Pre-opening Comments for Friday April 30^th

U.S. equity index futures are mixed this morning. S&P 500 futures are down 1 point in pre-opening trade. Index futures eased slightly following release of the advanced first quarter GDP report. Consensus was annualized real growth at a 3.3% rate. Actual was growth at a 3.2% rate.

Commodity prices including gold, crude oil, silver and copper are slightly higher following mild weakness in the U.S. Dollar Index.

Canada’s economy continues to grow at a satisfactory rate. Real GDP recorded a gain of 0.3% in February. Consensus was a gain of 0.3%. The Canadian Dollar was unchanged on the news.

First quarter earnings reports continue to surprise on the upside. Domtar and Chevron reported higher than consensus earnings.

Goldman Sachs fell 3% after Federal prosecutors confirmed that they were exploring the possibility of registering legal charges against the company.

Cenovus Energy slipped slightly after UBS downgraded the stock from Buy to Neutral. Target price is $31.

The U.S. oil services sector is trading lower after FBR Capital downgraded the sector. President Obama announced this morning that no new offshore drilling will be allowed until after the Gulf of Mexico oil spill disaster is investigated.

(Mr. Vialoux is scheduled to appear on Market Call Tonight on BNN at 7:00 PM EDT today)

Technical Action Yesterday

Technical action by S&P 500 stocks was mixed yesterday. Three S&P 500 stocks broke resistance (Life Technologies, Newmont and Valero Energy) and six stocks broke support (Apollo, Cabot Oil and Gas, Diamond Offshore, DeVry, Harmon International and Iron Mountain). The Up/Down ratio increased from 7.50 to (412/54=) 7.63.

Technical action by TSX stocks also was mixed. Three TSX stocks broke resistance (Celtic Explorations, Great Basin Gold and Semafo) and four stocks broke support (Altagas, Emera, Maple Leaf Foods and Shoppers Drug). The Up/Down ratio slipped form 3.16 to (140/45=) 3.11.

Interesting Charts

More gold stocks broke resistance levels (e.g. Newmont Gold, Great Basin Gold)

A shot across the bow? Many trusts will need to convert to common shares by the end of the year. When the conversion is completed, they will have fewer funds available for distribution. Announcements about conversions can have a significant negative impact on the trust units. AltaGas Income Trust is an example.

More reactions to first quarter earnings reports! Unless a company reports an extraordinary gain relative to consensus, equities quickly come under profit taking pressures on news.

THE CASTLEMOORE INVESTMENT COMMENTARY

It’s been a busy week.

Sovereign debt of Greece and Portugal were downgraded on Tuesday, Spain on Wednesday. The continued problems in the Euro-zone had led to an exodus from the Euro and into the US dollar, which is fine with us since we shorted the Euro in aggressive accounts, but the €64 question is, how far it will spread. It’s safe to say that a contagion would be bearish for Euro-zone equities as well as debt, and bullish for the US dollar and gold. But considering that more than 40% of revenues of S&P 500 companies are from outside the US, corporate profitability, and, by extension, the S&P index, could be impacted. This, combined with a pre-existing overbought condition, warrants caution in equities.

The Senate investigation of the financial crisis of 2008 is underway, with Goldman Sachs, owing to its status as the Street’s most profitable firm, the prime suspect. We are too far removed from the scene to judge, but that hasn’t stopped many in the media. It’s hard to imagine how a security could be rigged to fail, given that the underlying security, the subprime mortgage market, has no inside information to exploit. In other words, any security bought and sold based solely on expectations can’t be manipulated. But we’ll leave that to Mr. Levin and his colleagues to sort it all out for us.

What concerns us is the impact on the entire financial sector in the US, which would impact the market at large. Certainly, if there is one offender there is apt to be more. Difficult as it is at times, we can measure risk on the basis of fundamental and technical inputs, events like Senate investigations, particularly those that have political undertones, are almost impossible to quantify. Thus, there is increased risk across the entire financial spectrum, providing a further reason to tread carefully in equities.

….Copper has caught our eye here too as it struggles when the market is trying to reaccelerate. Maybe a divergence can occur – that N.A. markets can go higher ‘alone’ – as has been the case with Asia in general since the New Year, with the lead market, Shanghai, off 13.5%

Last, something odd has occurred in our relative strength ranking tables: the indices themselves be they US or Canadian, occupy the top 3 spots in both the weekly and monthly tables. We did have such an upward migration in the late fall of 2007 and early 2008 but not to this extent. One possible answer (and we are open to suggestions) is that there are less obvious undervalued securities and investors are searching our laggards. The chart below of stocks above their 200dma is trying to move higher back above its own 200dma….

