TSX TrendWatch Weekly

Although we had further declines this past week, there were no headline events that would suggest that we have more to worry about or, for that matter, a cause to celebrate. It’s just another one of those wishy-washy times that take the fun out of trading. More on these “summer doldrums” below, but first a quick review of the markets last week.

WEEKLY REVIEW…  The S&P/TSX Composite Index declined again last week… -1.8%. The S&P/TSX Venture Index  was down -2.0%.

The major American indexes took bigger hits… Dow -2.9%, S&P500 -3.6%, Nasdaq -3.7%.

Among the sector indexes HEALTH CARE jumped +13%. This index contains a tiny group of 4 companies and Bovail had some big news to drive up the sector last week.

MATERIALS, TELECOMMUNICATION SERVICES and CONSUMER DISCRETIONARY are also on the upside of zero trendwise. Look to the DATA & CHARTS workbook for more details.

We’re still north of 50% with the proportion of S&P/TSX Composite Index stocks with positive trend values (56%), although that slipped a bit from the previous week. The median trend value is 0.1%.

As far as new purchase go, I will probably wait until I see the %-up figure above 60% for a couple weeks in a row and the median trend value above 0.5%/week (that would be about 25% annualized).  Those who like to “bottom feed” might like to move in earlier.  Those looking for a bit of extra income may want to sell some covered calls.

DOLDRUMS… Maybe it’s just coincidence, but every summer there seems to be a a period of time where us market observers start talking about summer doldrums. This is an old meteorological term basically stating that not much happening with the weather. Consistent temperatures, no winds. The term seems to apply in the equities markets too.

Generally, there’s a downward drift, which is assumed to be due to people going into cash… so as not to worry while they spend some downtime out at the cottage for a month or two. A little extra selling pressure = a drift lower in prices. The phenomenon can also be associated with the “sell in May and go away” approach to investing.

Regardless, the net result is the same. Aside from those quirky events that will suddenly drive markets up or down, we generally have sideways to slightly lower price movements.

I’m still not ruling out the fact that the incredible one year bull market from Spring 2009 to Spring 2010 could be over, but that’s highly unlikely. It’s more a matter of too much, too fast… now it’s time to catch our breath.

As I’ve indicated over many previous updates, I’ve been selling both winners that have lost their momentum (as measured by trend and consistency) and losers that never quite achieved upward momentum.  In other words, I’ll have cash available once I’m convinced that the bull market has resumed.

And, finally, if the pendulum does swing the other way, I’ll be using vehicles to capitalize on the downside this time, instead of the more conservative approach of simply holding cash on the sidelines.

REFERRAL REWARDS… Just to remind you, Bob H. from Oakville, Ontario is the winner of an annual subscription to one of our premium services for May. He chose to receive our Global ETF database updates for the next 52 weeks (a $299 value).

Keep in mind that there are at least two more months to win a subscription like Bob’s. Here’s how it works…

To encourage you to refer friends and acquaintances to take advantage of this free newsletter, we’re offering you a chance to win a one-year subscription to one of our premium service subscriptions (your choice of which one… but that’s up to a $299 value).

Just send us an email. Include your full name, plus the full names and email addresses of people that you think might benefit from reading TSX TrendWatch Weekly. We’ll then send them an invitation to sign up, if they are so inclined.

For each new person that you’ve recommended who signs up for email delivery of the newsletter, you’ll get one entry in the contest. There will be one winner selected each month for the next two months (June/July). We ask that you please use your best judgment in selecting your referrals.  We aren’t looking for spam lists.

Finally, this is the last week to enter for the June drawing… act now!

Thanks in advance and good luck!

BOOK STORE… don’t forget that we have a recommended book section in the form of an Amazon mini-book store.  We’ve pruned out a few out-dated books recently and added some new ones over the past few weeks.

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