Biovail fails

Biovail (TSX:BVF) pressed above the key $15 resistance level last week but failed to hold, dropping 5% on Friday to close at $13.84. The stock drew our attention in January when it was a Bullish Crossover. But last week's failed move signals an exit from this trade.

Financial mustard seeds

Up among the swelling gold stocks on the TSX is National Bank of Canada (TSX:NA). The stock has out-performed the S&P/TSX Composite Index by 43% over the past 13-weeks - an impressive standard amid the crippled financial sector. The big Canadian banks lag NA's bouyancy, but investors can consider this a mustard seed for the sector. Include in that hopeful spin the improved trend picture of TMX Group (TSX:X) and Canaccord Capital (TSX:CCI).

Silver slipper

As the market turns increasingly to commodities and precious metals investors can look for some leverage in silver. The price of silver has risen 23% since the beginning of the year, closing Friday at $13.65. Silver stocks have enjoyed an even better ride. Silver Wheaton (TSX:SLW) is up almost 50% in the past three months thanks to a big pop last week. The stock is one of several precious metal stocks on this week's Stock Trends Picks of the Week.

Bearish sentiment will not easily dissipate

Don't be suckered into another bear rally yet. Hungry bottom feeders have got a lot of buying ahead to make yesterday's move sustainable. The foundation is far too weak to put all your marbles down. No need to look further than the Stock Trends distribution of trending stocks: it remains highly bearish. Stick with the winning sectors: precious metals, long bonds, and technology. Investors eager to call this a bottom for financial stocks are brave risk-takers.

The Big Board gets a Bell Curve

Not surprisingly, the NYSE had to change its market capitalization listing rules in the current bear market. With stocks like Citigroup (NYSE:C), General Motors (NYSE:GM) and Ford (NYSE:F) all flirting with a share price level that would trigger delisting - a $1 minimum - the exchange temporarily suspended its minimum rule late last year and lowered the minimum market cap to $15-million last month. Now the lower standard is being floated as a more permanent fix. This is a sign of the time, but surely raises some questions about standards going forward. The Big Board ain't so Big anymore.

Eldorado

It's always telling to see a stock hit a new 52-week high while the rest of the market suffers. Eldorado Gold (TSX:ELD) scaled to $11.60 this morning. The stock was a Stock Trends Pick of the Week on January 9 at $9.25. It turned Stock Trends Bullish a month ago.

Nova's Middle East saviour

Maybe we need a lot more foreign vultures at the table. Abu Dhabi's state owned IPIC has swooped in to offer $6 share for downtrodden Nova Chemicals Corp. (TSX:NCX, NYSE:NCX). Trading in NCX was notably slim last week as the stock stabilized after several weeks of heavy trading and gruesome losses. This offer was likely very swift in the making.

Tech relative strength

Most investors are running for cover. The question they should ask, though: what cover? most of our trend signals point toward precious metals - and for good reason. But technology stocks are also garnering a stalwart reputation in the market downdraft. The Nasdaq 100 index has outperformed the S&P 500 over the last three months by 12%. The Powershares Nasdaq 100 ETF (NASDAQ:QQQQ) is currently Stock Trends Bearish, but its relative strength has been on an upward trend since November. Investors should feel reasonably comfortable weighting some of their holdings in tech.

Out with the plastic, in with the cheese

First it was doughnuts, now it's cheese - Canada's blue chip club is slowly becoming a food emporium instead of an industrial complex. Replacing the beleaguered plastics and chemicals firm Nova Chemicals Corp (TSX:NCX) in the S&P/TSX 60 Index is Canada's largest cheese maker, Saputo Inc. (TSX:SAP). SAP now joins Tim Horton's (TSX:THI) as the latest consumer stock added to the blue chip index. Oh, I may be forgetting about the addition of T-shirt maker Gildan Activewear (TSX:GIL), but the message remains the same: Canada's economy is exceedingly lightweight when it comes to the consumer sector. The TSX will remain the domain of the resource and financial sectors.

A healthy advance

Bright spots on the TSX are few and far between, but the performance of SXC Health Solutions (TSX:SXC) is notable one. It reached an new 52-week high today, climbing to $25.40 in the morning session. SXC has been Stock Trends Bullish since June of last year, but made its significant move in November. The 13-week moving average trend line offered support last week, giving investors reason to stick with this bullish trend. Today's move rewards the trend traders.

Investors coming out of hibernation

Relative market stability is starting to bring back anxious investors. January was the first month since August to have net inflows into Canadian mutual funds. Much of that went to fixed income funds, but stocks also benefited from this gradual renewal. This is another sign of hope.

Mega Brands scores

Mega Brands (TSX:MB) spiked 182% today after its deal with Microsoft was announced. Mega Brands will be producing construction toy sets for the Halo Wars video game franchise. Trading in the stock had been unusually light in recent weeks, so this deal was kept under wraps. Still, MB remains in a bearish trend and has more to prove before it deserves Stock Trends attention.

Money manager cat fight

It's like a cat fight between Peter Schiff's adversaries and beleaguered Mr. Schiff. Last week there was the fire bomb. Now Schiff sends his lobby back. His gold message rings true with Stock Trends.

Open Text reads well

Hitting a new high today on the TSX is Open Text Corp. (TSX:OTC, NASDAQ:OTEX). The move takes out the previous resistance level and should allow the stock to build on existing price momentum. Although OTC is Stock Trends Bullish, OTEX is still in a Weak Bearish category. Today's advance of the NASDAQ-listed stock back to $35 puts OTEX back to the level it was at before stock's precipitous drop in October.

TSX Group

Financial stocks had a good day. Many of the big banks have advanced over 5% today - a welcome relief echoing the jump in financials south of the border. Still, this is a sector investors should stand clear. One exception may be the exchange stocks, though. TSX Group (TSX:X) was one of the few financials stocks that fizzled today. The company announced improved profits in its Q4 performance - something the market clearly has already discounted. The stock fell 2% to close at $31.36. But X is Stock Trends Weak Bearish with a good chance to build upon the relative price performance of recent weeks. Today's poor showing in a positive day for financials should be seen as more opportunity than warning. South of the border both the NYSE Euronext (NYSE:NYX) and the CME Group (NASDAQ:CME) logged healthy gains today.

