Equities Roar Back After Multi-Week Slump
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http://ymlp229.net/zdoeLY ——————————————————————————– October 26, 2014 Week In Review…
Week In Review For October 20 to October 24, 2014 This week on AllPennyStocks.com:
* Article Published, October 21, 2014: Highbank Resources Ready for First Aggregate Production at Swamp Point North (http://www.allpennystocks.com/aps_ca/special-reports/458/Highbank-Resources-Ready-for-First-Aggregate-Production-at-Swamp-Point-North.htm) (CDN Company) * Article Published, October 21, 2014: iWallet a New Old Fashion Way to Protect and Carry Cash and Credit Cards (http://www.allpennystocks.com/aps_us/special-reports/481/iWallet-a-New-Old-Fashion-Way-to-Protect-and-Carry-Cash-and-Credit-Cards.htm) (U.S. Company) * Article Published, October 24, 2014: Sangoma Technologies Swings to a Profit in Q4 and Fiscal 2014 (http://www.allpennystocks.com/aps_ca/special-reports/459/Sangoma-Technologies-Swings-to-a-Profit-in-Q4-and-Fiscal-2014.htm) (CDN Company) Video charts for the week:
* October 22nd Video Chart for ZAZA.The Zaza Energy chart made a big move on Tuesday on a surge in volume to close ahead 45 percent at $2.98. There is resistance at Tuesday`s high of $3.50, but little more until $4, aligning the stock for possibly another sharp move upward as the momentum builds. view:
( http://www.youtube.com/watchv=b9J4dTNHTpo ) * October 22nd Video Chart for CDV:CA.The Com Dev International chart hit the area of $3.45 in January and followed that with a climb to $4.20 After hitting $3.45 again in April, a climb to $4.32 followed.
The stock price is back down at the support level again, leaving technical traders wondering if it will rise again. view:
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________________________________________________________________ WEEKLY UPDATE – EQUITIES ROAR BACK AFTER MULTI-WEEK SLUMP Less the Toronto Venture exchange, it was a strong week for North American equities, led by the Nasdaq exchange roaring ahead 5.3%. All the major exchanges had been under significant selling pressure for at least a month and pushing on correction territory with losses of 10% from recent all-time highs. The selling pressure began to recede late in the week prior and the momentum continued last week with the Dow Jones Industrial Average, S&P 500, Nasdaq and TSX Composite indexes all posting winning days every day, but Wednesday to record solid weekly advances.
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Earnings season was at full steam, including 12 of the 30 Dow components reporting earnings last week, with mostly upbeat results fueling the bullishness, especially late in the week. Tech stocks in general were hot, including behemoth Apple impressing with quarterly results and saying demand for its new products is high, helping the Naz have its best day in more than two years on Tuesday. That wasn`t the only “best” posted last week; the S&P 500 notched its best week in 2014 as it broke a four-week losing streak.
Economic data was somewhat light, but what did come showed the US housing market getting some traction, the jobs market holding firm and inflation remaining relatively muted, meaning that the US Federal Reserve isn`t under any pressure to boost interest rates. The Fed has been under a microscope with economists trying to predict when the central bank will lift rates, with most thinking sometime in mid-2015.
Fed officials have been chirping their opinions on rates and stimulus, including Dallas Fed President Richard Fisher last week that he supports ending the policy of monthly asset purchases this month. The Fed has been tapering its purchases every month in 2014 (from $85 billion to now$15 billion each month), but there has been a few questions raised if the purchase package will end in October or not.
Right now, it looks like it will, but that question will be answered next week with the latest meeting of the Federal Reserve on Tuesday and Wednesday.
More stimulus efforts from the European Central Bank to help Europe`s flagging economy also helped raise market sentiment. A news report by Reuters on Tuesday said the ECB may start buying corporate bonds as early as December in addition to its purchases of covered bonds and asset-backed securities in a bid to fight deflation and breathe life into its economy. Adding to optimism that Europe isn`t falling into another recession, Spain`s unemployment rate fell to its lowest level in three years and manufacturing in the euro zone unexpectedly grew in October. Elsewhere, HSBC`s preliminary reading on manufacturing in China showed an improvement and continued expansion, albeit a modest amount. When the market is looking for good news, this type of info is plenty to run with to quell worries about deceleration in global growth from leading economies.
