For GT Blog June 8, 2009

Let’s listen on a broker client conversation

Broker (investment advisor): The infrastructure stocks are getting really strong

Client: How strong are they?

Broker: They are so strong even the O'Leary Global Infrastructure Fund went up 5 cents this week

Client: Wow – that is really strong we bought the O’Leary fund when on the IPO last December and it is down 10%, how come we just didn’t by SNC Lavalin Group – it is up 26 per cent over the same time period

Broker: That is because we agreed you must be diversified – O’Leary is on several TV shows, he plays a little guitar, he owns a mutual fund business and on top of that he is an investor – just like you.

Client: Your right, let me know when the Don Cherry fund comes out.

Now for some reality – we at Getting Technical ran one of our weekly relative perform filters on the TSX – we were looking for stocks in the early stages of out performance vs. the TSX Composite index. To our surprise the infrastructure stocks dominated the filter selections – have fun and remember – investing and reality TV do not mix

For GT Blog June 2, 2009

The great advance in most of the major world bourses from the early March 2009 lows rolls along leaving the bears sitting on the sidelines praying for a correction. Nothing gets in the way as fears of swine flu and a GM bankruptcy are brushed off

Back here on May 12 I referred to my Toronto Star "recognition point" column of March 3, 2009 setting out the technical conditions that have to be met in order to declare a new bull market. One condition was met a week earlier when the TSX cleared the recognition point (TSX Comp 9500) and entered into bull market territory. The current advance is now an official 2nd up-leg or Elliott wave (3) bull market advance

The "recognition point" can occur anywhere from a third to one-half way into the Wave 3 advance - if we assume the half way point we can now set time and price magnitude levels this would give us a price target of 11500 on the TSX Composite Index and a time target of the first week of July 2009

Now the bulls have a pleasant investing dilemma - do they hold on for more or should they rotate down to lower risk stocks? The bears have an unpleasant investing dilemma - do they sit on cash and pray, or should they capitulate and jump into lower risk stocks?
Our weekly Rotation Table clearly sets out the risky leaders - Metals & Mining, Financial, Technology and Energy. The lower risk laggards are Gold, Staples, Telecom & Utilities

For GT Blog May 27, 2009

The great advance in most of the major world bourses from the early March 2009 lows has now generated much opinion and controversy as to the structure of the advance

Is this the beginning of a new bull market or – just another bear market rally?

The bears sitting on the sidelines are praying for a correction – even a retest of the March lows so they can finally get invested. One money manager sitting in cash has gone public with the following table setting out modern bear market rallies in the S&P500 since 1960

The average gain was 17.66% and the average bull skew in weeks was 5.8 weeks – compare those numbers to the current advance - now gaining 30+% and into week 12 which in terms of magnitude and time are both double the average modern bear rally – We conclude the current advance is not a bear rally – and that’s no bull

The April – May 2001 bear market rally