Gold pullback

Gold stocks are off today, dropping over 3%. Perhaps a good time to pick up more iShares S&P/TSX Global Gold Index Fund (TSX:XGD). The ETF is now trading at $18.54, but has a good chance to rally off support here.

Maple Leaf Foods (TSX:MFI)

Traditionally, investors flock to the consumer staples stocks in a recession, and among this group are food processing companies. Not surprisingly, many of these food product stocks are showing positive price trends in the midst of an economic slowdown. Stock Trends alerts for these improving trends with a Weak Bearish indicator – a sign that the short-term price trend is improving against the long-term bearish price trend. On the NYSE many familiar food product stocks are now Weak Bearish, including Chiquita Brands International (NYSE:CQB), Dean Foods (NYSE:DF), Del Monte Foods (NYSE:DLM), Kraft Foods (NYSE:KFT), and Smuckers (NYSE:SJM).

Canadian names are also hitting Stock Trend alerts. Maple Leaf Foods Inc. (TSX:MFI) suffered more than most last year – the listeriosis outbreak in one of its plants was nothing less than devastating for the company. But there is mounting evidence that the stock has started to respond to the company’s repaired image. A recent report on insider buying by corporate officers of Maple Leaf gives added fuel to the improving bullish picture for MFI. The stock is projected to be a Stock Trends Bullish Crossover next week – signifying the start of a new long-term bull trend. This is a good buy signal for investors looking for exposure in this relatively strong sector.



The important trend line for MFI at this moment is the short-term (13-week) moving average. It should offer investors key support signals moving forward. The trend line support is at the $9.90 level, also a price support level framed by the stock’s price pattern last September and its breakout to the plus-$10 region in early December. Shareholders of MFI should be expecting a bounce off this level and valuations above $12 as the sector continues to attract capital. Trading volume in MFI has been weak recently, but will have to improve to fuel this bullish scenario. Every bullish trend needs strong and improving trading activity.

Barring another unexpected announcement about listeriosis, MFI should perform in a predictable pattern. If the stock fails to rally off the support level, the premises of the trade fail. In that result this could be a position of short duration. A stop-loss order at $9.70 would limit losses, and also force the trade to perform quickly. The Bullish Crossover is a helpful entry signal, but the crucial trend element guiding this trade is the support level isolated by the short-term trend line (13-week moving average) and the previous price pattern. Investors should learn to establish these specific types of parameters to a trade before buying. Doing so will limit losses and foster specific expectations of the way the stock will perform. No trade has certainty on its side. But traders can develop certainty of their actions – that is, when they buy and when they sell.

IBM

International Business Machines (NYSE:IBM) opened above $91.60 and hit a high of $91.95 this morning before dropping to $90.50. Will be watching to see if the stock can regain the morning losses. IBM is categorized as Stock Trends Weak Bearish and has a chance at a triple digit share price on tech strength. Looking for $95+ before entry.

Poof! More smurf than stone

Smurfit-Stone Container (NASDAQ:SSCC) filed for Chapter 11 today. A sad ending that completes a precipitous decline, but a good reminder of how far corporations can fall. SCCC stock and bonds traded feverishly in the past couple of weeks - the writing clearly on the wall. Bond holders will be ready hat-in-hand. Last week the Smurfit-Stone Conatiner junk bonds yielded 61% and advanced on active trading. The stock, meanwhile, evaporated. Whatever. Stock Trends said goodbye to this dog back in September of 2007 when it turned Stock Trends Bearish.

Gold/Oil Ratio spikes

Milton Friedman underscored that "inflation is always and everywhere a monetary phenomenon." The current economic recession has made deflation the primary concern of central bankers, and rightfully so. The risk of systemic failure of the international financial system weighs heavily on the best and brightest bankers and economists. They may lead us out of the current financial crisis, but investors should be forewarned about the ugly consequences of the current fiscal and monetary plans in place. Look no further than the shifting crude oil and gold pendulum for a glimpse of the future.



The Gold/Oil Ratio has started a steep climb that is starting to look ominously similar to the the period leading up to the great stagflation of the 1970s. Alternatively, it could be the more benign shift to a period of weak crude oil prices, as in 1986 when the Gold/Oil Ratio also skyrocketed. Investors are hoping for the latter scenario, but there has to be considerable concern about the busy U.S. printing press. Inflation is obviously not an immediate concern, but the sudden shift in the relationship of gold and oil commodity values tells us that an unwelcome monetary storm may be brewing ahead. If the gold/oil ratio rallies further it will be concerning.

Below are graphs of the growth of U.S. monetary base and U.S. core-CPI (excluding food and energy). The grey bars represent recessions.

Golden opportunity

Gold stocks advanced again last week, finishing with a 10% gain after a strong trading session on Friday. The gold sector has outperformed the S&P/TSX Composite Index by 96% since the sector’s October low. Investors are clearly gravitating toward the portfolio insurance afforded by precious metals. Poor broad market performance – both the Toronto market (down 7%) and the S&P 500 Index (down 5%) have lost ground in the last quarter – has investors turning to gold as an anchor in the market downdraft. With the price of bullion tipping $900 again there will be even more buying presence lifting the sector. The S&P/TSX Global Gold Index has been categorized as Stock Trends Weak Bearish since early December, signalling the sector’s move above the short-term trend. In the absence of any competing strength in another sector, momentum traders will extend the current rally.




Investors can either trade gold stocks or use a number of bullion commodity funds. The iShares COMEX Gold Fund (TSX:IGT) has been categorized as Stock Trends Bullish since early December, and shows the quality of the asset even in the face of a weakened Canadian dollar. The bullion fund, denominated in Canadian dollars, is up 19% over the past three months – well below the 81% return gold stocks have generated over the same period - but solid ballast in the stormy waters. However, if the loonie has bottomed, or at least stabilized, Canadian investors can expect to get more traction out of their bullion fund investments as we move further into the first quarter of 2009. Another fund that gives investors heavy exposure to bullion is Central Fund of Canada (TSX:CEF.A). It currently sports a Stock Trends Bullish Crossover indicator, a signal that the short-term (13-week) average price has moved above the long-term (40-week) average price. This intersection of trend lines is a primary buy signal for trend traders with an investment time horizon of two-months and beyond.


