ShareThisPre-opening Comments for Friday June 11th
U.S. equity index futures are lower this morning. S&P 500 futures are down 8 points in pre-opening trade. Index futures moved lower following release of May Retail Sales. Consensus for Retail Sales was an increase of 0.2% versus and increase of 0.6% in April. Actual was a decrease of 1.2%. Excluding autos, consensus for Retail Sales was a gain of 0.1%. Actual was a decrease of 1.1%.
The U.S. Dollar strengthened and the Euro weakened following the May Retail Sales report.
Goldman Sachs upgraded Medco Health Services from Neutral to Buy.
National Semiconductor slipped 1% despite reporting higher than consensus quarterly results.
Jeffries launched coverage on the Silver sector. Hecla was rate a Buy with a target price of $7.00. Couer D’Alene was rated a Buy with a target price of $20.00. Pan American Silver was rated Neutral with a target price of $28.00
CIBC initiated coverage on Canada’s senior energy stocks. Encana, Canadian Natural Resources, Talisman, Cenovus, Nexen and Suncor were rated Sector Outperform. Imperial Oil was rated Sector Under Perform.
Motorola and Research in Motion announced settlement of a licensing agreement.
WWW.Equityclock.com stock of the day
Technical Analysis: Merit Medical Systems (MMSI)
http://www.equityclock.com/2010/06/10/merit-medical-systems-inc-nasdaqmmsi-technical-analysis/
Technical Action Yesterday
Technical action by S&P 500 stocks was quietly bullish yesterday. Two stocks broke resistance (Conagra and Medco Health Services) and none broke support. The Up/Down ratio improved from 0.80 to (187/229=) 0.82.
Technical action by TSX Composite stocks also was quietly bullish. Two TSX Composite stocks broke resistance (Forzani Group and Northwest Trust) and none broke support. The Up/Down ratio improved from 0.82 to (75/92=) 0.82.
Interesting Charts
Short term momentum indicators for the Euro are recovering from an oversold level.
Conversely, short term momentum indicators for the U.S. Dollar have rolled over from overbought levels.
Technical signs of a bottom in the Euro and corresponding technical signs of strength in the U.S. Dollar were the main reasons for strength in North American equity markets yesterday.
THE CASTLEMOORE INVESTMENT COMMENTARY
US Dollar or the Dixie Takes a Pause
Global equity markets are now affected by the unwinding of the “carry trade” as they are by macro economic and political issues. In fact, they are somewhat intertwined in a push-pull relationship between the two forces. As we released in late December (CMI Release 13 DEC 09) the break of the downtrend of the US dollar against the basket of global currencies - the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc – foreshadowed a change in the future of global stock market risk assumptions.
CMI Chart – Press Release 13 DEC 09
The same chart today…..
As will be noticed, though we are at short-term levels that are “overbought”, the uptrend in the US dollar against the global basket is clear. Over bought conditions may dissipate quickly with only a few upside days in equities, the dollar’s “Moriarty”
The Trifecta of the Nasdaq, Copper and Shanghai Show Stock Market Fractures
More evidence is mounting that the bounce from the lows (March 9, 2009) may have already set the high-water mark for prices. The “trifecta” of Copper, the Nasdaq and the Shanghai led markets higher by bottoming first in late fall of 2008 and with the exception of the Nasdaq did not come close to the final trough in March 2009. The Shanghai, now down 28% since its peak in July suggests a pause or retracement of the up move in equities from that trough.
Use of a 125 day MA
Just as an aside, its been noted by our team the last few years many prop and trading desks have been rather fond of the 125d MA.
Market Focus
Strength on a weekly basis to June 4th has been seen in Canada in Gold Producers, Telecom and Energy and on a monthly basis in Small Caps, Health Care and Real Estate. In the US the weekly winners have been Utilities, Consumer Discretionary and Consumer Staples; monthly, Consumer Discretionary, Industrials and Financials.
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CastleMoore Inc.
