Loonie weakness + gold strength = IGT

If the recession risk in the U.S. heightens, despite the recent Fed easing, investors can continue to build gold weightings in their portfolio. The implication of a weaker Canadian dollar also lends itself to trading the iShares COMEX Gold Trust (TSX:IGT). The gold trust has been outperforming the iShares S&P/TSX Global Gold Fund (TSX:XGD), and represents a more profitable option for Canadian investors as the loonie weakens in a bullish bullion environment.

Canadian Oil Sands Trust

Stock Trends shows a number of energy stocks in Weak Bullish territory, including Encana Corp (TSX:ECA), Imperial Oil (TSX:IMO), and Husky Energy (TSX:HSE). Canadian Oil Sands Trust (TSX:COS.UN) is another. It is recovering and should move back into a Stock Trends Bullish category as it trades above $36. Positive earnings and improved unit distributions will help COS.UN regain its lost ground.

Improving U.S. stocks

Canadian investors should start casting their nets again in U.S. waters. The trend distribution on the NYSE is showing an improvement that is not evident on the TSX. Although both exchanges are registering a Bearish trend breadth, the NYSE now has 16.6% of its stocks in a Weak Bearish trend. This compares to only 6.4% on the TSX. A rising level of Weak Bearish stocks is generally a prelude to a change in investor sentiment toward bullishness. The low reading of the Stock Trends Bull/Bear Ratio (0.3 on both exchanges) indicate that this may be the nadir of bearish sentiment. However, it is clear that U.S. stocks are offering more of an early glimpse at this optimism. Stock Trends subscribers should see more U.S. Picks of the Week stock picks if the market stabilizes.

Gold Reserve Inc

Showing signs of a developing intermediate trend, Gold Reserve (TSX:GRZ, AMEX:GRZ) is a new trend trade found in the Stock Trends Weak Bearish camp. The stock has advanced from a low of $3.91 in the autumn and has traded with growing and high volume in recent weeks. Weekly highs for GRZ have been rising in each of the past seven weeks, giving traders a strong pattern as the stock moves through $6.

Fording Canadian Coal stokes

Fording Canadian Coal Trust (TSX:FDG.UN) pounced to a new 52-week high today, jumping to a high of $44.33 before settling back into a 7% gain in mid afternoon trading ($42.74). The positive pop and robust trading volume brings the 35-week Bullish trend back in order.

TransAlta support?

Holders of TSX-listed utility TransAlta (TSX:TA) have reason enough to be disgruntled. The stock has now dropped to the $30 level from its $34 perch, jeopardizing its bullish trend. Some institutional holders are calling for corporate streamlining and asset sales. The Stock Trends Weak Bullish alert last week certainly puts investors on call. But as the stock tests the current support level - the 40-week moving average trend line - traders might look for signals of strength. If TA holds and rebounds off the primary trend line, the stock should benefit from the broad market's turmoil.

Sino-Forest gumption

Canadian forestry stocks have been wet kindling for an eternity. Only TSX-listed Sino-Forest Corp. (TSX:TRE), with its timber harvests in China, has been in our good trend books. The stock has been trending positively since November of 2006 when it first entered the Stock Trends filters as a Pick of the Week at $6.88. Its Bullish trend elevated it to a peak of $26.15 last autumn. TRE faltered in November and amid the January market collapse it has been driven back to its primary trend line (40-week MA). With last week's 11% drop TRE turned Stock Trends Weak Bullish, but it could be in a position to recover from the brutal slip earlier this week when TRE dropped to a low of $15.11 on Tuesday. Today's advance of 4.3% on moderate volume brings the current price back to $18.50. We'll have to see if the stock can gain some traction on the slippery market slopes, but this is a materials stock investors need not give up on yet. A further advance to above $21 will reassure shareholders and help buoy TRE in these troubled waters.

U.S REITs? It's alive!

As expected, it was a wild and woolly ride today. Hope for the financial sector appears in the offing, but do not be fooled by this rally. The gyrations of a bear market have tempted even the steadfast trader. The extreme movements in financials and materials stocks embodies the clash of will among monetary forces. Despite today's adventure, stick with commodities and defensive sectors.

However, the market is looking for signs of a bottom. Stock Trends offers little help with such fortune-telling. It can serve up a storyline as it unfolds, though. One of the recent Stock Trends NYSE Picks of the Week is Anworth Mortgage Asset Co (NYSE:ANH), a real estate investment trust that has developed price momentum over the past 13-weeks. The appearance of this California-based REIT, and its inherent assets - those mortgage-backed securities left for dead meat - in the Stock Trends filters gives us encouraging indications about the prospect for more stable housing and credit markets going forward. ANH will be a Stock Trends Bullish Crossover this week, its steadily building secondary trend is pushing the stock toward its May 07 high of $10.06. Every bit of financial market news that shows that ANH is still good paper is helping. Things must be improving - the company is proceeding with an 11-million share offering. The stock closed at $9.10 today. We will see what kind of appetite the market now has for this soured, but revived asset class.

Viva Vivus!

