Natural Gas U.S. Futures ($7.15)

As expected, the Natural Gas price has challenged the $7 area on the short term and poked above its 100 and 200-Day Moving Averages.

On a seasonal basis, there is reason to be optimistic about price prospects for Natural Gas. However on the short term, in spite of its recent spike upward, the over all trading pattern remains sluggish. For now I am satisfied with neutrality for both the short and intermediate term, while keeping a watchful eye for a seasonal indication of strength, should it emerge.

Copper U.S. High Grade Futures (339.10)

Copper Futures have been moving sideways, straddling the 100-Day Moving Average for three months. In the next week or so, the trading pattern will be forced to take sides on the uptrending 200-Day Moving Average as the 100 and 200-Day converge.

The intermediate term trading pattern is now showing evidence of weakness in a way that has not been apparent for a number of years.

Short and intermediate term trading patterns are at a critical moment in terms of Moving Averages and trend resistance. The situation is sufficiently precarious to force me to the sidelines, out of copper, until the air clears.

U.S. T-Bill 91-Day (5.1 percent)

The T-Bill continues to push relentlessly higher after pausing to digest resistance in the 5 percent area. This week we touched the 5.13 percent recent high first established in July of this year. I see nothing to prevent this index from moving on upward.

What we need now is a pop in rates at the long end to dispel the prevailing view that we are headed into recession.

Nasdaq Composite Index (2350)

I have maintained a positive outlook for Nasdaq since early September, but I did expect to see a brief short term correction in this uptrend sometime during the month of October. Instead, we appear to have nudged up against resistance at the April/06 high of 2375.

Over the short term, I see no reason why we should not reach for intermediate term channel resistance in the area of 2430.

The intermediate term outlook remains positive.

Canadian Dollar Futures ($89.50)

The Canadian Dollar is recovering on the short term from a successful test of support at the 200-day Moving Average at $88.50. We appear to be in a trading range between the 200-Day Moving Average and the April/06 high in the area of $91.40.

Intermediate term outlook remains healthy.

U.S. Dollar Index (85.52)

The U.S. Dollar has been snarled up beneath the 100/200-Day Moving Averages and downtrending intermediate term channel resistance for months now, and nothing has changed.

Downtrending 200-day Moving Average resistance is currently in the area of 87. The persistent intermediate term downtrend remains in place.

TSX Index (S&P/TSX) (12,335)

During the month of October, I was hoping to see a brief short term setback in an otherwise healthy uptrend. Instead, we are nudging up against resistance at the high (12,494) established in July of this year.

I would not be surprised to see the TSX push through to intermediate uptrending channel resistance at the 13,000 area in the near term.

The intermediate term trend remains healthy.

Hang Seng Index (18353)

In August I suggested that the Hang Seng might approach all-time high (year 2000) resistance in the area of 18300. We have now achieved this objective and I have moved my intermediate term outlook from positive to neutral. I suspect that it may take several months to successfully penetrate this important resistance area.

My long term outlook remains positive.

CRB Index (383.30)

The CRB has worked at penetration of the all-time high resistance level at 400 for several months and failed to succeed. On the short term it has now pushed above its 100-Day Moving Average in the area of 380, as it makes another attempt to approach all-time high resistance.

I now suspect that the struggle to push above 400 may take many more months to accomplish, and for this reason I'm changing my intermediate term view from positive to neutral.

I continue to maintain a positive outlook beyond the intermediate term.

Philly Bank Index (114.36)

The Philly Bank Index has penetrated its May/06 all-time high only to slam into intermediate term uptrend resistance in the area of 114. A modest short term correction from this resistance level would make sense at this time.

I have revised my intermediate term outlook from neutral to positive.

S & P 500 Index (1389)

The S & P has pushed its way higher to intermediate term uptrending channel resistance and as yet has not given me the benefit of the brief short term correction that I expected in the month of October.

Back in July, I had called for market recovery into the month of October. Now, it looks like the July recovery could extend into November and possibly December after a pause at current resistance.

During the summer months, I was all alone among prognosticators with my positive forecast into October. The street was awash in September-October bears. Conventional wisdom suggests that September and October are unhappy months for the market. Fortunately, my math models know nothing of conventional wisdom.

My intermediate term outlook for the S & P remains positive.

Oil U.S. Light Crude Futures ($60.36)

On September 24/06 I was looking for Oil to hold in the $60 support area and I expected a short term bounce from there. Today I am watching the price hang on by its teeth in the area of $60, still showing no sign of my anticipated recovery.

I'm still looking for a short term recovery once this period of relentless downside price momentum subsides, and I'm hopeful we can hang on in the $60 area for now.

