Thursday, December 8, 2011

Is it a Bull or a Bear?

The big technical question right now is; are we in the early stages of a new bull market or are we about to print another leg down in the global bear that has operating since April 2011?

As technicians we need to know the dominant North American sectors – in the U.S. they are financials, technology and the industrials. In Canada the dominant sectors are financials, energy and materials. Note one common sector, the financials. This should be of no surprise because there has been no modern bull market that has operated without participation or leadership of the financials. If you know of one, let me know

Our chart today is the daily closes of the CDN bank sector plotted above the U.S. bank sector. Note that our healthier CDN banks briefly traded below their Sept-Oct lows while the “riskier” U.S. money center banks did not confirm the CDN bank breakdown. I blame the selling in the CDN banks on those young and inexperienced portfolio managers who watch too much business television. I believe we are in the early stages of a great new bull market and our CDN banks are a buy at these levels. If I am wrong I will convert to the temple of noted bear and economist David Rosenberg.

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