Thursday, November 20, 2008

S&P/TSX Composite drops below 8,000

It's been 5-years since the S&P/TSX Composite Index scaled the 8,000 level. Today it dipped to sub-8,000, a mark that tells us a bottom has not been found yet. We may be at risk for another 20% slide to the 2002 low. Worse, bullish stocks on the TSX now only number about 5% of trending stocks. This brings us back to the bearish depths of the previous commodity stock bottom in 1998.

Thursday, November 13, 2008

NT, meet GM

It cannot be a surprise to investors to wake up to reports of impending bankruptcy. It has been a predominant theme in the last quarter. Adding Nortel Networks (TSX:NT, NYSE:NT) to the list is hardly newsworthy...but here it is: a fresh report.

Wednesday, November 12, 2008

Beat the odds, standing still

Are you a deer caught in the headlights? Maybe its not such a bad idea in a bear market to embrace your inactivity. Here's an article that reviews the results of a study of the action bias of elite soccer goalkeepers. There is something to be said for standing still when everyone else is running about in a panic.

Friday, November 07, 2008

GM a lost cause

Trend traders should have bailed on General Motors (NYSE:GM) long ago. Stock Trends dropped this stock with its Bearish Crossover at the end of 2007. With today's announced 3rd quarter loss of $2.5-billion the future of GM is as dark as ever.

The energy lunacy cycle begins

Investors and energy consumers should take full notice of this in the new Obama/Biden plan for "revitalizing the economy":

Enact a Windfall Profits Tax to Provide a $1,000 Emergency Energy Rebate to American Families:Barack Obama and Joe Biden will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.

A tax of this proportion practically wipes out three quarters of the total profits of the U.S. energy sector - profits that go back into developing new energy reserves. The end result of this lunacy is higher energy prices and a crippled economy.

Wednesday, November 05, 2008

The more things change...

...the more things stay the same. Just another 5% drop in U.S. stocks - but the biggest post-election day dip in history.

The markets await ...

There are many core principles of economics that escape the understanding of the electorate. In part, we can be forgiven for the lack of economic literacy - human nature is a fickle and powerful force. Even economists have trouble dealing with it. But the birth of an administration with left-leaning impulses and a Congress that fuels social change through the heavy-handed modus of big government makes it imperative that investors be alert for the destructive potential of unintended consequences.
"The road to hell is paved with good intentions."
Gird yourself, investor.

Trend cuffs

The stock market has been in dire straits for months now. Stock Trends gave investors a Bearish marker over a year ago when the Stock Trends Bull/Bear Ratio turned sour for North American stocks. Since then the stock picking vitality of Stock Trends has been sedated. The growing number of bearish stocks has been the prevailing current. Presently, 82% of North American stocks are categorized as Stock Trends (strong) Bearish. Until the market bottoms and starts to generate a shift in intermediate-term trends, there will be a bias in the Stock Trends analysis to stand clear of the volatility and wait for for improved sentiment. This approach keeps investors from benefiting from gains achieved by successful bottom-pickers, but minimizes the risk in making such a call. Trend followers cannot take aggressive stances against a prevailing trend - it is antithetical. Still, technical traders make money and names for themselves when they can pick a market bottom. The pattern showing in recent weeks shows stratospheric volatility slowly giving way to a more shapely consolidating figure. If the SPDR (AMEX:SPY) maintains the $84 support level over an extended period there is hope for a rally for short-term traders. For the bulk of investors, though, SPY will have to scale past $115 before they come out of hibernation.