ShareThisPre-opening Comments for Tuesday August 24th
U.S. equity markets are sharply lower this morning. S&P 500 futures are down 13 points in pre-opening trade. Index futures are anticipating disappointing economic news. July existing home sales to be released at 10:00 AM EDT are expected to fall to 4.72 million units from 5.37 million units in June.
Goldman Sach’s economists noted this morning that consensus estimates for GDP growth and corporate earnings in the second half of 2010 need to be adjusted downward. He currently is estimating second half GDP growth at 1.5%.
Economic news released this morning showed that Canada’s economic growth also is sputtering. Consensus for June retail sales was a gain of 0.4% versus a decline of 0.2% in May. Actual was a gain of 0.1% in June. In addition, May retail sales were revised to a decline of 0.4%. The Canadian Dollar weakened on the news and is down more than $0.01 U.S. in pre-opening trade.
The fiscal third quarter earning report season by Canada’s largest banks is off to a difficult start. Bank of Montreal reported less than consensus earnings. Consensus was $1.21 per share. Actual was $1.14.
Celestica fell 3% after Ticonderoga downgraded the stock from Buy to Neutral.
Technical Action Yesterday
Technical action by S&P 500 stocks was quiet yesterday. No S&P 500 stocks broke resistance and five stocks broke support (Robert Half, ADP, Goodyear, Legg Mason and Principal Financial). The Up/Down ratio slipped from 0.69 to (161/240=) 0.67
Technical action by TSX Composite stocks also was quiet. One TSX stock broke resistance (Davis & Henderson) and none broke support. The Up/Down ratio was unchanged at (102/66=) 1.55
BMO InvestorLine and Horizons AlphaPro Presents:
A Conversation with Don Vialoux
When: Thursday August 26th starting at 5:00 PM EDT
Where: York Room, First Canadian Place, 68th floor, Toronto
Everyone is welcome
Please RSVP by sending an email to rsvp@hapetfs.com or call 866 641 5739
Interesting Charts
Genzyme has been a notable gainer during the past couple of trading days. Negotiations for a possible takeover by Sanofi Aventis presumably are continuing. The take out of Genzyme (if and when completed) will have a positive impact on the biotech sector. At least some of the funds from a takeover are expected to flow back into the sector and will raise expectations for other possible takeovers in the sector. The biotech sector currently is in the middle of its period of seasonal strength.
Ditto for grain prices! They moved slightly higher during the past few days despite challenging equity markets. Improving grain prices is good news for the Agriculture sector and its related ETFs. The following chart shows performance of the grain ETN.
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Points of View
By Adrienne Toghraie, Trader’s Coach
There are many points of view that you have for all of the areas of your life. Basically, every story you hold on to has your own point of view. Those points of view are developed by your experiences and the beliefs you choose. Analyzing, and questioning those “points of YOU,” can give you a new perspective. The following exercise can dramatically change your life should you choose to follow through on completing it. And of course, what changes your life, changes your trading.
First, let us look at some of the areas in life where changing your point of view would make the difference between status quo and earning more profits.
Life issues:
· What do you think about life in general?
· What do you believe about your life in particular?
· How do you view your childhood?
· What do you feel about each significant person in your life?
· What would have to change to improve your life and relationships?
All negative and conflicting thoughts will limit your success.
Trading issues:
· What do you believe about your trading strategy?
· How do you feel about your discipline and consistency?
· How much would you be earning if you followed your rules?
· What would have to change in order for you to earn more profits?
Once you have a good strategy, then it is all about you following that strategy.
Take each one of these issues and look at them from the point of view of others whom you respect. You might choose different people for each one of these points of view, or look at many points of view from several people.
People such as:
· Family members
· Peers
· Mentors
· Clergy
· Teachers
· People you do not know, but that you can imagine
Notice how you feel and what lessons come up for you when observing the point of view of others.
Here is an example using one of the trading questions from above:
Question:
How do you feel about your discipline issues?
Your point of view:
My discipline would improve if I trusted myself and trusted my system.
Friend’s point of view:
I’ve seen you be disciplined in every area of your life. You might want to check out what you are doing differently in your trading.
Spouse:
Until you can prove to me that you can make money, I will see trading as gambling. If it takes discipline to make the difference, then you must define what that means. If you cannot do it or find someone to assist you in becoming disciplined, get out of trading.
