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Pre-opening Comments for Monday June 22nd
U.S. equity index futures are lower this morning. S&P 500 index futures are down 10 points in pre-opening trade. Futures are responding to news that the World Bank has adjusted downward its projection for world Gross Domestic Product. In March the Bank projected a 1.7% decline in 2009. Its new projection is a decline of 2.9%.
The U.S. Dollar is stronger this morning. Commodities priced in U.S. Dollars are lower. Gold is down $16 U.S. per ounce. Crude oil is off $1.77 to $67.78 and has broken an intermediate uptrend. Weak commodity prices are expected to weigh on the Canadian equity market at the opening.
Chart courtesy of StockCharts.com www.stockcharts.com
Xstrata is reported to have offered $68 billion to purchase Anglo American. Xstrata is trading lower and Anglo American is trading higher in pre-opening trade.
Trading in Nortel is expected to halt shortly. Over the weekend, Nortel announced sale of its biggest unit to Nokia and announced plans to sell remaining units under current bankruptcy protection laws.
Apple is slightly higher in pre-opening trade. The company announced the sale of more than one million units of its new iPhone over the weekend.
Economic and Earnings News This Week
The focus this week is on the Federal Reserve and monetary policy.
![clip_image002[3]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/06/clip-image00231.gif "clip_image002[3]")
Source: www.marketwatch.com
Significant earnings reports this week are sparse.
Source: www.cnbc.com
Trends
The ratio of S&P 500 stocks in an uptrend to a downtrend (i.e. the Up/Down ratio) plunged last week from 5.39 to 3.89. Eighteen S&P 500 stocks broke resistance last week (including 12 stocks on Friday, primarily healthcare stocks). Fifty stocks broke support (including six stocks on Friday). The Up/Down ratio clearly has passed the Peaking phase and is now in the Distribution phase.
Bullish Percent Index for S&P 500 stocks dropped from 74.00% to 64.80% and fell once again below its 15 day moving average. The Index reaffirmed its intermediate sell signal by falling below its 15 day moving average from an intermediate overbought level.
Chart courtesy of StockCharts.com www.stockcharts.com
The Up/Down ratio for TSX Composite stocks rose last week from 3.90 to (115/28=) 4.11. However, all of the gain came from changes in content in the Index effective today. Excluding the change, the ratio slipped to 3.76. Two TSX Composite stocks broke resistance and six stock broke support last week.
Bullish Percent Index for TSX Composite stocks fell last week from 72.25% to 67.46% and fell below its 15 day moving average. The Index recorded a sell signal by falling below its 15 day moving average from an intermediate overbought level.
Chart courtesy of StockCharts.com www.stockcharts.com
The S&P 500 Index lost 24.98 points (2.64%) last week. Intermediate trend remains upward. Short term support is at 878.94. Resistance could be forming at 956.23. MACD, RSI and Stochastics peaked five weeks ago and are trending lower. Stochastics already are approaching a short term oversold level.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of S&P 500 stocks trading above their 50 day moving average fell from 84.80% to 62.40% and have established an intermediate downtrend. Percent remains intermediate overbought.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of S&P 500 stocks trading above their 200 day moving average fell from 67.20% to 62.20% last week. Percent is intermediate overbought and likely peaked last week.
Chart courtesy of StockCharts.com www.stockcharts.com
The Dow Jones Industrial Average lost 259.53 points (2.95%) last week. Intermediate trend remains up. Support has formed at 8,221.01. Resistance may be forming at 8,877.93. MACD, RSI and Stochastics peaked five weeks ago, remain short term overbought and have established downtrends. Stochastics already have reached a short term oversold level. Strength relative to the S&P 500 Index remains negative.
Chart courtesy of StockCharts.com www.stockcharts.com
The S&P 500 Index in Canadian Dollars is down 3.77% from its May 7th high.
Chart courtesy of StockCharts.com www.stockcharts.com
The Dow Jones Industrial Average is down 3.41% from its May 7th high.
