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

• The S&P 500 rose for the third consecutive week up about 6.2% on the week.
• We spiked into resistance of the 13 week MA near 844 and our first initial target of 840.
• We have also run into resistance of the 100 day MA at 838.
• We are positive as long as we stay above … [ read more ]

TSX INDICES

The TSX continued its recent string of gains for the third consecutive week with another 3.7% gain. Still the end of the week saw a sell off that left the index under its opening levels of the week leaving a slight negative tinge to the gains of the week. This may be signaling a pause in the recent rebound rally. 11 of 14 sub indices finished up on the week with the only downs coming from Healthcare, Golds and Utilities. The fall in the Golds appears to be a correction within … [ read more ]

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• G20 meets this week in London and it could be a riotous affair.
• Will non-farm payrolls be down over 600 thousand again.
• Gold and silver faltered this past week as the US$ jumped.
• Could Gold and silver be poised for another corrective down move?
• Oil rising but natural gas quickly fell back to new lows. Energy stocks at resistance.

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WHAT A MESS!

It is generally considered that the Roman Empire was at its peak around 117AD under Emperor Trajan. From there it was downhill for centuries, although not in a straight line.

Its decline can be primarily traced to three reasons: declining moral values and political civility at home;an overconfident and overextended military in foreign lands; and fiscal irresponsibility. These reasons were cited by David Walker, former Comptroller General of the United States (1998-2008) who in a speech in August 2007 warned of the similarities … [ read more ]

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

• Following the previous week’s huge reversal the S&P 500 followed through with another up week by 1.6%.
• Following the quantitative easing the S&P rallied up to the 50 day MA but failed to break
  through and follow through was feeble as the market fell on Thursday and Friday.
• We did break out of the down trend line from the August/September highs.
• This could be setting in motion our rebound rally to the 1000/1050 level.
• TThe S&P commercial COT rose to 47% from 46% as long open interest rose by 26,000
  contracts indicating fresh … [ read more ]

TSX INDICES

For the second week in a row the TSX Composite closed up on the week this time by 2.4%. Some good gains in the early part of the week were trimmed at week’s end. Leading the way was the TSX Gold Index up 9.4%. Energy was up almost 3%. Despite the up week a number of sub indices closed down but the losses were very minimal. Losers were Consumer Staples … [ read more ]

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• Markets had another up week following the big reversal week seen the previous week.
• Quantitative easing goosed the markets and bonds but follow through was feeble..
• Gold responded to quantitative easing with a huge reversal up week and gold stocks (HUI) finally gave us an official buy signal.
• The S&P 500 may be finally having its rebound rally and we would target up to 1000/1100.
• Gold should cross $1000 and target $1100 to $1250.
• Bonds are shaky due to a falling US$. But the Cdn$ reversed sharply to the upside.

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

• The S&P 500 put in a sharp reversal week up 10.7% for the biggest weekly jump since
  late November.
• There were numerous positive divergences at the lows especially on the weeklies where the MACD indicator did not really turn down again despite the new lows recently. This is a positive development if you want to be a bull .
• Support is now 740 and 720. Below 720 we will test the lows again.
• At 666 (hmmmm!) the S&P 500 fell just short of our target of 650.
• The Dow Jones Industrials (DJI) on the other hand hit down to 6440 in the vicinity of our
  6500 target. We also hit the bottom of our potential descending wedge triangle for the DJI.
• Resistance on the S&P 500 is seen at 770 but  … [ read more ].

TSX INDICES

A week after making new lows the markets rebounded sharply this past week. Every sector was up on the week except for the TSX Gold Index and it was unchanged. Leading the 9.4% gain for the TSX Composite was the TSX Financials who were up a sharp 19% on the week. Many of the maligned banks were giving buy signals. So is this it? The bottom is in? well actually we don’t think so but we are making some noise for at least a temporary  … [ read more ]

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• Big reversal week. Is the intermediate bottom in?
• Too soon to tell but this week might at least resolve it as we are near a breakout on a number of downtrend lines.
• We have major positive divergences at the lows.
• The US$ appears vulnerable.
• Oil prices rising again and the energy stocks look positive.