Mentor’s point of view:
Your discipline must start with your completing a plan and testing your theory.
If you can make money in simulated trading and cannot in trading real money, then the issue is you and you should seek out help.
Of course, if you are being honest with yourself, you might not like all the answers. But remember that all answers have an element of truth and lessons to be learned.
Conclusion
The point of view you choose to have will make the difference in status quo or greater success. When you allow yourself to see other people’s point of view, then you might be giving yourself the added edge you need to make the difference between status quo and great success.
Adrienne’s Calendar of Events
www.TradingOnTarget.com
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8/25 |
Online Event |
Motivators for a Down Day – Free Webinar http://tradingontarget.omnovia.com/registration/pid=73481282070462
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Adrienne |
Free |
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9/12-9/15 |
Live Expo |
TraderBambu Expo in Budapest, Hungary September 12 – 15 Adrienne presents Recognizing 15 Sabotage Traps & Traders’ Secrets Workshops September 14 Call now – 919-851-8288 for details |
Adrienne |
Fee |
Go to www.TradingOnTarget.com or email: Adrienne@TradingOnTarget.com for more information
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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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Shooting Star Month |
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August 12, 2010 |
Each summer we get a special treat. In mid-August, the earth’s orbit passes near the asteroid belt, resulting in the season of shooting stars. We see far more shooting stars in August than any other month. Shooting stars are really meteors that enter the earth’s atmosphere and burst into flames. All we have to do to see this annual show is gaze at the night sky in mid-August; the odds are that we will eventually see one. If we watch long enough, we will see several. It’s a seasonal thing, tied to the orbit of our earth around the sun.
But, in order to see it, we have to look up. And most of us spend our busy lives attending to our earthly affairs. We rarely make time to gaze upward at the night sky.
I wonder who first discovered Shooting Star Month. Ancient literature has many references to the heavens. The Greeks seemed to have particular wisdom in this area. Was Shooting Star Month discovered by an ancient Greek who spent a lot time looking up? In order to notice the August shooting star phenomenon, he would have had to look up all year long. Only then could he notice the increased shooting-star activity in August. And he would have to verify his work by looking up over several years. Discovering nature’s patterns is difficult work.
But once some noble, hard-working Greek discovered the phenomenon, it became easy for the rest of us to participate in his genius and enjoy August’s shooting-star show. All we have to do is read about it somewhere, wait for mid-August, and look up at night. The hard work had been done long ago.
In my investment book, Beyond the Bull, I discuss the phenomenon of using other people’s knowledge for our own financial benefit. Is there a financial pattern that someone may have observed long ago that we might be able to use for our own well-being? Is there a Shooting Star Month in the financial world?
It turns out that there are many examples of such occurrences in the money world. The most relevant right now is known as secular alternation. Secular alternation refers to the tendency of the stock market to alternate between long-term secular bull markets and long-term secular bear markets. This financial gem is the key to planning our investment futures. Here are examples of how secular alternation has worked for the past 100 years or so:
- In the late 1800s, there was a railroad boom in North America. This gave rise to a stock-market boom that ended in 1906 when that secular bull market ended.
- 1906 to 1921: This secular bear market included World War 1 and hyper-inflation in Germany (15 years).
- 1921 to 1929: The roaring ‘20s produced a short powerful secular bull market (8 years).
- 1929 to 1942: The US stock market experienced a secular bear market accompanied by a depression and a world war (13 years).
- 1942 to 1966: Secular bull market (24 years).
- 1966 to 1982: Secular bear market (16 years).
- 1982 to 2000: Secular bull market (18 years).
- 2000 to now. Secular bear market (10 years so far . . .).
During the secular bull markets, the stock markets went up a long way. Those who bought stocks and simply held them as long0term investments did well during these times. The secular bear markets either took stocks a long way down or took them sideways for a long time. Simply buying stocks and holding them resulted in either severe or minor losses. In the long-term secular bull markets, investing in equity mutual funds was profitable. In the secular bear markets, it was not. Secular alternation dictates which investment strategies make sense at any given time.
What makes sense in a Secular Bull Market? Ordinary stock-market investors can buy reasonable stocks and hold them for extended periods. In a rising market, that strategy works: “Buy and Hold for the Long Term.”
