Chappy’s Technical Commentary, Chappy’s StockPicks

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

How do you know when you are in a bear market rally? Easy – when you ignore all the bad news and cheer all the good news. Case in point: the market ignores the $5.1 billion quarterly loss reported by Citigroup and the slashing of 9,000 more jobs and cheers the higher revenue. It also ignored record oil prices and cheered the better than expected earnings of Intel, Google and JP Morgan Chase.

Lurking behind the scenes to fuel the bullishness is unprecedented monetary growth. The latest monetary report from the Fed shows M2 growing at an astounding 12.6 per cent rate over the last three months. Even the six-month and one-year growth rates are above seven per cent. The unreported M3 is now estimated to be approaching 17 per cent. While this is not quite Weimar Republic stuff, it is starting to be. Remember that all this money, most (if not all) of it held by large institutions, has to go somewhere. Right now a big chunk of it is finding its way into the stock market. [read more…]

TSX INDICES

TSX Composite put in a stellar 4.0 per cent up week, with all sectors up except Consumer is cretionary. Maybe we should heed the warning of the Consumer Discretionary stocks, because if that group can’t rally in this environment then maybe we should treat this rally with a grain of salt.

The TSX 60 also saw new highs, but we note that Potash Corp (POT-TSX) is a major contributor to that record and of course the energy stocks have been soaring to new highs as well. Even the TSX Composite is not far from its all-time highs but again it is POT and the energy stocks that are taking the index close to record territory.

Most of the remaining sectors, despite some positive moves on the dailies and the weeklies, remain moribund and are not giving us any buy signals. The Materials group also gave us new highs this past week but both Gold and Metals & Mining remain below their all-time highs. [read more…]