Pre-opening Comments for Thursday January 28^th

U.S. equity index futures are higher this morning. S&P 500 futures are up 3 points in pre-opening comments. Futures are responding to President Obama’s State of the Union speech last night.

Index futures moved slightly higher following release of economic news at 8:30 AM. Weekly jobless claims fell 8,000. December Durable Goods Orders improved 0.3% versus a gain of 0.2% in November. Of greater importance, Durable Goods Orders ex aircraft sales rose 0.9%.

Today the Senate starts the process of approving the reappointment of Federal Reserve Chairman, Ben Bernanke. Approval must be completed by January 31^st

Lots of companies reported higher than consensus fourth quarter earnings this morning including Ford, Netflix, Motorola, Procter & Gamble, MMM, Lockheed Martin, Celestica, Canadian Pacific, Nokia, Time Warner Cable and Potash Corp.

Celestica was upgraded from Market Perform to Outperform at Raymond James.

Notable among companies reporting less than consensus fourth quarter earnings were Eli Lilly and Qualcomm.

‘Tis the season for U.S. oil and gas exploration companies to move higher from January 30^th to April 13^th! U.S. analysts are starting to recommend individual U.S. oil and gas exploration stocks. This morning Wells Fargo upgraded Apache from Market Perform to Outperform. In addition, Barclays upgraded Anadarko from Market Perform to Outperform. Target price is $82.

Oil service stocks are expected to move higher on media reports this morning that demand for oil services has grown to a level where the industry is experiencing a shortage in skilled labour.

BHP Billiton has offered to purchase Athabasca Potash for $8.15 per share.

Technical Action Yesterday

Technical action yesterday by S&P 500 stocks was slightly bearish despite gains by the Index in late trading. Five S&P 500 stocks broke resistance (Devry, Giliad Sciences, Heinz, McGraw Hill and Rockwell Automation) and nine stocks broke support (Agilent Brown Foreman, Caterpillar, Centerpoint, International Flavours & Fragrances, Newell Rubbermaid, Staples, Ventas and Waste Management). The Up/Down ratio slipped from 3.89 to (329/89=) 3.70.

Technical action by TSX Composite stocks was quiet. No TSX stocks broke resistance and one stock broke support (Gerdau AmeriSteel). The Up/Down ratio was unchanged at 3.70.

Interesting Equity Market Tidbit

U.S. equity market indices have advanced on 11 of the past 14 days following the State of the Union Address.

More on Seasonality in the U.S. Materials sector

Brooke Thackray developed the following charts showing seasonality in the sector in a real and relative basis. Technicals have yet to show an entry point for this year’s trade.

Chart courtesy of Brooke Thackray

Materials vs. S&P500 1990 to 2009

Chart courtesy of Brooke Thackray

THE CASTLEMOORE INVESTMENT COMMENTARY

The latest edition of the CastleMoore Investment News is hot off the e-presses. Sign up below to receive this month’s jammed packed issue and get on the regular mailing list (no catches, just like Timing the Market) Highlights of this edition include:

From Ken Norquay:

Rest assured, however, that we have not lost sight of our two founding principles: 1. Safety first: it is more important to not lose money than it is to make money. 2. We manage risk by selling, not by diversifying. There will be times when we have very high levels of cash in our clients’ accounts. And, as a result of our new sensitivity to the short and intermediate term, there will be more transactions in 2010 than in 2009.

From Hap Sneddon:

Perception is often reality – for a while anyway. In the investment industry it can be profitable or reflect good risk management to understand where disconnects may be occurring between price and “reality”. Prices don’t lie, but sentiment can cloud eventual truths. The last year has led many market players to fixate on some apparent certainties, if not solely to tether onto something and run with it, its human nature. In three small pieces, one on China, the US dollar and fixed income, consensus or sentiment is strong in one direction on each of these, yet the opposite, or something less than meets the eye today, anyway, maybe in the cards.

From Sheldon Liberman:

Not literally of course. But our practice in every investment decision is to decide on a plan of action for cases where a stock doesn’t perform as expected. When do we sell if it moves against us, and how much of a move is required to trigger that sale? And what if we’re wrong about being wrong, i.e. when do we get back in? It’s much easier to conquer the psychological barriers to exit when we realize that it is possible to make a good decision and still have a bad result. At that point, the sell decision is not viewed as an admission of failure but rather as an instance where a sound investment decision simply didn’t pay off – this time.

From Guest Columnist Don Vialoux:

Prospects for equity markets beyond the first half are less attractive. Historically, the third quarter in the second year after a President is elected has been the weakest quarter for North American equity markets in the four year cycle. Political rhetoric escalates in the third quarter prior to the mid-term election. Equity markets respond to disappointment about the ability of the President and Congress to pass promised legislation successfully. Uncertainty about control over Congress following the election creates concerns about future government and economic policy. This year political rhetoric will ramp up in the U.S. when higher costs of health care, financial service regulation and climate change legislation become apparent.