What makes sense in a Secular Bear Market? Ordinary stock-market investors have to buy reasonable stocks when they are depressed in price and sell them when they are reasonably priced: “Buy Low, Sell High.”
What makes sense today? We have been in a secular bear market for ten years. If stock-market investors have been buying low and selling high, they have had great opportunities to earn solid investment returns. If investors had been holding stocks for the whole ten years, they have been disappointed. They feel like the sky gazer who looks for shooting stars in January.
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.
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.
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Editor’s Note: Tech Talk also is presenting at this conference.
FP Trading Desk Headlines
FP Trading Desk headline reads, “Rising correlations tough on stock pickers”. Following is a link to the report:
http://business.financialpost.com/2010/08/23/rising-correlations-tough-on-stock-pickers/
FP Trading Desk headline reads, “Move aside bears and bulls! We’re in a wolf market”. Following is a link to the report:
http://business.financialpost.com/2010/08/23/move-aside-bears-and-bulls-were-in-a-wolf-market/
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
HAC Seasonal Rotation ETF HAC $11.03 August 23rd 2010
· Open 11.06
· Close 11.03 (Down $0.04)
· High 11.07
· Low 11.02
· Bid 11.02 x5
· Ask 11.14 x4
· Volume 11,578
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.30
· Net Asset Value per unit: $11.02 (Up $0.01)
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Discussions from the Tech Talk Forum:
An error has occurred, which probably means the feed is down. Try again later.
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August 24th, 2010 at 5:58 am
Don, or anyone else who can answer…In the midterm election years, do the gold equities still tend to follow their seasonally strong period, or are they dragged down with the rest of the market? It would be interesting to see charts of gold equities from July through September compiled only for midterm election years.
August 24th, 2010 at 7:25 am
Hi Don
Where do you see support levels for RIM-T ?
Thanks
Jeff
August 24th, 2010 at 9:54 am
Jan Mohammed,
Your info about oil from Kitco was right.Today trading under $72.Also your comment about following DonV is correct as I have been following for just under a year & seosonal calls are correct.
Congratlations
Muntazir
August 24th, 2010 at 11:13 am
Ron, I’m thinking of buying Teck today in USD to take advantage of the lower price in USD. Do you think it would be an okay move from a technical perspective? Also, any thoughts on manulife? Thank you.
August 24th, 2010 at 11:56 am
Slava: NYSE:TEK is still falling but has tagged 1st support at 31 which was the mid July lows. It is bouncing off that support pt but may not hold being in such a downtrend. Just below it at 29 is far stronger support. That is the bottom of a large 3 month channel from 37 to 29 with 29 serving as support even further back than that. A person could buy 31 now but be ready do bail out fast on a close below it. Or hold it and count on 29 holding up. Much riskier than buying at 29 but one could miss a bounce as well. Presently price is 31.17. Price tracks Copper and the economy and the TSX basically so any further market selling will take TEK with it. As far as MFC goes it just broke below 12 support and despite being very oversold there is no price support all the way to 9 on a Daily chart. Doesn’t mean it will fall that far but the stock is plunging. Price is miles from its 50ema and has deeply oversold technicals but price is king and it is in a scary free fall. While it is likely to have a sharp snap back at some pt one has to wonder when that will come. Buying in here is stepping in front of a roaring freight train. Depends on your risk tolerance. One would think at this price it would be a great takeover candidate but that may be like betting on tropical storm “DANIELLE” for a rally in Nat Gas……very risky.
August 24th, 2010 at 12:22 pm
Ron, thank you for the words of wisdom. When I see “cheap stocks” (or what I perceive to be “cheap stocks”) I sometimes feel like a kid surrounded by candy on a Halloween night – there is an abundance of candy yet it doesn’t mean I should eat a lot at once.
This morning I so regretted not having sold Sandisk and BMO yesterday afternoon at a small profit. I decided to keep them and they are both down more than 5% today. So frustrating! Now that I’m down on both, I have to decide – do I take a smaller loss or do I keep them as a long term investment? Well, you know the dilemma… This is how people lose money. At least I managed to avoid Natural gas disaster this year as I was caught in hnu last August.
August 24th, 2010 at 12:35 pm
Don, or anyone else … VT (Viterra Inc.) is up 5% today. Is there a reason for this?
