Pre-opening Comments for Friday February 5th
U.S. equity index futures are mixed this morning. S&P 500 futures up 1 point in pre-opening trade. Index futures recovered from overnight losses following release of the January U.S. employment report. Consensus for Non-farm payrolls was unchanged from December. Actual was a decline of 20,000. Consensus for the unemployment rate was unchanged from December at 10.0%. Actual was a drop to 9.7%, the lowest level in nine months. Consensus for Hourly Earnings was a gain of 0.2%. Actual was a gain of 0.3%.
Additional strength in the U.S. Dollar Index dampened enthusiasm for U.S. equity index futures.
Canada announced an encouraging January employment report. Consensus for employment was a gain of 15,000. Actual was a gain of 43,000. The Canadian Dollar gained 0.34 to 93.55 following release of the news.
Several companies reported better than expected fourth quarter earnings. Consensus for Brookfield Asset Management was $0.33 per share. Actual was $0.35. Consensus for Weyerhaueser was $0.41 per share. Actual was $0.52 per share. Weyerhaueser is benefiting from a surge in lumber prices. Lumber prices are moving higher in anticipation of strong growth in infrastructure spending this spring.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/02/clip_image00111.gif "clip_image001[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
Sunoco, a major U.S. oil refiner continues to struggle. Consensus for fourth quarter earnings was a loss of $0.25 per share. Actual was a loss of $0.27 per share. Refiners such as Sunoco cannot continue to produce gasoline for sale at a loss. The stage is set for a significant recovery in gasoline prices this spring.
Technical Action Yesterday
Technical action by S&P 500 stocks was bearish yesterday. No S&P 500 stocks broke resistance and 28 S&P 500 stocks broke support (Autodesk, American Electric Power, Applied Materials, Baxter International, Peabody Coal, Quest Diagnostics, Dun & Bradstreet, Ecolab, Edison International, Exelon, Goodyear, Hudson City Bancorp, Health Care REIT, Iron Mountain, Mastercard, McAfee, Northern Trust, Office Depot, Peoples Bank, Paccar, Progressive, PPL Corp., Pactiv, Quanta Services, Donnelley, MEMC Electronic, Xcel Energy and Xilinx). The Up/Down ratio fell from 2.84 to (290/119=) 2.44.
Technical action by TSX Composite stocks was quietly bearish yesterday. One TSX stock broke resistance (Just Energy Income Trust) and three stocks broke support (Cameco, First Quantum and TMX Group). The Up/Down ratio slipped from 2.43 to (130/55=) 2.36.
Interesting Charts
Fear entered equity markets yesterday on concerns about European sovereign debt defaults. The VIX Index (better known as the Fear index) jumped 20.74%.
Chart courtesy of StockCharts.com www.stockcharts.com
The fear quickly translated to strength in the U.S. Dollar. Commodities priced in U.S. Dollars quickly came under pressure.
Chart courtesy of StockCharts.com www.stockcharts.com
As noted in Monday’s Tech Talk, intermediate downside risk for North American equity markets is to support set at the beginning of November. Support levels also are near their 200 day moving average.
Support levels are at 1,029.38 for the S&P 500 Index, 9,679 for the Dow Jones Industrial Average, 553.31 for the Russell 2000 and 2,047.27 for the NASDAQ Composite Index.
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Short term momentum indicators remain deeply oversold.
Headline from the FP Trading Desk
Headline reads, “Canadian banks expected to post lower provisions for bad loans”. Following is a link to the report:
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:
Seasonal trades in the book that currently are active include Consumer Discretionary, Small Cap, Platinum, U.S. Materials, U.S. Oil Exploration & Production 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 $9.66 February 4 2010
|
Open |
9.980 |
|
- |
|
|
High |
9.980 |
- |
||
|
Low |
9.660 |
- |
||
|
Bid x11 |
|
- |
||
|
Ask x50 |
|
) |
- |
|
|
Volume |
14,370 |
- |
||
|
52-wk High 01/18 |
10.650 |
- |
||
|
52-wk Low 02/04 |
9.660 |
![clip_image011[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/02/clip_image01111.gif "clip_image011[1]"){kind=small}
Net Asset Value: $9.65
February 5th, 2010 at 4:56 am
Looks like we have about 4% more to go down to November support on the TSX. The correction will then amount to about 11%.