Of the number of health care stocks that have been recent Stock Trends picks, Vivus Inc.(NASDAQ:VVUS) stayed firm in the market volatility. VVUS first came to our attention in the January 11 Picks of the Week when it closed at $5.61. It had a Stock Trends Bullish Crossover last week. Today it hit a high of $6.25 before closing at $6.18. The eclipse of the stock's previous high attained last August could help propel VVUS in a very difficult stock market. It appears there will be no dysfunction in this stock, recession or not.

Materials sector still noble

Investors looking for direction in the current market disarray should review the sector trend strengths evident in the exchange traded funds reports posted at Stock Trends. The relative strength of materials stocks, despite the haircut the sector has suffered in recent sessions, is still a steady railing. Toronto Stock Exchange listed funds that stand out currently include Claymore Global Agriculture Fund (TSX:COW), iShares COMEX Gold Fund (TSX:IGT), Horizons BetaPro Global Gold Bull Plus Fund (TSX:HGU), iShares S&P/TSX Global Gold Fund (TSX:XGD), and the iShares S&P/TSX Materials Fund (TSX:XMA). Look for a rebound in these funds as equity markets stabilize. XMA recovered 6.7% today to close at $36.48, sitting perhaps not coincidentally at the ETF's 13-week moving average trend line. Volatility has made this a rough ride, but sticking with the commodity play should be rewarding.

Hope for 2008

The emerging bear market of 2008 comes after a less than gratifying year for the Stock Trends TSX Portfolio. The trend conditions in 2007 never really favoured the trading strategy. Indeed, the number of portfolio buys totaled 15, half the average yearly number of buys. The return on average invested capital was an uninspiring 10.2%, better than the 7.1% the S&P/TSX Composite Index logged in 2007, but well below the 42% average return on invested capital measured over the 14 complete years the trading strategy has been active. If there is an appetizing morsel to nibble on, it may be the outstanding performance of the Stock Trends TSX Portfolio in the last market downturn. The results of 2002 - an impressive return of 62% for the ST Portfolio versus a 13% drop in the S&P/TSX Composite Index - reveal that the trend apparatus of Stock Trends can produce trading profits in a grizzly market. It is a matter of being in the right place at the right time. For now we must wait for investor sentiment to turn, an event that will be represented by a rising level of Weak Bearish () stocks. With only 7% of TSX stocks currently in a Weak Bearish trend, we know that patience is in full order. Until the level of Weak Bearish stocks increases the Stock Trends TSX Portfolio will be in hibernation with the bears.

Hang on to your hats

Add another 600-point drop to the S&P/TSX Composite Index as the Canadian equity market tumbled with the rest of the world exchanges on this U.S. holiday. Tomorrow will be an interesting day, indeed. Anxious investors have some work to do when U.S. markets re-open. It is now a matter of degree: just how far will the markets plunge?

Stock Trends has revealed the ominous conditions since last summer. It was then that the level of broad bullishness collapsed - Stock Trends Bullish stocks fell from 53% to 20% of trending stocks. Although the price level of the benchmark North American indices rallied in Q4 of 2007, broad investor sentiment measured by the aggregate of Stock Trends indicators clearly made the case that the market peaks were unsustainable.

There will be more painful days ahead, but investors should look to rebalance their portfolios and move toward sector strengths in consumer non-cyclical, utilities, health care and gold stocks. Also, certain global commodity plays - like agri-business - have bullish trends that can withstand the strains of the bear market onslaught. These strengths are exhibited by the Stock Trends Bullish indicators that charm these sectors - see the Stock Trends U.S. market indices report.

POT, AGU served

Although the S&P/TSX Composite Index has dropped below another price level support and is a currently in a Stock Trends Bearish category, today's big hit on blue chip momentum leaders Potash Corp (TSX:POT) and Agrium (TSX:AGU) may prove to be another great opportunity for traders to pick up these Bullish stocks.

POT has dropped 10% and is now trading ($124) above a support level it touched in earlier trading. AGU similarly sits above its support level represented by its 13-week MA ($60). The global agriculture-chemical boom will not be swayed by the forces working against North American equity markets - the bullish trend of stocks like POT and AGU should give positive guidance for traders ready to pick up these stocks at the support levels touched today.

Healthcare Service Group

Defensive investors have taken to the health care sector again. The Stock Trends Picks of the Week reports have been active with U.S. health care stocks over recent weeks. Top among the year-to-date performers are medical supplies stocks - up 5.4%, second only to the YTD performance of gold stocks. Less glamorous suppliers like Healthcare Services Group (NASDAQ:HCSG), a supplier of linen, maintenance and food services to nursing homes and hospitals, is a worthy trend moving stock. HCSG ranks as the longest running bullish stock on the NASDAQ, clocking in 241 weeks as a Stock Trends Bullish stock. It has been trading in a range over the past two quarters, but today's move to $24 could tip investors to a new bullish move. Look for a buy signal if the stock scales its 52-week high, $24.45.

Yamana dips - buy

Yamana Gold (TSX:YRI) has slipped 6% today and is currently trading at the $15.40 level. The stock is a Stock Trends Bullish Crossover, a trade entry signal. Investors looking at this lagging big cap gold stock can buy on the dip. Gold stocks have considerable price momentum working in favour of the sector. Today's gold weakness is a good opportunity.

