Category: US & Canada

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Canada TSX: Momentum trades

Bullish:

New Zealand Energy: Reversal above support at $3.00.

New Zealand Energy

Rio Alto Mining: Respected support at $4.25.

Rio Alto Mining

Roxgold: Strong recovery above $1.90/$2.00 support band.

Roxgold

Watch for breakout:

Tri-Oil Resources A: Narrow consolidation suggests upward breakout.

Tri-Oil Resources A

Argonaut Gold: Bearish divergence on 21-day Twiggs Money Flow indicates selling pressure at $10.00, but narrow consolidation suggests upward breakout.

Argonaut Gold

Atna Resources: Narrow consolidation below $1.50 suggests upward breakout.

Atna Resources
Northern Graphite: Bearish divergence (21-day Twiggs Money Flow) indicates selling pressure at $2.00, but respect of $1.80/breakout above $2.20 would signal another advance.

Northern Graphite

Watch:

Pretium Resources: Short candles suggest more resistance at $18.00.

Pretium Resources

Negative watch:

Silvercrest Mines: Strong bearish divergence on 21-day Twiggs Money Flow suggests reversal.

Silvercrest Mines
Madalena Ventures: Breach of rising trendline and bearish divergence on 21-day Twiggs Money Flow suggest another test of $1.00.

Madalena Ventures

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US stocks bullish

Dow Jones Industrial Average consolidating in a narrow range below resistance at 13,000 suggests an upward breakout and continuation of the primary up-trend. Strong values on 21-day Twiggs Money Flow indicate buying pressure.

Dow Jones Industrial Average

* Target calculation: 12200 + ( 12200 – 11200 ) = 13200

The S&P 500 displays a strong primary up-trend on 63-day Twiggs Momentum. Breakout above 1370 would complete the picture, offering a medium-term target of 1450*.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

The Nasdaq 100 is building up a head of froth and is due for a correction to test support at 2400. Breach of the secondary rising trendline would give an early warning. Bearish divergence on 13-week Twiggs Money Flow continues to warn of long-term weakness.
Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2150 ) = 2650

Bellwether transport stock Fedex continues in a primary up-trend, though rising oil prices could spoil the party. Respect of the rising trendline would reinforce the up-trend.

Fedex

Bear in mind that we are experiencing a lot of window-dressing ahead of the November election. The Fed is suppressing long-term interest rates, making stocks a more attractive alternative (the lesser of two evils). While ECRI’s Lakshman Achuthan points out that retail sales, the true driver of economic recovery, remain soft. There are some positive signs, however, so follow the rally by all means — but with caution. This is not another massive bull market like the 1990s. Not without a strong rise in debt levels — which is most unlikely. Markets will remain risk-averse for most of this decade — as long as it takes to clean up the mess.

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Canada: TSX 60 tests support

The TSX 60 Index is testing the new support level at 720 on the weekly chart. Failure would indicate a test of 700, while respect would confirm the primary up-trend. Breach of 700 is unlikely but would warn of a correction to primary support at 650. 63-Day Twiggs Momentum above zero continues to favor a primary up-trend.

TSX 60 Index

* Target calculation: 720 + ( 720 – 650 ) = 790

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US Housing Still Drowning in Underwater Mortgages – WSJ

According to mortgage-data firm CoreLogic, 11.1 million of homeowners had an underwater mortgage in the fourth quarter, representing a large 22.8% of all residential properties with a mortgage. The share has not come down much since the recovery started in 2009. Of those underwater borrowers, 6.7 million have only a primary mortgage, with an average negative equity of $51,000. Of the 4.4 million with first and second liens, the average amount is $84,000. According to CoreLogic, an estimated $715.3 billion in negative equity is floating throughout the housing market.

via Housing Still Drowning in Underwater Mortgages – Real Time Economics – WSJ.

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Five Largest Banks ‘Should Be Broken Up’: Fed’s Fisher – CNBC

The five biggest banks in the United States are too powerful and should be broken up, Dallas Fed President Richard Fisher said on Wednesday.

The financial crisis has left the five biggest banks even more powerful than before, he said at an event in Mexico City……

“After the crisis, the five largest banks had a higher concentration of deposits than they did before the crisis,” he said. “I am of the belief personally that the power of the five largest banks is too concentrated.”

via Five Largest Banks ‘Should Be Broken Up’: Fed’s Fisher – US Business News – CNBC.

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Forex: Aussie Dollar, Canadian Loonie and South African Rand

The Aussie and Canadian Dollar mirror the CRB Commodities Index, testing resistance at their long-term highs. The Aussie encountered resistance at $1.08. Breakout would confirm a primary up-trend — already signaled by 63-day Twiggs Momentum above zero.

Aussie Dollar

* Target calculation: 1.08 + ( 1.08 – 0.96 ) = 1.20

Canada’s Loonie is similarly testing resistance at $1.01. Breakout would offer a target of $1.06*.

Canadian Loonie

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

The South African Rand is fairing slightly better, with the Aussie testing medium-term support at R8.00. Failure would warn of a correction to the long-term rising trendline at R7.50.

South African Rand

* Target calculation: 8.00 – ( 8.50 – 8.00 ) = 7.50

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Contrarian view: ECRI’s Lakshman Achuthan says economy is slowing

ECRI’s Lakshman Achuthan says the economy is slowing:

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Momentum trades: Northern Graphite Corporation [NGC]

NGC turned up in my Momentum Stock Scan, but bearish divergence on 21-day Twiggs Money Flow warns of short/medium-term selling pressure.

Index

But respect of the bottom trend channel (at $1.80) and recovery above $2.00 would mean all’s forgiven and we can expect another advance.

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Equipment Demand Hasn’t Dropped Out, Just Taking a Breather – WSJ

New orders for durable goods fell 4.0% in January. And bookings for nondefense capital goods excluding aircraft — a measure of future business spending on equipment — dropped 4.5%. Although the declines were larger than expected, they shouldn’t raise alarm bells. That’s because much of the weakness traces to special factors.

The first is the end of a tax credit that allowed 100% deduction for equipment bought last year. Not surprisingly, businesses front-loaded their purchases early in 2011.

The second reason is a quirk in the very volatile orders series: New bookings tend to fall in the first month of a quarter, then rebound in the second or third months. The pattern is especially acute in the first quarter.

via Equipment Demand Hasn’t Dropped Out, Just Taking a Breather – Real Time Economics – WSJ.

Comment:~ Accelerated tax write-offs stimulate new capital investment by the private sector, as companies bring forward or initiate expenditure in order to take advantage of the tax deduction. But there is bound to be a (partial) offset when the accelerated write-offs are removed.

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