By James Langton

(February 21 – 13:00 ET) – U.S. traders are on holiday today. In their absence, the TSE is heading south. Although the broader market is positive, weakness in Nortel Networks Corp. and BCE Inc. is knocking the index down. The TSE 300 is off 43 points, down to 9,252. Volume is lighter than usual at 115 million shares, although lots of penny stock action has volume at almost 5:1 in favour of buyers. Advancers are outpacing decliners almost 4:3.

Just three of 14 TSE subgroups are down, but they are the biggies, dragging the whole market down too. Utilities are off more than 2%, industrials are down 1.3% and miners are off slightly too. Nortel and BCE are each down 3%, dragging off BCE Emergis, Sierra Wireless and Cognos. Nervousness about higher interest rates and the impact on highly-valued tech stocks seems to be the concern.

Cinar is the big loser on the day, down 30% in its class A shares and 23% in its B shares after the tax credit fraud controversy resurfaces and the firm admits it will hurt the bottom line.

Apart fom the few big losers everything else is up. Financials, conglomerates, merchandisers and media stocks are all strong. 724 Solutions is up $10 to $200 on light volume. Corus is up 16% on news that Liberty Media in the U.S. will take a 19% stake. Assorted techs are up strongly on lightish volume, including Informission, MGI Software, Xenos and Descartes Systems. Perennial favourite Ballard Power is doing well, as are some old names, Bowater and Potash Corp.

Penny stocks have been creeping onto the TSE leader board recently, but today it looks more like the CDNX. None of the TSE’s top 10 volume stocks are trading at more than $3 per share. William Reources is leading the way, up 20% on 15.5 million shares. Erstwhile penny play golds such as Vengold, Sikaman, Redaurum and Aurado are all up strongly on heavy volumes.

The small caps are trading well too. The CDNX index is up another 24 points to 3,527. Volume hasn’t slackened there, with 60 million shares changing hands. Tech stocks are the strongest area on the CDNX. Miners are up too, energy stocks are down. Everest Mines and Minerals is the hot stock up 61% to 29¢ on 3.7 million shares.