Will the Market Crack at this Level?

Posted by Patrick Ceresna on Nov 8, 2013 12:24:00 PM

Anyone reading our blogs over the last week is not surprised that the market is taking a breather. A pullback was overdue and we identified that 1730.00-1740.00 area as a level that would very naturally be tested if the bulls failed to break the market out. So what happened in the last few days? The market corrected lower to the support and is now using the Jobs numbers as short term momentum back toward the highs. Should we be concerned or on high alert?

Things supporting bulls:
  • The bull trend remains intact
  • Bonds are correcting as interest rates rise (short term)
Things supporting bears:
  • The S&P500 traded over 200 S&P points above its mean indicating that the market is overextended on the upside.
  • The leadership stocks (Tesla, Facebook, financials) have stopped advancing in spite of the index being at its highs.
  • Market sentiment is very complacent. 
  • Breadth indicators have rolled to give sell signals. 
So should we be on high alert? In the big picture, yes we should be.  On the short-term we have to have a more neutral stance as the market can still squeeze ambitious shorts (artificial buying). Today bonds rapidly declined (interest rates up) on the release of the Jobs numbers.  This defuses the immediate risk but does not solve the problem.  The best way to describe it is that we are standing at the bottom of a mountain looking at a rather large ridge of snow that if disturbed, could trigger an avalanche that would bury us all. Rocks are being thrown at the ridge, but surprisingly it does not give out. With everyone watching rock after rock being thrown, we start to believe that the rock will not be able to start the avalanche based solely on the evidence that it has not happened yet.  That breeds complacency.  The saying goes- a boxer does not get knocked out from the punch he expects. So complacently put your guard down, because a robust stock market rally like this can’t end badly, right?       
market conditions market breadth index 
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Topics: s&p500, S&P, market outlook, stock market, Market Levels

Weekly Market Forecast for Traders and Investors March 18, 2013

Posted by Jason Ayres on Mar 18, 2013 2:10:00 PM

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Topics: Gold, weekly market forecast, oil, S&P, weekly market outlook, stock market, stocks, U.S. Dollar, resistance levels, support levels, silver, technical analysis, currencies

Is Royal Bank a Buying Opportunity?

Posted by Patrick Ceresna on Mar 4, 2013 7:46:00 AM

Investors that have been heavily invested in Canadian banks have not been disappointed. Recently Royal Bank (TSX:RY) announced stellar earnings of more than $2 billion dollars.  This was surprising to some skeptics as there are clear economic statistics suggesting a slowing in real estate and the Canadian economy as a whole. So the questions is...Is Royal Bank a buying opportunity and if so, how can you participate at a reduced cost?

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Topics: dividends, risk, call options, stock market, limited risk, calls, royal bank, canadian banks, investing, investors, dividend investing, stock decline, trading, risk exposure, options expiration, option strategy, risk managed, blue chip stock, upside potential, TSX-RY

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