Pre-opening Comments for Wednesday December 16th
U.S. equity index futures are higher this morning. S&P 500 futures added 4 points in pre-opening trade. Futures moved higher overnight on a slightly weaker U.S. Dollar. Economic news released at 8:30 AM EST also helped. Consensus for U.S. November housing starts was 574,000 versus 529,000 in October. Actual was 574,000, a gain of 8.9%. Consensus for November Consumer Prices was an increase of 0.4% versus a gain of 0.2% in October. Actual was a gain of 0.4%. Consensus for November core CPI was an increase of 0.1% versus an increase of 0.3% in October. Actual was no change.
Investors are waiting for the Federal Open Market Committee to comment on administered interest rates at 2:15 PM EST. Consensus is that the Fed Fund rate will remain unchanged in a range between 0.0% and 0.5%.
Today is the start of the traditional yearend rally in North American equity markets. Equity markets usually move higher from December 15th to January 6th.
Telus was upgraded from Neutral to Buy by UBS.
Canadian Natural Resources was upgraded from Neutral to Buy at Goldman Sachs. Target price was raised to $90 U.S.
Coverage on Canadian Pacific was initiated as a Buy at Maxim. Target price is $67 U.S.
Coverage of American Express was initiated as an Outperform by Wells Fargo.
Darden was upgraded from Neutral to Buy by UBS. Target price is $36.
U.S. Steel was upgraded from Hold to Buy by KeyBanc.
Intel is down 1% after the FTC charged the company with using anti-competitive behavior. Advanced Micro Devices, Intel biggest competitor is trading higher.
Microsoft added 1% after the company reached an agreement with European regulatory that included a drop of anti-competitive charges.
Technical Action Yesterday
Technical action by S&P 500 stocks was bullish yesterday. Nine S&P 500 stocks broke resistance (Allegheny Energy, AmerisourceBergen, Starwood Hotels, Laboratory, Linear Tech, News Corp, Robert Half, UPS and Williams) and none broke support. The Up/Down ratio increased from 2.96 on Friday to 3.06 on Monday to (329/104=) 3.16 yesterday.
Technical action by TSX Composite stocks also was bullish yesterday. Ten TSX Composite stocks broke resistance (Atco, Aeroplan, Capital Power, Gildan, NAL Oil & Gas, Northland Power, Pembina Pipelines, SunLife, CGI Group and Labrador Iron Ore) and one stock broke support (Fairfax Financial). The Up/Down ratio increased from 3.26 on Friday to 3.62 on Monday to (141/38=) 3.71 yesterday.
Interesting Charts
Technology stocks continue to move higher. ‘Tis the season for the sector to move higher until the middle of January!
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
The U.S. Dollar continues to strengthen. Yesterday, it broke above another resistance level.
Chart courtesy of StockCharts.com www.stockcharts.com
Despite strength in the U.S. Dollar, commodity prices moved higher yesterday, a sign that the inverse relationship between the U.S. Dollar and commodity prices is changing. Investors are becoming convinced that the recovery in the U.S. economy is real and the demand for commodities is increasing. Stochastics are recording short term buy signals or are close to recording short term buy signals.
Chart courtesy of StockCharts.com www.stockcharts.com
Several commodities moved higher including crude oil, silver and platinum.
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Gold is trying to bounce from its 50 day moving average.
Chart courtesy of StockCharts.com www.stockcharts.com
Bond traders are skittish about today’s FOMC news. The yield on 10 year U.S. Treasuries broke above resistance at 3.59% late yesterday due to concerns that the Fed will announce plans for a more restrictive monetary policy.
Chart courtesy of StockCharts.com www.stockcharts.com
U.S. long term bond prices broke a key support level on Monday and are now trending lower.
Chart courtesy of StockCharts.com www.stockcharts.com
The seasonal trade in the U.S. small cap sector from December 19th to March 7th continues to line up. The Russell 2000 Index has outperformed the S&P 500 Index during the past 10 days.
