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Pre-opening Comments for Wednesday October 28th
U.S. equity index futures are lower this morning. S&P 500 Index futures are down 3 points in pre-opening trade. Equity futures continue to weakness on strength in the U.S. Dollar.
Third quarter earnings reports continue to exceed consensus estimates. U.S. companies that reported higher than expected third quarter earnings include International Paper, Rubbermaid, Hess, ConocoPhillips, Wellpoint, Coca Cola Enterprises and Southern Companies.
Apollo Group was downgraded by RBC Capital Markets, Morgan Stanley and Bank of America/Merrill Lynch after the company revealed that the SEC is unofficially is conducting an investigation on its recognition of revenues in its financial statements. The stock is down 15% before the opening. On the charts the stock is expected to open below support and its 50 and 200 day moving averages.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/10/clip_image001112.gif "clip_image001[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
Brookfield Properties added 2% after Goldman Sachs raised its rating on the stock from Neutral to Buy.
Rogers Communications added 1% after Bank of America/Merrill raised its rating on the stock from Neutral to Buy.
Canadian Pacific added 1% after Raymond James raised its rating on the stock from Market Perform to Outperform.
Technical Action Yesterday
Technical action by S&P 500 stocks remains bearish. No S&P 500 stock broke resistance and another nineteen S&P 500 stocks broke support. The Up/Down ratio fell from 5.25 to (368/81=) 4.54.
Technical action by TSX Composite stocks also remains bearish. No TSX stocks broke resistance and 10 stocks broke support (Barrick Gold, Bank of Montreal, Bombardier, Canadian Pacific, IGM Financial, Manulife, National Bank, Power Corp., Power Financial and Royal Bank. The Up/Down ratio fell from 5.69 to (157/35=) 4.49.
Interesting Charts
“Sell on news” remains the main theme despite the release of third quarter reports that exceed consensus. Canadian Pacific is an example.
Notable on the list of U.S. stocks breaking support were the U.S. Steel stocks (e.g. U.S. Steel, AK Steel, Allegheny Tech) after U.S. Steel reported a lower than expected third quarter loss.
Chart courtesy of StockCharts.com www.stockcharts.com
Gold stocks once again were on the list of stocks breaking support.
Chart courtesy of StockCharts.com www.stockcharts.com
In Canada, Financial Service stocks were prominent on the list of stocks breaking support. iShares on the TSX Financial Service Index broke two support levels yesterday on higher than average volume. Short term momentum indicators show that the sector already is oversold.
Chart courtesy of StockCharts.com www.stockcharts.com
Weakness in the financial service sector was a major reason why the TSX Composite Index fell below its 50 day moving average.
Chart courtesy of StockCharts.com www.stockcharts.com
The Russell 2000 Index also broke below its 50 day moving average.
Chart courtesy of StockCharts.com www.stockcharts.com
Bullish Percent Index for S&P 500 stocks fell below its 15 day moving average, a Bullish Percent Index sell signal. The Index peaked five weeks ago and has established an intermediate downtrend.
Chart courtesy of StockCharts.com www.stockcharts.com
Relative Strength in Sector SPDRs since the first week in August
Lots of changes during the past week! The Information Technology sector changed from Market Perform to Outperform. The Financial Service sector changed from Market Perform to Underperform. The Materials sector changed from Market Perform to Undeperform. The Industrial sector changed from Outperform to Market Perform. Consumer Staples, Energy and Consumer Discretionary remained Outperform. Utilities and Health Care remained Underperform.
Four sectors SPDRs have dropped below their 50 day moving average: Financial Services, Utilities, Materials and Health Care.
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
Adrienne Toghraie’s “Traders Coach” Column
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In Hindsight
By Adrienne Toghraie, Trader’s Coach
How many things in hindsight would you have not done had you known the outcome? For traders that can be a daily occurrence. The fact is that you were right in not taking many trades based upon the information you had at the time. Let us look at the type of trading day where you should not have traded or the types of trades that you should not have taken.
Personal Issues
· You just had a fight with someone and you are out of sorts
· You are physically sick or mentally tired
· You have an issue that is disrupting your focus
· The environment in which you are working is distracting
· You are making a major change in your life (good or bad)
· You need to prove to yourself how smart you are
Trading Issues
· You took a trade that did not fit good risk parameters
· You traded based on someone else’s advice that you did not think out for yourself
· You took a trade during breaking news where you knew it could affect the market you were trading
· A trade that was against your rules
What would be the results if you only traded when your personal issues were in check and you only traded your rules?
