The Bottom Line
The “hoped for” short term correction has arrived. The correction will set up seasonal trades in several sectors including silver, mines & metals, basic materials and energy. However, the technicals for these sectors currently are unfavourable. Please be patient.
Ed Note: a small selection of the 41 Charts Analysed on Don Vialoux’s Monday Morning comment HERE.
The S&P 500 Index fell another 17.89 points (1.64%) last week and 6.66% from its peak on January 14th. The Index remains below its 50 day moving average and could be testing support at 1,029.38 and its 200 day moving average at 1,013.05. Short term momentum indicators are oversold, but continue to trend lower. Seasonal influences remain positive.
The TSX Composite Index dropped another 249.12 points (2.20%) last week (8.09% since January 11th). Downside risk is to its 200 day moving average at 10,865.53 and support at 10,745.25. Short term momentum indicators are oversold, but have yet to show signs of bottoming. Strength relative to the S&P 500 Index remains negative. Seasonal influences remain negative.
The U.S. Dollar Index added another 1.19 last week. Intermediate trend is up. It moved above its 200 day moving average and is testing resistance at 79.51. Next resistance is at 81.47. Seasonal influences are positive until April Short term momentum indicators are overbought, but have yet to show signs of peaking. Stochastics are above 80% and RSI are above 70%, levels where a correction frequently is imminent.
The Canadian Dollar fell another 1.10 U.S. cents last week in response to strength in the U.S. Dollar Index and weak commodity prices. The Dollar remains in a four month trading range between 92.16 and 97.79. Short term momentum indicators continue to trend down.
Gold lost another $17.80 U.S. per ounce last week mainly in response to strength in the U.S. Dollar. It closed below support at $1,075 on Friday. Next support is at $1,025 and long term support at its 200 day moving average currently at $1,012.93.
You can check out Don Vialoux’s Long Term Forecast at January 22,23rds
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.