Sell-off continues

The Toronto Stock Exchange's main index closed down for a seventh consecutive session, losing 100 points on Thursday on weakness in the energy and financial sectors. The Toronto Stock Exchange S&P/TSX composite index fell 100.66 points, or 0.86 percent, to 11,539.95. The index has lost 4 percent this week and is down 6 percent in the last seven sessions. "We don't know whether it's a two or three day shake-out, or a two or three week shake-out," said Bruce Latimer, a trader at Dundee Securities in Toronto.

The energy sector fell 1.4 percent although crude oil for June delivery rose 76 cents to $69.45 a barrel amid worries that higher-than-expected inflation in the United States could cut fuel demand. "For equity investors the underlying commodities may have gotten ahead of themselves but ultimately valuations are compelling within the materials space, particularly Canadian gold equities," said Neil Andrew, a research analyst at Leeward Hedge Funds in Toronto.

nytimes.com :

Only a week ago, the Dow Jones industrial average was on the verge of a record high. But nearly every trading day since last week's high-water mark, stocks have fallen, and yesterday they really tumbled on a government report that showed consumer prices rising more than expected. The Dow industrials fell 214.28 points, or 1.88 percent for the day, closing yesterday at 11,205.61, for the biggest point decline in more than three years. The Standard & Poor's 500-stock index and the Nasdaq fell as well, with the Nasdaq composite index hitting a new low for the year.

Behind the market's reversal is a growing concern among investors that inflation may not be as firmly under control as they had hoped. Even as most economic signals continue to point to a growing economy, the prospect that the Federal Reserve might still feel compelled to keep raising interest rates has unnerved many on Wall Street. Indeed, the sudden unwinding in the market began on May 11, the day after Fed policy makers raised interest rates another quarter-point, to 5 percent, and left open the prospect that more interest rate increases "might yet be needed to address inflation risks."

- Yep, the sell-off has been quick and sharp. A fellow forummer (and peakoiler) asked me "why didn't you sell? why didn't you sell?!" Well, I was planning to do so in a staggered fashion, but the bottom fell out faster and further than I thought it would. So far the resulting damage to my portfolio has been to the size of the earlier gains - a gain of 60% at its high has now been trimmed to 26% or thereabouts. Quite a haircut, yes, but still in the black. For some, a gain of 26% might have been pretty good, but I aim for 100% (and more), so ... well.

I went into this sector knowing full well that volatility like this presents trading opportunities on both the buy and sell side of things. So I'm hanging tight. And, unless the global economy collapses entirely, the resource bull runs still. Crude oil has already rebounded somewhat and is trading in the $70 range. Remember when $45.90 was an all-time record?

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