The TSX Composite closed down on the week

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

It was a big outside reversal week, setting up a major sell signal on the markets. Outside reversal weeks see a higher high, a lower low and a close below the low of the previous week. We busted through and closed below our important 1,380 support. We also busted through the uptrend line from the March lows. It is amazing how in one fell swoop we wiped out a month’s gains.

The key day was Monday, when we ran right up to a perfect topping zone at 1,440. This was the area of both the 200-day MA and the 40-week MA. We raced to the highs, then collapsed late in the day to the opening levels. Except for Thursday’s small up day, the rest of the week was spent on the downside[read more…]

TSX INDICES

The TSX Composite roared to new all-time highs this past week on the back of energy and gold but at the end of the week the only one standing was the gold sector. All other sectors and the TSX Composite closed down on the week. Since we hit new highs for the Composite as well as for Energy and Income Trusts (propelled by the oil and gas trusts) and then closed lower on the week it does constitute a reversal week. But since we did not take out the previous week’s lows and close under that level as we saw with the S&P 500 and the NASDAQ it does not constitute a key reversal week.

Particularly hard hit were the Financials, Consumer Discretionary and Real Estate. The Energy sector closed lower despite record highs for oil and new highs for natural gas. That was disappointing but as we note in our oil and gas commentary it may be because they fell in sympathy with the rest of the market or maybe there is a lot of nervousness that the high prices will not be sustained and that at the least sign of trouble they rush for the exists. The latter reason is actually quite bullish although the former only suggests to us a mild bear at best. [read more…]