daytrades oct 18 pre-market, page-2

Stocks To Watch

Market Direction: For the week the XJO gained 7.6 points or 0.2%. The Australian market continues to trade near resistance close to the top of the trading channel which began about 5 months ago. There has been little change to my view from last week which was that the XJO will either power through the top of the channel and head towards 5,000 points or it will head towards the bottom of the channel at around 4,400 points. It looks like their might be a positive cross on the MACD this week whilst the slow stochastic has already crossed over. Given the economic data out of the US on Friday was not disastrous I am still leaning towards a breakout through the top of the channel and a move towards 5,000 points for the XJO. The smaller stocks seemed to take a break in the latter part of last week. Whether that is an alarm bell or just a pause in a rising market remains to be seen.



For the week that past the DJIA gained 57 points or 0.5%. If we compare this move with that of the AUD/USD exchange rate which saw the AUD climb 0.6% versus the US dollar the DJIA actually fell in A$ terms. If we run the same comparison over the past month then we see that the DJIA is up by 4.4% compared to the A$ which is up by 4.9% over the same time period. So over the past week and the past month the DJIA is actually down in A$ terms. What this tells me is that a lot of the recent rise in the DJIA is most likely being driven by the weakness in the greenback.

Last weeks economic data was not disastrous but it also didn't paint a picture of an economy that is gaining pace. The most concerning data was a rise in the weekly jobless claims which came in at 13,000 above the previous week and 14,000 above expectation, so still no encouraging signs in the labour market. On the other side retail sales were much in line with expectations and the preliminary consumer sentiment reading was relatively stable.

The Dow is still up against resistance at the top of a trading channel. If it breaks out above resistance then the first target still stands at 11,200 where previous resistance is. I still don't see the index going much higher than this unless the US dollar collapses further which is possible if the FED announces further quantitative easing (money printing).

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Economic Data:
I would argue that the most important data coming out for our market this week will be the Chinese economic growth numbers coming out on Thursday afternoon. Apart from that the big event for next week is the G20 meetings taking place on Friday and Saturday.

USD TIC Long-Term Purchases - Tuesday 12:00am
AUD Monetary Policy Meeting Minutes - Tuesday 11:30am
EUR German ZEW Economic Sentiment Tuesday 8:00pm
USD Building Permits - Tuesday 11:30pm
GBP BOE Governor Speaks - Wednesday 5:50am
GBP MPC Monetary Meeting Minutes - Wednesday 7:30pm
USD Beige Book - Thursday 5:00am
CNY CPI y/y - Thursday 1:00pm
CNY GDP q/y - Thursday 1:00pm
GBP Retail Sales m/m - Thursday 7:30pm
USD Unemployment Claims - Thursday 11:30pm
USD Philly Fed Manufacturing Index - Friday 1:00am
ALL G20 Meetings - Friday
EUR German Ifo Business Climate - Friday 7:00pm
ALL G20 Meetings - Saturday

The US reporting season heats up this week with many major companies reporting their results including:

US Reporting Season:
Monday: Apple, Citigroup, IBM
Tuesday: Bank of America, Goldman Sachs, Johnson & Johnson, Coca Cola, Yahoo
Wednesday: Delta Airlines, eBay, Merck, Morgan Stanley, Boeing, US Airways, Wells Fargo,
Thursday: Amazon, American Express, AT&T, Caterpillar, Continental Airlines, Xerox
Friday: Honeywell,


MBA: There was no announcement regarding the JV with 4th Screen Advertising last week so I would expect one this week. For the benefit of new readers I will continue to leave the comments about fundamentals below. Four weeks ago the company announced a placement of 10m shares at 3 cents to raise $300K whilst the shares were trading at 2.1 cents. This represented a 43% premium to the last sale price. It also agreed to a secured loan facility for a further $1m from the same party. This takes care of funding issues for the company in the near term. The company has been operating in a tough environment and only made $80K on $12.1m dollars in revenue last year. The MD has committed to stay with the company to implement a 3 year strategic plan which should see the company generating profits in the future. The potential of this company is hard to value however the private British company MIG, which owns 4th Screen Advertising has a turnover of about $100m GBP and is profitable indicating the potential of MBA in future years. According to the MD Australia is about 18 months behind Europe in terms of the development of the mobile advertising business. News Due: Final joint venture agreement with British Company 4th Screen Advertising including details of its significance for MBA. Price Target: Provided support at 3.2 holds I have a target of around 5.7 cents based on a move of the same size as the previous one from 2.1 to 4.6 cents. If 3.2 does not hold then 3 cents is the next level of support. Disclosure: Holding MBA



SVL/SVLO: I don't have much to add to my comments on SVL this week other than that the price action on Friday was very encouraging in that large bids were not being hit meaning that the supply of stock available appears to be declining. The resource update (which based on drilling results released is likely to be an upgrade) must be due to come out any day. With silver up considerably over the past week any decent upgrade is likely to be very favourably received by the market. SVL's previous JORC resource was for 4.5m ounces of silver at a grade of 210 g/t au. Based on recent drilling results I am hopeful that the resource update to be announced soon will be a substantial upgrade on the previous resource estimate at the company's Webbs Silver Project in North Eastern NSW. The company's statutory accounts pointed to the potential for a significant upgrade where in the summary it stated "Updated resource model currently underway with significant upgrade on existing model expected". Also of interest was the following reference which stated that the "IP geophysics program shows high chargeability anomalies to the east and west of the main Webb's Lode system suggesting potential for parallel mineralization". So whatever the result is of the current resource update there appears to be potential for a much larger resource at the Webb's Silver Project. News Due: Updated resource estimate for the Webbs Silver Project and based on drilling results I would expect a significant upgrade to the resource appears likely. Price Target: Based on the trading channels shown on the chart below I expect the price to head towards 30 cents this week. Disclosure: Holding SVL/SVLO



BLT: Benetec and the CSIRO appear to have finally prevailed in the long running patent dispute with the USPTO involving the re-examination of the '099 Graham patent which is involved in the field on DNA-directed RNA interference (ddRNAi) in humans. This result provides new impetus for expanding license negotiation with all US firms working in this field. I would also expect that there will be potential to pursue new patents in the field where the CSIRO and Benetec have conducted additional work. I expect there will be good trading opportunities in the lead up to the confirmation that the patent has been re-issued. News Due: Issue of the "Notice of Intent to Issue Ex Parte Re-examination Certificate" by the US Patent Office. Within several weeks of this an "Ex Parte Re-examination Certificate" will issue which is analogous to the re-issue of the '099 Graham Patent to Benetec. Price Target: The pennant is still in play with a breakout price target of 6.2 cents. I would not increase my position now until a breakout to the upside is confirmed because the slow stochastic has crossed down and the MACD looks set to do the same. Based on anticipated news this is one that might be worth watching for a buy signal. Disclosure: Holding BLT



SHE/SEHOC: SEH was a strong performer in the past two weeks with a spike on the back of an announcement that flow testing had begun at its Ordos basin project in the Shanxi province of China. 2.7Tcf of resources have been independently verified on the Tuban prospect. Should flow testing results be positive then a breakout to the upside is likely. News Due: Flow testing results from the Tuban prospect in the Shanxi province of China. The project is in partnership with CUCBM and PetroChina CBM. Price Target: A flag has formed with the breakout at 6.5 cents and a target of around 9.5 cents.. Disclosure: No Stock Held


Good Luck this week.