ShareThisPre-opening Comments for Tuesday February 3rd
U.S. equity index futures are mixed this morning. S&P 500 futures are up 3 points in pre-opening trade. Mixed fourth quarter earnings reports counteracted strength in commodity prices.
Fourth quarter results did not help U.S. equity index futures. UPS, Dow Chemical, Avon, Sandisk and Motorola reported lower than consensus fourth quarter earnings and offered negative guidance. All are trading lower in pre-opening trade. Offsetting was a lower than consensus loss reported by DR Horton and better than expected fourth quarter earnings reported by Merck and Automatic Data Processing.
Weakness in the U.S. Dollar has triggered strength in commodities priced in U.S. Dollars. Crude oil, gold, silver and copper prices are slightly higher. Strength in commodity prices is expected to help boost the TSX Composite Index slightly at the opening.
Another government has joined the “bailout bandwagon”. Australia announced a $26 billion economic stimulus package. The Bank of Australia’s overnight lending rate to banks also was slashed by 1.00% to the lowest level in more than 40 years. The Australia All Ordinaries Index gained 3% in overnight trading.
Early technical signs that the Chinese economic stimulus package is working have surfaced. The Shanghai Composite Index rose another 2% to 2,054 last night and currently is testing the top of a potential base building pattern.. A break above 2100.80 completes the pattern and implies an intermediate upside technical target of 2,650. Technical action by the Shanghai Composite Index is being watched closely as a leading indicator for industrial commodity prices.
Chart courtesy of StockCharts.com www.stockcharts.com
Technical Action Yesterday
Technical action by S&P 500 stocks was bearish yesterday. One S&P 500 stock broke resistance and 13 stocks broke support. The Up/Down ratio slipped from 0.85 to (169/209=) 0.81.
S&P 500 stocks breaking resistance
S&P 500 stocks breaking support
Technical action by TSX Composite stocks was quiet. One TSX stock broke resistance and two stocks broke support. The Up/Down ratio slipped from 1.33 to (79/61=) 1.30.
TSX stocks breaking resistance
TSX stocks breaking support
ETF News
Northern Trust exits ETF business
January 27, 2009–Northern Trust Corp. said Tuesday it is throwing in the towel on its exchange-traded fund business, less than a year after the Chicago trust bank first entered the marketplace by unveiling a number of ETFs focused on international stocks.
The financial-services concern said officials decided to withdraw from the ETF segment in view of current market conditions and "the inability of the funds to attract significant market interest since their inception."
Editor’s Note: Northern Trust plans to liquidate the 17 ETFs that it sponsored. If you own them, best to consider switching into a comparable ETF.
State Street Global Advisors Lists Two SPDR ® Bond ETFs on NYSE Arca
January 27, 2009 — NYSE Euronext (NYX) announced that its wholly-owned subsidiary, NYSE Arca, today began trading two SPDR ® Bond ETFs. Names and ticker symbols of the two SPDR Bond ETFs trading on NYSE Arca:
SPDR Barclays Capital Mortgage Backed Bond ETF (MBG)
SPDR Barclays Capital Short Term International Treasury Bond ETF (BWZ)
Gold Company Earnings Reports
FP Trading Desk headline reads,” Kinross and Agnico Eagle kick off gold earnings”. Following is a link to the site: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2009/02/02/kinross-and-agnico-eagle-kick-off-gold-earnings.aspx
Editor’s Note: Senior gold producers are scheduled to report fourth quarter earnings in the third week in February. Generally, they will be “nothing to write home about” mainly because earnings from bi-products (copper, zinc, lead, nickel) will be significantly lower in this quarter.
Thackray’s Market Letter
Brooke Thackray’s monthly market letter highlights:
- The January predictor
- Blowing bubbles with Ben Bernanke
- Seasonal weakness in U.S. long term treasuries
- Brooke’s favourite seasonal trade – Energy stocks
The newsletter is free. Subscribe by sending an email to subscribe@alphamountain.com with SUBSCRIBE in the subject line. Also, state your first and last name, city and country.
Fourth Quarter Earnings Reports by S&P 500 Companies
Reports released as last Friday showed that 56% beat consensus estimates, 10 reported in line with consensus and 34% reported lower than consensus.