The iShares S&P/TSX Global Gold Index Fund (TSX:XGD) joins a growing list of TSX gold stocks that are triggering Stock Trends buy signals. Among these are Iamgold Corp. (TSX:IMG), Eldorado Gold (TSX:ELD), Kinross Gold (TSX:K), Barrick Gold (TSX:ABX), and Agnico-Eagle Mines (TSX:AEM). Kinross failed to advance last week, in contrast to the rest of the big cap gold stocks, but it is the first of this group to have a Bullish Crossover. Only 3% of TSX stocks are currently categorized as Stock Trends Bullish, so the addition of every new one should not go unnoticed.


Risk tolerant investors should consider the leveraged gold funds listed on the TSX: the Horizons BetaPro Global Gold Bull Plus Fund (TSX:HGU) and the Horizons BetaPro COMEX Gold Bull Plus Fund (TSX:HBU). These funds deliver 200% of the daily return of the respective underlying bullion and stock funds. More active investors betting on continued short-term performance of the sector can take a more aggressive gold position with these funds.

More education

Two other education stocks are Bullish Crossovers: Career Education (NASDAQ:CECO), and Capella Education Company (NASDAQ:CPLA). Trade on industry strength.

Vocational schools looking smarter

Educational stocks again faired well in a down market. Devry (NYSE:DV), Apollo Group (NASDAQ:APOL), Corinthian Colleges Inc. (NASDAQ:COCO) and ITT Educational (NYSE:ESI) hit new highs today. It's not a bad idea to go with strong swimmers in the face of stormy waters.

Small caps showing better

Small cap stocks will likely be the most promising segment of the market over the next quarter. Big cap stocks withstood the bear slide of last year better than the vast majority of stocks. Stock Trends Relative Strength Indicator for the Dow Jones Industrial Index, for example, ran positive through Q3 and Q4 of 2008. The RSI of the Russell 2000 Index, though, underperformed the S&P 500 Index for most of that same period. Now things are changing. Blue Chips are starting to lose ground to the recent performance of small cap stocks. The Russell 2000 RSI is trending up. The Dow Jones Industrial Index RSI is trending down.

Biovail Corp. (TSX:BVF)

Although the stock market has yet to deliver convincing evidence of a bottom, there are opportunities for brave investors to once again enter the water. Gold stocks attract most of the trend and momentum crowd, but another sector has shown relative strength gains in recent weeks: health care. Among the growing number of stocks that have signaled short-term trend improvement are pharmaceuticals. A leading Canadian name in this space is Biovail Corp. (TSX:BVF). The stock’s recent strength has triggered a Stock Trends Bullish Crossover indicator – signalling a crossover of the 13-week moving averge above the 40-week moving average. Intermediate to long-term traders and investors can use this crossover as a buy signal.

One of the most important measures of a stock’s performance is how it is doing relative to the benchmark market index. Regardless of the market direction, a stock should be performing better than the market as a whole. The Stock Trends Relative Strength Indicator (RSI) helps identify these performers. The ajacent graph shows how the Stock Trends indicators categorized the trend and price momentum of BVF over the past two years. The Relative Strength Indicator revealed the building market support for BVF dating from last September when the Stock Trends RSI started trending positively. This rising RSI pattern reveals the stocks stalwart appeal in the face of a tough bear market. The share price of Biovail held fairly steady in the autumn while the market floundered.

The Stock Trends trend indicator shifted to Weak Bearish in December, alerting investors of the stock’s modest move above the intermediate-term trend line (13-week moving average). However, it was the price breakout to $13.50 in the first full trading week of 2009 that moved the trend line upward. This price advance through resistance at $11.75 was a crucial move that opens up the stock’s bullish trade potential.

If BVF’s breakout is to be sustained, improved trading volume will lend a helping hand. Look for increased trading activity in BVF as we move further into this quarter. The bullish prospects of BVF improve with the market, and especially with expanded leadership potential from other names in the sector. On the blue chip end, Pfizer Inc. (NYSE:PFE) has outperformed the S&P 500 by 14% over the past three months and is one of only two Dow Jones Industrial stocks currently in a Stock Trends Weak Bearish trend. While continued relative performance gains for PFE will help push stocks like BVF, it is the small cap resurgance of biotech stocks that will attract additional money flows to the sector. Investors now holding BVF can hope to book a 30% gain if the stock achieves a sustained rally to the $18 level.

As much as the breakout past $11.75 opened the lid on a BVF trade, resistance at the $14.75 level could be a tough ceiling to move past. The stock may simply extend its trading range of the past year. Only a strong advance through $15 will diminish this concern. Nevertheless, BVF’s chart gives investors key price points to monitor. Failure to move above $15 should signal an exit.

Pharma stocks attractive

The predominant theme emanating from the trend and momentum constellation points investors toward gold and biotechnology stocks. A good number of the current Stock Trends Picks of the Week report are pharmaceutical stocks, some of which traded quite actively last week. On the large cap side of the ledger stands Pfizer (NYSE:PFE), a Dow Jones Industrial entry that ranks number 6 amid the Blue Chip’s 13-week momentum ranking. It has outperformed the S&P 500 by 4% in the past three months and until this week’s entry of Kraft Foods (NYSE:KFT) was the only Dow Industrial stock to have achieved a Stock Trends Weak Bearish indicator. PFE also held steady in last week’s market drop. However, traders are turning hot on junior stocks in the space. Among the NASDAQ Picks of the Week report are a number of biotechs.

