October is set to treat investors, trick pundits

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In looking at start the start of October, we entered a period which began under a great deal of negative sentiment thanks to the volatility of the last few months and the financial media which always seem ready to trot out annual comparisons to October 1987 or various analogs to the 1929 stock market crash. We see this as a very bullish backdrop from a contrarian point of view. In fact, we are already seeing increasingly bullish signs across North American financial markets. The S&P 500 and Dow Jones Industrials have thumbed their noses at the mainstream media as they have risen 5% in the last week alone, one of the best starts to October ever!
 
What's more, we've seen gold and silver stocks return with a vengeance. The two miners Barrick Gold (ABX) and Timmins Gold (TMM) we wrote about last week have soared 15-20% since we highlighted their bullish insider activity and outstanding set-ups. Last Friday alone, the Market Vectors Gold Miners ETF (GDX*US) rose an impressive 8% and the S&P 500 made a powerful reversal, closing the day up 1.5% after starting the day down 1.5%, fulfilling a bullish Friday prediction on the miners and US market we posted on Twitter two days earlier. So we can see investor confidence is slowly returning- and we believe so, too, is speculation and appetite for risk.
 
 
Our proprietary Alpha Signals indicate the Venture (CDNX) is about to follow suit and surge higher.  The Venture chart's technical picture seems to confirm our forecast.  The Venture has been locked in a 6-week sideways consolidation and over the last week or so we've seen increasing volume on up days as momentum has increased. Another plus is the bullish positive divergence on its MACD indicator, which has climbed ever since the heavy capitulation day for the markets on August 24th. A break over the 540 and 554 resistance levels would provide as much as 50 to 100 points in upside for the Venture, which could amount to a 10% or even 20% gain.
 
We are also bullish on oil (which stunned many and gained 6% today) as well as energy stocks.  
 
 
In the chart of the US oil ETF (USO*US) we can see a collection of bullish elements, including a bullish rounded saucer breakout pattern that followed its own multi-week box-shaped consolidation (a pattern we're seeing in many indices and stocks), a recent sharp increase in volume and positive divergence on its MACD oscillator.
 
I've highlighted a trio of ideas we think will thrive as energy prices move higher:
 
 
Ballard Power (BLD) is a Canadian green-tech company that was founded way back in 1979 without sustaining much success. However, our forecasting work indicates that Ballard and other innovative and fast-growing fuel cell energy companies such as Plug Power (PLUG*US) are about to finally reward investors. What's interesting is that on Sept 14, Ballard insider Steven Karaffa made the first insider purchase in over a year.  He purchased 26,313 shares at $1.83, increasing his holdings by more than 100%. Why follow the insiders?  Well, in the 3 weeks following his purchase, the company landed both a US$17 million fuel cell bus deal in China and a purchase order for as many as 200 power back up systems for a large cellphone company in India. And shares have risen 10%. We also note that daily volume has been steadily increasing over the past two weeks and shares have now bullishly surpassed their 50-day moving average. Its 200-day moving average of $2.31 is sitting there like a target about 30% from current prices. Ballard Power is a stock we recently added to our Hedgehog Trader Newsletter buy list and we think it is well worth watching.
 
 
Fission Uranium (FCU) is a quality uranium explorer we've highlighted before for its steady insider accumulation. Shares held their own not far from the $1.17 level where we wrote about them in April thanks to continued positive exploration results. (For traders, we wisely suggested a stop around $1.10, its 50 day moving average at the time.) What shook things up was a July takeover proposal from Denison Mines (DML) which underwhelmed investors, resulting in both stocks hitting the floor. Both stocks have begun to recover and I remain especially bullish on Fission's prospects going forward, especially since we've seen energy prices put in a bottom and begin to surge higher, including a nearly 5% gain Tuesday. What I like from an insider standpoint is seeing renewed buying by CEO Devinder Randhawa who picked up 175,000 shares in late September at 65-67 cents. These were his first purchases since May around the $1 mark. Fission Uranium holds potential for significant price appreciation based on its excellent exploration success and potential for takeover at much higher prices. It's been on our Hedgehog Trader Newsletter buy list for over a year based on the potential we see.
 
 
Cameco Corp (CCO) is the world's largest uranium producer. Due to its high market cap and attractive 2.4% dividend, it's a uranium stock institutions will likely accumulate. When we last wrote about it in May, shares were trading in the high US$15 range and it rose to US$17 for about 10 days - fortunately, we suggested a tight US$15.75 stop which proved worthwhile as energy stocks pulled back. What we like at these cheaper prices is that two company insiders recently made purchases, marking the company's first insider buys since March. Scott McHardy and George Assie bought a combined 3,300 shares between late August and late September, spending over $50,000 in total. We also like that Cameco Corp recently regained its 50-day moving average which the stock can now use as a springboard for further advance.
 
We see any significant pullbacks in the next week as great buying opportunities.
 
This article appeared on INKResearch.com Wednesday Oct. 7 before the market open.
 

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