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bounce should be weaker than the previous bounce. There is a clear pattern of
higher lows on each sell-off, but the market has struggled to make new highs. No
doubt the oil sands and mining in gene...
Analysts continue to
downgrade the outlook for Canadian banks and upgrade the outlook for insurance
companies. In a rising rate environment, insurance companies tend to outperform.
Stock markets glob...
Some seem to have agreed
with us that 1640 was not compelling in either direction as volume fell off a
cliff Friday about 20% lower than the 3 month average and the lowest reading in
months. Clearly ...
So as much as we are
looking for a dip to buy below 1600, we do not see much if any upside beyond
recent highs for now. So at 1640, the reward to risk ratio is not compelling.
Some were clearly excit...
The banks (ZEB)
confirmed the break of support yesterday and look to be heading 3-5% lower as a
group. For those looking to place cash into bank dividends, this is the dip we
have been waiting for ov...
The banks are threatening key support levels in many cases.
Initially they could hold, but overall risk there is growing. ZEB has broken
the 200-day and the April low. WTI remains vulnerable to the down...
We had been concerned
that S&P would downgrade the US credit rating again this year as the
Administration has done relatively little to suggest otherwise. However, they
have done enough through i...
The gold sector got
hammered once again on the marginally better than expected US jobs reports. The
very robust Canadian report lifted the C$, but did very little for equities. For
the first time in ...
The combination of
the oversold condition and support of the rising 50-day average and trendline
off the lows of the past six months caused a major test and reversal pattern
yesterday. The pattern is...
OECD says Canada
has one of the most expensive real estate markets in the world. Free money will
do that ya know. While we do not think interest rates are going to normalize
just yet, there is a shif...
In our weekly review of
all the Dow stocks, many of them are threatening to roll over. From the
financials to IBM and HD, the breadth of bearish patterns is growing. INTC and
MSFT had notable bearish...
Despite the stronger
performance in the gold sector in the past few days, the overall breadth was
very weak yesterday and it would appear that the risk once again is building to
the downside. We cont...
So the thought of month
end window dressing was obliterated in the last hour of trading Friday. More Fed
fodder on cooling the pace of stimulus continues to impact the yield curve and
rather than cau...
The steepening yield
curve is positive for bank profits because they lend long to borrow and hedge
short. But we point out that the yield curve shift is a bear steepening, which
means yields are risi...
stocks globally are getting sold off. The thought that the rising government
bond yields are going to attract conservative dividend money is making the
rounds. We would stop short of calling it...
The market is in one of
those wait and see modes. As we noted in our US comments
recently, the bears are not going to all of a sudden celebrate and the bulls
certainly are not going to go down withou...
Volume was 72% below
average yesterday. It was so thin that we had an order in to sell a very liquid
stock on a normal day 1% higher than the current market and got filled on a
rogue looking market o...
Don’t expect the
bulls to go down without a fight. It is extremely rare that a top is so
glaringly obvious and never looks back. Especially after such a record breaking
rally phase and breakout to al...
Okay so sometimes one
gets lucky. Make enough forecasts and something is bound to be right eventually.
There were massive reversal patterns on reasonably high volume in many sectors
yesterday as the ...
The market is setting
all sorts of records in terms of rally phase. The higher it goes the harder it
comes down, when it does. We wait patiently for it to do something bearish. We
simply cannot buy i...
We are somewhat surprised
by the strength in crude oil. Recent economic data confirms that the world is
slowing slightly and demand for crude oil (in the US and
elsewhere) is soft. Spreads between WT...
On the global crude
market front, supplies are rising and demand remains tepid. The most recent
report from OPEC suggested slightly lower demand numbers, yet most members
continue to pump higher rate...
Our favourite ETF to
track the Canadian banks is ZEB (equal weight). The price pattern in 2013 shows
that returns are now negative and that we have established a pattern of lower
highs at this point....
If the US market is
booming because growth is getting stronger,shouldn'tcommodities be at least
somewhat strong too? Stands to reason, right? Several things do not add up from
the perspective of the ...
There is really nothing more to say at this point. The market will grind higher until it doesn’t and we are waiting for it to do something bearish to get short in our long short trading model. The trend...
