daytrades oct 11 pre-market, page-3

Stocks To Watch

Market Direction: The XJO gained 102 points for the week or 2.2%. The Australian market is up against resistance at the top of a trading channel which began about 5 months ago. From here 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 4,400 points. Not a lot has changed to the prognosis from last week. The MACD looks encouraging as does the stochastic and given the recent strength in commodity prices I am now leaning towards a breakout through the top of the channel this week. The Australian economy is continuing to perform well with very low levels of unemployment and continued jobs growth driven by booming exports to the Asian tiger economies.



One thing I find amazing at the moment is that the economic data is showing signs of weakness and yet the DOW continues to grind its way higher. In A$ terms the market is actually falling due to the continuing devaluation of the US dollar. For the week the index gained 177 points or 1.6%.

Last weeks jobs report was far from encouraging and confirmed that the recovery continues to fail to spread to the labour market. So far there has not been any recovery in the jobs market during the pick up in economic activity which followed the GFC. In September the US economy lost a total of 95K jobs for the month versus the expectation for a 1K rise. In terms of non farm employment 39K jobs were lost for the month versus an expected gain of 23K. In my opinion the chances of a double dip recession are increasing and, in actual fact, I wouldn't be surprised if a second recession has actually already begun in the US.

Looking at the chart the Dow is currently up against resistance at the top of a channel. If it breaks out to the upside then the next target is strong resistance at 11,200. Based on economic data I would be surprised if it went much further than this to the upside. If the market starts to fall from here then the Dow could head towards the bottom of the channel at around 10,250 points.




Economic Data:
The most significant data coming out this week is retail sales for the month of Sepember on Friday at 11:30pm and Consumer Sentiment early on Saturday morning. If retail sales show any signs of weakness or if consumer sentiment falls, it might be the catalyst for the market to finally reverse the trend of the past 6 weeks and start falling. If the data is reasonable then the market will probably head to the next resistance at 11,200 points. Given recent economic data I will not be surprised to see weakness in both numbers which will not bode well for the Christmas retail period which begins shortly. The reporting season gets underway in earnest this week. Big companies reporting include:

GBP BOE Governer Speaks - Caplin Conference Washington DC - Monday 10:00am
AUD Home Loans - Monday 11:30am
GBP CPI y/y - Monday 7:30pm
USD FOMC Meeting Minutes - Wednesday 5:00am
CNY Trade Balance - Wednesday
USD Fed Chairman Bernanke Speaks - Business Innovation - 7:10pm
GBP Claimant Count Change - Wednesday 7:30pm
USD PPI m/m - Thursday 11:30pm
USD Trade Balance - Thursday 11:30pm
USD Unemployment Claims - Thursday 11:30pm
USD Fed Chairman Speaks - Monetary Policy Objectives and Tools in a Low-Inflation Environment - Friday 11:15pm
USD Core CPI m/m - Friday 11:30pm
USD Core Retail Sales m/m - Friday 11:30pm
USD Retail Sales m/m - Friday 11:30pm
USD Prelim UoM Consumer Sentiment - Saturday 12:55am

US Reporting Season:
Tuesday: Intel
Wednesday: JP Morgan Chase
Thursday: Google
Friday: General Electric


AVB/AVBOB: What a great performer AVB has been in recent weeks, delivering many holders a 10 fold increase in the value of their investment. Speculation is likely to increase this week as results from a further 20 holes from the Rio Verde Copper Project are due to be received any time. As per my previous post they include holes 83 to 91 which are lines 30-40 metres on either side of the line where they hit 9m @ 50.49% Cu. On the lines on both side of the two lines where holes 83-91 have been drilled, there were high grade intercepts of 4m @ 21.53% Cu to the Northwest and 6m @ 21.02% Cu to the Southeast. Based on these actual results and the spacing between the lines I would be very surprised if there aren't some extremely good assays in the two lines where holes 83-91 have been drilled since they are sandwiched in between lines where substantial assays have been returned. The strike area of the copper rich zone appears to be at least 140m in length and approximately 30 metres in width as shown on the map below. An update on the company's iron Ore Project on the 29/9 indicated that many of the awaited holes have logged abundant copper mineralization. News Due: Assay results from holes 83-102 from the company's Rio Verde copper project in Brazil. Price Target: The stock easily exceeded my target of 13.5 cents last week and powered ahead to a high of 20.5 cents before a period of long overdue consolidation began. That period of consolidation looks to have finished on Friday with the price breaking out from a flag formation. The next target of this breakout is 25 cents however as mentioned earlier the results will need to live up to expectations for it to get there. Disclosure: No stock Held



CEO: The level of interest in CEO increased dramatically last week with the highest weekly volume since January. The new MD has extensive experience in the coal industry so the company is now expected to move towards the acquisition of coal assets in Mongolia. I expect speculation that a deal is imminent will generate further demand for shares this week. News Due: News on potential acquisition of coal assets in Mongolia. Price Target: The price finally broke out above 1.8 cents this week with the initial target being 2.2 cents, which could be achieved this morning. The stock finished with a bullish marubozu candle on Friday (the open was the low and the close was the high of the day) which showed the buyers were in control. Disclosure: Holding CEOO



MBA: I have little to added to my previous comments about MBA except that I expect the JV with 4th Screen Advertising to be announced this week (I believe that the CEO is back in the office this week). For the benefit of new readers I have left the comments about fundamentals below. Three 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: The stock has retraced from recent high of 4.6 cents and the uptrend support lies at 3.5 cents so hopefully that level will hold today. If the stock breaks out to the upside on an announcement then I expect prices around the low to mid 5's to be achieved. Disclosure: Holding MBA



SVL/SVLO: Again I have little to add to my commentary for SVL this week other than the fact that the resource update (likely to be an upgrade) is likely to come any day. With silver up nearly 3% on Friday night I expect interest in the sector to remain strong this week. 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: Although the indicators on the chart are not bullish the support for the stock should kick in at 20.5 and 20 cents. I'd be surprised if it went lower than this given the potential of the Webbs silver project. 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: A pennant has formed on the chart with a breakout level of 4.2 cents. A close above this level would give a target of 6.2 cents. Disclosure: Holding BLT



Good Luck this week.