Technical Commentary For August 20th

This week…

• The S&P 500 continues its recent rise and objectives up to 1,450 and even 1,525 remain possible. But the risks are mounting with the LIBOR scandal and the potential for an expansion of war in the Mid-East and tensions rising further in the South China Sea. Which one triggers a stock market is anybody’s guess. And of course it could also be nothing happens. But with negative cycles kicking at least after October 2012 odds appear to favour something going wrong.

• Bonds fell for the 4th consecutive week as the risk-on trade continues (sell bonds, buy stocks).

• Gold prices were off slightly this past week and remain below strong resistance. However, the gold stocks enjoyed another up week and may be leading. The gold stocks appear poised to break out. Platinum had a big up week thanks to the strike at the Lonmin mine in South Africa where police opened fire on strikers killing upwards of 3 dozen.

• Oil prices were up again as US supplies continue to dwindle and war talk in the Mid-East is spooking investors afraid that an attack on Iran by Israel could trigger a broader war and soaring oil prices.

• The S&P TSX Composite rose to its best levels since May 2012 as rising gold, energy and materials helped push the index higher.

Next weekend I leave on a week-long canoe trip in Algonquin. As a result an email will come out with a brief update but no full report. The following weekend could also see an email update although if we get back in time we will attempt to complete a short technical commentary update. An email update contains no charts.

D.C.