US MARKETS CORRECT AS FINANCIALS CONTINUE TO WEAKEN, WHILE S&P/TSX CONSOLIDATES NEAR RECORD HIGHS.

THE COMMON BELIEF IS THAT IT IS IMPOSSIBLE TO TIME THE MARKETS. IT WAS ALSO A COMMON BELIEF THAT A NORMAL PERSON COULD NOT SWIM 3.8 KM (2.4 MILES), CYCLE 180 KM (112 MILES) AND RUN 42.2 KM (26.2 MILES) IN ONE DAY. SEE BELOW.

It is normal to have a six to seven week correction after a strong rise and that is what I believe is happening now. There seems to be announcement of more serious problems with the US financial firms everyday, leading to new lows in the US Banking Index and a retest of the lows in the US Financial Services Index. In the meantime, the TSX is holding within a few percent of its all-time high as the resources are strong and the banks here hold up relatively well. This corrective process could end by early July. As mentioned before, the deeply oversold characteristics of the market would imply that the downside risk is low while the upside potential when this is over, is high.

This is a short comment as I completed an Ironman Triathlon in Coeur D'Alene, Idaho yesterday. While it is impossible to time the market all of the time, it is possible to be successful quite often. I will continue to use the same discipline, perseverance and determination that it takes to train for an Ironman in my quest to time the market successfully as much as is possible.

There is no change for bonds and currencies from the previous week. However, the oscillators for gold and silver are pausing in the up trend.

Oscillators are getting closer to the fully oversold level for US markets.

Volatility is not nearly as high as it was in August 2007, and January and March 2008. The oscillator is still rising, confirming that the correction is not over yet.

IYG is testing the low along with the oscillator.

Bonds are holding near the lows along with the oscillator.

The long-term oscillator for gold (the chart for silver is identical) has turned down without making much progress on the upside. As you can see, this is very rare. Gold and silver have been extremely volatile in the last month. As mentioned last week, be prudent rather than aggressive in this sector.

The long-term oscillator for oil is moving lower as the price of oil moves higher. This is usually a sign of weakness.

The CAD$ is weak versus the US$.

The euro is still weak versus the US$.

The euro is still strong versus the yen but is in the overbought level. However, this does not mean that it will decline. The oscillators are much more accurate at the lows than the tops.

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