Markets Take a Breather

Markets closed negatively yesterday, with the TSX experiencing the largest percentage decline. Most of the indices have returned to their 10 day moving average, and it would not be surprising to see them return to the 20 and 50 day moving averages. While the markets have crossed above the critical 200 day moving average, and we are shifting out of the bottoming market condition, institutions, traders and investors will be looking to earnings and guidance for continued signs of recovery. The US dollar moved up yesterday but the primary trend still remains down. Canadian Finance Minister, Jim Flaherty, has made comments about taking action to stem the rise of the Canadian dollar which continues to take a toll on Canadian manufacturing and exports. Gold and silver remain in trading ranges, moving mostly sideways. Oil has reached the $70 level and has crossed above the 50 week moving average, but the slope of the average remains down. The most likely scenario is that oil will consolidate at this level. The primary driving factor for any commodity are supply and demand, and for stocks, earnings. This would be a good time to take a look at the sectors that are holding up well and build a watch list of stocks.

The market condition scans are showing weak numbers regarding positive short term momentum. The RSI scan continues to have a high number showing 900, and the institutional scan is at 128. The number of overbought stocks is increasing. So while the markets declined slightly yesterday, it appears that we will likely continue to see more sideways choppy price action over the next few days. The market bias indicators remain neutral, confirming the indecisive sideways price action. I would not recommend short selling unless you really know what you are doing. As of this writing futures are positive, indicating a positive open.

Index	Change	%Change	Level	Phase
TSX	-253.56	-2.30%	10793.37	Bullish
DJIA	-24.71	-0.27%	9256.26	Bullish
Nasdaq	-19.89	-1.00%	1973.16	Bullish
SP 500	-5.64	-0.56%	997.08	Bullish
Russell 2000	-8.37	-1.48%	557.62	Bullish
NYSE	-40.52	-0.62%	6517.67	Bullish

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral bias

Energy: weak

Primary Trend: up

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

Source: Telechart