Today was very interesting. It really felt to me like a day of major trend changes, but the charts just hinted rather than roared.
Some of the interesting data was on the Agriculture index, livestock and defensive sectors seem to be gaining relative strength.
The strongest sector in the last few days is the Consumer Staples. The Utilities chart looks like the relative strength is starting to bottom. The GOLD chart needs no comment as the blog sphere was roaring. Oil was interesting. The oil services index in the US started to lose some relative strength. The USD soared. It felt like all currencies pulled back, till I saw the $CDW. The Canadian Loonie roared forward but oil was little changed. A very interesting twist with the Cdn $ up, the USD index up, and the precious metals releasing. The Materials pulled back and then spent most of the day working back up. Gold just got weaker all day. Considering both are based in $USD, it was an interesting move. If the USD makes a strong move here, there are a lot of commodity positions on the wrong side of a $USD higher trade as the oils and precious metals were running up expecting inflationary pressure. Here is the Ag chart...
Livestock is also prepped to keep running. Click here to check it out. This could be the trade of the year with livestock totals vastly lower than historic averages. $GVX. Last night I checked in on MFI.TO It certainly got a bid today. Also look at VT.TO, AGU.TO, maybe POT.TO.
But here is an interesting chart in a no volume small cap. A Small Cap right at a major level. Fresh air above multi year resistance. You can compare it to TSCO in the US. As well, DE and CAT are obviously big Ag providers. If farmers are in a good mood, these equipment stocks will get new orders.
The Telus, Bell, and Shaw charts are starting to turn up on relative strength. Rogers has not started to turn up. Lastly, transports got weaker, and so did Industrial metals. It's been a few weeks since our discussion of Dow Theory. Back then we were hoping for some strength in the metals and transports before month end. So far, they have only gotten weaker. Is this the European Recession starting to price in? We don't know.
What we do know is every major central bank has done a lot of easing. The extra $500B in Euro zone loans today were as anticipated. When Ben didn't give a hint on QE3, Gold sold off, but upside calls were still 2:1 according to Pete Najarian.
The "most interesting phrase"I read this week was along the lines of: The Bond Market is pricing in global implosion, and the equity market says higher from here.
Very interesting day. I'm tightening my focus on these Ag/food plays, watching the defensive sectors behaviour and getting more defensive on the metals.
Lastly, we have a few spots at Chartcon left in August. Please come and join us in August. Click on the Chartcon 2012 link.
We have great sessions in Calgary in March .Tom McClellan and Ed Carlson. For all Canadian Technical Analysis meetings see www.csta.org
Good Trading,
Greg Schnell, CMT