Is the TSX developing a
massive head and shoulders top? A head and shoulders top is a pattern that
develops where the trend of the market that was making higher highs and higher
lows transitions to o...
And so…it looks like an
off again day for gold and gold equities because apparently REITs are the new
gold according to one Asian hedge fund manager. Global REITs are now more
expensive than any time...
Gold stocks up 5% one
day down 6% the next and gold has moved in less than a 2% range over the past 2
weeks. Are these stocks that leveraged to gold prices at these levels or is it a
signal of desper...
The entire rise in
the past few days post NFP has been on low volume. We expect that means that the
demand side is drying up, but the supply side has yet to show up. The supply
side (sellers), like u...
In our review of Dow stocks, the most notable development is that IBM
closed the breakdown earnings gap yesterday and showed strong evidence of
resistance. While GE continues to suck wind on a relativ...
The market can remain
irrational far longer than you can remain solvent. This quote often attributed
to Keynes after making a bad leveraged trade and others over the years.
Regardless of who said it ...
A strong US
employment report and previous revisions should in theory be a positive catalyst
for growth stocks and sectors. Occasionally, and because we are in May, there is
a reasonable expectations...
The intra-day high on SPY
was 158.71 on April 11th and 158.72 on April 30th. The cash market was 1597.35
and 1597.57 respectively. So technically that qualifies as a higher high, but
not really when ...
Now we are looking at the
potential for a broadening top. That is a series of higher highs and lower lows.
Historically, this has been one of the more ominous price behaviours and one of
the most dif...
The market failed to make
a new high. That is not necessarily bearish, because it has not done anything
negative yet, but at this point it is another piece of the weakening trend. The
pattern of high...
The market looks to be
failing to make a new high on this latest bounce, and with the FOMC and NFP this
week, the range should resolve one way or the other. While some may expect the
Fed to suggest a...
The market showed
some evidence of resistance as it approached recent highs. Another failure back
below 1576 would suggest that for the first time since October, the market
failed to make a higher hi...
Yesterday was a commodity
risk on day—a recovery from strong oversold levels in mining and energy stocks.
And because of that, the TSX outperformed everything. It is highly unlikely that
it was anyth...
We have noted for the
past week that the S&P 500 was showing signs of a false breakout having
moved above the 1576 intraday high from 2007 and falling well back into the
range over the past week....
The next move to test the
rising trendline and the 50-day average (1544) will most likely break the
current market trend in the S&P 500. Until then, we are focused on earnings
and corporate outlo...
So the 50-day did not
break and overall breadth was decent Friday, though IBM crushed many of the
stats and did have a material impact on the Dow’s relative weakness. One look at
Friday’s leader boar...
The market closed
flirting with breaking the 50-day average. Post market, earnings misses for a
few big names, IBM in particular, pushed futures back below the line, around
1:00am they have recovered...
Is global growth
about to collapse? That is the question one needs to ask given the absolute
carnage we are seeing in the commodities sectors. From copper to coal to
precious metals to energy, we are...
No bearish follow
through selling has been typical of the US market in recent months, but the
internal decay continues to build. Small caps (IWM) have underperformed large
caps (SPY) by over 4% in re...
Right now it looks
like a false breakout with the S&P 500 falling well back into its previous
range. A break of support at 1540 would likely confirm a top that should last
for most of the summer ...
That 200-day average
thing is back again and more importantly all will know by now a key support
level for gold has broken and downside targets range from 1430 to 1120 and
places in between. Global c...
The noise level remains
high for the TSX, several stock specific stories like ABX, BB, CP and AGU to
name some of those on the front burner are adding to the day-to-day volatility.
The correction pro...
The S&P 500
breakout to new highs changes our near-term view. Recall that in 2007, it broke
to new highs for five days boosted by a 50 bps rate hike from the Fed only to
mark a five and a half ye...
Gold is gold again…at
least for a day. It would appear the short-term bearish sentiment for gold did
not manifest in a break of key support and the exodus seen in ETF outstanding
shares (GLD/IAU) as ...
While the TSX continues
to flirt with its 200-day average, the European banking sector ETF (EUFN)
continues to weaken suggesting that at least some investors are not simply
giddy. For the past few ye...
The TSX hit the 200-day
average, the XEG held the dip below $15, and SU held the dip below $29. So for
now our analysis got lucky, only hindsight will confirm if it holds or not. We
do know that the ...