Valerie the list maker
People in Valerie’s life would laugh about how she had a list for everything. She was laughing in her penthouse apartment in the middle of Manhattan when she became a trader. At the end of every trading day Valerie would go over each trade and make a list of what she would have done had she known the outcome. As part of that list she did an analysis of herself and the individual trades, and if they were in alignment with her trading plan. By the fifth year of trading Valerie was a multimillion-dollar trader.
We can all learn from Valerie’s strategy for life. I have passed this lesson on to many of my clients with exceptional results.
Your checklist
· How did I feel mentally and physically today?
· Was there anything that disrupted my focus today?
· Did I break any of my rules?
· What lessons did I learn?
Enjoy the process of becoming your best trading self.
Upcoming Events with Adrienne Toghraie
Adrienne will present at Traders Expo Las Vegas
Friday, November 20 (no charge) – 5:30 PM – 6:30 PM
Recognizing 15 Sabotage Traps in Trading & Investing
After the Traders Expo in Las Vegas
Adrienne will present her Master Class for Traders
Sunday, November 22 – Tropicana Hotel – 9:00 AM – 12:30 PM
$500 (Ask about the early enrollment discount – now $300)*
The aim of the Master Class is to provide Traders
with Winning Psychological Models for Trading
You will learn from Adrienne
P Lessons Adrienne has learned to assist you in overcoming your self imposed limitations
P A success model to direct your mind towards the information you want and need to become a master trader
P A success model to deal with time management and getting things completed
P Lessons of professional traders
Who should attend
P Those who want to learn the pitfalls and lessons before they start to trade real money
P Those who are struggling with earning profits as a trader
P Those who can’t get to the next level of success
P Those who want to speed up the process to become a master trader
* TO REGISTER AND RECEIVE THE DISCOUNT FOR THE MASTER CLASS CALL – 919 851 8288
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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October 28th, 2009 at 4:01 am
Hi Don
Your seasonal natural gas chart is different then Brooke’s T., could you help me understand? Thanks!
Guy Ks
October 28th, 2009 at 4:51 am
The difference between SeasonalCharts.com and Brooke’s analysis is the period of time selected for the study. SeasonalCharts.com uses data from 1990 to 2007. Brooke uses data from 1995 to 2008. Both studies show a period of seasonal strength from August to near the end of October. Both studies show weakness in November followed by strength during the first three weeks in December. The main difference between the studies is the magnitude of the gain in Brooke’s study during the month of December. I have completed a separate study on Canadian natural gas. It also shows a period of strength in December. Additional information including Brooke’s charts is available in Brooke’s book entitled, “Thackray’s 2010 Investor’s Guide”.
October 28th, 2009 at 6:08 am
Hi Don
thanks for all your insight on the markets. When and where can I get the new copy of Brooke’s new book??
October 28th, 2009 at 6:27 am
Good morning Don,
Looking at a near sell signal on the weekly TSX chart and a possible double top forming on the daily, can you see the average testing the 200 day at around 10,000?
October 28th, 2009 at 6:55 am
Hi Ken. Next support level for the TSX Composite Index is 10,855.16. Thereafter, support is at 10,480.18.
October 28th, 2009 at 7:53 am
Hello Don
Seems like the Agriculture sector (AGU,POT,VT,JJG etc) is getting the brunt of the drop in the markets, even though we are supposed to be in the optimal time for this sector. Comments? Thanks Don.
October 28th, 2009 at 8:55 am
Hi Don,
I would like to invest in US stocks but I have a concern on the US dollar. Is there a way to protect myself from the decline/volatility of the US dollar? Is there any currency hedging strategy that you can recommend?
Thanks,
Jay
October 28th, 2009 at 9:07 am
Hi Don,
The CDN$ has formed a rising wedge pattern, and its lower trend line has been broken recently. Does this mean that further weakness in CDN$ should be expected in the following weeks/months? Thanks a lot.
October 28th, 2009 at 9:10 am
Hi Don,
Do you have any comments on what may be happening with Goldcorp on the TSX? It’s close to its 200 day ma, yet neither gold nor the TSX are close to their respective 200 day ma’s.