Back to school

Swelling jobless rates are never a pleasant figure to face. But unemployment does put educational providers in a sweet spot. Some of these stocks have been performing quite well in the hovering recession. A Stock Trends Bullish Crossover last week, Devry Inc. (NYSE:DV) has been a bit of a yoyo around the 40-week moving average for a while. The secondary trend line, despite the crossover signal, is not showing an attractive uptrend. However, there is some supporting evidence in the educational services group that makes DV and its peers attractive trades. Others in the group include Apollo Group (NASDAQ:APOL), Corinthian Colleges (NASDAQ:COCO), Strayer Education (NASDAQ:STRA), and ITT Educational Services (NYSE:ESI). The volatility of these stocks is hazardous, but their potential makes them interesting trades. ESI stretched for a 52-week high today, while the others all enjoyed a nice rebound after Wednesday's stumble.

PIMCO Muni Income Fund

Another fixed income fund that has performed well in the early days of 2009 is PIMCO Municipal Income Fund (NYSE:PMF). It turned Weak Bearish in last week's Stock Trends reports after its 35% pop - aided by the renewal of a suspended dividend payment. On the theme of US Treasuries losing their appeal, PMF and its ilk offer investors handsome yields as a hedge against market weakness. The stock is off 5.75% to $10.30 amid the stock market's fumble today. Perhaps a good opportunity to enter PMF.

Grocery shopping on a bad day

The market has dropped 3% today, but no matter for Loblaw Cos. (TSX:L): it hit a new 52-week high. The solid move to plus-$37 leaves behind resistance and spells a good chance for $40 on the next leg.

Biovail teases

The bear trend of Biovail Corp. (TSX:BVF) dates back 74 weeks, but there seems to be some hope that the stock is breaking out of its rut. A move above $14 would be a good signal that the trading range that has shackled BVF over many months has been breached. The stock reached a high of $13.77 today and is a current Stock Trends TSX Pick of the Week selection.

Some bond funds beckon

Last week's NYSE Picks of the Week report included several fixed income funds. Included in the group were: iShares Investment Grade Corporate Bond Fund (NYSE:LQD), iShares Aggregate Bond Fund (NYSE:AGG), iShares 1-3 year Credit Bond Fund (NYSE:CSJ), iShares Government Credit Bond Fund (NYSE:GBF), iShares Inter-Government Credit Bond Fund (NYSE:GVI). The US Treasury market is in a precariously overbought position, with yields likely to rise in the current monetary and fiscal constellation launched by Washington. The spread on corporate yields have risen to attract investors in this tight credit market, so some of the funds that focus on these areas have attracted a yield-hungry crowd.

Little chirps from Bird Construction Income Fund

Another contractor is starting to wake up, as Bird Construction Income Fund (TSX:BDT.UN) has advanced in healthy fashion in recent weeks. Today's lift back above $21 shows that BDT.UN will hold on to the gains of the previous week. This is another issue highlighted in last week's Newly Weak Bearish report - a filter report investors can use to help identify stocks breaking out of a long-term down trend.

Paladin Labs hits new high

A Bullish Crossover stock in last week's TSX reports, Paladin Labs Inc. (TSX:PLB) soared to a new 52-week high in early trading today before settling back to $12.65. The Bullish Crossover (13-week moving average moves above the 40-week moving average), although a lagging indicator, is often a good timing signal for entry into a stock and is the core trend indicator used by the Stock Trends TSX Portfolio trading strategy. However, PLB had insufficient trading volume and underperformed the S&P/TSX Composite last week - important sets of criteria in this mechanical trading system. Still, PLB is an interesting play in the pharmaceutical space.

Gold stocks dip

Gold stocks dropped today, but traders might want to take this opportunity to buy the S&P/TSX Global Gold Index Fund (TSX:XGD). The retreat to $16.50 should find support over the short-term. Gold stocks lead the market presently, so we can expect periods where the sector pulls back. The weakness in crude oil and commodities in general weighs heavily on gold, and today's draw on crude prices factored in the drop in gold stocks. However, investors can reckon on monetary factors keeping the ball in gold's court. Gold is a bet against the US Dollar, a bet that many will be willing to make.

Some life in Ultralife (ULBI)

The Stock Trends Picks of the Week reports are starting to become active again. These filter reports look for stocks that are showing signs of breaking out of a bearish primary trend and give investors a short list of stocks to monitor for buying opportunities. One the stocks in the current NASDAQ Picks of the Week report is Ultralife Corp. (NASDAQ:ULBI). It has surged over the past two months and now trades at $13.44 and tipped the $14 resistance level that dates from Q2 08. The stock still has some work to do, but last week's high volume indicator adds to the interest.

Agra-chem stocks offer opportunity

The change in trend distribution has brought quite a few trading opportunities to our attention. Among the newly Weak Bearish stocks are the agra-chem stocks that had fallen precipitously last year. Potash Corp. (TSX:POT, NYSE:POT), Agrium (TSX:AGU), and Mosaic Co. (NYSE:MOS) all show promise of being in the advanced stages of a bottom, moving in an extended trading range but giving investors a good opportunity to play the upside on limited downside risk. Seasonal factors as well as improved broad market conditions should help these stocks.

And joining the group in a positive move today is Monsanto Co. (NYSE:MON), jumping over 15%.

Loblaw ready to move

Of the 60 stocks in the S&P/TSX 60 Index only George Westin Ltd (TSX:WN) and subsidiary Loblaw Companies (TSX:L) is currently in a bullish Stock Trends category. Loblaw's stock has outperformed the broad market by 39% over the past three months as it has battled with price resistance at the current level since early December. The Bullish Crossover (the secondary trend line has penetrated above the primary trend line) should be a good opportunity to buy L given the strength of the consumer staples sector and the clear signal a move above $36 gives. The stock has been trading in a range for a year, but will attract capital flows as conservative investors move back into stocks cautiously.

Manulife advancing

After lagging Sun Life Finanial (TSX:SLF) in Q4 of 2008, Manulife Financial (TSX:MFC) has logged in a good start in the new year. Although MFC still has a Bearish indicator, if it maintains its current plus-$24 level the stock will be in Stock Trends Weak Bearish territory - a positive alert for Stock Trends followers.

