BullMarketRun.com

Gold has traded between $1,180 and $1,194 so far today…as of 7:30 am Pacific, bullion is down $1 an ounce at $1,187…Silver is flat cents at $16.65…Copper is up a penny at $2.77…Crude Oil is off 55 cents at $56.96 while the U.S. Dollar Index is unchanged at 97.31…the greenback is trading at a 13-year high against the yen…the market is currently pricing in the first Fed rate hike for December, while previously it had been September…the expectations shifted slightly back toward September after Fed Chair Janet Yellen spoke Friday…

Reuters reported that San Francisco Fed President John Williams said today that the Fed was likely to raise interest rates later this year, adding that he expects above-trend U.S. growth for the rest of 2015 after a weak first quarter…asked by reporters in Singapore about the possible timing of a U.S. rate hike, Williams said the subject is “on the table” at every meeting of the Federal Open Market Committee, whether the next one at June 16-17 or later ones…

“We’re going to be…likely raising interest rates later this year, raising them gradually over the next few years,” Williams said during a Q&A session with the audience after delivering a speech at a symposium…

Today’s Equity Markets

Asia

Chinese stocks were rocked by a sharp sell-off late in the session overnight that left Shanghai 6.5% lower, a sudden reversal of fortune for one of the world’s top-performing markets this year…it was the market’s biggest daily drop since January 19 when it fell 7.7%…the Shanghai Composite closed at 4620 after starting the day within reach of 5000, an important Fib. resistance level which the index last traded at in January 2008…

India releases GDP data tomorrow that is expected to show the economy growing faster than China for a second consecutive quarter…

Europe

European markets are down modestly in late trading overseas…the day-by-day shifting optimism regarding a potential deal between Greece and its lenders took a turn for the worse today…

The FIFA scandal over alleged corruption among top officials in the global football governing body continues to unfold…Russia, which is due to host the World Cup in 2018 and whose bidding process to host the competition is now under investigation, hit back at the U.S. for the charges…the Russian Foreign Ministry said yesterday that the arrests of officials with the soccer governing body FIFA appeared to be an illegal attempt by the U.S. to impose its laws on foreign states…

North America

The Dow is off 79 points as of 7:30 am Pacific…U.S. home buyers signed more contracts to buy existing properties in April. A monthly index of so-called “pending” home sales from the National Association of Realtors rose 3.4% from March to the highest level in 9 years…pending sales are now up 14% from a year ago…

The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but remained at levels consistent with a strengthening labor market…initial claims for state unemployment benefits rose 7,000 to a seasonally adjusted 282,000 for the week ended May 23, the Labor Department reported this morning…despite last week’s increase, claims have stayed below 300,000, a threshold associated with a firming jobs market, for 12 straight weeks, an unusually long stretch given a weak economic backdrop…

In Toronto, the TSX has reversed earlier gains and is off 78 points through the first hour of trading while the Venture has added 1 point to 691 as it attempts to recover some lost ground after 3 straight losing sessions…Mezzi Holdings (MZI, TSX-V) had a big day yesterday (scroll down for updated chart) and is pushing higher again this morning on strong volume…

Dow vs. Dow Transports

Is weakness in the Dow Transports foreshadowing trouble later this year for stocks?…the Dow hit a new all-time high of 18351 last week, but the Transports have fallen as much as 10% from their high set late last year…this divergence is known as the Dow Theory…the basic premise is that the market is on better footing when both the DJIA and the DJT are confirming moves to new highs…

This 20-year monthly chart shows a current non-confirmation that may bring alarm bells from the Dow Theorists…it’s important to note that while not all divergences mark tops, many tops are marked by divergences – so the Dow Theory is often accurate but certainly not always…several major intermediate-term or cyclical tops did see this negative divergence among the Transports, including 1937, 1946, 1961, 1973, 1981, and – as y0u can see below – 1998, 2000 and 2007…this is something to continue to keep an eye on over the next few months…

