Volume Analysis Points Higher

05/30/2011 11:35 am EST


Mark Leibovit

Chief Market Strategist, VRTrader.com

Mark Leibovit of VRTrader.com uses volume patterns to determine recommendations, and his analysis suggests that both US equities and metals can go much higher over the next few years, as he explains in this exclusive interview with MoneyShow.com.

Mark, I would like to know about your tool. I know it’s very proprietary and not many people know how it works, but does it apply to specific stocks or specific funds, or is it focusing on sectors broadly?

Where volume is available, where we can analyze—whether it’s in the futures market, the equity markets, currency through ETFs—as long as we see volume patterns, we can make projections based on the tool.

Basically what the tool is saying is volume proceeds price. If more buyers have come in than sellers, or more sellers than buyers at key inflection points, that’s our trigger.

We’ve used it in currency markets, in commodities, in stocks, individual stocks, ETFs...Can’t do it in mutual funds, because we don’t have volume on the mutual funds—but we have surrogates, like the SPDR for the SMP500—and I take the total volume of trades on the major exchanges, like the NYSE or Nasdaq, and apply that to the major indexes.

So it has cross-applications, and we’re very pleased. As long as the volume is there, we’re okay.

So, based on the volume that you’re seeing right now, can you give our investors maybe a couple of ideas of where the opportunities are?

I think the opportunities on an intermediate to longer-term basis—meaning the next six months to two years—is still on the long side in the US equity markets, so any pullback would be an opportunity to go long.

It’s an old bull market. It’s already two years into it. It’s not like you’re coming in at the bottom now, so there are increased risks, but I still think the trend is up.

And I also favor the metals. I’m a big proponent—have been for ten years—of gold, silver, platinum, and palladium. But we just hit a little trading top here. I think it might be choppy for the next few months, because we had a big move, but the big picture? I’d be a buyer if we get a nice setback here in the next couple to three months.

You actually think that gold could double from here?

Absolutely. I’ve been predicting, since gold was $500 an ounce, that it’s going to at least be $3,000, and I've revised my target higher now, to $3,600. Silver, which got to about $49, I can see at $100 to $150 an ounce in the next two to five years.

I think you just have to dollar-cost average, because I don’t know if you can time the exact moment to buy any of these. If I think gold is going to $3,000, does it make a difference if I pay $1,500 or $1,410?

I mean, it depends what your perspective is. If you’re trading day to day, yes. If you’re more intermediate- to longer-term, no.

So, if somebody wants to get into gold, do you have a particular instrument they can invest in that you would believe would be the best way?

Well, I’m a little crazy this way, because I tell people I would rather see them own physical gold—actually take delivery of the metal. I even write this in my newsletter, even though we also talk about trade and the various other vehicles.

But, if I had to pick one vehicle for everybody, my main stock...it's the Central Fund of Canada (CEF). It’s about a $20 stock. [It closed just under $22 on Friday—Editor.] It’s actually a closed-end fund.

It’s been around since 1961, and it’s 55% gold and 45% silver—and there is no counterparty risk. There’s no intermediate bank, like there is Barclays with GLD. Everybody seems to favor that, but I don’t, even though I may trade it.

It must have done pretty well already this year and last year.

Yeah, I think it’s up like 30% this year. [Actually, closer to 6% year to date—Editor.]

It’s going to go higher. It’s just a question of, is it going to drop two points before it goes up another five points? I mean timing the exact entry...it appears the metals are a little toppy here, because we had the CME raise margin requirements on silver, and there seems to be a little correction now in the commodity market as the regulatory bodies are trying to cool down the speculation in the commodity markets.

This is going to be temporary because we’re in a huge commodity boom, so it’s just a question of whether it’s two months, or six months, until the momentum returns to the upside. That’s the art versus the science of predicting the exact moment.

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