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Pre-opening Comments for Thursday December 17th
U.S. equity index futures moved lower this morning. S&P 500 futures dropped 8 points in pre-opening trade. Futures are responding to overnight strength in the U.S. Dollar. Commodities priced in U.S. Dollars including gold, silver, copper and crude oil are trading lower.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2009/12/clip_image00111.gif "clip_image001[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
Equity index futures weakened further following release of the weekly jobless claims report. Jobless claims rose from 473,000 to 480,000.
Canada’s inflation rate increased at a faster than expected rate in November. Consensus for Consumer Prices was an increase on a year-over-year basis of 0.9% versus 0.1% in October. Actual was an increase to 1.0%. The month-over-month increase was 0.5%. Core CPI in November on a year-over-year basis was 1.5% versus 1.8% in October.
The Senate Banking Committee votes this morning for approval of Ben Bernanke as chairman of the Federal Reserve. The vote is expected to pass in favour of Bernanke.
Citigroup fell 9% following news that its $20 billion equity issue was priced at $3.15 per share, lower than the anticipated $3.25.
Goldman Sachs and Morgan Stanley slipped 2% following a downgrade by Meredith Whitney. .
Fedex fell 3% despite reporting higher than expected fiscal second quarter earnings. Consensus was $1.06 versus $1.58 per share last year. Actual was $1.10 per share. However, third quarter guidance was lower than expected.
Biovail added 1% after Thomas Weisel initiated coverage with an Overweight rating. Target price is $18 U.S.
Agnico Eagle fell 4% after TD Newcrest downgraded the stock from Buy to Hold due to higher than expected costs and capital spending at new projects. Target was reduced from $78 to $68.
BCE added 2% after announcing an increase its quarterly dividend from $0.405 to $0.435 per share. In addition, the company announced a share buy back program valued at $500 million.
Technical Action Yesterday
Technical action by S&P 500 stocks remains bullish. Another ten S&P 500 stocks broke resistance (Adobe, Black & Decker, Carnival, Coventry Health, Denbury Resources, Genuine Parts, Hewlett Packard, Nvidia, Stanley Works and Xilinx) and one stock broke support (Constellation Brands). The Up/Down ratio rose from 3.16 to (332/101=) 3.29.
Technical action by TSX Composite stocks also remains bullish. Another five TSX stocks broke resistance (Husky Energy, Russell Steel, Shawcor, Trican and Talisman) and none broke support. The Up/Down ratio improved from 3.71 to (142/33=) 4.30.
Interesting Charts
Equities in the Technology sector continue to show strong seasonal characteristics. ‘Tis the season for the sector to move higher!
Chart courtesy of StockCharts.com www.stockcharts.com
Fourth Quarter Earnings Outlook for Dow Jones Industrial Average Companies
Finally, quarterly earnings on a year-over-year basis for the Dow Jones Industrial Average companies on average (median) turn positive. Average gain is 5.3%. Largest percent gains are expected to come from Alcoa, DuPont, the technology sector (Intel, Microsoft) and the financial services sector (American Express, JP Morgan). Largest percent declines are expected to come from Caterpillar and General Electric. Following are earnings consensus estimates for the calendar fourth quarter:
*Median picks
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 $10.19 December 16 2009
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Discussions from the Tech Talk Forum:
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December 17th, 2009 at 5:23 am
Hello All, I am interested in other’s feedback regarding membership with stockcharts and John Murphy’s commentary? I have used his “free charts” for awhile, but am looking at the advantages of paid membership. Feedback from users of his charting and commentary would be greatly appreciated.
Thanks
December 17th, 2009 at 8:04 am
Concerning the calculation for the up/down ratio for the TSX: what group of stocks is it based on?
December 17th, 2009 at 9:32 am
Hi Wendy:
I subscribe to Stockcharts. Biggest plus for me is to be able to annotate and save charts, and link these to spreadsheets. I am not a sophisticated user and find the functionality more than sufficient. Customer service is uncommonly good (5 stars IMO).
I do not subscribe to JM’s commentary not because he is not good, but because my feeling is that as an investor the most important thing is to pay close attention to the charts and make your own interpretations. Stockcharts does provide a newsletter every 2 weeks that includes a comments by JM, Carl Swendlin, and others.