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WEBINARS/SEMINARS

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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

 

The Financial Philosopher
Ken Norquay, CMT
President, Market Street Investment House
Brain Feel vs. Gut Feel
April 29, 2010

Stock market analysis is a brain-power business. It’s not at all touchy-feely. At least, that’s what the analysts would like us to believe.

They love to grind the facts and figures of the latest news stories through the discipline of logic. Right now, the main focus of analysts is on Europe. A cloud of volcanic ash has played havoc with the tourist industry and a sovereign debt crisis is rocking the credit markets. Logically, none of this news is good for the world’s complex economy: the financial world is a riskier place than we had thought. On the other hand, the once bankrupt General Motors recently announced refits for several of its factories. Corporate profits seem to have rebounded from the depressed levels of one year ago. Logically, this is good news for the stock market: the economy is not as sick as we had thought. To what investment conclusion would our logical brains come, based on this analysis of current economic events?

Right now just over 70% of investment managers are bullish on the stock market. That’s the conclusion they came to. (The other 30% are either bearish or neutral.)

What should we do?

For every good-news story, there is an equally compelling bad-news story. And the Canadian stock market has gone sideways for the past month, reflecting the inconclusiveness of logical stock market analysis. So what should we do? Should we invest in the stock market right now? Logic doesn’t help much, does it? Instead of relying exclusively on our intellectual brain for guidance, let’s try another faculty: our instinctive gut feel.

Remember how we felt in the winter of 2008-2009? The market had utterly collapsed, down almost 50% in nine months. Our guts were in knots, growling over the losses. That’s the mysterious thing about gut feel: in the investment world, it’s a contrary indicator. When we feel least confident (as we did in the winter of 2008-2009), it’s the best time to buy. Contrarily, when we collectively feel most confident, it’s the best time to sell.

Determine your gut feel ― and act against it

In my investment book, Beyond the Bull, I explain how the Theory of Contrary Opinion works: the best time to buy is when everyone is negative and the best time to sell is when the crowd is optimistic. This is the irony of using gut feel to make our investment decisions. Once we determine what our gut feel is, we should act against it. When we feel most bullish about the market, we should sell. When we feel most bearish, we should buy. No wonder so few successful investors use gut feel in their buy-sell decisions. It’s like betting against ourselves.

How do you feel about investing in the stock market right now? Remember, about 70% of investors believe the market will be higher in six months than it is now. Logically, this is a time to be thinking ‘sell,’ not ‘buy’. But logic is not what we are being asked to use right now. The question is: How do you feel about investing in the stock market? Feel ― not think. In the investment world, it is difficult to separate our feelings from our thoughts. It is hard to separate our brains from our guts.

Let the Computer Do the Thinking

In the stock market, money is made by buying and selling, not by thinking and feeling. To assist in the buying and selling process, we use objective investment models ― an objective way of determining whether the stock market is going up or down. Once we have found that objective model, we let the computer do the thinking and feeling. We do the buying and selling.

To order your copy of Beyond the Bull and the Five Levels of Investor Consciousness CD, or to sign up for Ken’s free monthly webinar, visit www.gobeyondthebull.com (Bullmanship Code = SS32).

This article and others by Ken are available at http://kennorquay.blogspot.com.

Contact Ken directly at ken@castlemoore.com.

Horizons AlphaPro Public Events

The Horizons AlphaPro Team will be hosting investor seminars in the following cities:

Markham – May 17	Oakville – May 18	Toronto – May 19
Hilton Suites Toronto/Markham Conference Centre & Spa Room: C.C. Ballroom I & II	Glen Abbey Golf Club There is no specific room name	Four Seasons Hotel Room: Tudor Stuart Orange
8500 Warden Avenue Markham ON L6G 1A5	1333 Dorval Drive Oakville ON L6M 4G2	21 Avenue Road Toronto ON M5R 2G1
Register for Markham Event	Register for Oakville Event	Register for Toronto Event

Event runs from 7:00 pm to 8:30 pm.  Refreshments will be provided.

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, 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 $10.80 April 29^th 2010

· High 10.85

· Low 10.80

· Bid 10.78×5 lots

· Ask 10.85×30 lots

· Volume 2,870

· Open 10.85

· Close 10.80

· 52-week High 10.91 on Apr 14

· 52-week Low 9.44 on Feb 5

· Beta 2.28

· Net Asset Value per unit: $10.81

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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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