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Pre-opening Comments for Tuesday July 27th
U.S. equity index futures are higher this morning. S&P 500 futures are up 7 points in pre-opening trade. Strength can be attributed to a series of second quarter reports that exceeded consensus earnings estimates and included positive third quarter guidance. Companies in this category include AK Steel, Dupont, UBS, Daimler, Lockheed Martin, Lexmark, Domino’s Pizza, Rogers Communications, Cummins, Office Depot and Under Armour.
Not all second quarter reports released overnight received a positive response! Occidental Petroleum and L3 Communications moved lower after reporting results that were slightly less than anticipated.
Response to the May S&P Case-Shiller home price index was minimal. Home prices rose 1.3% on a month over month basis and 4.6% on a year over year basis.
Stiffel Nicolaus changed its opinions on several retail merchandiser stocks. Costco was raised from Hold to Buy and Wal-mart was downgraded from Buy to Hold.
WWW.EquityClock.com stock of the day
Technical Analysis: Becton Dickenson (BDX)
http://www.equityclock.com/2010/07/26/becton-dickinson-and-co-nysebdx-technical-analysis/
WWW.EquityClock.com seasonality chart of the day
Rogers Communications has a history of coming under profit taking pressures shortly after releasing encouraging second quarter results.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/07/clip_image002111.gif "clip_image002[1]")
Technical Action Yesterday
Technical action by S&P 500 stocks was bullish yesterday. Twenty six S&P 500 stocks broke resistance yesterday and none broke support. The list of stocks breaking resistance was too long to include in this report. The Up/Down ratio increased from 0.60 to (170/254=) 0.67.
Technical action by TSX Composite stocks also was bullish yesterday. Seven TSX stocks broke resistance (BCE, Brookfield Properties, CCL Industries, CI Financial, IGM Financial, Rogers Communications and Sherritt) and none broke support. The Up/Down ratio increased from1.06 to (92/81=) 1.14
Seasonality in the Gold Equity Sector
The gold equity sector has just entered its period of seasonal strength. Preferred strategy is to start purchasing gold equities and related ETF at current prices and to add to positions in weakness.Following is a series of seasonal studies on major gold producer equities.
Gold equity indices show the same seasonal pattern
Junior gold equity ETFs recently started to outperform big cap gold equity ETFs. Short term momentum indicators on both are recovering from oversold levels.
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The Financial Philosopher |
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Ken Norquay, CMT |
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Partner, CastleMoore Inc. |
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Conrad Black |
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July 21, 2010 |
Conrad Black is still a star. The media still love him. Newspapers and electronic media report everything that happens to him with great enthusiasm and in great detail. But let’s face it: Lord Black is a has-been. His days of power and influence are over. We don’t see sports reporters following the lives of Bobby Orr or Wayne Gretzky. We don’t see Parliamentary reporters telling us detailed stories of Brian Mulroney or Jean Chrétien. So why do editors and journalist still love to tell us about Conrad Black?
Perhaps it’s because he was once a media baron; he’s one of them. He’s a member of the club ― their club. Maybe that’s why they love to tell us every little thing about his Lordship’s up-and-down career. Maybe they actually do have a sincere affection for this man, even though he has been convicted of several serious criminal offences. They are experts on Conrad Black. But I wonder what good their expertise can do. Just because they know him and love him and report all the details of his life, are we obliged to pay attention? Or would our time be better spent following the story of someone we love, someone who is interesting to us, someone who is a member of our club.
In Beyond the Bull, my book on investing, I discuss the importance of paying attention to the news. In the investment world, we need to pay attention to news that affects our investments ― and to ignore news that is irrelevant. Part of learning to become a better investor is learning what’s important for us and what’s important for someone else. The endless stories about Lord Black’s adventures in crime and their consequences seem to be important for someone else.
I wish investing were always this simple. But the financial world is a perverse place. Sometimes what seems important is useless and what seems useless is important. In a way, stock market news is a bit like Conrad Black news: interesting, but not important to investors.
The investment firm Gluskin Sheff released a study on the long-term profitability to Americans of certain investments over the past ten years. Of the asset classes they studied, the US stock market was the poorest performer at -2.3% (annual return for 10 years). The best performing asset class over the past ten years was gold at +33%. US government bonds rang in at +11%. You’d think that prudent investors would naturally have their investment in the better-performing bonds and gold, and not in the poorer-performing stock market.
Yet day after day, we see an endless stream of news about the stock market ― and hardly ever do we see news about gold or bonds. The financial media seems hooked on the underperforming but glamorous stock market and uninterested in bonds and gold: the investments that are leading the pack. It’s like sports writers filling the dailies with Orr and Gretzky ― or Parliamentary writers following Mulroney and Chrétien . . . or Conrad, Lord Black. Interesting, but not important.
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.
ETF News
Global X Funds Lists Global X Lithium ETF on NYSE Arca
July 23, 2010–NYSE Euronext (NYX) announced that its wholly-owned subsidiary, NYSE Arca, today began trading the Global X Lithium ETF (Ticker: LIT). The ETF is sponsored by Global X Funds.
Special Free Services available through www.equityclock.com for a limited time only
Equityclock.com is offering free access to a data base showing seasonal studies on individual stocks and sectors. The data base holds seasonality studies on over 1000 big and moderate cap securities and indices. Free services are available for this summer only. Enjoy while available!
