ShareThisPre-opening Comments for Wednesday February 17th
U.S. equity index futures are higher again this morning. S&P 500 futures added 5 points in pre-opening trade. Higher than expected fiscal fourth quarter earnings contributed to strength.
Reaction to economic news released at 8:30 AM EST was mixed. January housing starts rose 2.8%, in line with expectations. January building permits slipped 4.9%, also in line with expectations.
Companies reporting better than expected fiscal fourth quarter earnings included Rogers Communications, Devon Energy, Deere, Humana and Loblaw. Rogers Communications also raised its dividend by 10% and announced a share repurchase program. Deere rose 8% after releasing better than consensus first quarter earning and after offering positive guidance for 2010.
Bank of America/Merrill initiated coverage of the U.S. Home Building sector with Buy recommendations on most stocks in the sector including Lennar, KB Homes, Pulte Homes, Ryland Group and DR Horton.
Home Depot added 2% after Oppenheimer upgraded the stock from Perform to Outperform.
Microsoft improved 1% after Citigroup initiated coverage with a Buy recommendation. Target is $31.
Credit Suisse has raised its estimates for fertilizer prices. Fertilizer stocks including Potash Corp, Agrium and Mosaic have gained 1%-2% in overnight trade.
Uranium stocks continue to advance following news yesterday that the U.S. government will provide an $8.3 billion loan guarantee to be used to build two new reactors in the U.S. Cameco Corporation (NYSE:CCJ) – $28.34 and Uranium Participation Units were notable gainers in late trading yesterday. Their short term momentum indicators recently turned positive. Cameco added to gains this morning. Cameco has a period of seasonal strength from January 21st to June 5th.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/02/clip_image00114.gif "clip_image001[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/02/clip_image00212.gif "clip_image002[1]")
Chart courtesy of StockCharts.com www.stockcharts.com
Technical Action Yesterday
Technical action by S&P 500 stocks was bullish yesterday. Nine S&P 500 stocks broke resistance (Altera, Autozone, CF Industries, Conagra, Genuine Parts, Hershey, Mattel, Rockwell Automation and Whole Foods) and none broke support. The Up/Down ratio for S&P 500 stocks improved from 1.82 to (260/142=) 1.83
Technical action by TSX Composite stocks also was bullish yesterday. Ten TSX stocks broke resistance (Bonavista Energy, Consolidated Thomson, Great West Life, Industrial Alliance, Keyera Facilities, Industrial Alliance, Pembina Pipeline, PennWest Energy, Power Corp., Power Financial and Westshore Terminals) and none broke support. The Up/Down ratio for TSX stocks improved from 2.18 to (125/57=) 2.19.
Interesting Charts
Energy stocks on both sides of the border were notably higher yesterday. Selected stocks and trusts in the sector are breaking above key resistance levels and are continuing intermediate uptrends.
Chart courtesy of StockCharts.com www.stockcharts.com
Charts courtesy of StockCharts.com www.stockcharts.com
Lots of encouraging technical signals yesterday:
- The TSX Composite Index moved above its 50 day moving average.
Chart courtesy of StockCharts.com www.stockcharts.com
- The S&P 500 Index recorded a MACD buy signal
Chart courtesy of StockCharts.com www.stockcharts.com
- The Dow Jones Industrial Average recorded a MACD buy signal
Chart courtesy of StockCharts.com www.stockcharts.com
- The NASDAQ Composite Index recorded a MACD buy signal
Chart courtesy of StockCharts.com www.stockcharts.com
- The Russell 2000 Index recorded a MACD buy signal and moved above its 50 day moving average
Chart courtesy of StockCharts.com www.stockcharts.com
- The Dow Jones Transportation Average recorded a MACD buy signal
Chart courtesy of StockCharts.com www.stockcharts.com
Weekly Relative Strength Review of Sector SPDRs
(Assuming November 5th was the entry date for the seasonal trade in U.S. equity markets)
Highlights during the past week included:
- Continuing strength in economically sensitive sectors including Consumer Discretionary, Industrials and Basic Materials.
- Sectors that moved above their 50 day moving average yesterday included Consumer Discretionary, Industrials, Consumer Staples and Energy.
- Notable weakness in Health Care and notable strength in Energy.
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
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
ETF News
Tech Talk’s team has updated the basic report on Exchange Traded Funds. Updates include a listing of all Canadian ETFs, their MERs and their optionable status and their average daily volume in recent months. The report has been archived in the Education section. It is available at http://www.timingthemarket.ca/techtalk/2010/02/14/investing-in-exchange-traded-funds-etfs-diamonds-spdrs-qubes-holdrs-vipers-ishares/
Deborah Fuhr at Blackrock offers an extensive monthly report on exchange traded funds around the world. Following are highlights from her report for the end of January.
