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On behalf of the BMR crew, I wish you and your family a very happy Thanksgiving.  For many, this year has been difficult financially and the turmoil and the volatility in the markets has not been easy to deal with.  You may not feel as “rich” as you were six months ago or a year ago, but I challenge everyone to think of richness not just in financial terms.  This is a time, in particular, for each of us to reflect on all the blessings we do enjoy and to be grateful for each and every one of them.

The Apostle Paul writes, “You will be made rich in every way so that you can be generous on every occasion, and through us your generosity will result in thanksgiving to God” (2 Corinthians 9:11, New International Version).

We are all called to live generous lives and to be a blessing to others.  From our house to your house, God bless you all on this Thanksgiving.

Terry Dyer

Owner/Publisher

Langley, British Columbia

www.BullMarketRun.com

This is Thanksgiving weekend in Canada, and as a result our regular Week In Review will not be posted.  We will, however, be posting a general market update tomorrow evening (Canadian markets are closed but U.S. markets are open) and Terry will also be posting his regular Thanksgiving message. We wish all of our Canadian readers a wonderful and relaxing Thanksgiving.

Gold had traded as high as $1,666 this morning but has pulled back over the last half hour or so…as of 9:30 am Pacific, the yellow metal is now down $11 an ounce at $1,639…Silver almost hit $33 but is now down 57 cents at $31.36…Copper has gained 4 cents to 3.31 while the U.S. Dollar Index is now well off its lows and down just one-tenth of a point at 78.53…the greenback has been quite strong since the beginning of September, trading in a bullish upsloping channel as John shows below in a chart that was completed after yesterday’s trading..the Dollar Index tested the bottom of that channel this morning and should be monitored closely in the days ahead for clues regarding the near-term direction of the markets in general as well as Gold…

Stocks have given up their early gains as ongoing worries over the euro zone overshadowed a better-than-expected jobs report out of the U.S. this morning…after plunging to an intra-day low of 1306 Monday, the CDNX has gained more than 13%…it traded as high as 1497 in early trading but has since pulled back to 1477, a loss of 3 points…the Venture’s 10-day moving average (SMA), at 1470 entering today, has generally provided resistance since the spring of this year – just the opposite of the situation throughout 2010 when the 10-day was generally a supporting moving average…in otherwords, any rallies in what we now view as an overall bear market are going to have difficulty punching through or much beyond the 10-day SMA…in addition, the CDNX has other technical hurdles – 1530 is a major one – as John outlined in his chart posted prior to the market open…so we don’t view the move since Tuesday as a reversal in what has to be regarded now as an overall downtrend…investors should continue to exercise caution as September’s action has convinced us that protection of capital is paramount during what will likely be a very volatile and perhaps bloody six months coming up…not everyone shares that view but that’s what makes a market…

There was news on the jobs front in both Canada and the United States today…the Canadian economy churned out 60,900 jobs last month, quadruple expectations, all in full-time positions…the jobless rate also fell to 7.1%, its lowest level since October, 2008…however, most of those job gains were in the public sector – private sector job growth actually declined which is not a good sign…we need to see the reverse of that – retrenchment of the public sector in conjunction with private sector job growth…

Meanwhile, the monthly non-farm payrolls number in the U.S. grew more than expected in September, jumping 103,000, though the unemployment rate remained steady at 9.1%…economists polled by Reuters expected a total of 60,000 jobs to have been created…the jobs report, which also included an upward revision of the August payroll number, is the latest in a string of encouraging economic data that has come out of the U.S. in recent days which has helped to give the market a lift..however, as former Federal Reserve Chairman Alan Greenspan stated in an interview today with CNBC, the U.S. economy and the stock market face potential severe consequences from the European financial crisis which, according to Greenspan, will not resolve itself without major debt restructuring…