Natural Gas
Jim Cramer offered encouraging comments on natural gas and natural gas stocks during Mad Money last night. The Natural Gas ETF in the U.S. finally is showing early technical signs of trying to bottom.
Chart courtesy of StockCharts.com www.stockcharts.com
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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.
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Discussions from the Tech Talk Forum:
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February 3rd, 2009 at 3:07 am
NATURAL GAS – I’ve been watching UNG and HNU for a trade for several months. I asked you last week about it and you advised to hold off. The $4.30 level seems to be support for now. I want it to re test that level this week before I go long HNU. I think we get another chance to get Natural Gas and there is no need for anybody to chase it at this level.
Nick
February 3rd, 2009 at 6:35 am
Nick;
I agree with you. I have also been watching Nat Gas and there are no indications that it will be making a ‘V’ bottom. Probably it will be a long, drawn-out ‘U’, so there will be plenty of time to buy HNU or GAS when technical indicators signal it’s time to enter.
February 3rd, 2009 at 7:04 am
Hi Don
Please tell me whEn TECH. season starts. I noticed that RIM made a huge recovery in
last two months.
Is Tech.PLAY in season now?
I will appreciate a quick response.
THNAKS,
NG
February 3rd, 2009 at 8:02 am
Volatility is still in the mid 40′s and most people have been losing money over the past year or so; yesterday’s volume for HOU and HNU shows how closely watched oil and gas prices are. For these reasons I believe in a choppy bottom for both commodities and one or more false breakouts before the world economy outlook improves.
February 3rd, 2009 at 10:36 am
Thanks Don, for your excellent column in the Financial Post on Saturday. I always enjoy your comments in this website and read them every day.
To carry the silly Super Bowl myth of its market predictive abilities to its ridiculous extreme it looks like we will have an uncomfortable time with the bears trouncing the bulls until March 31st at which time we will have a see-saw match back and forth between the bulls and the bears with neither taking charge until September 30th. Then we’ll have a nail-biter with the bulls actually overpowering the bears late, after Christmas then the bears will finally pull off a surprise to “complete a dramatic long pass into the end zone and a fantastic catch right on the sidelines” as it were, just minutes before the market close on New Year’s eve day, to take charge again in 2009 – but just by a little bit this time. Meanwhile, occasional market participants will all learn painfully, much about the occult rules of the market with lots of mishaps along the way.
But never mind. We should have a spectacular show early next summer, perhaps the best one for years, at least since Janet Jackson’s costume failure, which will take our minds off the markets for a wee while.
And oh, by the way the Super Bowl has other predictive powers as well. For example, this might be a good time to be long butter futures in Bangladesh. Analysts are now calling for a shortfallin butter production there .
And oh, by the way the Super Bowl has other predictive powers as well. For example, t his might be a good time to be long butter futures in Bangladesh. Analysts are now calling for a shortfall there in butter production.
February 3rd, 2009 at 12:12 pm
Hi Don:
Do you see a rally in the near future for the stock market. One of the longest down period. Thanks for your reply.
February 3rd, 2009 at 1:43 pm
Hi Don,
I’ve been watching your comments and read Thackray’s latest newsletter re: the coming oil seasonality. Reviewing my options, I am considering either Horizons’ HEU, HOU or Barclay’s XEG – do you have a preference?
Thanks for your website!
February 3rd, 2009 at 6:03 pm
does anyone know how I can search for stocks whose stochastic is at or very near 0
February 3rd, 2009 at 6:22 pm
Hi Kevin. I prefer XEG because of the four month time horizon for the seasonal trade. HOU and HEU are attractive trading vehhicles for a shorter time horizon (e.g. three weeks or less). A recent study showed that the average time period for retention of leveraged ETFs is four days.
February 3rd, 2009 at 6:57 pm
Hi Don,
Great show the other day!
what’s your opinion on global dividends and are there any canadian etfs that play into that area similar to the TD global dividend fund (mutual fund) that recently came out?
Thanks
February 3rd, 2009 at 10:41 pm
Hi don,
I was wondering what you think of UGA at this time?
thanks