One of the more
overbought segments of the US markets at this point is not the
financials (XLF) or consumer cyclicals (XLY), it is the defensive sectors
concentrated in SPLV (S&P 500 low volatili...
We’ve seen another big
example of a bearish engulfing pattern in the S&P 500 with small caps and
key stocks and sectors underperforming. But as we sit this morning futures are
trying to mount a b...
A report from Soc Gen
that gold could see $1375 by year end seemed to spook the gold sector. Yeah,
like Soc Gen knows where gold is going…Nevertheless, several stocks made new
52-week lows and the se...
A bearish engulfing
pattern: This type of pattern usually accompanies an uptrend in a security,
possibly signalling a peak or slowdown in its advancement. We clipped part of
that from Investopedia to...
The S&P 500 closed at
all-time highs, but not yet above the intra-day high of 1576. All might recall
that it closed a few days above its 2000 high of 1553 in 2007 before embarking
on the massive ...
Another recovery off a weak open on extremely tepid volume. Looks
like the overnight weakness in futures did the same thing. There appears to be a
calm before the storm brewing. It may take until afte...
The unwinding of a
massive bet against WTI relative to Brent may be the only thing pushing WTI
higher. There were some news stories that the strong durable goods report was a
catalyst. P-LEASE! The o...
The market is resilient
for now. As we noted last week, these outside influences like
Cyprus are a nuisance to say the
least. They actually mater more than stock investors would like to believe, they...
The market jumped Friday
much like it dumped on Thursday on little more than rumours. However, Friday’s
jump came on lower volume suggesting that many investors are not convinced
Cyprus maters all th...
Congress passes a
spending Bill that pushes the debt limit back to Sep 30th. This story got very
little attention yesterday…and the clowns in Congress actually took a bow that
they were able to get i...
Occasionally you need to
step back and look at the big picture. So let’s take the Fed’s latest assessment
of the outlook. They do not expect to tighten policy for at least another two
years. The econ...
There are several factors
suggesting the market should begin a corrective phase that could last a few
weeks to months. First and foremost is that the market has had an extended run
to test all-time h...
The TSX certainly has
many of the Hallmarks of distribution. A break of the February low (12,603)
would confirm at least an intermediate term top that could last a few quarters
as we have seen in the...
Behavioral financeis a growing field of research that I have been studying for many years. I will be speaking on this subject at the annualMarket Technicians40thAnniversary symposium in New York on Apri...
There is some excitement
over valuation developing in the oil sands (CLO) sector as talk about Keystone
XL heats up. However, the timing for a significant advance in WTI and global
energy prices is n...
Just when the TSX is
making 52-week highs and is approaching resistance around 13,000 (61.8%
retracement), we see the most bearish single day selling pattern in months. So
what gives? There is some r...
There are bound to be a
few head and shoulders aficionados out there looking at the 2000 high (1553),
the 2007 high (1576), and the current rally and suggest that we need to look for
a right shoulder...
The length and magnitude
of the current rally is getting very long in the tooth, but it is not extreme by
any stretch. Like we saw last year and in 2011, the ensuing correction was in
the 10% range. ...
This month marks the sixth anniversary of
Berman Call on BNN. My “call” this month is a call to action, to support a
worthy caus: the search for a cure to Alzheimer’s disease.
To help make a difference...
situation remains the most important indicator of so many things in the US
market since the Fed linked policy accommodation to the unemployment rate to
help achieve its new mandate. Wi...
Our reference to the DJIA
price index being a useless economic barometer caught fire on the Twittersphere
yesterday, but the index did not seem to care and it continued to grind higher
giving us a so...
The Dow makes a new high
and the Dow is an irrelevant index of 30 price weighted stocks where IBM is 9
times more important than GE. The magnet of the all-time highs in the S&P
500 is a far more ...
The world keeps throwing
crap at the tape and nothing is sticking. The latest is a dump in Chinese real
estate and the CSI 300 falling 4% on Sunday night. Good bet the market takes out
recent highs a...
Every time the market has
broken the 50-day average to the downside in the past few years, the market has
corrected another 5% or so. We could see something like that in the coming weeks
to give the ...