SNC-Lavalin

Among the best performing big cap TSX stocks in the final quarter of 2008 was SNC-Lavalin Group (TSX:SNC). Its strong 13-week price momentum shows the market's interest in this global engineering firm's prospects - not surprising since infrastructure spending is the big element in governments' recession fighting arsenal. Trading volume in SNC should build over the coming weeks, a required element if the stock is going to move past the price resistance at the $40 level. A quick move to $45 will bring SNC further into our spotlight. It hit the Stock Trends Weak Bearish category on December 12, and bas been battling with resistance since. Improved broad market conditions should help.

15-year Trading stats

The Stock Trends TSX Portfolio has been active for 15-years now. Last year was a losing year, with losses totaling about 20% on average investment. Trading activity was low, reflecting the bearish market conditions, and helped avoid the market downturn to some extent. By comparison the S&P/TSX Composite Index dropped 35%. The lifetime annualized return on investment of ST Portfolio, though, remains at 40%.

The following table provides some pertinent trading statistics for the trading strategy:


ST TSX Portfolio Trading Startegy Trade Analysis

Total Gain: $ 240,164 607%
# of weeks: 788
Total # of trades: 419
Winning Trades: 169
Losing Trades: 250
Winning %: 40%
Average # of weeks each position held: 7.5
Average # of positions held each week: 4.0
Average Gain: $ 2,922 29%
Average Loss: $ (1,015) -10%
Average Investment: $ 39,566
Average trade: $ 10,000
Maximum Drawdown (%): -34.2
Largest Gain $: 40,880 409%
Largest Loss $: (3,542) -35%
Maximum losing trades in Succession: 12

Losing Runs Frequency

2 losers in a row: 22
3 losers in a row: 11
4 losers in a row: 9
5 losers in a row: 4
6 losers in a row: 1
7 losers in a row: 2
8 losers in a row: 1
9 losers in a row: 0
10 losers in a row: 3
11 losers in a row: 1
12 losers in a row: 1


Sharpe Ratio: 5.2

Martin Ratio:4.2

Ulcer Index: 9.2

Profit factor: 1.95

Pessimistic Return Ratio: 1.92

Shifting sentiment shown in trend distribution

The market remains in a Bearish long-term trend, but the fact that a full 60% of NYSE stocks are now sporting a Stock Trends Weak Bearish indicator suggests, if the constellations align, we could be in for a more hopeful year ahead. The TSX, too, has its share of stocks now in a more promising trend category, with 35% of trending TSX stocks now categorized as Weak Bearish.

More embarrassment for the TSX

The Mickey Mouse operation of the TSX defies belief sometimes. Yes, the impressive trading volume that passes through a modern exchange like the TSX goes without much heralding. Performance, no matter how active the market, is expected. Failure is not. When a market is unable to function properly, even for a short period, it is not acceptable. When it is halted for a whole day - well, that is absolute failure. Gone are the days when you can blankly blame the technology and the people behind it. This is a management problem. After today's failure, heads should fall.

A little sweetener in your portfolio

According to a recent Businessweek table there are some commodity prices that have actually risen in the past year. While wheat prices have fallen almost 30%, the prices of refined sugar are up over 20% over the past year. Some may take this as proper incentive to cut down on fattening sweets and sweeteners, but investors like to follow the pricing power. Not surprisingly, Rogers Sugar Income Fund (TSX:RSI.UN) is showing signs of a change in trend. It is now a Stock Trends Weak Bearish stock and is one of a few encouraging trading opportunities in the consumer staples sector.

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.

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.

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.

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.

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.

Black Tuesday's anniversary

The unwieldy gyrations of the market is making investors evermore uncertain. Perhaps it is time to cue up this quaint historical picture of the great stock market catastrophe of 1929. Today marks the 79th anniversary of Black Tuesday. Sit back, relax, and enjoy:

Gratuitous income redistribution

A story making the rounds as found on Donald Luskin's blog:

Today on my way to lunch I passed a homeless guy with a sign that read "Vote Obama, I need the money." I laughed.
Once in the restaurant my server had on an "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn, even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

Somebody wants to spread our wealth, traders. In the markets profits are NOT a dirty word. It is the result of hard work - something that is especially true in a tough bear market.

UnBearable

The breadth of the bearish sentiment on the TSX now matches that of October 1998 - precisely 10-years ago. The Stock Trends TSX Bull/Bear Ratio has been published since 1993 and is represented in the graph below:

Leftovers for TUP

Markets are plainly volatile, so its hard to get truly excited about the movement of stocks. The dark cloud of recession hangs heavy - always a signal to investors to take cover. Perhaps some are putting their cold hard cash in Tupperware containers - Tupperware Brands(NYSE:TUP) is up a tidy 14% today. Is this a place to keep your investments fresh in a bear market? The current Stock Trends Bearish indicator suggests TUP is not such an air-tight place to put your money.

Sign of the times

Today's Wall Street Journal features an article about an investment club, showing how this tough market has affected typical small retail investors. The inertia that has gripped many investors reflects the fear that has mounted the prevailing sentiment. Record high volatility comes with this terrain.

Dow wow!

The market has been nothing short of violent this week. The Dow Jones Industrial Index has ridden wild gyrations of 20% - from a high of 9924 on Tuesday to today's low of 8197 - measured against the index opening on Monday. That range was 25% last week! The last time it had that kind of movement was the week of Black Monday in October of 1987. Prior to that the great moments of market volatility were in mid-July 1933 (after the Dow had rallied famously off its July 1932 bottom, recording a record 154% annual return, before stagnating for years with the consequences of the National Industrial Recovery Act of June 16, 1933) and the October 1929 crash. Indeed, this is another epic moment for the stock market, which is again teetering on the powerful whims of government intervention.

Ode to Joe

Markets are about freedom and wealth creation. In a world where the political landscape often threatens the sanctity of exchange with creeping socialist ideals of redistribution, it is refreshing to hear a vote of commitment to the American Dream come from the aspiring working class. Investors should hail the dreamer!

