July 25 Color GuardDownside risk outweighs any upside potential in our Canadian market. However, the good news is that we are nearing VectorVest market timing levels that historically signal a market bottom. That signal is when the MTI or Market Timing Index is near or below 0.60. The MTI fell to .66 from .80 last Friday.

The TSX fell Friday for the sixth straight day as shown in the graph below. It has been trading in a downward channel since early May and is currently right at the support level of the lower trend line. We might, therefore, expect a short term bounce off this support on Monday or Tuesday, however, Brian D’Amico cautioned investors in Friday’s Market Timing video that prudent investors should remain on the sidelines at least until we have a Primary Wave Up (PW/Up) signal with follow-through the next day. If you want to play it even safer, you’ll wait for a green light or two to start showing up in the Color Guard before trickling back into long positions.

july 25 TSX2

July 25 SOTWCandlestick charting has been around for hundreds of years. They offer tremendous insight into human emotion and are extremely useful in identifying potential turning points in a stock’s price. Go to VectorVest University to hear Jerry D’Ambrosio, Sr. Instructor, in this week’s “Special Presentation” titled, “Strengthening Your Candlestick Arsenal.”

We will be holding a live webcast on Monday, July 27 at 12:30 p.m. ET where will host a Q&A session related to this strategy presentation. To register for this webcast CLICK HERE. We’ll also analyze the market in Realtime and see which stocks and industries are moving the market.

The market appears to be oversold in both oil and gold, so some analysts are saying a bounce may be overdue. It’s tempting to jump in and buy good companies that have been beaten down, however, it’s often best to wait for more signs the industry trend has righted itself. It’s strictly a traders market right now until we see some longer term underlying strength return to these markets. Speaking of Candlestick patterns, we had a bullish engulfing pattern Friday on our TSX Gold Index (TTGD) along with a 5.06% gain on 40% higher than average volume. Gold Digger, VectorVest’s bottom fishing search for beaten down gold/silver stocks, gained 5.87% with 8 winners and 2 losers. Iamgold (IMG) was the biggest gainer at 17.53%.

A look at the industry graph shows Mining is at a multi-year low.
July 25 mining

Here’s a graph of the TSX Energy Index (TTEN). A solid break above the 40-MA resistance line still looks a long way away. On the sub-graph, you can see the 2X-leveraged HOD has provided outstanding returns on its own, and it’s been a good hedge for anyone trying to hold onto long term petroleum stocks. However, HOD can be volatile. Intraday and daily volatility can be unnerving, so one has to be absolutely convinced of crude’s longer term direction. HOD is currently up 36.41% from it’s July 2 New BUY REC.

July 25 TTEN2DISCLAIMER: The information contained in this Blog is for education and information purposes only. Example trades should not be considered as recommendations. There are risks involved in investing and only you know your financial situation, risk tolerance, financial goals and time horizon.

Presented by Stan Heller, Consultant, VectorVest Canada