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[Chris G]

Leibovit Files

Tuesday, December 17, 2013
by Mark Leibovit

Check out my Leibovit VR Tutorial for UNG and AVGO


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STOCK MARKET - ACTION ALERT -BEAR- It's 'Turnaround Tuesday', the FOMC reports tomorrow and Friday is Options Expiration. We stopped out (even) of our inverse ETFs yesterday morning, but looking at the SPX it managed to rally right to resistance in the low 1790s. If we fail from those levels and, in particular, we take out last week's lows, watch out below! With 'Turnaround Tuesday' today I would look for at least a modest market retracement here. I am on the sidelines with regard to stock indexes, but with a bearish bias, especially if negative volume appears and/or last week's lows fail to hold. Meanwhile, as I mentioned yesterday, the market is listening to sleigh bells certainly not uncommon this time of you. Though anything is possible, it would be hard to believe that the Grinch will steal Christmas this year. In other words, the FOMC will likely stand pat.
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COMMENTARY:

Even though equities registered solid gains, all ten sectors remain in the red for the month. Countercyclical consumer staples, health care, telecom services, and utilities are down between 1.0% and 2.7% in December while losses among cyclical groups are limited to no more than 1.2% (consumer discretionary and financials).

On the economic front, revised productivity data for the third quarter showed an increase of 3.0%, which was above the 2.7% increase that had been expected by the Briefing.com consensus. Unit labor costs for the third quarter were revised lower to reflect a decrease of 1.4% (from -0.6%). The consensus expected the reading to reflect a decrease of 1.3%.

Separately, the Empire Manufacturing Survey for December registered a reading of 1.0, which was up from the prior month's reading of -2.2. However, the reading came in below the 5.0 expected by the Briefing.com consensus.

November industrial production increased 1.1% while the Briefing.com consensus expected an uptick of 0.4%. Meanwhile, capacity utilization hit 79.0%, which was better than the 78.4% expected by the consensus.

Lastly, the October net long-term TIC flows report reflected an inflow of $25.5 billion into U.S. denominated assets. This followed the prior month's $25.5 billion inflow.

Today, November CPI, core CPI, and the third quarter current account balance will all be reported at 8:30 ET. Separately, the NAHB Housing Market Index for December will be released at 10:00 ET.
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The DJ was up 129.21 at 15884.57. My analysis now projects a possible 1000 point decline. The all-time high of 16174.51 was posted on November 29.
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The S&P 500 was up 11.22 at 1786.54. My analysis now points to a potential 100 point decline. VRtrader Platinum subscribers were stopped out even of our INVERSE ETF for the S&P 500 at this time. The record high was posted on November 29 at 1813.55. If we breakout, the next upside target is 1857 and my 100 point decline projection would be called into question. Support is at 1729, 1700, 1646.47, 1627, 1610 and then 1550.
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The Dow Transports were up 64.73 at 7151.16. It touched a new record high on Monday, December 2 at 7304.49 intraday. Next upside target remains at 7750.00 when and if that high is penetrated.
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The Russell 2000 was up 12.80 at 1119.85. VRtrader Platinum subscribers were stopped out even of our INVERSE ETF for the Russell at this time. On November 29, it traded at 1147.00, a new record high. I have no clear upside target for the Russell at hand and the most recent volume is negative coming off the high. Support is at 1075.00, 1037.86, 1009.46 and then 960.00.
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The Nasdaq Composite was up 28.54 at 4029.52. It touched a new record high of 4081.78 on December 9. Once we clear that high the next possible upside includes 4100 and 4500. It sure appears Bernanke wants the Nasdaq to trade back up to its record high of 5132.52 from 13 years ago. I believe the date was March 12, 2000!
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The CBOE Volatility Index (VIX), which measures the cost of using options as insurance against declines in the S&P 500 (i.e., the higher the number, the more fear in the marketplace) was up .27 at 16.03 touching 16.08 intraday. The recent highs are 21.34 on October 9 and 21.91 on June 24 -the highest highs since the March 15 low of 11.21 - the lowest level since February 2007. The higher we go in the VIX, the more likely a bear cycle is upon us with the opposite being true for a bull cycle.
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Eight of the nine market sectors were higher on Monday:

XLB +0.41% Materials
XLE +0.87% Energy
XLF +0.62% Financial
XLI +0.94% Industrial
XLK +0.99% Technology
XLP -0.02% Consumer Staples
XLU +0.53% Utilities
XLV +0.19% Health Care
XLY +0.65% Consumer Discretionary
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NYSE Advance/Decline 2070/1046.
NASDAQ Advance/Decline 1718/802.
NYSE UP volume to DOWN volume was 2 to 1.
NASDAQ UP volume to DOWN volume 3 to 1.
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>From the VRtrader.com website here is a link to World Market Indices:

http://www.vrtrader....rkets/index.asp
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ECONOMIC CALENDAR:
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Courtesy of www.equityclock.com:

Economic News This Week:

November Consumer Prices to be released at 8:30 AM EST on Tuesday are expected to increase 0.1% versus a gain of 0.1% in October. Excluding food and energy, November Consumer Prices are expected to increase 0.1% versus a gain of 0.1% in October.