Chart courtesy of StockCharts.com www.stockcharts.com
Bullish Percent Index for Dow Jones Industrial Average stocks slipped last week from 80.00% to 76.67% and is just above its 15 day moving average. The Index likely reached an peak last week at an intermediate overbought level. A bullish percent index sell signal is indicated when the Index stays below its 15 day moving average.
Chart courtesy of StockCharts.com www.stockcharts.com
Bullish Percent Index for NASDAQ Composite Index stocks slipped last week from 68.04% to 65.29%. The Index is intermediate overbought and likely peaked last week. On Friday, it closed below its 15 day moving average and likely triggered a bullish percent index sell signal.
Chart courtesy of StockCharts.com www.stockcharts.com
The NASDAQ Composite Index fell 31.33 points (1.69%) last week. Intermediate trend remains up. Support is at 1,664.19. Resistance could be forming at 1,879.92. MACD, RSI and Stochastics have rolled over from overbought levels and are trending down. Stochastics already are short term oversold. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
The Russell 2000 Index dropped 14.11 points (2.68%) last week. Intermediate trend remains up. Support is at 470.37. Resistance is at 535.86. MACD, RSI and Stochastics are short term overbought, have rolled over and established a short term downtrend. Stochastics already have reached a short term oversold level. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
The Dow Jones Transportation Average gave up 141.65 points (4.21%) last week. Intermediate trend remains down. The Average remains in a two month trading range with support at 2,971.96 and resistance at 3,458.23. MACD, RSI and Stochastics are short term overbought, have rolled over and are trending lower. Stochastics already have reached a short term oversold level. Strength relative to the S&P 500 Index is undetermined.
Chart courtesy of StockCharts.com www.stockcharts.com
The TSX Composite Index lost 357.01 points (3.35%) last week. Intermediate trend remains neutral. Support is indicated at 9,683.13. Resistance may be forming at 10,726.01. MACD, RSI and Stochastics peaked five weeks ago, have rolled over from a short term overbought level and are trending lower. Stochastics already have reached a short term oversold level. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of TSX stocks trading above their 50 day moving average plunged from 78.95% to 64.59% last week. Percent remains intermediate overbought and has established a downtrend.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of TSX stocks trading above their 200 day moving average slipped from 73.21% to 68.42% last week. Percent likely reached a peak at an intermediate overbought level last week.
Chart courtesy of StockCharts.com www.stockcharts.com
The Australia All Ordinaries Composite Index fell 167.10 points (4.19%) last week. Intermediate trend remains up. Support is at 3,703.70. Resistance may be forming at 4,078.30. MACD, RSI and Stochastics are short term overbought, have rolled over and are trending down. Strength relative to the S&P 500 Index is undetermined.
Chart courtesy of StockCharts.com www.stockcharts.com
The Nikkei Average dropped 349.56 points (3.45%) last week. Intermediate trend is up. Resistance may be forming at 10,170.82. Short term momentum indicators (MACD, RSI and Stochastics) are overbought, have rolled over and are trending down. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
The Shanghai Composite Index added 136.73 points (4.98%) last week. Short term momentum indicators (MACD, RSI and Stochastics) are overbought, but have yet to show signs of rolling over.
Chart courtesy of StockCharts.com www.stockcharts.com
The London FT Index gave up 96.02 points (2.16%), the Frankfurt DAX Index fell 229.78 points (4.53%) and the Paris CAC Index dropped 104.87 points (3.15%) last week. Charts courtesy of StockCharts.com
The U.S. Dollar was virtually unchanged last week, up 0.08. Intermediate trend remains down. Support is at 78.33. MACD and RSI continue to recover from short term oversold levels. Stochastics already has recovered to a short term overbought level, but its uptrend remains intact. Upside potential is to the breakdown level at 82.63 where overhead resistance begins to appear.
