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News affecting investments

Senior Desi
Member since: Nov 06

Posts: 1628
Location: carl sagan's universe

Holey Moley! This is beginning to look like my own personal blog.

Rough ride seen ahead for TSX


By Scott Anderson

TORONTO (Reuters) - Investors are advised to stock up on stomach elixirs if they plan to ride what is likely to be the Toronto Stock Exchange roller-coaster over the next few months.

There will be 200-point gains for the key S&P/TSX composite index <.GSPTSE> over the first half of the year, but they are likely to followed by drops of similar magnitude.

Just look at this past week. After climbing about 240 points in the middle of the week and coming within inches of its record high of 13,053 on Wednesday, the index took a turn for the worse a day later, giving back 83 points.

On Friday, the TSX was up again, rising 52 points.

"The market is racked by indecision right now in what it wants to do," said Rick Hutcheon, president of RKH Investments. "There is very little compelling evidence to suggest that the market should continue to march higher. Conversely there is very little compelling evidence that would suggest the market is due for a correction."

Hutcheon said part of the blame lies in the fact that the market is stuck in a "directionless" phase as investors question their positions in natural resource issues.

Being overweight in these commodities seemed like a good idea at a time when gold was flirting with a 26-year high of $730 an ounce last May and oil was king when it was tapped at $78.40 a barrel in July.

Since then, both have slipped from those highs and investors have started to look for better spaces to park their money.

"Directionless markets, are markets that are backed by the 'story du jour'," he said. "They shoot up 200 points on some thing and then you correct and find another reason to go one way or another."

Worries over the strength of the U.S. economy, which in turn affects worldwide demand for resources, as well as concerns over geopolitical tensions, will continue to weigh on the minds of investors.

"There are a lot of undercurrents, and a lot of undercurrents generate indecision, and indecision gives you a volatile market," Hutcheon said.

Fears that the market's huge gains in recent years -- including a 14.5 percent rise in 2006 and 2005's eye-popping 21.9 percent climb -- have been overdone are adding to the general uneasiness.

"When a lot of investors are not quite sure of what's going to happen and they feel that the market has run its course over the past two or three years, they will tend to pare off gains every time the market moves up a notch," said Joe Ismail, a technical analyst at Maison Placements Canada.

"One step forward, two steps back ... That's the type of volatility we will see."

Ismail is not convinced the worst is over yet and is forecasting a "corrective phase" of 10 to 15 percent between now and April, with geopolitical worries being the prime bugaboo.

But Ismail said he is convinced that once the market shakes off this uncertainty there is nothing but blue skies ahead, predicting the TSX could hit 13,600 sometime this year.

"I don't know whether it will happen in the first six months, or the last six months, but for whatever reason there is enough room for the Canadian market, from the mental side of it, for it to be able to reach that level without having any difficulties," he said.

Some see the current ups and downs as beneficial.

"Volatility is healthy. If you only go in one direction you either get bubbles or depressions," said Julie Brough, a senior advisor at Morgan Meighen and Associates.

"Volatility is not something we should be concerned about. You should see repeated moves down within the 5 to 10 percent range. It's just natural movement."

Brough sees the market testing lows down around 12,200 to 12,300 sometime this year before moving higher.

"The trend is still intact. I don't think we have broken the trend in any way and the market continues to churn higher. But it does need to consolidate sometimes and find a new base and move on. And that's what we are working through."

Reuters Limited

Post ID: 94010 26-01-07 18:03:49
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Senior Desi
Member since: Nov 06

Posts: 1628
Location: carl sagan's universe

Breaking News from The Globe and Mail

Oil prices settle at nearly $57 (U.S.)

Tuesday, January 30, 2007

NEW YORK Oil prices settled just below $57 (U.S.) a barrel Tuesday a gain of almost $3 and natural gas soared more than 11 per cent on expectations of more Arctic weather in the U.S.

Renewed concerns about OPEC production cuts also bolstered oil prices.

Light, sweet crude for March delivery jumped $2.96 to settle at $56.97 a barrel on the New York Mercantile Exchange. Prices reached as high as $57.05 during trading before falling back.

March Brent crude at London's ICE Futures exchange settled at $56.39 a barrel, up $2.71.

Meanwhile, natural gas soared more than 80 cents, or 11.6 per cent, to settle at $7.740 per 1,000 cubic feet on the Nymex.

People were digging their spurs into it. This is just a lot of people running to get out of the way of the rally, said Tim Evans, energy analyst at Citigroup Global Markets There wasn't a lot of foresight, not a lot of calculation to it. It's just a reaction to the cold weather.

Seven-day forecasts on Tuesday predicted temperatures to dip below zero in the Midwest, the heart of the natural gas market, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

That's just driving the natural gas market up dramatically, Mr. Flynn said. And it's leading the way up.

Colder-than-normal temperatures are also expected through mid-February in the Northeast, which is responsible for 80 per cent of the country's heating oil consumption. Heating oil rose nearly 9 cents to settle at $1.6380 a gallon.

Crude oil also received a boost Tuesday from a Wall Street Journal report that said Saudi Arabia has told its customers it will cut supply by a further 158,000 barrels a day, effective Feb. 1.

After these cuts, our oil production will have declined by about 1 million barrels a day since last summer, a senior official said, according to the newspaper.

It seems a cartel has a right to change its mind, Mr. Flynn said. Yesterday, Saudi Arabia says it's happy with $50-a-barrel oil, then today there's a report on the Saudi's cut in production. It's a day of contradictions.

On Monday, prices fell by more than $1 to settle at $54.01 barrel after a Saudi official reiterated that they don't favour further production cuts and are comfortable with prices at current levels, according to a Dow Jones newswire report. The Saudi Arabia ambassador to the U.S., Turki al Faisal Saudi, was speaking at a National U.S.-Arab Chamber of Commerce event.

The Organization of Petroleum Exporting Countries said it would begin cutting production by 1.2 million barrels a day in November but some traders have speculated that a few cartel members were not complying. The group said late last year it planned to cut production an additional 500,000 barrels a day starting Feb. 1. Saudi Arabia is OPEC's biggest producer.

The markets are also looking ahead to the weekly report on U.S. inventories on Wednesday.

U.S. crude imports are expected to have risen by 1.2 million barrels in the week ended Jan. 26, according to a survey of analysts by Dow Jones Newswires. Gasoline stockpiles are expected to gain 1.6 million barrels, while distillate stockpiles, which include heating oil and diesel, are seen falling by 2.6 million barrels.

In other Nymex trading, gasoline futures rose 8 cents to settle at $1.5213 a gallon.

The Globe and Mail

Post ID: 94186 30-01-07 22:08:35
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