The Canadian Technician

Monitoring the Ms. Merkel Market Mood

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It has been a few days since the EU summit.

Let's check in on some places for strength to show up.

1) Let's look at some US banks to see if they are going vertical.

JPM

While JPM may be stronger, let's look at BAC.

BAC

I don't get any courage looking at these. Let's go look at a Canadian Bank. RY.TO is big, so lets go there.

RY

Doesn't look like it is accelerating much since the European decision.The short term ones are flat.

Let's go into the storm. Europe.

UBS

This looks particularly weak to me. Let's try London. Here's Barcley's.

BARC

Here are some French banks.

Soc Gen

Another one.

BNP

I could use some grouped ETF's to demonstrate this by region, but I see no real surge higher with investors clamouring to get in on this train.It doesn't seem to matter if we look at the strong or the weak.

Italy bonds continue to trade above 6% which is higher than where they traded before the announcement.

My bias for the overall market is that it desperately wants to go higher. A pause after this fantastic move is not unexpected.

Usually a late bull market run will be dominated by commodities (read Ag and Energy). These are late cycle sectors that should emerge. In Canada, the Potash and Agrium names have excellent earnings momentum. It really comes down to whether or not we can move with this European situation still stalling.

I went back and looked at the SP500 since 1990. This rally is truly exceptional in scale. The last time the $NYMO oscillator surged into overbought so many times so quickly, it was coming off the 2009 lows.

$NYMO

My indicators of stocks above their 50 day compared to 200 day screams buy.

A group of indicators I use together to help me with market timing scream buy.

The late bull market cycle screams buy.

The seasonality screams buy.

The GDP at 2.5% was strong enough to scream buy. Last year it was the upgrading of analyst expectations that made the market expect higher GDP (up to 4 or 4.5%) but the GDP never really changed. When did the market start to slow...right after everyone realized that Q2 wasn't going to get there and the analysts started a downgrade growth cycle.

The bottom line...everything is bullish and trying to move higher... I'll stay focused on the financials for signs of reversal. If they start to break down from here, all this could momentum could quickly reverse.

The OECD announced Europe to have a .3% GDP for 2012. That isn't good.

The Euro is breaking down a bit today. Still seems to be a RISK on/ RISK off machine. When the Euro is up, so are the indexes. When the Euro is down, so are the indexes.

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MOST IMPORTANTLY!

Tom Bowley of InvestED Central out of Washington is coming to Calgary next week. He will be presenting Saturday November 5 from 9:00 AM till Noon, He will also be presenting Tuesday night from 6:30 till 9:00. Space is limited but let's pack the house! Same presentation both days!

Follow this link to the CSTA  website.Register for FREE online on the Right hand side farther down the page.

www.csta.org

 

Good trading,

 

Greg Schnell, CMT

 

 

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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