Canada’s TSX60 index is headed for another test of support at 700. Respect of support would present a buying opportunity, with confirmation from recovery above 720.
* Target calculation: 720 + ( 720 – 650 ) = 790
Trader’s Almanac’s Hirsh says “more of the same”
Jeffrey Hirsch, president of the Hirsch Organization and editor of the “Stock Trader’s Almanac,” sees “more of the same” for U.S. stocks markets, with solid performance for the year. But first expect an adjustment (of 5 to 15 percent) starting in the second half of March because of:
- tax season;
- end of quarter sell-off; and
- triple witching.
That should present buying opportunities for investors.
The outlook for 2013 is not as good. The first two years of a new presidential term are when bear markets are prevalent. They try to do the hard stuff in the first two years and then prime the pump in the two years leading up to the next election.
Morgan Stanley Still Expects QE3 This Year – WSJ
“For some time, our call has been that the Federal Reserve will undertake additional balance-sheet action in the first half of 2012,” writes Vincent Reinhart, an economist with the bank and a former top-level Fed staffer.
He argues it’s most likely the Fed will act to expand its balance sheet via Treasury and mortgage bond buying — in market parlance, QE3 — at either the April or June Federal Open Market Committee, and that the ultimate size of the program could tack on $500 billion to $700 billion onto what is currently a $2.9 trillion balance sheet. There’s also a chance they will put in place a modified version of the current effort to sell short-dated bonds to buy longer-dated securities.
Why act? Reinhart says the second half of the year will box the Fed in politically. Officials won’t wish to be seen starting a high-profile action in the thick of the presidential campaign. Also, he reckons growth will still be too weak, and inflation will be falling short of the Fed’s 2% target.
via Morgan Stanley Still Expects QE3 This Year – Real Time Economics – WSJ.
Economic Data Shows Signs of a Slowdown – NYTimes.com
WASHINGTON (Reuters) — Manufacturing slowed in February and consumer spending was flat for a third straight month in January, new economic data showed on Thursday, suggesting the economy lost more momentum than expected early this year.
……the spending and factory data cut into the optimism generated by a recent decline in the unemployment rate, and suggested rising energy prices were taking a toll.
Canada TSX: Momentum trades
Bullish:
New Zealand Energy: Reversal above support at $3.00.
Rio Alto Mining: Respected support at $4.25.
Roxgold: Strong recovery above $1.90/$2.00 support band.
Watch for breakout:
Tri-Oil Resources A: Narrow consolidation suggests upward breakout.
Argonaut Gold: Bearish divergence on 21-day Twiggs Money Flow indicates selling pressure at $10.00, but narrow consolidation suggests upward breakout.
Atna Resources: Narrow consolidation below $1.50 suggests upward breakout.
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.
Watch:
Pretium Resources: Short candles suggest more resistance at $18.00.
Negative watch:
Silvercrest Mines: Strong bearish divergence on 21-day Twiggs Money Flow suggests reversal.
Madalena Ventures: Breach of rising trendline and bearish divergence on 21-day Twiggs Money Flow suggest another test of $1.00.
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.
* 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*.
* 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.
* 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.
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.
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.
* Target calculation: 720 + ( 720 – 650 ) = 790
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.
TSX Momentum trades: Americas Petrogas [BOE]
Americas Petrogas was identified as a Momentum Trade using Incredible Charts screen #48894.
![Americas Petrogas [BOE]](https://i0.wp.com/www.incrediblecharts.com/images/2012/2012-03-01-boe-ca.png?w=1140&ssl=1)
Narrow consolidation is bullish and Thursday’s long tail/hammer candlestick indicates good support at $4.00.
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.