February 5th, 2010 at 7:26 am
Hi Don. I thought natural gas was out of it’s seasonal period, yet it has continued to rise in value despite negative employment numbers, bad news from Asia and Europe, and a correction in markets in general.
Will natural gas come down in price in the near term or will it continue to rise?
Thanks
February 5th, 2010 at 8:38 am
Hey Don
Saw you on bnn.As I said at csta ann meeting-you really know your stuff.
Thanks again for your advice—it’s good for my pocket book.$$$
Cheers
Doug
February 5th, 2010 at 9:05 am
under the ‘responses’ section, it is great to be able to see the questions to Don, but not the answers. can this be done to help readers like me. thanks
February 5th, 2010 at 9:18 am
Don,
In his January newsletter Brooke felt that IWM could possibly hit its target of $75 by March. Do you still see this is possible after the correction we have had ? Secondly, is XSU a better choice as opposed to IWM to play small cap seasonality ?
Joe
February 5th, 2010 at 9:31 am
Hi Don,
Any comments regarding silver? It’s in a period of seasonal strength but has dropped from above $18 to below $15. Do you consider it a buy at this point? Thanks and I hope you have a great weekend.
Daryl
February 5th, 2010 at 9:55 am
Anyone else taking a haircut on these seasonals? Double down??
February 5th, 2010 at 10:14 am
Taking some serious hurt on the seasonals especially silver which is supposed to outperform gold, but seems to be trading in tandem with gold and reverse of the US buck. Is it the problem with the Euro nations hats perhaps causing the strength in the US buck? I thought it always moved up from Jan to April anyways and would not affect silver or the commodities. Double down perhaps on silver, OIH,IWM,etc? Comments please Don. Thanks.
February 5th, 2010 at 10:50 am
http://www.seasonalcharts.com/volatilitaet_cadusd.html
The website above would suggest the lugubrious news from PIGS and the unemployment reports in the US are just noise. The correction would have happened anyway and just about anything would have been the pretext.
February 5th, 2010 at 11:00 am
When would be an opportune time to purchase the ZEO and at what price? Thanks very much for any information. We also agree with David Yuen as the responses are not easily found and need more clarity. Thank you.
February 5th, 2010 at 11:42 am
The chart posted above was presented in error. Although interesting, this one illustrates the normal seasonality point better.
http://www.seasonalcharts.com/classics_cadusd.html
February 5th, 2010 at 12:28 pm
Hi Don,
What is the seasonalaty for the USD and also for the commodities? Do they have opposite seasonalties?
February 5th, 2010 at 4:33 pm
Don,
In the seasonality chart for silver (http://www.seasonalcharts.com/classics_silber.html), it seems that silver peaks in Feb and then declines a bit in March and moves sideways till May. PAA ($16.84) and SLV ($24.84) are’nt looking too good since I bought in. Do you still feel silver is following its seasonal pattern ?
Richard
February 5th, 2010 at 5:36 pm
As the day ends at the end of this wild week (check the bottoming tail on today’s candle on ES), I thought I’d add a comment that probably will not be read by many, and that is maybe just as well.
This is a free site, with I think, the most useful content of any investment site I, a Canadian investor, have found on the internet over the past 10 years.
Don Vailoux is dedicated to providing you with the best seasonal trading related technical analysis possible!!!!!!
Pay attention and build the core of your financial future.
If a question goes unanswered, generally you will find it is answerable by the questioner if he / she were willing to do just a little research, yes a bit of time and mental exercise, (either on this site or with a bit of googling) themselves.
Generally, Don will answer any and all questions that provide reasonably broad educational value.
Continuing congratulations to Don Vailoux.
