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Market Monitor – The Nightly Business Report
TOM HUDSON Well, the stock market rally has room to run, even as it sits close to 18-month highs tonight, at least so says tonight’s “Market Monitor” guest. He’s Mark Leibovit, chief market strategist at vrtrader.com, and he joins us tonight from Phoenix. Mark, welcome back to NIGHTLY BUSINESS REPORT.
MARK LEIBOVIT, CHIEF MARKET STRATEGIST, VRTRADER.COM: Thanks for having me. Nice to meet you, Tom, on the air.
HUDSON: Nice to meet you as well. So more room to run. How much more room to run as we’re at these 18- month highs?
LEIBOVIT: Well, you know, the trend is your friend, as they say, and until we get a clear reversal pattern, and my technique using volume reversal in theory volume preceding price, until we get that volume reversal and we get an indication of important selling in the market, you let the market work for you. We have targets that still say this market could go higher, but you know, the bottom line is, you know, the trend is your friend and, you know, we’re just past that halfway retracement point that I mentioned in our previous interview, which was 10,005. So as you go through a half-way retracement, then you start saying, well, are we going to do a 6-1-8 retracement or a full retracement of decline, which would get you all the way back up to that 14,000 area. I don’t know if we can get there or not. I’m not thinking that. But we’re going to stay with it and we’re going to look at some other indicators here to guide us.
HUDSON: Yes. Well, Mark, let’s put some numbers to these ideas. And you brought along with you a model forecast for the Dow Industrials, for instance. And what you see here is this is basically your forecast for 2010 for the Dow, with the actual performance down below. And you see the dog days of summer being some tough months for long investors and the Dow ending the year near the lows of the year.
LEIBOVIT: Right. this is a cyclical forecast. So what we do with the annual forecast is we’re combining that with our volume work. So it’s like the proverbial weatherman looking out the window. You know, you wait for your short-term signals. You don’t stick with your big forecast until you get confirmation that, indeed, it’s happening. But yes, according to this model, we should run out of steam here some time this summer and have a pretty sharp correction. But how high are we going to be when we hit that top? Could it be 12,000, 14,000? You don’t know. So we will have to wait for that point. Could be quite high.
HUDSON: OK. So the velocity of the move higher, you’re unsure about, but the timing you think August looks like that could be the high for the Dow?
LEIBOVIT: That does appear to be the case at the moment, yes.
HUDSON: OK. Let’s take a look at the chart pattern on the S&P 500, the broad market here. And you’ve got what the technicians and yourself call a reverse head and shoulders pattern. You see the neck line, Mark, right there. Your projected target of 1,230, that brings us, what, about 5.5 percent by where we’re looking at to the close of the week this week?
LEIBOVIT: Right. Now remember, this measurement was made months and months ago, and I think in my September interview, we showed the Dow forecast, which was showing 11,500, which is the equivalent to S&P 1,230. So this is an existing forecast for months, and we haven’t got to that target yet of 1,230. We could go much higher. This just gives you an indication of where, I guess, a minimum expectation would be. So this would be about 1,105 in the Dow, 1,103 in the Dow, and if that occurs by August, that will be it. I suspect it will be higher, but we’ll see.
HUDSON: All right. Let’s take a look at some of the picks that you brought along with you in September and get a quick comment about the dollar, especially when it comes to the Central Fund of Canada (CEF) and the Silver (SLV) exchange-traded fund. Each of these certainly very commodities-based and precious metals-based. Do you still like these and is this a play on the U.S. dollar?
LEIBOVIT: Well, the dollar is still in an uptrend, which could be a problem for the precious metals, but according to the cyclical forecast, we’re due for a little correction here this summer, which could drive these metals higher. I’m hoping at a point we’re going to see the dollars and precious metals actually diverge and won’t track inversely as they have been.
But for now we’re going to stick with these players because I think there could be another run here in the precious metals in the next couple of months. And then after that, we may go into a correction as well. But how do you know gold won’t be 1,300, 1,400 this summer and then correct from a higher level? So let’s let the time work for us here a little bit and that’s what the dollar is saying, we’re going to pull back here in the dollar, and then a run later in the year.
HUDSON: Mark, just 15 seconds left, but I want to show the previous picks, the last two, PAL, North American Palladium (PAL), and Vanguard Total Stock Market (VTI) ETF. Each of these nice gains. Do you still like them? Put new money to work?
LEIBOVIT: Yes, I would hold PAL, I would hold V-T-I, I would hold C- E-F, these are all solid plays at least through the summer.
HUDSON: OK. Fair enough. They we go. Our Market Monitor guest this evening, Mark Leibovit, chief market strategist at vrtrader.com.
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