Ontario voters elected a minority Liberal government last night in an election that was Tim Hudak’s to lose and he did exactly that by not offering a bold vision for the future…despite a massive run-up in provincial debt and a failed green energy plan, Premier McGuinty amazingly was able to win a third consecutive term in office though his party lost 19 seats and is one seat short of a majority…minority governments (even “strong” minorities) are notoriously unstable which is not helpful for Ontario in these turbulent economic times…in addition, the resurgent NDP is sure to have increased influence at Queen’s Park…if the PC’s choose to oppose the Liberals consistently, McGuinty will have to look for the NDP for support which will create a right-left dynamic in Ontario politics…

The TSX Venture Exchange has gained a whopping 13.3% or 174 points over three sessions since plunging to an intra-day low of 1306 Tuesday.  The Index, however, faces some daunting technical challenges with a major hurdle at 1530 as John shows below.

Gold got as high as $1,656 overnight but has since slipped back…as of 8:30 am Pacific, the yellow metal is unchanged at $1,643…Silver is 91 cents higher at $31.42…Copper is up 11 cents at $3.23…Crude Oil is up 44 cents at $80.12 while the U.S. Dollar Index is off one-fifth of a point at 78.79…John’s latest Gold chart, posted earlier this morning, shows selling pressure has abated while RSI and Stochastics point to increased momentum as Gold bases in a channel between $1,600 and $1,680…

The CDNX is up another 48 points at 1461…however, before investors get too excited, what we’re seeing is typical of the bear market trading pattern that has been in place since the spring…the CDNX will face stiff resistance around its 10-day moving average (SMA), currently at 1470…this is a rally in our view that cannot be trusted…the CDNX is the best leading indicator there is, and it continues to tell us the global economy and the broader markets have entered a very difficult phase with some negative surprises likely during the fourth quarter…

An interesting chart is the single-leveraged HIX (TSX), the Horizons BetaPro S&P/TSX Inverse ETF…it got as high as $12.66 during Tuesday’s plunge and is currently at $11.75…this chart is showing some textbook bullish patterns and while the HIX will drop a little lower if the market extends its rally, there is plenty of support between $11.40, just below the rising 50-day moving average (SMA), and $11.70…that equates to resistance on the TSX between roughly 11,750 (the top of a resistance band) and 12,000 (another resistance area)…inverse ETF’s aren’t for everyone but they can be an excellent hedging tool to protect against downside risk…more sophisticated and risk-oriented investors may wish to look at double-leveraged reverse ETF’s…below is an HIX chart completed by John during yesterday’s trading but it gives a clear big picture view…below that, John updates the TSX, showing the 11,500-11,750 resistance band and additional resistance at 12,000…

On the economic front, U.S. weekly jobless claims gained less than expected last week, climbing 6,000 to a seasonally adjusted 401,000, according to the Labor Department, from a revised 395,000 in the prior week…economists had forecast claims rising to 410,000, according to a Reuters poll…the jobless claims news comes ahead of the important government jobs report tomorrow…non-farm payrolls are expected to have increased 60,000 in September, according to a Reuters poll, after being flat in the month prior…meanwhile, in an encouraging sign, most U.S. retailers have posted solid chain-store sales results for September as consumers remained resilient despite weakening consumer confidence…

The European Central Bank sees “intensified” threats to the euro zone economy and will provide struggling banks with longer-term liquidity to ward off a new credit crunch, President Jean-Claude Trichet said today…the ECB kept rates unchanged at 1.5% at its meeting in Berlin, the last for Trichet before he hands over the reigns to Mario Draghi, currently Italy’s Central Bank Governor…”The economic outlook remains subject to particularly high uncertainty and intensified downside risks,” Trichet told a news conference, offering a more gloomy prognosis than last month when he merely talked of downside risks…that shift in rhetoric will encourage investors to believe a rate cut is not far away…”Ongoing tensions in financial markets and unfavorable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of the year,” he stated..

