Written by: Mike Simonato, Ontario Presenter: “Investing for the Long Term, presented to the Feb. 6 2021 International Online Forum, you can watch by CLICKING HERE.
This was another volatile week. Intraday moves could be from up triple digits to down triple digits and then close up.The VIX continues to fall (down over 4% again today) to close at 23.3 It Spiked at the end of January and has fallen off a cliff ever since.
The world markets are giving mixed signals.
Australia was in C/DN, but now Bullish
Britain, Canada USA Bearish Divergence. USA back to C/UP WED but could go back to C/DN soon
Let’s look at what’s being watched/ Anticipated: Sources: Financial Post, Yahoo Finance and Real Life
- The anticipation that 50% of Restaurants could close
- Equifax in 2020 Q4 seeing early signs of delinquencies rise
- Canadian Small Business has accumulated $170,000 of debt per business on average over the past year. They are at least 1 yr away from getting back to typical profits, and lower than average sales is unsustainable.
- Last year was an incredible Bull Run, but now the markets are jittery, and volatility is back in with lots of confusion worldwide. No Clear Direction
- Bond yields have been a key reason for jitters. In 6 months, yields have gone from .5% to approx 1.6%. Key level to watch is 2% As Bond Rates rise money will leave stocks and Dividend Stocks to Bonds.
- In Canada, the housing market is Insane, with prices going way over asking. Canadians are taking on insane amounts of debt, and with Bond yields rising, then Mortgage Rates and Borrowing costs rise.
- Govt Debt is at record highs in both Canada and USA and while both have committed to keeping their benchmark rates at record lows until 2023, the interest on their debt is rising
- Govt has been buying $4 Billion in Bonds per week to help; however this will end in May. USA Bank stocks sold off big today as a result of the news
- $CDN vs $US This week, the $CDN got as high as 80.64 and then fell back. What I was watching for was a typical move. When a stock finally breaks above resistance, you want a retracement, thus making former resistance now support. This happened. Today was a little concerned as the Bulls and Bears fought between 7991 and .80. Near the end of the day the Bears looked like they would win however, when the dust settled the $CDN closed at .8000 cents. Next week will establish the new reality.
Real Life: This week alone a big Restaurant and the only Movie Theatre closed for good. Every store says the same thing they can’t get any good workers, and the few good workers are beyond exhausted. Front-line workers are exhausted and fed up. Stupid continues to thrive. A University dorm had a series of parties. Result: 60 cases of Covid. One good kid who didn’t attend because he knew it was wrong died as a result of the stupid. My window-washing business is already booked until the end of June. I’ve never been so booked up this early. Houses in Collingwood (2 have sold in the last month for $2.5 Million)
- Many business mergers happen as everyone tries to position themselves to survive and come out stronger on the other side.
Panic is setting in as there’s a huge rush to get at least one dose of vaccine in everyone as fast as possible, and they are rushing to loosen restrictions to help as many businesses as possible survive.
I clearly have no idea how this will all play out. For me I’ve got an insane amount of work. However, as I have written in previous essays, this will be a K Shaped Recovery
I’m about to start up and be insanely busy so there should be another huge bull market. Stay Safe everyone and let’s get through this together.
NOTE I forgot. VISA is being investigated for anti competitive practices.
As always, nothing more than my 2 cents, and I hope it’s of interest and value
Now for the Markets:
USA Back into a C/UP on Wed
DOW JONES: Price pulled back to 8 EMA Huge selling volume today. RT Falling
NASDAQ: Pulled back to 79 SMA Big Buying Vol today RT Still weak
S&P 500 Price Bounced off the 20 SMA RT Still Weak
MKT TIMING: Price below 8 EMA and 20 SMA Indicators lowers as well Could be back in a C/DN soon
READ Views and Strategy
PTSE: Still in a nice uptrend. Holding the 8 EMA which is a strong uptrend signal Strong Buying volume today
VENTURE: Bounced off the 79 SMA resuming the uptrend, Must rise above the 20 SMA next week to confirm.
MKT TIMING: Price is still stuck at the resistance level.. Bearish Divergence with indicators
READ Views, Strategy, Climate Earnings Indicator is getting close to 1
AUSTRALIA: Read Views and Strategy Buys 206 Sells 416 Hold 1381 BSR 50 C/UP Next week???
Britain: Read Views, Strategy (Bearish Divergence)