Chart courtesy of StockCharts.com www.stockcharts.com
The Euro slipped 0.76 last week. Resistance has formed at 143.31. MACD and RSI are trending down from a short term overbought level. Stochastics already have dropped to a short term oversold level.
Chart courtesy of StockCharts.com www.stockcharts.com
The Canadian Dollar slipped 1.27 last week. Intermediate trend remains up. Resistance has formed at 92.64. MACD and RSI continue to trend lower from short term overbought levels. Stochastics already are short term oversold and may be trying to bottom.
Chart courtesy of StockCharts.com www.stockcharts.com
The Japanese Yen gained 2.26 last week. It remains in a four month trading range between 98.94 and 106.88.
Chart courtesy of StockCharts.com www.stockcharts.com
The CRB Index fell 9.46 (3.6%) last week mainly due to lower energy prices. Intermediate trend remains up. A return to the top of its previous trading range is likely
Chart courtesy of StockCharts.com www.stockcharts.com
Crude oil fell $2.73 U.S. per barrel last week. Intermediate trend remains up. Short term resistance may be forming at $73.90. Short term momentum indicators have rolled over from overbought levels. RSI has fallen below the 70% level.
Chart courtesy of StockCharts.com www.stockcharts.com
Gasoline has a similar technical profile. It fell $0.12 U.S. per gallon with most of the weakness occurring on Friday.
Chart courtesy of StockCharts.com www.stockcharts.com
Ditto for heating oil! Weakness was notable on Friday.
Chart courtesy of StockCharts.com www.stockcharts.com
Natural gas rose sharply early last week, but found resistance at $4.57. Stochastics are short term overbought.
Chart courtesy of StockCharts.com www.stockcharts.com
The S&P Energy Index found resistance just below 420.95 and fell 6.5% last week. Its period of seasonal strength finished at the end of May. MACD, RSI and Stochastics have rolled over from short term overbought levels.
Charts courtesy of StockCharts.com www.stockcharts.com
Ditto for the TSX Energy Index! It lost 7.2% last week.
Gold slipped $4.70 U.S. per ounce last week. Resistance has formed at $989.00 U.S. MACD and RSI continue to trend lower from a short term overbought level. Stochastics already has declined to a short term oversold level. According to Thackray’s 2009 Investor’s Guide, seasonal influences are positive from July 12th to October 9th.
Chart courtesy of StockCharts.com www.stockcharts.com
Gold in Canadian Dollars looks very different. It has formed an 11 week trading range between $1,038.00 and $1,122.00.
Chart courtesy of StockCharts.com www.stockcharts.com
Gold in Euros has a similar technical pattern. Its three month trading range is between 645.48 and 712.00 Euros.
Chart courtesy of StockCharts.com www.stockcharts.com
The seasonal play in gold and gold equities is unlikely to start in earnest until gold in Canadian Dollars, Euros and British Pounds moves above key trading ranges.
Silver has a similar technical profile to gold in U.S. Dollars. MACD and RSI have rolled over from a short term overbought level. Stochastics already are oversold.
Chart courtesy of StockCharts.com www.stockcharts.com
Platinum quickly lost momentum following completion of its period of seasonal strength at the end of May. MACD, RSI and Stochastics have rolled over.
Charts courtesy of StockCharts.com www.stockcharts.com
The Gold Bug Index has fallen 16% from its high and has returned to the top of a previous trading range where support begins to appear. Stochastics are oversold.
The TSX Gold Index has declined 10.3% from its recent high. It remains in a five month trading range. Stochastics are short term oversold and may be trying to bottom.
Charts courtesy of StockCharts.com www.stockcharts.com
Copper fell 12.15 cents U.S. per lb. last week on trader rumors that China has exited the market. Short term momentum indicators have rolled over from overbought levels.
Grain prices returned to the top of their previous trading range. Intermediate trend remains up. See additional comments below on grain prices and the Ag sector.
