Tuesday, September 4, 2012

Larry Berman is still cautious

A clip from Larry’s blog post August 31, 2012

TSX Likely to Slide Before Support Develops - The TSX appears to failing above the 200-day average as anticipated. A cooling in the energy and gold stocks are the main catalyst, but bank earnings, while tending to be better than expected (especially on the dividend front), had some weaker elements. They have also rallied in the past few months, so some natural post earnings profit taking is typical too. When added all up, the TSX is likely to slide a bit more next week before support is likely to develop. With all key sectors moving, and some likely rotation, it is tougher to determine where support is likely for the broader TSX. If the breakout is going to hold, we should not close back below about 11,700. Weaker than that would suggest no QE support from the Fed and ECB.
End Quote

Very good analysis from Larry and it is obvious he focusing on the negative data. When in doubt I always refer to a point & figure chart for clarity. A point & figure study has several advantages – the most important of which they are not popular with the younger analysts because they are thought to be “old school” – not flashy like the modern MACD and those other squiggly lines. Point & figure charts have a non linear time scale and can store a huge time frame and point & figure charts can display reliable trend reversal junctures – I never argue with a point & figure – the TSX Comp P&F displayed clearly displays a bullish reversal - don’t shoot the messenger.


Gettingtechnical.com said...

Hello Terry – the TLT seems to be building a head & shoulder top but I still would not short the t-bonds – the CDN product is the HTD or the Horizons BetaPro U.S. 30-yr Bond Bear Plus ETF (HTD) which I would avoid – the best way to play a topping bond market is to buy the banks and the lifeco’s.

Hello Shawn

Yes the long bonds are toppy but the best way to play a topping bond market is to buy the banks and the lifeco’s.

Hello dh12 – Larry has a big audience – I am not questioning his analysis - I am simply compelled to table an opposing and perhaps overlooked technical observation

Hello Anonymous - I think the P&F in my recent post supports your opinion

Getting Technical

dh12 said...

You say that falling bonds will help banks and lifeco's. I just read an article that says rising rates will hurt banks.

the article is here


Gettingtechnical.com said...

Hello dh12

the initial stages of rate increases are good for banks because they can lend high and borrow low - as the economy improves inflation becomes a problem and the banks are forced to pay more for deposits - a normal business cycle - BC

Shawn Severin said...

Bill you continue to be right about the market. Excellent analysis.