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October 21, 2014

BMR Morning Market Musings…

Gold has traded between $1,246 and $1,256 so far today…as of 8:00 am Pacific, bullion is up $5 an ounce at $1,252 at it attempts to push through a critical resistance band between $1,240 and the low $1,250’s…Silver has added 17 cents to $17.60…Copper is up 4 pennies to $3.03 as China’s Q3 growth slightly exceeded expectations…Crude Oil has gained 46 cents a barrel to $83.17 while the U.S. Dollar Index is up nearly one-quarter of a point to 85.27

Gold holdings by ETF’s have fallen despite recent strength in the precious metal, according to Commerzbank…Gold extended last week’s multi-week highs today after holding up yesterday even though ETFs tracked by Bloomberg posted net outflows of 8.9 metric tons that was the result of an outflow from the world’s largest such ETF, SPDR Gold Shares…Commerzbank notes this was the largest single day outflow from the ETF in a year…

“Given the numerous risks on the market, we are surprised that there is still any substantial retreat at all from Gold ETFs,” Commerzbank stated. “It might, though, also be the result of forced selling to cover losses elsewhere. It remains to be seen, however, whether the price increase of Gold is sustainable. Physical demand in Asia has not after all really started to pick up much again. According to industrial sources, the Reserve Bank of India is not going to relax restrictions on Gold imports further. The relatively high level of Gold imports in September in the run-up to the holiday season could therefore soon ease off again. In our view…an increase in demand for Gold in Asia is a must if a sustained price recovery is to occur.”

Interesting comments from Mineweb’s Lawrence Williams who counters the Commerzbank statement that “physical demand in Asia has not after all really started to pick up much again.”  In an article this morning (www.mineweb.com), Lawrence noted, “Indeed the latest weekly figures from the SGE could be seen as particularly strong given that the markets were closed for half the period due to China’s Golden Week holiday. While the total for the two weeks at around 68 tonnes may not seem spectacular, given that these purchases were actually made in only five days (September 29th and 30th and October 8th, 9th and 10th) due to the long holiday market closure could suggest that Chinese demand is indeed soaring enormously.”

Today’s Equity Markets

Asia

China’s Shanghai Composite declined 17 points overnight to close at 2339…a slew of Chinese economic data painted a mixed picture…China’s economy grew last quarter slightly above expectations but nonetheless at its slowest pace since the depths of the global financial crisis…this raises fresh concerns over global growth prospects and increases the likelihood Beijing may introduce broader stimulus measures…GDP in the world’s second-largest economy expanded 7.3% in the third quarter from the same period a year earlier, its weakest performance since the first quarter of 2009, when growth was just 6.6%…meanwhile, September industrial input grew 8% on year, beating estimates, but retail sales and fixed-asset investment both missed expectations…

Europe

European stocks are up sharply in late trading overseas… stocks jumped and the euro sank on news the European Central Bank is considering buying corporate bonds – a move that would beef up its program aimed at stimulating the continent’s sickly economy…the Financial Times reported that no specific plan had been discussed, one person familiar with the matter said, and there is no timetable yet for when such a step may be considered…earlier, Reuters reported that the central bank may decide on the matter as early as December and could begin buying early in 2015…

North America

Better-than-expected earnings from Apple set the stage for a higher open on Wall Street this morning…the Dow is up 97 points as of 8:00 am Pacific while the S&P 500 has fared even better, surging 23 points to 1927

The latest Politco Battleground Poll of likely voters in key House and Senate races finds that 50% say the nation is “off on the wrong track” while just 20% say things are “generally headed in the right direction.” A remarkable 64% say things in the U.S. are “out of control” while just 36% say the U.S. is in “good position to meet its economic and national security challenges.” Whether Republicans will be able to seize on voter dissatisfaction in the upcoming mid-term elections (and gain control of the Senate) remains to be seen, but this is clearly not good news for President Obama whose job performance numbers continue to deteriorate over his mishandling of a host of issues…a very rocky final 2 years of the Obama Presidency at the very least would likely mean continued high volatility in the markets, but opportunity for savvy investors…

The TSX continues its rally, up another 130 points as of 8:00 am Pacific after posting triple digit gains in each of the past 3 sessions…the Venture has added 10 points to 821 – a 6.8% increase over last week’s low…

