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Technically Speaking

In much the same manner as last week, we find dire economic news having little negative effect on the markets and this is a solid indication of the strength of this rally. The dominant stories in the news this week were the consumer confidence and resales of US homes. While home sales continue to fall as expected, the consumer confidence level touching a 26-year low was perhaps more shocking and still this was not deemed sufficiently bearish to bring down the market.

On Friday, the last of the major markets, the S&P 500, surpassed its February high on a closing basis thus putting all four majors on an equal footing with regards to the current rally. The principle chart formation common to all four is the development of a reverse head and shoulders pattern with the neckline located around their respective February highs.

Potentially, we see moves on the S&P 500 to 1525, on the Dow Jones Industrials to 13,750, on the ND-100 to 2100 and on the Nasdaq Composite to 2600. We don’t consider it likely at this point that these indexes will see new highs exceeding their respective tops reached in the fourth quarter of 2007 for the underlying theme remains that this is a bear market rally and not that a new bull that has formed.

New Buy Recommendations (in order of preference):

Trimble Navigation (TRMB) – Trimble lifted significantly on Friday – topping both the previous resistance near $30-31 as well as the 200-day moving average just north of $33. This impressive gap higher coupled with the extraordinary volume lights a path higher for this stock and a likely move to test the previous all-time high reached in October.

Precision Castparts Corp. (PCP) – This castings firm is bouncing back after a test of the 25-month moving average and Friday’s move to close above $120 on higher volume was doubly significant for having broken resistance at the February high. On the daily chart, this move also concluded a Lindahl buy signal and on the weekly chart, the MACD chart displays a key crossover swinging upward from a low starting position.

Eastman Chemical (EMN) – Eastman Chemical reached a 10-year high on Friday in a session that featured a strong gap higher and heavy volume. EMN had been largely moving sideways since late 2006 however this move on the last day of the week is an indication that a new leg higher has begun.

New Short Sales

None.

Stock Positions to Sell/Exit:

We were exited from both Randgold and Curtiss Wright at their respective stops. The exit on CW was quite irritating as it occurred on whipsawing price action in a session that saw the stock close higher in an outside day.

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.

New stops in BOLD

* Stop on a closing basis

** Buy if above entry price

*** Split-adjusted price