Pre-opening Comments for Friday February 12^th

History is repeating itself. According to Thackray’s 2010 Investor’s Guide, two of the weakest days in U.S. equity markets is the day before and the day after the U.S. Presidents’ Day holiday. The day before Presidents’ Day is typically the worst day with an average negative return and down 67% of the time. Presidents’ Day is held on Monday.

U.S. equity index futures are lower this morning. S&P 500 futures are down 5 points in pre-opening trade following news that the Chinese central government has taken steps to cool economic growth. Reserves requirements on deposits placed in Chinese banks have been raised.

Equity index futures also were negatively influenced by strength in the U.S. Dollar. Commodities priced in U.S. Dollars including crude oil, gold, copper and silver are trading lower.

U.S. equity index futures recovered slightly after better than expected January retail sales were released. Consensus was an increase of 0.3% versus a decline of 0.2% in December. Actual was an increase of 0.5%. Consensus for retail sales ex autos was an increase of 0.4%. Actual was an increase of 0.6%.

Analysts are taking a more positive stance on Metals & Mining stocks. This morning RBC Capital Markets upgraded Teck Resources from Sector Perform to Outperform. Credit Suisse upgraded Rio Tinto from Neutral to Outperform.

Analysts also are taking a more positive stance on energy stocks. This morning, Morgan Stanley initiated coverage on Southwestern Energy with an Overweight rating and a $60 target price. Canaccord upgraded Encana from Speculative Buy to Buy. Target was raised from $32 to $35.

Coverage on Procter & Gamble was initiated at Credit Suisse with an Outperform rating.

Ingersoll Rand is down 7% after reporting lower than consensus fourth quarter earnings and after offering lower guidance for the first quarter.

ManuLife fell 2% in overnight trading after RBC Capital Markets downgraded the stock from Outperform to Sector Perform.

Precision Drilling was unchanged after announcing a loss in the fourth quarter. It also announced plans to convert from a trust to a corporation.

Shaw Communications has arranged to purchase a controlling interest in CanWest Global Communications.

Technical Action Yesterday

Technical action by S&P 500 stocks was quietly bearish yesterday. Two S&P 500 stocks broke resistance (Biogen, Lennar) and five stocks broke support (Apollo, Boston Scientific, First Energy, FLIR Systems and Scripps). The Up/Down ratio slipped from 1.91 to (260/141=) 1.84.

Technical action by TSX Composite stocks was quietly bullish. Three TSX Composite stocks broke resistance (Cineplex Galaxy, Osisko Exploration and Rogers Communications) and one stock broke support (Canadian Tire). The Up/Down ratio improved from 2.18 to (125/56=) 2.23.

Interesting Charts

Lots of Canadian energy equities and their ETFs are showing technical signs of bottoming. All of the selections below also are entering their period of seasonal strength.

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

Tech Talk’s Financial Post Column this Saturday

(Available in hard copy or electronic distribution at www.nationalpost.com )

The focus is on the seasonality of the Canadian energy sector.

An Update on the Precious Metal Sector

Bullish Percent Index for the gold sector has dropped to an oversold level and is showing early signs of trying to bottom.

Chart courtesy of StockCharts.com www.stockcharts.com

Preferred investment vehicle in the precious metal sector is Platinum. Platinum entered its period of seasonal strength on December 24^th. A second entry point within the period of seasonal strength lasting until the end of May has appeared recently.

Chart courtesy of StockCharts.com www.stockcharts.com

Although not a preferred precious metal, gold’s short term momentum indicators also are showing technical signs of bottoming.

Chart courtesy of StockCharts.com www.stockcharts.com

Ditto for Silver! Silver’s seasonality is closer to the seasonality of Platinum than the seasonality of Gold.