IMO
February 5th, 2010 at 6:40 pm
David, you’re absolutely right. Don does so much to educate us to take control of our financial well-being And it’s up to us to then take personal responsibility.
Thanks for all you do for this community, Don.
February 5th, 2010 at 8:13 pm
David
Do you speak for Don?
February 6th, 2010 at 12:40 am
I agree too with David – very well said David
Don, loved you on BNN, as always! And thank you so so much for all you do to help us all out by having this daily site to turn to! It is a tremendous help! Thank you too for answering the questions posted – I’m sure everyone reading the questions and answers, gets a lot of value of out them for their trading portfolios – so, thank you again Don!
Have a great weekend!
Eve
February 6th, 2010 at 3:21 am
I have met Don Vailoux.
I speak in favour of his generosity and work ethic.
I certainly do not speak for him.
February 6th, 2010 at 3:25 pm
Mr. Vialoux. I saw you on BNN the other night and simply loved your approach to investing and looking at seasonal trends. As an active investor, the information you presented is greatly appreciated by small investors like myself. Thanks very much.
P. Ali
February 7th, 2010 at 7:31 am
Hi Don,
At what point do the holdings in portfolios usually get updated? Quarterly? as an example – HAC is showing portfolio holdings as of dec 31st and we’re in feb. Same with Sprott Asset Management. I guess my question would be is this standard to wait to post holdings?
Thanks,
Marc
February 7th, 2010 at 10:45 am
Hi Larry. Just confirming that natural gas has passed its period of seasonal strength. During a period of seasonal strength, a security has a series of annual recurring events that trigger a favourable influence. Beyond the period of seasonal strength, annual recurring events are not sufficient to have an influence one way or the other. Accordingly, performance of the security is random (some times up, some times down). Tech Talk currently currently does not have an opinion on natural gas based on seasonality.
February 7th, 2010 at 10:52 am
Hi Joe. IWM (iShares on the Russell 2000 Index) continues to outperform the S&P 500 Index (just barely). More information is offered in tomorrow’s Tech Talk. XSU is an interesting alternative to IWM. Essentially, it is IWM with a hedge against U.S. currency risk. A word of caution! Liquidity is somewhat suspect if dealing with say 10,000 shares or more. Market orders for size occassionally have “blown out” the bid and offer. The market makers are there if prudent (read: price limit)orders are placed for sizeable trades
February 7th, 2010 at 10:54 am
Hi Daryl. A comment on Silver is offered in tomorrow’s Tech Talk. Technicals are not there yet for a seasonal trade.
February 7th, 2010 at 10:59 am
Hi Rene. The period of seasonal strength in the Canadian energy sector (and its related ETFs)starts on February 25th and continues to May 9th. Brooke Thackray recently completed an updated study on the sector, but Tech Talk has been sitting on it until timing technically and seasonally becomes more opportune. Please be patient.
February 7th, 2010 at 11:02 am
Hi David. Seasonality in the U.S. Dollar Index is posted on page 139 in Thackray’s 2010 Investor’s Gulde. Generally, it moves higher from January to April, flat from April to September and down from September to December (based on data from 1973).
February 7th, 2010 at 11:08 am
Hi Richard. According to Thackray’s seasonality study on silver (based on data from 1984 to 2008, Silver moves higher until the beginning of May. When available, Thackray’s seasonality studies are preferred over SeasonalCharts.com studies because they are more up to date.
February 7th, 2010 at 11:23 am
Hi Marc. End of month positions in HAC as well as other managed funds are reported publicly once a month on the Horizons AlphaPro site(Usually in the second week after the end of the month). Brooke Thackray reviews changes in the fund in his monthly newsletter (expected to be released this week). Best to subscribe to his newsletter. The price is right: it’s free. In addition to public releases, Tech Talk discusses timing of seasonal trades on a daily basis that provide clues to activity in the fund and Thackray’s 2010 Investor’s Guide gives specific buy and sell dates that provide additional clues. Discussing actual trades in the fund before or just after their transaction and prior to their public release is illegal. Tech Talk avoids coming close to that line.