Chart courtesy of StockCharts.com www.stockcharts.com
Other Factors
The VIX Index was virtually unchanged last week, down 0.16%. It remains in a two month trading range.
Chart courtesy of StockCharts.com www.stockcharts.com
The yield on U.S. Treasuries was virtually unchanged last week, down 0.02%. Federal Reserve purchases surfaced just below the 4.00% level. The 4.00% level is unlikely to be broken until the Fed backs off. Intermediate trend remains up.
Chart courtesy of StockCharts.com www.stockcharts.com
Long term Treasury bond prices improved slightly thanks to Fed buying in the 2-10 year maturity range. Intermediate trend remains down.
Chart courtesy of StockCharts.com www.stockcharts.com
The S&P Financial Services Index lost 5.12 points (3.06%) last week. It remains in a two month trading range between 151.61 and 175.87. Momentum indicators trend lower.
Charts courtesy of StockCharts.com www.stockcharts.com
The TSX Financial Service Index was virtually unchanged thanks to a late move in trading on Friday. Momentum indictors are trending lower.
Technical deterioration was significant last week. Major technical indicators including Up/Down ratios, Bullish Percent indices, Percent of stocks trading over their 50 and 200 day moving averages) have rolled over from peak levels, remain overbought and are trending lower.
Large cash positions remain on the sideline and have yet to show signs of returning to equity markets.
Economic news will focus on comments after the FOMC meeting on Wednesday. The Fed Fund rate will remain unchanged. Key questions that remain to be answered include, “ How committed is the Fed to buying long term Treasuries?” and “ When will monetary stimulus end?”
Second quarter earnings come into focus. Analyst estimates continue to slip lower.
Political events will continue to influence equity markets. Events in Iran remain uncertain. Iran is the world’s third largest producer of crude oil behind Saudi Arabia and Russia. U.S. healthcare stocks rallied strongly late last week on rumors that the health care bill has been delayed until fall and some of the onerous proposals supported by “far left” Democrats will be modified.
The Bottom Line
Technical, seasonal, and fundamental influences on equity markets and sectors suggest that it’s not too late to take profits in most equity and ETF positions.
Tech Talk’s Financial Post Column in Saturday’s National Post
The full column was shortened when published on Saturday. Enclosed is the full version:
And the winner of the 2009 Financial Post’s Rubber Duck Award for Junk Science goes to …
Today’s Financial Post includes a special Lifetime Achievement Award to a person or institution that has done much to undermine confidence and to instill fear in the population. The award is given annually to scientists, NGOs, activists, politicians, journalists, media outlets, cranks and quacks who each year advance the principles of junk science. Author of this column did not take long to select a candidate. His name is former U.S. Vice President Al Gore. Al’s theory is that greenhouse gases are causing global warming. Unfortunately, Al forgot to mention that factors other than greenhouse gases also influence climate change.
A well known influence on climate change is sun spot activity. History shows that a lack of sunspot activity over an extended period of time corresponds with global cooling. For example, the earth experienced a little ice age between 1645 and 1715 when sun spot activity dropped to unusually low levels. Snow fell in the United Kingdom in June. This year, Edmonton experienced a snow fall in June. Sun spot activity currently is tracing the bottom of an 11 year cycle. Scientists suggest that the bottom was reached in March 2008, but signs of a recovery have yet to surface. Since March 2008, temperatures around the world have been below average. Cool weather conditions are starting to impact grain crops, particularly in North America. Seeding was delayed this spring due to cooler and wetter than average weather. Planted acreage has declined and yields are expected to fall. Crops planted on time are growing slower than average and are in danger of frost damage before their harvest. Adding to strains on grain crops this year was a tendency by farmers to use less fertilizer than usual due to a spike in fertilizer costs last year.
