A new Technical Scoop.

D.C.

This week…

• It was quite a week. Greek elections that brought a coalition government dedicated to keeping Greece in the Euro zone; a stimulus package in the Euro zone equal to 1% of Euro GDP; easing of collateral rules by the ECB to help the capitalization of banks particularly Spain; further signs of global slowdown in Europe, China and North America; and, the FOMC extending operation twist but disappointing the market for a further round of QE.

• Stock markets fell but rebound on Friday following the announcement of a Euro stimulus package. 15 global banks were downgraded and this is a potential major source for a blowup in the global derivatives market at some point down the road.

• Gold and silver stocks took a hard hit following the disappointing FOMC with no QE program. Like the rest of the market they rebounded on Friday after learning of the Euro stimulus program. But gold (and silver) sit on the cusp of either a major breakdown or a rebound that could take them new highs. The seasonals for gold are turning positive. It was last year around this time that gold started a two month rise from around $1,500 to over $1,900.

• The US$ was up on the week but dangers abound for the US$. These dangers are discussed.

• Oil prices fell sharply again under $80 but natural gas had another sharp up week. Storms are brewing in the Gulf of Mexico that could shut down rigs. As well the Saudis want to keep the price of Brent crude up. At $80 many oil sands become uneconomical. Talks are breaking down with Iran once again and Syria remains a place where a potential blowup could occur as a Turkish reconnaissance plane was shot down by Syrian forces.

• The TSX Composite was quite mixed this past week as while many sectors closed higher the commodity sectors (gold, energy, and materials) all took hits and the TSX Composite finished the week down slightly.

Note: Next weekend I will be away. As a result there will be no update; however, we will endeavour to put out a short email commentary. A full update will return in two weeks.

D.C.

• China, Russia, and Korea are buying more gold.

• Gold prices drop!

• It’s been reported that China is upping the ante against US sanctions and is actually increasing its
  importation of oil from Iran

This week…

• The markets await the results of the Greek election. The world’s central banks are standing by in the event of a result that is not favourable for the markets. Indeed the stock markets rallied this past week on the expectation that the central banks would step in to ensure the markets remained stable following the results of the Greek election. Cycles are potentially supportive of a late June/early July low and a rally that could last into August before a further decline gets underway. The G20 also meets starting Monday in Mexico. The G20 are trying to persuade the US and Canada to support the IMF for a further bailout of Europe in the event of instability following the Greek election.

• Bonds also rallied and the Cdn bonds appear to be breaking out. However, the futures rollover took place on Friday and it may have been a contributing factor. Bonds also rallied on the expectations of stimulus from the world’s central banks. However, the 6 year cycle is getting long in the tooth and there are numerous negative divergences on the weekly charts.

• Gold was up but remains suppressed. Seasonal cycles begin turning up in July or even from late June. Markets still need to get through$1,700 and $1.600 needs to hold. Monetary stimulus from the world’s central bank would be very supportive for gold (and silver). The US$ Index fell this past week. Could a top be in for the US$ Index as it did reach symmetrical triangle objectives.

• Oil prices were stable and natural gas had a strong up week. The energy stocks should follow the broader markets and if they rally the energy stocks should follow.

• The TSX spent a very quiet week with minimal movement in front of the Greek election.

D.C.

Chart of the Week – Currency Wars?

Stock of the Week – Bottom fishing another gold stock.

D.C.

This week…

• The stock markets rallied this past week on expectations that a bailout package would be prepared for Spain. On Sunday the market got its wish and a $125 bailout package for Spanish banks was announced. This is QE once again. While it remains to be seen how the markets will react once they open for Asian trading later this afternoon the early expectation is further gains. Or could it be buy the rumour, sell the news? The gain this past week left a large bullish engulfing candle on the charts. It could be signalling a possible temporary low and the start of the summer rally that will take us into July for a top (earliest) or as late as October.

• Bonds reacted negatively to the possibility of a Spanish bailout and fell this past week. Cdn bonds managed to hold their gains but that could see them fail this week if US bonds fall further. US bonds failed at the top of their bull channel.

• Gold fell this week after Fed Chairman Bernanke did not give the gold market its magic words of more QE. Bernanke continued to say, however, that he will “take action as needed”. Gold fell sharply as Bernanke’s speech wound down. It was mysterious considering the US$ was also falling. Silver fell but not nearly as much. Usually silver leads up and down.

• The US$ as a the world’s reserve currency is under attack. A couple of areas are noted in a special section under the US$ Index.

• Oil prices fell then rebounded on news of a possible Spanish bailout. Still oil prices remain vulnerable unless they can regain $90.

• The TSX rebounded this past week following the US market up. With the Spanish bailout now announced further gains could be seen this coming week.

D.C.

Chart of the Week – Debt, debt, debt.

Stock of the Week – A junior gold producer

D.C.

This week…

• Deteriorating conditions in Europe and the unexpected below expectations US job numbers this past week sent global stock markets reeling. The US stock markets have not as yet given a trend following system sell signal but another week down should tip the markets into an official sell. Many other indicators are already in a sell mode and the S&P 500 closed below key MA’s.

• If the stock markets fell the bond markets rallied. The US bonds as represented by the 30 bond futures are now trading at the top of a possible bull channel. The Cdn bonds are close to the top of their bull channel.

• Gold had a sharp up day on Friday on expectations that the deteriorating economic situation in Europe and the weak US job numbers could bring another round of QE. QE is the only monetary tool left for the authorities. And it is an election year. A falling stock market, rising unemployment and deteriorating economic conditions are not conducive to Obama’s re-election chances. Recall that in 2008 deteriorating economic conditions and the devastating market collapse in September/October 2008 were contributors to the Republican McCain losing that election. Many economists are expecting that the Fed may have no choice but another round of QE. The US$ continued its recent rally but QE would not be friendly to further gains for the US$. Gold stocks also soared on the week.

• Both oil and gas prices fell sharply this past week as deteriorating global economic conditions pointed to reduced demand for oil and gas.

• The TSX was down on the week with only the TSX Gold Index and the Materials Index holding the market up.

D.C.