The last full week of May trading spawned another mixed bag amongst the North American markets. The Canadian markets paced the week with sizeable gains, while the main U.S. indices fell in unison for the fourth straight week, although recovering significantly from lows to stave off large losses and close only mildly lower across the board.
The observance of Victoria Day shortened the Canadian trading week, which may have proved to not only be restful for the trading community, but beneficial to the markets as the week started with a solid dose of bad news from Europe. More downgrades were smacked to Greece's fragile credit rating. Protestors in Spain expressed their disgust with spending cuts and wickedly-high unemployment rates and dealt the ruling Socialist a crushing election blow. The win for the conservative Popular Party puts it in a prime spot to win the general elections and return to power after eight years of Socialist rule. Further European woes were evident with warnings being issued on Italy's debt as Standard & Poor's cut its ratings outlook on Italy from stable to negative.
But…things picked up for the markets on the final three days of the week which allowed the U.S. markets to recover part of its early-week losses and the Canadian markets to flourish, pushing the S&P TSX Composite back near four-week highs. Traders will be looking for continuation in the U.S. markets after taking Monday off for Memorial Day in the States next week.
The U.S dollar weakened, giving light to rising gold and copper prices, which always strengthens the resource-heavy Canadian markets even as financial markets on both sides still languished. Sentiment is sentiment and even an increased dividend and 13 percent increase in quarterly profit announcement from the Royal Bank of Canada couldn't slow the financial slide as it and other big banks, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, reported profits that missed expectations.
Positive notes did come in the form of rising commodities. Light Crude Oil for July delivery advanced 1.1 percent on the week to $100.75 a barrel on the New York Mercantile Exchange after touching $102 on Wednesday. Oil prices could very well soon be in focus again with Yemen on the brink of civil war and world leaders barking once again for Libya's Moammar Gadhafi to step down.
Gold for August delivery, the most actively traded contract, surged again this week; adding nearly two percent for the week to close at $1,537.60 per troy ounce. Silver got its groove back as well; July silver rose a whopping 7.9 percent on the week to $37.86 an ounce. July copper, which did show some weakness intraweek, added 1.7 percent to wrap the week up garnering $4.19 per pound. Although the U.S. Dollar Index decreased significantly, the relationship of the Loonie to the Greenback remained relatively stable on the week with one Canadian dollar buying 1.0231 U.S. at Friday's close.
In another sign of bank woes, the FDIC on Friday shut down Snohomish, Washington-based First Heritage Bank with its $173.5 million in assets and $163.3 million in deposits, pushing to the tally a total of 44 U.S. bank failures in 2011 still sluggish in the recession aftermath and mounting troubled loans. On a positive note, this is still better than 2010 when 78 banks had closed by the same time that year. It should be duly noted, however, that in contrast to the much-publicized banking issues, banks insured by the FDIC reported a 67 percent increase in profit of $29 billion in the quarter ended March 31 as compared to the first quarter of 2010.
In another round of the "Meeting of the Minds," the leaders of the G8 ended their summit Friday in Deauville, France. Little information came from the latest meeting other than a pledge to cut debt burdens and assurance that the global economic recovery is gaining strength and becoming self-sustained.
The S&P TSX Composite Index extended its green weeks to two in a row; climbing 145.32 points, or 1.06%, on the week to 13,797.59. The TSX Venture Exchange snapped its losing streak by adding 69.23 points, or 3.41%, to finish at 2,100.67.
In the States, the Dow Jones Industrial Average extended its run of down weeks to four; giving up another 70.46 points, or 0.56%, on the week to 12,441.58. The much-broader S&P 500 followed suit; dropping 2.17 points, or 0.16%, on the week to close at 1,331.10. The tech-rich NASDAQ composite closed higher than it opened the week, but still was down as compared to the previous week's close; losing 6.46 points, or 0.23%, to close at 2,796.86.
On Tuesday, the U.S. Commerce Department said new home sales increased for the second straight month by 7.3 percent in April to a seasonally adjusted 323,000 unit annual rate, the highest level since December 2010. However, compared to April last year sales were down 23.1 percent.
On Wednesday, it was reported that orders for U.S. durable goods dropped 3.6 percent in April. Led by slacked aircraft demand and auto parts supplies stemming from the earthquake in Japan, April saw the biggest drop in durable goods orders since October 2010.
On Thursday, Statistics Canada reported that from February to March 2011, average weekly earnings of non-farm payroll employees increased 0.5% to $876.53. On a year-over-year basis, average weekly earnings were 4.1% higher compared with March 2010. Stateside, the original Q1 GDP estimates were confirmed showing tepid growth as steep rises in fuel and food commodity prices combined with decreases in government spending and high unemployment stunted any signs of rapid economic recovery. GDP slowed to 1.8 percent for the quarter from 3.1 percent in the final quarter of 2010. Consumer spending and business inventory and exports aided in gains. Additional hard-to-swallow news came as the Labor Department unexpected reported a rise in applications for unemployment benefits for the week ending May 21, 2011. Jobless claims increased by 10,000 to 424,000 for the week.
