BullMarketRun.ca

Gold is pulling back to begin the week…as of 8:00 am Pacific, bullion is off $30 an ounce at $1,309 after dipping as low as $1,302…Silver has retreated 50 cents to $20.95…Copper is off a penny at $3.24…Crude Oil has slipped 43 cents to $100.40 while the U.S. Dollar Index is relatively unchanged at 80.18…

Gold rallied to a 3.5-month high late last week, coming within just a few dollars of the important $1,350 resistance level, after minutes of the Federal Reserve’s last meeting showed a dovish tone while concerns about Portugal’s largest listed bank sparked heavy selling of equities…Portugal bond yields lowered further today after the country’s biggest bank took steps aimed at reassuring investors of its stability, calming peripheral debt markets after their first episode of contagion this year…

Physical buying from Asia remains lackluster and will need to pick up, which it often seems to do during the second half of the third quarter, in order to help Gold overcome resistance at $1,350…RSI(14) shot up into slightly overbought territory at 73% on the 6-month daily chart at the end of last week, and the combination of technical factors and profit-taking has contributed to selling pressure today…the $1,300 area will be interesting to watch while the 6-month chart shows strong Fib. support in the $1,270’s and $1,280’s…

Geopolitical hotspots and a U.S. President seemingly incapable of effectively handling foreign policy may help underpin support for Gold in the months ahead, and indeed could be a driver for higher prices…U.S. Senator and former Presidential candidate John McCain (R., Ariz.), in a CNN interview yesterday, said the world is “in greater turmoil than at any time in my lifetime.”  Those are significant words from McCain who has always shown a strong pulse for global threats…

As Wall Street Journal reporters Jay Solomon and Carl E. Lee wrote over the weekend, “A convergence of security crises is playing out around the globe, from the Palestinian territories and Iraq to Ukraine and the South China Sea, posing a serious challenge to President Barack Obama’s foreign policy and reflecting a world in which U.S. global power seems increasingly tenuous.  The breadth of global instability now unfolding hasn’t been seen since the late 1970s, U.S. security strategists say, when the Soviet Union invaded Afghanistan, revolutionary Islamists took power in Iran, and Southeast Asia was reeling in the wake of the U.S. exit from Vietnam.”

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 20 points overnight to close at 2067, its highest level since June 17 ahead of Wednesday’s second-quarter growth report…China’s economy likely expanded 7.4% in the three months to June 30 from a year earlier, according to the median of 44 economists’ estimates compiled by Bloomberg… Japan’s Nikkei advanced 133 points overnight to finish at 15297…

Europe

European markets are up strongly in late trading overseas, bolstered by merger and acquisition activity in the pharmaceutical sector, and a very positive tone to begin the week on Wall Street…

North America

It’s a big week for U.S. corporate earnings…Q2 earnings in the U.S. are likely to be the next major driver of global markets…Alcoa (AA, NYSE), which reported last week, is generally a reliable guide and that is fueling expectations for a strong overall quarter for earnings growth and an upbeat assessment for the balance of the year…meanwhile, markets will also be focusing on Federal Reserve Chair Janet Yellen who is set to begin giving testimony to Congress tomorrow…

The Dow has surged 135 points as of 8:00 am Pacific, hitting a fresh intra-day all-time high…better-than-expected earnings from Citigroup (C, NYSE) have given the bulls reason to cheer this morning…

The TSX is up 51 points while the Venture is down 3 points at 1020 as of 8:00 am Pacific…Gold Bullion Development (GBB, TSX-V), which encouragingly has hit a new 52-week high of 7.5 cents, is the Venture’s most active resource stock through the first 90 minutes of trading…GBB announced this morning that it has now signed an agreement with IamGold Corp. (IMG, TSX) to process ore from the Granada Gold Property at IMG’s Westwood mill facilities…GBB’s first goal is to ship a trial-milling batch of 30,000 tonnes for milling in October prior to winter freeze up…subsequent milling will continue in April of next year…

Venture 6-Month Daily Chart

The Venture fell 15 points last week after encountering resistance around 1040…the retreat should be considered normal and healthy from a technical standpoint as a very strong support band runs from the 1000 level (the rising 50-day moving average) to 1020…this should be the final pullback before a sustained third quarter move that powers the Index through the mid-March high of 1050 to at least the 1150 resistance area…

Below is an updated 6-month daily chart from John…the rising 50 and 100-day SMA’s are within that band of Fib. support between 1000 and 1020…

Venture 5-Year Weekly

This updated 5-year weekly chart shows a very, very healthy Venture with RSI(14) at 57% continuing to follow an uptrend line…it has plenty of room to move higher as Q3 progresses…the CMF shows a trend of increasing buy pressure while the ADX indicator is highly encouraging…the smart money is going long…

West Point Resources Inc. (BLO, CSE) Update

One company in the non-resource sector we’re extremely excited about is West Point Resources (BLO, TSX-V)…we initially brought BLO to our readers’ attention the first day it began trading on the CSE June 26 (in the mid-to-high teens)…this is a company with such a simple and compelling story, so we’re not at all surprised by the investor interest in BLO which has traded as high as 32 cents on average daily volume through its first 11 sessions of more than 1 million shares…while certainly speculative, BLO has tremendous upside potential in our view – it has an exciting product, the company is well-financed, the share structure is attractive, and management knows what it’s doing…

This morning, West Point announced it has contracted KLN Klein Product Development of Vancouver to complete the first prototype of the Cannabix Marijuana Breathalyzer (CMB)…as expected, West Point is drawing considerable investor attention on the CSE and in the media regarding this patent pending technology which puts the company at the leading edge of future commercial development of a roadside marijuana breathalyzer that could be hugely beneficial for law enforcement…the CMB may also have other practical applications, such as testing employees in certain workplace environments where intoxication by THC can be hazardous…the breathalyzer provides rapid detection of very recent use of marijuana (i.e., within a couple of hours) which makes this technology so potentially significant…

Keep in mind, the current alcohol breathalyzer market in North America is worth in excess of $3 billion…the growing social acceptance of marijuana has already contributed to many road fatalities and that problem is only going to get worse…BLO has an important solution to help address that problem…

Below is a chart for how BLO has traded since starting on the CSE June 26…in its early days, BLO is showing strong support in the low 20’s…as of 8:00 am Pacific, BLO is off 2 pennies at 24 cents…

Silver Technical Update

Silver has broken out above one important downtrend line but remains susceptible to a minor pullback given temporarily overbought conditions…RSI(2), for example, closed last week at 86% with the metal still slightly below strong resistance around $22…Fib. support levels on the 6-month daily chart range from $19.50 to $20.33, so a retrace into that range is certainly very possible…

This 11-year monthly chart confirms that the metal has exceptional support in the high teens…note the two downtrend lines on this chart – a confirmed breakout has occurred above one of those downtrend lines…

If and when Silver clears stiff resistance at $26, watch out – you’ll want to back up the truck and load up…

Silver Seasonality Chart

Over the last two decades, July, August and September have proven to be Silver’s shiniest months of the year…there’s no reason to believe that pattern won’t continue…

Note:  John and Jon both hold share positions in BLO.