Slow progress with the current grain crop comes at a difficult time. The possibility of a world grain shortage exists. The U.S. Department of Agriculture (USDA) monthly World Agriculture Supply and Demand Estimate report revealed last week that corn reserves at the end of August 2010 are expected to fall 9.4% to the lowest level in five years. In addition, analysts are forecasting soybean supplies on August 2009 at 113 million bushels, down from 130 million bushels estimated by the USDA in May and down from 205 million bushels a year earlier. Reserves will be the lowest since 2004. Wheat production for the crop year ending August is forecast by the USDA to remain stable near 2.02 billion bushels.
If sun spot activity remains low and weather conditions continue to be cooler than average into harvest time, current USDA estimates are high, world grain inventories will fall and grain prices will soar. Farmers with successful crops will have additional funds to purchase agriculture products such as fertilizer, tractors, etc. Purchases will climax before the end of the year when farmers traditionally buy supplies for the next planting season. Purchases prior to year end are eligible for tax deductions.
Seasonal influences
According to Thackray’s 2009 Investor’s Guide, the agriculture sector has a period of seasonal strength from August 1st to December 31st. The trade has been profitable in 11 of the past 14 periods for an average gain per period of 17.4%.
Technical influences
The Dow Jones Agriculture Grains Index has an improving technical profile. The Index is based on corn, wheat and soybean prices. It recently developed an intermediate uptrend after breaking above an eight month trading range and currently is trading just above its break out point. The Index is tracked by an iPath Exchange Traded Note (Symbol:JJG). Moving Average Convergence Divergence, Relative Strength Index and Stochastics recently have rolled over from short term overbought levels. Preferred strategy is to defer purchases until technical parameters show signs of bottoming. Likely timing is near the end of July.
What to do?
Investment possibilities include agriculture related stocks and Exchange Traded Funds when seasonal and technical influences turn positive. Canadian listed stocks participating in the sector include Potash Corp (Symbol: POT), Agrium (Symbol:AGU) and Viterra (Symbol: VT). Exchange Traded Funds include the Claymore Global Agriculture ETF (Symbol: COW) and the Horizon Beta Pro Agriculture Bull ETF (Symbol: HAU). The latter selection tracks the Dow Jones Agriculture Grain Index, but is double leveraged and needs to be rebalanced on a regular basis.
Update comment:
The Globe and Mail offered an interesting report on Friday on the condition of crops in the Prairie Provinces. Weather has been cooler and dryer than average this year. Finding forage for cattle has been difficult. Wheat and canola plantings are struggling at best and already are a write off for many farmers in Saskatchewan. Growing conditions have been described as the worst in over a decade.
Ken Norquay’s Column
When is a good attitude a bad attitude?
In the 1980s Ken worked for a large stock brokerage firm. Because he was known as a technical analyst, the head of stock market research asked him about market psychology. As a financial analyst, he couldn’t understand how people’s attitudes about investing could affect the stock market. The financial world was all about corporate earnings and book values. Everything useful in the stock market could be expressed mathematically: it was all about accounting. Things like optimism, fear, concern, and capitulation meant nothing to a fundamental analyst.
But Ken maintained that the key to understanding risk in the stock market was to understand investors’ attitudes. The more optimistic they are, the more risky the stock market is. The more cautious and concerned investors are, the less risk. And when investors are outright scared of the stock market, the risk is at its lowest. In his book, Beyond the Bull, he explains how investor attitude changes during the normal course of a stock market cycle. It’s the most important part of stock market analysis.
Case in point: here and now. How do investors feel about the market now, in June, 2009? Are they afraid? Are they cautious? Fearful? Or are they confident the market is about to give them back what they lost in 2008? Are they bullish or bearish? Are they “afraid” of missing out on the next bull market?
We are in constant contact with ordinary investors and stock brokers. And right now they are REALLY BULLISH. It seems that most of them were fully invested in the stock market at this time last year, June 2008. Within 5 months they had lost 45%! Winter of 2008 and ‘09 was a long painful financial experience for most of them. But spring brought new hope. ‘Midst news of increasing unemployment and GM’s bankruptcy, the stock market rallied. Analyst after analyst talked about the market “climbing a wall of worry.”
