Stockscom Report for Sunday Dec 28 2003

Publisher: Colin Alexander     Editor: Ken Wilson

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

 

• Divided market for now

 

 

Market Synopsis

 

We are now into the final vacation period of the year and volumes have taken their expected plunge. With many traders remaining on the sidelines, we see a marked decrease in volatility for most equity issues. At this time of year, we hesitate to make too many pronouncements on the daily machinations of the indexes, however there are some generalities that are visible and worth noting.

 

The latest rise in the broad markets represented by both the Dow and the S&P 500 has been almost parabolic and will necessitate some retracement in the very near future. Moreover, the lack of confirmation in this rise by the Nasdaq puts the recent move entirely in doubt. The Nasdaq reached its pinnacle at the beginning of December and has yet to mark another. At this point in time, one has the impression that a significant head and shoulders pattern is developing in the Nasdaq on the daily chart beginning in mid-October.

 

Overnight trading in equity indexes has both the S&P and the Nasdaq-100 trading firmly above the even line but that masks the reality that a clear distribution in equities is occurring even while the Dow and S&P are reaching new heights. Unfortunately, it is difficult to surmise if this distribution pattern is due simply to the seasonal lack of volume or whether it represents something else worthy of note. Regardless of what one feels about the lack of volume, the technicals are telling traders to take a precautionary stance with regards to new buys.

 

The Philly semiconductor index is hitting significant resistance at its 25- and 40-day moving averages and this sub-index is often a good early indicator for the rest of the Nasdaq market. Since price is currently bumping up to the averages, we should know rather quickly, the odds of seeing a new leg up on this sub-index.

 

Gold shares halted their retracement of the past few weeks and since the price of bullion has been uncommonly strong in holding its price above the important $400 level, it stands to reason that a move on the part of the shares will be followed promptly by a move in the price of gold. Undoubtedly part of the reason for the strength in gold is the weakness in the US dollar and judging by the charts of the US currency versus other currencies, there is little chance of a rebound occurring soon. There is not so much a marked propensity to sell the US dollar, as there is a lack of interest to buy the dollar. And with gaping deficits in the current account as well as the budget, there is a need for massive dollar purchases just to support it at its current level.

 

New Buy Recommendations:

 

None.

 

New Short Sales

None.

 

Stock Positions to Sell/Exit:

 

CHU – it's still being monitored but it's showing more signs of strength these past few days. It is tracing out a pennant pattern right now and we see that as a positive given that the stock should resolve itself to the general overall direction, which is up.

 

ABB – we continue to monitor this stock though we believe that whatever caused the sudden bout of selling, has dissipated.

 

TRP – we bumped up the stop on this stock as it now appears likely to be a candidate for near-term retracement. Those investors with a penchant for dividends might consider hanging on though to this stock as its ex-dividend date is December 29^th.

 

New stops have been added to the list while others have been modified. Those that have blanks, are being carried unstopped for now. Please see our complete list of stops in the table below.

 

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	Stop	Action Rating
11/13/03	ABB	ABB	6.14	5.06		H
09/29/03	AES	AES	7.50	8.92	7.41	H
08/25/03	Bema Gold	BGO #	3.08	3.65		B
12/08/03	BHP	BHP	17.18	18.27		B
11/10/03	BP Prudhoe Bay	BPT	23.11	26.90	23.50	H
09/29/03	China Unicom	CHU	8.18	9.22	8.00	H
12/08/03	Consol Energy	CNX	22.75	25.30		B
05/12/03	Cott Corp	COT #	20.02	27.16	24.90	H
12/08/03	Inco	N #	35.70	39.66		B
12/08/03	Nanophase Tech.	NANX	7.64	7.40		H**
12/15/03	Overstock.com	OSTK	20.35	20.90		H
12/01/03	Steelcloud	SCLD	5.05	4.05		H
04/28/03	TransCanada Pipe	TRP #	15.85	21.79	20.65	B
11/03/03	Wheaton River	WHT #	2.36	2.92		B

 

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

 

Short sales

Date of Entry	Name	Symbol	Entry Price	Current Price	Stop	Action Rating
12/22/03	Intel	INTC	30.39	31.36	33.00	H

 

New stops in BOLD