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Pre-opening Comments for Thursday November 12th
U.S. equity index futures are lower this morning. S&P 500 futures slipped 3 points in pre-opening trade. Weakness was triggered by a slight gain in the U.S. Dollar.
Equity futures did not respond significantly to the weekly jobless report. First time jobless claims fell 12,000 to 502,000.
Wal-Mart rose slightly after reporting better than expected third quarter earnings. Consensus was $0.81 versus $0.77 per share last year. Actual was $0.84 per share. The stock broke above resistance at $52.00 yesterday in anticipation of an encouraging report.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/11/clip_image00118.gif "clip_image001[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
BCE rose 5% after reporting higher than expected third quarter earnings. Consensus was $0.70 versus $0.60 per share last year. Actual was $0.84 per share.
Hewlett Packard announced a friendly takeover of 3COM in a cash offer valued at 2.7 billion. 3COM jumped 32%. Hewlett Packard slipped 1%.
Encana was unchanged despite reporting lower than expected third quarter operating earnings.
Research in Motion was unchanged after MF Global upgraded the stock from Sell to Neutral.
Technical Action Yesterday
Technical action by S&P 500 stocks was bullish again yesterday. Another 20 S&P 500 stocks broke resistance yesterday (ANF, COH, CSC, EQR, FCX, FDX, GAS, GLW, ISRG, JCI, JDSU, PGR, PSA, SNI, TXN, UPS, VNO, WDC, WMT and none broke support. The Up/Down ratio increased from 2.14 to (291/128=) 2.27.
Technical action by TSX Composite stocks was mixed. Three TSX stocks broke resistance (IESI-BFC, Pacific Rubiales and Rona) and two stocks broke support (Ensign Resource Sources and Finning International). The Up/Down ratio slipped from 3.00 to (131/44=) 2.98.
Interesting Charts
The S&P 500 Index managed to move briefly above resistance at 1,101.36 yesterday and confirmed its intermediate uptrend. Next upside technical target is 1,180.
Chart courtesy of StockCharts.com www.stockcharts.com
The Information Technology sector continues to show positive technical strength. Strength is likely to continue this morning following news that Hewlett Packard made a friendly cash offer for 3COMS. Information Technology stocks breaking resistance yesterday included Computer Sciences and Texas Instruments. The sector currently is in a period of seasonal strength.
Chart courtesy of StockCharts.com www.stockcharts.com 
Chart courtesy of StockCharts.com www.stockcharts.com
Worth Repeating
The following article appeared on this web site about a year ago.
A book entitled “The Encyclopedia of Commodity and Financial Spreads” by Steve Moore, Jerry Toepke and Nick Colley is filled with information and statistics on seasonal trends on commodity futures. The book confirms many of the seasonal trends offered in this newsletter. The main difference between seasonal studies done by this book and seasonal studies done by Tech Talk is the study period. Tech Talk’s studies use 10 years of data and data is constantly rolled over as available. The book uses 15 years of data from 1991 to 2005. Following are “eyeball” results of seasonal charts shown in the book:
Commodity (Cash) Seasonal Trough Seasonal Peak
Crude Oil Mid July Mid October
End of February Mid May
Heating Oil Mid June Early October
Unleaded Gasoline Mid December Early May
Late June Late August
Natural Gas End of December End of May
End of July End of October
Corn End of September End of March
Oats Middle of August End of March
KCBT Wheat End of July Early December
Soybeans Middle of October Middle of May
Soymeal Early February Middle of May
Early August End of September
Soyoil Mid October End of November
Early February Mid May
Live Cattle End of August Middle of March
Feeder Cattle End of April Middle of August
Lean Hogs End of December End of June
Pork Bellies Middle of December End of April
Copper Middle of January Early March
Middle of June Early September
Middle of October Early December
Gold Early August Early October
Silver End of October Middle of February
Platinum Early January Middle of April
Cotton Mid December End of May
Sugar End of February End of July
Coffee Early October Middle of May
Cocoa Mid June End of August
Orange Juice Mid October Early December
Lumber Mid October Mid February
U.S. Dollar Mid January End of March
Euro Mid August End of December
British Pound Mid May Mid December
Canadian Dollar Mid March End of June
Early August Early November
Japanese Yen End of March Mid October
Swiss Franc End of April Early October
3 Month T-Bills Early October Late November
Mid January Mid March
10 year Treasuries End of December Mid May
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 12th, 2009 at 7:01 am
Don, would you please provide an example of the trough and peak for one one of the commodities – say Natgas? I want to make sure I am reading the list properly.
