Today the report cards for 19 US Banks comes out, however, with all the leaks, it seems this news is already baked into the markets and is having little impact. Gold, silver and oil are moving positively, continuing to lift the Canadian markets. With interest rates virtually zero, it appears that both the institutional and retail investors are looking for better returns, which may explain the strength of what is still considered to be a bear market rally. Also, as mentioned several times, the selling pressures seem to have dissipated. The velocity of the moves from lows suggests that institutional traders are taking advantage of very low prices in many stocks. The risk is that if they decide to take profits, we could see prices pullback sharply. These types of movements are more difficult for the retail investor to trade. The indexes are challenging their 200 day moving averages, and these should be watched closely to see if they can break above this key level and stay above. A positive confirmation of this would be to see ADX rise and the positive DMI to cross above the negative DMI, on an intermediate term weekly chart.
As of this writing, futures are positive and the DAX is positive, indicating a positive open. The market bias indicators are showing a bearish bent. The market condition scans remain neutral but continue to show improvement in the institutional scans and RSI scans. The markets are at the high end of the oversold indicators, showing extreme conditions. Volumes have been declining as the rally has continued which is divergent. Finally, using the ADX indicator, the –DMI remains dominant on the indexes. All of these clues combined suggest that we should be seeing a pullback in the markets, but so far that has not been happening. The longer markets continue to rally without a breather means that risk for new entries is increasing. There is always opportunity in the market and if you are trading, it may be prudent to take some profits and sit on the sidelines and wait for the better opportunities. On the other hand, if you are a more passive investor, primarily invested in mutual funds, just sit back and relax, as it appears that we are starting to recover from the credit crisis shock and slowly emerge from recession.
| Index | Change | %Change | Level | Phase |
| TSX | +262.71 | +2.66% | 10143.43 | Recovery |
| DJIA | +101.63 | +1.21% | 8512.28 | Recovery |
| Nasdaq | +4.98 | +0.28% | 1759.10 | Recovery |
| SP 500 | +15.73 | +1.74% | 919.53 | Recovery |
| Russell 2000 | +2.54 | +0.51% | 505.09 | Recovery |
| NYSE | +119.79 | +2.08% | 5890.55 | Recovery |
Source: Telechart
Short Term market outlook:
Bias: Scans showing a neutral bias
Energy: moderate
Primary Trend: Remains down to sideways
| Sector | Phase |
| Consumer Staples | Recovery |
| Healthcare | Recovery |
| Technology | Recovery |
| Utilities | Recovery |
| Energy | Recovery |
| Financials | Recovery |
| Industrials | Recovery |
| Materials | Recovery |
| Consumer Discretionary | Recovery |
Source: Telechart
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