Wednesday, November 30, 2011

Last BNN Sept 30, 2011

This is the text word for word setup for Market Call appearance September 29, 2011

TO: BNN – "Franklin Cameron"
From: Bill Carrigan
RE Market Call Sept 30, 2011

Current activities:

Editor of the Getting Technical Market letter (and)
Business columnist Toronto Star
A sub-advisor to Stonebrooke Asset Management Ltd and Union Securities

Top Picks for September 30, 2011

Over sold assets to out perform through year -end

BMO Equal Weight US Banks Hedged to CAD Index ETF (ZUB) @ $10.00 – a TSX listed ETF that gives you exposure to the large beaten up U.S. banks

BMO Nasdaq 100 Equity Hedged To CAD Index ETF (ZQQ) @ $17.27 a TSX listed ETF that gives you exposure to the important U.S. technology sector

iShares S&P/TSX Capped Energy Index Fund (XEG) @ $15.40 a TSX listed ETF that gives you exposure to the beaten up CDN energy producers and oilfield service co’s


Direct ownership of ZUB

Indirect - Client /firm (Union portfolios) have direct ownership of All selections

The Markets:

I recall Warren Buffet saying during a televised interview, "If you wait for the robins, spring will be over." Mr. Buffet was referring to the relationship between stock prices and the economy. Buffet believes the stock market will move higher well before either the sentiment or the economy turns up.

This relationship is being tested once again as fears of a new recession are putting pressure on the stock markets which in spite of a recent rally are struggling to remain above the year-to-date lows posted last August.

The opinion among many experts is always mixed at these important junctures because during periods of confusion and panic traditional forms of fundamental and technical analysis fail to work. Stock valuations are trashed, moving averages and trend lines are broken and safe havens such as the U.S. dollar and U.S. T-bonds with negative returns are nonsensical.

What I look for technically during difficult times like this is divergence.

Currently there is positive divergence between the Dow Industrials and the Dow Transports see CHART (1)

There is also internal positive divergence in the DOW 30 and the TSX60 components with more components now higher now than back at the last August lows. CHART (2)

Chart #1

Positive diverge and DOW THEORY – the averages must confirm

Chart #2 the DOW Industrials Internal Strength

HD is one of 22 components well above the August low

Fibonacci retracements of the 2009 – 2011 Bull are text book

1 comment:

Shawn Severin said...

Great commentary. The Fibonacci retracement is amazing. It's as if the market is simply a facet of nature.