Housing Starts to be released at 8:30 AM EST on Wednesday are expected to increase from 891,000 in August to 900,000 in September to 920,000 in October and 950,000 in November.
Decision from the FOMC meeting is expected to be released at 2:00 PM EST on Wednesday.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to fall to 333,000 from 368,000 last week.

November Existing Home Sales to be released at 10:00 AM EST on Thursday are expected to slip to 5,000,000 units from 5.120,000 units in October.

December Philadelphia Fed to be released at 10:00 AM EST on Thursday is expected to slip to 5.0 from 6.5 in November.

November Leading Economic Indicators to be released at 10:00 AM EST on Thursday are expected to increase 0.6% versus a gain of 0.2% in October.

Third estimate of third quarter real GDP to be released at 8:30 AM EST on Friday is expected to remain unchanged from the second quarter estimate of 3.6%.

Canadian November Consumer Prices to be released at 8:30 AM EST on Friday is expected to increase 0.1% versus a loss of 0.1% in October.

Canadian October Retail Sales to be released at 8:30 AM EST on Friday are expected to increase 0.2% versus a gain of 1.0% in September.

No Earnings Reports This Week
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METALS - ACTION ALERT FOR THE METALS - BUY -The key for the bulls is that 1212.43 in Spot Gold holds. It's a flip of a coin whether it will nor not. If the rally resumes and we clear 1262-1278, we may have seen a near-term bottom. Let the market tell us. Bearish sentiment is quite high and a rally here (perhaps a big one) would not surprise me, but it's too early to call a big bottom, though some metal shares are showing accumulation patterns. Meanwhile, under 1212.43, we could very likely see a test of the big 1186.40 low from June 28. A potential break toward 1000 cannot be discounted, but I'm taking it one day at a time. So far, historic 'seasonal' patterns which are usually strong in February have failed gold this year, but things can change quickly. I am not officially predicting it, but the least likely expected scenario for gold and the metals would be an explosive move higher. Important resistance levels are way above the market and include: 1263, 1292, 1330, 1362, 1378, 1433 and 1500. Support is at 1186, 1080 and 922. Bottom line: I'm a long-term bull, but the bear's claws are still clinging on.
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Spot Gold was up 6.92 at 1240.95. The December 4 low at 1212.43 is part and parcel of the current retesting process of the June 28 low of 1186.40. On the upside resistance is 1263, 1292, 1362 and 1375 and ultimately the August 28 peak at 1432.38.
(Kitco News) - With the Federal Open Market Committee meeting slated for Tuesday and Wednesday, market participants are split on how gold prices will trade next week, although there is a nominal higher number who see weaker prices. In the Kitco News Gold Survey, out of 34 participants, 23 responded this week. Of these, eight see prices up, while nine see prices down and six see prices sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week, survey participants were evenly divided over gold's direction. As of noon EST Friday, February gold on the Comex division of the New York Mercantile Exchange was up about $6 an ounce for the week. Several participants said they're on the sidelines in gold until after the FOMC meeting and others said they expect the back-and-forth trading gold experienced lately to continue.
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Spot Silver was up .41 at 19.98. We are testing its June 27 low of 18.31 with risk thereafter into the 13.00-15.00 range. It will soon be time to back up the truck. Stay tuned.
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Platinum was unchanged at 1354.50. Platinum has recently traded as high as 1550.50 on August 27. Under 1303.00, look for a 1250.00 next target. The big, big low was at 731 on October 27, 2008 and the big, big record high of 2308.80 that preceded it was back on March 4, 2008.
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Palladium was unchanged at 717.50. Palladium had recently held support at 710.00. On June 10, we touched a new recovery high of 775.00 before we nosedived to 633 (the June 26 low). That pretty much defines the current near-term trading range. Under 633, downside potential is next to 526. Above 775, look towards the 825-875 range and possibly 1000+. The big, big low was posted back on November 28, 2008 at 154 and hit an all-time high of 968.00 back in December, 2000. VRtrader Platinum subscribers are currently long Palladium via an ETF.
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The Philadelphia Gold and Silver Index - the XAU (for shares) - was up .79 at 82.94. We touched 80.49 intraday Thursday which was the lowest low since the recent peak of 115.21 posted on August 27. Should we clear 115.21, look for 116.20 and 127.00. Under 82.28 (the June 26 low), downside potential (risk) could be to 65.00. The 'big picture' high was 232.72 in December, 2010.
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Copper was up .0225 at 3.3565. Resistance remains at 3.39, 3.44, 3.48, 3.5605, 3.5905, 3.7935 and the 3.8520 high from September 14, 2012. . Under 3.0065, next support (a possible target) is 2.85. The record high of 4.6495 was posted on February 15, 2011. Recall, Copper had hit a bear market low of 1.2710 back on December 26, 2008.
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The December 13 Newsletter is now available and can be purchased at www.vrgoldletter.com. The Leibovit VR Gold Letter tracks precious metals, guns and energy.
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BONDS - ACTION ALERT - NEUTRAL - Thirty year bonds down 9/32 at 129 12/32. Treasuries registered modest losses as the 10-yr yield ticked up one basis point to 2.88%. The thirty-year bond bottomed at 129 28/32 on August 22 and have subsequently rallied to 135 24/32 on October 24. We are now likely to break to new lows. That said, the consensus view has been talking about higher interest and lower bond prices, so it only makes sense that a bond rally could resume. The July 27, 2012 peak was at 153 11/32. The lowest recent low was posted on August 22 at 129 28/32.
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CRUDE OIL - SUMMARY
Crude was up .88 at 97.48. It is now headed higher targeted in my work to 102.00, possibly 107.00. Stay tuned. I am watching the retracement. Crude Oil traded down to 91.77 (near my 90.00 trading objective) on November 27, a new reaction low. It appears we may now have a shot at trading back near 102.00 or higher. Crude traded as high as 112.24 on August 28.
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NATURAL GAS - SUMMARY
Natural gas was down .072 at 4.279 and traded at a token new high of 4.443 intraday on Friday. Next potential upside could now be 4.80 following a retracement. VRtrader Platinum subscribers are long the Natural Gas ETF. Natural gas hit a 10-year low of 1.902 on April 20, 2012.
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US DOLLAR AND OTHER CURRENCIES - SUMMARY
The U.S. Dollar Index was down .14 at 80.074. VRtrader Platinum subscribers are currently still long the U.S. Dollar ETF. Previously, The Dollar touched 78.998 on October 25 down from the recent July 9 peak of 84.753. This now defines the near-term trading range. Above that high there is potential to 86.00, 88.80 and later into the 90s. Below that low we could see 76.00 and possibly 70.00. In my view the big bear market in the U.S. Dollar is still the primary trend, i.e., the U.S. Dollar may only be the 'best horse in the glue factory'. When and if we break under 70.008, the correction resumes, possibly quite significantly. My downside target range is a low target of .30 and a high target of .66 - both likely the result of an ultimate devaluation. Its recent low was posted on September 14, 2012 at 78.601.
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URANIUM - SUMMARY
Spot Uranium's posted on www.uxc.com was down 1.25 to 34.75 at the December 9th posting. Please note that this is only an estimate of the cash market. Uranium has swung from the June 13, 2007 high of 154.95 down to present.
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The Canadian Dollar (using FXC as our surrogate) was up .08 at 93.91. We touched 92.93 on December 5, the lowest low since the September 14, 2012 high at 102.96. If you draw a downtrend line from the September 14, 2012 peak at 102.96, you can see a breakout would occur above 97.46. Traders would be short the Canadian Dollar until indicators change.

