TSX is Bouncing Back Spurred Part By The Energy Sector


Author Larry Berman

Posted: 1 May 2012 re-posted from etfcm

The TSX is bouncing back helped by a slight improvement in the gold stocks and more specifically a bounce in the energy sector spurred on by a potential longer-term bottom in natural gas. The excess supply issues in natural gas are not fixed to be sure. This is likely no more than a short covering rally and it is serving to get some of the speculative juices flowing for those very depressed HNU investors. It could last another few months seasonally, but we would be surprised if we did not see another dip back below $2 for nat gas in the fall shoulder season.

The energy sector (XEG) probably has strong resistance above $17 given the economic risks over the next few quarters, so do not chase the upside for now. Call the range for the sector $15.50-17.00 for the next two quarters and focus on buying dips for longer-term buy and holders. WTI most certainly has a date with $90 before it sees $115.

The TSX should not be able to hold above 12,500 unless we are completely wrong about the global economy remaining weak for the next few quarters.

 

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