Contact Exploration Inc. (CEX, TSX-V) Update

In a merger that will consolidate the companies’ interests in the Deep Basin, Donnycreek Energy Inc. (DCK, TSX-V) has entered into an arm’s-length definitive arrangement agreement with Contact Exploration Inc. (CEX, TSX-V) whereby Contact and Donnycreek will merge to form a new, amalgamated corporation (Kicking Horse Energy Inc.) on the basis of 0.075 of a common share of Kicking Horse being issued in exchange for each outstanding Contact share and 0.600 of a Kicking Horse share being issued in exchange for each outstanding common share of Donnycreek…the merger will represent an exchange ratio of 8 Contact shares for each Donnycreek share, representing a value of $2.96 for each Donnycreek share based on the issue price of Contact shares in a $20 million bought deal financing announced by CEX today at 37 cents…it all adds up to some serious dilution at a time when Oil prices are in a fresh primary downtrend, not an uptrend, though clearly there are certain synergies between the two companies…Donnycreek has responded vigorously to the merger news but Contact is down 6 cents to 37.5 cents as of 8:00 am Pacific

VIX “Fear Index’ Update

We’re not sure we’ve seen the “high” yet in this cycle yet for the VIX (the Volatility Index for the S&P 500) which shot up to 31.06 last week when stocks were getting hammered…it has since retreated to 18.57, an area just above the August high…this is a very volatile gauge of investor fear…it’s generally positive for stocks when the VIX holds at or below 25…last week’s reading of 31.06 was the highest since the summer of 2011

VIX9

TSX 5-Year Weekly Chart

The TSX is bouncing off RSI(14) support on this 5-year weekly chart but resistance exists between 14700 (the 200-day SMA) and the 15000 level where the index broke down from an upsloping channel in place since the summer of last year…

TSX11(1)

Venture 5-Year Weekly Chart

After falling through 3 important support levels (970, 920 and 860), the Venture finally gained its footing at the 800 support…a re-test of that area in the near future should be expected as such would be normal, healthy technical behavior…as long as accumulation (buy pressure) doesn’t reverse into sell pressure on this weekly chart, last week’s low may indeed hold…RSI(14) is clearly oversold but that in itself is no guarantee we’ve seen a market bottom…

CDNX348

Gold 20-Year Monthly Chart

This 20-year monthly chart demonstrates how important it is for Gold to hold critical support at the Fib. $1,185 level (a triple bottom low) which also corresponds with an uptrend line going all the way to the beginning of the bull market nearly 14 years ago…a confirmed breach of this support, especially on the monthly chart, could force bullion down to the next major Fib. support (50%) around $1,000…interestingly, RSI(14) and SS have both broken above their downtrend lines which is encouraging…fundamentally, demand from Asia will be key in order to protect the $1,200 area…

GOLD203

Graphene 3D Lab Inc. (GGG, TSX-V)

We first mentioned Graphene 3D Lab (GGG, TSX-V) in mid-August, shortly after it made its debut on the Venture and climbed from a low of 40 cents to more than $1 in the first two trading sessions…

This is merely an updated chart to help readers with their own due diligence – as always, we encourage investors to contact management and perform their own DD on any company they might be interested in…

After climbing as high as $2.56 in early September, GGG quickly retraced to the Fib. 38.2% level around $1.22 where the rising 50-day SMA currently sits…since then, GGG has been gradually climbing again and closed yesterday at $2.00…it’s down slightly in early trading today…

RSI(14) has unwound from extreme overbought conditions, finding support at the 50% level, and is now heading higher again…

GGG is down 3 pennies at $1.97 as of 8:00 am Pacific

GGG2

Note:  John, Terry and Jon do not hold share positions in DCK, CEX or GGG.

10 Comments

  1. sold vry at .30 – she is going to do a good correction now. and no, I am not the anon guy that posted yesterday.

