Yukon's Economy gets a boost from Alexco's first quarter production.

Section that highlights Alexco Resources Corp.:
"The Yukon Economic Outlook forecasts mineral exploration spending to exceed $250 million, setting a record high.
Mineral production is expected to exceed $560 million this year — up from a forecasted value of $284 million in 2010 — due to strong gold, silver and copper prices and the recent launch of Alexco Resources Corp.'s Bellekeno silver-lead-zinc mine and Yukon Zinc Corp.'s Wolverine zinc mine.
The Bellekeno mine officially started commercial mining operations in January, while Yukon Zinc is expected to reach commercial production at the Wolverine mine in the third quarter of this year, according to the government's outlook.
"Current estimates have the total value of production from Wolverine and Bellekeno at almost $300 million for 2011," the outlook report states in part."

Yamana Gold Inc. TSX: YRI - Break above the 50 MA, Strong bullish momentum - UPDATE - 2.15% up

Yamana Gold Inc.  TSX: YRI - Review May 24th, 2011.

Strong move today, however on average volume.  The MACD is signaling continuing upside momentum with the RSI just getting above 50.
With today's move in Gold to 1527, Yamana Gold (YRI) is poised for continuing upside.

Below is a live Gold chart from Kitco:

UPDATE May 25th, 2011:

Up 2.15% today, with continuing momentum.  However, Today's rally seems to be on lower volume so be cautious.

Abercrombie & Fitch Co. (ANF) - Be cautious of today's move - May 23rd, 2011

Abercrombie & Fitch Co. (ANF) had a 0.58% jump May 23rd, 2011.  The the S&P500, Dow Jones, and the NASDAQ were all down over 1% as well.  So here are some reasons to be cautious of this move.

1. Slow stochastics / RSI shows a bearish divergence in May.
2. MACD momentum is pointing down.
3. Low volume move.  This jump had no conviction.


With stocks in general in negative territory, and with GAP INC (GPS) close last Friday, a correction in ANF is likely to occur. 

Alexco Resource Corp, TSE:AXR, AMEX:AXU, Q1 Results Highlights: Production of 447,524 ounces silver, calendar year 2011 production guidance of 2.8 million ounces silver

Alexco Resources Corp. (TSE:AXR, AMEX:AXU) Released its 1st Quarter results on May 12th, 2011.

"Third Fiscal Quarter Highlights

• Net income for quarter of $3.5 million ($0.06 basic and diluted earnings per share) and pre-tax income of $5.0 million on combined mining and consulting services revenue of $20.5 million
• Cash flows from operating activities of $7.2 million
• Bellekeno mine revenue of $18.8 million and gross profit of $9.5 million, on sales of 3,083 tonnes of lead-silver and zinc concentrate
• Production of 447,524 ounces silver, 3,682,304 pounds lead and 1,334,144 pounds zinc
• Realized metal prices averaged US$39.88 per ounce silver, US$1.20 per pound lead and US$1.07 per pound zinc
• Cash costs of production1 of $8.88 per ounce of payable silver produced, net of by-product credits
• Bellekeno ramp up continues, maintaining calendar year 2011 production guidance of 2.8 million ounces silver, 18 million pounds lead and 8 million pounds zine"

Daily chart Hosted by: StockCharts.com

 

The current chart looks very promising.  The MACD will likely have a bull cross over this upcoming week.  The RSI has plenty of room to run.  The 200 Day MA was not touched but seems there is heavy support at the current level.  Classic Morning Star candlestick formation May 16th - May 18th followed by a DOJI on May 20th.

I am expecting a run for the 50 Day MA.  Silver has seemed to turn already as well.   With Alexco's impressive Q1 financial results, Alexco's Management team has proven its ability to execute on their plans.  This silver mining stock is one to watch throughout 2011. 

Current Entry: 7.20

Additional Reading:

Alexco Resource Corp.: Emerging, Undervalued Silver Producer  

Alexco turns in 'historic' first full quarter of silver production

Alexco Reports Net Income of $3.5M and Operating Cash Flows of $7.2M in First Quarter of Production

Learn more above Alexco Resources from CEO Clynton Nauman

 

Gap (NYSE:GPS) meet reality - How 17.5% drop in a day signifies a re-evaluation of the retail sector has begun

 
At the start of the day Gap Inc gapped down below the 200 MA.  This is an extreme example of stock re-evaluation. So what happened?

First Quarter earnings were announced today.
Here are some highlights from the announcement:

- Gap Inc. (NYSE:GPS) today reported that net income for the first quarter, which ended April 30, 2011, decreased 23 percent to $233 million compared with $302 million for the first quarter last year.
- As stated earlier in the year, the company expects business performance during fiscal year 2011 to be heavily impacted by pressure from sourcing cost inflation, particularly in its value channels.
- While the company anticipated that the cost of goods would increase during the back half of the year, costs are actualizing above the initial estimates.