The market jitters on Wednesday stemmed from shots being fired at Canada`s National War Memorial and Parliament building in Ottawa where Prime Minister Stephen Harper and the Conservative caucus were meeting. 32-year-old Michael Zehaf-Bibeau was gunned down by Parliament Hill security after storming Centre Block, but not before Zehaf-Bibeau shot and killed 25-year-old Corporal Nathan Cirillo, who was guarding the war memorial. Zehaf-Bibeau is thought to have extremist beliefs, as he had converted to Islam and unsuccessfully tried to get a passport to go to Syria.
Ebola was back in the news with the first case being diagnosed in New York City. Emergency room doctor Craig Spencer had returned to the US a week earlier after treating Ebola patients in Guinea (West Africa) through his work with Doctors Without Borders. It is the fourth case in the US. The financial capital of the world is on high alert, but officials caution there is no need for panic as the risk of Ebola spreading in NYC is next to nil.
So, was last week a relief rally after heavy selling or are the markets now ready to continue the multi-year upward march Simply, that depends who you ask. Some analysts have warned that the bottom is not in yet, while others say “up we go.” One thing that is a common theme, though is that volatility is going to be around for a while, and that is something we at AllPennyStocks.com believe to be true.
Fundamentally, there`s too much guessing (and that`s what it is”guessing”) about what the Federal Reserve is going to do and how it will impact the economy, which looks to be doing quite well, by the way. Europe is still a mess and years away from recovery. Earnings are coming in above average, but there have been some poor outlooks put forth for the current quarter. However, companies seem to be making a habit of pulling back guidance and setting the bar low, so reading into that too much makes a person`s head swirl. We`re looking at some strong technical reversal patterns with last week`s movement and will be looking for some confirmation in the charts this week to give us a hint as to whether or not we think the markets are once again on their way to new record highs.
A Few Things to Consider:
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For those that subscribe to the philosophy that the Russell 2000 (RUT) is a leading indicator for the broad markets, note that the small cap index is still trading below its 50 day moving average (although it`s still well above its 200 DMA). It`s not the end of the world that RUT is under the 50 DMA, but we will be watching going forward to see if it can break back above it and, more importantly, how it responds to some stiff resistance at 1,213. If the Russell can`t break that resistance, which will be its third attempt, we take that as a very bad sign for the overall market.
Oil is a big topic right now as West Texas Intermediate Crude (WTIC) has been beaten down hard since July. The bottom line is that supply is meeting demand and the US isn`t even exporting its glut yet. Oil remains under pressure even on days where equities are strong and the US dollar is weak, two factors that usually help crude. Overall, there`s confusion in the crude market as international conflict is not deemed a threat to the supply chain, Iraq exports are near all-time highs and Saudi Arabia says it will cut prices to keep its portion of the market, even as it reduced exports. Technically speaking, $80 is a key level for WTIC. WTIC has only closed below $80 on a weekly basis twice since September 2010. Although it keeps flirting with that level, buyers keep coming in with WTIC essentially bouncing off it in each of the last two weeks. If it fails with volume, we expect WTIC to hit at least $75 per barrel and possibly even $70 (where it gets strong support again).
We`d like to take a moment and discuss the TSX-Venture as it is clearly the laggard of North American indexes. The Venture is lumbering around its lowest level since December 2008, the point where the markets started recovering from the effects of the Great Recession. We`re keeping an eye on 800 for the Venture because there`s just not much support beneath that point until around 700, a point we would be astonished to see if the overall markets continue to move upward. There`s some mixed signals in the indicators as the RSI is grossly oversold, which would suggest a bounce could be coming, but the Moving Average Convergence/Divergence (MACD) has sunk back into negative territory, indicating that the momentum is weak and the trend is bearish. Where does that leave us Keeping a close eye on 800, and you should be too.
Thoughts for the Week – Our 2 Cents on Ebola:
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While we as North Americans have some of the best healthcare in the world, this is still a scary disease because of its high mortality rate that kills quickly. We`re not going to rant or fear monger because modern medicine has got us through epidemics in the past and will again, but we recognize that anxiety is justifiably starting to ride high. We will talk about stocks that are running up on drugs or products related to Ebola. Every market vet knows that what goes up on panic, will come back down, so if you`re going to play Ebola stocks, don`t be afraid to dock profits appropriately to mitigate risk.
