Newsletter

The North American markets staged a rally after Monday's plummet on threats of Greek loan default took the TSX to 23-month lows to kick-off Q4. Tuesday, investors once again got a boost from news overseas regarding the European debt crisis and some information locally that warranted economic optimism. Economic data came in a bit mixed, but generally slightly better than expected this week, with employment and manufacturing data showing that both Canada and the United States are still experiencing growth; pushing off threats of a recession to some degree. The bullishness of optimism was shown in three days of triple-digit gains by the Dow Jones Industrial Average. Investors continue to ride a wave of volatility as European efforts to quell the threat of financial meltdown were in the news daily. The Bank of England reported expansion of its bond-buying program this week as it launched a second round of quantitative easing to defend Britain's faltering economy against the euro zone debt crisis. The European Central Bank will continue with its bank liquidity measures as it opened its pockets to new emergency loans for banks in efforts to steady the shaky financial systems. Recapitalization of euro-zone banks stays at the forefront of discussion as it could control damages to the financial system should the Greek government default on loans. The multi-day rally may have been getting a little long in the tooth on its own, but the downgrade of credit ratings of a dozen British banks by Moody's helped dampen the bullish fire. Was it a bear rally, a technical bounce or is there genuine optimism for the European financial problems? That is the question that will once again be searching for answers next week as investors continue to weigh economic data right here in North America (earnings season also kicks off next week) with the woes stemming from Europe. Next week could be another white-knuckle ride as turbulence continue to be fueled by economic uncertainty.

The Toronto Stock Exchange is closed on Monday for the Thanksgiving holiday.

Some of the biggest news this week had both stock market and personal components as the world lost Steve Jobs in his fight against cancer. Achieving icon status, Jobs was thought of as one of the most innovative and forward-thinking businessmen of our time. Jobs' death was reported shortly after Wednesday's closing bell which brought a sense of mourning, questions about Apple's new leadership and a dose of reality about the fragility of life. On the business front, Apple unveiled its newest iPhone this week to a bit of a sigh after the hype beforehand. Shares of Apple lost 3.02 percent on the week. On the life side of things, the world lost a lot more with Jobs' passing.

The Canadian dollar got a pop on Wednesday as oil prices surged after European Commissioner Olli Rehn hinted at potential recapitalization measures to buoy European banks. The loonie had dipped as low at $0.94 compared to the greenback, but recovered to close the week up nearly 1 percent against the USD. Next week will begin with 1 Canadian dollar buying US$0.962465.

Commodity Snapshot:

• Gold found strength as equities plummeted on Monday, but mostly traded sideways this past week despite early volatility. Investors are exercising caution on almost all fronts including commodities as there hasn't been a catalyst to spur a solid push either direction. On the week, December contracts rose modestly, adding $13.50, or 0.83%, to close at $1,635.80.
• Silver made a strong upward push on Thursday and Friday after trickling mildly lower in the first few trading sessions. On Friday, December contracts rose to $32.85, but fell later in the day as many investors appeared to be taking a cash mentality into the weekend. For the week, December Silver, the most actively traded contract, rose by 3.02% to $30.993.
• High grade copper bucked the sell-off trend slightly on Friday to close the day mildly higher and solidify gains for the week. News of increased demand from China helped push the metal. January 2011 contracts were the most actively traded and added 3.85% on the week to $3.2735.
• Crude oil continues to have investors trying to guess which is coming first; $50 per barrel of $100 per barrel? A sharp drop in November contracts to $75 per barrel on Monday and Tuesday was followed by a rise the remainder of the week to leave the black gold ahead by 4.77% on the week at $82.98.

