TOM HUDSON: Credit the Federal Reserve for the higher stock prices we’ve
been seeing. That’s how tonight’s “Market Monitor” describes the recent
market rally. Mark Leibovit is chief market strategist at vrgoldletter.com.
He’s back with us tonight from Phoenix. Mark, welcome back, always great
to see you.
MARK LEIBOVIT, CHIEF MARKET STRATEGIST, VRGOLDLETTER.COM: Same here, Tom. Thanks for having me.
HUDSON: Engineered by the Federal Reserve or not, what about the
recently encouraging economic data that we’ve been seeing? What’s your
sense of the economy?
LEIBOVIT: My sense is not as optimistic. I don’t believe the figures
that we’ve been getting from the government. There’s a lot of talk about
the employment numbers. We know those have been doctored up and we know the
Fed has been engineering this rally. Even Chairman Bernanke has targeted a
higher stock market. The printing presses are running 24/7, Tom and even
though there’s not official QE3 that’s been going on, the Fed has been
helping bail out Europe, basically an engineered rally in the hope that
stocks go higher and people get employed.
HUDSON: Mark, why do you say that the numbers are doctored?
LEIBOVIT: Because the way that they calculated the employment,
unemployment numbers. They exclude people that stop looking for work, when
years ago they didn’t do that and this informal/formal studies that have
shown that the unemployment numbers are really 16 to 20 percent, not 8 or 9
percent. We’re not really getting a true picture of what’s going on out
there and the average person on the street — I talk to a lot of people —
the economy really isn’t what it is. The stock market is an illusion right
now. But it doesn’t mean we can’t make money doing it.
HUDSON: Absolutely. Prices are prices. They are what they are here.
Stocks, they’ve been higher. You’re looking at the charts and you’re
looking at the traditional trading patterns for the Dow Jones Industrial
Average. First how the average year plays out for the Dow. A rally in the
spring, a big sell-off, summer rally, a drop in the fall and then a rally
through the end of the year. But things look a little different during an
election year. What are the key differences?
LEIBOVIT: This is a seasonal study based on the presidential cycle
and the presidential election year and it is a little bit of a difference.
Because even though you may get a pullback into early March, the pattern
says be careful. It could rally perhaps a little bit longer than the bears
would care to, maybe into early April, and then nosedive for a couple of
months, then have a big rally into September. So either way, we’re in a
period where you have to be looking for a possible little bit of a
correction. We’ll know in a few days whether we’re following the
traditional or the presidential pattern, Tom. But overall, if you look at
the model, they’re bullish because of the presidential year and because we
follow a rally into the end of the year anyway.
HUDSON: A couple of places where you’re looking to make money is
Smith and Wesson, the gun maker, SWHC. It’s had a nice rally from $3 to $5.
Where do you see this going on the charts?
LEIBOVIT: Minimum target is $7. But I could see it in the $10 or $12
area probably in the next six to 12 months. There’s been a big interest in
guns and protection. Ammunition sales are up. I’m not advocating it. I’m
just telling you what the charts are saying and in the case of Smith and
Wesson, it’s a low-priced stock. It’s got some upside potential.
HUDSON: You also like silver here. I don’t want to make you out to a
doomsday scenario kind of idea here, but you like guns and metal. Here
we’re looking at silver continuous weekly over the past couple of years and
it’s just above a 40-week moving average. Why is this an important point?
LEIBOVIT: It’s a big support area. We just rallied above it.
Hopefully we can stay above it. It has been tracking pretty much with it
the last couple three years, the longer — gold has done the same thing,
Tom. So right here it’s sort of a critical area for it and we also have an
inverse head and shoulders pattern in silver that’s projecting into the
40s. So between those two, and the fact that technically we’re getting
volume to the upside, and the technical shake the last couple of days, my
technical work says you’re going to see higher prices here. I’m very
bullish, very bullish on the numbers. Some of the numbers are off the
charts in terms of where I think it’s going. Bit I think we’re going a lot
HUDSON: Just 20 seconds here, I want to update a pick back on
October 7 of 2011. You liked gold. In fact it was at $1600 and change.
You called it bargain basement 4 percent higher. Would you buy even more
here at $1700?
LEIBOVIT: Absolutely. When you’re going to $2500, $3,000, $5,000, and
maybe $11,000 in the next five to six years, any pullback is a buy and
silver, silver we’re looking at triple digits easily in the next few years.
HUDSON: Do you own anything we mentioned tonight?
LEIBOVIT: Yes, I own and trade all of them, absolutely.
HUDSON: Our Friday “Market Monitor,” from the sands of Phoenix,
Arizona. It’s Mark Leibovit of vrgoldletter.com.