This week…

• The story this week was the possible solution to the European fiscal crisis. A deal was hammered out, however, the details may yet unravel the plan. The markets rallied but volume was weak and as is noted in the commentary there are a couple of potentially quite bearish patterns forming. All may not be well and the traditional “Buy when it snows, sell when it goes” season could be in jeopardy.

• US bonds fell this past week as the Europeans came to an agreement and some stronger than expected economic numbers were reported. However, as noted both are full of holes. However, this may not stop bonds from breaking down. The European plan includes a measure of QE. Could QE in the US be far behind? A note is included on a very interesting derivatives move by Bank of America.

• Gold jumped this past week as the US$ fell and the European debt plan became known. The European debt plan had a good dose of QE and this is “music” to gold’s “ears”. However, both gold and silver have resistance above still to overhaul but the week was encouraging. The gold stocks broke out and could be leading the way as they overhauled some key resistance zones on good volume.

• Oil prices also rose and are now just short of key resistance at $95. Natural gas was up strong but that was mostly due to a change in the front month futures contract. Oil prices were buoyed by the agreement in Europe and stronger US economic numbers.

• The TSX Composite rose on the week as metals, golds, oils and materials enjoyed a strong up week.

D.C.

A computer crash on Thursday kept us busy in recovery mode rather than preparing the usual reports.

Chart of the Week – The bank indices

D.C.

This week…

• The potential for a European contagion has dominated the headlines. The stock market rallies if a solution appears at hand but sells off when no solution appears to be on the horizon. The markets rallied but are fast approaching a zone of significant resistance. As well potential objectives for the S&P 500 down to 970 have yet to be fulfilled although one objective at 1078 was seen which has thus far proved to be the low of the move. Positive seasonals for the stock market are approaching. However, the risk remains for at least one more plunge towards the lows and the potential objectives.

• Bond prices waffled this past week. The fear of European contagion remains prime in bond dealers minds. Spreads in the interbank market are rising as the market pulls back from European banks.

• Gold fell but there are abundant signs that another rally could soon get underway. Positive seasonals that get underway at the end of October and musings from Fed officials of QE3 could help push gold prices higher. As well a new gold exchange is operating in Hong Kong a potential rival for London. The US$ attempted to rally but failed as a possible solution was being bandied about for the European crisis.

• Oil prices rose on hopes that the European crisis would resolve itself. Tight supplies are also helping oil prices. The AMEX Oil & Gas Index (XOI) had a strong up week. Natural gas prices continue to be weak.

• The S&P TSX Composite faltered as the commodity sectors including gold, metals and mining and materials were weak this past week.

D.C.

Chart of the Week – China

Stock of the Week – The Oracle of Omaha

D.C.

Note: this is a shortened version of the usual technical commentary. We were away for part of the weekend.

This week….

• The S&P 500 had its best gain since July 2009. But looming above is significant resistance in the 1250-1270 zone. A failure to break through that level could indicate a swift return to the lows. The rally has quickly seen indicators rise to overbought levels and volume has been poor. The risk trade, however, appears to be back on.

• Bonds fell as equities rose. Signs that Europe might resolve its problems and stronger retail sales helped push bond prices lower. The retail sales are not, however, what they appear. There is a short commentary on retail sales on what they are really doing.

• Gold rose on the week as the US$ fell. Silver and other commodities also rose on the week. As with equities the risk trade could be back on. But gold needs to overhaul resistance zones above to suggest that a new bull move could be underway.

• Oil prices rose as well this past week with the better than expected retail sales and the improvement in the European situation. The potential for an improved economy usually takes oil prices higher. The TSX Energy Index had a strong up week.

D.C.

Chart of the Week – The James Turk Fear Index

Stock of the Week – A gold producer that flies under the radar.

Note: We are out of town for part of the weekend but a short technical commentary will be prepared.

D.C.

Today is Canadian Thanksgiving. Banks, brokerages, stock exchanges, government offices and more are all closed.

This week…

• After hitting new lows the markets reversed and the S&P 500 closed up on the week. However, Friday saw the market fail at resistance. Above lies major resistance at 1200 and 1250 with the 1250 resistance being particularly important. A failure now could still set up the decline to potential objectives between 970 and 1000.

• Bond prices fell again (yields rose). The employment numbers were a surprise. However, in looking behind the numbers they were not as good as suggested. A discussion of the numbers is included.

• Gold and silver rose on the week as the US$ fell. If the Euro situation comes under control as seems to be the case then the focus could once again shift back to the US$ and the Treasury’s insatiable demands. The gold stocks fell, however, they made an impressive reversal from the lows that were seen over the past 9 months. Copper rose on the week which was a surprise. Copper is often a leading indicator.

• Oil prices were up on the week but remain below critical resistance at $85. In the drop this past week the market fell towards $75 support. There remains unfulfilled potential objectives down to $68.

• The TSX Composite failed to turn up this past week unlike the S&P 500 and the NASDAQ. While Metals & Mining were strong (especially given the rebound in copper prices) the rest of the market was mixed to down.

D.C.

Chart of the Week – Signs of a bottom in gold and gold stocks. Includes two bonus charts.

D.C.

This week…

• After rallying earlier in the week the S&P 500 fell sharply Friday against the background of a deteriorating global economic situation and the ongoing crisis in Europe. All signs continue to point to a Greek default and the fallout that would emanate from such an event. Potential objectives could take the markets below the lows of 2010. That would suggest that the markets are returning to the bear market that got underway in 2007. Friday’s decline suggested that the markets this week could see even lower prices.

• Bond prices fell this week as well as the US$ reversed direction. Bonds fell despite the background of the Bernanke “twist”.

• Both gold and silver fell on the week once again, however, the declines were muted following the sharp declines seen in the previous week. The US$ Index reversed direction and closed lower this past week as well. If the US$ as a safe haven trade ends it a falling US$ would be positive for both gold and silver. The US$ below 78 looks negative. Gold and silver must hold their recent lows or lower prices could be seen for both. Above $1750 for gold and silver above $36 would lessen thoughts that new lows would be seen.

• Oil prices fell this week on fears of a global recession. Once again oil prices closed under $80. This suggests that oil prices could fall down into the $70’s to potential objectives as low as $68. Regaining above $85 would be positive.

• The TSX Composite managed to eke out a gain this past week although it too fell on Friday. The TSX Composite should follow the S&P 500 lower with potential objectives near 11,000 and the 2010 lows.

D.C.