The DJIA was a nose hair
from all-time highs and the S&P 500 was a whisker from recent highs, when
selling begat selling and we closed out at the day’s low. Some nonsense about
Republican’s not g...
Global markets rallied back yesterday on notably lower volume. The energy was buoyed by the noise in the weekly US inventory numbers, but that can be changed in minutes should Italian bond yield tick hi...
The market has
entered a manic phase where the bulls and the bears are battling it out daily.
Yesterday, the bulls won backed, in part, by some ridiculous notion that AAPL is
worth more if it splits....
That was the most bearish
price action the S&P 500 has seen in months. Save for a handful of stocks,
the selling was on slightly elevated volume and appeared to be of the pent up
calibre. Minor s...
We saw some
follow-through selling to take the index down close to the monthly range lows
around 1495. While the price action of the past two days is the first sign of
follow-through selling we have ...
A bearish engulfing day
occurs when a market opens above the previous day’s close and closes below the
previous day’s low. We saw many of those yesterday and they were exacerbated by
the FOMC minutes...
The grind continues and
most everyone, even many of the core fundamentalists, concede that a correction
is due. The previous two rallies from the 2011 and 2012 lows were about 70 days
before a notabl...
Gold finally gave some
indication of capitulation last week, but it is not conclusive. We remain
longer-term bulls, but the cycles may not turn positive again until the summer
months, which suggests ...
The S&P TSX is
starting to look like it did in September and October when sellers were starting
to outnumber buyers. The gold sector continues to be bombarded with bad news and
Kinross, once agai...
Seems to be some
excitement in the energy patch that Keystone may be further along than expected.
All the Oil Sands names jumped yesterday, but Kerry is a Climate Hawk and we
heard first hand, off-th...
Fed Vice-Chair Janet
Yellen spoke eloquently about the Fed’s conundrum on how and when they will
tighten policy. Our summary of the speech concludes that they are seat of the
pants on this and they r...
Sentiment is overtly
bullish, the market is overbought, and there are all sorts of technical
divergences—therefore a correction is due. Over the past two weeks the market
stalled around 1500 and Frid...
seems to be taking on a flight to safety mode in the past few days. There has
been a notable amount of selling as US equities strengthen and a bid
comes back to gold as stocks go limp. Gold is coil...
The Jury is still
out, but we are seeing cracks in Europe, parts of emerging markets, and so on.
Occasionally, we see a stealth correction; that is where most stocks correct
5-10%, but they do it at ...
The market is confused.
It is rare that we see a 90%+ down day followed by a 90%+ up day. We are not
surprised the market is getting a bit confused as we are beginning to see the
debate heat up over ...
The corrective price
action in the TSX is more notable than for the S&P 500 largely because of
gold, mining and energy heavyweights. Similar to the US markets and
even more dramatic was the signi...
Neither of our NFP
scenarios played out and we saw the Goldilocks numbers and an improved ISM and
consumer sentiment to back it. There is little (in the US) stopping the market
from grinding up to th...
There was no clear
reason for gold to decline yesterday other than a fear of a strong NFP changing
the Fed's outlook for policy, which as of 2 days ago was unchanged, so we will
chalk it up to more n...
You are rarely going
to sell the exact high or buy the exact low. Occasionally, we get lucky and buy
or sell on the day of the high or low, but most often, positioning to catch the
main trend is wher...
The Energizer Bunny
(a.k.a. the S&P 500) keeps on grinding higher, but there is a slight fade in
the Russell 2000 relative to the S&P 500 in the past two weeks that we
should pay attention to...
Gold equities are
approaching a capitulation phase. The more aggressive selling in the past few
days suggests a low is close by. That should help the TSX to some degree, if,
and only if, the broader ...
The S&P 500
officially has Eveready Bunny status. If you told me in September when AAPL was
topping $700 and analysts were practically giddy about $1001 price targets that
it would be south of $4...
The S&P 500 stalled
right at the first resistance line (1502) and sits there again this morning
having bounced on stronger sentiment in Europe.
It is noteworthy, that some DeMark indicators are s...
A bipartisan Congress
voted (somewhat ironically) to temporarily suspend the debt ceiling limit so
that they can seek deeper spending cuts to (hopefully) address longer-term
fiscal responsibility. As...