Gold is starting the new week on a positive note…as of 8:05 am Pacific, the yellow metal is up $14 an ounce at $1,656…Silver has jumped 45 cents to $31.85…Copper has climbed 18 cents to $3.40 on positive news out of China…Crude Oil is up $1.94 to $89.34 while the U.S. Dollar Index is off one-quarter of a point to 76.24…
The CDNX, which found support at its 20-day moving average (SMA) last week at 1500, is up 20 points at 1553 through the first hour-and-a-half of trading…interestingly, the CDNX has hit RSI(14) resistance at 50 this morning while both the Slow Stochastics and CMF indicators are in overbought territory, at levels where sell-offs previously started…so the CDNX is really at a critical point at the moment where it has to decide if it wants to blast higher, consolidate or head straight down again…we remain very cautious given what we view as a negative primary trend…
Markets this morning have cheered better-than-expected manufacturing data out of China and there’s also cautious optimism among many traders/investors that euro zone leaders at their next meeting on Wednesday will announce some positive developments with regard to that region’s debt crisis, though sharp differences remain over the size of losses private holders of Greek government bonds will have to accept…meanwhile, Italian Prime Minister Silvio Berlusconi has called an emergency cabinet meeting for tonight to consider new economic reform proposals after what the Financial Times said was a “humiliation” for Berlusconi at yesterday’s meetings in Brussels…there’s clearly a lot of “finger pointing” among euro zone leaders and whether that 17-nation group can come together cohesively and effectively at this time of crisis remains to be seen…
China’s vast manufacturing sector picked up moderately in October, snapping a three-month contraction and underscoring the resilience of the world’s second-largest economy and top energy consumer, according to HSBC’s China Flash Purchasing Managers’ Index…the PMI, designed to preview China’s factory output before the release of official data, rose to 51.1 in October from September’s final reading of 49.9, putting it above the 50-point level for the first time since July…the data could further soothe fears of an abrupt slowdown in China…China is by no means immune to weakening demand from the United States and Europe but robust domestic demand and solid export growth to emerging markets have provided some cushion…
The situation is not so good in Europe, however…the flash Markit euro zone composite PMI sank to 47.2 this month from 49.1 – way below the 50 mark that divides growth from contraction…that was below every forecast from 19 economists polled by Reuters, to say nothing of the consensus for 48.8… survey compiler Markit said it was consistent with a 0.5% rate of quarterly decline in gross domestic product…
The Dow’s run this month – a gain of 8.2% entering today – has been quite spectacular from an historical perspective…in fact, the Dow is within striking distance of enjoying its best monthly performance in nearly a decade…in July, 2009, the Dow advanced 8.6%…historically, the average monthly gain for October is 1.4%…trading volumes during this move, however, have been unimpressive…in fact, a disturbing trend over the last few month is that on big upturns, trading volume sags precipitously but when the market tumbles, it’s routinely on big volume…in addition, the Dow’s rally has been fueled significantly by short-covering…
The 33% yearly decline by the CDNX serves as a warning sign that the major markets are likely in trouble over the coming months…the CDNX is always the first to fall and it’s always the first to rebound when markets turn bullish…the CDNX is not giving us any indication that a new bull phase is underway…
John has three charts to share this morning…investors should keep an eye on the HIX (TSX) which is the single-leverage inverse ETF for the 60 largest companies on the TSX as measured by market capitalization…the HIX and the double-leveraged HXD have been profitable plays for savvy traders over the last several months…they have fallen significantly from their October 4 highs but remain in long-term uptrends with the HIX having excellent support between its rising 100 and 200-day moving averages (SMA) that are currently at $11.20 and $10.75, respectively…as of 8:05 am Pacific, the HIX is down 12 cents at $11.39…it appears to be breaking below the upsloping channel that John has highlighted in the chart, so more weakness could be on the way which would open up a good buying opportunity…
Below is a longer-term chart for the HIX…
A non-resource play we have following off-and-on for the last number of months is iSign Media Solutions (ISD, TSX-V)…the company continues to progress with its business plan but of course ISD is still a highly speculation situation where investors could either lose everything or potentially make a fortune…John updates the chart below, showing a resistance band between 37 and 40 cents…ISD is currently off 2 pennies at 35 cents…
Didn’t SFF just release pathetic drill results or are you not following it anymore?
Comment by jake — October 24, 2011 @ 7:40 am
Results from DQ are mediocre but not pathetic. SFF has a lot of cash and an attractive land package which includes a growing resource at Miraflores. Lopez is doing a good job of moving this company in the right direction. We’re in an overall bear market – you have to keep that in mind.
Comment by Jon - BMR — October 25, 2011 @ 5:47 am