S&P 500 STRATEGY: STAND ASIDE (for definitions of terms see end of report)

Unlike the NASDAQ, the S&P 500 fell on the week. But as with the NASDAQ, there are signs that we could be in the process of making a bottom. The previous week we had a huge outside reversal (we won’t call it a key reversal because we were not making any major new lows although we made a new low for the move down). Big reversal weeks are often a sign of a bottom. Indicators are turning up from oversold levels. Overall we don’t have any major positive divergences on the weekly charts although we have clear ones on the daily charts.

Our best argument for the possibility of at least a good intermediate bottom is our cycles. The cycle that we appear to be following this decade is the 1930s. There was a major top in March 1937, a secondary top in August, then a financial panic. The first good low was made the first week of April 1938. We had a top in July 2007 (and interestingly a lower temporary top in late February 2007), a secondary higher top in October 2007, then our financial panic.[read more…]

TSX INDICES

The TSX Composite gained 3.6% this past week and all sub indices rose. Still we did not generate any new buy signals so officially we are still for the most part in a stand aside mode. Traders may wish to look selectively for bargains. The golds were beat up thoroughly the previous week so their short term has turned down. Most of the sub indices that were up on the week have seen their short term indicators go form down to up or at least neutral.

While we are seeing some signs of a possible bottom we can not come right out and say buy this market as we will require some more backing and filling and to actually form a bottom before we could say buy this market. [read more…]

ROUGH TIMES

One of the dangers of being a contrarian writer is when suddenly what you have been writing about for some time becomes the headlines. We expected a financial panic in 2007 and said so, and while it took time to materialize and while we didn’t know precisely what might cause it, the
fact is that it happened when many (we say the vast majority) were either blithely unaware or mocked the doomsayers.

So now what do we do? Write about how we were right? Or write about the headlines?

Writing about how we were right makes no sense because predicting disaster is no fun, even if it was obvious in coming. Writing about the headlines is difficult as well, because now what you were writing about is fodder for the six o’clock news. [read more…]

Why Spitzer was Bushwhacked
By F William Engdahl

http://www.atimes.com/atimes/Global_Economy/JC20Dj04.html

Disgraced New York State governor Eliot Spitzer had cause to feel frisky when he visited Washington in February. As he was paying off a call girl, the press was preparing to run a Spitzer broadside against the world’s biggest financial powers and President George W Bush, whom he described as a [tag]fugitive[/tag[ from justice and a partner in crime with predator lenders. It was a politically fatal coincidence.

Emirs take pity on dollar for now
Fabrice Taylor, Globe & Mail

http://www.reportonbusiness.com/servlet/story/RTGAM.20080321.wtakingstock0322/BNStory/
Business/home

[read more…]

THE “D” WORD!

The “D” word – depression – has popped up a number of times in interviews on BNN TV this past week. Of course, each time the response is “You’re kidding” or “Unbelievable” or “Impossible” or “You don’t really think so”. It has been mentioned many times in writing as well, and more of it is being seen of late even from respected media writers. Much of the “depression” writing continues to come from the crowd that often writes about these pending economic disasters. For years the doom and gloom writers have been dismissed, ignored, laughed at or treated as a sad joke as people who had no grounding in any reality of the “new economy”. Well, they may not be laughing much any more.

The events of the past week have hammered home the fragility of the banking system[tag]. If one thought that the $200 billion 28-day repo exchanging [tag]prime mortgage-backed securities for more liquid US Government treasuries was desperate, the unprecedented move to bail out the floundering Bear Stearns, the US’s fifth-largest investment dealer, was really desperate. That was the first time since the Great Depression that the Fed bailed out a financial institution. Bear Stearns may have survived the Great Depression, WW2 and many other ups and downs in the investment business, but this may be its last hurrah. [read more…]

TSX INDICES

The TSX Composite was down a mere .04% this past week. Keeping it up was energy, gold and materials while dragging it down was the financials, info tech and health care. Getting a lot of mixed signals here. A number of the sub indices were essentially flat – either up a little or down a little including the TSX 60 (up), Consumer Discretionary (up), Consumer Staples (down), Real Estate (up), Industrials (down).

We are beginning to wonder whether our 11,000 to 11,300 targets are in trouble. Oh it is still possible don’t get us wrong. These were measured targets from the double top on the TSX Composite. But since [tag]energy[tag], gold and materials essentially makes up about 48% of the TSX these strong sectors are keeping the TSX stronger then it might be. The MACD on the TSX Composite is trying to turn up but it hasn’t crossed over to the upside and we failed at resistance of the 40 week MA. [read more…]

S&P 500 STRATEGY: STAND ASIDE (for definitions of terms see end of report)

It was a wild and woolly week. The Fed came in to save the day with the $200 billion repo, taking back prime mortgage-backed securities for US Treasuries, and the market rallied like crazy. Then they were disappointed that it wasn’t enough so it sold off. Then, just as it looked like it might collapse again, S&P (the rating agency) predicated that we were nearing the end of the credit crisis so the market once again came back from a potential big down day. Then Friday’s bailout of Bear Stearns sunk the market and put it back in the red for the week. All in all, a range of 61 points on the week. Despite the volatility we made no new lows below 1,270.

In fact the only index to make new lows on the week was the NASDAQ. But we did get a new low close for the S&P; the DJI actually eked out a small gain on the week. The Transportation index also had a small gain on the week and is nowhere near its recent lows – a possible interesting divergence to keep an eye on. Even the Russell 2000 gained slightly but did see new lows for the move. [read more…]