Chart of the Week – Euro woes

Stock of the Week – Bank woes

NOTE: Chart and Stock of the Week will return in August.

D.C.

This week…

• The job numbers were well below expectations and predictably the markets faltered. But those losses were muted on Friday and further follow through to the upside could well be seen. Cycles remain generally positive into at least September but after that cycles turn negative. Watch support resistance levels for clues as to which way the market will break. The background news is universally gloomy but that does not necessarily stop the markets from rising. The market will tell you it is going to fall and action can still be taken to hedge up.

• Bonds jumped this past week following the previous week’s sharp decline. The US bond model system shifted to stand aside but the trends remain up although faltering. The looming debt ceiling mess suggests the US is headed for default. But as noted there are ways to put it off but that has a short shelf life that could get the markets through to about November if an agreement is not reached.

• Gold rose and silver had a strong up week. The gold stocks enjoyed the third consecutive weekly rise. Gold and silver remain alternative currencies and an up week in copper is suggesting that it too could be becoming an alternative currency. There is a history of copper as currency.

• Oil prices rose on the week but the weak employment numbers trimmed the gains. Good supplies are keeping a lid on natural gas prices.

• The TSX Composite was up but it was mixed. Golds, metals & mining, materials and energy were strong but financials continue to falter.

NOTE: This weekend we leave on a two week vacation to Newfoundland. We are hopeful of being able to provide periodic short email updates but there will be no full report again until the first full weekend in August.

D.C.

Chart of the Week – The S&P TSX Composite/TSX Financials ratio.

Stock of the Week – it was right under our noses.

D.C.

A short update…

• As expected a week ago we did get a strong oversold bounce off of the lows for the S&P 500. The market broke through 1310 and hit resistance around the 1340 zone. Some further resistance would not be surprising here. A failure here would be quite bearish for the market but a good close over 1350 (whether this week or next) would suggest that new highs could be seen. There remains targets above at 1410 to 1425. This is a short squeeze and sometimes these short squeezes can go a lot further than bears expect. To the downside 1310 now is important as you would not want to see a break back under that level as that could suggest that a failure is underway and new lows would be seen.

• Gold continues its corrective action but notably this past week the stocks did not plunge. So that is a potential bullish sign. Gold could still reach down toward 1450 but that is not necessarily bad news. New lows in gold below 1473 while no new lows in the gold stocks would be potentially quite bullish. Gold rebounding today. 1475 is support but a move back up above 1520 would be bullish. Silver has support down to 32 but below 31.70 a fall to 30 and even 28 is possible. Regaining above $37.50 would be bullish.

• The US Dollar Index is currently at near support but a break back under 74.50 could be bearish. Below 74 new lows are possible. The US$ Index must regain 76 if it is to go higher towards 78/79 resistance.

• Oil prices are holding nicely above $90 but need to break back over $100 to suggest higher levels. Under $90 a fall to $85 is probable. Daily indicators are turning up with positive divergences so watch the $100 level. This in turn would take oil stocks higher as well.

Full report this coming weekend.

D.C.