Pre-opening Comments for Thursday September 4^th

9:15 AM EDT: U.S. equity markets are lower this morning. S&P 500 Index futures eased six points in pre-opening trade. Futures were lower prior to 8:30 AM, but recovered slightly following release of second quarter productivity. Productivity was surprisingly strong at an annual rate of 4.3%.

Commodity prices finally have moved higher. Crude oil, gasoline, gold, silver and copper prices are slightly higher before the opening.

Bombardier reported better than expected second quarter earnings. Consensus was $0.11 versus $0.05 per share last year. Actual earnings were $0.14 per share. On the charts, Bombardier has a positive technical profile. Intermediate trend is up. The stock trades above its 50 and 200 day moving average. Strength relative to the TSX Composite and S&P 500 Index remains positive. Resistance at $8.97 Cdn. could be tested shortly. Technical target on a breakout above $8.97 is $11.90.

Chart courtesy of StockCharts.com www.stockcharts.com

This morning OMERS made a $2 billion offer to buy Teranet.Income Trust. The cash offer is worth $11.00 per share. Rumors of a takeover have circulated during the past week. Units have moved higher on above average volume.

Chart courtesy of StockCharts.com www.stockcharts.com

Technical Action Yesterday

Technical action by stocks on both sides of the border was bearish yesterday. Six S&P 500 stocks broke resistance and 25 stocks broke support. The Up/Down ratio eased from 0.95 to (199/212=) 0.94. Most of the stocks breaking support already were in downtrends and therefore did not impact the Up/Down ratio. Home supply stocks (HD, LOW) were notable on the list of stocks breaking resistance. Oil service and coal stocks were notable on the list of stocks breaking support. In Canada, no TSX stocks broke resistance and 18 stocks broke support. The Up/Down ratio eased from 0.59 to (56/100=) 0.56. Most TSX stocks breaking support already were in a downtrend. Base metal stocks (HBM, LUN, FNX) were notable on the list of stocks breaking support.

Chart courtesy of StockCharts.com www.stockcharts.com

Chart courtesy of StockCharts.com www.stockcharts.com

Chart courtesy of StockCharts.com www.stockcharts.com

S&P 500 stocks breaking resistance included Home Depot, Lowes, Northern Trust, Qwest, Tenet Healthcare and Viacom.

S&P 500 stocks breaking support included Akamai, AK Steel, Baker Hughes, Broadcom, Consolidated Energy, Corning, Dynergy, Forest Labs, Exelon, FPL Group, Freeport McMoran Copper & Gold, Google, Halliburton, IBM, KLA Tencor, Jacob Engineering, MEMC Electronics, Murphy Oil, Newmont, Noble Drilling, Peabody, PPL Corp.,Praxair and TransOcean

TSX Composite stocks breaking support included AddaxAurelian Resources, FNX Mining, Gardeau AmeriSteel, Golden Star, Highpoint Oil and Gas, Hudbay Mining, Janguar Mining, Kinross, Lundin Mining, Nexen, Norbord, Novagold, Pan American Silver, Potash Corp., Savanna Energy, Talisman and Tanzanian,

Tech Talk’s Comments posted on the FP Trading Desk site

(Available at http://www.financialpost.com/trading_desk/index.html )

(Charts have been updated to yesterday’s close)

FP Trading Desk headline reads, “New Gold and Bankers Petroleum probable additions to S&P/TSX Composite. Following is a link to the report: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/09/03/new-gold-and-bankers-petroleum-probable-additions-to-s-amp-p-tsx-composite.aspx

New Gold and Bankers Petroleum are possible candidates to be added to the TSX Composite Index later this month.

New Gold currently has a negative technical profile, but is showing early signs of trying to bottom. Intermediate trend is down. The stock trades below its 50 and 200 day moving average. Strength relative to the TSX Composite Index has been negative since May. On the other hand, the stock recently found support at $4.82 and short term momentum indicators (RSI, MACD) recently have recovered from oversold levels.

Chart courtesy of StockCharts.com www.stockcharts.com

Bankers Petroleum currently has s neutral technical profile. Intermediate trend is neutral. The stock trades above its 50 and 200 day moving averages. However, strength relative to the TSX Composite Index has been negative during the past three months. Short term momentum indicators (RSI, MACD) are recovering from oversold levels, but already have reached a neutral level. Support exists at $3.40. Resistance exists at $6.72.

Chart courtesy of StockiCharts.com www.stockcharts.com

Updated report

The special report on Exchange Traded Funds has been updated to include ETFs launched since June. The report is available at http://dvtechtalk.com/specialreports/specialreport1.htm

THE CASTLEMOORE “FOCUS” PORTFOLIO

What does CastleMoore think typical Canadian investors should be invested in NOW?

Focus Investor – Moderate Risk

Markets are like ski hills. It takes longer to get to the top than to get to the bottom. In both cases, the slow ascent to the top allows for careful consideration, mainly about what to do when you get there. On the other hand, in skiing, unlike in investing, the trip down is the point.

The rapid descent has been no fun so far this week for Canadian equities. After a (hopefully) restful end-of-summer long weekend, investors in the TSX 60 has seen a quick 4.6% paring of their portfolios. The index is now down about 13.3% from its March peak.

This week’s culprit, as it has been throughout the decline, has mainly been energy, whose decline, as previously mentioned in this column, has been beneficial to the US market and the US dollar. Hurricane Gustav’s potential to inflict damage to US refineries and rigs, hence curtailing demand from crude supplies, turned out to be no cause for concern at all, and energy prices acted accordingly. Also contributing was gold bullion and even more so, producers.

The Castlemoore Focus Portfolio is actually up this week. No, we have no advance knowledge about what a hurricane will or will not do. Nor do we revel in the losses other investors have suffered. But what our combined years of experience has taught us is that when bearish sentiment prevails the markets are more sensitive to bad news and generally less sensitive to good news. And vice versa. And anything that bucks a current downtrend despite the plethora of bad news is worth a closer look. Our one equity in the portfolio, Shaw Communications, has actually been up trending against general market weakness, despite content management issues with the CRTC.

We have increased our exposure in this portfolio in bonds. For the moment, our deflation thesis, previously mentioned in this column (2008.08.21), seems to be gaining some traction with central bankers, including BoC Chairman Carney whose positive (but tentative?) characterization of the Canadian economy and inaction on rates halted the currency gains the US bond position has also collected.

Read this commentary on your Blackberry or any other WAP-enabled device. Go to http://www.castlemoore.com/mobile. Feedback welcomed.

To request our bi-monthly newsletter, learn more about our model portfolios or access an audio file of our investment philosophy, “Modern Financial Fiascos”, click on the link http://www.formdesk.com/castlemoore/register . We are also accepting interest for seminar attendance as well

CastleMoore Inc. uses a proprietary Risk/Reward Matrix that places clients within one of 12 discretionary portfolios based on risk tolerance, investment objectives, income, net worth and past investing experience. For more information on our discipline and methodology please contact us.

CastleMoore Inc.

Buy, Hold…and Know When to Sell

www.castlemoore.com

Disclosure: Mr. Vialoux does not own securities mentioned in this report.

Disclaimer: Comments and opinions offered in this report are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed.

 Print This Post