Equity Market Snapshot:

• AMR recovered to only fall 15.54% on the week after a 32% nosedive on Monday amongst bankruptcy rumors surfacing. While steep losses could be on the horizon, the Company denies the rumors of bankruptcy.
• Mexican telecommunications giant America Movil SAB expects that in November it will place an offer to buy the 40% of Telefonos de Mexico SAB that it doesn't already own, according to America Movil management. The industry giant bought 60 percent of the fixed line company in 2010.
• Labatt Breweries of Canada lost the latest round in its legal battle over NHL sponsorship rights as it reported that the Ontario Superior Court of Justice has dismissed its suit against the NHL and Molson Coors. The court will release its reasoning behind the decision at a later date.
• Energy heavyweight Enbridge Inc. agreed to become a majority owner of the Cabin Gas Plant in British Columbia for $250 million. Enbridge will be taking a 57.6 percent position from Encana Corp. and others who jointly own the property. Shares of Enbridge rose by 0.97 percent on the week.
• Ivanhoe Mines shares rose sharply this week. On Thursday, Ivanhoe reported an investment agreement for the massive Oyu Tolgoi gold and copper mine - a deal with partner Rio Tinto and the Mongolian government and partner Rio Tinto - had been reaffirmed without giving the Mongolian government a bigger cut. Canadian shares rose 16.06% on the week to $16.77.
• Microsoft may be throwing its hat into the ring as companies appear to be lining up to place their offers for Yahoo. Last week, Alibaba announced their interest in Yahoo as well. Shares of Microsoft rose 5.46% on the week to help the NASDAQ exchange gain some traction.
• Shareholders of pharmaceutical company Labopharm approved a friendly takeover by Paladin Labs Inc. in a deal valued at approximately $20.5 million.
• Research In Motion shares rose this week on rumors of a takeover hitting the airwaves. A London report surfaced that British telecommunications giant Vodaphone is eyeing the Blackberry maker. Toronto-listed shares rose 13.76 percent on the week to $24.30.
• Plaintiffs the Center for Biological Diversity, the Western Nebraska Resources Council and Friends of the Earth have filed a lawsuit alleging that the U.S. Fish and Wildlife Service has allowed TransCanada to prematurely disrupt the environment with its planned Keystone XL pipeline before receiving final approval for the project.
• Precision Drilling Corp. reported that it signed deals to build eight new rigs for the Canadian and U.S. oil and gas industry. No terms were disclosed. NYSE traded shares rose 11.46% on the week to $9.24.
• Heatherdale Resources Ltd. and Niblack Mineral Development Inc. reported that Heatherdale intends to acquire all of the outstanding shares of Niblack.

Weekly Indices Results:

The S&P TSX Composite Index closed higher than it opened the week, but still slightly down from last week's close, slipping 35.48 points, or 0.31%, on the week to 11,588.36. The TSX Venture Exchange stopped its four-week slide, rising 5.33 points, or 0.36%, to finish at 1,472.50.

In the States, the Dow Jones Industrial Average closed green for the second straight week, adding 189.74 points, or 1.32%, on the week to 11,103.12. The much-broader S&P 500 rose after two straight losing weeks, climbing 24.04 points, or 2.12%, on the week to close at 1,155.46. The tech-rich NASDAQ Composite stops its two-week fall as well, increasing its total by 2.65%, or 63.95 points, to 2,479.35.

Canadian Economic Data:

• The Ivey Purchasing Managers Index slipped modestly from 56.4 in August to 55.7 in September. Estimates had predicted a 54 reading. Readings above 50 reflect growth as compared to the prior month, so the 55.7 mark indicates that the economy is still growing on a month over month basis, albeit at a very slow pace.
• Building permits slipped substantially in August as compared to the month prior as municipalities issued building permits worth $5.9 billion in August, down 10.4% from July.
• The unemployment rate dropped to 7.1 percent as more jobs were created than expected in September. The unemployment rate is at its lowest point since December of 2008. 61,000 new jobs were reported, topping economists' expectations of 15,000. The majority of the increase came from the addition of 38,000 educational workers being put to work to pare losses of 15,000 private sector jobs and 23,500 jobs in the manufacturing sector.

Next week, investors will be watching for September's Housing Starts on Tuesday; the New Housing Price Index on Wednesday; Canadian International Merchandise Trade updates on Thursday; and the Monthly Survey of Manufacturing on Friday morning.