- At the end of January, the global ETF industry had 2,053 ETFs with 3,928 listings and assets of US $984.0 billion.
- The number of ETFs increased 5.4% in January with 106 ETF launches
- The number of ETFs listed in Europe has surpassed the U.S. with 869 listings compared to 791 in the U.S.
- Average daily trading volume in U.S. Dollars increased by 40.6% to US $70.7 billion or 3.3 billion shares.
- iShares is the largest global ETF provider in terms of number of products (434 ETFs and assets: US $470.0 billion) reflecting 47.8% market share. State Street is second with 107 products (assets: US $139.1 billion) and 14.1% market share followed by Vanguard with 47 products (assets: $92.2 billion) and 9.4% market share.
- Nineteen new ETFs were launched in the U.S. in January.
- The Canadian ETF industry had 125 ETFs valued at $28.4 billion in January. Sixteen ETFs were launched in January.
ETF Asset Rally Ends as Institutions Rework Strategies
February 16, 2010 at 2:03 pm by ETF.com
For nearly a full year, exchange-traded funds have added assets despite incredible market uncertainty. However, in the first month of 2010 trading, investors yanked $16.7 billion in assets.
Exchange-traded fund assets dipped to $746.9 billion, with a negative growth rate of 4.8% since December, the Wall Street Journal reports. Despite the hefty outflow numbers, exchange-traded funds contain 49.2% more assets than the same month a year ago.
Though the data may be negative, analysts expect that much of the differential is due to tax loss harvesting and early portfolio adjustments from institutions, which continue to make up the bulk of ETF volume. The theory is substantiated by positive inflow data at mutual funds, showing that most ordinary investors are still plowing money into the markets, even if institutions aren’t.
Rumor Mill: WisdomTree is Prepping for Takeover
February 16, 2010 at 1:55 pm by ETF.com
WisdomTree, a small but established exchange-traded fund sponsor, may be seeking a takeover. The fund recently cut 10 unprofitable ETFs, creating rumors the company is prepping to sell.
On a conference call regarding the company’s fourth quarter earnings, CEO Jonathon Steinberg noted that following the sale of iShares to BlackRock, “anything could be for sale at the right price,” Financial Planning reports. Having already established itself with several funds totaling $6 billion in assets, WisdomTree is a perfect “cookie-cutter” target for investment companies not yet in the ETF industry.
WisdomTree posted asset growth of 88% year-over-year, well over the 50% growth rate set by the industry as a whole in the same period. Although no official efforts have yet been made to sell the company, rumors in the ETF industry have generally followed through to completion. Long before the iShares sale, BlackRock was rumored to be a potential buyer and eventually purchased iShares for $13.5 billion.
ETF Securities Plays Fund Alchemist with Precious Metal Blend
February 11, 2010 at 2:26 pm by ETF.com
Capitalizing upon the precious metal trend, ETF Securities’ newest addition to its family of US commodity ETFs will blend holdings of various precious metals. The fund will buy physical gold, silver, platinum and palladium to back investors’ assets.
The ETFS Physical PM Basket Shares, as it will be named, will be created with a new trust, according to the Wall Street Journal. ETF Securities hopes to latch onto a growing trend in investing, with many investors seeking exposure to precious metals as an anti-inflationary play, regardless of the allocations.
Interestingly, in the SEC filing, ETF Securities specifically acknowledges that their purchase of physical metals for storage may temporarily drive up market prices.
ProShares Unveils 16 Triple-Threat ETFs
February 11, 2010 at 2:19 pm by ETF.com
In furthering its hold in the niche market, ProShares has filed to create 16 new exchange-traded funds, all of which will be triple leveraged. The funds look to be a threat to Direxion, another fund company which has competed directly with ProShares for the leveraged space.
The 16 new funds are as follows:
1. UltraPro QQQ
2. UltraPro Dow30
3. UltraPro MidCap 40
4. UltraPro Russell2000
5. UltraPro MSCI EAFE
6. UltraPro MSCI Emerging Markets
7. UltraPro 7-10 Year Treasury
8. UltraPro 20+ Year Treasury
9. UltraPro Short QQQ
10. UltraPro Short Dow30
11. UltraPro Short MidCap 40
12. UltraPro Short Russell2000
13. UltraPro Short MSCI EAFE
14. UltraPro Short MSCI Emerging Markets
15. UltraPro Short 7-10 Year Treasury
16. UltraPro Short 20+ Year Treasury
The funds will invest in cash equivalents and derivative investments to maintain proper tracking of their respective asset classes, according to the SEC filing. As with all triple leveraged funds, it is rare to see a direct investment in the underlying investment, as it is impossible to achieve triple returns without expensive margins.
