Pre-opening Comments for Thursday February 26^th

U.S. equity index futures are higher this morning. S&P 500 futures are up 8 points in pre-opening trade. Strength can be attributed to media comments that Treasury is close to completing a deal to acquire a 40% interest in Citigroup.

S&P 500 futures gave up some of its early gains after the release of disappointing economic news. Consensus for January Durable Goods was a drop of 4.0% versus 3.0% in December. Actual was a decline of 5.2%. Consensus for weekly jobless claims was 625,000. Actual was 667,000.

General Motors is trading slightly higher despite reporting a greater than expected fourth quarter loss. Consensus was a loss of $7.46 per share. Actual was a loss of $9.65 per share. The company also plans to approach Congress today for an additional financing valued at $16.6 billion.

Crude oil continued to recover in overnight trading, up another $1.25 U.S. per barrel. Energy stocks on both sides of the border are responding. Stochastics and Relative Strength Index are bouncing for short term oversold levels.

Chart courtesy of StockCharts.com www.stockcharts.com

Fiscal first quarter reports by Canada’s banks were mixed this morning. Consensus for Royal Bank was $1.01 versus $1.13 per share last year. Actual was $1.18 per share. Consensus for Commerce Bank was $1.29 versus $2.04 per share last year. Actual was $0.31 per share. Consensus for National Bank was $1.29 versus $1.46 per share. Actual was $0.36 per share.

Torstar reported lower than expected annual earnings and reduced its dividend by 50% to $0.37 per share. Consensus for 2008 was a profit of $1.20 versus $1.29 per share in 2007. Actual was $0.64 per share.

Technical Action Yesterday

Technical action by S&P 500 stocks remains bearish. One S&P 500 stocks broke resistance and seven stocks broke support. The Up/Down ratio was unchanged at (113/277=) 0.41.

S&P 500 stocks breaking resistance

S&P 500 stocks breaking support

Technical action by TSX Composite stocks also remains bearish. No TSX Composite stocks broke resistance. Four stocks broke support. The Up/Down ratio slipped from 0.58 to (51/93=) 0.55.

TSX stocks breaking support

Interesting Charts

The energy sector was notably stronger yesterday on both sides of the border. The trigger was an unexpected draw down in gasoline inventories. Gasoline futures gained $0.08 U.S. per gallon. The draw down offered hope that more crude oil will be processed. Crude oil added $2.35 U.S. per barrel. Energy stocks quickly followed. Refinery stocks were notably stronger (e.g. Tesoro, Valero).

Chart courtesy of StockCharts.com www.stockcharts.com

Adrienne Toghraie’s Trader’s Coach Column

Working on the Roots
By Adrienne Toghraie, Trader’s Coach

www.TradingOnTarget.com

Most traders are familiar with Stephen Covey’s now classic book, The Seven Habits of Highly Effective People. In that book, Covey wrote about his son, also named Stephen Covey, who has written a wonderful and equally important book, The Speed of Trust. In this book, the younger Covey discusses the fact that trust is essentially the lubricant that moves individuals, organizations and societies forward. Without it, everything slows down:

If I cannot believe what you say, I will need to take the time to verify it.
When everyone along the line has to verify, the machinery grinds to a halt.

This is what is happening now in the US economy. One after another, the people and institutions we trust to manage our money by employing the principles of honesty, integrity, and strict fiduciary guidelines established by law, the Bernie Madoffs who exemplified those qualities, have sidestepped those principles in the name of pride, greed, and expediency. The entire system of credit ultimately depends upon trust; and without trust, the system has crumbled.

But, the problem has gone deeper than merely our financial institutions. A growing cadre of the elected officials we entrusted with the responsibility to lead us, to make our laws and ensure their enforcement, to use our tax money to protect and support us and to protect our constitution and its implementation, have broken that trust. They have been caught hiding bribe money in the refrigerator, selling congressional positions to the highest bidder, and just about every nefarious and illegal act imaginable.

We have even learned to distrust the source of our food supply. Foodstuff from foreign sources that do not adhere to our safety requirements has infiltrated our system. Lethal E-coli bacteria and salmonella infected countless citizens. Shortcuts taken in the raising, production, and processing of our food have led to the contamination of our basic necessities of life.

People have started looking around and asking themselves, “Whom can we trust?”

What does all of this have to do with making money in the markets? The gears that drive a trader’s business are greased with trust. The trade you just entered or exited was placed on the basis of trust, trust that whoever is responsible along the line to execute that trade will have done so based on the rules of the game. When traders conclude that they cannot trust the people on the other end of the transaction, they must verify everything that happens to their money. The gears slow down and eventually grind to a stop. This example is just one step taken in your trading day that involves trust.

What about those annual reports? On the basis of the financial statements made by a company’s top executives and signed off by their lawyers and accountants will determine the investment decisions made by investors who do not have the resources to personally investigate the financial condition of each and every company on the exchange. Regardless of how deep or shallow the pockets are of those who are making investment and trading decisions, lives will be seriously and adversely affected if the accounting firm that signs off on the audit is being paid generously to cook the books. When you discover the ruse, you lose trust. You are then forced to stop and reconsider your entire investing strategy.

