Today,
Just a brief look at the different sectors. A quick scan says things are still weak. The Euro currency as well as the Yen were quiet today. The bond market has not confirmed the big move of yesterday.
Here are the Canadian Sector charts. I recommend looking at the recent price action, trending up, flat or down. Secondly, watch the 10 week MA on the right hand side. Lastly, check if the price is currently above the 10 week. That is where price has to be to turn the MA up!
Did you find any upsloping 10 week MA's? How about price above the 10 week MA?
Regarding all of the sectors, we would expect these recent November lows to be above the October low. If not, these sectors are weak and getting weaker.
So Financials, Consumer Discretionary, Materials and Technology have taken out the October lows or are already pushing down at the same level. Notice how the Canadian financials clearly broke through the area of previous support on the left side of the chart.
RIM.TO dominates our tech sector but it's falling in value and importance.
The Canadian financials are clearly weak.
The Consumer Discretionary sector has been more bouyant in the US, but we have a smaller pool.
I continue to think materials are being hit by the strong US Dollar. This hurts Agriculture and the commodities.
I've dropped in a currency chart to demonstrate the issue.
Notice how every currency is near a major support level. On the USD chart this is resistance overhead. Four of the five currencies have downsloping 10 week MA's.
For the Canadian Loonie, this 95 level is important. A generous support level would be 94. If we break through there, the strength of the USD is probably a global event affecting all currencies. The little dotted line is important on each chart.
You can click on the charts for a live update. You can revisit the blog page to get current updates on the chart. The blog photo won't update, but if you click through on the chart, it will take you to a current update chart. The currencies are going to be a major indicator as we go forward. The Yen and the Euro are the large currencies. If they can continue to find support here, that is great news. If they both start to break down below support, it will be a massive push to the USD which would hurt commodity prices. This in turn would hurt the $TSX.
The entire world is expecting Fed QE3. Will it be talk, that the Fed stands at the ready? Will it be reality that they QE somehow?
I am not as convinced. The food inflation is really high already. More QE will be inflationary and all commodities - especially energy - will surge higher. Surging energy costs are a tax on the consumer. That is tricky for the Fed. Currently the GDP is 2.0% in the 3rd quarter. While not aggressive, it makes it hard to justify additional QE when it is growing.
Please register for the CSTA meetings in December. Head to www.csta.org and see if there is one venue close to you. All the meetings are free for first time visitors. The CSTA is a volunteer based group to help educate investors on technical analysis in Canada. For US investors, check www.mta.org. For International investors, check www.ifta.org
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Good Trading,
Greg Schnell, CMT