U.S. Economic Data:

• The Institute for Supply Management's factory index topped estimates of 50.5 with a rise to 51.6 in September from 50.6 in August. Readings above 50 show growth in manufacturing.
• Construction spending in the U.S. unexpectedly rebounded in August. Giving the first positive reading of 2011 and the biggest jump in more than two years, August data showed a 1.4 percent gain, offsetting the revised 1.4 percent loss in July. Estimates were expecting a 0.2 percent decline for the month.
• While the ISM reported on Monday that national manufacturing activity rose in September, new factory orders told a bit of a different story with a slide of 0.2 percent in August, according to the Commerce Dept. This was the second fall in three months. Factory orders excluding transportation dropped for the first time in six months.
• ADP's September jobs report showed a gain of 91,000 private sector jobs in September. Although still not enough to lower the unemployment rate, the increase follows a revised 89,000 jobs gain in August.
• The ISM Non-Manufacturing Index slipped to 53.0 in September from 53.3 in August, beating estimates of a 52.8 reading, but still indicating that companies could be contracting. A caveat is ISM's Employment Index falling 2.9 percentage point to 48.7 percent from August to September, highlighting volatility in employment.
• September brought about employers hiring more workers, but not enough to change the employment rate from 9.1 percent. The rate has been stuck there for three straight months. 103,000 new non-farms jobs were reported, which included 45,000 communication workers returning from a strike. Excluding the return from the strike, jobs growth was a somewhat unimpressive 58,000.

Next week will bring Trade Balance info on Thursday; Retail Sales info and Reuters/U of M Consumer Sentiment on Friday.

Penny Stocks to Watch & Company Spotlight Results:

Among the stocks we watched this week, steel pipe maker Lakeside Steel Inc. (TSX-Venture:LS) gapped up on Monday and held firm the rest of the week to add $0.025, or 12.2%; closing at $0.23 after hitting an intraweek high of $0.24 on three occassions. The other stock we had on radar, miner Orestone Mining Corp. (TSX-Venture:ORS) rose to its high of the week at $0.105 on Monday, but slipped back to close down mildly by $0.005, or 5.0%, at $0.095 to end the week.

In the States, tech company Orbit International Corp. (NASDAQ:ORBT) started down on Monday, but moved northward the rest of the week to add 13 cents, or 3.67%, to close at $3.67 after hitting an intraweek high of $3.775. The other U.S. stock on our watchlist, medical device developer BioElectronics Corp. (Pink Sheets:BIEL), put together a strong week and rose to touch an intraweek high of $0.01 before closing the week at $0.0075, a rise of $0.001 or 15.38%.

If you'd invested in all four stocks and held them to the end, you'd have seen a solid average gain of 6.56%. However, if you'd bought all four at the beginning of the week and sold each at its peak, you would have realized an even stronger gain of 20.64%.

Next week, we focus on Canada's Colombian Mines Corp. (TSX-Venture:CMJ) and Asia Bio-Chem Group Corp. (TSX:ABC). In the States, look for big things from Anooraq Resources Corp. (AMEX:ANO) and TurkPower Corp. (OTCBB:TRKP).

Congratulations to those who were involved in our penny stocks to watch this past week. BIEL was particularly impressive with a bottom to top surge of 53.85 percent.

Looking at our company spotlights, Industry leader, GreenCell, Inc. (OTCBB:GCLL) closed the week strong with news of another significant development, this time with regards to the UltraTemp™ technology used in igniters. Through its Joint Venture with SenCer, Inc., GreenCell has developed an UltraTemp-C based firing system for its line of igniters, sensors and fuel cells. Per the press,

"The unique design provides for easy manufacture of sensors and igniters at temperatures beyond 1400C. The system provides for handling ease for all high temperature operations and is completely silica free. The unique "interlocking" block design is accomplished through software based manufacturing with no requirement for hard tooling."

Shares of GCLL have established a solid support level at 60 cents and surged on the week by 22.46 percent to close at $0.76. We encourage our members to keep a close eye on GreenCell as the company's technologies offer a significant opportunity to revolutionize several industries in the near term while shares are still traded at a discounted price compared to potential. Also, AllPennyStocks.com released an article on the Company late on Friday further discussing the news and the Company, click here to read the full article.