Volatility Index vs. S&P 500

This is another interesting chart we’ll be following in the months ahead…it’s possible the Volatility Index (VIX) may have hit an important low in the middle of last year and is now in a gradual uptrend that could foreshadow a major correction in stocks within the next year or so…

The VIX started a significant downtrend in late 2002 that ended in late 2006…the downtrend from late 2008 may have ended last year…

First Major Company Takes Shot At Alberta NDP

Uncertainty over the new Alberta NDP government’s energy and environment agenda started to hit home yesterday when Canadian Natural Resources Ltd. (CNQ, TSX) said it would postpone meetings with investors because it cannot finalize its spending plans…

In what looks like an opening salvo aimed at Premier Rachel Notley’s new government, the Calgary-based Oil and gas giant said it would defer its investor open house scheduled for June 17 and replace it with a conference call focused narrowly on its strategy to navigate the low commodity price environment…

“Due to the current uncertainty surrounding the government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies, detailed future capital allocation plans for each of the company’s assets cannot be finalized at this time,” CNQ stated in a news release.  “Therefore, the company will defer the detailed open house until greater clarity can be attained, to allow for finalization of this capital allocation.”

“Capital allocation” – those are 2 key words…the Alberta NDP will soon find out that the process of capital re-allocation has started in that province given the agenda of this government…it’s amazing how quickly capital can flee when it gets nervous or doesn’t feel welcome…

Mezzi Holdings Inc. (MZI, TSX-V) Update

Earlier this month, John noted the importance of a breakout in Mezzi Holdings (MZI, TSX-V) above a downsloping flag, and then Fib. resistance at 19 cents which is also now the 50-day rising SMA…patience was necessary here, but MZI has performed according to script as far as TA is concerned…it has backed off slightly to 27 cents in early trading today…strong Fib. support now at 24 cents…this is just a chart analysis to aid in our readers’ own due diligence…

MZI is up a penny at 29 cents as of 7:30 am Pacific after backing off as low as 26 cents in early trading…

Probe Metals Ltd. (PRB, TSX-V) Update

Readers would be wise to keep David Palmer’s Probe Metals (PRB, TSX-V) on their radar screens…the company, which was a spin-out from the recent Probe Mines–Goldcorp deal, has about $19 million in cash after receiving a payment recently of $4 million from the sale of the 5% NSR royalty on a portion of the Goldex mine to Agnico Eagle Mines (AEM, TSX)…this is a a great time in the market cycle to be sitting on nearly $20 million…

With only 34 million shares outstanding, PRB’s current market cap (based on yesterday’s 41.5-cent close) is 25% below its cash value…PRB has 3 properties in Ontario, including the Black Creek chromite deposit, but is likely searching for an exciting new story…

Technically, it’s not easy doing a chart for a stock that has traded for just a few months…however, it’s reasonable to expect strong support at the rising EMA(20) at 40 cents…the 50-day SMA is in the upper 30’s…

PRB is up half a penny at 42 cents as of 7:30 am Pacific..

GoldQuest Mining Corp. (GQC, TSX-V) Update

We continue to keep a very close eye on GoldQuest Mining Corp. (GQC, TSX-V) which has been threatening to break out above a long-term downtrend line, but so far that hasn’t occurred…a month ago, the company released a revised and more robust PEA for its Romero and Romero South Gold-Copper deposits in the Dominican Republic…GQC’s exploration upside in the DR remains huge – more discoveries are very possible despite a string of disappointing results the last couple of years…by itself, this is a company that in the past has boosted overall market sentiment with some spectacular drill holes…can they do it again?…

As expected, on a recent pullback following a powerful run from 8.5 cents to 20 cents in just 5 trading days, GQC found support at its 200-day SMA which is flattening out around 13 cents…a pennant has formed recently but keep in mind this could develop into a downsloping flag with strong support expected between the 38.2% and 23.6% Fib. levels…

GQC is unchanged at 16 cents as of 7:30 am Pacific…

Note:  John, Terry and Jon do not hold share positions in MZI, PRB or GQC.