I don't want to lose sight of my own positive intermediate term outlook for oil.

Gold London PM (U.S. $596.25)

Gold has tracked along beneath its 200-Day Moving Average for a month. It has now run into downtrending channel resistance that coincides with important round-numbered resistance in the area of $600. With this in mind, I have once again moved to consider the intermediate term trend.

As I see it, the intermediate term outlook is decidedly negative, so much so, that I have shifted my longer term view from positive to neutral. This, in order to express concern that we may have launched a long term downtrend from the recent $700 high.

My intermediate term trend downside target remains in the area of $500.

Oil U.S. Light Crude Futures ($58.57)

Prime Minister Steven Harper says that Canada is becoming an energy Super Power. Retired U.S. Fed Governor Alan Greenspan says that Canada has become a major world player in energy. In 2004, the CNBC television network listed the top six suppliers of oil to the U.S. as: Canada, Mexico, Venezuela, Saudi Arabia, Nigeria and Iraq.

Are Canadians listening? Most of us are simply not paying attention to the reality that we live in one of the wealthiest countries on the planet. Canadians are the beneficiaries of a huge Federal Budget Oil Surplus, generated for the most part by the Province of Alberta.

Alberta has returned to the driver's seat as the engine of growth for our great country. We are indeed an energy Super Power.

Market Comment

It will not be surprising to see a broad short term market correction develop as we move further into the month of October. If such a correction does take hold, you can expect to see bears come forth in a loud chorus of prognostications simply because of the problems widely recognized as symptomatic of October trading action.

While I am very respectful of the history of trading difficulties in October, at this point my work suggests a short term correction as opposed to an October debacle.

If and when we do see a correction, I intend to monitor it carefully. All long term problems start out as short term problems.

Friday closes:
DJII (11,850)
S & P 500 (1349)
Nasdaq (2300)
TSX (11,691)

TSX Index (S&P/TSX) (11,691 Fri. close)

In my October 2nd Comment, I suggested a possible challenge of the recent high in the area of 12,300. Since then the prospect of moving higher on the near term has faded and now I see the potential for a broadly based short term market correction. I'm stepping aside until short term downside pressure eases.

The intermediate term outlook remains positive.

Natural Gas U.S. Futures ($5.62)

Natural Gas has gapped up in recent days, indicating a release from the relentless downside price pressure that preceded the demise of the huge Amaranth Hedge Fund. With Amaranth now history, it seems appropriate to revise my short and intermediate term views on Natural Gas.

Over the short term I would expect an eventual challenge of the downtrending 200-Day Moving Average in the area above $7.

I have spoken about year end price strength that often occurs in the case of this commodity. Now that we are post-Amaranth, it is just possible that we have passed an intermediate term low at this point. In order to acknowledge this, I am revising my intermediate term outlook from negative to neutral, with a plan to move toward a positive view if this low is confirmed.

Nikkei Tokyo Index (16,127)

As expected, the Nikkei Index has tracked along its 100/200-Day Moving Averages in recent weeks. I had previously assumed that once this process was over, we would see a correction.

I've now come to suspect that the next push could be higher rather than lower, If so, we might possibly retest the Apr/06 high in the area of 17,500.

No change in the positive intermediate term outlook.

TSX (S&P/TSX) Index (11,761)

The TSX Index has bounced from short term support and is attempting to move above its 100/200-Day Moving Averages. A retest of the recent high in the area of 12,300 appears possible on a short term basis. However, I do not want to lose sight of the need for further corrective action for the TSX after this short term push is over.

The intermediate term outlook remains positive.

S & P 500 Index (1335)

During the past week we nudged above the important May/06 resistant level (1326). The next short term resistance boundary is in the area of 1355 along the uptrending channel.

I had earlier called for a rally out of the summer months into October. Now I will be pleased if a correction develops once we have achieved the short term price target set out above. If we do see a correction in October, I will pay attention to it because the intermediate term trend, though positive, is getting long in the tooth at this time.

The long term outlook remains favorable.

Gold London PM Fix (U.S. $599.25)

In an earlier Comment (Sept 20) I suggested that I would like to see Gold eventually hit the $500 area in an intermediate term uptrend correction, as it completed the process of digesting the spike that took it to its May/06 high.

My problem now stems from the fact that my short term math models indicate possible tracking along the rising 200-Day Moving Average, dimming the prospect for achievement of my $500 intermediate term downside objective. If anything, short term work indicates the potential for further gains. Nothing gloomy about it.

For now I want to watch this short term trend unfold, and I will reserve judgement on my earlier intermediate term downside objective.