Further, do your due diligence and find out if a company has anything else in the pipeline. If a biotech is playing the hype, they most likely will be in trouble when the Ebola worries fade.
Look, many companies are going to jump on the Ebola train hoping to gain recognition for their company; it`s a smart move to gain attention and can certainly have a strong humanitarian component. For example, NanoViricides (NYSE MKT:NNVC) who doesn`t have any drugs in clinical trials, has used the word “Ebola” in the title in 4 out of the last 5 press releases as it aims to develop an Ebola drug candidate. We haven`t looked into their drug, so we can`t speak to it one way or the other. It`s up to you as investors to play it smart and find companies that have merit to their portfolio or else you can get cooked just like people did as the pot.com bubble popped earlier this year as countless comanies were all of a sudden in the legal marijuana business. Tekmira Pharmaceuticals (NASDAQ:TKMR) has probably been the most talked about, helping shares swell up to near an all-time highs last month, but they`re not a one-trick pony with several drugs in mid-stage trials for cancer. Even the first case of Ebola in NYC last week and news that Tekmira is manufacturing limited doses of its Ebola drug didn`t stop the stock from falling 14% last week as traders logged profits from the recent run. Lakeland Industries, who makes protective gear for the medical community has seen shares skyrocket from around $6 to a high of$29.55, but have now pulled back to $13.
Wanna talk about a microcap Take a look at Aethlon Medical (OTCQB:AEMD)who has seen shares spike as its blood filtration device has now been used on Ebola patients. Point being here that these plays can move very quickly in both directions. If fears are sparked again and momentum comes back in, don`t be afraid to hop in an Ebola play, but don`t be afraid to put the profits in your account when they`re available either.
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Forex & Commodity Snapshot:
* The Canadian Dollar edged up against the US Dollar, appreciating by 0.16% on the week to US$0.8901.
* December Gold futures were the most actively traded, nipping down by $7.2 per ounce, or 0.58%, to $1,231.80.
* December Silver futures were the most actively traded, slipping 14.9 cents per ounce, or 0.86%, to $17.182.
* December Copper futures were the most actively traded, advancing 3.75 cents per pound, or 1.25%, to $3.041.
* December West Texas Intermediate Crude futures were the most actively traded, losing $1.05 per barrel, or 1.28%, to $81.01.
Equity Market Snapshot:
(All percentages on a weekly basis unless otherwise noted) * NewLink Genetics (NASDAQ:NLNK, +31.11%) inked a partnership with Roche (OTCQX:RHHBY, +3.32%) unit Genentech for development of NewLink`s experimental cancer drug. NewLink gets $150 million upfront, but could receive more than $1 billion in milestone payments if the drug, NLG919, makes it to marketing approval.
* IBM (NYSE:IBM, -10.97%) fell quickly after earnings missed analysts’ expectations, making it the worst S&P 500 component last week. Big Blue also said it is divesting its money-losing global semiconductor technology business. It can`t really be said IBM is selling the business, as it is paying Globalfoundries $1.5 billion to take the plants, technology and personnel that have been costing IBM hundreds of millions every year to operate. The transaction included a one-time pre-tax charge of $4.7 billion, or $3.3 billion net of tax for IBM’s Q3 profits, an expense the cut earnings all the way down to only 2 cents per share.
* Amid the barrage of earnings reports, Shares of Caterpillar (NYSE:CAT,+4.62%) were up with adjusted Q3 profits of $1.72 per share (vs. estimates of$1.33) as the company raised its earnings outlook for the year.
* Microsoft (NASDAQ:MSFT, +5.73%) beat analysts by a nickel with profits of 54 cents per share, 3M (NYSE:MMM, +8.14%) was a penny better than predicted at $1.98 per share and Yahoo! (NASDAQ:YHOO, +13.13%) topped expectations in a report that showed the sale of 140 million shares of Alibaba (NYSE:BABA, +8.93%) boosted its cash position from $5 billion to $12 billion.
* A notable loser was Amazon.com (NASDAQ:AMZN, -5.46%), whose shares fell after the e-commerce company reported a net loss of $437 million, or 95 cents per share, for the third quarter, compared to a net loss of $41 million, or 9 cents per share, a year earlier. Analysts expected a steep loss associated with a huge write-off related to the Fire Phone, but only 74 cents per share.
