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Editor’s Note: “By the Numbers” reports are taking a break.
Pre-opening Comments for Tuesday November 10th
U.S. equity index futures are slightly lower this morning. S&P 500 futures slipped 3 points in pre-opening trade. Traders are slowing activity prior to a banking holiday tomorrow.
Tyco added 1% and Beazer Homes gained 8% after reporting higher than consensus third quarter earnings.
Electronic Arts is down 4% after reporting a larger than consensus fiscal second quarter loss and announcing the lay off of 1,500 workers.
Fluor fell 6% after reporting lower than consensus third quarter earnings.
‘Tis the season for analysts to comment favourably on Canada’s major banks! This morning, UBS upgraded Royal Bank from Neutral to Buy. Canada’s banks have a period of seasonal strength from the end of October to the end of December.
BJ Wholesale is down 2% after Goldman Sachs downgraded the stock from Sell to Conviction Sell. Target was reduced to $33.
Ivanhoe Energy added 3% after Raymond James upgraded the stock from Market Perform to Outperform. Target price is $3.00 U.S.
Silver Wheaton was upgraded from Hold to Buy by TD Newcrest. Target was raised from $15.50 to $17.50.
Pan American Silver added 1% after Canaccord upgraded the stock from Hold to Buy. Target was raised from $26.50 to $29.50.
Technical Action Yesterday
Technical action by S&P 500 stocks was substantially bullish yesterday. Twenty five S&P 500 stocks broke resistance and one stock (Apollo) broke support. The Up/Down ratio improved from 2.01 to (286/136=) 2.10.
Technical action by TSX Composite Index stocks also was substantially bullish. Twelve TSX stocks broke resistance and none broke support. The Up/Down ratio improved from 2.71 to (133/44=) 3.02. Gold stocks were prominent on the list of stocks breaking support.
Interesting Charts
It’s all about the Dollar! The U.S. Dollar Index briefly broke support at 74.94 yesterday and resumed an intermediate downtrend. Short term momentum indicators are trending lower. Next technical target is 73.10.
Chart courtesy of StockCharts.com www.stockcharts.com
Strongest sectors yesterday were Industrials, Consumer Discretionary and Information Technology. All broke to new 2009 highs. All are benefitting from favourable seasonal influences. Following are charts on their SPDRs:
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Strength in these sectors was the main reason why the Dow Jones Industrial Average broke resistance to reach a new 2009 high. Notice that the Average closed near its high for the day. Next upside technical target is 10,580.
Chart courtesy of StockCharts.com www.stockcharts.com
Another seasonal play that is performing exceptionally well is the forest product sector.
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Joint TSFA/CSTA Presentation on Gold and Gold Equities
The Toronto Financial Analyst Association and the Canadian Society of Technical Analysts are jointly sponsoring a lunch presentation on December 10th in Toronto at the Sheraton Hotel (Across from Toronto’s City Hall). The topic is the outlook for gold and gold equities. Presenters are John Embry representing the fundamental analysis side and Ian McIvity representing the technical analysis side. Your hosts are Denis Taillifer from the TSFA and Don Vialoux from CSTA. More information on the lunch as well as reservations are available in the following link:
ETF News
OOK Advisors LLC has launched the Texas Large Companies Exchange Traded Fund (TXF) based on the SPADE Texas Index, a modified market-cap weighted index that seeks to measure the performance of publicly traded companies headquartered in Texas. Last week the advisor launched the Oklahoma Exchange-Traded Fund (OOK), based on an index of publicly traded, Oklahoma-based companies. The fund is based on the SPADE Oklahoma Index.
Schwab Splashes into ETFs with Four Funds
November 5, 2009 at 2:21 pm by ETF.com
Schwab’s entry into the exchange-traded fund business has been anticipated by investors for nearly a year. After a long wait, Schwab released its first four funds on November 3 to bring its ETF business full-circle.
Charles Schwab’s first four funds are U.S. Broad Market ETF (SCHB: Quote, Profile, Advanced Chart, News), Schwab U.S. Large-Cap ETF (SCHX: Quote, Profile, Advanced Chart, News), Schwab U.S. Small-Cap ETF (SCHA: Quote, Profile, Advanced Chart, News) and Schwab International Equity ETF (SCHF: Quote, Profile, Advanced Chart, News).
The first two exchange-traded funds will sell with a .08% annual expense, while the last two cost .15% per year, MarketWatch reports. Clearly, Schwab is seeking market share by undercutting its competition, as only a handful of funds trade for less than .10% per year.
Charles Schwab is seen as a company that can help propel the exchange-traded fund industry into the mainstream. The company currently services brokerage accounts for 8 million clients.
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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November 10th, 2009 at 6:04 am
Don
Could you offer some insight on the following?
Yesterday gold was up about .5%, the Cdn $ was up about 2%, and yet the Claymore Gold Bullion Fund CGL.UN dropped slightly.
Why would that be?
Thanks
David
November 10th, 2009 at 6:10 am
Hi Don,
Is there a way to play consumer discretionary without having the currency exposure?
I haven’t been able to find an ETF that hedges.
Thanks for all the great info.
November 10th, 2009 at 6:57 am
Don
Whats the seasonality for Silver and could you comment on the chart of PAA.TO? Thanks
November 10th, 2009 at 7:15 am
Hi Bubbles. There will be a way soon. Stay tuned.