Suppose you discover that the single most important source of information about the markets can no longer be trusted, what do you do? Where do you go for the information vital to your decision-making? For many loyal readers, their major city newspaper’s imprimatur on a story was the very guarantee of authenticity. Then, in recent times, stories began to circulate about the lack of fact-checking and editorial rigor and of political and personal bias that colored reporting and pushed politically embarrassing stories to the back of the paper or simply off the radar. The result has been a decline in readership due, in part, to a lack of trust. In the news business, trust is the coin of the realm. One major newspaper in the US that is not experiencing a decline in readership is the most trusted source for business news, The Wall Street Journal (and no, this is not an advertisement for TWSJ). But, just suppose that you could no longer depend upon it?

The speed of trust goes all the way down to the people who clean your offices at night. If you cannot trust them not to go through your files, hack into your computer or steal the money in your desk drawer, you will be forced to clean your own offices after work hours.

As we watch in amazement at how rapidly the speed of trust is slowing down, we ask ourselves if there is a way back out of this mess. The answer is yes. It starts with each of us showing the people around us that our word is unimpeachable, that we are willing to do what we promise to do, that we are following the rules (our own rules as well) and that we can be trusted. Then, we can rightfully demand the same from those upon whom we depend. Reagan said it well so long ago: trust but verify.

Each and every one of us is hurt by the broken trust of one of our colleagues. Our profession is smeared with the same brush. We can, however, restart the speed of trust by raising the bar, by expecting and demanding more trustworthiness, and by verifying that we are getting it. If we do not do this, if we simply wring our hands in dismay, we will not be able to get the machinery back up and running. And we must do this across the board. We need to hold our elected officials accountable and let them know that government by the wink-wink-nod-nod process of governance is not acceptable and we will not allow the game to be played by those rules. The trillions of dollars being borrowed from our children and grandchildren to “jump start” the economy cannot be distributed like a shell game or we will all be the losers as trust further erodes and, instead of being jump started, the economy will lay down and slip into unconsciousness.

Adrienne Toghraie, Trader’s Coach

Adrienne@TradingOnTarget.com

www.TradingOnTarget.com

 

 

To register go to  www.tradingontarget.com (Master Classes, Webinars & Workshops)

(will be available for replay for 30 days)

 

In this Webinar, Deron Wagner explains his proven "top-down" methodology of selecting the best ETFs (exchange traded funds) for generating consistent profits in both up and down markets.  Maintaining a simple and easy to replicate strategy, Wagner will discuss how he uses relative strength to minimize risk while maximizing profits.

DERON WAGNER is the Founder and Head Portfolio Manager of Morpheus Capital LP, a long/short equity hedge fund, as well as Morpheus Trading Group, a trader education firm specializing in exchange traded funds. Wagner recently completed his fourth book, Trading ETFs – Gaining An Edge With Technical Analysis, and also appears in his best-selling video and course book, Sector Trading Strategies. Wagner teaches his ETF investment and trading methodology through his Wagner Daily and Wagner Weekly electronic newsletters, available at www.morpheustrading.com

 

THE CASTLEMOORE “FOCUS” PORTFOLIO

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

FOCUS MODERATE PORTFOLIO

 

You know you’re in a recession when the only thing that going up in price are Leaf tickets. This could easy develop into a discussion of price versus value, the difference being very relevant to those trying to ascertain the future direction of the market. However, with the RRSP deadline approaching and the tax season upon us, we will table the discussion about price versus value until most of you are likely to have more time on your hands—perhaps during the hockey playoffs.

We have sold our positions in Shaw and in gold bullion. These positions hit our stop losses, and the sales serve as useful illustrations of our techniques for loss avoidance. Shaw Communication was a case of what we believe was a good decision with an unfavourable result. Consequently, we opted for a small loss rather than risk a larger one. As for gold, we made a profit for clients and raised our stop losses in order to protect it. We will look to consider accumulating gold bullion again at first retracement around $830USD.

Our latest newsletter is out, and one that we are most proud of because of the substance of topics and of course, because our dear friend Mr. Don Vialoux is a guest columnist. Please request below.

GOLD BULLION

And

SHAW CABLE

——-

If you live outside of the Toronto area and would be interested in participating in a upcoming CastleMoore online webinar please fill out the short form at http://www.formdesk.com/castlemoore/register (make sure to check the radio button at the bottom!)

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

If you like to receive bi-monthly newsletter, know 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 .

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 at www.timingthemarket.ca 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.

Sponsored By...

More from the network: Stock Market Outlook for February 9, 2012 Stock Market Outlook for February 8, 2012 Stock Market Outlook for February 7, 2012 Stock Market Outlook for February 6, 2012 Next Report on Monday, February 6th

Discussions from the Tech Talk Forum: An error has occurred, which probably means the feed is down. Try again later.