Chart courtesy of StockCharts.com www.stockcharts.com
Thackray’s 2010 Investor’s Guide
Tech Talk frequently mentions Brooke Thackray and his book entitled, “Thackray’s 2010 Investor’s Guide”. The book summarizes attractive seasonal trades that are available during the year. The book can be purchased electronically or directly at Chapters, Amazon.ca, Barnes & Noble and Amazon.com. Following are links to these book stores:
http://www.chapters.indigo.ca/books/Thackrays-2010-Investors-Guide-Brooke-Thackray/9780978220037-item.html?ref=Search+Books:+%27thackray%27s%27
http://www.amazon.ca/gp/product/097822003X/ref=s9_sims_gw_s0_p14_i1?pf_rd_m=A3DWYIK6Y9EEQB&pf_rd_s=center-1&pf_rd_r=0773ED3P045NMSDK94ZA&pf_rd_t=101&pf_rd_p=465532811&pf_rd_i=915398
http://search.barnesandnoble.com/Thackrays-2010-Investors-Guide/Brooke-Thackray/e/9780978220037/?itm=1
http://www.amazon.com/Thackrays-2010-Investors-Guide-Seasonal/dp/097822003X/ref=sr_1_1?ie=UTF8&s=books&qid=1252640152&sr=8-1
Seasonal trades in the book that currently are active include Agriculture, Information Technology, Consumer Discretionary, Natural Gas and Metals & Mining.
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.
Don Vialoux is a research analyst for JovInvestment Management Inc. All of the views expressed herein are the personal views of the author and are not necessarily the views of JovInvestment Management Inc., although any of the recommendations found herein may be reflected in positions or transactions in the various client portfolios managed by JovInvestment Management Inc
HAP Seasonal Rotation E.T.F. HAC-T $10.13 December 15 2009
|
Open |
10.200 |
|
- |
|
|
High |
10.200 |
- |
||
|
Low |
10.130 |
- |
||
|
Bid x4 |
|
- |
||
|
Ask x50 |
|
- |
||
|
Volume |
13,185 |
- |
||
|
52-wk High 12/03 |
10.400 |
- |
||
|
52-wk Low 12/09 |
10.000 |
- |
![clip_image014[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/12/clip_image01411.gif "clip_image014[1]"){kind=small}
December 16th, 2009 at 6:16 am
Love Tech Talk – and love the snow. Thank you for both, and Seasons Greetings.
Gwyneth
December 16th, 2009 at 7:28 am
Don, what are your expectations for HAC? I bought it day one at $10.10 and it has been as high as $10.40 and as low as $10.00. What market events will have to happen to move the price significantly?
Thanks
ps. great daily column.
December 16th, 2009 at 8:06 am
Hello Don,
Could I please get your TA on MT-N at this point ? Where do you see it before the end of the year? Is steel considered to be seasonally favorable at this time among other metals ? Thank you for your daily reports.
Richard
December 16th, 2009 at 8:17 am
Don: In an earlier commentary you stated “According to Thackray’s book, the period of seasonal strength is from August 1st to December 21st. Chart in the book shows an exceptional “sweet spot” from mid November to the third week in December followed by a significant decline from December 21st to December 31st.” I also note that the seasonal chart for past 17 years shows Jan & Feb weak as well.
My question is two parts: 1) Is there an opportunity to go bear Natural gas from mid Dec until into Feb 2010? and 2) is there a Bear ETF that does not double up like the HOD?
Appreciated.
December 16th, 2009 at 8:37 am
Hi Guys,
Great column as usual and it looks like the santa claus rally is here again!
My question is for Don or anyone else who might have some insight.
How often do the marketmakers adjust HAC price to reflect its holdings? I’ve noticed that there seems to be arbitrage opportunities due to the fact that HAC seems to lag the markets by sometimes up to a day?
Anyone else notice this?
December 16th, 2009 at 9:03 am
Hello Don
Thanks for a great call on AMD. Much appreciated.
December 16th, 2009 at 9:38 am
What is the best way to play seasonal trend in the US small caps? Is there one hedged for currency? Does the TSX venture follow a similar pattern?
Thanks for your input. I read your column daily and have recommended it to many colleagues.
December 16th, 2009 at 9:51 am
Don, so many of the issues and indexes mentioned above show stockastics at an overbought level (over 80) with RSI still and MACD comfortably below 70 and 1.0 respectivley. How does the prudent investor interpret that. Does one let the Christmas rally go or does one take the trade, especially if it is is the “sweet spot”?
December 16th, 2009 at 9:52 am
Hello Don
Could you tell me the sweet spot for base metals and especially TA for QUA.TO (Quadra mining)? Thanks.