On Friday, the U.S. April Personal Income report showed slower spending than expected with Personal Income moving upward by only 0.4 percent, Personal Consumption Expenditures moving the same amount. The National Association of Realtors announced that the number of Americans signing contracts to buy previously owned homes took a nosedive by 12 percent after showing signs of life with an increase of 3.5 percent in March; a sign the industry simply continues to struggle. The Thomson Reuters/University of Michigan Consumer Sentiment index rose to 74.3 in May, topping expectations.
Next week in Canada, investors will be on the lookout for first quarter GDP figures on Monday and updates on the Industrial and Raw Materials Price Indices as well as the Bank of Canada's interest rate decision on Tuesday.
In the States, May's consumer confidence stats will hit the wires on Tuesday. June will be kicked off on Wednesday with ADP's employment change information and April's construction spending data. Thursday will bring about new stats on factory orders and the weekly update on unemployment claims. The economic data week will be concluded on Friday with a fresh new unemployment rate that includes May and figures on nonfarm payrolls.
Among the stocks we watched this week, miner Metanor Resources (TSX-Venture:MTO) climbed the first couple days of the week to hit its intraweek high of $0.285, but slipped back to close the week even at 26 cents when all was said and done. The other stock we had on radar, mineral resource explorer Largo Resources Ltd. (TSX-Venture:LGO), had a solid week and closed strong on Friday; up three cents on the week, or 7.5 percent, at $0.43 after touching its intraweek high of 44 cents.
In the States, biotech TapImmune, Inc. (OTCBB:TPIV) tried over and over again to sizzle upward, but lost the momentum each day, but still produced multiple opportunities as it hit an intraweek high of 29 cents on Thursday, but slipped back to close the week even at 19 cents. The other U.S. stock on our watchlist, tech company Dynamotive Energy Systems, Inc. (Pink Sheets:DYMTF), slipped backwards on Monday, but closed higher in the green every other day for the remainder of the week; wrapping the week up a penny, or 7.69 percent, at its intraweek high at 14 cents.
If you'd invested in all four stocks and held them to the end, you'd have seen an average gain of 3.80%. However, if you'd bought all four at the beginning of the week and sold each at its peak, you would have realized gains of a solid 19.98%.
Next week, we focus on Romios Gold Resources, Inc. (TSX-Venture:RG) and BonTerra Resources, Inc. (TSX-Venture:BTR) and In the States, look for big things from Golden Phoenix Minerals, Inc. (OTCBB:GPXM) and Amarok Resources, Inc. (OTCBB:AMOK).
It was a solid week and month for stocks that we focused on in May at AllPennyStocks.com. News flowed regularly which helped fuel solid gains supported by strong fundamentals and technicals. Notably, Tootie Pie Company (OTCQB:TOOT) issued a release last Wednesday announcing its plans to open its second Tootie Pie Gourmet Café in Austin, Texas. This will bring the rapidly-expanding Company's total to six, including others located in San Antonio, Fredericksburg, Austin, Dallas and Frisco, TX. Shares of TOOT have been driving upward since we first brought it back into the spotlight in March at 43 cents as a value proposition for such a burgeoning company. Shares surged to touch 70 cents and are still holding firm above key technical indicators at 58 cents, representing a nearly 35 percent premium still to our introductory price for those who didn't snag profits when the price increased 62.79 percent.
BioMedical Technology Solutions Holdings, Inc. (OTCBB:BMTL) also updated shareholders with news this past week. On Tuesday, the Company disclosed that it has completed another sale of its unique Demolizer™ II biomedical waste disposal system to its Russian medical distribution partner, ZAO NPP "MEDINTECH-M." This represents the fourth sale to the Moscow-based medical supplier. BMTL is a low-key company with huge potential in this price range that is just waiting for a catalyst to send shares soaring. Since introduction to our members just two weeks ago, the price of a share has risen from 11 cents to touch 18 cents (a move of 63.64 percent) and shares are still holding strong; closing Friday at 16 cents for gains of 45.45 percent.
