Here is a nice way of looking at the TSE, that is if you happen to subscribe to the head and shoulder idea. If so , it is my understanding that we should once again travel to just under the 11000 level as a minimum. This could be accomplished in as little as 10 trading days judging by the previous tumble of the same, approximately, 1000 points. If the H&S has no appeal, than perhaps the elliptical curve drawn does. There are at least 8 points that determine the form of this curve, perhaps we well get a few more in which case stocks would have to start trading down very soon (if not, it would probable be a real strong break-out to the upside !).

From a shorter term perspective here is the chart from a few days ago again;

Assuming we had an initial wave 1 down into the July low, we then had a counter-trend correction in the shape of an a-b-c (with the b as a triangle). Today (at about 12100) we are within a few points of where c=a AND we are at the 4th wave of previous degree level. Also we got through the first few days of the month of Sept and we are a day away from the labor day weekend and the US employment numbers. This should be it.

Just heard that the TSE, together with the Tel Aviv stock market, were the only ones to be up for the year and up for the month of August. Even the DAX, despite making a new high, has dropped so much since that it is not in this league. Not sure why Canada is different, perhaps we are more Pavlovian or something like that, perhaps it was Potash but it was only good for about 120 points.   In any case 2 scenarios are still operative, both start with a diagonal type 2, a not so common structure that does allow overlap. Which one is correct does not matter too much as in both cases we should have a wave 3 down ahead of us.

It is fairly common for the TSE to run behind everyone else, Nortel as an example peaked in September whereas the Composite Index in the US did so in May. The C$ had the worst month in a long time, suggesting that Canada too is in a bear.

For the DAX the picture is slightly different as it made (an irregular) new high, or simple a 3-wave 5th wave in a diagonal. The drop off from there is quite violent and this despite all the good news on the economy.

The TSE is potentially showing a very scary 1-2, 1-2 situation. Given the overlaps not too many alternatives present themselves. We should go down a little further tomorrow and then come back into Monday to keep the spirits going, thereafter it COULD be all downhill for a while. After hearing that our “authorities” are more concerned about losing the potash cartel than the price at which Potash Corp. might be taken over, I would not be surprised to see a backlash  against an economy that prides itself on torpedoing free-enterprise wherever it shows up.