If you like to receive bi-monthly newsletter, know more about our model portfolios or access an audio file of our investment philosophy, “Modern Financial Fiascos”, click on the link http://www.castlemoore.com/investorcentre/signup.php.

WEBINARS/SEMINARS

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If you live in southern On area and would be interested in attending an upcoming CastleMoore seminar, send an email to info@castlemoore.com after registering above

CastleMoore Inc. uses a proprietary Risk/Reward Matrix that places clients within one of 12 discretionary portfolios based on risk tolerance, investment objectives, income, net worth and past investing experience. For more information on our discipline and methodology please contact us.

CastleMoore Inc.

Buy, Hold…and Know When to Sell

www.castlemoore.com

Ken Norquay’s Column

The President’s Problems Jan 27, 2010.

Mr. Obama has a big job: saving the world is not easy. Last year he took command of America in the middle of a financial crisis. And today, the problem seems to have disappeared. The recession is over and the banking system has survived. His plan seems to have worked. Even General Motors seems to have survived.

Like all other US presidents, Mr. Obama, is a great speaker. And tonight when he gives his state-of-the-union address, he will be most eloquent in explaining how effective his government has been since they took command in the middle of a financial crisis.

If he did such a good job, why is he losing ground in the popularity polls and why did the Democrats recently lose a senate seat in Massachusetts? [The January 2010 bi-election to replace the late Senator Ted Kennedy was won by the Republican candidate.] What’s wrong? Why is the President behind the 8-ball?

The answer lies in a mysterious place: the tiny European island nation, Iceland. Iceland is home to the particularly aggressive Bank of Iceland. The bank has failed and the government of Iceland is being asked to repay 3.8 billion Euros to the British and Netherlands governments. These two governments loaned the money to the Bank of Iceland in an attempt to save it in the dark days of last year’s banking crisis. The Icelandic government guaranteed the loan and now it’s pay-back time. But now it appears the people of Iceland are rebelling. 25% of the voters signed a petition: they don’t want to repay the loan. The president vetoed a bill that outlined the repayment schedule. And now they will have a referendum. On March 6 the people of Iceland will decide whether or not they are responsible for the big bank’s blunders.

The people feel cheated. They feel that the bank got to keep the profits in the good times, but in the bad times, the people pay for the losses. Icelanders are in a bad mood.

Maybe Icelanders are not the only ones who feel cheated and who are in a bad mood. Maybe Americans feel the same about US bankers’ blunders as Icelanders feel about theirs. Maybe Americans are losing faith in the banking system like their Icelandic counterparts. And maybe that’s why they’re ticked off with president Obama. Obama saved the bankers by putting the American people in debt. Are Americans looking for a better way?

According to the US Federal Deposit Insurance Corporation’s website, 140 US banks failed in 2009. 8 more closed their doors yesterday! [Jan. 26, 2010] Yes, there is a problem. Something is not working. There is a distinct possibility that the people are losing faith in the banking system and in their government’s ability to save it.

Remember Jimmy Stuart’s movie It’s a Wonderful Life? When the people lose faith in a bank, that loss of faith causes the bank to fail. If the Icelanders vote NO, their banking system will fail. They’ll likely be bounced out of the European common market too. Iceland could become the banana republic of the north. It’s like It’s a Wonderful Life: they need a local hero to persuade the people that they should keep the faith. And if they don’t get an eloquent local financial hero, Iceland will become a ghost town.

President Obama is the eloquent local hero for the American people. Somehow he has to persuade the people to keep the faith in big American institutions. Otherwise, America will go the way of the old USSR: she will collapse and have to be rebuilt. Good luck, Mr. President.

Ken Norquay, CMT,

Partner

CastleMoore Inc.

www.castlemoore.com

ETF News

Blackrock announced the launch of six new Canadian Exchange Traded Funds:

• XBZ: iShares MSCI Brazil Index Fund
• XCH: iShares China Index Fund
• XID: iShares S&P CNX Nifty India Index Fund
• XLA: iShares S&P Latin America 40 Index Fund
• XHY: iShares U.S. High Yield Corporate Bond Index Fund (CAD Hedged)
• XIG: iShares U.S. IG Corporate Bond Index Fund (CAD Hedged)

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 directly at Amazon.ca and Amazon.com. Following are links to these book stores:

U.S. Customers: Thackray’s 2010 Investor’s Guide: How to Profit from Seasonal Market Trends (Thackray’s Investor’s Guide)

Seasonal trades in the book that currently are active include Information Technology, Consumer Discretionary, Small Cap, Platinum 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 $10.04 January 27 2010

Open	10.000			-
High	10.070		-
Low	9.950		-
Bid x10	9.960		-
Ask x3	10.040		-
Volume	17,934		-
52-wk High 01/18	10.650		-
52-wk Low 01/27	10.000		-

Net Asset Value: $9.99 per unit.

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