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Dear Fellow Trader

Proposed government changes to the financial system were met with a lot of pessimism Thursday. As a result the Dow Jones Industrial Average shed over 200 points and most of the selling happened in the morning. The DJIA ended the day at 10.389.88. If there is renewed fear over the state of the financial sector we could see a lot more selling pressure in the next few weeks. On the down side 10,200 appears to be the first support line. However if we can hold near the 10,400 it could encourage some renewed investment.

Negative sentiment was also in the tech sector as the NASDAQ gave up all of its gains it made since the start of 2010. QQQQ, the EFT of the NASDAQ composite dropped 43 cents on Thursday and finished the day at $45.49. I think there is a very good chance the ETF hits $45 before we see any major buyers jump in which will basically be the next support area in sight…

The fear in the market place helped drag down gold prices. According to some comments I have heard, there are some concerns that new restrictions on risky trading practices could impact the gold investments. GLD, the major U.S. gold ETF, broke through major support levels on the news. The ETF dropped to its lowest point in January and closed Wednesday at $107.37. Looking at the chart I do see some strong support at $106. But we could still slide down to the Dec. 22 low of $105.31.

I now want to turn to the Canadian market and look at a stock on the TSX Venture. Back in August we had a buy recommendation for FLX, a Rare Earth Play. Our initial entry point was around 11 cents for a quick trade and then we realoaded again and i have been holding these since then. And because of the sector we see this as a long-term (6 to 18mths) investment. The stock has performed very well over the last few days and the reason I want to mention it is because we see another buying opportunity. The stock big a big move on Wednesday it broke through resistance at $0.25  on Thursday. It started Thursday at $0.26 and finished at $0.27. $0.25 was a strong resistance level and I am expecting it to now be a short term support area. We see this as a good area to buy and are very bullish on this stock.

The volume we see is most probably institutions loading up on it. I met with the company in Vancouver last week-end and they have great projects…and more importantly some of the Big Toronto names are actively talking with the management….

Although gold prices took a beating for a second day in a row, our gold pick AGCZ continues to perform better than expected. The stock rallied strong in the morning, hitting an intra day high of $0.42  (i think only one trade happened there..). However it couldn’t hold those gains as traders digested the news from Washington. The stock ended the day petty much where it started closing at $0.301. I am still bullish on this stock because it continues to outperform gold and I think that trend will continue when gold prices turn around.

HSCO is turning out to be an amazing pick and despite all the selling pressure in the market this continues to outperform. The stock opened at $1.09 and moved up through the entire session to close at its high of $1.30. The moves we have seen in the last two days tell me that this stock will at least touch $1.50.

Of course not all stocks were immune to the general market sentiment. Our pick BYSD ended the day in negative territory closing at $0.455. However there appears to be strong support at $0.40. When it hit that level on Wednesday a lot of investors jumped in and drove the price higher. I know there are big plans for this company, so let’s be patient and we should see this stock continues its ascend.

RVBF was another stock that was hit because of the the market pessimism. However the stock continues to hold support in the $0.08 to $0.07 area. On Dec. 15 the stock hit a low of $0.061 but investors jumped in and drove the price to $0.136 a few days later. I think we could see a similar move again.

Have a Great Trading Day!