Vol. 74 - SEASONAL TRENDS

Dear member,

For most of us summer has finally arrived and we are set to relax and enjoy some sun. However, with the battered and bruised markets it might be harder to relax. Gold and oil are two of the only lights still shining through a dark and cloudy market. The Dow Jones Industrial Average which holds America's blue chip companies is on the brink of officially dropping into a bear market. It crashed 4.2% last week.

Fact: An official bear market is present when an exchange drops 20% from its high.

The North American markets have been following the troubled US economy down and don't look to be coming up for air just yet. The Nasdaq lost 3.8% last week and the S&P 500 fell 3%. The TSX has been performing differently than its counterparts in the United States. Both TSX and TSX Venture exchanges are weighted heavily (just over 50%) in the resource sectors. These sectors have been benefiting from the inflated commodity prices and financial turmoil originating from the US. These issues have torn down financial and industrial sectors which balance out the exchange.

GOLD AND OIL

Gold and oil are both reacting to a weakness in the US dollar and huge inflationary pressures.

The past 14 months has seen more volatility than past years. There is an element of seasonal analysis that exists and can help you time the markets and your investments.

The commodity markets are entering a seasonally strong period. We have mentioned in the past that gold's historic seasonal strength arrives in mid July and holds strong until September. Our staff and many analysts believe it's coming early this year as support is mounting around gold. We believe gold is set to break through $1000 an ounce and set a new record above US $1033 an ounce.

Many professionals invest using technical analysis which determines their investment entries and exits for them. Moving average convergence divergence or (MACD) is one of the more known momentum indicators. This type of short term momentum indicator is frequently used by fund managers and professional investors alike. These charts provide entry and exit signals occurring directly after a short term low or a high has been reached.

There are three main momentum indicators.