ShareThisPre-opening Comments for Friday May 28th
U.S. equity index futures are slightly higher this morning. S&P 500 futures are up 2 points in pre-opening trade.
Volume on North American equity markets is expected to be less than average today. Many institutional traders already have gone for the Memorial Day holiday.
Index futures were virtually unchanged following release of economic news at 8:30 AM EDT. Consensus for April Personal Income was a gain of 0.4% versus a gain of 0.3% in March. Actual was a gain of 0.4%. Consensus for April Spending was a gain of 0.4% versus a gain of 0.6% in March. Actual was no change.
Royal Bank was downgraded from Outperform to Market Perform by three investment firms: Scotia Capital, Macquarie and CIBC.
National Bank reported fiscal first quarter earnings in line with consensus.
Precision Drilling added 2% after Raymond James upgraded the stock from Market Perform to Outperform.
Cenovus added 1% after BMO Capital upgraded the stock from Market Perform to Outperform. Target price is $32.
WWW.EquityClock.com stock of the day
Technical analysis: Neogen Corporation (NEOG)
http://www.equityclock.com/2010/05/27/neogen-corporation-nasdaqneog-technical-analysis/
Technical Action Yesterday
Technical action by S&P 500 stocks was quietly bullish yesterday. Two S&P 500 stocks broke resistance (Network Appliances and O’Reilly Automotive) and none broke support. The Up/Down ratio improved from 1.02 to (208/201=) 1.03.
No TSX Composite stocks broke support or resistance yesterday. The Up/Down ratio was unchanged at (73/95=) 0.77.
Interesting Charts
Broadly based U.S. equity indices including the S&P 500 Index, Dow Jones Industrial Average and NASDAQ Composite Index recorded short term momentum buy signals yesterday:
§ Stochastics recovered from at or below the 20% level.
§ Relative Strength Index (RSI) recovered from at or below the 30% level
§ Moving Average Convergence Divergence (MACD) is starting to recover from an oversold level and is close to recording a positive cross over.
The short term buy signals come at a time near the Memorial Day weekend when U.S. equity markets historically have moved higher.
Strongest sector in Canada yesterday was energy. Short term momentum indicators are recovering from oversold levels.
ETF News
Bank of Montreal has launched nine more ETFs. Following is a summary:
Name Symbol MER (basis points)
BMO Long Federal Bond Index ZFL 20
BMO Real Return Bond Index ZRR 30
BMO U.S. Health Care Hedged Cdn Index ZUH 35
BMO U.S. Banks Hedged Cdn. Index ZUB 35
BMO Equal Weight REIT Index ZRE 55
BMO Small Cap Index ETF ZSE 55
BMO Junior Oil Index ZJO 55
BMO Junior Gas Index ZJN 55
BMO Emerging Markets Bond Index ZEF 60
FP Trading Desk Headline
Headline reads, “Natural gas demand to benefit from low water supply” Following is a link to the report:
http://business.financialpost.com/2010/05/27/natural-gas-demand-to-benefit-from-low-water-supply/
Keith Richard’s Blog
Keith says, “Market tops and bottoms are complex”. Following is a link to his blog:
Lou Schizas’ Blog
Lou talks about, “A bad case of gas”. Following is a link to his blog:
http://www.happycapitalism.com/2010/05/a-bad-case-of-gas/
Tech Talk and EquityClock.com’s Column in the Financial Post this Saturday (available by paid subscription at www.nationalpost.com )
The column focuses on the U.S. Medical Device sector.
Dear Colleague,
IMN is delighted to invite you to our 9th Annual Canada Cup of Investment Management, taking place once again at the InterContinental Toronto Centre, Toronto on June 17-18, 2010. For a limited time only we have 30 complimentary passes available for qualifying financial planners, independent financial advisors, or other private client wealth management professionals*. Respond now to ensure your place at Canada’s longest-running and largest investment management conference!
2010 Advisory Board Includes:
|
Savvas Pallaris, Director, |
Brent Robertson, Principal, Quantitative Equity, |
The following topics are under Advisory Board review:
- The importance of risk management and its impact on asset allocation
- Deconstructing the crises: Lessons learnt, actions taken and future implications
- The active vs. passive debate
- Overview of trends in index products and benchmarks
- Liability driven investing
- Fixed income overview, analysis and usage
- Investing in BRICs and Emerging Markets
- Electronic trading platforms
- Absolute return, long-short and quantitative strategies
- Commodities
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- Leveraged and inverse Products
- Active ETFs
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- 8th Annual Canada Cup of Investment Management Agenda
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IMN’s 9th Annual Canada Cup of Investment Management is not to be missed. Respond now to register for your chance to receive one of our limited complimentary passes*. Additionally, if you are interested in participating as a moderator or panelist at the conference, I’ll be sure to pass this information on to the conference producer who would be happy to discuss this with you further.
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We look forward to seeing you in June.
Kind regards,
Stephanie Cumbley| Business Development Associate
Information Management Network (IMN)
225 Park Avenue South, 7th Floor | New York, NY 10003
scumbley@imn.org
t: (212) 901-0590 | f: (212) 768-2410
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
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.
