ShareThisPre-opening Comments for Tuesday March 9th 2010
U.S. equity indices are lower this morning. S&P 500 futures are down 4 points in pre-opening trade. Index 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.
China’s auto sales in February rose 55% on a year-over-year basis. That’s good news for platinum. Demand for platinum used in catalytic converters continues to increase. Platinum currently is in a period of seasonal strength lasting until the end of May.
Platinum Futures (PL) Seasonal Chart
![clip_image002[1]](http://equityclock.com/pictures/PlatinumFuturesPLSeasonalChart_C8D2/image.png "clip_image002[1]")
Chart courtesy of www.equityclock.com
The last of Canada’s major banks reported fiscal first quarter “cash” earnings this morning. Bank of Nova Scotia reported $0.93 versus $0.82 last year. Consensus was $0.88 per share.
Mattel added 1% after Citigroup upgraded the stock to a Buy.
Yum Brands gained 2% after UBS upgraded the stock to a Buy.
Cisco improved 1% in anticipation of news to be released at 11:00 AM EST. The company is expected to announce launch of a new device that will speed up internet use.
Technical Action Yesterday
Technical action by S&P 500 stocks remains positive. Seven S&P 500 stocks broke resistance (Macy’s, McAfee, MetLife, Prudential, Qwest Communications, VF Corp. and Visa). The Up/Down ratio improved from 2.80 to (313/109=) 2.87.
Technical action by TSX Composite stocks was mixed. Three TSX stocks broke resistance (Equinox Minerals, Gildan and Dorel) and two stocks broke support (Pembina Pipeline Trust and Uranium One). The Up/Down ratio was unchanged at (126/54=) 2.33.
Interesting Charts
Several bullish technical analysts are now talking about the possibility of the S&P 500 Index and the Dow Jones Industrial Average breaking above resistance levels set in January to reach a 17 month high. Several other widely based indices including the Russell 2000 Index and the NASDAQ Composite Index already have broken above their January highs. Bullish technical analysts often note the possibility that the S&P 500 Index and Dow Jones Industrial Average could fulfill their intermediate upside technical target based on a reverse head and shoulders pattern. Target for a reverse head and shoulder is determined by calculating the point gain from a chart’s low to its neckline and projecting the point gain forward. The S&P 500 Index recorded a 277 point gain from its low to its neckline implying an upside technical target of 1,220.
Chart courtesy of StockCharts.com www.stockcharts.com
The Dow Jones Industrial Average gained 2,618 points from its low to its neckline implying an upside intermediate technical target of 11,700.
Chart courtesy of StockCharts.com www.stockcharts.com
Weekly Relative Strength Review of Sector SPDRs
(Assuming a seasonal low was reached by U.S. equity sectors in November)
Sectors showing greatest relative strength and continuing to trend higher included Consumer Discretionary, Industrials and Materials. Sector showing weakest relative strength and continuing to trend lower were Utilities and Consumer Staples. Energy is neutral, but showing early signs of turning positive.
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
FP Trading Desk Headline
Headline reads, “The money illusion” Following is a link to the report:
http://network.nationalpost.com/NP/blogs/tradingdesk/archive/2010/03/08/the-money-illusion.aspx
ETF News
February Trading Activity in ETFs and ETCs on the London Exchange
Trading in ETFs and ETCs during the month was strong, with the average daily number of trades up 60 per cent year on year, totalling 15,609. The average daily value traded was up 38 per cent to £428 million (€489 million).
Barchart launches ETF fundamental data service
March 5, 2010–Barchart.com, a provider of market data and information, has launched an exchange-traded funds fundamental data service.
The fundamental ETF dataset, including exchange-traded notes, is a database of reference, financial and price related information covering all US listed ETFs and ETNs.
The dataset is available from Barchart as a data feed service, as well as hosted website content.
Barchart’s fundamental ETF data includes over 900 ETFs and dozens of data fields, including sectors, top holdings, assets under management, fund family information, and key financial ratios and returns.
Barchart also provides real-time, delayed, end-of-day and historical ETF price data.
ETFs Enjoy Growth in the Shortest Trading Month
March 4, 2010 at 2:29 pm by ETF.com
Although February has the fewest trading days of any month, exchange-traded funds still racked up healthy inflows from investors. Inflows into US based ETFs and ETNs grew by $5.4 billion in February 2010.
Assets in exchange-traded funds and notes in the United States now top $765 billion, a gain of 66% over February 2009. In addition, the number of listed exchange-traded products grew from 843 to 964, well under the percentage change in assets, reflecting a trend of asset consolidation among the largest ETFs, according to a press release.
Fixed income investments remain the biggest breadwinners, taking in $2.3 billion in net inflows and continuing a trend of monthly inflows for more than a year. US stocks rebounded slightly from January’s $19.6 billion outflow to add $5.8 billion in February.
Greece’s Debt Woes Elate Currency ETFs
March 4, 2010 at 2:20 pm by ETF.com
Troubles in Greece have only incited the popularity of exchange-traded commodities in the wake of what could be the largest bankruptcy since the credit crunch began.
Often suffering from limited liquidity, currency funds are now on the up and up. The CurrencyShares Euro Trust (FXE: Quote, Profile, Advanced Chart, News), which has an average volume just under 580,000 shares daily, posted volume of over three million shares on February 19, the day Greece’s debt issues came to light. Since that time, the volume has increased over 60%, reaching nearly one million shares daily.
Although overall volume for the 30 different currency ETFs on the market remains thin, a growing number of ETF investors are using exchange-traded currencies as a way to hedge their portfolios. The sector recorded $7 billion in assets under management in February, MarketWatch reports.