We also sent out two quick alerts recently on companies that we have followed for extended periods of time, Gryphon Gold Corp. (OTCBB:GYPH) and MagneGas Corp. (OTCBB:MNGA). Gryphon is moving forward quickly towards gold production this year and starting to grab the attention of the investment community as such. We picked up on the great news of financing being completed and the spike in volume and congratulate our members who seized the opportunity from our last newsletter when shares were down at 14 cents as shares swelled to a high of $0.185, an increase of 32.14% last week before settling at $0.18. MagneGas issued news regarding a potential deal with the U.S. Navy, which spurred a prompt report to our members to check them out while a share price was at 19 cents at Tuesday's close. Volume has been flowing in since the news with shares popping to touch 22 cents (a 15.79% rise) on Friday before closing at $0.21. We encourage our members to pay attention to both of these companies in the coming weeks for more news which could propel them, as well as our other Company spotlights, potentially much higher.
On the month, believers in the old phrase, "Sell in May and walk away" are smiling at the moment for the most part. Although pulling well off its lows, the Canadian markets suffered their third straight month of losses and all three major U.S. indices gave back nearly all of April's gains. Despite the monthly losses, the Canadian markets had a particularly strong final full week of May with the S&P TSX Composite markedly showing strength in the second half of the month. Resources appear to be kicking it into gear and if financial plays can gather any sort of momentum, June just may be the time that snaps the string of red months for the Great White North.
The bulls still appear to be sluggish with global turmoil hanging in the balance and the wrapping up of QE2. Honestly, June should be an interesting time with regards to any additional government intervention as mumblings about whether or not a third round of quantitative easing will be forced upon Fed Chairman Ben Bernanke despite Big Ben's firm stance (at the moment) about no more coming in the near future. The disasters in Japan are now becoming something for the history books as time passes, but it is still showing effects on economic data as U.S. GDP and durable goods orders slowed with the automobile industry placing at least a portion of the blame on the catastrophe. A dart can be thrown at a map and the country hit is having some sort of economic or civil unrest that will become a mention of reason if the markets don't reverse course next month.
The big boys certainly dominated the headlines throughout May. Microsoft's purchase of Skype for a cool $8.5 billion in cash rattled cages as the Company tries to keep pace with Google's communication efforts, but didn't do much for the stock as shares of MSFT fell 4.5 percent on the month. Keeping the Google theme, the final week of May saw the industry giant in the news as PayPal unit filed a lawsuit against Google Inc. over Google's new online payment service accusing them of swiping top PayPal executives who then brought confidential information with them to their new employer. LinkedIn, the massively popular business social site highlighted IPO's for the month with an entry price slated for approximately $45 a shares quickly wiped-out as the value of a share rifled upward to touch $122.50 before finally coming to a halt last week at $88.32.
Gold may be off its highs of the month, but the real story is its course and recovery over the last four weeks. Starting the month around $1,570 per ounce, August gold plummeted nearly $100 an ounce in the opening week, but has reversed the plight to develop a strong upward channel heading into June in excess of $1,560 an ounce. Commodities in general found strength after a rough beginning in May to pare early losses. Energy stocks are heading towards the spotlight with the days after Memorial Day kicking off the unofficial start of the summer driving season. On the month, the ARCA Oil Index fell nearly 75 points to 1,315.40, but the total reflects a nearly 50 point climb during the last full week of May.
Despite depressing news primarily dominating the wires, Canada's S&P/TSX Capped Financials Index wrapped the month relatively flat with the last week of May proving to cost the index nearly five points; staining what could have been a pretty solid month.
May followed the path that was set forth by March and April with the S&P/TSX Composite Index falling 147.20 points, or 1.06%, to 13,797.59 while the TSX Venture Exchange subtracted 151.47 points, or 6.73% to bring its total to 2,100.67.
May didn't benefit the U.S. markets either with the Dow Jones Industrial Average giving up 368.96 points, or 2.88%, to 12,441.58; while the S&P 500 fell 2.38%, or 32.51 points to move to 1,331.10. The Nasdaq Composite decreased its total by 76.68 points, or 2.67% to wrap up May at 2.796.86.
Among the stocks that we watched in April, the champion of the month in Canada was Northern Gold Mining, Inc. (TSX-Venture:NGM) which we listed for the first week of May at which time the price was at $0.455. In a very tough month for the Venture Exchange, Northern Gold proved resilient and overcame a mid-month dip to close out May strong at $0.50 after touching its high for the month on Friday at $0.53, representing a rise of 16.48% and looking good going into June. In the U.S., the final week of May provided our single biggest mover with TapImmune, Inc. (OTCBB:TPIV) surging from our initial price of $0.19 up 52.63% to hit 29 cents. Although TapImmune slid back to close even for the week, traders were provided several opportunities to benefit from this penny stock to watch throughout the week. We congratulate all the followers of our "Penny Stocks to Watch" who after doing their own due diligence of course, and consulting with a financial advisor, were able to reap rewards from these most recent penny stocks and we look forward to another solid month in June.