Review: “Climbing a wall of worry” refers to a phenomenon that occurs at important bottoms in stock market cycles. Economic news is so bad that the investing public worry that the economy is getting worse and the stock market will continue down. In other words, the stock market goes up, but investors do not believe it… they are too worried.
Is that what’s happening now? That’s not what we see.
What we see is “don’t worry, be happy.” It started with last year’s lightning losses in the crashing stock market of September 2008. People were shocked! Then came Obama-mania: hopes that the new president’s stimulus package would somehow save us all. Surely a new economic age had begun: surely the economy would rise like a phoenix out of the ashes of America’s fallen corporate giants. Then came a normal bear market rally: March 9, 2009 to now. The Canadian stock market has retraced about 40% of its 2008/9 drop; the US market about 30%. This rally has both Canadian and US investors breathing a huge sigh of relief. “Another four or five months of this and we’ll break even for the year!” The latest stock market buzz-phrase is “green shoots.” These are the early signs of economic recovery: the green shoots of spring, growing out of the icy soil of winter… optimistic hope that the worst is over and the recovery is just around the corner.
That’s not a wall of worry. The wall of worry is about investors NOT believing that things are getting better. In June 2009, investors think [hope?] things ARE getting better. They think they WILL make back the money they just lost in 2008. If they are worried at all, they are worried about missing out on the recovery.
When the 2008/2009 bear market finally does end, the first move up will be met with an attitude of disbelief. Investors will have a bad attitude toward the stock market. The green shoots they see now will be replaced by the green light they don’t see.
Ken Norquay, CMT
905-847-8511
CastleMoore Inc
Matt Blackman’s Column
Matt discusses “Rally break or break down”. Following is a link to his report:
http://tradesystemguru.com/content/blogcategory/34/68/
Comments or questions for Matt? Contact him at http://tradesystemguru.wordpress.com:80/
Bill Carrigan’s Blog
Bill offers an update on the Technology sector. Following is a link to his blog:
http://www.gettingtechnicalinfo.blogspot.com/
Bill’s column in the Toronto Star is entitled, “Cynical investors urged to check out wealth generators”. Following is a link to his column:
http://www.thestar.com/comment/columnists/article/653930
Lou Schizas’s Column
Lou offers a “heart-felt” comment on Father’s Day investing. Following is a link to his site:
http://www.happycapitalism.com:80/2009/06/investing-in-thanks-for-dads/
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Disclosure: Mr. Vialoux does not own securities mentioned in this report.
Disclaimer: Comments and opinions offered in this report at www.timingthemarket.ca are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed.
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June 22nd, 2009 at 5:47 am
Don:
Thanks for the comments on global warming and sun spots. The theory that greenhouse gases cause global warming has been attributed to Margaret Thatcher’s government who were pushing for nuclear power plants in the UK at that time. There is a good book ‘Unstoppable Global Warming’ every 1500 years that reviews the scientific facts instead of theories. It points out that global warming moves in cycles – in 1000AD Greenland was indeed green and Newfoundland had grape vines (hence its Viking name Vinland) – yes, there’s proof of both these issues.
June 22nd, 2009 at 8:28 am
BREAKDOWN AND SNAPBACK
Breakdown and Snapback
by Carl Swenlin
June 19, 2009
On Monday, in predictable fashion, prices broke down from the ascending wedge pattern we’ve been watching. Then, after a correction of 5%, prices began a snapback move up toward the recently violated support line (now overhead resistance). Prior to the breakdown, you will notice that overhead resistance was presented by the 200-EMA (exponential moving average), which also happens to coincide with the top of the wedge pattern. Once the snapback is completed, I am inclined to expect the correction to continue for a while. There is good support at 880, and after that the most obvious support is around 670.
http://decisionpoint.com/ChartSpotliteFiles/090619_sb.html
June 22nd, 2009 at 8:39 am
Don, how are the technicals shaping up for the seasonal play in the US Biotech sector? Great site!
