A 5 chart sampling and the Bottom Line taken from the comment plus 45  Charts Don Vialoux analyses in this great Monday comment HERE

The Bottom Line
Preferred strategy for equity investors is to be patient. Most equity markets appear to be forming a base pattern for an important intermediate upside move starting in the fourth quarter. Based on current technical data, chances are high that bottom of the four year cycle occurred this year on July 1st. Chances also are high that one more downside move in equity markets is likely before the next important intermediate upside move is in place. Stick with current favourable seasonal patterns (e.g. gold, agriculture, natural gas) and “sit in the weeds” with cash positions until the next important intermediate low is identified.

Sectors that are top candidates for purchase after the next intermediate bottom is identified are economically sensitive sectors including materials, consumer discretionary, industrials and technology.

U.S. equity index futures are lower this morning. S&P 500 futures are down 7 points in pre-opening trade. Traders are responding to a Wall Street Journal article suggesting that recent stress tests of European banks were not a rigorous as previously announced. Many of the banks’ reserves are based on sovereign debt in countries such as Greece where valuations are somewhat suspect.

The S&P 500 Index gained 39.92 points (3.75%) last week. Intermediate trend remains down. Support remains at 1,010.91. Resistance remains at 1,129.24. The Index moved back above its 50 day moving average and recovered to just below its 200 day moving average. Its 200 day moving average has proven to be a reliable intermediate resistance level during the past four months. MACD and Stochastics have recovered to a neutral level. Stochastics have recovered to an overbought level, but have yet to show signs of peaking.

Gold also responded to the Wall Street Journal article. It gained $10 in pre-opening trade and is testing its all time high at $1,265.00 U.S.

Both the Philadelphia Gold and Silver Index and the AMEX Gold Bug Index are poised to break above six month highs. ‘Tis the season for gold and gold stocks to move higher!

The TSX Composite Index added 265.20 points (2.23%) last week. Intermediate trend changed from down to neutral after the Index moved above resistance at 12,077.01 on Friday. Support is at 11,065.53. Resistance is at 12,321.76. Short term momentum indicators are overbought, but have yet to show signs of peaking. Strength relative to the S&P 500 Index remains positive.

The U.S. Dollar Index fell 0.88 last week. Support is at 80.08. Resistance is at 88.71, but could be forming at 83.56. Resistance also was found recently near its 50 day moving average. .Short term momentum indictors have rolled over and are trending down. A break below support would be a major event because it implies completion of a head and shoulders pattern.

Crude Oil slipped $0.31 per barrel last week. Short term momentum indicators are recovering from oversold levels.

…..view the entire 50 Charts analysed and Don’s comments HERE

Don Vialoux has 37 years of experience in the Investment Industry. He is a past president of the Canadian Society of Technical Analysts (www.csta.org) and a former technical analyst at RBC Investments. Don earned his Chartered Market Technician (CMT) designation from the Market Technician Association in 1995. His CMT paper entitled “Seasonality in Canadian Equity Markets” was published in the Spring-Summer 1996 edition of the MTA Journal. Don also has extensive experience with Exchange Traded Funds (also know as Index Participation Units) as well as conservative option strategies. In 1990 he wrote a report that was released in the International Federation of Technical Analyst Journal entitled “Profiting from a Combination of Technical and Fundamental Analysis”. The report introduced ” The Eight Phases of the Stock Market Cycle”, an investment concept that continues to identify profitable entry and exit points for North American equity markets.   He is currently a member of the Toronto Society of Fundamental Analyst’s Derivatives Committee.   Now he is the author of a daily letter on equity markets available free on the internet. The reports can be accessed daily right here at www.dvtechtalk.com.