Market Overview

http://www.theglobeandmail.com/report-on-business/

Pescod Talks about...TRANSGLOBE ENERGY

TRANSGLOBE ENERGY
You can tell that Transglobe Energy is having a little bit of
a problem these days as oil prices head up, most oil com-
panies are going up and Transglobe is going the other way.
It has a whole bunch to do with politics as this company is
associated with Yemen.
We don’t know whether it’s just a handful or whether it
is several hundreds of Al-Qaeda that are creating all the
damage and concern in Yemen, but there are certainly at-
tracting the attention. Today the British and Americans
have decided despite the small numbers of Al-Qaeda, they
are going to be shutting down their embassies and British
Prime Minister Gordon Brown calls the country a “failed
country.”
It’s one of the poorest countries on the face of the earth,
but what next for Transglobe? Good question. First of all,
Transglobe has been moving a lot of its operations to
Egypt recently and two-thirds of their production now
comes from that country and it’s growing there.
In the meantime, Transglobe had been getting some
chit-chat that management and some big shareholders
would be probably looking for an exit strategy within the
next twelve months given the fact that they are currently
flirting with 10,000 barrels a day, but this little political
problem with Al-Qaeda and all, just might give them the
odd problem or two.
Bloomberg’s on the weekend came up with a rather in-
teresting observation...over the last decade no money was
made in American markets. It’s been a lot better in other
countries, particularly the Brit Countries, but still, it made
Bloomberg ponder the fact that suddenly you are learning
that it may not be that easy to make money in the markets
and secondly, the old strategy of buy and hold might be
passé.
In the meantime on the weekend, well-known technical
analyst Don Vialoux had some thoughts on what next for
the markets as he wrote in the Financial Post, “Equity mar-
kets are expected to follow their traditional four-year Presi-
dential Cycle, implying strong equity markets in the first
half of the year followed by a sharp decline into the third
quarter, followed by an important recovery beginning in
November.
A major reason for weakness in the third quarter is an-
ticipation of the U.S. mid-term election in the first week in
November.
Historically, political rhetoric escalates in the third quarter prior to the election. Equity markets respond to disap-
pointment about the ability of the President and Congress to pass promised legislation successfully.”
Meanwhile of more interest to us is Vialoux’s thoughts on seasonal influences as he writes, “Equity markets on
both sides of the border are expected to follow their traditional seasonal pattern in 2010. Look for choppy markets
during the fourth-quarter earnings report period in January and early February, followed by gains into early May in
anticipation of strong first-quarter results. There could be a significant decline from May to October, followed by a
strong upside move in November and December.”
He adds, “The best seasonal sector play in 2010 likely will be in the energy sector. Colder-than-average weather
this winter will prompt energy prices and energy equity prices to move higher during their seasonally strong period
between February and May.”

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Markets rise amid jump in U.S. retail sales

NEW YORK–U.S. stock futures crept higher Monday as investors returning from a long holiday weekend were heartened by good news on retail sales.

Overseas markets were also higher. The dollar weakened against other currencies, giving commodities prices a boost. Bond prices fell.

The TSX in Toronto was closed for the statutory holiday.

Data released Monday showed shoppers opened their wallets more this season, a good sign that consumers are feeling better about the economy.

Figures from MasterCard Advisors' SpendingPulse, which track all forms of payment, show retail sales rose 3.6 per cent from Nov. 1 through Dec. 24, compared with a 2.3 per cent drop a year ago. Adjusting for an extra shopping day between Thanksgiving and Christmas, the number was closer to a 1 per cent gain.

Consumer spending is one of the biggest drivers of economic growth and is vital to a sustained recovery.

Investors will also be keeping a close eye on airline stocks after a failed attack on a Northwest flight on Christmas Day. Another incident on the same flight to Detroit from Amsterdam on Sunday raised further alarm.

Shares of Delta Air Lines Inc., which owns Northwest, slipped 14 cents to $11.63 (U.S.) in premarket trading. UAL Corp., which operates United Airlines, fell 39 cents, or 3 per cent, to $12.70.

Stocks are currently at their highest levels of the year, and in the absence of any bad news, analysts say the market is likely to drift higher during the final days of 2009. Trading volume has been extremely light due to the holidays, which can exaggerate price swings. Markets were closed on Friday for Christmas and will be closed again this Friday for New Year's Day.

Ahead of the market's open, Dow Jones industrial average futures rose 9, or 0.1 per cent, to 10,475. Standard&Poor's 500 index futures gained 2.40, or 0.2 per cent, to 1,124.40, and Nasdaq 100 index futures rose 4.0, or 0.2 per cent, to 1,872.

Overseas, Japan's Nikkei stock average rose 1.3 per cent to its highest close since late August, boosted by encouraging news on factory production. In afternoon trading, Germany's DAX index rose 0.7 per cent, while France's CAC-40 rose 0.8 per cent. Britain's FTSE 100 was closed for a holiday.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.83 per cent from 3.80 per cent Thursday.

Commodities prices rose as the dollar fell. Commodities are priced in U.S. dollars, so when the greenback is weak they become more attractive to foreign buyers.

The ICE Futures U.S. dollar index, which measures the dollar against other major currencies, slipped 0.2 per cent. Oil prices gained 45 cents to $78.50 a barrel in electronic premarket trading on the New York Mercantile Exchange. Gold prices also rose.

Major stock indexes ended a holiday-shortened session Thursday at new 2009 highs following upbeat reports on unemployment and durable goods orders. This week, readings on home prices and consumer confidence are among the few economic reports expected.

Stocks have managed to grind higher this month despite lingering concerns about the economic recovery. But the gains have been more subdued than in recent months as investors have held back on taking risks heading into the end of the year. The Standard&Poor's 500 index is up 66.5 per cent since hitting 12-year lows in March.