A Comment -- General Comments From an Expert (A Commentary)

Economy. We still have stimulus from both monetary boards. The old adage is “Don't fight the Fed”. Valuations are very strong. This is a stock selective market.

Canadian banks. Generally speaking he thinks the Canadian banks very, very fairly valued. Currently they are yielding almost twice as much as the 10 year Canada yield. Their earnings outlook will probably be much more muted over the next few years. When you can buy them at 10X earnings with the yield of almost twice the 10 year Canada.

Markets. This is a time when you want to look for defence first. You want to find companies that can deliver on cash flows, boost their dividends and can still grow in this environment. A little more disappointed that Europe hasn't done more. The key still lies with Germany.

Investing in silver. ETF's, mines, bullion or certificates? The best way he found to trade it is through the futures market. The ETF iShares (SLV-N) is a pretty good way also. Silver is a very whippy metal. It gets moved around very quickly and you want as much liquidity as possible.

Markets. Have been under some pressure from anticipation of very weak 2nd-quarter results. Market peaked on April 4 and has come down since then. People anticipated bad 2nd-quarter results. Numbers are now coming out. They’re bad, but not as bad as people had expected. Less Bad is good for the equity markets.

NASDAQ Comp. Chart shows the 3-year trend completely on the upside. Will probably test the high of 3,122 by the end of the year. Technology sector seasonally normally does very well from October until January. You might see this come up a little bit sooner than average this year because there are a whole bunch of interesting products coming to market in the technology sector late this year.

Printing of money. This has to do with what is happening with the US$. Right now the US$ has been going stronger because it is less bad than the other currencies! This can't continue indefinitely because the Americans are printing money very quickly, which will have an impact on their dollar. During the last couple of days, the dollar has reached a very import and resistance level and is about to roll over. If the US$ moves lower, watch for commodity prices to move significantly higher. Watch PowerShares DB U.S.$ Bull ETF (UUP-N) for the next 2 weeks for a very important indication of trend in the market.

Gold or oil? Goldcorp (G-T) or Barrick (ABX-T)? A bit tricky right now because he likes both energy and gold. Technicals are saying, on a short-term basis, oil has gone above its 20 and 50 day moving averages, which is encouraging, and started outperforming the S&P 500. Gold did the same but hasn't started to outperform the S&P 500 yet.

Short term indicators that are most useful in assessing a stock’s direction? First of all, you want securities that have an upward trend. You want one that is trading at least above its 20 day moving average. You also want one performing above the market's performance such as TSE Composite or ESP 504 for US markets. Also watch momentum indicators such as Stochastic, RSI and MACD. Stochastics are the fastest followed by RSI and MACD.

20 day moving average? This is kind of a minimum marking position. Use moving averages as guidelines and in conjunction with other technical indicators.

Point and figure charts it eliminates time from the charts so you have the price chart without time. Over a period of time, it gives you a different configuration than a regular chart that includes time. He often uses these to confirm his expectations using the regular charts.

On insurance in general, the one on his watch list is Manulife (MFC-T). There are 2 key factors with insurance companies, interest rates and the stock market. If interest rates go up, they should do better. If the stock market goes up, evaluation should also improve. One problem is that they have added a lot of shares in the last 2 years. They are paying a nice dividend, but it has to go out on a lot more shares.

Natural gas. Thinks it has a lot of potential. There is a lot of substitution for energy sectors such as oil and coal through the use of natural gas. Feels it has a tremendous future. A great sphere for contrarians.

Markets. He sees some light, but only on a fundamental basis, which in the current market means absolutely nothing. This is a fear driven market. The first thing people sell are the smaller companies. Some stocks are getting down to levels that are just jaw dropping. There are a lot of fears of a slowdown in Europe and in China. Until people gain some sense of semblance of normality or confidence in what Europe, or more importantly China, we will be in a bit of a holding pattern.

Natural gas. Power companies in the US have switched from coal to natural gas. That has even a year over year surplus from about 850 BCF to 550 so it now looks that unless we have a really, really cool summer, we will exit US storage at around 4.1 BCF to about 3.8.