So, would the chart suggest that G could go lower than its 200 day ma (if gold and the TSX continue their declines)? If it could, where then would its next level of support be?
Do you anticipate that it will be able to get back up to the mid $40’s level once things pick up (in say November or December)? Or does the chart show that there may be something going on technically or fundamentally with the stock that will prevent it from reaching its yearly high before years end(which was reached in September)?
I just don’t know what to make of this chart Don, so any opinion on this would be greatly appreciated!
Thank you!
Eve
October 28th, 2009 at 9:22 am
Don
How long do we hold onto COW – what’s the seasonal sell time?
GDS
October 28th, 2009 at 10:11 am
Hi Don,
What’s the support and resistance for RIM? Thanks.
October 28th, 2009 at 10:53 am
Hi Don,
I am thinking of adding HBM to my portfolio and I wonder if this is the time. If yes what would be a good mental stop for it.
Thanks
October 28th, 2009 at 12:07 pm
There are a lot of babies being thrown out with the bathwater and opportunities galore are beginning to show up. Time to check the watchlist for an entry point, maybe in a day or two. But be patient, watch the charts and stick to your discipline.
October 28th, 2009 at 12:37 pm
Don, Thanks for all of your great work. Do you follow FNX Mining(FNX) and if so when does it have it’s period of seasonal strength? Thanks again.
October 28th, 2009 at 3:47 pm
Don,
How does the seasonal S&P 500 buy look? Anything happen to make your change you entry on it. You had pointed to this week when we met early this summer.
October 29th, 2009 at 5:37 pm
Hi Dave1. Brooke’s book is now available either directly from Brooke at Brooke.Thackray@alphamountain.com or from major book stores (Amazon.com, Indigo, Chapters).
October 29th, 2009 at 5:43 pm
Hi Roy. Just confirming that the Agriculture sector recently has outperform the market (both the TSX Composite Index and the S&P 500 Index). Unfortunately outperforming the market when the market is moving lower is like kissing your sister. It may be pleasant, but not exciting. Investors holding Ag stocks and ETFs should continue to hold until near the end of the period of seasonal strength in December.
October 29th, 2009 at 5:45 pm
Hi Jay. Bay Street is looking for a solution to the currency risk issue for investors dealing with investments valued below $100,000. Stay tuned for more developments.
October 29th, 2009 at 5:49 pm
Hi MFR. Weakness in the Canadian Dollar caused it to slightly exceed Tech Talk’s short term downside risk target at 93 cents U.S. where the 50 day moving average exists. Next downside support is at 89.91. Intermediate trend remains up. Short term momentum indicators are oversold. Hap Sneddon offers additional comments in Friday’s Tech Talk.
October 29th, 2009 at 5:54 pm
Hi Eve. Nice bounce by G today (Thursday) from near its 200 day moving average. Short term momentum indicators are oversold and trying to bottom. Intermediate trend currently is down. The stock likely will need to build a base before regaining significant upside momentum.
October 29th, 2009 at 6:01 pm
Hi GregDS. COW’s period of seasonal strength ends at the end of December.
October 29th, 2009 at 6:02 pm
Hi HS. RIM on the TSX could fill the gap implying downside risk to $61 Cdn.
October 29th, 2009 at 6:08 pm
Hi Reza. Nice move by HBM today (Thursday). Seasonal influences start to turn positive for base metal stocks at the end of October. The stock currently has a positive intermediate technical profile. Use the low set during the past few days as a stop loss level.
October 29th, 2009 at 6:10 pm
Great comments, Fred. Stick to your discipline. Seasonal trades are lining up. Recent weakness comes at an opportune time. Watch for seasonal entry points based on short term technical signals.
October 29th, 2009 at 6:15 pm
Hi Maggie. Nice move by FNX Mining today (Thursday). Seasonal influences for base metal stocks such as FNX Mining turn positive at the end of October. The stock has a positive intermediate technical profile. Its 50 day moving average currently at $9.73 has been a reliable support level for the stock during the past eight months.
October 29th, 2009 at 6:20 pm
Hi Dan L. Great question! The complete answer is found in Saturday’s Financial Post. For a sneak preview, check out comments on the seasonality of the S&P 500 Index and TSX Composite Index in the “Other Factors” section of Monday’s Tech Talk. The bottom line is “Stay tuned for a technical entry point”.