HAP Seasonal Rotation E.T.F. HAC $10.80 May 27th 2010
· Open 10.65
· Close 10.80 (Up $0.26)
· High 10.80
· Low 10.65
· Bid 10.84 x5
· Ask 10.85 x1
· Volume 13,800
· 52-week High 10.91 04/14
· 52-week Low 9.44 02/05
· Beta 2.30
· Net Asset Value: $10.84 (Up $0.31)
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Discussions from the Tech Talk Forum:
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May 28th, 2010 at 4:45 am
Starting after June 2 the S and P 500 could crash to about 840 in one or two days. Why?
Grantham and Rosenberg think this is where there is fair value from a fundamental basis (implies earnings of $60 and a p/e of 14). These two guys were right in estimating the effects of the credit crisis in 07 and 08.
From a technical perspective 842 is a 50% fib retracement from the March 09 lows and a 50% fib retracement (declining) from the April 26 highs. 840 also looks like a point of support from the fall of 08 and the spring of 09 and it is about the point where the market both crossed the 100 day moving average and where the slope of the 100 day moving average transitioned upward.
It could crash instead of decline slowly as volatility is still high and bad news events could panic investors (such as war (Korea, Iran) or hidden sovereign debt issues).
Call it intuition as well. I hope I am wrong because I do not want to liquidate my holdings today or Monday.
May 28th, 2010 at 7:31 am
Well i have the other side of that Bet.
May 28th, 2010 at 7:37 am
Hi Don,looks the Soverign Debt crisis has evaporated for the time being, I have been succesful in trading HOU and HOD recently and also XEG that youve mentioned in your daily reports. Whats your view of where Oils going in the next few months.Thanks for your excellent views and seasonal and technical advice . Jan.
May 28th, 2010 at 8:24 am
Hey Don,
with all these analysts talking about gold hitting $2000 by year end and it’s seasonal strength coming up, i was looking at Semafo (SMF). chart looks really good with nice rising channels of resistence and support, almost can guess what will come next, i think. what’s your opinion?
May 28th, 2010 at 9:46 am
Amelia, if you’re so bearish why don’t you just buy puts on XIU?
May 28th, 2010 at 9:47 am
Rates low, negligible inflation, valuations reasonable. Major support zone for SPX around 1050, DJIA 9800, TSX 10,700 to 11K. Sovereign debt probs are exactly that, we have a handle on the problem, unlike the massively leveraged sliced and diced residential mortgages that got us into all the trouble more recently. Are Eurozone issues overblown due to this most recent debt experience? Maybe so. USDollar index (which moves in 6 to 8 yr cycles) running into major resistance but could push signif. higher towards 105-110 longer term. Looking like the turn in mid-1990s currently. What, funadamentally, gets us to 100+, I ask? What does it mean for oil/gld?
May 28th, 2010 at 10:05 am
Sorry, XSP.
May 28th, 2010 at 11:33 am
To Amelia:
SPY has been one of my main option trading ETF’s.I am now trading it according to the BEAR trend it has developed:the extreme volit. has made it especially attactive. I have no doubt, presently, that it should go lower. However, if it does this by dribs and drabs or a toilet flush is simply an unknown, regardless of the guru seeking headlines and photo ops. Support and resistense has a way of fading or falling apart just when you convince yourself that such a happening is impossible: especially in the long term.
Be well aware of the long term but trade the short and intermed. especially with high volit. Selling calls and buying puts works well on the way down. Buying calls and selling puts works well to take advantage of the retracments or simply buy puts
as insurance.
May 28th, 2010 at 12:16 pm
I may be conservative in my estimation. Sprott is calling for lows below those of 2009 and that we are entering a major bear. I know he is just ramping up interest in his funds but the guy is the top large fund performer in Canada over the past 10 years.
He is an accumulator of gold and shorting some Canadian banks. Oil could go either way depending on the trigger couldn’t it?
Here’s an article in todays Financial Post about his call:
http://www.financialpost.com/news-sectors/story.html?id=3078746
I see things changing fast on any really bad news and the market may be vulnerable post June 2nd. We also cannot discount the extent to which the black box program traders may be in control and the speed with which they short or just sell.
May 29th, 2010 at 5:19 am
Don/Jon: Just read the Fin Post article you published on Health Care. It is very attractive as a buy but I have one question related to the current down draft of the markets. Can health care equity actually gain value when the rest of the market is tanking? I can see it under normal market conditions when the summer is say trading sideways or some sectors are down, but we are in a major correction. Can the health care sector actualy go against the tide? Alternativly do we wait through June if there is more market down draft and then get in to hit a sector rise before July 31st? Thanks
May 29th, 2010 at 5:21 pm
This link http://www.sprott.com/main3.aspx?id=54 may take you to a list of articles by Eric Sprott and David Franklin. The latest one is: “A Busted Formula”.
BTW, you can read John Embry’s opinions on “Gold” in the “Manager’s Insights” section
May 31st, 2010 at 9:39 am
Hi Marc. Just confirming that Semafo has a positive intermediate technical profile
May 31st, 2010 at 9:51 am
Hi DaddyO. Just confirming that the Health Care and some of its sub-sectors (e.g. Medical Devices, Biotech)have a history of outperforming equity markets and showing positive real performance during the May to October period. News this year about new products announced at conferences plus the initial addition to the U.S. healthcare roles this September add to their potential. Am not looking for equity markets to tank during the May to October period this year, just a downward sloping volatile market that will be difficult to read. If interested in seasonal trades this summer, best to focus on sectors with lower than average volatilty.