Deflation?

Futures are negative this morning along with DAX, indicating a down open. Market condition scans although slightly positive, are also pointing to a choppy indecisive day prone to whipsaw. The market bias indicators are neutral with no directional bias. Follow through is weak as markets remain in a range. Canadian CPI dropped in July and the Canadian inflation rate is the lowest it has been since 1953. The Bank of Canada will remain pat on its current policy. The Canadian leading indicators are positive confirming the recession in Canada is over. The German PPI dropped 7.1% indicating a potential deflationary trend. China is now back into a bear cycle with the greater than 20% drop in the Shangai index. Although we are into recovery, its pace will be slow, and it looks like we will continue to trade in a range as the VIX rises indicating fear increasing and a return to risk aversion.

The indexes remain in sideways trends, as their values continue to trade in a range near support levels. Gold and silver continue to drop in reaction to the lack of inflation. Oil like the indexes has also shifted to a sideways trend. Swing trading remains risky given this type of price action.

Index	Change	%Change	Level	Phase
TSX	+142.25	+1.35%	10673.84	Bullish
DJIA	+82.60	+0.90%	9217.94	Bullish
Nasdaq	+25.08	+1.30%	1955.92	Bullish
SP 500	+9.94	989.67	+1.01%	Bullish
Russell 2000	+8.25	+1.50%	556.43	Bullish
NYSE	+84.96	+1.34%	6437.07	Bullish

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral bias

Energy: weak

Primary Trend: sideways

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

Source: Telechart