There's another reason why I am so reluctant to put money into a TFSA trading account to invest in Canadian stocks. As you know, in a registered trading account, such as a RRSP self-directed trading account or a Questrade TFSA trading account (aff), you cannot short shares and can only buy because you can't trade on margin. As such, a registered trading account is an account for buy-only trading. It doesn't take a genius to figure out that a buy-only trading strategy is best used ... in a bull market. As trading wisdom goes, trade with the trend. So the question is, are we in a bull market in 2010? Figures 1 and 2 shows the weekly chart of TSX Index and the TSX Venture Index, respectively. Referring to Fig. 1, TSX is bumping up against some headwind at a 12,000 resistance. Unless TSX can stay above 12,000 cleanly (a weekly low above that level at least), I am still bearish in the market because that financial crisis back in 2008 (remember those days?) is still overshadowing long term prices and trader sentiments.
[caption id="" align="aligncenter" width="570" caption="TSX, weekly"][/caption] TSX Venture is depressed even more as seen in Figure 2 below. Just look at the huge gap from current price to the 200 week moving average (red line). This isn't a good sign as lack of interest in high-risk stocks means traders are generally cautious. Yes, it's true that the equity market has been running up, up, and up for a good year. However, the fact that TSX is sitting at the same level as in 2001 proves that the long term, multi-year bull market has been cleanly broken. We might very well see pockets of multi-month rallies materialize (like we're seeing now), but unless proven otherwise, the long term trend is not looking green for the markets. It will not be easy money in the stock market like back in the pre-tech bubble 1990's. As opined by Bill Cara, the time for buy-and-hold is gone. It is well known in the community that the coming years will be volatile with big ups and downs. That is my little secret for moving to trade forexlast year and the main reason why I am reluctant to set aside money on a one-sided stock trading account. [caption id="" align="aligncenter" width="570" caption="TSX Venture, weekly"]1[/caption]