The funds will trade for ProShare’s signature annual expense ratio of .95%.
Chinese Sovereign Wealth Fund Overflowing with American ETFs
February 11, 2010 at 2:04 pm by ETF.com
What is good enough for individual investors is apparently good enough for governments. A fresh look into China’s holdings has revealed a staggering $9.6 billion invested in US traded ETFs.
Although most of the Chinese holdings are in pure indexing funds like the SPDR (SPY: Quote, Profile, Advanced Chart, News) and Powershares QQQ (QQQQ: Quote, Profile, Advanced Chart, News), the funds were also diverted into less traditional funds, such as the MarketVectors Gold Miners ETF (GDX: Quote, Profile, Advanced Chart, News).
China’s largest holding is the iShares S&P Global Materials Index Fund (MXI: Quote, Profile, Advanced Chart, News), which corresponds with its aggressive purchases of foreign commodity producers and comprises $254 of its nearly $10 billion portfolio, according to The Street.
China’s holdings showcase what individual investors have known for years: exchange-traded funds are a convenient and inexpensive way to buy a variety of stocks across whole sectors.
Drilling for Seasonal Profits with Oil ETFs
February 9, 2010 at 2:23 pm by ETF.com
Oil stocks have a reputation for generating immense profits in a few short months each year. With February trading now underway, oil stocks have a four month window of quick returns.
Oil services stocks rev up during the period of January 31 to May 9, a trend that has proven profitable 17 out of the last 20 years, Financial Post reports. On average, the oil sector delivers a hefty 14.2% return compared to 3.2% for the S&P 500 during the same timeframe. This year is poised to be equally profitable, with today’s $70 per barrel price well above the sub-$50 price tag set last year.
iShares offers two ETFs perfect for catching seasonal tail winds: iShares Dow Jones U.S. Oil Equipment & Services Index Fund (IEZ: Quote, Profile, Advanced Chart, News) and iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (IEO: Quote, Profile, Advanced Chart, News), which invest in oil equipment providers and exploration companies respectively.
Harvard Endowment’s U.S. Securities Rise 26% on ETF Purchases
February 12, 2010–Harvard University, the richest U.S. university, reported the value of its U.S. securities increased 26 percent in the fourth quarter, as it bought exchange-traded funds that track markets outside the U.S.
Harvard’s biggest security purchases in the fourth quarter were exchange-traded funds tracking markets including China, Brazil and Russia, the filing shows. Emerging markets, measured by the MSCI EM Index, gained 8.3 percent in the three months ended Dec. 31.
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 most of 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://search.barnesandnoble.com/Thackrays-2010-Investors-Guide/Brooke-Thackray/e/9780978220037/?itm=1
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 $10.09 February 16 2010
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Open |
9.930 |
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- |
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High |
10.100 |
- |
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Low |
9.930 |
- |
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Bid x8 |
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- |
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Ask x27 |
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- |
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Volume |
8,060 |
- |
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52-wk High 01/18 |
10.650 |
- |
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52-wk Low 02/05 |
9.440 |
![clip_image021[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/02/clip_image02111.gif "clip_image021[1]"){kind=small}
Net Asset Value per unit: $10.05
Performance since inception:
HAC: 0.90%
S&P 500 0.00%
DJIA – 0.60%
TSX Composite -0.16%
Notice the MACD buy signal at the close yesterday.
Chart courtesy of StockCharts.com www.stockcharts.com
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Tags - Previous posts for stock ticker: ccj
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Discussions from the Tech Talk Forum:
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February 17th, 2010 at 1:49 am
Hi Don,
Thanks once again for all you do – helps a great deal. Two questions if I may !
First when looking at seasonal trades, does the companies location of assets, or % there of have an effect on the amount of price movement during a seasonal trade?
Example NKO.T= Niko Resources – energy sector – Head office Calgary and we are lining up for seasonal trades in Canada if not already – but all resources located out of country for this company ! I would think it is based on trading index but with global trade and more and more out of country purchases and interaction, I am a little lost on this
Second question – would you kindly provide your TA for short term and intermediate term on NKO – is that a reverse Head & Shoulders I am seeing on intermediate time frame ?
Regards as Always
Riptor
February 17th, 2010 at 6:11 am
This looks like a rally beginning from oversold conditions. I bought XSP on the 8th because of the deviation off the bottom of the Keltner Channel, RSI bottoming, Stochastics all a go and Money Flow deeply oversold (deeper than March 2009).
