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Technically Speaking

The broader indices, the S&P 500 and the Dow Jones Industrials, traded in a virtual repeat performance of the previous week with neither exhibiting much commitment to buying nor selling. Once the week was complete, the score was quite similar with both indices settling a little lower but again on reduced volume.

The volume issue has become quite a question mark owing to the unknown of whether the lack of volume pertains to vacation time being exercised or genuine disinterest in purchasing equities. Probably, the answer lies somewhere in between both possibilities, however one should keep in mind that a market drop occurs when there’s a shortage of buyers while a rally requires a consistent stream of buyers attracting other buyers.

The support levels continue to be the 200-week moving averages and there’s resistance coming into play at their respective 25-week moving averages. The longer the S&P remains below the 1300 level and the longer the DJ-30 remains below its key level of 11,750, the stronger the likelihood that these areas develop firmer resistance.

The tech sector was the weaker portion of the markets this past week. Both Nasdaq twins closed lower by greater percentages than their broader market cousins. In terms of volume, these indices were similar however with substantial drops in trading volumes for the week. Interestingly, both indices are toying with their respective 200-day moving averages. The ND-100 closed a bit above this level on Friday and has been generally stronger than the Composite average, which closed slightly below its 200-day MA on Friday. In the case of the Composite index, this MA is developing into significant resistance.

We are now entering what is considered to be the final week of the slow summer period but there is a wide variety of economic data being released, which could impact on the trading volumes. Moreover, there is the potential for more clarity on the situations involving both Fannie Mae and Freddie Mac, which would also have an impact on the stock markets.

Commodities, namely gold and oil, rebounded strongly until Friday when sharp drops resulted in most weekly gains evaporating. The substantial slide in gold and oil has brought in some buying interest but both need to build larger bases before firmer rallies can take place. In both cases, there were support levels broken that would normally take extra time to repair. What is interesting and caught our attention is that the stocks performed comparatively stronger with the rallies occurring on greater volume while the selling on Friday occurred on vastly fewer shares traded.

New Buy Recommendations (in order of preference):

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.

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