Initially following the open today, it appeared that U.S. equity markets had received a boost from positive housing news. In April, U.S. housing starts were 1.032 million and building permits were 0.978 million, which were well above the 0.93 million and 0.915 million the Street had been expecting. After the open, however, the wheels seemed to fall off the equity bandwagon, particularly after the University of Michigan Consumer Confidence reading dropped to 59.5 in May, well below the 62.0 reading expected. 

In particular, note that the Dow Industrials (US30 CFD) broke through the key 13,000 level briefly and then slumped back toward 12,950. As is often the case, trading heading into the weekend could be a significant indicator of sentiment. Although the 13,000 breakout attempt appears to have failed, closes above previous breakout points such as 2,000 for the NASDAQ 100 (NDAQ100 CFD), 1,400 for the S&P 500 (SPX500 CFD), and 12,800 for the Dow Industrials may indicate continued underlying support.

The mixed UIS economic data does not appear, however, to have impacted sentiment toward commodities. Crude oil, for example, advanced 2.7% and traded through $127/bbl this morning and appears to be steadily advancing toward a $130/bbl measured objective. Natural gas, meanwhile, has been trading near $11.50/mcf, gold has advanced 2% to challenge resistance near the $900/oz level once again, and copper has climbed 2.1%. Agricultural commodities also appear to be attracting increased interest, with soybeans up 2.7%, and wheat and corn up approximately 1.0% each. Rough rice, on the other hand, has dropped 2.2% and broken down through the 20 cent level, suggesting that a significant correction may be underway.    

Canadian share update: Crystallex crushed, Enerflex ebbs, Lundin rallies, Bombardier takes off

In recent weeks, Crystallex (TSX: T.KRY, Bullboard) has moved significantly in both directions as its application to develop the Las Christinas mine seems to have come to a head. Today, Crystallex has dropped 12.8% after Venezuela’s environment minister indicated that the country will not allow open pit mining for gold, diamonds, or coal, a move that could also affect trading in Gold Reserve (TSX: T.GRZ, Bullboard), which holds a nearby project. This development also seems to have impacted sentiment toward resource companies operating in areas perceived to be more risky politically, as Ivanhoe Mines (TSX: T.IVN, Bullboard) has declined 1.4% this morning on no news.

Enerflex (TSX: T.EFX, Bullboard) has declined 12.1% this morning after the company announced overnight that due to a change in non-cash working capital accounting, its distributable cash for last quarter was only six cents per unit, giving it a 410% payout ratio. Investors should note, however, that revenue and backlog were up 16% and 19% over year, respectively, and the order backlog grew over quarter to a record $414 million. Enerflex appears to have attracted initial support near $12, a former resistance level, with additional potential support near $10.65. FirstService (TSX: T.FSV, Bullboard) also appears to still be under pressure from its earnings report, dropping another 15.3% so far today.

With commodity prices advancing, a number of energy and metal producers have been climbing, including High River Gold (TSX: T.HRG, Bullboard) up 6.9%, First Calgary (TSX: T.FCP, Bullboard) up 4.6%, UTS Energy (TSX: T.UTS, Bullboard) up 3.6%, Kinross Gold (TSX: T.K, Bullboard) up 3.5%, and Denison Mines (TSX: T.DML, Bullboard) up 3.3%.

Lundin Mining (TSX: T.LUN, Bullboard), meanwhile, has advanced 6.1% today and has broken out of a long-term downtrend. The base metal miner recently announced that it earned 20 cents per share last quarter, up 10% over year as revenue increased by 58% to $305 million. Lundin also announced plans to sell its 90% interest in the Norrliden zinc and copper project to Gold-Ore Resources (TSX: V.GOZ, Bullboard). Lundin gapped through $8.25 resistance on this news and appears to be retesting the $9 level this morning. A move through there could confirm the start of a new recovery trend. A measured move from the current $6.50 to $9 trading range would suggest that Lundin could move toward a possible $11.50 objective over time.

Bombardier (TSX: T.BBD.B, Bullboard) has advanced another 2.9% this morning, confirming yesterday’s breakout through the key $7 resistance level. The plane and train maker is now trading at its highest levels since 2002. Since testing support at $4 in January, Bombardier has been advancing in a step pattern of rallies followed by consolidation at higher levels, a sign of possible accumulation. A measured move from the previous trading range suggests that over time, Bombardier could advance toward a retest of $10, a previous resistance level.  

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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