THE CHAPMAN REPORT – The US Dollar Falls AS Canadian Dollar Makes New Highs

This Week…

• S&P 500 continues to ignore the background turmoil in the Mid-East/North Africa and Japan and instead was buoyed by the stronger than expected job numbers. Stock markets rose this past week and now appear poised to make new highs. But cycles suggest that April could be a month of reckoning. April is historically the best month for the Dow Jones Industrials.

• Bonds were steady this past week despite the job numbers as many other economic numbers were showing some weakness. But Cdn bonds fell to new lows and the bond model buy was stopped out. Right now Cdn and US bonds are diverging slightly. Who is right?

• Gold waffled this past week but eked out a gain. The HUI and the TSX Gold Index diverged as one was up and one was down. A weak US Dollar will send gold higher. The pattern forming on gold rather than being a top appears more as a bullish ascending triangle.

• The US$ fell this past week and the Cdn$ enjoyed a strong up week making new highs. But for the US$ Index 75 continues to be a line in the sand. If that zone breaks than the markets are headed lower to 70 and even 68, But holding that zone could send the US$ higher once again.

• Oil prices rose to new highs and natural gas was also higher. The energy stocks were mixed with the XOI making new highs but the TSX Energy Index eking out only a small gain.

• The TSX Composite was higher but Health Care one of the smallest components of the index was the leader. Not necessarily a sign of strength for the composite. Financials were up that helped but energy was weak (although higher) and the golds were lower.

D.C.