November 10th, 2009 at 7:26 am
Hi Roy. Pan American Silver has an improving technical and seasonal profile. Its period of seasonal strength during the past 10 periods is from October 25th to February 22nd. The trades has been profitable in 9 of the past 10 periods for an accumulated return of 644%.Technical buy signal this year (based on Stochastics and at least a one day reversal) was triggered on November 2nd. The stock recently moved above its 50 day moving average. Resistance is at $27.42 Cdn.
November 10th, 2009 at 7:41 am
Don , was the Oct.28th low of 10,805 for the TSX your projected shallow correction for the fall ??
A number of the market advisors I follow are indicating a correction between now and year end in the magnatude of 25%.
TSX is now overbought and advances have been on lower than average volume.
Have you revised your thoughts on market direction from your original forcast. ??
Regards
G
November 10th, 2009 at 8:25 am
Hi Don,
Will the CSTA give a seminar in Montreal at some point?
What other training material do you suggest?
Thanks for your good insight.
Bruno
November 10th, 2009 at 9:11 am
David Linton…CGL.UN is not a true ETF, but a closed-end fund that invests in gold. That means it does not necessarily follow the price of gold exactly. If you go into http://www.claymoreinvestments.ca/cef/ you will find it trades at a discount to the market price. Yesterday, the discount was -6.52%, quite high in comparison to the usual dscount. It will be converting to an ETF sometime later this month.
November 10th, 2009 at 9:27 am
Don,
Can you comment on whether SLW or PAA is a better buy based on fundamentals and current technical profile please ? Which is likely to have more upside up until the end of the current seasonal trend ? Thanks again!
Richard
November 10th, 2009 at 10:28 am
Can anyone tell me where I can get a schedule of earnings reports, preferably with consensus eatimates? The 3rd quarter season is pretty much winding up but I would like to have the info in lots of time for the 4th quarter.
November 10th, 2009 at 10:41 am
Fred,
I see news, fundamentals, earnings and reports through the links available for each company through my brokerage website.
-R
November 10th, 2009 at 10:44 am
Don,
In addition to my questions about SLW, PAA… is there a reason for the high difference in volume between the two ?
Richard
November 10th, 2009 at 11:03 am
Don,
I learned how to set up stop loss point from you but forgot to ask you how often we have to fine tune it, As you mentioned earlier, there are books at CSTA so I joint the membership with CSTA, I am very excited about the December lunch meeting at Sheraton hotel because I had previous metal fund at RBC when Mr. Embry were there,seeing you and Mr. Embry in person will be like seeing celebrity, by the way, how is the food at Sheraton Hotel?
Thank you for your time,
Phil
November 10th, 2009 at 11:23 am
To add to Don’s comments to David on how CGL.UN trades at a discount to the market price (which has hurt performance), the trust has the following proviso: Commencing after November 28, 2009, if for a period of 10 consecutive trading days, the daily weighted average trading price (or, in the event there has been no trading on a particular day, the average of the closing bid and ask prices) of the Units is greater than a discount of 2% of NAV per Unit for that day, there will be an automatic conversion of the Fund to an ETF.
I talked to Claymore about this and was told that if performance after November 28 continues as it has since inception, the trust should convert to an ETF some time in December. It has to go through the ten consecutive days of trading and meet the 2% discount criteria. I hope it does convert to a ETF ASAP and better reflects the price of gold (along with the currency hedging).
As far as I know, there is no other gold bullion fund in Canada that is currency hedged to the Canadian Dollar. I think IGT.TO is $US based.
Any further comments on this are welcome.
November 10th, 2009 at 11:23 am
Hi George. Just confirming that the technical requirements for entry into the seasonal play in the TSX Composite and S&P 500 occurred on November 4th this year. See the Tech Talk report for November 5th for background.
November 10th, 2009 at 11:25 am
Hi Bruno. Good idea on a conference in Montreal. Will mention to Matt Caruso, president of CSTA. He is located in Montreal.
November 10th, 2009 at 11:28 am
Hi Richard. A relative strength chart on StockCharts.com using the following symbol: slw.to:paa.to shows that SLW currently has been outperforming PAA since July. That trend is likely to continue, but needs to be monitored from time to time.
November 10th, 2009 at 11:30 am
Hi Phil. Food at Sheraton is okay (better than average for hotel food). The best reason for attending (other than presentation from two interesting and knowledgeable characters) is the opportunity to meet lots of people with similar interests.
November 10th, 2009 at 12:50 pm
Don Would you buy PAA today, even tho earnings are tonight?
November 10th, 2009 at 3:15 pm
You guys in Toronto get all the good stuff. Any chance of downloading Embry’s and McIvity’s talks at the upcoming CSTA lunch, Dec 10th, and posting it on your website for the rest of us in the hinterlands?
November 10th, 2009 at 3:22 pm
Fred and Paul
Thanks for your input on CGL.UN.
1. Any idea why it trades at a discount? Why does the market discount the value if the fund holds the bullion to generate the NAV?
2. When it converts to an ETF (assuming it does), does the ETF price become the unit trust NAV at that date?
3. I have some warrants from the initial subscription that I have yet to decide on exercising. Any thoughts?
Thanks
David
November 10th, 2009 at 9:03 pm
Hi Fred. We are working on it. Hope to post both Power Point presentations on the TSFA and CSTA websites shortly after the presentation.
November 10th, 2009 at 9:04 pm
Hi Roy. That’s your call. Haven’t heard anything on the Street to suggest moving one way or the other.
November 12th, 2009 at 7:49 am
Hi Don ………..any thoughts on why crude oil starts out low in the morning and increases thoughout the day , what about HOU with the daily rise then sell and repurchase HOD and ride crude down ??
Regards
George