Obama/Geithner Effect

The Obama Administration’s plan for dealing with the toxic bank assets met with resounding market approval leading to a monster rally yesterday.  In Canada, the positive sentiment was further fuelled by the positive reception to the PetroCanada/Suncor merger.  On a positive note, contrary to our expectations, the market action was rather steady yesterday, not the choppy whipsaw type of action we have been seeing for so many months.  It would appear that the market manipulation had the desired effect on the market sentiment.  However, we have some caveats.  Institutional investors are still largely on the sidelines, and the volumes were not above average.  However, reversion to mean, suggests that we could continue to see legs to this rally as so many stocks remain significantly below their 200 day moving averages and could move another 20% to get to that level.  The challenge is to take advantage of the positive momentum, but remain nimble if the market turns again.

As of this writing, futures are negative and the DAX is positive, indicating a negative open.  The market condition scans are showing no strong bias.  The market bias indicators are showing a negative bias.  Given this, it would not be unreasonable to expect a resting day.   The market stochastics are overbought.  After the market action yesterday, it would not be surprising to see a negative to flat day today.

Index	Change	%Change	Level	Phase
TSX	+452.16	+5.32%	8958.51	Recovery
DJIA	+497.48	+6.84%	7775.86	Recovery
Nasdaq	+98.50	+6.76%	1555.77	Recovery
SP 500	+54.38	+7.08%	822.92	Recovery
Russell 2000	+33.61	+8.40%	433.72	Recovery
NYSE	+353.72	+7.32%	5185.86	Recovery

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral bias

Energy: Weak

 Primary Trend: Remains down

Sector	Phase
Consumer Staples	Bearish
Healthcare	Bearish
Technology	Recovery
Utilities	Bearish
Energy	Recovery
Financials	Recovery
Industrials	Bearish
Materials	Recovery
Consumer Discretionary	Recovery

Source: Telechart