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The Week of February 18th to February 23rd, 2014 “A Brief Look Back Into Tomorrow”

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The Week of February 18th to February 23rd, 2014 “A Brief Look Back Into Tomorrow”

 

 

 

 

 

Following a much needed mid-winter long weekend on both sides of the border, investors were eager to see if the previous week’s market gains were a prelude of more to come or just a short term relief rally in a longer term bear market.

 

 

 

Technical analysts Dave Harder & Ron Meisels – “Market action continues to demonstrate there is more of a desire to add funds to stocks than to withdraw money from stocks.” (To see the full report send a request to ronmeisels@phases-cycles.com).

 

 

 

The shortened trading week begins on Tuesday, February 18th with Actavis PLC (ACT-N) making a friendly US$25-billion cash & stock takeover of rival drug maker Forest Laboratories  (FRX-N).

 

 

 

Rona Inc. (RON-T) shares’ fell by over 6% to $11.58 when Canada’s largest home improvement retailer failed to meet the street’s expectations with its 4th quarter financials.

 

 

 

You may not be able to win the lottery, but Canada’s largest coffee shop, Tim Hortons (THI-T), announced it was doubling your chances to two tries per cup of coffee to win their annual ‘RRRoll Up the Rim to Win’ contest.

 

 

 

Statistics Canada reported that the country’s farms are getting fewer and bigger, and farmers are getting older as the number of Canadian farms has fallen by 74,000 over the past 20-years to 206,000, while their average size has almost quadrupled from 200 to 780 acres and the average farmer has aged by 6.5-yers to 54-years of age.

 

 

 

Cargojet (CJT-T) shares’ flew higher by over 25% to $18.08 on Wednesday, February 19th when the commercial courier received a $1-billion contract with Canada Post Group of Companies or Canada Post to carry the nation’s mail for the next 7-years.

 

 

 

The merger and acquisition game continued with Canadian Natural Resources (CNQ-T) paying $3.125-billion to acquire Devon Energy Corps. (DVN-N) Canadian oil & gas interests.

 

And Facebook Inc. (FB -Q) announced it had acquired rival social messaging company WhatsApp Inc. in a cash& stock deal worth some US$19-billion.

 

 

 

Uranium sticks continued to garner investor attention as Fission Uranium (FCU-V) and NexGen Energy (NXE-V) rose by 6.72% and 91.11% respectively when both explorers reported better than expected drill hole scintillometer results that would indicate uranium in the holes.

 

 

 

Meanwhile, the shares’ of Sherritt International (S-T) went the other way when the nickel/petroleum producer reported much lower than expected 4th quarter financials and worse yet, cut its quarterly dividend to just $0.01 from $0.043.

Statistics Canada reported that poor sales of machinery and equipment helped to drive the country’s wholesale sales down by 1.4% in December to a 6-month low of $49.6-billion.

 

 

 

The markets got a taste of reality on Thursday, February 20th when the China HSBC Flash PMI number fell again for February to a new 1½-year low of 48.3. (Numbers below 50 indicate a contraction in the economy.)

 

 

 

TranAlta Corp. (TA-T) disappointed its shareholders when the Calgary based power producer not only reporting poor 4th quarter financials but worse yet, cut its annual dividend by 38% to $0.72.

 

 

 

Conn’s Inc. (CONN-Q) shares’ plunged by almost 43% to US$31.89 when the retailer reported weaker than expected 4th quarter financials.

 

 

 

Tesla Motors (TSLA-Q) had a good day when the upscale electric car company said that deliveries of its luxury Model S electric sedan would increase by some 55% in the coming year.

 

 

 

Friday, February 21st began with Statistics Canada giving us a hint that inflation may be on the rise at they reported that the country’s inflation rate rose by a greater than expected 0.3% in January to an annualized 1.5%.

 

 

 

Meanwhile, the National Association of Realtors reported that extreme winter weather was a contributing factor in American existing home sales plunging by 5.1% in January to an       18-month low of an annualized 4.64-million units.

 

 

 

The NASDAQ Exchange was the leader south of the border as the tech heavy index rose to a new 14-year high of 4,273.

 

 

 

The Canadian Exchanges continued their recent winning ways during the week by reaching what was thought only a few months as an unattainable milestones, as the TSX Venture Exchange rose once again above the 1,000 level and reach at a new 10-month high of 1,022 while the TSX Composite Index closed at a new 2¾-year high of 14,210.

 

 

 

Some of that strength in the Canadian markets came as a result of rising petroleum prices and in particularly natural gas, whose short term contract rose above $6 for the first time in 4-years to reach US$6.10/mmbtu.

 

 

 

Canadian Natural Resources (CNQ-T) at $41.60, Husky Energy (HSE-T) at $33.98 and Osisko Mining (OSK-T) at $7.08 all established new TSX 52-week trading highs on the week while Cenovus Energy (CVE-T) at $28.25, Labrador Iron Mines Holdings (LIM-T) at $0.13 and Sherritt International (S-T) at $2.82 all touched new 52-week trading lows.

 

 

 

The 2014 Olympic Winter Games in Sochia, Russia drew to a close where once again the desire, skill and achievements of the athletes rose above the cynicism of the media and politicians.

 

 

 

For the WeekThe Dow Industrials fell by 0.32% to 16,103, with the S&P 500 Index easing by 0.13% to 1,836 while the NASDAQ Exchange gained another 0.45% to 4,263. In the we are winter north, the TSX Composite Index advanced by another 1.07% to 14,206 and the TSX Venture Exchange improved by another 2.54% to 1,022.

 

 

 

Gold bullion gained another 0.45%to US$1,324, with copper remaining unchanged at US$3.26. Meanwhile crude oil rose by another 2.08% to US$102.18 and natural gas soared by 9.65% to US$5.00. Overall, the CRB Commodities Index rose by 8.37-points to cross above 300 and end the week at a new five month high of 302.25.

 

 

 

The Canadian dollar fell by 1.33% to finish the week at US$0.8981.

 

 

 

The market barometer CBOE Volatility Index or VIX rose by 1.10-points on the week to a slightly more nervous level of 14.67.

 

 

 

And Finally – As the Canadian Registered Retirement Savings Plan (RRSP) season comes to a close we note that once again, fewer workers are contributing, as a Scotiabank poll finds that the percentage of people who intend to contribute to their plans fell by 8% this year to just 31%, while 74% of Canadians admit they can’t afford to contribute at all.

 

 

Posted February 24, 2014

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