To login, simply go to http://www.equityclock.com/charts/ and enter the
following details:
Username: equityclock.com
Password: equityclock.com
Also, please take advantage of Google ads and other ads available in the data base.
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 $10.88 July 26th 2010
· Open 10.88
· Close 10.88 (Unchanged)
· High 10.88
· Low 10.88
· Bid 10.88 x13
· Ask 11.00 x5
· Volume 1,328
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.25
· Net Asset Value per unit $10.85 (Down $0.02)
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July 27th, 2010 at 6:18 am
Hi Don
Thanks for the report.
Which gold stock ETF is the best to take advantage of the seasonal trade?
July 27th, 2010 at 7:20 am
Hi Jan M…….the nat gas etf’s seem to be a different but how do you decide on buys for HXD and do you always get out of your position by the end of the day. I often get caught by putting tight stops in but it gaps lower than my stop the next day. I don’t know what to do about that. If you or anyone else has any suggestions, it would be greatly appreciated!
July 27th, 2010 at 8:00 am
Whenever I traded ETFs like HXD I never bought in the first hour of trading and I always sold it 15 mins to half hour before 4:00. I never held overnight. I also used technical indicators to determine if there was an entry point and tight risk controls and position sizing. I often legged in and out of a position (25%, 50% etc…). I was alway open to the idea that there may not be favourable conditions for trading on any given day as well.
I used mostly slow stochastics on a 15 minute chart and money flow and moving averages to indicate entry points, and sometimes Bollinger bands. It all depended on the conditions.
July 27th, 2010 at 9:02 am
Hi Amelia…………thanks for that! Do you find that you have problems with stops with the market gapping up/down the next day when you do hold something? What can you do about it???
July 27th, 2010 at 9:24 am
Amelia: Don perfer GDX-N .
July 27th, 2010 at 9:33 am
I wouldn’t hold a volatile ETF overnight because I just don’t know what the news flow is going to be for those 17 and a half hours. I used trailing stops to protect gains throughout the day and a hard stop for the capital I risked in the trade. One thing you could do if you really want to hold overnight is to evaluate the volatility of the stock for the past few days and use this metric to determine the stops so that even if it gaps on the open your position may remain intact if the gap is within the volatility you are comfortable with. But this could not be good if the gap change on the open indicates a change in the direction of the market. But I would only trade a volatile ETF like HXD and HXU on a trend or a change in direction of a trend. Position size depended on the momentum of the moment and stops depended on the volatility and my risk parameters.
I used to trade HXD and HXU using the indicators above as well as parabolic SAR. I would compound the gains with changes in direction of the market (say on a 10 minute basis) by switching between the ETFs and I did hold these ones overnight sometimes. The strategy worked best when volatility was very high and I did it during the fall of 2008 for about 2 months.
July 27th, 2010 at 10:03 am
Thanks for thoughts and ideas, Amelia!
July 27th, 2010 at 10:23 am
Hi, Anyone any comments on gold. GLD appears to be right at support at 113. Dave
July 27th, 2010 at 10:52 am
Hello Don,
What is the difference between GDX and GDXJ? Do you prefer one over the other and why ? Why are we seeing a big dip in gold equities today ? Thank you for your help as always.
July 27th, 2010 at 12:28 pm
DON – thanks for the gold advise. What is the ideal date for GAS this year – end of Aug or early Sept?
BTW – I don’t often agree with Ken Norquay…but the news media is out of control re. his Lordness Black.
Greg
July 27th, 2010 at 12:59 pm
Amelia,
Your comments with reference to HXD, HXU are in past tense. Do you no longer use these and why not? I appreciate your willingness to share. Thank-you.
July 28th, 2010 at 4:02 am
Hi krystal
Yes I used to trade these but can’t stomach it anymore (even though I had tight risk controls). The reason is volatility isn’t high enough right now to get clear direction from the indicators and because you basically have to watch the trade all day.
The VIX is only 23 right now and I wouldn’t use the strategy I had unless it was over 30. It would have worked in May of this year.
The trading was excellent in the fall of 2008.
You can trade them over a period of days but you have to be very careful and have conviction. The other thing is these instruments have a “tracking” error when held for long periods of time if the market is whipsawing up and down and not on a strong trend line.
July 28th, 2010 at 5:05 am
VXX is an even worse ETF. USO doesn’t even track the oil prices – see business week this week for further details on ETFs.
Some ETFs are just horrible investments.
July 28th, 2010 at 11:00 am
Hi KC. GDX holds a basket of global senior producers. GDXJ hold a basket of junior producers and explorers. Best to go to the Market Vector web site to see content and weights. Selection depends upon your risk/reward parameters.
July 28th, 2010 at 11:06 am
Hi Greg DS. EquityClock.com shows an average optimal time to enter the natural gas trade at the end of August. However, interesting comments on CNBC this morning suggest that timing is likely to be earlier than usual this year. The latest long term weather forecast is that likelihood of hurricanes during the next two weeks are highly unlikely, but thereafter are highly likely and are likely to lead to a series of significant storms. Natural gas prices are highly sensitive to anticipation on hurricanes. Meanwhile, prices are moving higher due to greater demand for power needed for air conditioning.