Chart courtesy of StockCharts.com www.stockcharts.com

FP Trading Desk Headline

Headline reads, “Get ready for a rally in gold stocks”. Following is a link to the report: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2010/02/11/get-ready-for-a-rally-in-gold-stocks.aspx

Ken Norquay’s Column

Financial Valentine’s Day: The Flip Side

In the 1950s, chick flicks were all about falling in love and getting married. And we all know the dark side of love and marriage is divorce. Human emotions run the full gamut through love and light to resentment and darkness. Do these human emotions affect our investments? Contrarians tell us that investors love the stock market at long term cyclical tops and hate it at the bottom. Can we make better investment decisions if we learn to read the market’s emotions?

Yes we can. And the year 2010 has just presented a text-book lesson. The first week of January saw over 50% of investment advisors in love with the stock market, and fewer than 20% shunning her. There had not been so much bullish love and so little bearishness since the stock market top way back in late 2007. Financial love was everywhere.

But the next three weeks featured an investment lover’s quarrel: the Dow Jones Industrial Index dropped almost 9% in 13 trading days: a real heart-stopper for the bullish love crowd. [The cover story was something about PIGS. Apparently Portugal, Ireland, Greece and Spain were experiencing difficulty meeting their debt obligations.] And now, at the end of the sudden short term drop in the stock market, many of the market’s enamoured suitors have changed their minds. Three short weeks ago they thought she was beautiful: now they think she’s ugly.

Valentine’s Day came early this year. But infatuation has turned to distain: 40% of investors now expect the market to correct downward. [Recent Investors’ Intelligence Poll]

The stock market is fickle lover. When we love her the most, she lets us down. And when we love her least, she gives us her best. Now that investors are no longer starry eyed optimists, what can we expect from the stock market?

In my book, Beyond the Bull, I talk about human emotions and their effect on our long term investment performance. In order to invest successfully we have to by-pass our natural human emotions and somehow buy when we feel like selling. We have to embrace her when the others shun her; and we have to leave her when her bullish suitors most love her. It’s called the theory of contrary opinion and it’s the only market rule of thumb that has worked consistently over the years.

So, in three short weeks, investment advisors have fallen out of love with the stock market. It’s Valentine’s Day: it’s time to buy.

At CastleMoore, we have purchased some utility stocks and some energy stocks. Maybe next week, we’ll look at some high tech. But, as always, if she turns against us, we’ll sell out like we did in spring of 2008. It is no longer wise to marry such a fickle lover.

Ken Norquay, CMT

Chief Investment Strategist,

CastleMoore Inc, A portfolio

management company.

Links to Amazon for those interested in Beyond the Bull

Canada
http://www.amazon.ca/Beyond-Bull-Taking-Market-Wisdom/dp/0980923182/ref=sr_1_1?ie=UTF8&s=books&qid=1228246016&sr=8-1
US
http://www.amazon.com/Beyond-Bull-Taking-Market-Wisdom/dp/0980923182/ref=sr_1_1?ie=UTF8&s=books&qid=1228246055&sr=8-1
UK
http://www.amazon.co.uk/Beyond-Bull-Taking-Market-Wisdom/dp/0980923182/ref=sr_1_1?ie=UTF8&s=books&qid=1228245979&sr=8-1

Keith Richards’ Blog

Keith discusses, “Smart Money, Dumb Money”. Following is a link to his blog:

http://www.smartbounce.ca/Smartbounce/Blog/Blog.html

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 Consumer Discretionary, Small Cap, Platinum, U.S. Materials, U.S. Retail, 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 $9.94 February 11 2010

Open	9.780			-
High	9.940		-
Low	9.780		-
Bid x8	9.940		-
Ask x4	9.960		-
Volume	5,900		-
52-wk High 01/18	10.650		-
52-wk Low 02/05	9.440	5-star Rating	-

Net Asset Value per unit: $9.91

Relative performance since launch on November 20^th

HAC:                -0.60%

TSX Composite: -1.42%

S&P 500            -1.55%

DJIA                 -1.82%

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More from the network: Stock Market Outlook for February 9, 2012 Stock Market Outlook for February 8, 2012 Stock Market Outlook for February 7, 2012 Stock Market Outlook for February 6, 2012 Next Report on Monday, February 6th

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