a buying opportunity.

Chevron Corporation (CVX)

Chevron pays a dividend yielding 3.10%. The stock is trading down 2% from its 52 week high and has 5% upside potential based on the consensus mean price target of $122.18. Chevron was trading Wednesday for $116.30, down nearly 1% for the day.

The company has many fundamental positives. Chevron has a forward P/E ratio of 9.30. Chevron is trading for 1.76 times book value. The company has a net profit margin of 10.79%. Chevron’s EPS is up 47% this year. The ROE is 21.68%.

The stock has been in a well-defined uptrend since the start of June. The stock has pulled back to approximately 4% above the 50 day sma and is currently still in an uptrend. The stock is up 28% for the year. Chevron is a solid performing low beta stock.

With the Eurozone crisis coming to the fore recently, the Euro has taken a dive driving the dollar higher and consequently, dollar denominated commodities such as oil lower. Use this weakness as a buying opportunity.

E. I. du Pont de Nemours and Company (DD)

DD pays a dividend yielding 3.41%. The stock is trading down 5% from its 52 week high and has 12% upside potential based on the consensus mean price target of $56.36. DD was trading Wednesday for $50.50, up slightly for the day.

The company has many fundamental positives. DD has a forward P/E ratio of 11.15. The company has a net profit margin of 8.66%. DD’s ROE is 31.53%.

The stock has been in a well-defined uptrend since the start of July. The stock is up over 235 over the past 52 weeks, yet has pulled back to 4% to just above the 50 day sma and is near the bottom of the uptrend channel.

Any pullback in the stock is a buying opportunity. With the recent droughts and various weather events across the globe driving crop prices higher, the demand for DD’s product will only rise. Moreover, the recent QE programs being implemented by central banks should provide support for the stock as well.

Freeport-McMoRan Copper & Gold Inc. (FCX)

Freeport pays a dividend yielding 3.18%. The company is trading 18% below its 52-week high and has 24% upside potential based on the consensus mean target price of $48.89 for the company. Freeport was trading Wednesday for $39.28, down slightly for the day.