Appled out

Even Steve Jobs' predictably energized introduction of Apple's new movie rental service and razor thin laptop swayed the market little from an increasingly bearish temperament. Apple Inc. (NASDAQ:AAPL) turned Weak Bullish in Stock Trends most recent report, and today's drop to the $167 level makes the alert sound even stronger. Tech stocks are off their impressive highs of the final quarter of 2007 and the Nasdaq 100 is now threatening to dip to 1,800 - a remaining support level. Fellow tech darling Google (NASDAQ:GOOG) is also a new Weak Bullish stock - Stock Trends' earliest sell alert.

Junior oil stocks pumping trading profits

Select oil and gas stocks have shone in recent weeks. Some of them are previous Stock Trends Picks of the Week like Birchcliff Energy (TSX:BIR), Peerless Energy (TSX:PRY.A), and Tristar Oil & Gas (TSX:TOG). BIR screamed to another high yesterday, closing at $8.99 - a 73% gain since it was a Stock Trends pick in early November. PRY.A also hit a new high , and TOG advanced another 6% Monday to close at $14.43. The stock was a Pick of the Week on November 23 at $11.13. Oil and gas stocks now in the Stock Trends focus include Arsenal Energy (TSX:AEI), Berens Energy (TSX:BEN), Celtic Exploration (TSX:CLT), Rider Resources (TSX:RRZ), and Vero Energy (TSX:VRO).

Market trends signal downturn

Stock Trends now signals Bearish Crossovers for the S&P/TSX Composite Index, the Dow Jones Industrial Index, and the S&P 100 Index. They join recent Bearish Crossovers of other benchmark indices: the S&P 500 Index, and the Wilshire 5000 Index (See Stock Trends U.S Indices report). The price trend of these indices no longer diverges from the trend breadth of North American exchanges, represented in our analysis as the Stock Trends Bull/Bear Ratio, a gage that has signaled substantive bearish sentiment since the summer.

Low volume gainer - SXC Health Solutions

Stock market technicians know the importance of trading volume. Active trading fuels price movement. However, in some conditions price advances under low volume of trading conditions alerts us to possible breakout stocks. Stock Trends monitors for these situations in the weekly Low Volume Gains reports.

This week two TSX stocks draw out attention, one of which is SXC Health Solutions (TSX:SXC), an IT company supporting the health management industry. The health sector has come to the stage in recent weeks, primarily in the U.S. reports. SXC fits into the sector's strength, and its tepid price momentum is developing. The stock closed at $15.04, a 5.5% advance on the week, with the Stock Trends low volume indicator. As a Stock Trends Weak Bearish stock SXC is a good candidate for a bullish turn once the market is drawn to this ember.

Picks good as gold

Stock Trends focuses on stocks that are changing trend from bearish to bullish, as defined by the relationship between the 13-week and 40-week moving average of price. Expanding price momentum and volume alerts us to particular stocks every week. Often these Stock Trends Picks of the Week generate timely signals for trade entry.

Investors in gold stocks will have taken to the signals for big cap golds in the latter half of last year. Barrick Gold (TSX:ABX) was a Stock Trends Pick of the Week in late August at $34.71. It closed Friday at $52.26 (a 51% gain). Also a pick in late August was Agnico Eagle Mines (TSX:AEM), now trading 39% higher. The end of October brought out other golds in the Picks of the Week report: Kinross Gold (TSX:K), now up 33%; Goldcorp (TSX:G), advanced 20%, and the iShares S&P/TSX Global Gold Fund (TSX:XGD), now a 17% gain. The most recent big cap gold stock in the TSX Picks of the Week Report, Yamana Gold (TSX:YRI) showed up in the January 4th report. It advanced 14% last week.

Gold fund currency play

The price of gold is once again front page news. Although the inflation adjusted high of bullion is a considerable leap from its current level ($881.70), the nominal record has captured the speculator's podium. In the old days unsophisticated retail investors were left with few real alternatives for investing in the gold cycle other than buying gold stocks. The modern age of exchange traded funds has improved the offering. Gold bullion funds now attract plenty of trading. Canadian investors, however, should be aware of the effects of currency fluctuations when they consider buying into these assets. Traded on the Toronto Stock Exchange is the iShares Comex Gold Fund (TSX:IGT), denominated in Canadian funds. As the value of the Canadian dollar advanced through much of last year the relative return of the U.S. dollar denominated asset was discounted. There is always currency risk in holding assets denominated in another currency, just as investors would experience in investing in the AMEX-listed iShares Comex Gold Trust (AMEX:IAU) once they repatriate the asset. For Canadian investors a firming of the U.S dollar is now helping the situation. The adjacent graph charts the 13-week price momentum spread between the TSX-listed Comex Gold fund and the AMEX-listed Comex Gold trust. It shows the discount of IGT dissipating over the past two months, now turning in favour of the Canadian listed fund. Bullion price advances in the context of a stable currency exchange give Canadian investors more of an opportunity to reap a full return on the commodity.