The Waiting Game Continues
Wednesday, January 21st, 2009We continue to digest the surprise gain of +11% in the S&P/TSX Composite Index during the week containing New Years Day… by giving some of it back. The index was off -1.8% last week. Losses south of the border were larger was again. The major US indexes dropped -3% to -5%.
The slide seems to be continuing this week, especially (so far) on yesterday’s US Inauguration Day.
The trend value for the S&P/TSX Composite Index is 0.0%, as is its consistency value. You can’t get any more neutral in terms of direction than that!
The retreat continues from the New Years spike in the chart above. Nonetheless 58% of the companies in the S&P/TSX Composite Index still have positive trend values, however small. But, as we reported last week, you’ll be hard pressed to find a single stock anywhere that has a consistent positive trend. More patience required!
Exactly half of the industry indexes have positive trend values as you’ll see in the DATA & CHARTS workbook. MATERIALS and HEALTH CARE are the stand-outs at the moment. It will be interesting to see if we get a full-blown price revival in commodities (and commodity stocks) this soon after massive declines. The HEALTH CARE group has only 4 companies in it, so not a lot can be read into its #2 position.
The Bank of Canada cut rates by 50 basis points yesterday. That’s intended to stimulate the economy by making borrowing easier, but that will take time to work its way through the system. Interest rates and stock prices are poorly correlated at the best of times.
We’ll leave it at that for this week, while we carry out some more research with our relative trend analysis™ (RTA) model to share with you later.