Last night's U.S. Presidential debate brought one to the foreground, where he belongs. Meet Joe the Plumber - a man that strives to be successful and loathes the thought of a society that will punish him for his success. Joe has a lot in common with traders and investors alike. The spectre of big government, of higher taxes, of wealth redistribution, kills the spirit of budding wealth creators like Joe as much as it drives the markets into the ground. God Bless Joe!

In crude oil's HOD

Crude oil is now 50% off its peak level, falling to $71 in trading today. Traders who took the short side of oil over the past quarter played their cards right. Traders in the Horizons BetaPro NYMEX Crude Oil Bear Plus Fund (TSX:HOD) took an aggressive stance in Q2 when trading volume in the Bear play accelerated as crude hit new highs above $140. This leveraged instrument gives aggressive investors a chance to score big on crude oil's downward slide. Today's move adds another 13% gain for HOD traders.

Pizza and beer capitulation

When markets are gripped by fear the rendering of men and women to headless chickens is a painful sight to behold. As the stock market reels the inevitable capitulation spawns a new day. From those ashes a new bull market grows.

After the market's slide toward 5-year lows and perhaps threatening negative returns on the decade before all is said and done, investors are left looking for signs of complete capitulation. A broker friend tells me a key signal is post-work day alcohol consumption by brokers at their local watering hole. When the days are at their darkest expect the libations to flow freely. An even more telling signal is when branch managers start bringing in pizza and beer to the offices. In any case, according to this grizzled veteran, if either of these signals is flaring in your parts, it's time to check your gonads and buy, buy, buy.

Safety on the sidelines

Trend trading implies waiting for the market to signal entry. When a trend is identified and supporting technical triggers are met the investor exposes capital to the market. When the market turns south this strategy sends the investor to the sidelines. Stock Trends TSX Portfolio has been on the sideline for much of the past year. The number of trades over the past 12-months is about a half of its annual average - its recent dormancy an indictment of the weak foundation of the market. During the period the TSX at times outperformed the return on investment of the ST TSX Portfolio. But now that the bear has a stranglehold on the market the divergence of returns falls in ST Portfolio's favour. The S&P/TSX Composite is now down almost 30% over the past 12-months: the Stock Trends TSX Portfolio one-year return on investment is -14.5%

Turning the bear upside down with HXD

Stock markets around the globe are tumbling again today. Investors have lost confidence in the global economy and are heading for the exits. The Toronto Stock Exchange has been hit hard - dropping 11% last week and suffering another 6% shaving today. The Horizons BetaPro TSX 60 Bear Plus Fund (TSX:HXD) is up 11% in early trading. Nimble traders looking for relief from the downpour can turn to these leveraged shorting instruments.

"Rolling the dice"

Today's Wall Street Journal serves up a few juicy quotes from Congressional speeches regarding oversight of Fannie Mae and Freddie Mac, like this one:

House Financial Services Committee hearing, Sept. 25, 2003:

Rep. Barney Frank (D., Mass.): I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .

Seems Congress rolled snake eyes.

POT prices drop

The pullback in shares of agchem stocks extended today, dropping Potash Corp (TSX:POT, NYSE:POT) 20% in early morning trading. The market reaction to Mosaic Co. (NYSE:MOS) first quarter profits - which were up almost 300% - showed just how high expections were, and how the market views the global economy going forward. MOS dropped over 33% in morning trading. MOS is a current Stock Trends Bearish Crossover stock, while POT is most defintitely on the verge of the same. No mystery here - these stocks are in a bear trend, no matter how "undervalued" global boom bulls would have us believe.

TSX Bearish breadth grows

The Stock Trends TSX Bull/Bear Ratio is now 0.3, with over 78% of stock in a bearish trend. Things have not been this grim for the TSX since the sad autumn days of 1998, a decade ago. Only 9% of stocks are Stock Trends Bullish. Clearly, the commodity bull market is no more...at least for now. The last quarter was particularly brutal for materials (down 29%) and energy (down 24%) stocks, the bread and butter of the TSX.

U.S. stocks still the place... for now

Global stock markets have been on a skid - some dropping as much as 37% in the third quarter. Emerging markets, resource dependent markets like Australia and Canada, Asia and Europe - all dropping amid a slowdown in the global economy. America caught a chill, and the rest of the world has fallen ill. So much for decoupling theories. Notable in the fallout is the fact that the American stock market, on a U.S. dollar basis sits atop the 13-week performance ranking of global indices. Actually, the Philippines scores higher, outperforming the S&P 500 by 6%, but the relative performance of U.S. stocks is substantially better than all the major markets. The future of the U.S. dollar, though, has to be a concern going forward. The commitment of public finance to shore up the balance sheets of financial institutions is bound to stoke inflationary fears. We'll see how U.S. stocks hold out in the coming months.

Spent piston at SPX

SPX Corp. (NYSE:SPW) is not officially at the end of its Stock Trends Bullish run, but it's days are numbered: two more. SPW has the current distinction of holding on the longest to its Stock Trends Bullish designation - a full 193 weeks - but the psi has really fizzled on the stock of a company formerly known as Piston Ring Co. SPW had dropped 37% in the last quarter - and that was before the $10 drop in the stock so far this week. The Bearish Crossover is baked in here. Hopefully, investors will have pulled out already. The Stock Trends Weak Bullish indicator flagged SPW at the $120 level at the end of July. SPW closed today at $71.88.

JPM hitting $50 ceiling again

If one thing is certain about the fallout from the current credit crisis, it is that there will be a select few institutions coming out on top. We pretty well know which ones those are. Count JP Morgan Chase (NYSE:JPM) as the biggest winner in that group. From a technical viewpoint the picture is starting to gel as the stock verges on an important resistance level. Should JPM manage to drive clear ahead of $50, a stalling point in today's trading, the bullish crowd will saddle up on this horse. The Senate vote this evening will dictate tomorrow's move, but with a "yea" expect a handsome advance.

Buffett's buffet

Warren Buffett is showing value leadership again, making a $3-billion deal with General Electric (NYSE:GE) for preferred stock.

"GE announced that it has reached agreement to sell $3 billion of perpetual preferred stock in a private offering to Berkshire Hathaway, Inc. The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term.

