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Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
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Market Synopsis
One might be tempted to state that the
score is Euro-skeptics: 2 vs. Euro-pushers: nil after the resounding defeat of
the referendum held in the Netherlands mid-week, which when coupled with the
other defeat in France Sunday past, marks the week as one of the most damaging
for Euro-supporters since the EC began. Certainly it was bad enough that the
plebiscite to poll the citizens was met with unexpected disfavor but to make
matters worse, on Friday, the Italian Minister for Social Affairs, a
euro-skeptic, voiced his opinion that
Yes dissension is alive and well and living
in Europe with those members in smaller countries continuing to believe in a
united Europe while the larger partners, France and Germany, whose policies
have been further left-of-center, have had to come to terms with their
socialist desires and now must decide which economic and social direction they
wish to take.
For now the bottom line is that Europe is at a crossroads and must clarify the joint vision that they thought they were sharing. Until there is wide agreement between the large partners and the small partners on economic policy, the euro will continue to feel the heat of investors unwilling to accept the downside risk of holding euros and the dollar will, conversely, strengthen.
The May employment report was released early Friday morning and it was quite surprising given that there was a mere 78K jobs created during the month. This was the weakest report since Aug/03 and has some analysts questioning the strength in payrolls. Manufacturing employment dropped once more for the tenth time in the past twelve months – an unhealthy sign regardless of the number of jobs created. Since the beginning of the year however, good months have alternated with bad months and therefore we must wait for June’s report before making conclusions. If there were two consecutive months with weak jobs numbers, then there would be an argument for a potentially damaging slowdown in the economy. Until then, these numbers represent only a pause in job growth.
Technically Speaking
All three major indexes finished the week in the red as overbought stochastics chased away technical buyers and offered a chance to the indexes to retrace some of the recent gains. A counter movement here would inject some health into their respective charts however there are some key support levels that must hold for us to believe that this rally truly has legs.
The leader for this latest rally has been the ND, a first in 2005. The ND must hold above its 200-day moving average at 2011 and preferably above the uptrend channel boundary located near 2020. On the weekly charts, we are getting some indicators turning negative, which puts the index on watch with negative implications. For example, one of the key elements of ND’s rise is the Philly Semi index and ominously, this index has reversed course, just below previous highs. So although there is a tradable rally that began, support must be uncovered if we are to trust the technicals at this point.
As for the followers, the SP and DJ, support lies at 1167 and 10300 respectively. In the case of the DJ, the support line is below the 200-day moving average however given the rise in this particular index, we believe that if support were uncovered here, this would probably be sufficient. More importantly, we are watching the development of potential head and shoulder tops on both of these indexes and again this puts very negative implications on the rallies we’ve seen thus far.
New Buy Recommendations:
None.
New Short Sales
None.
Stock Positions to Sell/Exit:
None.
Portfolio Comments:
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.
Please take note that the following clause
is being removed under the assumption that the aforementioned federal budget in
[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 |
|
|
Air T Inc |
AIRT |
17.63 |
17.62 |
13.64 |
B |
|
|
Aleris International |
ARS |
22.65 |
23.26 |
|
B |
|
|
Canadian Nat Res. |
CNQ *** |
28.47 |
30.40 |
|
B |
|
|
Captiva Software |
CPTV |
14.03 |
14.59 |
|
B |
|
|
|
GILD |
39.58 |
41.43 |
34.50 |
B |
|
|
Humana |
HUM |
36.30 |
37.78 |
|
B |
|
|
|
HTCH |
37.00 |
42.25 |
32.00 |
B |
|
|
Pacificare Health |
PHS |
62.60 |
65.83 |
|
B |
|
05/31/05 |
Sun Hydraulics |
SNHY |
35.88 |
36.77 |
|
B |
|
03/08/04 |
Transcanada Corp |
TRP |
21.34 |
24.50 |
23.25 |
B |
|
04/25/05 |
Verisign Inc |
VRSN |
29.24 |
32.94 |
24.60 |
B |
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price