Equity markets on both sides of the border have been climbing this morning, building on selected overseas market gains overnight. U.S. equity markets appear to be responding to the news that jobless claims for last week declined to 357,000, below the 375,000 expected. While this may be viewed as encouraging, don’t forget that tomorrow morning the monthly U.S. employment report is due, which could have a significant impact on broad market sentiment heading into the weekend and possibly into next week. 

Although equities have advanced today, investors should note that the Dow Industrials (US30 CFD) and the S&P 500 (SPX500 CFD) have been unable to break through previous highs and thus remain in near-term downtrends. These indices would need to overcome resistance 12,750 or 1,410 respectively to signal a trend change, with support in place near 12,250 and 1,370.

Canadian markets also have rebounded somewhat today but remain below the key levels of 15,000 for the S&P/TSX Composite and 900 for the S&P/TSX 60 (Toronto60 CFD). It appears that with commodity prices starting to decline, these indices may consolidate near current levels in the near term. Note that declines through current support levels of 14,650 for the Composite or 850 for the 60 may suggest the start of a deeper correction.

Commodity price action continues to suggest that following significant advances earlier this year, a period of consolidation may now be underway. Crude oil, for example, appears to have settled into the 120/bbl to $125/bbl range while gold seems to be moving back and forth in the $850/oz  to $900/oz zone. Natural gas broke through $12.50/mcf and then dipped back under it, a sign that resistance may be building.  

Canadian share update: Fronteer’s gold deposit grows, Baytex boosts distributions, MDS melts down

While trading in Fronteer (TSX: T.FRG, Stock Forum) can often be driven by its interest in uranium explorer Aurora Energy (TSX: T.AXU, Stock Forum), today the gold side appears to have come to the forefront. Fronteer has soared 8% so far today after the company released a new resource estimate for its Northhumberland gold deposit in Nevada. In the latest study, the measured and indicated resource has increased by 28% to 2.41 million ounces of gold and added a new resource of 9.0 million ounces of silver. Current resistance appears near $5.50, with support near $4.75.

Baytex Energy Trust (TSX: T.BTE, Stock Forum) climbed 4.5% today toward a test of resistance after announcing overnight that it is increasing its quarterly distribution by 25.0% to 25 cents per unit. Advances by other energy trusts today, such as Daylight (TSX: T.DAY, Stock Forum), up 2.1%, and Peyto (TSX: T.PEY, Stock Forum), up 1.3%, suggest that investors may be starting to anticipate additional distribution and dividend increases from the energy sector in response to rising commodity prices and cash flows.

MDS (TSX: T.MDS, Stock Forum) dropped 4.7% this morning after the company announced overnight that it earned six cents per share last quarter, down from 11 cents in the same quarter last year. The company also slashed its EPS guidance for this year to 27-33 cents from 37-43 cents, which could impact sentiment for some time. MDS has been trending lower since early April, and broke down to a new low on trend following the release of this news. The next major support for MDS does not appear until the $16 to $17 range.        

Upcoming free seminars

In the coming weeks, Colin Cieszynski will be making a number of free presentations for accredited investors across Canada.

Location          Date                Time                Topic                                      

Vancouver        June 15            1:00 pm PT      Sector Rotation and Pairs
                                                                         Trading Strategies in Resource
                                                                         Markets

For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at http://www.cmcmarkets.ca/en/content/education/free_seminars.do

Upcoming educational webinars

In the coming months, Colin Cieszynski will be presenting a series of free webinars on trading for accredited investors from coast to coast. 

Date                Time                Topic                                      

June 10            7:30 pm ET      Developing a Trading Strategy 2:
                                                Risk Management Techniques
                                                (for CMC Markets clients only)

For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at http://www.cmcmarkets.ca/en/content/education/free_seminars.do

This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision.
This commentary is provided for informational and educational purposes only. Nothing contained in this commentary is intended as investment advice or a recommendation or solicitation to buy or sell. All opinions expressed are current as of the date of publication and subject to change without notice.

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