TSX BREAKS OUT WITH 2.85% GAIN LAST WEEK WHILE US MARKETS SEEM TO BE A WEEK BEHIND. MAJOR INCREASES IN THE PRICE OF COPPER, GOLD, OIL, WHEAT AND COST OF SHIPPING SINCE JAN. 23 ARE NOT SIGNS OF A SEVERE SLOWDOWN. THEY ARE SIGNS THAT LOWER INTEREST RATES ARE SOWING SEEDS FOR A GLOBAL RECOVERY WITH OR WITHOUT THE US.

While there are still many negative news reports and comments from market experts, global investors are voting with their money by pushing up commodity and raw material prices, in some cases to new all-time highs. These gauges of global industrial demand argue that the increase in liquidity since January is having the desired affect. While the US economy could still perform poorly for a while, it seems as though the growth in Asia and the economies that benefit from higher resource prices will continue. While there are still some signs of a new bull market missing, the strength of global markets in the coming weeks should provide investors with more evidence to come to a conclusion.

With this in mind, in today’s update I have displayed the short-term and long-term trend charts I use instead of the oscillators. In recent weeks, the long-term oscillators for most all global equity markets and commodities have turned up from oversold levels. The oscillators are very accurate for determining bottoms. The trend charts confirm what the oscillators are indicating when they turn green for the short-term and then for the long-term. Please see charts and comments for equities, bonds, commodities and currencies below.

The long term Trend chart for the TSX has been red since November and needs to turn green during this up trend to indicate that this is a new bull market rise and not a rally in a bear market. You can see how clear and accurate this has been in the past.

As is the case with the TSX, the long term Trend charts for the SP 500, DJIA, NASDAQ and other global market averages should all turn green to confirm that this is not a bear market rally.

The short-term trend chart for the TSX turned green over a week ago while the SP 500 short-term chart is still red. While they can sometimes be helpful, I believe that it is more important to focus on the long-term charts than the short term.

The Volatility Index peaks and turns green when the market bottoms and turns red when the market rallies. It has been green since early 2007. Turning red would be a very positive confirming signal that the corrective phase, which began last summer, is over.

Like the Volatility Index, government bond prices usually peak when equities bottom as the flight to quality trade reverses. Bond prices have fallen since the January peak and yields have increased. When this bond chart turns red it will be another confirming signal that this is a strongest equity rally since last summer.

Gold has been strong since the long-term oscillator issued a buy signal by turning up from a deeply oversold level last July.

The long-term trend chart for gold has also been very strong after a yearlong consolidation that ended in the summer of 2007 when the long-term oscillator turned up last July.

The short-term trend chart for oil turned green over a week ago shortly before the long-term oscillator turned up Feb. 18.

The long-term trend chart for oil has been positive since February 2007 when I issued a long-term buy signal for oil (at $62.96 US) and oil stocks. That coincided with the long-term oscillator turning up from a low.

The long-term oscillator for the CAD$ turned up on Feb. 12, 2007 at $0.8507 US and the long-term trend chart turned green shortly thereafter. It has just turned green again after the long-term oscillator turned up three weeks ago on Feb. 4.

The euro has been green and in a steady up trend since Fall 2006. The long-term oscillator is rising which suggests that it could have another advance as the flight to safety trade into the US$ reverses.

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