05/20/05: ""Market Monitor"- Mark Leibovit, Chief Market Strategist for Vrtrader.com.
PAUL KANGAS: My guest "market monitor" this week is Mark Leibovit, chief market strategist for vrtrader.com. Welcome back to NIGHTLY BUSINESS REPORT Mark.
MARK LEIBOVIT, CHIEF MARKET STRATEGIST, VRTRADER.COM: Thanks Paul for having me back.
KANGAS: Wall Street staged a rather impressive rally this week as you know. And as a market technician, I`d like to know if you think the upturn has staying power or is just a flash in the pan.
LEIBOVIT: Maybe it`s a dead cat bounce Paul, but I think it`s a traditional summer rally. We were looking for at least a halfway retracement of the down move. We have broken some trend line and volume has accompanied the move, so we`re long here giving it the benefit of the doubt. As a trader I would say we need to pull back for a couple days next week, but I think there`s more to the rally. It`s funny and sort of a perverse in a way, the summer rally might be over by the time we hit summer, June 21, so I`d be careful. Our intermediate work said (ph) if we get a rally here in the summer, then possibly down to new lows in the fall, but ultimately we go with our volume and our indicators. Long here, but we`re keeping the foot in the door for later in the year.
KANGAS: So by the end of the year, we could actually be lower than where we are.
LEIBOVIT: I believe it the end of the lows that we saw in April. So again, we`re going to go with the volume, so that people have to follow us carefully.
KANGAS: Well, that`s when the V. R. Stands for in vr.com. It`s volume reversal.
LEIBOVIT: Volume changes we`re going to go short.
KANGAS: That`s it. OK. Now you have been bullish on the long term outlook for gold for quite a while, but it`s been having a hard time recently. We have some charts of the XAU gold index and let`s start with your forecast for 2004 and what the index actually did. We see it there now.
LEIBOVIT: 2004 we had a sell signal right in January. We didn`t make a lot of friend among the gold bugs but we got out and we trade them, but the model said get out in January of 2004. We were pretty much out the whole year.
KANGAS: Let`s have a look at the 2005 forecast for the gold index.
LEIBOVIT: Very choppy this year. It`s looking choppy to side ways, lower, so we`re not getting the clear buy signal looking at this indicator yet. And I think that`s partially the result of what`s happening in the dollar.
KANGAS: But it looks like you think gold`s going to be lower by the end of the year.
LEIBOVIT: I believe so. It`s very depressed here, particularly the share, not the metal itself, but we`re not getting confirmation of a bottom yet. So it`s tempting. They`re cheap, but we`re doing a little fishing, but I think we`re early.
KANGAS: You wanted us to see a dollar index chart as well because the dollar moves inversely with gold. There we see your 2004 index and forecast. Go ahead.
LEIBOVIT: 2004 was basically telling us that you`d be looking for a possible turn in the dollar. Everybody has been bearish on the dollar for good reason for the last few years, but since 2004 particularly now coming forward, our work is saying --
KANGAS: Looking forward at 2005 we have that chart.
LEIBOVIT: More of a rally. More of a rally, side ways to higher, but a little bit more of a rally in that dollar. So since dollar and gold tend to trade inversely, we need to tie markets together, but that`s the way it`s working and we`d say, be still a little careful about the gold and look for a higher dollar this year.
KANGAS: OK. Now in your last visit with us on November 19th of last year, you gave us three buy recommendations. Let`s have a look at how they fared. Newmont Mining, one of those gold stocks, has been hit, down almost 28 percent. Still with it?
LEIBOVIT: Big picture very bullish. Depends how you trade it. We`re traders, but on the long-term portfolio, we want to be in it.
KANGAS: OK, Standard & Poor`s 500, the old Spyders, up 1.4 percent.
LEIBOVIT: Stay with the diamonds and the spiders because we`re in a summer rally.
KANGAS: We`ll have a look at the diamonds, how they compared. They were absolutely unchanged. They`ve been a little higher though.
LEIBOVIT: NASDAQ has been doing better, but the blue chips should participate in the summer rally.
KANGAS: OK, how about any new buy recommendations?
LEIBOVIT: OK. Here are a couple ideas. Coca-Cola is one of our favorites. It`s not a favorite of Wall Street, but it`s coming out of a base. There`s volume accompanying the move. I think there`s a 10 or 15 percent move. That`s KO. I do not own it personally but love the stock. A cheaper name to give the low priced players a shot would be America West Airlines, AWA.
KANGAS: OK, let`s have (INAUDIBLE) a lot of that in the news this week.
LEIBOVIT: Yeah and it`s coming off a bottom. We`re not long it personally, but were recommending it. I think it`s going to be an $8 or $9 stock. It`s around 5 1/4, good volume coming off a big base. So these two are good names and the way we like them is because of the bottoming formation with volume.
KANGAS: OK, do you own America West?
LEIBOVIT: Do not. I fly it all the time though.
KANGAS: Do you?
LEIBOVIT: And I don`t drink Coke.
KANGAS: But you like the stock.
LEIBOVIT: I like the stock yeah.
KANGAS: OK. All right. I think our time has run out for the moment, Mark, but thanks very much for being with us once again.
LEIBOVIT: See you next time, thank you, Paul.
KANGAS: My guest market monitor Mark Leibovit of vrtrader.com.
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