Buy, Hold…and Know When to Sell
WWW.Equityclock.com reports
Clock that stock: Walgreen (WAG)
http://www.equityclock.com/2010/06/10/walgreen-company-nysewag-clock-that-stock/
Market sentiment: Options activity for June 10th
http://www.equityclock.com/2010/06/10/market-sentiment-options-activity-for-june-10-2010/
FP Trading Desk Headline
FP Trading Desk Headline reads, “JP Morgan hikes gold targets”. Following is a link to the report.
http://business.financialpost.com/2010/06/10/j-p-morgan-hikes-gold-targets/
Lou Schizas’ Blog
Lou says “Fortune Minerals has two questions that need answers”. Following is a link to the report:
http://www.happycapitalism.com/2010/06/fortune-minerals-has-two-questions-that-need-answers/
Tech Talk and EquityClock.com’s Financial Post Column
(available tomorrow at www.nationalpost.com by paid subscription).
The topic is “Setting the stage for the seasonal trade in gold equities”.
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:
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 $10.88 June 10th 2010
· Open 10.79
· Close 10.88 (Up $0.04)
· High 10.88
· Low 10.79
· Bid 10.86 x5
· Ask 10.90 x10
· Volume 17,209
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.36
· Net Asset Value per unit: $10.81 (Up $0.01)
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Discussions from the Tech Talk Forum:
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June 11th, 2010 at 3:13 am
How do you think the Canadian miners will perform through the summer. FM.to and QUX.to charts look interesting, however I’m tryng to keep my power dry these days.
June 11th, 2010 at 4:13 am
I like the use of the 125 day MA above. I use the 150 often.
The cross I look at is the Euro/Yen. It topped in Aug 08 and its change in direction down indicated a big selloff was on its way. The cross turned up in Feb 09 preceding the rally. It was sideways until Jan 2010 and has since dropped in as sharp a selloff as the fall of 08 to its lowest level in 5 years. I wouldn’t yet say it is oversold.
As for the trifecta above consider using the copper gold ratio as a leading indicator. It seems to turn direction about a two weeks before SPX and recently ticked up. Its 50 day MA just descended below the 200 however and both are downward sloping after rolling over at the end of April.
Type in $COPPER:$GOLD in StockCharts. It turned down earlier this year and is also highly correlated SPX.
June 11th, 2010 at 5:25 am
Hi Don:
I bought SGG (Sugar ETN) below $39.00, as it was bottoming. I understand that it’s seasonal strength runs into July. However, it has had a pretty good little run up. To me, it seems due for a little correction. Is it wise to continue to hold right on through the seasonal period, sell part of my position, or, how will the charts let me know that it’s time to sell?
DOUG
June 11th, 2010 at 6:56 am
Don/Jon,
With nat gas seasonality coming late summer…how does the current challenges in the energy sector change the entry point?
Thanks Greg
June 11th, 2010 at 8:44 am
Doug, why not move your stops up? Just a suggestion.
June 11th, 2010 at 9:05 am
In addition to Don’s buy signals (Stockastics moving above 20%, RSI moving above 30%, MACD spread narrowing, price and recent positve strength – see January 27th, 2010) I am looking for volumes at least equal to the 200 MA and at least two days up, in these volatile times. I haven’t been buying on these terms but there seems to be some bargains developing out there.
Am I too chicken? Anybody have any better ideas?
June 12th, 2010 at 7:53 pm
Hi RichardL. Base metal stocks have recovered nicely during the past few trading days partially in response to weakness in the U.S. Dollar are partially in response to strength in the Shanghai Composite Index. Several fundamental analysts have turned positive on the sector during the past few days. Additional short term strength in the sector is possible for nimble traders.
June 12th, 2010 at 7:56 pm
Hi Doug. Technicals on SGG continue to improve. It broke above a base building pattern on Friday. Last week, it was the strongest commodity on the board. Seasonal influences remain positive. Preferred strategy is continue to hold until near the end of the period of seasonal strength.