August 24th, 2010 at 12:39 pm
Slava: BMO broke below the July lows but is tagging 56 support that has in the past been an important support level. Below that is 54.50. BNS, CM and TD have not broken their July lows but haven’t reported yet either.(all this week) And RY that I was considering buying broke a tight 8 day one dollar channel of 51-52 and has also broke its July lows even though it hasn’t reported yet.(Thurs) But if BMO can hold very close to 56 support it just might hang in there. The other banks are expected to have better earnings than BMO and RY. Prices are reflecting this. Overall not a lot of technical damage has been done to the Can banks yet. I’ve been looking for a buy there but they aren’t selling off to significant support levels for my fussy liking. Even BMO is remaining below 56 which is a concern. But the banks are not in season either and are not exactly leading the way recently. Just have to have stops in place it seems and go from there.
August 24th, 2010 at 1:11 pm
Found an article in the Financial Times: Warm weather boosts prairie grains forcasts: StatCan by Eric Lam to support increase for Viterra Inc. VT
http://business.financialpost.com/2010/08/24/warm-weather-boosts-prairie-grain-forecasts-statcan/
August 24th, 2010 at 1:14 pm
Ana: Only answer I know when price rallies is there were more buyers than sellers. (That’s a pure technician’s joke). But price is once again bumping up against its downtrendline from the Oct, Mar and Aug highs. Price keeps stopping cold there on each tag and needs to clear 8.80 and more importantly then needs to clear price resistance at 9.10. That was the Feb lows support that broke down in April and was bumped and confirmed as resistance in early August. The overall sell off on the Daily chart from Oct/09 to July shows this present price level a Fib 38.2% retracement which isn’t a lot and also serves as a resistance pt. Bottom line: Price needs to clear 9.10 to mean much. That’s what the Daily chart is saying to me fwiw………..Perhaps someone who follows fundamentals can give you a good reason for the rally today……
August 24th, 2010 at 1:23 pm
Dean Foods has been pounded pretty bad. I read an article suggesting Stocks with high Free Cash Flow may be favourable Buys in this Market. They’re in the Dairy Product Biz I believe especially Consumer Milk and its become a Loss Leader in a Tough Economy it seems. Chart looks nasty BUT whats your take on their Investment merits on the Basis of their FCF.
August 24th, 2010 at 2:10 pm
Ron, I hope you are planning to stick around this board for a while… Joking aside, I’m very grateful for your advice especially since I’m not experienced enough to contribute any great ideas myself – so this seems to be very one-sided as I keep on asking you questions.
By the way, I remember you mentioning that most of your trading is done in your RRSP account and that you are mostly in cash, taking quick positions here and there? I’m starting to seriously consider this strategy. My rrsp is down -10% since April and flat since August 2009. So all this work for nothing primarily because of my “long-term holds” such as manulife and rim dragging down the overall results. Not sure if “long-term” works anymore.
I’m actually thinking of buying Jan 2013 $12 calls on Manulife. Hopefully things will turn around by then. As for RIM, it’s now slightly below $50.
August 24th, 2010 at 2:35 pm
Interesting article, opinions?
http://www.moneytalks.net/daily-updates/4182-read-this-now.html
August 24th, 2010 at 3:21 pm
Slava: I don’t post on other forums anymore so if I’m around and handy and check this forum I’ll answer direct questions if I can. They are only opinions and nothing more. No one has all the answers and everyone has a different time frame they trade in. That makes even suggestions difficult. And technicals are as much art as science and everyone quantifies each factor with different weighting. No easy answers so I concern myself with strategies that can work for most. But your RRSP matches what the market has done since the April highs. No coincidence. You are 100% correct regarding long term holding. Doesn’t mean you can’t be a position trader as they have higher odds of success and don’t get whiplashed out as much as day traders or swing traders. But you must decide at what point you will sell a position you own “before” you buy it as we all rationalize when wrong. Also when you can refrain from taking a quick profit odds are much higher at having much higher profits as long as you use some very basic technical support and resistance levels. Just not close ones for a quick day or swing trade but catch a trend of some length. Look a the Gold charts in July and you’ll see the breakouts that match the seasonals and most are still in uptrends. But I lack faith and confidence in the financial markets so get out too quickly as a rule. It works and suits my mindset but it is better to catch a trend with a trailing stop a reasonable distance away to catch the bulk of the run. Only market I tend to trade perfectly has been switching currencies from CD to U.S.$ and back. But now I lack confidence in the U.S.$ and haven’t switched lately despite strong evidence to do so. That now gnaws at me as well as I spotted a few turning points lately and ignored them. That’s ignoring technicals which I don’t normally do. As far as options go if you are wrong in direction, or in time, or in the amount of move above your strike price plus enough to cover the premium you had to pay for your options they expire “worthless”. Many ways to lose your shirt trading options. Far easier to lose than stocks as you have to be right on all three points. While a stock you may lose 10%to 20% on a stock and feel bad. Better than 100%. And on a quick move against you options turn to garbage “instantly” unlike a stock that can be sold at a simple percentage loss. Dangerous game to play with extreme results either way. Smart money sells options not buys them as a rule but that is a market all its own. But spending a little on Dec or Mar/01 calls could pay off big and you do have time for a turn around which is likely. Just don’t spend a bundle on it as it is a gamble. Dec 11 call is 1.25 and Dec 12.50 call is .65. A Mar/01 11 call is 1.65 and Mar/01 12.50 call is 1.00. Not a lot to pay but lots of potential. Just keep in mind they could turn to “garbage” in a heartbeat any time along the way …if you can live with that thought…….. RIM does need to hold close to 50 or expect next support at 45 to be tagged. Technicals are showing positive divergences now at 50 but it is in a nasty downtrend too……..
