Comments on: Tech Talk for Friday June 19th 2009

By: chris

chris — Mon, 22 Jun 2009 13:25:19 +0000

The only thing right about ftse’s comment is that this investor is spending his ‘winnings’ from the march rally. Many words used i.e. “always” suggests to me that i hope he sold all his positions before going on vacation with the profits!

Lower earnings and de-leveraging will not mean higher stock prices.

By: John A

John A — Mon, 22 Jun 2009 02:46:59 +0000

Thanks very much Don for your last posts. I have found often in my investing career that we often are impatient and your comments certainly reinforce the need for patience! It takes time for such a strong short term rally to lose momentum. Also thanks for your continuing excellent market analyses. I have been able to take advantage of some of your seasonal plays over the last several months of following your site. I have been pretty well called away on my recent covered calls and so will wait patiently???!!! for a summer fertilizer opportunity.

By: Don Vialoux

Don Vialoux — Mon, 22 Jun 2009 00:44:18 +0000

Hi Mary Broderick. The period of seasonal strength for fertilizer stocks is from the end of June to the end of December. The period of seasonal strength in the Agriculture sector according to Thackray’s 2009 Investor’s guide is from the end of July to the end of December. The seasonal trade is starting to line up nicely prior to the periods of seasonal strength. More information on the trade is provided in Monday’s Tech Talk. Technicals currently do not support entry into the trade. Fertilizer stocks such as Agrium and Potash Corp. have dropped 22% from their highs set in mid May and need to show technical signs of bottoming before buying. Momentum indicators show that these stocks are short term oversold, but have yet to show signs of bottoming. In addition, fundamentals currently do not support entry at this time. Both companies are scheduled to report substantially lower second quarter earnings in late July. Recent comments by both companies suggest that analyst estimates likely are high. Please be patient.

By: Don Vialoux

Don Vialoux — Sun, 21 Jun 2009 22:46:18 +0000

Great comments! Thanks to everyone who participated. Dennis Gartman frequently talks about “the box” when discussing corrections. The box is a trading range that a chart can correct after a significant intermediate upside move. The assumption is that the chart will continue its current upward trend after the correction has been completed. Gartman’s box implies a correction of 40%-60% of the previous upside move. For simplicity sake, let’s use 50%. Both the TSX Composite Index and the S&P 500 Index have gained 43.4% from their March lows to their recent highs. A normal correction suggests downside risk of 21.7%. That is a significant hit from current levels(812 on the S&P 500 and 9103 for the TSX Composite. Likely time horizon for the correction is between June 11th when recent highs were reached and November. Notice that I used the term “Downside risk”. Best guess is that the downside target will not be reached because likely weakness in the U.S. Dollar starting later this summer and continuing into fall likely will mute downside risk. A lower U.S. Dollar has a psychological positive impact on U.S. equity
markets without changing the actual outlook for corporate earnings. What likely will be the fundamental trigger for the correction? Probably earnings! Consensus estimates for the third and particularly the fourth quarter are too high. Analysts will adjust after seeing “difficult” second quarter earnings reports. Second quarter earnings reports wiil be “less bad”, but guidance for the rest of the year will be “less good”. Second quarter earnings reports start to flow in volume in the second week in July. Stay tuned!

By: T.J.

T.J. — Sun, 21 Jun 2009 17:20:11 +0000

I think the good news on infrastructure is already baked into the stock prices. Buy the dips, sell the rips!

By: mark

mark — Sun, 21 Jun 2009 16:35:32 +0000

Re: “buy when it snows,sell when it goes” Isn’t this year absolutely unique in that we have enormous amounts of stimulus money pouring into businesses all around the world right now?

By: roy

roy — Sun, 21 Jun 2009 16:30:04 +0000

Anyone care to comment on the Canadian infrastructure stocks (STN,SNC) including the ETF and their charts?

By: Dave

Dave — Sun, 21 Jun 2009 09:09:11 +0000

Dead Cat Bounce

By: Dave

Dave — Sat, 20 Jun 2009 22:36:13 +0000

Ken, At 3:50 it was 10234. It didn’t really gap on close, but in the last 35 min basically gained the 40 points.
Dave

By: Ken A

Ken A — Sat, 20 Jun 2009 21:09:08 +0000

What happened to the TSX Friday at 4pm??

Can anyone tell me why the TSX gapped over 30 points at the close? Can buy-on-close orders account for that big a jump? Thanks.