A Comment -- General Comments From an Expert (A Commentary)

Quantitative easing is driving the market. If that stops then that is sort of the end. GDP ratio to Debt is at .289. Currently we are at $3.50 of debt for every $1 of GDP, which is where productivity of debt falls to zero. Unless US continues to borrow a tremendous amount of money, their economy will tend to retreat.

Bank Stocks? The 6 bank stocks are giving mixed messages. 2 of them have given him clear Sells. 2 of them have hit ceilings and look as if they are going back down again. Remaining two, TD (TD-T) and Scotia (BNS-T), would be rated as good solid holds.

Strike price for writing a covered call? (Covered Call is where you buy a stock and sell someone else the right to buy that stock from you at a fixed price, usually in 6 months.) Strike price on most larger capped companies are in $2 increments. Likes to be very close to “at the money” option. Give or take above or below the strike price of about $0.25 either side.

US$ Hedge? This is basically buying into the US market but without exposure to the US$. Rather than buying a US ETF with us$, he buys a Cdn ETF that is based upon the S&P500. The ETF provider will put on a futures contract such that they are hedging exposure to the US$.

Converting a diversified portfolio into ETFs instead? Before doing this you should look at the tax implications. Every portfolio he manages has iUnits S&P/TSX 60 (XIU-T) in it as well as the iShares S&P 500 (CAD-Hedged) ETF (XSP-T).

Copper? Bullish on copper and a lot of the base metals. There isn’t a specific copper ETF right now but there’s going to be one coming from BMO in the next week or two. He would be more inclined to look at the S&P/TSX Base Metals ETF (ZMT-T), which has a bunch of metals in there.

Markets. TSX hit a high for the year on Jan 3/11. Dropped 150 points so we’ve been in a flat correction, which he expects to continue until mid-February. After that look for a continuation in the upward movement. Looking for a target of 15,500 this year. In the midst of the presidential cycle which is the sweet spot until June. S&P 50. He has a target of 1,450.

Gold. Broke a short term support level today of around 1315. Usually from around the end of January until the end of February it climbs higher because 1) Chinese new year (Feb 3) and 2) the PEDAC convention around the beginning of March.

Oil. Very strong seasonality from around the 3rd week in February through until May. A little too early to go in on a trade but has a hunch it’s going to be a really good one coming in the spring. Looking for oil to hit $100 per barrel by some time this summer.

Copper. Historically its sweet spot is from around the end of January though until May. Expects this will happen again this year. Demand for copper will increase as economies improve. Inventory levels are at historic lows.

Entry and Exit points? Starting point is to know the seasonality of the sector involved. (Can be found on his son’s site at www.equityclock.com) You then want to look at technicals. as to whether it has been overbought or oversold based on short term momentum indicators. You also want to look at fundamentals.

Gold. One of the better indicators for gold is the 200-day moving average. Ever since 2002, when gold has come down to the 200 day moving average it has been a classic opportunity to Buy. This would be around $1285 and we are not there yet. Doesn’t think it will get down there since the US$ is under pressure.

Gold. Risky play. Gold does not do well in a rising interest rate environment. If the US economy is on a track of better growth and getting down its deficit, then gold is not the currency you want to be in.

Corning (GLW-N) or Suncor (SU-T)? You are better off in energy so Suncor would be his choice. A terrific company with long life assets and growing production. Expects dividends will start to grow. Buy on a pullback.

MiGaming (?). Software company that works with resorts and phone companies for gambling solutions. Also have arrangements with some countries to do national lotteries. Very well run company. Stock is exceptionally thin. Likes the long term but will take a while for them to kick the contracts in and get them going.