August 24th, 2010 at 3:49 pm
Slava: Interesting article. As I’ve said before it’s hard to imagine this market plunging with so much bearish sentiment out there. Since the May flash crash money has been pouring out of the money and into bond funds and even fund managers are putting their money there out of fear. Add to that the low volume that has been the trend for months and months now and who is going to be doing the selling is the question. BUT… “IF” he is right on a major sell off then watch the ETF:VIXX that I mentioned the other day. It is the fear index based on the Volatility Index (VIX) When the market sells off it goes up like crazy. EX: April 26 high VXX-18 and a couple of weeks later on May 6th flash crash VXX-36. Now that’s price action. Also there are options on it as well. And right now price is in a very tight explosive range between 21 and 24. Price tagged 24 resistance today and backed off. A breakout above 24 would suggest a market sell off of some degree and could see VXX go parabolic. Print off a chart and draw lines across 21 and 24 to see. Just something to ponder or just watch as a guide for their other positions………Not a recommendation……….
August 24th, 2010 at 5:05 pm
I have just purchased some HAC and noticed that the volumes are
very low. Is this something that I should be worried about when I try to sell this ETF? Thanks
August 24th, 2010 at 5:13 pm
Hi Jeff. RIM broke support today on a move below $50.06 Cdn.
August 24th, 2010 at 5:21 pm
Also in regards to HAC there is currently a significant cash component to this ETF. Is the cash invested in short term fixed income ETFs?
August 24th, 2010 at 6:55 pm
Hi Don,
Hope you had nice holidays.
Sept will be 1 yr I have been following you on this website,BNN & FP.I started by adding position to Technology sector last year & had good return(%wise as I was starting, small $).Next I invested in energy(XEG) & made good return too(came out early when you suggested to trim 3rd position(again bcs small amt).Mistimed on tsx index.Lately invested in xma( came out early b4 pot bid) BUT with gain.Also holding to ABX.hence,for above THANK YOU VERY MUCH.Pls keep us informed & entertained.
Going frwrd do you think I still have time to get into COW or am I late.
Also what is your opinion about ECA (for natural gas season) as I would like to take a position or Should I avoid COW & ECa & stay in cash.
Once again THANKS for the past & ans to my questions.
Muntazir
August 24th, 2010 at 6:55 pm
Hi Don,
Hope you had nice holidays.
Sept will be 1 yr I have been following you on this website,BNN & FP.I started by adding position to Technology sector last year & had good return(%wise as I was starting, small $).Next I invested in energy(XEG) & made good return too(came out early when you suggested to trim 3rd position(again bcs small amt).Mistimed on tsx index.Lately invested in xma( came out early b4 pot bid) BUT with gain.Also holding to ABX.hence,for above THANK YOU VERY MUCH.Pls keep us informed & entertained.
Going frwrd do you think I still have time to get into COW or am I late.
Also what is your opinion about ECA (for natural gas season) as I would like to take a position or Should I avoid COW & ECa & stay in cash.
Once again THANKS for the past & ans to my questions.
Muntazir