The biggest gains can be found in sectors such as gold.

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

• S&P 500 up about 1% on the week.
• Another wide ranging week with a narrow opening and closing once again suggesting
  hesitation.
• We still appear to have completed a five wave down structure from the May 2008
  highs and a possible ABC pattern from the October 2007 highs.
• Continue to form what appears as a potential head and shoulders bottom pattern. A
  firm break above 920 has measuring implications towards 1200.
• With the background news continuing to be supportive for the markets we still expect
  a breakout and run to at least into the 1050/1100 level.
• If a rally can get going a break through 900 would be positive and focus us on 920 as
  the next point.
• Failure to break through 900 suggests that the recent trading range will prevail with
  the low end of the range down around 840.
• Below 840 would spell trouble and a further test of the lows.
• We suspect that the market will be ETF driven rather than particular stock driven.
  Volumes have been high there recently.

TSX INDICES

The TSX Composite had a sideways week gaining a mere .4 per cent. 9 sub indices gained and 5 fell. The big gainers were Metals and Mining, Materials and Real Estate all up roughly 6 per cent. The big loser was Health Care down 6 per cent but they are a small component of the TSX. The Energy Index fell 3 per cent as oil prices made new lows.

We continue to see signs that we are trying to form a bottom. Many of the sub indices continue to make higher lows and with credit conditions easing and more talk of bailouts and solutions to get the economy moving again the indices improve ever so slowly. Officially no one has given us an intermediate buy signal. The Gold sub index has been the best performer by far but it has now reached to 40 week MA resistance. While the Gold sub Index gave a short term buy a few weeks ago the intermediate buy as triggered by the weekly charts is still not a officially a buy. To make in this market one must react to the short term buy but if you are purely a long term strategist then await the intermediate buy. [read more...]

Subscribe to David’s reports and read more about:

• No Technical Scoop this week.
• There will no Technical Commentary or StockPicks for the next two weeks.
• We will put out a bulletin if we see anything develop of note.
• Have a great holiday and the best for 2009.

Click here to subscribe today!