ShareThisPre-opening Comments for Wednesday September 16th
U.S. equity index futures are higher again this morning. S&P 500 futures were up 4 points in pre-opening trade. Futures are responding to continuing weakness in the U.S. Dollar. Weakness in the U.S. Dollar has prompted the Canadian Dollar to test a key resistance level at 93.95. The Canadian Dollar is trading at 93.52 this morning.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/09/clip_image00115.gif "clip_image001[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
Gold also has responded to a weaker U.S. Dollar. Gold gained another $13 U.S. to $1,019 U.S. per ounce this morning to reach an 18 month high. It is testing its all time high at $1,033.90 U.S. per ounce
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/09/clip_image00215.gif "clip_image002[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
U.S. equity index futures were virtually unchanged following release of economic news at 8:30 AM. Consensus for August Consumer Prices was an increase of 0.3% versus no change in July. Actual was up 0.4%. Consensus for core CPI was an increase of 0.1% versus 0.1% in July. Actual was an increase of 0.1%.
Grain prices are expected to open higher this morning. One reason is weakness in the U.S. Dollar. However, the main reason is two reports from prominent U.S. weather forecasters that the northern U.S. states could see freezing temperatures by September 24th . A freeze in key grain growing areas prior to maturation of crops could significantly reduce the quantity and quality of this year’s crop. Look for agriculture equities and Exchange Traded Funds (e.g. MOO in the U.S. and COW in Canada) to open higher.
Adobe has offered to purchase Omniture for $1.8 billion. Several analysts have recommended taking profits on Omniture after the opening. In addition, Adobe reported slightly less than consensus third quarter earnings. Three analysts have downgraded Adobe from Buy to Hold this morning. The stock is down 5% in pre-opening trade.
Bank of America/Merrill has upgraded Amazon.com from neutral to buy. Amazon is up 3% in pre-opening trade.
UBS has downgraded Verizon from buy to neutral. Verizon is down 2% in pre-opening trade.
Technical Action Yesterday
Technical action by S&P 500 stocks remains bullish. Another 22 S&P 500 stocks broke resistance yesterday and only one stock broke support (Kroger). Notable on the list of stocks breaking resistance were Alcoa in the Materials sector and hotel stocks (Host Hotels, Marriott, Starwood Hotels). The Up/Down ratio increased from 11.39 to (414/35=) 11.83.
Technical action by TSX Composite stocks also remains bullish. Six TSX stocks broke resistance (Bank of Nova Scotia, Canadian Western Bank, Ensign Resources, Lundin Mining, Rona and Transforce). None broke support. The Up/Down ratio increased from 5.27 to (118/22=) 5.36.
Interesting Charts
It’s all about the U.S. Dollar. Weakness in the U.S. Dollar prompted strength in a wide variety of stocks yesterday (most notably energy and mining stocks). Its intermediate trend is down. RSI and Stochastics are short term oversold, but continue to trend lower.
Chart courtesy of StockCharts.com www.stockcharts.com
FP Trading Desk headline reads, “Underperforming grains ready to rally”. Following is a link to the report: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2009/09/15/underperforming-grains-ready-to-rally.aspx
Finally, grain prices recorded a momentum “bump”! The sharp gain in the iPath DJ-AIG Grains ETF (NYSE:JJG $36.86) from a substantially oversold level yesterday looks similar to the recovery in natural gas recorded ten days ago. Short term momentum indicator are recovering from oversold levels.
Chart courtesy of StockCharts.com www.stockcharts.com
Agriculture stocks quickly moved higher (e.g. Deere, Potash Corp.) ‘Tis the season for the Ag sector to move higher! The Claymore Agriculture ETF (TSE:COW $17.70 Cdn.) is about to break above a triangle pattern, a bullish technical action.
