Radio Rallies & Reversals

For the week last, the TSX Composite Index closed up .6%, the DOW .5%, S&P500 .9%, Nasdaq 2.8%, Russell 2000 1.3%, and EAFE 1.3%. Year-to-date and in CDN$ terms, those same indexes are up 7.3%, 1.8%, 1.2%, 4.4%, 7.9% and -1%, respectively. Clearly, the places to have been are Canada, technology and small caps. Bonds have also done well with the Dex Universe Bond Index up 7.4% year-to-date and high yields up over 13%.

Q3 earnings season picks up momentum this week with companies like Apple, IBM,Goldman Sachs, Bank of America, Coca-Cola, Johnson & Johnson, Boeing, United Technologies, Caterpillar, AT&T, and Verizon reporting in the US while in Canada, Encana and Shaw release their numbers. Nearly 60% of the S&P500 companies report in the next 2 weeks. Credit Suisse makes the following observations from Q2: S&P500 companies missing on both revenue and earnings were punished the worst, gapping nearly 3% down at the open, followed by another 1% in the first hour; Companies with mixed results i.e. earnings beat but revenue miss tended to see more volatility at the open before stabilizing later in the day.

Last Friday, FED Chairman Ben Bernanke didn't quite give the kind of reassurance the market was looking for regarding quantitative easing and so we're seeing a bit of a pull-back in precious metals and some strength in the US$. This might be a very short buying opportunity for precious metals and the CDN$. Also, Credit Suisse has updated their top 20 US dividend paying opportunities - If you'd like a copy, ask us at yourlifeyourplan.ca or call 250-868-5525.

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