The Bottom Line
The recovery in equity markets since February 5th was the start of an intermediate move by North American equity markets that is expected to last until May. However, equity markets have become short term overbought. Preferred strategy is to purchase equities and Exchange Traded Funds on weakness in sectors with favourable seasonality including silver, platinum, mines & metals, oil services, energy and materials.
A small sampling of the 50 Charts Don Vialoux analyses in this great Monday comment HERE.
The Canadian Dollar rose 0.98 last week. On Thursday, it broke above resistance at 97.79 cents U.S. and resumed an intermediate uptrend. Short term momentum indicators are overbought, but continue to trend higher. Seasonal influences have just turned positive. Current intermediate upside potential is to 103.75 cents U.S.
Interesting observation: Wholesale gasoline prices in the U.S. have increased 24.9% since their lows in the first week in February. During the same period, the price of gasoline in the Greater Toronto Area has increased only 6.5% from $0.94 to $1.001 per litre. The difference is strength in the Canadian Dollar. If the Canadian Dollar had remained at its low set in early February, the price of gasoline in the GTA area would be $1.06 per litre.
Gold fell $32.30 (2.85%) last week. Short term momentum indicators are neutral. Support is at $1,044.80 and at its 200 day moving average at $1,040.67.
The Shanghai Composite Index slipped 17.65 points (0.58%) last week. Support is at 2,890.02. Resistances are at 3,306.75 and 3,334.01. The Index has developed an intermediate triangle pattern. Short term momentum indicators are mixed. MACD has recovered from oversold to neutral. RSI is neutral. Stochastics have rolled over from a short term overbought level. Strength relative to the S&P 500 Index remains negative.
The TSX Composite Index gained 38.68 points (0.32%) last week. Intermediate trend is up. The Index closed at a 17 month closing high and is testing its January inter-day high at 12,070.20. Support is at 10,990.41. MACD, RSI and Stochastics are short term overbought, but continue to trend higher. Strength relative to the S&P 500 Index has changed from up to neutral. Seasonal influences remain positive. Strength in the Canadian Dollar curtailed performance last week. Current intermediate upside potential on a break above resistance is to 12,500, the bottom of a previous trading range.
The NASDAQ Composite Index gained 41.31 points (1.78%) last week. The Index continues to advance following a breakout above resistance at 2,326.28. Intermediate trend remains up. Support is at 2,100.17. MACD, RSI and Stochastics are short term overbought, but continue to trend higher. Strength relative to the S&P 500 Index remains positive.
The S&P 500 Index added 11.29 points (0.99%) last week. An upward intermediate trend was confirmed last week when the Index traded above resistance at 1,150.45 to reach a 17 month high. Support is indicated at 1,044.50. MACD, RSI and Stochastics are short term overbought, but continue to trend higher. Seasonal influences remain positive. Current intermediate upside potential is to 1,220.
All 50 Charts Don Vialoux analyses in this great Monday comment 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.