We were overall getting too many sell signals

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

In a week marked once again by perp walks we were rudely reminded that the sub-prime
mortgage crisis that started last summer is not over. The S&P 500 fell a sharp 3.1 per cent this
past week, triggered by weak economic numbers, rising fears of more losses being posted at
major financial institutions, rising oil prices, and fears of war with Iran (more on that in Gold and Oil & Gas).

We closed below our key 1,320 level and below the lows of the previous week, so odds now
favour a collapse to test the lows seen in March 2007. Support is therefore at 1,270 and 1,255
with some interim support at 1,300. Only a move back above 1,350 could change this. The worst case is that the lows of March actually break and we are headed to a much deeper bear drop. [read more…]

TSX INDICES

It was a down week for the TSX Composite as it lost 1.3 per cent. Gold, metals & mining, materials and telecommunications all managed up weeks. Everything else was down. Income trusts suffered a reversal week after hitting new highs for the move up. Not a positive sign so we will have to monitor that closely. Particularly hard hit were the Consumer Discretionary stocks and the Financials. These are two areas where you definitely do not want to be involved. Consumer Discretionary hit new lows and looks lower.

The Energy Group was down and while there is definitely a possibility of seeing lower prices just ahead we still do not have any major negative divergences on this group. If that is the case we suspect that this pull back will be corrective only and another buying opportunity. The golds may be coming out of a funk as they put in a good up day on Friday and are beginning to run counter to the broader market just as they did late in 2007 and into March 2008. [read more…]