* Cenovus Energy (TSX:CVE) rose from a 52-week low as it beat analyst estimates of Q3 profits of 41 cents per share by 3 cents. Operating earnings at 49 cents per share topped analysts by 8 cents. Still, Cenovus received a downgrade from TheStreet to a “hold” from a “buy” last week.
* Potash Corporation of Saskatchewan Inc. (TSX:POT) (NYSE:POT) is reporting $317 million of net income, or 38 cents per share, in the third quarter, which was five cents below estimates. Revenue of $1.6 billion beat estimates of $1.53 billion. Its shares are up 21 cents to $51.40 amid a weak outlook.
* Oilsands producer Cenovus Energy (TSX:CVE, +4.25%) beat analyst estimates on several key measures in the third quarter, including cash flow per share at $1.30, 15 cents ahead of estimates. Operating earnings came in at 49 cents a share, eight cents better than forecast.
* Tekmira Pharmaceuticals (NASDAQ:TKMR, -14.15%) said it has begun production of a small amount of TMK-Ebola, an experimental drug in development for treating the Ebola virus. Tekmira expects the limited production run to be ready early in December, but did not say exactly how many doses it was making.
* Shares of Regulus Therapeutics (NASDAQ:RGLS, +161.39%) were the biotech play of the week, skyrocketing on news that its experimental mico-RNA drug RG-101 showed promising results in early clinical trials for the treatment of Hepatitis C.
* A regulatory filing by Enbridge (TSX:ENB, +3.10%) showed the pipeline operator responding to concerns of the National Energy Board that the company hasn`t met all the conditions of approval for the Line 9 pipeline running through southern Ontario. Enbridge wants to restart work on the pipeline, saying that it has the correct shut-off system to reduce any risk to the environment in the event of a pipeline break.
* Shares of online review site Yelp (NASDAQ:YELP, -11.43%) sunk quickly after the company delivered a weak outlook as revenue growth is stubborn and paying members find other sources for recommendations and reviews. On the bright side, Yelp did post better-than-expected Q3 results. In the same vein, rival review site Angie`s List (NASDAQ:ANGI, -22.01%) also gave a weak outlook for the fourth quarter.
* Shares of Agrium (TSX:AGU, +11.75%) shot ahead on news that activist investor ValueAct Capital had taken a 5.7% stake in the fertilizer and seed company. Agrium said that ValueAct isn`t pushing for a breakup of the company.
* Procter & Gamble (NYSE:PG, +3.05%) just missed on Q3 profits, matched analysts on revenue and overpowered any noise about the financial report by saying that it is splitting its Duracell battery business into a separate company, which sent shares to a new 52-week high.
* Shares of Tesla Motors (NASDAQ:TSLA, +3.41%) weren`t effected by automaker Daimler AG (OTCQX:DDAIF, +1.09%) disclosing it sold its 4% stake in the electric car maker.
* Goldcorp (TSX:G, -3.25%), one of Canada`s largest gold producers, struck a deal with its workers in Timmins, Ontario that are members of the United Steelworkers union. The ratified collective agreement gives the workers a 6% wage hike over three years, a $1,500 signing bonus and better pensions, amongst other things.
Weekly Indices Results:
The S&P TSX Composite Index closed ahead for the second consecutive week, advancing 316.14 points, or 2.22%, to 14,545.82. The TSX-Venture Composite Index pulled up from lows, but still closed red for the eighth straight week, losing 4.68 points, or 0.58%, to 805.45.
In the States, the Dow Jones Industrial Average reversed course after four down weeks, taking on 425.0 points, or 2.59%, to 16,805.41. The much-broader S&P 500 surged back over 1,900, rising 77.82 points, or 4.12%, to close at 1,964.58. The tech-rich NASDAQ Composite was simply stellar, soaring 225.28 points, or 5.29%, to 4,483.71.
Canadian Economic Data:
(All data from Statistics Canada unless otherwise noted) * Following a decrease in July, the number of people receiving regular Employment Insurance benefits in August was essentially unchanged, at 498,100. Compared with 12 months earlier, the number of beneficiaries fell by 18,800 or 3.6%. In August, both Manitoba (-2.3% to 12,700) and Alberta (-1.2% to 28,500) had fewer beneficiaries. At the same time, Newfoundland and Labrador (+1.8% to 30,600) posted an increase, while there was little change in the other provinces.