Regards,
jordy
December 17th, 2009 at 9:52 am
Hi Wendy…I have subscribed to Stockcharts for almost a year and wouldn’t go back. I use the basic program and am constantly banging my head against the ceiling which is 100 stocks and indexes and am considering going the next step. One of the most important features over the free charts – that you can store your watch list, and the second is that you can store them as you want them, ie. candlesticks vs. OLHC Bars, size of chart, indicators and so on. And you can use the annotate tool to draw trend lines etc. Stockcharts themselves do a pretty good job of describing their advantages.
100 stocks and indexes seems like a lot but it’s not really. I have them categorized into sectors by setting the name of each with the sector at the beginning of the name, such as G for gold, EN for energy, IT for information tech, etc. The next program up apparently does that for you.
If you are into DYI investing, a Stockcharts subscription is a must.
December 17th, 2009 at 9:56 am
Does anyone know if the predefined scans are updated in real-time on stockcharts.com?
December 17th, 2009 at 11:13 am
Don… There have been a few inquiries about Viterra and I was hoping to get some Tech Talk perspective on this stock. Bought at $9.90 and reviewing the past 4 years, the average gain from Oct 31-Dec 31 has been 25% and between Oct 31-Feb 28 has been over 30%. Canola and grain markets don’t seem overly problematic.
Is the “harvest” for VT just setting up a little later than normal?
December 17th, 2009 at 12:26 pm
Fred, you said above “I have subscribed to Stockcharts for almost a year and wouldn’t go back.” yet, you do not seem negative on this service.
why “wouldn’t go back.”
December 17th, 2009 at 12:27 pm
Hi Don,
In a recent techtalk you indicated that the preferred strategy for Silver is to hold quality equities and ETFs like SLV, HUG. Would you be kind enough to indicate if you consider PAA, SSO, and SLW as the only equities of quality and sound fundamentals ? Are you aware of any issues, currency risk or other problems with the above 3 ?
Also, can you please comment on why we are seeing a divergence in Gold and Silver, dont they usually move in tandem ?
Regards,
Richard
December 17th, 2009 at 12:29 pm
Hello,
Don, sometime ago you indicated that the next upside target for Agrium is at $70 on break of resistance. We did see that in the past 10 days, but the stock has retreated a bit. Do you still see AGU.to hitting $70 before the end of Agri seasonality ? Thank you for your daily help.
Joe
December 17th, 2009 at 12:58 pm
Hi Don
For the Santa Clause rally to happen this year, do we need a breakout above 10500 Dow, 1115 S&P500 and 11650 TSX. For the past month we have been range bound banging up against this strong resistance. In other words, for those who want to play this “Seasonality” should one wait for it to break above the channel or wait to get in a the bottom of the channel ( 10250/1085/11300)
December 17th, 2009 at 3:58 pm
Hi Rebecca…perhaps I mispoke myself – I meant I wouldn’t go back to the “free” charts. I am very happy with Stockcharts and have no intention of quitting them.
December 17th, 2009 at 8:38 pm
Hi Josh. The Up/Down ratios are based on S&P 500 stocks and TSX Composite stocks. For example, 330 S&P 500 stocks currently are in an uptrend, 66 stocks currently are in a neutral trend and 104 stocks currently are in a downtrend. The Up/Down ratio was 330/104= 3.17.
December 17th, 2009 at 8:48 pm
Hi Richard. Sorry, I don’t follow the fundamentals of these stocks close enough to comment. All three are actively traded silver stocks that have silver production. Best to contact a service that offers fundamental research before deciding to invest.
Silver is more of an economic commodity than a monetary commodity. Gold primarily is a monetary commodity. Accordingly, gold and silver tend to have slightly different seasonality. They both tend to move higher from November to January. Silver’s period of seasonal strength extends into April.
December 17th, 2009 at 8:48 pm
Hi Don,
Nice information.From seasonality would you advise to buy xiu or xeg.
thanks
Muntazir
December 17th, 2009 at 8:52 pm
Hi Buy&HoldMustGo. Viterra currently is short term oversold and showing early signs of bottoming. Chances of one last upside move in the short term are above average before the period of seasonal strength reaches an end.
December 17th, 2009 at 8:56 pm
Hi 300M. Annual recurring events for the Christmas rally are there this year. However, preferred strategy to play the year end rally is to wait until short term momentum indicators are oversold and trying to recover. Technicals are not there yet.