Stockscom Report for Sunday Mar 9 2003

Publisher: Colin Alexander     Editor: Ken Wilson

Subscriptions and Administration: Pierre Fichaud (toll-free: 866-487-9711)

 

 

Market Synopsis

 

War is imminent and everything else is secondary. The US/British/Spanish ultimatum set March 17^th as the absolute deadline and efforts are underway to gather support among the other members of the UN Security Council who have yet to side with either those for or those against. Still the French may even employ their veto right though abstention is probably the course of action they will take once the vote takes place.

 

As a consequence of this conflict, stock markets sway between news generated by the major players in this potential military conflict. From the UN to the US, from Al-Queda to Iraq, comments from one party or another exert more force upon the markets then do economic data. The latest data to fall on deaf ears was the release of the worst jobs report since November 2001. In February, there was a net loss of 308,000 jobs and the rate surged to 5.8% from 5.7%. While the initial consternation caused the S&P futures contract to plummet 11 points, a brief report since denied by US officials that two of Osama bin Laden’s sons were captured, incited traders to buy and a rally was born in stocks. The indexes all completed upside closing reversals to end the session despite the unfavorable economic news.

 

Now looking at the S&P daily charts, there’s a double reversal to the upside yet trading is unlikely to push prices higher given the general sense that stocks are still too expensive at current levels. Once the war begins, we expect to see a rally but much depends on the speed at which the US forces advance and the resultant loss of life. At some point however, the lack of economic recovery will gain the attention it so deserves and stock prices will adjust to the realities of the current situation.

 

The monthly unemployment report together with the purchasing managers report and the Conference Board’s consumer confidence from last week illustrate quite forcefully that weak economic conditions persist. These reports coupled with the high cost of energy leave little doubt as to thoughts of the average consumer. Not only is the cost of fuelling up much greater than before, his or her job is threatened as companies gear down production to balance once more with sales.

 

We continue to hold onto the gold shares as well as the recommended issues, FED and EGN. In the case of gold, we’re watching the actual commodity price as well as the drop in the US dollar for indications of its trend.

 

New Buy Recommendations:

 

None.

 

New Short Sales

None.

 

Stock Positions to Sell/Exit:

 

None.

 

List of Current Stock Recommendations:

Action Ratings. The following is the legend for designating immediate action
for our stock recommendations. The first is B, meaning the stock is timely
to buy but the case for doing so right here is not overwhelming. Either the
stock may have gotten ahead of itself and may be vulnerable to a retracement or
else the stock has been performing disappointingly but may simply be
regrouping. B+ and B++ indicate stocks for which there is a technical case
to buy now, with plusses adding weight according to how many there are, up
to a maximum of two. Stocks rated H are ones to hold, awaiting confirmation
to buy more or to sell. SELL, of course, means what it says. It seldom pays
to override this designation. In the case of stocks held short, the rating is S where positions should be retained. S+ and S++ indicate stocks for which there is a technical case to add to the positions with plusses adding weight similar to long positions. The maximum number of plus signs is 2.

Stocks marked # are eligible as Canadian content in Canadian RSP funds. Otherwise there is a 30 percent restriction on foreign stocks held in these accounts.

Date of Entry	Name	Symbol	Entry Price	Current Price	Action Rating
03/04/03	Energen Corp.	EGN	30.68	30.67	B
03/04/03	Firstfed Fin. Corp.	FED	30.55	30.41	B
12/16/02	Glamis Gold	GLG #	10.40	10.31	H
12/16/02	Gold Fields	GFI	14.68	11.31	H
12/16/02	Goldcorp	GG #	12.75	10.70	H
12/16/02	Harmony Gold	HMY	16.98	13.14	H