Gold, Energy and Materials remain in long term bull markets

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

After the advance of the previous week, this past week was more or less a wash as the S&P 500 ended with a small loss. Sharp gains seen on Tuesday and Wednesday were wiped out on Thursday. Friday the market had a small up day as a response to the durable goods numbers.

We believe that the counter-trend rally that started from the lows on July 15 is still in place.
Wednesday’s high probably completed the “a” wave up; we are now seeing the b wave unfolding. The current drop is generally holding the 20-day MA zone so we may be seeing the lows of the bwave here or slightly lower. The following c wave could take us to the down trendline resistance near 1,300 to 1,310.[read more…]

TSX INDICES

The TSX Composite lost another 1 per cent this past week half the sectors down and the other half up. Gold, Energy and Materials sectors remain in longer term bull markets despite the drop this past week. Others that were up including Financials, Health Care, Utilities, Real Estate, Info Tech and Industrials remain in longer term bear markets despite the positive week. The CDNX Venture exchange continued its recent sharp fall hitting new lows but we continue to rate the sector as accumulate as there are numerous positive divergences in the weekly indicators despite the new lows. The volume on this decline has been down as well. A possible descending wedge triangle is also forming (bullish).

Our prognosis going forward on the TSX is similar to other thoughts. Most groups should be avoided but the counter rally that started with lows about a week ago could continue into mid or even early August for a top. Other sectors such as gold, energy and materials remain in long term bull markets but are experiencing some near term corrective pressures that may have more to run. Investors can maintain exposure to these sectors but cash balances and bullion holdings should rise on rallies. Except for those sectors the remaining sectors should generally be avoided.[read more…]