What the retail sector is finding out is that food / energy are of more importance to the consumer.  As food and energy have sky rocketed, stores are force to cut margins to incite consumers to purchase.  But accompanying food and energy on their surge up was clothing materials such as cotton.

 
Cotton has come off its multi year highs, but no doubt higher prices will be around for sometime.
Clothing retailers such as The Gap, American Eagle, and Abercrombie and Fitch are starting to feel the pinch resulting in narrowing gross margins. 

For some more information on the squeeze these and other retailers will face see:
US clothes shoppers facing squeeze

Now for a chart for Retails via ETF: XRT 

UPDATE: 5 day Moving avg holds - End of Day SLV and S&P 500 charts

Just to update my last post with the end of day charts.  As expected the 5 day MA held.  The S&P500 and SLV made their way higher to close.
Using the SPY as a proxy for the S&P500 to show volume:

The yellow line is the 390 period moving average which equals a 5 day moving average on the 5 min chart.  After the test just after 11 am, the market rallied quickly higher, pulled back, then closed up for the day.  This is a positive sign that the short - mid term trend change that happened on the 17th might be continuing for the next couple of weeks.

Above chart is the daily for the SPY.  Since the January 10th, 2011, the market has been trading sideways.  Today the SPY has broken above the top of the channel.  What is more encouraging is that the momentum indicators show a shift as well.  Slow Stochastics is pointing up indicating a increase in upside momentum as well as the MACD that has held the 0 level and is looking as if a "buy" signal cross over will occur early next week. 
I am not long term bullish on the Stock market, as the economic situation is unsustainable, however, QE3 will enviably give the market a boost.  However... If Elliott wave count that is generally accepted is true, then the impulse wave off of the July 2010 lows is in its final leg to the upside.  If there was a 32.8% retracment even from the current level, a drop to 121 would occur on the SPY.  Another way to look at this is that this entire year has been a correction through time and thus upside movement would be a confirmed trend change leading to another impulse.  Regardless, stay vigilant and ensure risk management via stops.

Silver has followed a similar pattern with a test of the 5 Day MA happening just after 11.  The SLV closed basically flat on the day.  This is to the surprise of the sellers between 10-11 am.  The bottom fell out of silver but the 5 Day MA held quite nicely.

As you can see, Silver had a substantial retracement from the highs of around $50.  This was not unexpected, as the price moved from around $17 to $50 in about 9 months.  The Slow stoch looks like it could pop up however it would be considered "locked in" at this stage until it can get above the 20 level.  The MACD is less encouraging that the S&P 500 as the MACD line is under the 0 level but is currently looking as it a bullish cross over will occur next week or the week after.

5 day Moving avg holds - SLV and S&P 500 charts

Below are 5 minute charts.  To get a 5 day moving average I placed a 390 period moving average on the charts which is denoted in yellow (usually my 200 MA).

Today just after 11 am, there was a test of the 5 day moving average.  The fact that a change of trend appeared to occur the 17th, this successful test and bounce could indicate additional upside potential.

The upside could be justify as more QE3 chatter is circling on the internet.  This speculation may not be very trust worthy, but have a look at the latest Philly Fed survey released today.

	Prior	Consensus	Consensus Range	Actual
General Business Conditions Index - Level	18.5	23.0	15.0  to 28.0	3.9

Dramatic miss on the consensus could force government to provide further accommodation as the QE2 deadline quickly approaches (June 30th, 2011).  Many people including myself don't believe the US economy can handle the removal of this critical source of funding that the government has created.  A typical analogy is the economy is like a drug addict with cheap credit / QE as the drug.  When the party is up, an extended crash will take place.  If this scenario does take place, it could signify a dagger in the heart of the worlds current economy practices.  That is, stimulating an economy to cushion a recession just kicks the can further down the road but every kick requires an exponential amount of stimulus. 

I reluctantly call this Keynesianism as I wrote a paper on how Keynes would never have agreed to this continuing action as his principles were not meant for our current system.  He proposed a dramatically different and more sustainable system that was shot down by America using the Breton Woods convention as it was in the worlds interest but not in America's interest at the time.  Coincidentally, now the US would be benefiting from the system which was purposed.  Read more here: Is John Maynard Keynes Turning in his Grave?

The scariest part of this current economy conundrum is that there are only two outcomes.  Deep recession surpassing the 2008 crash or hyperinflation due to additional quantitative easing.  This is another article I wrote which can be read here: Pick your poison.

Next chart is SLV which is the most popular ETF that tracks Silver.

 
Exactly the same test of the 5 day MA  which has up until now held twice.  Sliver have pulled back almost 15 dollars since it almost touched $50.  This correct was much needed and could provide an entry into this metal.  Commodities have come off their highs but with additional quantitative easing the safest trades are in the commodity complex.