The Bottom Line
‘Tis the season to be cautious! Chances are high that equity markets on both sides of the border will move higher this week. However, strength provides another opportunity to take intermediate and seasonal profits. The period of seasonal strength for many sectors and markets recently ended. Selected sector trades such as agriculture, gold and energy are lining up as interesting possibilities this summer. However, timing of their entry is premature. They appear to be forming base building patterns for possible entry in July/August.

The Dow Jones Industrial Average slipped 70.46 points (0.56%) last week. Intermediate trend is up. The Average briefly moved below its 50 day moving average, but managed to recover above that level on Friday. Resistance exists at its May 2nd high at 12,876.00. Short term momentum indicators continue to trend down. Stochastics already are oversold and showing early signs of bottoming by recovering above 20% on Friday. Strength relative to the S&P 500 Index has turned from positive.

The TSX Composite Index gained 145.32 points (1.06%) last week. The Index remains in a four month trading range with support at 13,237.93 and resistance at 14,329.49. The Index briefly moved above its 50 day moving average on Friday. Short term momentum indicators continue to recover from oversold levels. StochastiFull report plus 45 Charts Analysed HERE

The U.S. Dollar Index fell 0.76 (1.00%) last week. Intermediate trend is down. The Index found resistance at 76.37, near a previous resistance level. The Index fell below its 50 day moving average on Friday. Short term momentum indicators have started to roll over from overbought levels. The “short cover” rally appears to be over and the intermediate downtrend has resumed. Weakness is short term positive for North American equity markets and commodities priced in U.S. Dollars.

Gold gained another $24.40 U.S. per ounce last week. Short term momentum indicators are recovering. Stochastics already are overbought, but have yet to show signs of peaking. Support is at $1,462.40. Resistance is at its all time high at $1,575.10. Weakness in the U.S. contributed to strength. Look for media talk this week discussing the possibility of gold reaching a new all time high (particularly if the U.S. Dollar Index continues to trend lower).

Full Report plus 45 Charts & Analysis HERE

The Summer Rally?
This is the time of year when the media start to talk about a Summer Rally. Mark Hulbert has done the research and confirms that the Summer Rally is a myth. Following is a link to his report released on Friday  – HERE