Income trusts remain a positive place to be particularly the energy income trusts.
S&P 500 STRATEGY: STAND ASIDE (for definitions of terms see end of report)
In our last write-up at the end of the July we noted that the S&P 500 had major resistance at
1,310-1,315 and that this area might be a target zone in the correction that appeared to be getting underway. The high thus far on this rally: 1,313.
But the rally period may not be completely over. The action since the lows in July has clearly
been of a corrective nature. Thus far we appear to have an a wave and a b wave and the current
up wave appears to be unfolding in a five-wave manner typical of a c wave. So there is a chance
here of getting up to the 100-day MA resistance near 1,325 or in a best case to the 200 day MA
near 1350 before we complete this correction. But let’s be in no doubt that this is a corrective
wave and not the start of a new up leg, or that the decline that got underway last October is
somehow over. Elliott wave interpretation can be fraught, but we try. [read more…]
TSX INDICES
It was up, up and up this past week as the TSX Composite gained 2.4 per cent and every sub index was up. Even the TSX Venture Exchange was up for the 2nd week in a row. WE note the CDNX gave a potential bottom signal the previous week with a lovely hammer left on the chart. The hammer is a well known bottom pattern. WE can only hope so as the CDNX has been in a virtual depression the past year.
Despite the positive week there are few sectors that can be recommended as most are at resistance of their 40 week MA. We see few positive divergences on the charts so once this counter trend rally ends we expect the markets to turn back down again.
Gold of course turned down during our vacation but the Energy Index held its support zones and remains long. This is a positive development. One group that does have considerable positive divergences and may be trying to make a bottom pattern is Healthcare. However, it is still too soon tell but we will watch it. [read more…]