Chappy’s StockPicks, Chappy’s Technical Commentary

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

The S&P 500 put in another up week, reaching the key downtrend line from the September 2007 highs. Either we bust through this level now, targeting up to 1,425-1,450, or we will fail and turn back down. Even if we do bust through false breakouts are common and we need to get a series of closes over 1430 to confirm that we will advance further. We expect the market to mark time until the FOMC policy statement due out on Wednesday, unless something happens to spur it higher. GDP numbers and the Chicago PMI also due Wednesday morning could cause higher or lower prices.

There are a number of interpretations that one can make of the current patterns. One of course is that we have made a double bottom on the charts (the March low was slightly below the January low although with the DJI it was a slightly higher low). Targets could easily take us back to the highs of 1575. That is why a sustained move above 1430 would be so important as that is the vicinity of the 200 day MA. [read more…]

TSX INDICES

The TSX Composite actually fell almost 1% on the week with Energy, Golds and metals & mining leading the way down. It was actually a pretty mixed week with some up and some down. In the down category along with Energy, Golds and Metals & Mining were of course materials and consumer staples. Materials made new highs before turning lower. While the remainder were up most were barely up on the week especially Telecommunications and Utilities.

Still none of the energy, golds or metals or materials gave us signs that we should stand aside. Gold is at support of the 40 week MA (just closed below it) so it is important that it hold this level and we don’t see successive closes under this key MA.

At the other end some such as Info Technology are now at resistance of the 40 week MA. This is often an ideal spot to turn down again in a bear market just as testing it in a bull market is also quite normal. One sector that is strong is the income trusts but it has been largely led by the energy income trusts which is why we say buy selectively.. [read more…]