VC Market Intelligence - February 2013

MARKET INTELLIGENCE FEBRUARY 2013 VISUAL CAPITALIST ABOUT VC MARKET INTELLIGENCE The goal of this monthly infographic is to provide a big picture snapshot of market signals, commodity trends, and economic indicators in an intuitive and visual way. MARKET TRENDS Month-to-month January 2013 vs Previous Month +8 +7 The major US markets moved significantly thanks to the temporary resolving O +5.77% S&P 500 O +5.04% Dow Jones O +4.06% Nasdaq +6 +5 +4 of the fiscal cliff. Canadian +3 O +2.02% TSX markets, particularly the Venture, were more flat in +2 +1 comparison. O 0.03% TSX-V -1 -2 MONTHLY TECHNICAL ANALYSIS MARKET COMMENTARY We are due for a small pullback, but it is more likely to be a quick dip instead of a big decline. By Jeremy Salsburg NEUTRAL SILVER LINING Intermediate term (1-3 months) A bearish rising-wedge pattern over the last four years is shown on this weekly chart of the SPX index. The index closed this past week just above the upper trendline 1 ASSET ADVISORS Market commentary provided by Jeremy Salsburg of Silver Lining Asset Advisors, LLC 561-948-3414 x10 [email protected] Price can extend slightly above this line for a few weeks, as it did back in early 2011, without nullifying the pattern. S&P 500 ANALYSIS 1550.00 1500.00 1450.00 1400.00 1350.00 1300.00 1250.00 1200.00 1150.00 1100.00 1050.00 1000.00 950.00 900.00 850.00 800.00 750.00 700.00 650.00 2010 2011 2012 2013 Bearish rising-wedge pattern These rising-wedge patterns have bearish implications because each rally/selloff bound within the two trendlines becomes both smaller in magnitude, and shorter in duration. This makes the rallies less convincing as each new cycle progresses. On a daily basis, stocks are very overbought – and a sideways consolidation or decline at this point should be expected to work off some of that oversold status. CBOE OPEN INTEREST FOR WEEKLYS PUTS ONLY WEEKLYS PUTS WEEKLYS PUTS A- (1 YEAR AGO) 4500,000 4000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Dec 21st 2012 Dec 28th 2012 Jan 4th 2013 Jan 11th 2013 Jan 18th 2013 Jan 25th 2013 Feb 2nd 2013 Revisiting last month's content, the chart above shows open interest on weeklys puts at a new recent high. Even though volatility (as measured by the VIX, closing at 12.90 last Friday) is low, there is enough protection in place to prevent a large selloff. As such, a sideways consolidation is much more likely than a big drop anytime soon. EXCLUSIVE RESEARCH BY VISUAL CAPITALIST ARE SILVER JUNIORS UNDERVALUED? Last month, we showed that gold equities were possibly valued in contrast to bullion using the 0.6 0.4 GOLD GOLD 0.2 BUGS TO PRICE 0.0 INDEX RATIO '97 '01 '05 '09 '13 Since we weren't able to come across anything similar for silver, we decided to compile an index of primary silver junior miners under $1B market cap. HERE IS THEIR PERFORMANCE RELATIVE TO BULLION: Index - Silver Price 45 8. 40 35 30 25 4 20 3. 15 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 RATIO: SILVER JUNIORS Ratio 2.5 2.0 TO Mean Ratio SILVER PRICE 1.5 1.0 The value of primary silver junior miners is at its lowest 2013 0.5 2012 2011 2010 since the finan- cial crisis - and half of its value 2009 2008 2007 2006 compared to 2006/2007. 2005 2004 Companies included in index: COMPANY MARKET CAP ($M) WEIGHT Silvercorp 760 13.87% Endeavour Silver 720 13.14% CONCLUSION MAG Silver 643 11.73% Primero Mining 596 10.88% Fortuna Silver 527 9.62% Like gold equities compared to gold, junior silver producers also appear to be undervalued. If silver equities were to revert to the mean ratio of the last 10 years, silver juniors would increase 51% in value. Aurcana 411 7.50% Mandalay Silvercrest Alexco 373 6.81% 273 4.98% 247 4.51% Great Panther Silver 212 3.87% Scorpio Golden Minerals 204 3.72% 151 2.76% US Silver 150 2.74% Excellon Resources 136 2.48% Impact Silver 77 1.41% MARKET DASHBOARD ECONOMIC INDICATORS UNEMPLOYMENT RATE 7.9% |UNITED STATES Understanding VC Market Intelligence MONEY SUPPLY M2 10.40 VIX VOLATILITY INDEX 52 WEEK HIGH IN TRILLIONS 52 WEEK HIGH 13.51 1 CURRENT PREVIOUS MONTH 52 WEEK LOw PREVIOUS MONTH - THIS MONTH 52 WEEK LOw 229.6 CPI CONSUMER PRICE INDEX 52 WEEK HIGH GDP GROWTH Q4 – 2012 CI RETAIL SALES GROWTH VS PREV QUARTER PMI CONSUMER CONFIDENCE INDEX PURCHASING MANAGERS INDEX -0.1% 73.1 $370.12 54.1 $370.12 Q3 - 2012 3.1% $368.55 1 53.1 66.7 HIGHLIGHT The U.S. PMI raised to the high- est level in January since April 50.7 + 58.6 2012. Consumer confidence dropped to a 52 week low. 58.6 $356.96 49.9 EUROZONE CANADA CHINA PMI GDP UNEMPLOYMENT 2.0% 53 1.80% 1.60% 1.40% Current Previous Year 52 EUROZONE 11.7% 11.7% 51 1.20% 50.5 1 50.4 O 50 1.00% 0.80% 0.60% 0.40% CANADA O 7.1% 7.2% 49 urrent 47.9 48 0.20% 47 0.1% 0.00% |-0.1% t -0.20% -0.30% -0.40% -0.50% 46 CHINA' O 47.8 49.0 45 *Employed Person Index COMMODITY TRENDS Percentage change from last month 15% 14% COMMODITY AV. PRICE SUMMARY 13% A strong month for iron ore and energy, potentially feeding off signs of a U.S. recovery. GOLD (oz) AG SILVER (oz) PT PLATINUM (oz) $1670.95 $31.11 $1643.98 12% 11% 10% OIL OIL (WTI) GAS NAT. GAS (HENRY HUB) $3.34 U URANIUM (LB) $94.43 7% $43.88 6% 5% $150.38 $3.65 $0.92 FE IRON ORE FINES 4% CU COPPER (LB) AL ALUMINUM (LB) 3% 2% 1% FE OIL PT CU GAS AU AL AG -1% -2% 3% -4% -5% VISUAL CAPITALIST For more information on investing and commodities, visit us at: visualcapitalist.com LO