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Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
Subscriptions and Administration: Pierre Fichaud (toll-free: 866-487-9711)
·
Intentionally delayed
sending due to the wild fluctuations in the prices on overnight markets
Market Synopsis
Fed Chairman Ben Bernanke must be reconsidering his choice of professions. The newest Fed chief has been holder of the position since January arriving at an ignominious time for the twin deficits, both budget and current account, have put him in a particularly difficult position stuck between the proverbial rock and a hard place. Moreover the former boss, Allan Greenspan, departed without effectively addressing this issue leaving the new, inexperienced chairman to carve out his own solution.
What we have learned in this brief time is that Fed Chairman Bernanke requires some practice with the fine art of public speaking. His attempts at communicating the central ideas of his monetary policy have been sorely lacking extending all the way to conversations with financial reporters at cocktail parties.
Nevertheless the Fed chief made his policy very clear on Wednesday of this past week announcing once more an increase in the overnight interest rate to an even 5%. Furthermore, he and the committee spoke clearly of the need for future interest rate hikes, qualifying them as data dependant however. This comment was a surprise to market analysts who were assuming that we were approaching the end to rate increases.
While Wednesday’s regular trading ended mixed, the overnight hours gave analysts time to ponder the effects of the higher interest rates and by Thursday morning, the recipe for an economic slowdown was accepted as fact resulting in heavy losses both that day and Friday.
Technically Speaking
The final two days of the week were clear indications of trouble ahead. The Nasdaq-100 and the Nasdaq Composite were both clinging to marginal gains vis-à-vis their April lows while the S&P 500 was positioned at the edge of its lower boundary framing the upward trend. The DJ remains the only market, which is comfortably above its upward-rising channel bottom. Clearly, this is not enough.
While our initial thoughts rationalized this action as some brief but effective retracement to correct recent stock movements, upon reconsideration, we believe this could be indicative of a more far-reaching fall in value and that investors must take necessary precautions to avoid painful losses.
To that end we are assigning stop losses to any stocks remaining in our list. These should be strictly adhered to, for in any correction phase, the drop has the potential to be brutal. The fact is, with present conditions being what they are (i.e. twin deficits) and the dollar in a resounding tailspin, we may be watching the start of a much greater meltdown. And as mentioned before, investors must take precautions.
New Buy Recommendations (in order of preference):
None.
New Short Sales
None.
Stock Positions to Sell/Exit:
Birch Mountain Resources (BMD) – BMD made a new high this week and then abruptly reversed course over the final two days of the week to finish near where it began. Considering that the price of crude oil has dropped sharply in the past few sessions and that the success of BMD depends on a high price for oil, which in turn drives the development of the oil sands, BMD could be in for a rough period.
Silver Wheaton (SLW) – Despite the small loss, there are indications of a severe technical breakdown on the chart that have yet to present themselves in the price and we would best move to the sidelines for now.
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.
N.B. There are no longer restrictions on foreign stocks held in Canadian retirement savings accounts.
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
|
Amer Sci & Eng |
ASEI |
71.08 |
74.00 |
74.00 |
SOLD |
|
|
Anadigics |
ANAD |
6.85 |
8.26 |
7.64 |
B
|
|
11/14/05 |
Birch Mtn Resour. |
BMD |
6.65 |
8.20 |
|
SELL |
|
02/21/06 |
Cdn Natural Res |
CNQ |
58.00 |
56.78 |
53.00 |
H
|
|
03/20/06 |
LSI Logic |
LSI |
11.25 |
10.36 |
10.00 |
H
|
|
01/09/06 |
Nuvelo Inc. |
NUVO |
12.95 |
15.28 |
15.00 |
H
|
|
11/07/05 |
Redback Networks |
RBAK |
11.78 |
21.28 |
18.00 |
B
|
|
03/20/06 |
RTI Int’l Metals |
RTI |
47.70 |
73.81 |
61.00 |
B
|
|
01/09/06 |
Seabridge Gold |
SA |
9.49 |
11.13 |
10.25 |
B
|
|
01/09/06 |
Sierra Wireless |
SWIR |
13.60 |
19.12 |
17.85 |
B
|
|
04/10/06 |
Silver Wheaton |
SLW |
11.06 |
10.00 |
|
SELL |
|
05/08/06 |
Sunopta Inc |
STKL |
11.18 |
10.05 |
9.62 |
H
|
|
01/05/06 |
TGC Industries |
TGE |
14.50 |
12.71 |
11.79 |
H
|
|
11/14/05 |
Tom Online |
TOMO |
20.66 |
24.61 |
24.30 |
B
|
|
03/08/04 |
Transcanada Corp |
TRP |
21.34 |
29.26 |
28.00 |
B |
|
01/05/06 |
US Global Invest |
GROW |
21.18 |
24.00 |
21.50 |
B |
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price