* The Bank of Canada left its key overnight lending rate once again at 1%, the point it has been frozen for more than four years. That`s the longest string in about 50 years of the interest rate not moving.
The main bank cited a number of reasons, including crude prices slumping, mixed economic data and risks associated with the housing market as complicating its decision in adjusting its benchmark rate.
* Wholesale sales edged up 0.2% to $53.1 billion in August. Gains in three subsectors, in particular the machinery, equipment and supplies subsector (+3.6%), more than offset declines elsewhere. Excluding the motor vehicle and parts subsector (-3.7%), which recorded the largest decline, wholesale sales rose 1.0%. In volume terms, wholesale sales edged up 0.1%. Sales in one miscellaneous industry (+7.4%), which includes wholesalers of logs, wood chips, minerals, ores and precious metals, reached its highest level since October 2011, more than offsetting a second consecutive decline in the agricultural supplies industry (-6.3%), which fell to its lowest level in nine months.
* Retail sales declined 0.3% in August to $42.4 billion. This second consecutive monthly decrease follows gains in the six previous months.
Sales were down in 7 of 11 subsectors, representing 76% of retail trade. Sales at gasoline stations declined 2.1% in August to their lowest level since late 2013, mainly reflecting lower prices at the pump. Following four consecutive monthly increases, sales at building material and garden equipment and supplies dealers decreased 1.8% in August. Sales at motor vehicle and parts dealers were down 0.4% in August, giving back some of July`s gains. Store types traditionally associated with back-to-school sales advanced in August, as sales at general merchandise stores rose 1.8% and sales at clothing and clothing accessories stores (+1.1%) rising for the fourth time in five months.
This week, major economic data reports will include the Industrial Product Price Index and Raw Materials Price Index on Wednesday; and GDP on Friday.
U.S. Economic Data:
* The National Association of Realtors reported that existing home sales surged 2.4% in September to an annual rate of 5.17 million units, marking the highest level since September 2013, although this year`s rate was still 1.7% below last year`s. Economists expected a rise to a 5.1 million unit pace from 5.05 million in August. One disturbing fact was that first-time homebuyers are still not making purchases, only accounting for 29% of sales. That`s well below the 40%-45% that experts consider ideal in a healthy market. Inventory of houses for sale was 2.3 million in September, equating to enough supply for 5.3 months at the current sales rate and short of the 6-month supply economists consider a healthy balance. The median sale price for a home last month was $209,700, up 5.6% from September 2013.
Prices have climbed year-over-year for nearly 3 years now (31 straight months).
* The Labor Department said that consumer prices edged up by 0.1% in September, after contracting 0.2% in August, as falling energy prices offset rises in food and housing to keep inflation at bay. The modest uptick was in line with economist predictions. Compared to a year earlier, the Consumer Price Index was up 1.7%, still below the 2.0% target of the Federal Reserve. So-called “core” CPI, which excludes the volatile food and energy segments, rose 0.1% also in September after a flat month prior. Ultimately, benign inflation keeps pressure off the Fed to raise interest rates.
* The Labor Department reported that initial jobless claims rose by 17,000 to a seasonally adjusted 283,000 in the week ended October 18 after declining the previous three weeks. Economists expected the rise. The four-week moving average, which is viewed as a better gauge of labor trends because it smoothes weekly volatility, sunk by 18,260 to only 281,000. That`s the lowest level since May 2000 and raising expectations that October should be a strong month for job creation.
* The Commerce Department showed that new home sales jumped to a six-year high in September, increasing 0.2% to a seasonally adjusted annual rate of 467,000 units. Economists expected an annual rate of 470,000. Meanwhile, August`s figure was downwardly revised from 504,000 units to 466,000 units. Big revisions in new home sales estimates are not unusual. Inventory of new homes listed rose 1.5% to equate to a 5.3-month supply at the current sales rate. The median price for a new home slipped 4% from September 2013 to $259,000.
This week, data in the States will include Durable Goods on Tuesday; FOMC Meeting Announcement on Wednesday; Initial Jobless Claims and GDP on Thursday; and Personal Income and Outlays on Friday.
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