Analysts Cast Predictions for Gold’s Peak
March 2, 2010 at 2:01 pm by ETF.com
While some analysts are calling gold a bubble, others are forecasting where the precious metal will peak. For the first time in nearly two decades, the once boring metal has brought out the best and brightest market forecasters to put their money where their mouth is.
A Bloomberg survey of 22 analysts reveals that 15 are forecasting a run to $1300 an ounce in 2010, which 17% higher than where the yellow metal rests today, BusinessWeek reports. Much like the oil explosion throughout 2008, analysts are taking shots at gold’s peak price. When this happens, investors generally feel the bull run is over, with the bulk of the demand already removed from the market at lower price points.
While gold cools, another precious metal is just heating up. ETFSecurities Platinum ETF (PPLT: Quote, Profile, Advanced Chart, News) has accepted $440 million in assets as investors look for growth opportunities in the automotive sector, which represents the biggest driver of growth for both platinum and palladium, the Wall Street Journal Reports.
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. Retail, U.S. Oil Exploration & Production, U.S. Energy 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 $10.49 March 8 2010
· High 10.57
· Low 10.48
· Bid 10.00×5 lots
· Ask 10.58×14 lots
· Volume 7,700
· Open 10.57
· Previous Close 10.49
· 52-week High 10.65 on Jan 18
· 52-week Low 9.44 on Feb 5
· Beta 2.35
· Net Asset Value per unit: $10.51
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Discussions from the Tech Talk Forum:
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March 9th, 2010 at 8:08 am
Don,
I see RIM.to has broken out of resistance this morning. Could you please indicate the next potential upside. In your analysis, do you consider a slowly upward curving/rising 200dma as a good sign ?
Thanks,
Joe
March 9th, 2010 at 8:10 am
How many days does a stock like EQN-T (mentioned above) have to stay above its resistance level to generally head higher?
March 9th, 2010 at 8:27 am
Hi Don.
I have a couple questions.
I was just wondering what values you use for stochastics to get short term, intermediate, and long term indications.
I see that we seem to be rounding on the TSX. I am thinkibng there could be a re-test to 11750. Does this make sense?
Also, looking for guidance on chart length. I notice on IMN-T, the 200 dma was broken in february on the one year chart. However, on the 3 year charts, it bounced nicely from there. Do anaylyst typically look at the one year or is the 3 year a normal chart to use the moving averages? I am trying to understand what the bulk of investors look at.
Thanks!
March 9th, 2010 at 9:39 am
Hi George. Support and resistance levels are price levels and are not related directly to time.
March 9th, 2010 at 9:45 am
Don, you provide some excellent charts and some stellar gains in today’s report as well as in previous reports. But you have also recommended we avoid US$ investments unless they are hedged back to Cdn$. Can you provide some Canadian alternatives to those above?
For an example, the Canadian Consumer Discretionary $SPTCD presents are very different chart than XLY and is not available in an ETF that I can find, in any case. And, I already have enough unhedged US$ investments, maybe too many.
March 9th, 2010 at 9:46 am
Good morning, Don;
How do you think of GO-T? Thank you very much!
March 9th, 2010 at 10:15 am
Hello Don
Could you outline the period of seasonal strength of $BDI (Baltic Dry Index)with the Equityclock.com chart, and is the period also applied to DRYS. What is the total returns and positive results during the past 10 years. Thank you.
March 9th, 2010 at 10:58 am
DON
I had a similar question to Freddebuoy….if I buy the more liquid US investments – what ia a good way to hedge without literally buying/selling the currency? Esp. since you are looking at a 1.03 loonie.
Thanks D
Greg
March 9th, 2010 at 11:03 am
Don,
What do you think about buying the VIX?
March 9th, 2010 at 11:48 am
Don,
Love the new site http://www.equityclock.com/ and appreciate that you incorporated all the seasonality time frames in a one chart. I found it much easier than having to read through Brooke’s book. One questions here: I could not find the charts for EEM and EFA on Equityclock and what’s your take on them?
Thanks!
March 9th, 2010 at 12:09 pm
Greg DS, consider buying UDN (US) though it is not a perfect hedge.
March 9th, 2010 at 1:50 pm
Don,
I think many of us are concerned about being beaten up by the falling $USD. Some recommend holding US stocks some do not. The value of the portfolio keeps dropping and quickly eliminates gains. I hesitate to suggest, but would like to request whether you could perhaps indicate what the options are to mitigate the loss with falling $USD in Techtalk please ?
Thanks,
Joe
March 9th, 2010 at 3:10 pm
Good afternoon Don,
I am reading headlines that China is selling 55% auto, last 3 months rang is above 60%, so auto industries are doing very well? So this will help to GM? Does this make sense? Is Chines Govt. helping citizens to buy the car with incentive or low interest? Or it will be like another real estate?
I enjoy y
March 9th, 2010 at 5:38 pm
Hi Joe. Investors holding HAC need not be concerned about currency risk. All U.S. equity positions are fully hedged.
March 9th, 2010 at 8:14 pm
Hi Don, feel markets correcting, so sold HXU and am contemplating buying HXD if tomorrow is a down day. Also thinking of buying HOD as Crude seems to have come upon temporary resistance.Also carefully watching XEG for further weakness for a buy later. What do you think ? Thanks.
March 9th, 2010 at 9:19 pm
Roy,
Are you still planning to hold on to PAA.to? I feel like I should get out and put my money to work elsewhere.
Thanks,
KC
March 9th, 2010 at 9:23 pm
Don,
Thank you for all the answers to the numerous questions in the past couple of days. Techtalk is getting more informative each day and its quite a lot to absorb and digest, but thats a good thing.
KC