New feature for the members

This is the first of what we hope will be a new regular feature. The Technical Scoop “Chart of the Week” will feature an interesting chart that is catching our attention along with a short commentary.

• Is history about to repeat itself?

• Comparisons of 2007 and today.

D.C.

This week

• Stocks rebound after seeing new lows earlier in the week. This is potentially positive and could begin the corrective wave to the sharp decline that has been seen. The decline in May was the worst seen since 1940. The potential for a big nonfarm payroll this Friday could spur stocks higher again.

• Bonds made new highs then reversed and closed lower doing the opposite of stocks above. Easing of the European debt crisis was actually negative for bonds as the need for a safe haven lessened. The bond auction this past week sold out.

• Gold was up this week despite the US$ also having a sharp rise. But the US$ reversed and closed lower giving a possible signal that the US$ has topped for this move. If that was the case that would be positive for gold (and gold stocks) but seasonals are not favourable for the next month or two.

• Oil prices also rebounded but the break under $70 is a negative. The market must regain $75 and especially $80 if oil (and energy stocks) are to rebound.

Note: This coming week marks the start of the summer season for us. Next weekend we are off on a two week holiday. We are planning on issuing this Friday a short technical commentary. The following week there will be no report. Upon our return another short technical commentary will be issued. Long weekends in July and August will also see short commentaries issued.

Update only

• The markets are still under pressure but the golds bounced back.

• Energy stocks are sore thumb in the portfolio.

D.C.

This week

• The markets plunged again but an upside reversal day on Friday has given rise to the possibility of at least a temporary low. Cycles are suggesting that the market could indeed rebound into the latter part of June or even early July before the next leg down begins. The assumption will be that the debt crisis in Europe is under control. It isn’t but a temporary respite that could last a month or two is at hand.

• Bonds continue to benefit from a flight to safety and they have rallied back to the lowest yields seen in months. But with ongoing needs and another $113 billion note auction this week the market will have to digest even more supply at sharply reduced rates. Will the buyers buy?

• Gold corrected back this past week but it appears to be a correction within the context of its ongoing bull market. The stocks predictably were hit harder but they continue to be very undervalued in relation to gold itself. Gold’s seasonals tend to soften through July/August.

• Oil prices plunged swiftly to just under $70 on the expectation that the crisis in Europe would slow the world economy. But oil prices have become quite oversold and are due for a rebound. Again with any easing of the crisis in Europe oil prices could rebound quickly as well. But any breakdown under $70 would be bearish and suggest $60 and even $50.

D.C.

Update only.

• It was not a pleasant week for the markets. A number of energy stocks were stopped out.

D.C.

This week

• Stocks rose as fears about the Euro zone abated. The trillion dollar package was seen as a panacea for the ills. However, if this were to fail again then stocks could begin a long grinding decline. The ability to keep the bailout together could result in a breakout to new highs.

• Bonds were flat this past week as uncertainty settled around the bailout of the Euro zone. US bonds were still being seen as a safety haven. Canadian bonds were weaker as economic numbers continued to support the stronger economy theory.

• Gold rose to new all time highs not only in US$ terms but as well in British Pounds, Swiss Francs, Japanese Yen and of course against the Euro. Gold also rose against other commodities including oil and against bonds. Bonds was taking on currency attributes. All this occurred against the backdrop of a sharply rising US$.

• Oil prices fell sharply this past week quickly turning what was a bullish scenario into a bearish scenario. A breakdown under $60/$70 could suggest a decline to the $50 zone. On the other hand if the bailout package in Europe is seen as a panacea for the ills of Europe then oil prices could steady here. OPEC led by Saudi Arabia continues to see ideal prices in the $70/$75 zone for oil.

D.C.

Technical Scoop – The Road to Destruction (PDF)

• Explanation of the Cassandra Syndrome.

• A look at the debt to GDP ratios and the budget deficit to GDP of the G8 countries.

• US states may be forced to declare Chapter 9 bankruptcy.

• A look at the financial panics in the 20th century.

D.C.

Update Three new picks for the junior portfolio. All under $1.

• It was a bad week for the markets as the S&P TSX Composite fell 1.7%.

• There was some light as golds rose 0.8%.

• Golds were up higher earlier in the week before falling over the past few days due
  to the crisis in Greece.

D.C.

This week

• The chaos in Europe due to the Greek debt crisis triggered a mini panic this past week in the stock market. Difficult to say whether it is over but the expectation here is that by around May 24 it should be coming under control. The alternative to a solution is the chaos gets worse both in the debt collapse and on the streets.

• US Treasury bonds rose sharply as they became a safe haven. More buy signals were seen by the trend following systems. Beware a fast rise based solely on the chaos in Europe. If that should end then the bond rally will end just as fast.

• The US$ soared due to the rush into US Treasuries.

• But gold soared against every major currency and against all asset classes including stocks, bonds and commodities. Silver lagged but the big up day on Friday suggests it could catch up quickly. Gold is currency.

• Oil was hit falling to $75. Oil stocks fell sharply as a result and also due to fear of a global slowdown as a result of the chaos in Europe.

D.C.

Update only

• Crisis in Greece hurts markets

• It was a bad week for the markets as the S&P TSX Composite fell 1.7%.

• There was some light though as golds rose 0.8%.

• Golds, however, were up higher earlier in the week before falling over the past few days due
  to the crisis in Greece.

D.C.