Charts and technical commentary for March 3, 2008

FED IN A BOX – INFLATION OR DEFLATION?

Last week we talked about how the Fed is in a box over what to do: fight inflation or fight [tag]deflation[/tag]. Clearly deflation is winning, because the odds are high that they will cut interest rates again (and probably again, and then again and again).

You imagine either [tag]President Bush[/tag] or Prime Minister Harper or Ben Bernanke (Federal Reserve) or Mark Carney (Bank of Canada) saying we are going to fall into a recession? They cannot say so because the market would panic, even though for once they were telling us the truth. The signs are everywhere, particularly in the US and to a lesser extent here in Canada that weare indeed sliding into recession. [read more...]

TSX INDICES

The TSX Composite was basically flat on the week (down .02%) as [tag]Gold[/tag], Energy, Materials, Metals &Mining, and [tag]Income Trusts[/tag] offset everyone else being down. Setting new highs were Materials as they were pushed up by both Metals & Mining and Gold. Seeing new lows were the consumer stocks – Discretionary and Staples. Many of them also continue at resistance and we suspect that they will fail here. We are seeing few if any signs of bottoming patterns forming although [tag]Health Care[/tag] for one with another week we might be able to change its status to stand aside – bottoming. Utilities continue to top out but we have yet to receive a stand aside signal.

The first week of a month is often positive so we will see how this coming week plays out. [read more...]

S&P 500 STRATEGY: STAND ASIDE (for definitions of terms see end of report)

In the early part of the week the [tag]stock market[/tag] attempted to stay up, and indeed we went as high as 1,388. But as the economic numbers came out and hopes of a plan to save the monocline [tag]bond insurers[/tag] faded, the [tag]market collapsed[/tag] once again. Friday was an ugly day with the S&P 500 down 37 points and the Dow Jones Industrials down 315. These losses wiped any weekly gains that remained on Thursday night.

So have we now made our C wave of this recent correction? Possibly, but we need to bust under 1,312 first to tell us we might test or take out the lows of 1,270. At this time we can’t tell whether that will happen. Even if we were to try to go back up this coming week, the resistance at the 1,380/1,400 level is becoming formidable. [read more...]

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