Berkshire Hathaway Chairman and CEO Warren Buffett said, "GE is the symbol of American business to the world. I have been a friend and admirer of GE and its leaders for decades. They have strong global brands and businesses with which I am quite familiar. I am confident that GE will continue to be successful in the years to come."

This deal, as well as Buffett's earlier deal with Goldman Sachs (NYSE:GS), is dependant on the Treasury bailout of the financial system. Nevertheless, investor confidence in these stocks is buoyed by the Oracle of Omaha's blessings. Trend traders, though, should stand clear. Both GE and GS are Stock Trends Bearish.

VIX-en

Market volatility is obviously heightened. Investors are totally wigged out. A measure of that volatility is the Volatility Index (VIX). It is now trading at 40, a level that approaches other seminal moments in the last 15 years - the market bottom of 2002, post-9/11, the LTCM collapse, and the Asian Currency Crisis. This is either a moment of great opportunity...or tragedy. We will see.

The root of the credit crisis

At last, a voice (WSJ opinion piece - Judy Shelton: Loose money and the roots of the crisis) that clearly states the source of the credit crisis. Instead of vilifying market participants and regulators, Ms. Shelton directs blame on the compromising dual mandate of the Federal Reserve - its monetary fine-tuning of economic output at the expense of its core responsibility of protecting the value of the currency. Such an incompatible mandate is untenable over the long-term. Cheap money is the fertile soil of credit abuse. We should not be surprised that both financial institutions and borrowers abused a fiat money system that makes it so easy to lose sight of fiduciary responsibility and financial discipline.

GOOG - Suspicious volatility at close

The shares of Google (NASDAQ:GOOG) finished the day off another 10% to close at $341 after a late trading day collapse. Curiously, GOOG is now trading back above $400 in after-hours trading. Begs a few questions, no?

Techs tank

Amid the gruesome wreckage of today's market collapse following the political failure of the Treasury's plan to backstop credit markets, some blue chip tech names took a substantial hit. Apple (NASDAQ:AAPL)dropped 18%, closing at $103.75 after nearly dipping below $100. AAPL is a Stock Trends Bearish Crossover Prediction and has been on a Weak Bullish sell alert since the beginning of September when the stock traded at $160. Today's plummet through the $120 support level takes this darling stock out of our trend basket.

Also dropping significantly was Google Inc. (NASDAQ:GOOG). It dropped 12% to close at $385 - a price GOOG shareholder shave not seen in two years. However, GOOG has been Stock Trends Bearish for 29 weeks. The primary bear trend is solidly in play.

Another big name, Research in Motion (NASDAQ:RIMM), took a 14% shaving. After a big 32% drop last week RIMM became a Bearish Crossover (the 13-week moving average trend line penetrated below the 40-week moving average trend line) in the current Stock Trends report.

The NASDAQ Composite Index failed to move through resistance at the primary trend line during the summer, a failure that showed the tech sector's vulnerability to the current economic and credit conditions. Today's drop by the index below 2,000 spells a continued move south in the final quarter of 2008.

Commodities set to rebound

The dark cloud of financial Armageddon was lifted last week. Or so the market was told. Whether systemic failure was imminent will be left for the historians, but certainly the overlords of the U.S. financial system had a compelling and frightening storyline for the stewards of the American taxpayer. The end result is a massive backstopping of U.S. credit markets by the U.S. Treasury and Federal Reserve, an intervention that seeks to put the financial system back on its feet. The worrisome prospect of a 1930s style bank-run was the picture painted, and the crippling flight at mid-week toward U.S. Treasuries at the expense of money market funds gave Thursday night’s bipartisan bailout commitment the sombre resolution of a nation at war, fighting for its own survival. The stock market breathed a huge sigh of relief. Of course, the sound of the U.S. printing press revving up was sweet music for the recently toppled commodities market. The smell of inflation is in the air –crude oil rebounded above $100 and gold bullion rallied 14% to close at $864.70. The TSX bounced mightily on Friday an astounding 7%! Indeed, the U.S. move is a game-changer – it puts a quick stop in the global credit crunch and opens the stage for a new round of money flow as the consequences – both good and bad -bear fruit.

The dramatic shift in the market that has resulted from this prospective rehabilitation (socialization) of the credit market has traders embracing the short-term volatility. The incredible shift in late-week trading made for some exciting and profitable trades. But now that the house of cards has been cleared and shoved off onto the books of the U.S. taxpayer, what can we make of the current trend situation? Although last week may have ushered in a stock market bottom, there are – as always – lingering questions about the consequences of this government solution. Regardless of whether the bailout costs the American taxpayer as much as it is feared - $700-billion to $1-trillion estimated now, who knows if that is a lowball or exaggerated figure – there will be huge shifts in capital flows as nimble capital market participants deal with this huge shift in financial liability to the U.S. Treasury. Illiquidity triggered the intervention. Renewed liquidity will cap the knees of the greenback. Investors can expect the TSX and other global markets to revive.

The S&P/TSX Composite Index currently remains firmly in Stock Trends Bearish territory. The Stock Trends TSX Bull/Bear Ratio is 0.3, with 60% of trending stocks categorized as (strong) Bearish. That trend picture will not be reversed so easily. The cathartic moment of last Friday will be defining – the tremendous amount of trading is testimony to that. The Sector Select SPDR Fund (AMEX:SPY) recorded over 5.2-million trades last week, just short of the 5.7-million trades the entire Toronto Stock Exchange logged in (which is a considerable increase over its recent weekly average). As an indication of just how wild the market was last week – especially for financial stocks - the SPDR Financial ETF (AMEX:XLF) had over 2.7-billion shares traded! And the turmoil knew no borders. The iShares S&P/TSX Financial Fund (TSX:XFN) had a 326% increase in average weekly trading volume. The tremendous price swing that occurred over a very short period of time, ignited by the panic and frenzy that accompanied the collapse of the credit market and systemic failure of venerable financial institutions, was capped by the white knight appearance of public money. Although this moment may prove to be the bottom for many financial stocks, the Stock Trends barometer tells us to remain indoors. Our trend following approach dictates that others take the lead.

