Charts and more for Thursday

Thursday is set up for some bullish action. In recent issues, I've said that I expect this rally to peter out and another leg down. I could be wrong, but I thought I'd share some of my thinking.

First, after such a steep correction, it's rare to get a "V-shaped" recovery. More likely we'll see a "W-shaped recovery," where there is a test of the lows or at least a pullback.

Second, as I told my Red-Hot Global Small-Caps subscribers yesterday, I find the fundamentals for commodities more bullish all the time. I expect many commodity stocks to rally and rally hard -- I just think we'll see a better buying opportunity before that happens.

Here are some charts that shape my thinking ...

First, everybody watches the Dow. I think Wall Street focuses on the Dow too much, but here you go ...
If the Dow was the real benchmark of the market, I'd be watching 13400 like a hawk. But I think the S&P 500 is more important ...
It would not be surprising to see the S&P 500 push higher through its recent downtrend today, and that should rev up the bulls. But real overhead resistance is right above the 1490 area. I expect profit-taking to come there. That profit taking, if it comes, could signal the start of the next leg down. Oil is the weakest of the commodities right now. Despite the fact that it's up 50 cents per barrel this morning, I expect further weakness. Longer-term, however, I'm extremely bullish on oil. I just think we have better buying opportunities coming.

How about Canada? Let's look at the broad measure of Canadian stocks, the S&P/TSX Composite ...
There is more room for the TSX to run, but then it should run into -- you guessed it -- profit taking.

So how about uranium stocks? Here is one my subscribers should be familiar with ...

Paladin looks like a low-risk entry now. Just be aware that if we see another leg down, as I'm expecting, it could head lower again, because a sinking tide drags down all boats.

Now for some news you can use ...

This is either a very good idea, or a very bad one ...
Bank of America Buys $2 Billion Stake in Countrywide, Boosting Bank Shares Bank of America Corp. bought $2 billion of preferred stock from Countrywide Financial Corp., erasing concern the nation's largest mortgage lender will go bankrupt and boosting investor confidence in stocks worldwide.

Speaking of shoes still to drop ...
Coventree Failed to Sell Any of Its $399 Million Notes Matured Yesterday Coventree Inc., Canada's biggest non-bank issuer of asset-backed commercial paper, said it couldn't sell any of the $399 million in debt that matured yesterday.

But metals are bullish ...
Lead Rises in London on Speculation Demand Won't Slow; Copper, Zinc Gain Lead had its biggest gain in three weeks in London as stockpiles fell and investors judged a global credit squeeze won't hurt demand for commodities. Nickel, copper, aluminum and zinc also increased.

... Really, really bullish ...
Chalco Says China May Become Net Aluminum Importer as Metal Demand Surges China, the world's largest producer of aluminum, is on course to become a net importer of the metal for the first time since 2001 because of surging demand from automakers and packaging producers.

Have a good Thursday

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