Chart courtesy of StockCharts.com www.stockcharts.com
Look for Apple Inc. (NASDAQ: AAPL $175.16) to open higher this morning. Jim Cramer noted on Mad Money last night that accounting rules on reported sales and expenses on hand held devices are about to change. Deferrals of up to two years are to be eliminated under new FASB rules. Net result is that real revenues and earnings in the year that units are sold will be reported. Apple’s earnings will increase by about 50% under the new rules. Cramer raised his target on the stock from $200 to $264. A positive impact on Apple likely will flow into Research in Motion (NASDAQ: RIMM $83.14 U.S.) is about to break a key resistance level at $86 U.S.
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Relative Strength For U.S. Sectors
Six sectors moved to new highs last week: Industrials, Energy, Consumer Staples, Consumer Discretionary, Information Technology and Materials. Four sectors remain below highs set either in the first or fourth week in August: Financial Services, Health Care, Telecom Services and Utilities.
Two sectors have outperformed the S&P 500 Index since the first week in August: Industrials and Information Technology. Three sectors have performed with the S&P 500 Index: Consumer Staples, Financial Services, Health Care. Five sectors have underperformed: Energy, Consumer Discretionary, Telecom Services, Utilities and Materials.
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of Stockcharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.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.
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Tags - Previous posts for stock ticker: AAPL, COW, JJG, RIMM
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Discussions from the Tech Talk Forum:
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September 16th, 2009 at 4:27 am
Gold price is going up rapidly this morning 1018 when I checked.
September 16th, 2009 at 6:39 am
Thanks Don for all the info you provide everyday. Are you expecting a pullback in the Cdn Financials before their seasonal strength? Thanks.
September 16th, 2009 at 6:53 am
Don, so much seems to hinge on the U.S. dollar now. Why is it falling so quickly now? And what might stop its descent?
September 16th, 2009 at 7:18 am
Hi Jeff. The U.S Dollar is the topic of Tech Talk’s Financial Post article that will appear this Saturday. It also will be reproduced in Monday’s Tech Talk.
September 16th, 2009 at 7:19 am
Hi Don.
Could you please comment on the recent disconnect between gold and TBT (short US 20yr bond). If the market is driving up the price of gold based on inflation worries and a falling US dollar why would yields drop on US long bonds? Has TBT just been lagging the gold rise and due for a pop up?
Thanks
Larry
September 16th, 2009 at 8:33 am
Hi, Don,
I have been a huge follower of the site and thanks for the great work.
The DBA – PowerShares DB Agriculture Fund seemed to have lagged significantly compared to COW.To. While DBA seems to be still in a downtrend, COW.To is working on ascending triangle. What’s the reason for it and do you have a preference between the two?
Thanks!
September 16th, 2009 at 8:57 am
Seems to me that the Ag sector doesn’t agree with JJG. MOO is up, albeit shakily, COW is up, also shakily, HAU is up. Yet JJG is down sharply after a big gain yesterday. And POT continues to struggle.
I have two questions. Do we buy into the sector on the weakness of grain today? And what do we make of AGU? It seems to be climbing despite all the uncertainty in the Ag sector over the past six or eight weeks. I sold it on Monday and I now kick myself. I am considering buying back in.
September 16th, 2009 at 10:27 am
Hi Don: Above you say “Look for agriculture equities and Exchange Traded Funds (e.g. MOO in the U.S. and COW in Canada) to open higher.”
You don’t mention HAU. What is your opinion of HAU since it moved away from holding just the grain commodities to North American Agriculture stocks?
September 16th, 2009 at 10:42 am
Hi Jay. DBA is an ETF based on agriculture products. COW is an ETF based on equities in the agriculture sector.
September 16th, 2009 at 10:46 am
Hi Fred, Yes, the preferred strategy is to buy the agriculture sector on weakness for the seasonal trade lasting until December. Equity based ETFs are preferred over commodity based ETFs. Commodity based ETFs have been the subject of close examination by U.S. regulatory authorities that possibly could influence their structure and existance.
September 16th, 2009 at 11:37 am
TSX and S&P 500 today around RSI 70…once over this, overbought and reversal territory. Conversely USD way oversold, RSI 31, once below this, oversold and reversal territory.