Gold stocks were the winning TSX sector last week. The S&P/TSX Global Gold Index jumped 12.5%, with Kinross Gold (TSX:K) leading the blue chip precious metal stocks with a 22% gain. But the sector has much ground to make up before it triggers our trend interest. With the prospect of a U.S. dollar weakening looking a renewed probability, gold bullion should develop solid price momentum. We should see $1,000 gold soon. The flight to safety last week – U.S. T-Bills were yielding close to 0%! – was an indication of the crisis of confidence that gripped money markets. But the move to shore up the financial system has an almost certain implication – the greenback will lose the shallow footing it had gained over recent months. Commodity inflation appears imminent. Investors will again look for safety in a world where dollar inflation has once again been triggered. Nevertheless, this expectation is not our game. Trend followers must wait for the forces of momentum to build. The gold sector is still down 14% in the last three months and qualitatively in a bear trend. The S&P/TSX Global Gold Index`s primary trend line is flat, so only a sustained move over the final quarter of the year will change that picture.

Stock Trends celebrates 15-years

Simple and effective trend analysis: that has always been the core mission of Stock Trends. On June 5, 1993 Stock Trends indicators were first published in The Globe & Mail's Financial Times of Canada and have been adding value to the weekly stock tables of the national newspaper since (Stock Trends moved over to The Globe & Mail in 1995 after the Financial Times of Canada was folded). The simple visual cues provided by the graphics representing Stock Trends trend analysis continue to be a unique and effective screening tool for investors, generating both buy and sell signals for stocks on a weekly basis. Over the years it has helped many investors make profitable trades.

For investors unfamiliar with the Stock Trends system of analysis, visit www.stocktrends.ca to see view weekly stock tables for all major North American exchanges, including the NYSE, AMEX, NASDAQ, and Toronto Stock Exchange.

Trend picture

Investors should remain wary of the bearish sentiment that continues to weigh on stocks. The breadth of bearish sentiment can be viewed in the Stock Trends distribution graphs. The NYSE trend picture, shown here, is not particularly inviting. The surge in Weak Bearish stocks in early February - a positive move - lost conviction. The market is in a holding pattern. For trend investors the sideline is safe.

The epic undoing of Nortel

For even zen-like investors rarely ruffled by reminiscences of painful matters past, this week’s salt on the open gash we all know as Nortel Networks (TSX:NT) is a morbid spectacle. Dropping another 24%, NT has dipped into virtual penny-stockdom - if we measure by its pre-consolidation stature. Recall the 1:10 consolidation of late-2006 and Friday’s close of $8.48 tells shamefully of this once mighty stock. Not to be deceived by meaningless shuffles of the capital stock, the telling score of NT’s colossal fall from power is simply put: NT’s market cap in 2000 made up a whopping 30% of the TSX’s total domestic capitalization. If it were to have the same stature today it would be a $550-billion enterprise - a whole Exxon Mobil Corp away from the $3.7-billion market cap it currently sports. How the mighty fall.

Hello Moto

A big mover on the TSX today is Moto Goldmines (TSX:MGL), the most recent addition to the Stock Trends TSX Portfolio. The stock hit a high of $6.03, settling back to close at $5.08 - a 25% gain.

Gassing up

Encana (TSX:ECA) hit a new high today after reporting positive guidance and a jump in profits. Traders might want to leverage on the natural gas play by following the commodity more directly through the Horizon BetaPro NYMEX Natural Gas Bull Plus Fund (TSX:HNU). It is up another 5% today.

Dow continues to de-industrialize

Next week the Dow Industrial Index will be changing its membership for the first time since it opened its doors to the NASDAQ giants Microsoft and Intel in 2004. Leaving the index on Feb 19 are Altria Group (NYSE:MO) and Honeywell International (NYSE:HON). Replacing these stocks are Bank of America (NYSE:BAC) and Chevron (NYSE:CVX). The changes decrease the industrial sector's weighting to 22% from 26%, while consumer staples weighting drops to 11.6% from 16.4%. Financials increase to 13.9% of the index, from 11%. This is still below the 17.9% weighting the financial sector has in the S&P 500, though. The Dow's energy weighting increases substantially to 10.8% from 5.5%. Energy's weighting in the S&P 500 is 12.4%.

The end result of the change is the index is more exposed to the cyclical energy sector and the strained financial sector. Nevertheless, the Dow Industrial will now more closely reflect the broader economy. It's performance will also more closely mirror the S&P 500. Currently, the Dow is outperforming the S&P 500 by 2% over the past quarter and bested the S&P 500 through much of 2007. A chart of the Dow's Stock Trends Relative Strength Indicator shows the relative performance. See Dow Industrial Index Chart.

On the right road - YRC Worldwide

Transports continue to show some mettle in the face of a market downdraft. The Dow Industrial dropped 2.9% today, but the Dow Transport Index lost only 1.3%. In the face of a strong headwind transport YRC Worldwide (NASDAQ:YRCW) advanced $0.77 to close at $18.62. YRCW is a Stock Trends Weak Bearish stock and is worthy of a look.

Launch of Stock Trends Traders Network

In an effort to create a more integrated investor community, Stocktrends Publications would like to invite you to join Stock Trends Traders Network, a social networking site open to investors who use trend analysis in their trading decisions. Like other popular networking sites Stock Trends Traders Network allows users to communicate about shared interests. The site will offer you an opportunity to share your investment perspectives with other users. Member forums and groups allow for users to engage and interact with other community members, including Stock Trends Analyst, Skot Kortje. Other features include blogging, as well as photo and video uploads, which can be used to share investment-related media. We hope that Stock Trends followers and other investors interested in joining this new community will accept this invitation and be among the first to join. A successful Stock Trends Traders Network requires active involvement from its users.

To join Stock Trends Traders Network click on the following link:
http://stocktrends.ning.com/?xgi=5vleWGk

Riding Ryder

Ryder System (NYSE:R) has caught momentum traders' fancy. Among a resurgent group of transport stocks, R has advanced from $40 at the beginning of the year to above $57. Today's move builds on a 13% gain last week.

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.