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

Short bank stocks (ETF’s) and Long gold stocks. Good strategy? Not something he would do. He would go Long and Short bank stocks. Currently he’s long Bank of Nova Scotia (BNS-T) and Commerce (CM-T) and Short Royal (RY-T) and TD (TD-T). 6 weeks ago the picture was different. In gold he is Long Barrick (ABX-T) and Short Newmont (NMC-T). Wants to stay in the same sector to hedge out the industry Beta’s and isolate Alpha’s in the companies.

Natural gas. Was a bear on natural gas until a month and a half ago. A lot of people have been playing a spread, Long oil and Short natural gas. Probably need 4 to 6 more weeks to get through the inventory stuff. If we don't see a big selloff, then we are home free.

Oil. Discovery of a tremendously huge deposit in the Gulf of Mexico. Doesn't change anything since there won't be meaningful production until 2016-2017. In the meantime, there is a 7%-8% decline rate, which means we are under the gun to replace 4 to 5 million barrels a day.

Blue-chip Dow Jones Industrial Average. Chart shows a head and shoulders formation with a neckline at around 9000 so he is expecting a pullback to this mark and then going up to 1100-11500.

S&P 500. Expecting a decline by as much as 10%. Head and shoulders bottom formation has been forming for several months. Neckline of 900 has been broken which typically results in a pullback. This lines up with a seasonal pullback. Markets are a little overbought. Resistance is at 1300 and once head/shoulders is completed he thinks it can get there.

Market - Present market is overvalued and in an air pocket to be countered sometime between now and the middle of October followed by a failing rally maybe, which would be the in term top for the market followed by your more substantial 10%-15% correction. Key indicator of the failing rally are the small and mid-cap issues. Large-cap issues are probably going to be fine with earnings reports coming out for Q3.

US ETF Regulations. A number of proposals are being talked about which would mean greater restrictions and greater oversight's on various different types of instruments that might be potentially systemic risky. Doesn't believe it is going to be an issue with things like economic sector, common stocks, styles or even countries that could affect things like energy or commodities.

The rally in Natural Gas we have seen this month does not need to continue. The market was looking for the commodity that had not had a run yet. We are seeing some of the stocks price in what we see the futures curve looking like over the next 12 months. She thinks it is a bit aggressive. The rally could continue for another week or two. The fundamentals have not really changed in the last couple of weeks. Gas will not stay at the $2-3 level. It should hover around the $5-6 level.

Provincial government bonds. Most provinces issue debt from 1 to 30 years. The more liquid ones would be the provinces that are in the most debt such as Ontario, Quebec, BC and Alberta. On a 10 year term you are looking at about anywhere is from 75 to 100 basis points over a government bond give you lower-mid 4% yields. He is currently underway to this sector as he prefers corporate bonds but he does have exposure in the 30-year provincials.

XSB-T (iUnits Short Bond Market) and XBB-T (iUnits Cdn Bond Market) is not a bad way to participate in the bond market. This is a low-risk way of playing but potential returns are going to be low as well. As an active manager he would prefer you to be in a fund or individual bonds.

Gold. All-time high was $1032 set about a year ago and he believes it will break through this. If it does it should continue up to the $1200-$1300.

Natural gas. Short term not very happy with it and is bearish on pricing. Storage space will run out in the next 1.5 months. Surprised it is over $3 and expects below $3 going forward. Great buying opportunity. Not drilling and not spending money on it companies are not getting cash flow in order to drill again so there will be very quick production decline. Not expecting the problem to be cleaned up until the winter of 2010/2011. The longer low gas prices, the larger the rebound.

Oil. Expect it to trade roughly in the current range but couldn't get over $100 at several points of time in the next little while. Running out of cheap oil. Have been a lot of exciting discovery announcements out of Gulf of Mexico, offshore Brazil, offshore Ghana, etc., but it is very expensive.

TSX and S&P 500. Using the 200-day moving average as his guide, he knows that the index has no place to go but up. If you have a rising 200-day moving average, it means we are in a bull market. Short-term traders should pay attention to the 21-day moving average, intermediates to the 50-day and low traders to the 200-day.

Gold. Has tried to get through the $1000 area a number of times and believes it is now doing it. There is a rising 200-day moving average. Point and figure chart for 2008 and 2009 inclusive confirms that it is likely to go to at least $1500-$1600.