Pre-opening comments for Thursday July 29^th

U.S. equity index futures are higher this morning. S&P 500 futures are up 7 points in pre-opening trade.

Index futures were virtually unchanged following release of the weekly jobless claims report. Jobless claims fell 11,000 last week to 457,000.

Genzyme gained 5% on news that the company had received a takeover offer from Sanofi Aventis.

Second quarter reports continue to flood in. Most companies are exceeding consensus earnings estimates. Companies in this category that reported overnight included Visa, Barrick Gold, Akamai, Exxon Mobil, Citrix Systems, Southwestern Airlines, Celanese, Colgate Palmolive, Goodyear, Potash Corp. and Motorola. However, responses to reports varied significantly. Companies that substantially exceeded consensus saw their share prices move higher. Barrick Gold added 1%. Southwest Airlines gained 3%. Exxon Mobil improved 1%. Citrix Systems gained 9%. Potash Corp added 0.5%. Companies that merely exceeded consensus estimates saw their share prices come under profit taking pressures on news. Visa slipped 0.5%. Akamai dropped 5%. Colgate Palmolive fell 5%. Celanese gave up 2%. Goodyear lost 2%. Motorola slipped 1%.

Strength in Citrix Systems was helped by upgrades by Deutsche Bank, Cowen and BW Baird.

Companies that missed consensus estimates were punished in overnight trading. Kellogg fell 5% after reporting less than consensus second quarter earnings and after reducing third quarter guidance. Symantec plunged 9%. Nvidia dropped 8%.

WWW.EquityClock.com seasonality chart of the day

Potash Corp has a history of moving higher between now and the end of the year.

Technical Action Yesterday

Technical action by S&P 500 stocks was quietly bullish yesterday. Four S&P 500 stocks broke resistance (CB Richard Ellis, Family Dollar Stores, Kraft and Wyndham Worldwide) and one stock broke support (Boston Scientific). The Up/Down ratio improved from 0.70 to (175/245=) 0.71.

Technical action by TSX Composite stocks also was quietly bullish. Two TSX stocks broke resistance (Canadian Western Bank and Toronto Dominion) and one broke support (Encana). The Up/Down ratio slipped from 1.13 to (90/81=) 1.11.

A Comparison Between iShares S&P/TSX 60 Index Units (XIU) and Horizons AlphaPro S&P/TSX 60 Equally Weighted Units (HEW)

Horizons AlphaPro launched its equally weighted unit earlier this month. Both products have merit as investment products that track Canada’s top 60 companies.A closer examination is needed to determine when each product is preferred.

Horizons AlphaPro notes on its website that an equally weighted TSX Index has outperformed a capital weighted index during the past 11 years. Following is a link to the site showing the chart: http://www.hapetfs.com/pub/en/etfs/?etf=HEW&r=o. Conclusion in the AlphaPro study is not unusual. Similar long term studies comparing performance of the S&P 500 Index and its related ETFs (e.g. SPY) with performance of the equally weighted S&P 500 and its related ETFs (e.g. RSP) show that the equally weighted Index and related ETFs performed better. Following is a link to a site showing the chart:

http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DFactsheet_SP_Equal_Weight_Index.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243730067079&blobheadervalue3=UTF-8

Each product has a period of time during the year when it tends to outperform. The determining factor is sector weights. For example, the equally weighted S&P 500 Index tends to outperform the capitalization weighted Index in the fall due to its higher weights in Consumer Discretionary, Industrial and Materials sectors. The capitalization weighted Index tends to outperform in spring due to its heavier weight in the energy sector.

What about the TSX 60 index ETFs? Following is a comparison of their percent weights by sector:

Index                              Capitalization Weighted (%)     Equally Weighted (%)

Financials                                     34                                      17

Energy                                         27                                      25

Information Technology                   3                                       2

Telecom Services                            5                                       5

Industrials                                      5                                       7

Health Care                                    0                                       2

Materials                                      18                                     20

Utilities                                         1                                       3

Consumer Staples                            2                                      8

Consumer Discretionary                   5                                     11

Given the seasonal strength in Canadian sectors, HEW is favoured in fall due to its higher weights in Materials and Consumer Discretionary sectors and is favoured in summer due to its higher weights in Consumer Staples and Utilities. XIU is favoured in spring due to its higher weights in the Financial Services and Energy sectors.

Weekly Sector SPDR Review

Seven of the nine sectors have formed a trading range between their July 1^st low and their June 25^th high. The remaining sectors (Consumer Staples, Utilities) are trading above their June 25^th high.

Best performing sectors during the past week were Utilities, Financial Services and Industrials. Worst performing sectors were Health Care, Energy and Consumer Staples.

RSI and MACD for all sectors continue to trend higher. All except Health Care have recovered to at least a slightly overbought level.

Stochastics for all sectors except Health Care have reached overbought levels (at or above 80%) and are close to sell signals. Health Care already has rolled over from above the 80% level.

WWW.EquityClock.com reports released yesterday

Moves following the news: Earnings reports for July 29^th

http://www.equityclock.com/2010/07/28/moves-following-the-news-earnings-reports-for-july-2/

Market sentiment: Options activity for July 28^th 2010

http://www.equityclock.com/2010/07/28/market-sentiment-options-activity-for-july-28-2010/

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 $10.89 July 28^th 2010

· Open 10.86

· Close 10.89 (Up $0.01)

· High 10.89

· Low 10.85

· Bid 10.86 x20

· Ask 10.90 x5

· Volume 9,291

· 52-week High 11.37 06/03

· 52-week Low 9.44 02/05

· Beta 2.27

· Net Asset Value per unit:$10.84 (Down $0.01)

Sponsored By...

More from the network: Stock Market Outlook for September 3, 2010 Stock Market Outlook for September 2, 2010 Stock Market Outlook for September 1, 2010 Stock Market Outlook for August 31, 2010 Stock Market Outlook for August 30, 2010