Wednesday, May 27, 2009

For GT Blog May 27, 2009

The great advance in most of the major world bourses from the early March 2009 lows has now generated much opinion and controversy as to the structure of the advance

Is this the beginning of a new bull market or – just another bear market rally?

The bears sitting on the sidelines are praying for a correction – even a retest of the March lows so they can finally get invested. One money manager sitting in cash has gone public with the following table setting out modern bear market rallies in the S&P500 since 1960

The average gain was 17.66% and the average bull skew in weeks was 5.8 weeks – compare those numbers to the current advance - now gaining 30+% and into week 12 which in terms of magnitude and time are both double the average modern bear rally – We conclude the current advance is not a bear rally – and that’s no bull

The April – May 2001 bear market rally

Friday, May 22, 2009

For GT Blog May 22, 2009

Hello fellow bloggers and stock market participants.

Just to repeat – I am not a gold bug – I simply believe there are times to own gold stocks and there are times to ignore them. Last week we ran a relative comparison of bullion and a gold index (all US$) – noting the strong relative outperform and new cycle bottom in the hold stocks

The declining US dollar and the rebound in the US 10-y Note yields is obvious and so we assume the worst place to be now is in the US dollar and US Treasuries

However - a falling US dollar is a positive for the Dow Industrials which is loaded with US multinationals – but the strong CDN dollar will hurt our returns – this has us confronted with an investing dilemma

We have to own something because cash earns nothing and so that is why the precious metals complex and the TSX Materials complex seems to the place to be. Our gold silver chart suggests that silver may afford more opportunity than gold and so why not seek out the silver components of the TSX Materials sector?
A visit to the cluttered TSX web site turns up the following silver names - Silver Wheaton Corp. SLW, Silver Standard Resources Inc. SSO, Silvercorp Metals Inc. SVM – other smaller names are ECU Silver, Endevour and Pan American – call your advisor

Tuesday, May 19, 2009

For GT Blog May 20, 2009

Hello fellow bloggers and stock market participants.

Time for my one and only stock pick - a stock that I will love at least for a few weeks - don't forget we are here for a good time - not a long time

Also remember that if we fall in love with a stock - it will never love us in return - stocks don't know or care who owns them. If your stocks love is not working for you - dump it - run away because there will always be another attractive story for you to embrace

I have had two serious stock affairs so far this year. In early March 2009 I fell in love with Bank of Nova Scotia at $26 and then bailed at $33 when in mid April the attractive Trinidad Energy Services reeled me in at $3.50 - love at first sight

Now at the $5.50 level Trinidad is showing her age - especially in the morning sun and alas, I must move on

I do admit as this bull market up-leg advances most of the attractive stocks are taken - the lower fruit has been picked - and so I must select from more obscure names - and so a filter was need to seek new and early relative out-performers from the TSX data base

TimberWest Forest Corp. (TWF.UN-T) is a land management company. The Company is an owner of private forest lands in Western Canada - sounds like an over-looked recovery play - but the chart tells all - a youthful relative out-perform and a youthful intermediate stock cycle

TimberWest Forest Corp. (TWF.UN-T)

Thursday, May 14, 2009

For GT Blog May 14, 2009

Hello fellow bloggers and stock market participants.

Just to be clear – I am not a gold bug – I simply believe there are times to own gold stocks and there are times to ignore them. Do you not grow weary of the talking heads on business television telling you that gold is a hedge or safety net to insure against a meltdown of our modern economy?

Too bad that theory failed, during the great financial crisis of late 2008 the gold complex also collapsed. The Gold Bugs index (the HUI) lost two thirds of its value in twelve weeks. It is best to enjoy the gold complex for what it is – an opportunity from time to time to improve your equity returns.

Gold bugs should be avoided and you should know how to spot them.

They usually drive a 25-year old Volvo (green is a favourite). They have dandruff and love Vancouver penny stocks. They can be confrontational and they frighten small children. They wear brown socks with black shoes and never tip.

Now I set my emotions aside and look at the gold complex for what it is, an asset class that seems to be in the early stages of a new intermediate cycle advance.

I see that Iamgold Corporation (IMG-T) and Red Back Mining Inc. (RBI-T) just posted new 52-week highs and peers like Alamos and Aurizon (to name a few) are just below their 52-week highs. A sign of strength and don’t ask me why - I just want to participate. We will know why latter as the advance matures

Our chart below is the relative comparison of bullion and a gold index (all US$) – note the strong relative and the new cycle bottom.

Monday, May 11, 2009

For GT Blog May 12, 2009

Hello fellow bloggers and stock market participants.

My Toronto Star "recognition point" column of March 3, 2009 set out the technical conditions that have to be met in order to declare a new bull market. One condition was met a week ago Monday when the TSX cleared the recognition point (TSX Comp 9500) and entered into bull market territory.

The frame below should be familiar to the attendees of our Level I technical analysis seminars - a graphic structure of an Elliott Wave 3 which contains the recognition point

The "recognition point" can occur anywhere from a third to one-half way into the Wave 3 advance - if we assume the half way point we can now set time and price magnitude levels

This gives us a price target of 11500 on the TSX Composite Index and a time target of the first week of July 2009

And now for some good advice - never make an investment decision based on any public formant to include blogs, business TV and especially those business columnists

Thursday, May 7, 2009

For GT Blog May 07, 2009

Hello fellow bloggers and stock market participants.

On stop loss strategies

The True Range stop will adjust to the stock’s volatility - we can’t use the same per cent rule on stocks like the sleepy Shoppers and the volatile RIM. – the trick is to calculate the True Range and set your stop at the stock’s weekly low less the True Range

For RIM on the week of March 13, 2009 the high was 53.16 and the low was 45.56 and the prior week close was 46.60

We now need the greatest of the following:
The current high less the current low. (53.16 - 46.56 = 7.40)
the absolute value of the current high less the previous close (53.16 – 46.60 = 6.56).
the absolute value of the current low less the previous close (45.56 – 46.60 = 1.04)

The greatest value is 7.40

At the close of March 13,2009 - RIM’s True Range Stop is set at the low less the True Range (45.56 – 7.40 = 37.96)

Do this once a week on your volatile traders and never lower the stop

RIM – and the True Range