A clip from Larry’s blog post August 31,
2012
Quote:
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.
Posts
4 comments:
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
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
http://money.cnn.com/2010/01/25/news/companies/interest_rates_banks/index.htm
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
Bill you continue to be right about the market. Excellent analysis.
Shawn
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