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

• The S&P 500 fell a sharp 7.0% on the week following the previous week’s 4.5% decline.
• We are now down 26.7% from highs seen at the beginning of January 2009.
• We are down 56.8% from the highs of October 2007 making this the steepest stock market decline since the Great Depression collapse (Dow Jones Industrials fell 1929- 1932 – 89%).
• Bearish sentiment is very high.
• Despite the new lows in the market the indicators are not confirming this – a positive divergence.
• We have fallen below the 2002 lows. … [ read more ]

TSX INDICES

Gold is going through a correction but the broader market just can’t find a bottom. The TSX Composite fell a sharp 7.3% this past week posting new lows in the process. Only one sector was up – Gold. And we can’t say it was very impressive up either. Info Tech, Consumer Discretionary, Industrials, Telecommunications, Real Estate and Income Trusts all saw new lows. Financials saw their new lows the previous week and managed to hold a slightly higher low this past week. If there was an encouraging sign anywhere aside from the Golds it is in the Energy, Consumer Staples and Metals & Mining all of which are at least showing us some bottoming signs. For all other sectors it is why bother unless you just wish to speculate. The three sectors along with the Golds appear to us as the only place to legitimately be. But be warned that other than the  … [ read more ]

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• It is now officially the second worst stock market decline in history. A collapse of generational proportions.
• We are however, getting closer to a bottom.
• We are at least at an area where we should get at least a technical rebound with the final lows coming in April near 5,800 DJI.
• Gold remains the key place to be.

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For the first time since last July oil prices broke out over the 20 day MA (yes it has been that long). Even Natural Gas exhibited a bit of strength but not a lot. We now suspect that while it is difficult to say that we are about to begin a strong rebound rally we can say that we now expect further consolidation above the recent lows. Longer term that will be positive for energy bulls but in the short term it may not be a lot. Oil does have resistance now near $50 and the 100 day MA while support is evident at $40. As long as we can stay above $40 we  … [ read more ]

Gold, Silver the gold and silver stocks were all weak last week primarily because of the strength in the US Dollar. While recently Gold had gone up even as the US Dollar went up this past week saw a reversion to the norm. We expect this near term weakness to continue and the US Dollar could reach up towards 90. Gold has considerable support in the 930-950 zone but a break under that level could send us to 900 and 880 and even a test once again of 850. At this stage that is our worst case scenario. A lot depends on the US Dollar  … [ read more ]

US Treasury bonds broke hard this past week and Canadian bonds followed although certainly Canada was nowhere near as weak. Supply concerns and continued abnormally high monetary growth are weighing on the market. US bonds seem determined to test the 40 week MA below at 121 (currently 124^20) while Canadian bonds are holding their 13 week MA. We suspect that everyone remains baffled as to why bonds are weakening in the face of continued bad economic numbers. Maybe the US is losing some of its luster as a safe haven although as we have noted China is not about to do anything rash that would jeopardize them … [ read more ]

The S&P 500 broke to new lows this past week. Possible targets are down to 600/650 by April. If o we suspect an irregular decline with considerable choppiness. There are lots of potential positive divergences forming in the indices the most notable being the VIX indicator which is nowhere near its October/November highs. With all of the negative announcements including the AIG further bailout news the market does not appear to be in any mood to rebound. The 1938-1939 vey negative cycle appears to be kicking in which means now that being long is difficult but the biggest damage will continue to come in the banks, the consumer discretionary groups, industrials, real estate and others from the broader economy. But once we get to … [ read more ]

IS A BIGGER NIGHTMARE BEGINNING?

The rebound we had expected in the first quarter or so of 2009 is in trouble, or at least on hold. The Obama bounce has so far become the Obama bust. We suppose the signs were there earlier. November 5, 2008 – the day after the election – the S&P 500 dropped 5.3 per cent. January 20 (Obama inauguration day) it dropped another 5.3 per cent. It is an ominous start … [ read more ]

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• Rebound floundering.
• Dow makes new lows and takes out 2002 lows.
• Could something bigger be about to happen?
• We don’t think so but we may have some work to do here.
• Targets on the DJI is potentially down to 6500 as we detect a potential descending wedge pattern forming.
• Some comparisons with the 1930’s
• Bonds on the rebound but the major bond rally is over.
• Gold correcting but we are going to go through $1000 and higher.

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