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.