June 22nd, 2009 at 9:26 am
Don, I read all the material on your educational section and refer to your site daily. Do you also incorporate the Decennial and 4 year US Presidential Cycle in your investment strategy? Have you read those Harry Dent books and if yes…what do you think? Your site is great!
June 22nd, 2009 at 11:19 am
Canuck2004
I used a similar (but much simpler) analysis as the one you posted to see support at 880 and I am tending to agree with Swenlins assertion that a medium term correction has begun. I look at the VIX and the flow of institutional money it implies (many institutional investors must use VIX thresholds to indicate their degree of market participation), the Yen Euro cross and spreads like LIBOR OIS and corporate bond spreads. Volatility for now.
June 22nd, 2009 at 11:52 am
Please dont start discussing global warming here – otherwise we might be flooded with comments by the minority of naysayers…
June 22nd, 2009 at 1:00 pm
Hi Don
I have question regarding Agrium. It looks like it has support at $44 and $40. Where do you think is a good place to put my order? Thank you every much.
June 22nd, 2009 at 2:10 pm
Amelia
Swenlin posts every week or two… I always read his charts as he has been quite accurate so far…. but support at 670 is a pessimistic retest of the March 9th low. I don’t know if we will get there… but today’s TSX big red candlestick says probably… TSX broke 50 DMA… and seems like it wants the 200 DMA. We will see… Healy and Tardif both said we will see the March lows again.
I was stopped out of one my core pipeline trusts late last week… not in a rush to re-enter. Moved my other stops higher…. Even have stops on all my various Short Term Bond & Corps. ETFS. I have no intention of giving the market more than 4-5%, even less on the Bond ETFs. The safest is the CMR-TSX., it won’t do much, but one can still margin it at 50%.
I watch the VIX daily, but you should do a “weekly” 3 year chart on the WTIC (Stockcharts: $WTIC). Note the break-down with a “death cross”… and a 60% or so retracement from this year’s low to last year’s peak…. Very strong resistance at 73.90 and now rolling over. This longer term chart looks very bearish to me… in any case, fundamentally it makes no sense for oil to be where it is when the world is awash with oil and demand dropping… as it always does in a recession. I think what we have just seen is a typical “dead cat” bounce from peak to trough, and back more than half-way again… and the usual follow thru is a further break down to retest the low.
In my experience, indices tend to form very simple bottoming patterns…. a herd instinct I suppose… double bottoms, inverse head and shoulders, stuff like that. A 660 followed by a 670 double bottom would be very bullish…. I expect to see something of the sort eventually. Once support is firmly established, one can be more secure as to the risk/reward profile of the markets.
Since March 9th it’s been a pure gamble. The trend is your friend until it isn’t anymore…. And now it seems we have shifted trends.
June 22nd, 2009 at 2:52 pm
Hi Canuck 2004
Where do you thing the TSX is going? By looking at the chart, it looks like it has some good support at 9000ish. What do you think?
June 22nd, 2009 at 6:02 pm
Hi Jason. The Biotech sector is the key sector discussed in tomorrow’s Tech Talk. Recommendation is to wait before entering for a seasonal trade.
June 22nd, 2009 at 6:03 pm
Hi Yin. Agrium has support at $38.20. Downside risk for the TSX Composite Index is to 9,100.
June 22nd, 2009 at 6:03 pm
Hi Yin. Agrium has support at $38.20. Downside risk for the TSX Composite Index is to 9,100.
June 22nd, 2009 at 8:11 pm
Canuck2004
Thanks for your sage advice. I will be reading Swenlin regularly now. My problem for the time being is whether to sell my core dividend stocks: pipelines, utilities, consumer staples and some industrials. I bought them for the rising yield initially. What do you think? I will be dumping my energy trusts for now and get back in at a higher yield when the fundamentals look better.