Technical Action Yesterday

Technical action by S&P 500 stocks remains bullish. Thirty nine S&P 500 stocks broke resistance yesterday and none broke support. The Up/Down ratio rose from 8.00 to (406/46=) 8.83.

Technical action by TSX Composite stocks also remains bullish. Seven TSX stocks broke resistance (Canadian Natural Resources, Crescent Point Energy, Imperial Oil, Suncor, Encana, Husky Energy, Pacific Rubiales) and one stock broke support (Jean Coutu). The Up/Down ratio rose from 6.21 to (121/17=) 7.12. Notice the number of energy stocks breaking resistance.

Interesting Charts

Media banners read, “Dow closes above 10,000”. The cheers from Wall Street were jubilant and boisterous. Baseball caps reading “10,000 and higher” were quickly distributed on U.S. trading floors. Technically, the Average broke above resistance at 9,917.99. Measured move suggest an upside technical target of 10,430.

Chart courtesy of StockCharts.com www.stockcharts.com

Continuing weakness in the U.S. Dollar contributed to U.S. equity market strength

Chart courtesy of StockCharts.com www.stockcharts.com

Cheers from Canadian investors were somewhat muted. Gains by the Average have been more than offset by weakness in the U.S. Dollar in recent weeks. The Dow in Canadian Dollars recovered yesterday to levels reached in mid August. The Dow in Canadian Dollars remains 4% lower than its September 23^rd high.

Chart courtesy of StockCharts.com www.stockcharts.com

Most of the gains recorded in U.S. equity markets yesterday came from two sectors: Financial Services and Information Technology. Both benefited from higher than expected third quarter earnings by key companies in their sectors. The S&P Financial Services Index and related ETFs broke resistance to reach a new 2009 high.

Chart courtesy of StockCharts.com www.stockcharts.com

Ditto for the S&P Information Technology Index and its related ETFs! Seasonal influences also are helping the sector.

Chart courtesy of StockCharts.com www.stockcharts.com

Upcoming Events with Adrienne Toghraie

Adrienne will present at Traders Expo Las Vegas
Friday, November 20 (no charge) – 5:30 PM – 6:30 PM

Recognizing 15 Sabotage Traps in Trading & Investing

After the Traders Expo in Las Vegas

Adrienne will present her Master Class for Traders
Sunday, November 22 – Tropicana Hotel – 9:00 AM – 12:30 PM
$500 (Ask about the early enrollment discount – now $300)*

The aim of the Master Class is to provide Traders

with Winning Psychological Models for Trading

You will learn from Adrienne

P Lessons Adrienne has learned to assist you in overcoming your self imposed limitations

P A success model to direct your mind towards the information you want and need to become a master trader

P A success model to deal with time management and getting things completed

P Lessons of professional traders

Who should attend

P Those who want to learn the pitfalls and lessons before they start to trade real money

P Those who are struggling with earning profits as a trader

P Those who can’t get to the next level of success

P Those who want to speed up the process to become a master trader

* TO REGISTER AND RECEIVE THE DISCOUNT FOR THE MASTER CLASS CALL – 919 851 8288

Ken Norquay’s Column

The Big Three auto manufacturers stuck it to Canadian consumers in 2007 and they’re sticking it to us again. 2007 was the last time the Canadian dollar rocketed toward par; and it was the last time the auto industry stiffed Canadian car buyers.

There is a fixed cost to manufacture a car. Car dealerships sell it for cost + their mark up. And that’s how business works. But in 2007 things changed fast. The Canadian dollar went from just under 85 cents in March to just over $1.10 in November, 8 months later. That’s 30% in 8 months!

The Canadian dollar had 30% more buying power. Or did it? Did GM reduce the Canadian dollar price of a Chevy by 30%? Not a chance! They kept the Canadian dollar price the same and pocketed the extra profit. Ford and Chrysler did it too. And if an adventurous Canadian tried to buy a car from an American dealership, he soon found it was forbidden. Toyota and Honda did the same thing. Canadian consumers did not receive the benefit from the rise in buying power of the Canuck-buck because big auto manufacturers forbad their US dealerships from selling to Canadians. The American auto business stiffed Canadian consumers in 2007.

And now that our Loonie is flying high again, we see the same outrageous profit grab! So far in 2009, the Canadian dollar has moved from 77 cents to 97 cents in 7 months – that’s 26% in 7 months. And if we check a few auto import websites, we see that we can save 10% to 30% by buying from the Americans, even after paying the extra shipping, duty, conversions etc. Why don’t we try calling a few American car dealerships and seeing if they will sell us a new car? Don’t forget to tell them you’re a Canadian. Will they refuse to sell a car to us again in 2009?

Now think back to March 2009 when the Canuck-buck was 77 cents. What other big news event was making headlines? Auto company bailouts? Canadian consumers and tax payers forked up a couple billion Canadian dollars to help these guys stay in business.

And now that the auto industry REALLY needs to sell a lot of cars, and now that Canadian consumers have picked up 26% in buying power in 7 months, you’d think they’d open the flood gates! American car companies should funnel those high priced Canadian dollars to buy new cars from American dealerships. Capitalism: it’s the American way. Isn’t that why American exporters like a lower US dollar – so their domestically manufactured products are more competitive in foreign markets? Isn’t Canada a foreign market? Isn’t this the perfect opportunity?

This is an example of how economic theory and reality don’t match: the currency exchange has moved favourably for the American auto industry and the Canadian consumer. But, somehow, American dealerships won’t sell cars to Canadian consumers. Neither is capitalizing on the big move of the Canadian dollar. And it’s the big car companies who are stopping it.

Ken Norquay, CMT

Financial Philosopher

World Money Show in Toronto: October 20^th-22^nd

Tech Talk is presenting a workshop at the show from 1:30 to 2:15 PM EDT on Thursday October 22^nd. Topic is “Refining Entry and Exit Points for Seasonal Trades Using Technical Analysis”. The Money Show is free for all who subscribe. Information on the show and registration is available at http://www.moneyshow.com/toms/?scode=

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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