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The Week of November 18th to November 24th, 2013 “A Brief Look Back Into Tomorrow”

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Six weeks and counting. And as we enter the third week of November, that’s what investors of American stocks were wondering – Can the Dow Jones Industrial and S&P 500 Index run their string of six consecutive weekly gains to seven? Meanwhile those invested in Canada continued to wait patiently for the TSX to play catch-up to its American counterparts while watching the much unloved TSX Venture Exchange continue to bend under the weight of tax loss selling and a declining price of gold bullion.

 

 

The Keg Royalties Income Fund (KEG.UN-T) got a real shot in the arm on Monday, November 18th when it was announced that founder David Aisenstat has sold a 51% interest in the 102-steakhouse restaurant chain to Fairfax Financial Holdings (FFH-T) for an undisclosed amount of cash.

 

 

Statistics Canada reported that foreigners bought an additional $10.79-billion of Canadian equities in September, the largest monthly acquisition since the market meltdown of 2009.

 

 

Jinko Solar Holdings (JKS-N) shares’ helped the market climb higher by rising by almost 13% to US$33.30 when the solar panel maker reported much better than expected 3rd quarter financials.

 

 

Meanwhile, the fact that gold stocks are trading at their most oversold position of the past 30-years goes in direct contrast to the World Gold Council’s (WGC) latest report that revealed that the physical demand for gold bullion rose by 26% in the past year to a record        2.896-tonnes.

 

 

Forbes reported that their list of the world’s billionaires grew to 1,426 individuals last year with a combined net worth that rose by 17% to a record US$5.4-trillion.

 

 

Nothing reacts to news, either good or bad, more than a pharma development company, as was the case on Tuesday, November 19th, when the share price of Intellipharmaceutics Int’l. Inc. (I-T) exploded to the upside by some 160% to $5.09 on word the U.S Food & Drug Administration had granted final approval of the company’s dexmethylphenidate hydrochloride extended-release capsules for the 15 and 30 mg strengths.

 

 

Similarly, the shares’ of Cardiome Pharma Corp. (COM-T) surged up by over 22% to $5.10 when the company announced they had successfully purchased a private Swiss based pharmaceutical company Correvio LLC.

 

 

And the share price of Sears Canada Inc. (SCC-T) touched a new 52-week trading high of $19.89, not because the retailer reported a great quarter, but because it announced a special $5.00/share special dividend to distribute to shareholders the funds it had received from selling its vast real estate holdings and closing of stores.

 

 

When one car goes up in flames it could be an oddity. When two go up it could be a coincidence, but when three o0f them burn to the axles it is a concern to shareholders who have been putting downward pressure on the share price of high-end electric auto manufacturer Tesla Motors Inc. (TSLA-Q).

 

 

With the annual Christmas shopping season just ahead of us, it is noteworthy that according to work done by CNBC, the annual global cost of shoplifting reached an incredible      US$112-billion in 2012.

 

 

Markets that are looking for a reason to go down will, as was the case on Wednesday, November 20th, when the newly released minutes of the last U.S Federal Reserve (Fed) meeting hinted that the current $85-billion a month bond purchasing program, that has kept the economy stimulated for some 2-years now, may soon begin to be wound down. Thus, with the thought of economic tapering and perhaps higher interest rates on a much closer horizon, the markets sold off in tandem and gold bullion nosedived by $28.90 to end the day at US$1,244.60-an-ounce.

 

 

And to add salt to the wound, the shares’ of Augusta Resource Corp. (AZX-T) get slammed by over 74% to a new 52-week low of $0.48 when the anti-mining Save the Scenic Santa Rita’s picked this day down day for resources to release a disparaging report on the company’s Rosemont Arizona copper project.

 

 

If you really like to wear your stretchy yoga-pants, you are among many others as Canaccord Genuity reported that sales of the athletic apparel companies such as lululemon athletica Inc. (LULU-Q) or Under Armour Inc. (UA-N) have outpaced those of traditional clothiers by some 17% over the past 5-years.

 

 

Another encouraging economic indicator was released on Thursday, November 21st when Statistics Canada reported that the number of people receiving unemployment insurance benefits fell by 1.4% in September to 503,800 recipients.

 

 

Then on Friday, November 22nd, Statistics Canada also informed us that the nation’s inflation rate fell by 0.4% in October to an annualized 0.7%, and that retail sales, with the help of a 4-year high, 5% increase in new auto sales, rose by 1% in September to a record           $40.7-billion.

 

 

All of which helped push the Bloomberg Nanos Canadian Confidence Index up to 2½-year high at the end of September.

 

 

The resource sector finally got a much need boost when the price of Pretium Resources Inc. (PVG-T) surged intraday up by over 97% to $6.08 when Robert Quartemain’s much maligned mineral development company reported that the 8,090 tonne bulk sample from its Valley of the Kings project in North-west British Columbia had produced a much better than expected 4,215 ounces of gold. (If you’re having trouble with the math – that’s well over ½-ounce of gold per ton of gold.)

 

 

Like a popular movie that is held over for extended play, banks and consumer friendly stocks once again led the Canadian markets higher with CIBC (CM-T) at $91.62, The Keg Royalties Income Fund (KEG.UN-T) at $17.50 and Whistler Blackcomb Holdings (WB-T) at $16.76 all established new TSX 52-week trading highs, while precious metals issues continued to drag the market lower, with Allied Nevada Gold  (ANV-T) at $3.24, Detour Gold (DGC-T) at $4.41 and Northern Dynasty Minerals (NDM-T) at $1.14 all edging down to new 52-week trading lows.

 

 

Index records were again broken during the week with the DJIA rising above 16,000 for the first time ever to reach a new closing high of 16,045, along with the S&P 500 that crossed above 1,800 for the first time to close at a new all-time high of 1,805.

 

 

Technical analysts Olaf Sztaba & Ron Meisels – “We have been fans of this bull market since its early days and we still are. However, the bullish bandwagon has recently become quite crowded and has some participants have become too comfortable in their bullishness. Such complacency has been the harbinger of a correction in the past. After all, bull markets don’t like company.”

 

 

For the WeekThe Dow Industrials gained another 0.63% to end the week at 16,045, with the S&P 500 Index gaining 0.36% to 1,805 as each of them extended their run of consecutive weekly gains to seven. The NASDAQ Exchange improved by 0.15% to finish the week at 3,992. North of the border, the resource laden TSX Composite Index eased back down by a marginal 0.03% to 13,478 and the TSX Venture Exchange gave back by 0.21% on the week to 932.

 

 

Gold bullion ended the week down by 3.41% to US$1,243.40-an-ounce, while crude oil eased by 0.40% to US$94.80-a-barrel and the CRB Commodities Index eased by a further 0.34-points to 275.21.

 

 

The Canadian dollar lost 0.75% against its American counterpart to end the week at US$0.9500.

 

 

And Finally – Homer Simpson, (who some say hails from Winnipeg, Manitoba), would be proud in that Conference Board of Canada says that the Canadian beer industry supports some 163,200 workers or about 1% of the Canadian workforce and that every $1.00 spent on beer adds another $1.12 of gross domestic product or GDP to the economy. (Woo Who!).

 

Posted November 25, 2013

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