December 16th, 2009 at 10:15 am
Hi Norm. Perhaps the best way to play US small caps is the XSU. Check out the iShares website. Also, I found a great ETF screening tool on purinvesting.com.
December 16th, 2009 at 11:11 am
Hello,
Does anyone know of a way to get stock quote updates on a blackberry ? If so, are they delayed or real time ? Thanks!
Richard
December 16th, 2009 at 12:04 pm
Hello Don
Questions about the Santa Clause Rally
1) Do you think we will have one in Dec 2009 ?
2) BNN said that it starts Dec 15- January 1– do you agree ?
3) If we are have one what sectors – Industries do you favor ?
Many Thanks for this and ALL you do sincere Thanks
December 16th, 2009 at 7:54 pm
Hi Don,
Looking for your thoughts please on why gold has been rising up by quite good amounts within the last 2 sessions, yet, the big cap gold stocks like goldcorp and agnico-eagle (which are both severely oversold using stochastics and the williams %r) are barely making any move at all. Yet, when gold goes down by quite hefty amounts in the last 10 days, both these stocks have gone down siginificantly – so, not understanding the disconnect here. Also, goldcorp for example, is at the same price currently as it was at back in May when gold was in the $900’s – so, do you have any thoughts on why these stocks are not at all participating in the huge run up in gold we’ve had since August? Analysts have target prices on goldcorp of over $50 and for agnico-eagle of over $80, yet neither of these seem to be getting anywhere close to these amounts despite gold’s huge advances.
So, any thoughts on all of this Don would be greatly appreciated!
Thank you!
Eve
December 16th, 2009 at 8:36 pm
Hi Don, i like the tech profile of XEG.TO and HOU.TO, also HNU.TO, could you evaluate my selection, also are these the ones you mention for a period of seasonal strength starting end of January. Thanks for your advice.
December 16th, 2009 at 11:15 pm
Thanks Michael…I’ll look into that one…
December 17th, 2009 at 7:54 am
Hi Larry. HAC is a buy and hold ETF. Back testing over the past 19 years on trades indicated in Thackray’s 2009 Investor’s Guide showed an average gain per year of 18.5% versus an average gain of 5.9% by the TSX Composite and an average gain of 6.9% for the S&P 500 Index (plus dividends in each case). Past performance is no guarantee of future performance.
December 17th, 2009 at 8:01 am
Hi Richard. Nice breakout last week by MT. Seasonal influences for steel companies as part of the Materials sector is from October to April. The S&P Materials Index has gained in 9 of the past 10 periods for an average gain per period of 12.6%.
December 17th, 2009 at 8:04 am
Hi DaddyO. Seasonal trades are based on a series of favourable annual recurring events. Outside of the period of seasonal strength, markets and sectors are random due to a lack of annual recurring events. Accordingly, trading the downside outside of the period of seasonal strength is not a wise strategy.
December 17th, 2009 at 8:06 am
Hi Brendan. The market makers know content of the portfolio and bracket the NAV with bid/ask quotes on a real time basis.
December 17th, 2009 at 8:07 am
Hi Norm. A full report on the Small Cap trade is offered in this Saturday’s Financial Post.
December 17th, 2009 at 8:09 am
Hi Fred. The charts will let us know when action is needed. Currently, many equity and sector indices are overbought, but have yet to show short term momentum signs of rolling over.
December 17th, 2009 at 8:13 am
Hi Roy. According to Thackray’s 2010 Investor’s Guide, the period of seasonal strength for the Metals and Mining sector is from November 19th to May 5th. Recent weakness in the sector early this month has provided a buying opportunity.
December 17th, 2009 at 8:20 am
Hi Bob Hendry. According to Thackray’s 2010 Investor’s Guide, the Santa Claus rally normally starts on December 15th and ends January 6th. Annual recurring events that support the trade are lining up nicely this year (lower than average tax loss selling pressures, a better investment atmosphere for individual investors this year relative to last year, higher year end bonus payments than last year). The Santa Claus rally tends to be a period when all sectors move higher. Honourable mention can be given to the Small Cap sector that benefits from year end transactions.
December 17th, 2009 at 8:25 am
Hi Jan. XEG is the best of your three selections. However, annual recurring events (other than weather) that favourably influences the sector for a seasonal trade are not there yet.