Markets drop after initial surge

At midday the Toronto Stock Exchange 300 Composite Index is down almost 40 points. Volume is decent – well over 50 million shares. Sellers are coming out slightly ahead of buyers. Declines are leading advances about 8:6.

Similar to yesterday, every sector is selling off except for the golds, which are sustaining yesterday’s strength. Placer, Barrick and Kinross are dominating the trade for the golds. Placer is the hottest stock on the street today, trading more than 2.6 million shares, and it is up more than 4.25% on the day. Optimism about the gold business in the wake of yesterday’s big sale by the Bank of England is really driving the trade.

But apart from the golds the picture is ugly. Everything is down, specifically the big cap tech stocks. Corel recent run-up is eroding as the speculators are squeezed out. The stock is down almost 10% today in active trading. Nortel and BCE are also both trading heavily to the downside.

Montreal is following Toronto traders. Overall the Montreal Exchange is down about 23 points, with everything selling except for the miners. Vancouver is down half a point; while Alberta is the only market resisting the sell-off. The ASE is up more than seven points on the day.

In New York a brief rally was quickly quashed, revealing that much of the early-morning strength was indeed nothing more than a dead-cat bounce. The Dow is currently down 75 points. Nasdaq’s rally has been more resilient. At midday it is more or less unchanged. The S&P is down about four points with the Dow.