http://tinyurl.com/lz4bar9

As reported, downside risk was first to the 93.00 zone (achieved) and then possibly to 87.00. Upside potential is the 100-101 range if and when we clear 99.23. Above there, look for the 105.59 peak from July, 2011 and the 113.02 peak from November, 2007. Support numbers are 93.78, 93.20, 92.50 91.82, 91.00, 89.75, 87.50 and 85.18. Resistance is 97.50, 99.24. 101.74, 102.07, 103.08, 105.59, 108.00, 110.00, 113.00. We need a rally above 101.29 to re-establish the uptrend.
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TSX - ACTION ALERT - NEUTRAL
The TSX was up 58.71 at 13184.41. We traded at 13517.02 on November 22 where we hit a short-term top followed by a Leibovit Negative VR. A breakout above that level would be needed for me to consider the long side here with next upside potential then at 13680.00. Major support lies at 11759.04 (the June 24 low) and then 11,400.
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ACTION ALERT - NEUTRAL
The TSX Venture was down 3.81 at 890.66. Resistance is 974.38 then 1017.59. Recent support is the double-bottom formed comparing the 859.31 low from June 27 to the July 9 low of 873.05. Under those lows, look for support at 830.00 and 780.00 on the way down.
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CANADIAN SECTORS:

Energy
264.99 -0.59 (-0.22%)
Financials
224.90 1.45 (0.65%)
Health Care
84.02 1.12 (1.35%)
Industrials
161.60 0.65 (0.40%)
Info Tech
33.28 0.49 (1.49%)
Metals & Mining
715.16 0.15 (0.02%)
Telecom
116.40 -0.16 (-0.14%)
Utilities
200.18 -1.01 (-0.50%)
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KEY FOREIGN MARKETS:
GERMAN DAX:
Up 157.10 at 9163.56.
SWISS MARKET SMI:
Up 26.37 at 7856.27.
SHANGHAI COMPOSITE:
Down 35.21 at 2160.86.
NIKKEI:
Up 148.39 at 14301.30.
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IN THE NEWS:
---------------------------------------------From Yale Hirsch:
My 1987 Stock Trader's Almanac was dedicated to THE NEW PROGNOSTICATORS. Mark Leibovit was one of them. I evidently had insight as Timer Digest named Mark the "Number One Market Timer for the 10-year period ending in 2007." For the 10 years ending 2009, he was #2 intermediate Market Timer. He is also their #1 Gold Market Timer for 2011. This book should be REQUIRED READING for anyone who trades.
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