Thanks for your daily analysis and comments,
November 12th, 2009 at 8:38 am
Hi Don,
the periods above are very different from the ones by Tech Talk or Brooke, eg Natural Gas above says from end dec to end may, but as per your site it was from end sep to end dec for cdn natural gas, can you please clearify this.
Thanks
November 12th, 2009 at 9:34 am
Mills – Don states “The main difference between seasonal studies done by this book and seasonal studies done by Tech Talk is the study period. Tech Talk’s studies use 10 years of data and data is constantly rolled over as available. The book uses 15 years of data from 1991 to 2005.”
November 12th, 2009 at 9:37 am
Hi Don,
From the above periods,Does crude oil do well from mid July to mid Oct. than again from end of Feb. to mid May? am I reading this correctly?
November 12th, 2009 at 9:40 am
Also Don is the above the 10 year study or is it the 10 year and the 15 year respectively?
November 12th, 2009 at 11:08 am
Shawn, I understand that the 2 studies have differnt time frames and I appreciate you pointing it out. But that makes the seasonality for Natural Gas completely off, one says to sell end Dec and the other says to buy end Dec !! which one do we follow ??
Don your help needed here !!
Thanks.
November 12th, 2009 at 7:06 pm
Hi Sharon. Information from “The Encyclopdia of Commodity and Financial Spreads” is one source from a respected commodity trader in the U.S.. Tech Talk has not verified data in this report and is unable to duplicate charts offered in the book. Another example of an unverified source is http://www.seasonalcharts.com. Direct access to data used in these studies is not available. All of these services tend to provide similar historic trends (e.g strength in crude oil from February to May and strength in gold in August and September). However, each of these studies shows discrepancies and some, in the case of natural gas, are very different. Most of the discrepancies can be explained by the period that is used for the study. I prefer to use verified data focusing on 10 year and 20 year periods that also includes data during the horrible September 2008-March 2009 period. Brooke also uses up-to-date data that includes the the September 2008 to March 2009 period. Seasonalcharts.com used data up to March 2007 and the Encyclopedia used data up to 2005. All of these studies are useful, but studies based on older data is less relevant. Seasonal influence can vary slightly over time. A good example is fluctuations in my reports on sectors published annually at the end of May. One report will identify the bottom of a sector in say the end of September. The report on the same sector in the following year may identify the bottom of a sector in October. In reality, the bottom occurs in the middle of October and recent data has shifted the indicated bottom slightly in favour of October. Next year, the data could revert to a September bottom. Seasonality is useful as a starting point for determining optimal entry and exit points. It provides an average optimal date over a long period of time to enter and exit. The next steps include fine tuning the entry and exit points each year using technical analysis and an examination of the annual recurring reasons why the period of seasonal strength works. Examples of how to use the technicals to fine tune entry and exit in a seasonal trade are offered in tomorrow’s Tech Talk.
November 12th, 2009 at 7:09 pm
Hi David. According to Thackray’s 2010 Investor’s Guide, the periods of seasonal strength for the oil sector are from February 25th to May 9th and from July 24th to October 3rd.
November 13th, 2009 at 9:53 am
Good Day Don,
Is there still a seasonal play in uranium? If not, is there an ETF with the exposure? Thank you for your expertise and the wonderful site. Cheers! Ralph.