The Financial Times reported last night that fears of an economic slowdown in China have fueled a trading surge in instruments that insure investors against sovereign bond defaults, making the country a new focal point for the widely used financial products…the net value of outstanding credit default swaps on Chinese sovereign debt has soared, according to data released this week by The Depository Trust and Clearing Corporation….the market for China CDS is now the world’s 10th largest (two years ago it was the 227th largest), bigger than those for Portugal and Bank of America…“Clearly there is increasing market concern about China and a few cracks are starting to appear in its economic growth,” said Ann Wyman, head of emerging market research at Nomura…”A ‘hard landing’ still isn’t our house base case scenario, but we’re more concerned about this than we have been in the past.”

Gold faces resistance at $1,648, $1,680 and $1,753 but momentum is increasing as John’s chart shows below.  As of 6:40 am Pacific, Gold is unchanged at $1,642.

Markets have stabilized for the time being and have started to rally…Gold, as of 8:30 am Pacific, is down $9 an ounce at $1,615…Silver has lost 53 cents to $29.70…Copper is up a penny to $3.06…Crude Oil has gained $3 to $78.65 while the U.S. Dollar Index is up over one-tenth of a point at 79.23…physical demand has emerged on recent weakness in Gold and Silver according to Barclays Capital…Gold lost ground yesterday but “physical demand has been reinvigorated at these price levels and should provide support for prices, before investment demand and safe-haven interest returns to the driving seat,” Barclays stated…

The public sector is hurting in the U.S. but the private sector added a better-than-expected 91,000 jobs in September even as the amount of expected layoffs hit their highest level in more than two years, according to separate reports this morning…the monthly survey from ADP and Macroeconomic Advisors showed that the service sector added 90,000 positions, goods-producing rose just 1,000 and manufacturing fell by 5,000…economists had expected the ADP report to show 75,000 jobs created…this comes ahead of Friday’s important non-farms payroll report from the Labor Department for September…compounding uncertainty around the jobs market was a report earlier in the morning from a private consulting business (Challenger, Gray and Christmas, Inc.) that showed the number of planned layoffs at U.S. firms in September jumped to its highest in more than two years due to heavy cutbacks by the military and Bank of America…

Highlighting weakness in the global economy, business activity in Germany’s services sector contracted for the first time in more than two years in September…meanwhile, European finance ministers have agreed to safeguard their banks as doubts grew about whether a planned second bailout package for debt-laden Greece would go ahead…the situation in the euro zone is not going to be solved anytime soon and chances are it’ll get worse before it gets better, which means markets are going to be weighed down with this problem for an extended period…Greece is sure to default – the only question is whether it’ll be an orderly default or a disorderly one, and the politics of bringing some sort of necessary fiscal union to the euro zone appear to be very challenging at best…

In Greece today, flights were grounded, schools were shut and government offices were closed in the first nationwide walkout in months…labor leaders call it the start of a campaign to derail emergency austerity steps launched last month by a government that has already imposed two years of tax hikes and wage cuts…thousands of state workers, pensioners and students gathered peacefully, beating drums and waving banners reading “Erase the debt!” and “The rich must pay“…for years the citizens of Greece have demanded programs their government (the taxpayers) can’t afford…they’ve borrowed money and racked up massive debts…and then they demand “the rich” must pay?…something is dreadfully wrong with this world…Greece should have to suffer under austerity for the next decade if necessary…the “entitlement culture” that grips that society (and others) is stunning to say the least…

The CDNX led the markets higher out of the gate this morning, so we’re definitely in the midst of a rally after some crushing days to the downside…as of 8:30 am Pacific, the Index is up 51 points at 1384…one should be careful trying to play this rally, however, and it’s critical to understand that we’re now in a bear market – not a bull market – and in bear markets, rallies should be sold into…below is a long-term CDNX chart from John that shows what a true reversal pattern looks like…

Below is another chart that shows various CDNX support levels…it seems highly unlikely that 1300 will hold given the fact this market is now under pressure from a declining 300-day moving average (SMA) with a 500-day SMA likely to reverse to the downside later this quarter…