I would be looking to short the TSX any day now… it will not stay above RSI 70 too long before checking back some, most likely down to the 20 DMA or 10993 area. Last time it was this overbought was around the first of August. IMO we should see a repeat performance soon….
Time to raise stops and tighten up.
September 16th, 2009 at 11:56 am
Hi Don,
The market is going parabolic since march, makes me nervous. I understand weakness of dollar is helping but still it this healthy ?
Sunil
September 16th, 2009 at 1:02 pm
Don: I would still like to hear your opinion on the newly configured HAU? I own it and am thinking on switching to COW.
Thanks!
September 16th, 2009 at 1:36 pm
Hello Don,
Which seasonal chart is more likely to forcast the end of 2009, the 4 year presidential chart or the 4 year dow jones chart? Also, which year is 2009, the post election year instead or the election year?
Thank you.
Ana
September 16th, 2009 at 1:47 pm
KCL.T
I know you don’t like to talk about specific stalks and with good reason. There are to many variables. The information I need to get into a trade seems reasonably evident based on the principle of buy high, sell higher but getting out (not early or late) is a problem to me. Does your site have the coaching I need to sharpen my skills?
tnx in advance
September 16th, 2009 at 1:58 pm
Don,
The rise in oil prices on days like today seems very superficial. Are the technicals showing signs of rolling over at this stage or where are they at? Thanks. LLL
September 16th, 2009 at 2:03 pm
Hi Don,
I bought GAS.to at 5.8 few weeks ago, after which gas tanked but now gas has suddenly gone up and its now trading at 5.90, do you think I should sell it and wait for another dip to buy back or just hold on to it till the end of Dec.
Thank you
September 16th, 2009 at 2:56 pm
Hi Sunil. Major North American equity indices have formed rising wedge patterns. The pattern is bullish until the bottom trend line in the pattern is broken. See Monday’s Tech Talk for parameters.
September 16th, 2009 at 2:57 pm
Hi Ana. The Presidential Cycle continues to make more sense.
September 16th, 2009 at 3:00 pm
Hi Bert. The advantage of using seasonality analysis is that dates for entry and exit are known before the trade is entered. Technicals are useful for fine tuning. Normally, technicals will indicate a fine tuned transaction within a week of indicated seasonal entry and exit dates.
September 16th, 2009 at 3:03 pm
Hi LLL. Oil remains in a relative wide trading range with little or no momentum on the upside or downside. Short term momentum indicators are neutral. Seasonal influences are negative in October and November. Thereafter, they turn positive.
September 16th, 2009 at 3:06 pm
Hi Mills. The seasonal trade in Canadian natural gas lasts until the end of December. Technicals are turning positive. Preferred strategy is to hold until near the end of the period of seasonality.
September 16th, 2009 at 5:57 pm
Don – Was wondering why did gold stocks not have a big up day considering how much gold rose today?
September 16th, 2009 at 7:49 pm
Hi Canuck2004:
Does your prediction also apply to gold equity and agri stocks? Do you think we should use tight stops for these (ie. will they fall with the market or because they’re in seasonal strength, they’ll be relatively immune from any pullback)?
For Don, I would also like to know the answer to Victorian’s question please. Since HAU was recommended in April/May, it has tanked 30%. Should I cut my losses or is there a possibility that it will rise along with the rest of the agri sector?
Thanks
James
September 17th, 2009 at 4:14 am
Canuck 2004
Thanks for the insight re 20 day MA. And thanks so much to Don for providing this site and answering all questions.
September 17th, 2009 at 5:47 am
Hi James and Victorian. Just confirming that the period of seasonal stength for the agriculture sector (including HAU) is from August to December. Seasonal influences for HAU appeared slightly earlier than usual. A bottom was reached on July 22nd at $15.86. Units subsequently have gained 11%. Technically, XAU has an improving technical profile. Yesterday, it broke above a four week trading range yesterday on a move above resistance at $17.88. XAU has been restructured during the past few weeks. See the Horizon Beta Pro website for details: http://www.hbpetfs.com/