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 the summer doldrums have started a bit early, and to increase confusion, futures this morning are right back near last week’s highs. According to Tom McClellan, a complex structure of the osci...

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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 excited yesterday by the fact that the Fed was rumoured in buying bonds and that Bernanke was not happy with how yields have backed up. The increased two way anxiety over tapering QE or not should remi...

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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 over the past six months. The energy sector (XEG) gets interesting again below $15 as it did in several pushes lower in the past few years. This time should be no different. While we like CLO (oi...

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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 downside and the mining stocks seasonally are not ready to rally. 12,000 or slightly lower remains a near-term risk.

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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 inaction, to appease S&P for now. In their statement, they seem to be very bullish on QE as a policy tool. Frankly, we are shocked in several ways. We believe that the Fed will never be abl...

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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 a long while, there was a notable increase in those looking for work in the US, which is thought to be a good thing from the perspective of policy makers. And obviously bad for gold, at least fro...

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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 positive and suggests a short-term bounce, but it is not bullish just yet. Perhaps in anticipation of a not so bad NFP or maybe nothing more than a short-term exhaustion, there was a significant ...

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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 shift developing where most equities that are interest rate sensitive are correcting in a material way. In Canada, utilities and REITs have had the biggest impact thus far. Add in a (short-term) chan...

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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 reversal indications from overbought conditions. Most of the Dow stocks have had a great run and they have considerably deviated from trend while showing signs of exhaustion. Seasonally, odds are...

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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 continue to see the TSX dipping below 12,000 before we see 13,000. This morning, gold is continuing its volatile ways giving back most of yesterday’s gains and WTI is a bit softer. Global currency ...

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