It’s another ugly today on the markets with the Dow, TSX and Venture Exchange all sharply lower…as of 9:15 am Pacific, Gold is off $38 an ounce at $1,623…Silver is 67 cents lower at $29.82…Copper is off a penny at $3.07…Crude Oil is off its lows but has slipped 69 cents to $76.92 while the U.S. Dollar Index is down one-third of a point at 79.27…Goldman Sachs has reiterated its 12-month Gold target of $1,860 an ounce, though we may like the world we live in even less should Gold ultimately take off again to the upside as expected…Gold of course has collapsed from its late summer highs and has fallen back in line with Goldman’s three-month price target…”As we expect Gold prices will continue to be driven in large measure by the evolution of U.S. real interest rates, and with our U.S. economic outlook pointing for continued low levels of U.S. real rates in 2012, we continue to recommend long trading positions in Gold and reiterate our 12-month price target of $1,860 per ounce,” Goldman stated in a research report today…“Our U.S. economics team further lowered their U.S. GDP-growth outlook and expects below-trend economic growth in 2011 and 2012…as a result, we expect that 10-year TIPS (Treasury Inflation Protected Securities) yields will remain near current low levels”…should the 10-year U.S. TIPS yields remain close to zero basis points, Goldman says its pricing model suggests that Gold prices between $1,800 and $1,900 an ounce would be well supported…“We expect that the level of concern over European sovereign debt will continue to drive Gold prices, with the potential for a European financial crisis skewing the balance of risks to the upside”…as John’s chart showed last week, a re-test of Gold’s long-term trendline support on its 2.5-year weekly chart seems likely…that would take Gold down to $1,580 an ounce…

What’s astonishing and alarming, especially considering that Gold is still trading at historically very high prices, is how quickly the CDNX has gone from being in a bull market to a bear market…with a technical breakdown in September, and a 300-day moving average (SMA) that has now reversed to the downside, there can be no denying the fact that the Venture is now in the grips of a full-fledged bear market…it has plummeted another 60 points this morning to 1330, putting it below the early July 2010 important bottom…yes, the CDNX is technically very oversold and potentially could stage a minor rally at any point…but this now has to be considered a bear market and where the CDNX will finally bottom out is anyone’s guess…this does have the feel of a global meltdown in the works that could be even worse than 2008…the recovery from the ’08 financial crisis was relatively quick…governments stepped in and propped up a system that should have been allowed to self-correct…”Quantitative Easing” was deliberately designed to boost asset prices – Bernanke even spoke about the benefits of a rising stock market – to create a “wealth effect” that would help jump-start the economy and avoid a deflationary cycle…

The market appears to have come to the conclusion that the Fed is out of bullets…the market also seems to have lost confidence in the ability of the euro zone to contain its debt crisis…then of course there’s the U.S. Congress and a lame-duck President who could go down in history as one of the most economically illiterate Presidents to ever occupy the White House…in all fairness, Democrats and Republicans are both responsible for the mess the United States is in and their current actions are only making matters potentially worse…at the moment, the Senate is even cooking up protectionist legislation that could very easily precipitate a trade war with China…speaking of China, and the emerging markets in general, there is a growing perception (in the markets, perception is reality) that those economies may slow down more than expected which poses another threat to investors and the economies of the developed world…folks, cash is King right now and we’re simply going to have to wait until the dust settles…

Bernanke testified before a Congressional Committee this morning and stated the Federal Reserve is prepared to take further steps to help a fragile economic recovery held back by a weak job market and financial stresses in Europe…”The Committee will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in the context of price stability,” Bernanke said…given anemic employment growth that has depressed consumer confidence, Bernanke urged lawmakers not to cut spending too quickly in the short-term, even as they grappled with trimming the budget deficit over the long-term…”An important objective is to avoid fiscal actions that could impede the ongoing economic recovery,” he stated…

We’ll see how the markets finish today and tomorrow we’ll likely size up some oversold individual stocks where there could be some opportunities in the near future…