TSCI Street Pulse - November 2, 2009
Reverse Hand-Off
I have been waiting and waiting for a market correction, but it just will not come. Of course, it will eventually, but when? That old stock market adage, “The trend is your friend”, continues to dominate the markets.
The Dow Jones Industrials again broke through the 10,000 mark. Its uptrend line from March 9 remains intact. After briefly trading below its 50-day Moving Average, the index bounced higher, and is comfortably north of its 100-day Moving Average as well. Same for both the S&P 500 and the NASDAQ indices. They, too, briefly traded below their 50-day MA, but have since resumed their respective uptrends.
The S&P/TSX Composite Index has not done as well as its American counterparts, breaking below both its 50-day and 100-day MA in late October before the recent rally brought it, too, on-side, but just. The S&P/TSX is highly geared to the energy stocks, and oil has not performed so well recently.
Gold is near US$1,100/oz. I am not one of those looking for it to reach US $2,000/oz any time soon, but I have to reverse my former thinking that it would drop back towards the US $900/oz level. With the Central Bank of India making such a strong statement last week, I now think gold could move higher over the short to medium term to, perhaps, US $1,200/oz. That should keep gold stocks moving higher.
I have been a natural gas bull for some time, in large part because of the disconnect between the price of oil and natural gas. The “natties” may get a bounce in the short-term as we head into the winter heating season but, on balance, the industry fundamentals, I am now convinced, are weaker than I originally thought.
So, I do reversals on my predictions of a market sell-off, of gold going lower, and of natural gas returning to its normal price relationship with oil.
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Bob Weir, B. Comm, B.Sc., CFA. - eResearch
Mr. Weir has 43 years of investment research and analytical
experience in both the equity and fixed-income sectors, and in the
commercial real estate industry. He was at Dominion Bond Rating Service
(DBRS) from 1994 to 2001, latterly as Executive Vice-President
responsible for supervising the firm’s 34 analysts and conducting the
day-to-day management affairs of the company. He joined eResearch in 2004 and has been its President, CEO, and Managing Director, Research Services since May 2005.
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