February 17th, 2010 at 6:33 am
Hi Don
PBG.To had a tremendous move yesterday. Whats your opinion on its TA? Thanks for your reply.
February 17th, 2010 at 7:07 am
Heard on this site that Bill Carrigan had been dissing seasonality. So, I went to his blog and he does claim that it simply doesn’t work. However, interestingly, his research actually proves it does. In respect of the energy sector, for example, he says he has researched it and found that holding the sector from end of January to May 9 of each year for the last 10 has provided a 179% return while simply buying and holding for the last ten years would produce a 315% return. Thus, seasonality, he says, doesn’t work. But, even on his figures (which seem a little high) seasonality does work because one would be getting a 179% return for approx. 30 months of holding as compared to a 315% return for holding for 120 months. In other words, one would only be getting a 136% return (315-179) for holding for the 90 non-seasonal months. Obviously, he has shown that the return is much greater holding seasonally and having your money available to do other seasonal investments the rest of the year.
February 17th, 2010 at 7:45 am
+1 for Neil. Bill has some good insights but seems to have been attacking Don and Brooke lately – ever wonder why Bill does not turn comments on for his site?
February 17th, 2010 at 8:00 am
at last yellow page income fund finally took off! ylould you add to the existing position?
February 17th, 2010 at 8:53 am
Hi Don. What are your thoughts on Canadian banks? It looks like they are on a run. BMO, specifically, looks overbought and seems like it is approaching resistence. Thanks.
February 17th, 2010 at 9:32 am
An interesting comment from National Bank Financial. Sorry, I can’t send the chart.
Financial.
February 16, 2010– (Vol. XI, No. 20)
Market Watch
Many investors remain fixated on a potential
Greek default. Despite the news that a meeting of
European Finance Ministers on Monday and
Tuesday would yield more specific measures to
support Greece (that country has until March 16
to report back on ways to further reduce its
deficit), speculators remain massively short the
S&P 500 and the Euro. As today’s Hot Chart
shows, current net short positions on the U.S.
benchmark are the most extreme on record.
Under these circumstances, the presentation of a
credible political and institutional EU framework to
help Greece deliver on its fiscal reform
commitments could be the catalyst for a
significant rebound in global equity markets if risk
aversion positions are unwind.
Stéfane Marion
February 17th, 2010 at 12:35 pm
Amelia,
What is the difference from using Keltner over Bollinger bands ? Thanks,
Joe
February 17th, 2010 at 12:41 pm
Hello Don,
I see PAA.to was downgraded by some analysts today. The stock value dropped by almost 5%. I bought in at around 25.50 Do you see it dropping lower ? Can I get your TA and support level please ?
Thank you,
Richard
February 17th, 2010 at 12:46 pm
Hi Don,
Pan American Silver posted profit, best fourth quarter ever and declared a dividend, yet the stock sinked over 4%. What am I missing? Could you please give an opinion on its chart.
Thanks.
February 17th, 2010 at 11:47 pm
he hardly ever reply’s anymore so y do u even bother
February 18th, 2010 at 7:02 pm
Hi Riptor. Niko Resources has an improving short and intermediate technical profile. Intermediate trend is up. The stock recently moved above its 50 day moving average. Strength relative to the TSX Composite Index is positive. Short term momentum indicators have bottomed and are recovering from oversold levels. Seasonal influences are positive for the sector and the stock.
February 18th, 2010 at 7:06 pm
Hi Roy. Another interesting Canadian energy stock with an improving technical profile.Intermediate trend is up. Nice move on a gap above its 50 day moving average. Short term momentum indicators have bottomed. A MACD buy signal has just been recorded.
February 18th, 2010 at 7:10 pm
Hi Michael. Good technical action in the Canadian bank sector recently. TD broke out yesterday (February 17th). A minor dip could occur tomorrow morning (Friday)following news of the U.S. Discount Rate hike. Strength relative to the TSX Composite turned positive in mid January. Seasonal influences are mildly positive from the end of February to the end of May.
February 18th, 2010 at 7:19 pm
Hi Joe and Amelia. Keitner and Bollinger bands are similar and provide virtually identical signs of overvalue and undervalue. Keitner bands tend to be smoother and tend to be easier to read.
February 18th, 2010 at 7:26 pm
Hi Richard and Jerry A. PAA has the weakest chart among major precious metal charts. The stock remains in an intermediate downtrend, below its 50 and 200 day moving averages and shows negative performance relative to the TSX Composite. Support is indicated at $21.69. Short term momentum indicators recently have bottomed.