Technical Commentary – Greek Elections. US$ Dangers Discussed.

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.