    Comment by dave — October 21, 2014 @ 7:40 am

  2. I feel GGI may be the most popular stock with BMR posters.
    I mentioned before that i didn’t think they will be drilling
    Sheslay this year. I have nothing to back it up, just a gut
    feeling. The results up there so far, no doubt, are not
    enough to entice them to take their minds off Mexico & if
    they did, it may suggest that Mexico may not be as exciting
    as we have been led to believe. Maybe not solid thinking, but
    thinking just the same….We shall see…

    Comment by Bert — October 21, 2014 @ 8:02 am

  3. This guy knows what he is talking about, a must read for all gold fans out there:

    TF Metals Report homepage…

    Gold price analysis in euro:

    Watch at Youtube (Rhythm and Price Issue 173 10082014)

    We are very close to a turn around!

    Comment by 400yards — October 21, 2014 @ 8:16 am

  4. I am able to state with certainty that, although the ad-Venture was
    up today, the stocks i have been following, are still marking time,
    as i continue to see a standoff between buyers/sellers, for would you
    believe, half a penny. Pathetic ! The shine is gone my buddies & to
    continue participating, one would have to be considered a fool & the
    saying is, a fool & his money are soon parted. All the best.

    Comment by Bert — October 21, 2014 @ 12:16 pm

  5. This is not a resource stock but I suggest investors should do there dd on it. Theralase V.TLT Existing revenue stream from their TLC1000 laser with the much improved TLC2000 unit to launch next month significantly increasing revenue stream. This is not the blue sky potential though. PDT – Photodynamic Therapy – Proven 100% cancer kill rate in pitro dish for brain colon,lung, etc. 100% kill rate in mice with immunity response to further cancer. Rat study to be released very soon from a third party U of Toledo. They are working with some very well know cancer institutes such as the Princess Cancer Centre in Toronto. Working on FDA approval for human trial Q1 2015.
    Check at Theralase website

    Comment by Dan — October 21, 2014 @ 1:45 pm

  6. While roaming the net, i came across Vector Vest & the ad
    invited me to a free stock analysis. Of course, i wanted to
    see what GGI had to offer & here is the result.

    Company Information

    Business: Garibaldi Resources Corp. engages in the exploration and development
    of resource properties in Mexico and Canada. It also holds an 85% interest in a
    stone installation business.

    Capital Appreciation

    Value: Value is a measure of a stock’s current worth. GGI has a current Value of
    $0.36 per share. Therefore, it is undervalued compared to its Price of $0.16 per
    share. Value is computed from forecasted earnings per share, forecasted earnings
    growth, profitability, interest, and inflation rates. Value increases when earnings,
    earnings growth rate and profitability increase, and when interest and inflation
    rates decrease. VectorVest advocates the purchase of undervalued stocks. At some
    point in time, a stock’s Price and Value always will converge.

    RV (Relative Value): RV is an indicator of long-term price appreciation potential.
    GGI has an RV of 1.22, which is good on a scale of 0.00 to 2.00. This indicator is
    far superior to a simple comparison of Price and Value because it is computed from
    an analysis of projected price appreciation three years out, AAA Corporate Bond Rates,
    and risk. RV solves the riddle of whether it is preferable to buy High growth, High P/E
    stocks, or Low growth, Low P/E stocks. VectorVest favors the purchase of stocks with RV
    ratings above 1.00.

    Comment by Bert — October 21, 2014 @ 4:48 pm

  7. Also, if anyone is interested in following TLT’s progress,kereport does regular interviews.. updates .. with the company execs.

    Comment by Greg J. — October 21, 2014 @ 4:55 pm

  8. Prosper Gold Drills 324 meters of 0.44% Cu and 0.22 g/t Au at the Star

    Comment by Bert — October 22, 2014 @ 5:04 am

  9. Just in case anyone is interested, Prosper have release a PR detailing 1 hole of drilling (hole 49). 0.57% CuEq over 324m starting at 4m.

    Also:

    ”1 shallow hole at Star East and 3 holes Pyrrhotite Creek were drilled with no significant results. More analysis is required to understand the historical and observed mineralization at these targets prior to future drilling.”

    Comment by Tom UK — October 22, 2014 @ 5:19 am

  10. BLO NR:
    Cannabix Technologies Inc. (CSE: BLO) (OTC PINK: BLOZF) (the “Company”) common shares have been made eligible for book-entry delivery and depository services of the Depository Trust Company to facilitate electronic settlement of transfers of its common shares in the United States

    Jon -cant imagine this being a material issue yes?? formality only?? TIA

    Comment by Jeremy — October 22, 2014 @ 6:15 am

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